M 


■X 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


V4ii 


i..  A.  CO.  *-•  *• 


A  TREATISE  ON  THE  LAW 


or 


WE(;()T1A15LE  INSTILMENTS 

INCLCDINO 

BILLS  OF  EXCHANGE;  PROMKSrfORY  NOTES;  NEGOTIABLE  BONDS 

AND  COUPON'S;  CHECKS;  BANK  NOTES;  CERTIFICATF>?  OF 

DI^I'DSIT;  CEKTIP'ICATIIS  ( )F  ST(  X'K  ;  HILI>;  ( )F  CREDIT; 

BILI.^  OF   LADING;  GIARANTIRS;   LiriTERS  OF 

CREDIT;     AND    CIRCULAR    NOTES 


Bt 

JOHN   W.    DANIEL 

or    THE    LrNCHHURO    (VA.)    UAK 

IN   TWO   VOLUMES 

Vol.   I 
SIXTH   EDITION 

RE-EDITED  AND  ENLARGED  BY 

THOMAS    H.    CALVERT 

OF  THE   RALEIUH    (n.   C.)    HAH.      LATELY   OF  THE   EDITOKIAL  STAFF  OF  EDWARD 
TUOiUT»OS  company;  author  OF  "REUl'LATION  OK  COUUKKrK  LNDEK 
THE    FEDERAL  CONSTITUTION;"   ANNOTATOR   OF   THE   CON- 
STITUTION IS  "  FEDERAL  STATLTE8,  ANNOTATED" 


NEW  YORK 

BAKER,  VOORHIS  &  CO. 

1913 


Entered,  acconlinR  to  the  Art  „f  engross,  in  the  y.-ar  ciKhte<n  hun.lnHl  and 

Mfventy-six,  by 

JOHN    W.    DANIEL, 

In  tlu;  Office  of  the  Lihrurian  of  ConRrctw,  at  Washington, 

CopYniaiiT,  is7n, 
iJv  .JOHN    W.    I)A\II:F.. 

C'nl'YUKJUT,    1882, 

Hy  JOHN    VV.    DANIEL. 

CoPYHICMT,     IM91, 

Hv  .JOHN    W.    DANIEL. 

Coi'YiU(;nT,   1903, 
By  BAKER,    VOOKHIS  &   COMPANY. 


CoPYRIfiHT,     1913, 

By  baker,   VOORHIS  &  (JOMPANY. 


C5 


1 

0 


^  TO 

CHARLES  O'CUNOR,   ESQ. 

WHO,    A8   A    LAWYER 
HAM    UIUSIFIEO    HIH    fKOriZHHION    tiV    UIH    UPRIGHT   CHARACTER 

AND 

lI.I.rsTRATEI)   IT  WITH  TIIK  TRIUMPHS  OF  HIS  GENIUS 

AND 

WHO,    AS   A    PATRIOT 

HAS  NEVER  FAILED  IN  riDEt.ITT  TO  THE  PHIN('IPLEi<  UK  LIBERTY  PROTBTTBD  BY  LAW 

THIrt    WOKK 

IS  WITH  HIS  PKllMISSION 

KEiU'eCTrULLT    LSrtCRlBBO 

BY   THE   AUTHOR 


PREFACE  TO  THE  SIXTH  EDITION 

A  FEW  words  will  suffice  in  presenting  the  Sixth  Edition  of  this 

"ma  respect  to  the  treatment  of  the  general  law  of  Negotiable 
Instruments  the  work  of  the  revision  has  largely  taken  the  form  of 
l~gtt  citations  of  cases  to  date  and  of  adding  illustrafve  notes^ 
No  Hberties  have  been  taken  with  the  text,  as,  on  th,s  part  of    he 
work   it  has  been  the  intention  of  the  editor  to  let  it  stand  as  the 
work  of  the  author,  the  late  Senator  Daniel.    A  few  changes  m  and 
ackUtions  to  the  text,  however,  have  been  made.    A  charactens 
of  the  work,  and  one  which  gave  it  distmctiveness  and  added  to  its 
value  as  a  text  book,  was  the  clear  and  searching  analysis  of  the  cases 
In  que'tfons  upon  ^hich  there  was  a  conBict  in  the  authorities,  and 
heTxpression  by  the  author  of  his  personal  V-vs    These  expressions 
of  the  author's  views,  adding  discussion  and  thought,  could  not 
mislead  the  investigator,  as  on  all  such  point,  he  carefully  stated  the 

'°A'l'Sim:^rpublicationofthelastedition,theCniformNego^ 
tiab  e    nstruments  statute  had  been  then  recently  adopted  by  some 
of  the  States,  and  there  had  been  but  few  decisions  construing  the 
Ifu  e    tn^e  that  time  it  has  been  made  Pa^  of  the  .statu  e  law  m 
many  more  States  and  Territories,  as  well  as  m  the  District  of  Co  um- 
Taby  Act  of  Congress,  and  is  now  in  force  '"  fo^y-^/-^— 
fsee  the  Appendix).    The  consideration  of  the  effect  of  the  statute 
tem   a  very  substantial  part  of  the  work  of  this  edition.    An  effor 
wl^made  to  obtain  an  exhaustive  collection  of  the  cases  in  which  the 
TatuTha   been  construed,  and,  by  the  arrangement  and  method  o 
"enradopted,  the  discussion  of  those  -s-  separate  y,in^^^^^^^^^^^^ 
bv  a  catchline  "  Under  the  Negotiable  Instrument  Statute,    it  is  behevea 
that  convenient  opportunity  has  been  given  for  a  comparative  study 
of  the  general  law  and  the  effect  thereon  of  the  statute.    ^    ^    ^ 

Raleigh,  N.  C,  October,  1913. 


Vi  PREFACE   TO   THE   FIFTH   EDITION 


PREFACE  TO  THE  FIFTH  EDITION 


More  than  a  quarter  of  a  century  has  elapsed  since  this  work  was 
originally  published  m  1876,  and  over  eleven  years  since  the  last 
edition  appeared  in  1891. 

Now  the  fifth  edition  is  required  to  meet  the  continuous  demand 
with  which  it  is  honored,  and  to  bring  its  citations  of  cases  up  to  date. 

The  general  structure  of  the  text  remains  unchanged.  New  diver- 
sities in  the  forms  of  negotiable  instruments,  and  new  phases  of  ques- 
tions arismg  in  practice,  have  been  appropriately  dealt  with  in  new 
paragraphs  or  subsections. 

Some  thirty-five  hundred  new  cases  have  been  embodied.  They 
were  selected  from  the  decisions  of  the  highest  courts  of  the  British 
Empire,  as  well  as  from  those  of  the  highest  courts  of  the  United 
States,  both  Federal  and  State.  In  these  tribunals  the  work  has 
found  favor,  and  frequent  quotation,  and  it  seeks  to  be  a  true  reflex 
of  the  law  of  the  subject  as  understood  and  applied  throughout  the 
domains  of  the  English-speaking  people. 

Commerce  is  the  pioneer  in  the  assimilation  of  peoples  and  laws. 
The  negotiable  instrument  is  the  leader  of  the  pioneer  corps;  and 
it  is  quite  probable  that  it  will  produce  the  first  body  of  homogeneous 
law  that  is  evolved  in  the  realms  of  civilization.  These  principles 
were  recognized  in  the  first  edition  of  this  work,  and  their  triumph 
predicted.  Since  then  they  have  been  notably  illustrated  in  "The 
New  Negotiable  Instruments  Law,"  which,  up  to  this  period,  has  been 
adopted  by  nineteen  States  of  the  American  Union;  and  is  now  law 
in  the  Territory  of  Arizona  and  the  District  of  Columbia.  In  the 
Appendix  of  this  edition  this  new  statute  will  be  found. 

By  reason  of  other  exacting  employments,  the  author  could  not  give 
to  the  preparation  of  this  edition  throughout  the  close,  personal 
attention,  which  he  bestowed  upon  its  predecessors.  He  has,  how- 
ever, himself,  examined  and  annotated  many  of  the  new  cases.  This 
important  work  for  the  most  part  has  been  done  by  Mr.  Douglass. 
Our  labors  have  been  assisted  by  E.  S.  Douglass,  Esq.,  and  by  Messrs. 
Stanhope  Henry,  Levi  H.  David,  and  Joseph  D.  Wright,  all  members 
of  the  Washington  (D.  C.)  bar — gentlemen  whose  character  and 
ability  give  ample  assurance  of  their  fidelity. 

In  the  preface  to  the  fourth  edition,  issued  in  1891,  the  author 


PREFACE   TO   THE   FOURTH   EDITION  VU 

expressed  his  sense  of  the  loss  suffered  by  the  then  recent  death  of 
Mr.  Peter  C.  Baker,  who  had  long  been  the  honored  head  of  the 
publishing-house.  Since  then  Mr.  Voorhis,  in  the  serenity  of  a  well- 
spent  life,  has  also  departed.  The  "Baker  and  Voorhis  Company," 
which  has  succeeded  the  old  firm,  preserve  the  names  of  the  founders 
in  their  title,  and  attest  by  their  courtesy,  promptitude,  and  fairness, 
that  they  likewise  preserve  their  virtues. 

As  commerce  moves  to  greater  conquests,  the  negotiable  instru- 
ment will  maintain  itself  in  the  forefront,  as  the  harbinger  of  uniform 
law.  This  work  was  the  first  to  treat  the  subject  in  its  ample  scope. 
So  far  it  has  upheld  itself  in  the  good  opinion  of  the  legal  profession, 
and  of  enlightened  laymen,  and  the  hope  is  indulged  that  it  may 
long  continue  to  be  worthy  of  confidence. 

JNO.  W.  DANIEL. 
CHAS.  A.  DOUGLASS. 

November  20, 1902. 


PREFACE  TO  THE  FOURTH  EDITION 


The  first  edition  to  this  work  appeared  in  1876,  the  second  in  1879, 
and  the  third  in  1882.  The  last  edition  has  been  for  some  months 
exhausted  and  out  of  print,  and  the  fourth  is  now  issued  in  response 
to  continuous  and  imf altering  demand. 

The  author  is  gratified  with  the  evidences  of  the  usefulness  of 
his  essay  afforded  in  the  reception  given  it  by  the  profession  in  this 
country  and  in  foreign  lands,  and  in  the  extensive  and  favorable 
citations  of  the  text  by  the  highest  courts.  Dissent  from  its  doctrines 
has  been  but  seldom  expressed,  and  then  only  in  those  vexed  questions 
which  have  elicited  conflicting  adjudications. 

Some  two  thousand  new  cases,  taken  from  over  eight  hundred 
volumes  of  Reports  (State,  Federal,  English,  and  Colonial),  are 
hereui  cited,  and  the  newly  added  matter  embraces  over  one  hun- 
dred printed  pages.  But  the  comprehensive  plan  of  the  treatise  was 
such  that  but  little  emendation  of  the  text  has  been  found  necessary, 
and  the  amplifications  are  the  result  of  new  illustrations  and  diver- 
sities of  established  principles  rather  than  of  the  evolution  of  new  ones. 
With  forty-four  States  now  composing  the  Federal  Union,  no  one 
just  like  another  in  its  system  of  laws;  with  the  Federal  jurisprudence 


Vm  PREFACE   TO   THE   THIRD   EDITION 

assuming  a  certain  caste  of  its  own,  and  with  new  organizations, 
ramifications,  and  phases  of  business  arising  out  of  our  rapid  and 
progressive  development,  no  lawyer  can  keep  abreast  with  the  de- 
mands of  his  profession  without  attention  to  contemporary  decisions. 
Nevertheless,  the  scientific  basis  of  the  law  merchant,  and  the  elastic, 
equitable  spirit  which  pervades  it,  provide  the  solvent  of  difficulty  for 
all  complexities  and  novelties  of  circumstance;  and  amongst  the  new 
cases  there  are  but  few  not  referable  to  principles  fixed  by  precedent, 
and  heretofore  expounded  in  this  work. 

In  the  collection  and  digest  of  cases  for  this  edition,  I  have  been 
greatly  assisted  by  the  diligent  and  discriminating  labors  of  my  valued 
friend,  Mr.  Chapman  W.  Maupin.  of  the  Bedford  City  Bar,  to  whom 
I  render  my  acknowledgments. 

Since  the  last  edition  appeared  Mr.  Peter  C.  Baker,  the  senior 
of  the  firm  of  Messrs.  Baker,  Voorhis  &  Co.,  its  publishers,  has 
departed  this  life.  He  was  an  honest  man  who  has  left  an  excellent 
name,  and  more  than  this,  a  liberal-minded  and  accomplished 
gentleman,  with  an  enthusiasm  for  his  vocation  beyond  its  mercantile 
aspects.  Out  of  my  business  relations  with  his  house  grew  a  friend- 
ship for  him  which  strengthened  with  years,  and  I  mourn  his  loss  in 
common  with  all  who  knew  him.  His  worthy  associates  in  business 
have  my  thanks  for  their  uniform  courtesy  and  fair  dealing. 

J.  W.  D. 

Lynchburg,  Va.,  April,  1891. 


PREFACE  TO  THE  THIRD  EDITION 


Since  the  last  edition  of  this  work  was  issued,  just  three  years 
ago,  interest  in  the  subject  of  "Negotiable  Instruments"  has  in 
nowise  abated,  but  steadily  increased.  It  ranks  now  second  to  no 
title  of  the  law.  This  is  shown  by  the  multitude  of  cases  which  appear 
in  the  reports  and  the  legal  periodicals,  and  by  the  number  of  books 
published  on  Bills  and  Notes,  and  cognate  subjects.  It  is  also  shown 
by  the  fact  that  the  second  edition  of  this  treatise  was  more  speedily 
exhausted  than  the  first,  and  by  the  numerous  orders  which  have 
anticipated  the  appearance  of  the  third.  The  reason  is  obvious. 
This  is  an  age  of  rapid  transit,  of  vast  material  development,  and 
of  ever-extending  commerce.    And  Negotiable  Instruments  are  the 


PREFACE  TO   THE   SECOND   EDITION  IX 

instruments  of  commerce,  their  forms  and  varieties  taking  shape  to 
suit  its  usages  and  needs. 

As  rapidly  as  was  consistent  with  the  engagements  of  an  active 
practice  at  the  bar,  the  author  has  prepared  this  new  edition;  and, 
gratefully  appreciative  of  the  favor  with  which  its  predecessors 
were  received  by  the  Bench  and  Bar,  he  hopes  that  it  will  be  found 
more  useful  in  assisting  their  labors  and  more  worthy  of  their  com- 
mendation. 

The  plan  and  framework  of  the  original  text  have  undergone 
but  slight  alterations.  But  the  result  of  the  most  recent  and  best 
considered  adjudications  have  been  embodied  in  it;  some  of  the 
chapters  (notably  those  on  Certificates  of  Stock  and  Bills  of  Lading) 
have  been  considerably  enlarged;  many  passages  have  been  rewritten 
where  elaboration  seemed  desirable;  and  citations  of  over  fifteen 
hundred  cases  (for  the  most  part  new  ones)  have  been  added. 

The  decisions  of  the  higher  courts  (Federal  and  State)  of  the  United 
States,  and  of  England,  have  been  the  chief  sources  of  quotation; 
but  on  important  questions,  and  especially  where  the  opinions  seemed 
to  possess  more  than  ordinary  merit,  the  adjudications  of  the  Cana- 
dian, and  other  provincial  courts,  have  been  cited. 

To  present  the  Law  of  Negotiable  Instruments  as  it  is  to-day 
interpreted  has  been  the  author's  design,  and  to  accomplish  it  he 
has  not  only  consulted  the  reports,  but  also  the  advanced  publications 
of  judicial  opinions  in  legal  transcripts  and  journals.  His  researches 
have  been  greatly  facilitated  by  the  courtesies  of  the  excellent  pub- 
lishers of  the  work,  Messrs.  Baker,  Voorhis  &  Co.,  and  to  them  he 
again  renders  his  thanks. 

J.  W.  D. 

Lynchburgh,  Va.,  July,  1882. 


PREFACE  TO  THE  SECOND  EDITION 


The  rapid  sale  of  the  first  edition  of  this  work  has  demonstrated 
the  correctness  of  the  opinion  expressed  by  its  author,  that  a  treatise 
on  the  subject  of  "  Negotiable  Instruments  "  was  a  desideratum  to  the 
legal  profession;  and  the  flattering  utterances  with  which  it  has  been 
received  by  the  Bench  and  Bar  induce  him  to  hope  that  he  has  not 
altogether  failed  in  his  effort  to  supply  it. 


X  PREFACE   TO   THE   FIRST   EDITION 

In  response  to  continuous  demands,  a  second  edition  is  now  put 
forth,  containing  one  hundred  and  four  pages  of  new  matter,  and 
citations  of  over  a  thousand  cases  not  embraced  in  the  first  edition. 
The  important  adjudications  of  the  English  and  American  courts 
since  the  spring  of  1876  have  been  carefully  collated,  and  the  text 
presents,  as  the  author  hopes,  a  faithful  record  of  "The  Law  of  Nego- 
tiable Instruments,"  as  it  is  now  interpreted  and  practiced. 

To  those  who  have  so  generously  encouraged  and  favored  his 
work  the  author  returns  his  thanks,  and  to  his  publishers,  Messrs. 
Baker,  Voorhis  &  Co.,  he  begs  leave  to  renew  the  assurances  of  his 
highest  consideration. 

J.  W.  D. 

Lynchburg,  Va.,  June,  1879. 


PREFACE  TO  THE  FIRST  EDITION 


When  Lord  Holt,  in  the  year  seventeen  hundred  and  three, 
indignantly  denied  that  promissory  notes  payable  to  bearer  were 
negotiable  and  inveighed  against  the  "obstinacy  and  opinionative- 
ness  of  the  merchants  who  were  endeavoring  to  set  the  law  of  Lombard 
street  above  the  law  of  Westminster  Hall,"  he  had  no  prophetic 
vision  of  the  great  part  which  negotiable  instruments  were  to  play 
in  the  transactions  of  commerce,  and  little  dreamed  that  the  strug- 
gling idea  of  Lombard  street  was  destined  to  develop,  expand,  and  di- 
versify itself,  until  it  overspread  the  civilized  globe.  From  that  day 
to  this,  negotiable  instruments  have  been  a  subject  of  such  rapid  and 
continuous  growth  that  the  sheets  of  the  various  compilations  on  the 
subject  have  scarcely  dried  from  the  printer's  hand,  ere  they  have 
successively  become  historic  records  rather  than  mirrors  of  existing 
things.  It  is  true  that  certain  general  principles  permeate  the  law  af- 
fecting every  variety  of  negotiable  instruments,  and  that  in  Maljmes, 
Marius,  Molloy,  and  Beawes,  we  may  yet  find  the  rudiments  of  that 
system  which  in  our  own  day  has  received  ample  illustration  from  the 
hands  of  Story  and  Parsons;  but  the  pioneer  who  stood  on  the  borders 
of  our  western  civilization  thirty  years  ago,  and  who  to-day  sees  the 
same  landscape,  then  covered  with  primeval  forest,  or  stretching  wide 
in  solitary  prairies,  now  brilliant  with  gorgeous  cities,  and  teeming 
with  the  industries  of  crowded  millions,  recognizes  a  change  not 


PREFACE   TO  THE  FIEST  EDITION  XL 

more  marked  than  that  which  has  been  exhibited  in  the  rapid  and 

diversified  development  of  the  subject  of  our  treatise.  And  the  devel- 
opment was  scarcely  more  marked  in  the  long  period  elapsing  between 
the  days  of  the  first  commentators  to  whom  we  have  referred  and  the 
last,  than  it  has  been  smce  the  latter  put  forth  their  admirable  works. 
Chancellor  Kent  remarks,  with  an  evident  spirit  of  congratulation, 
that  "the  law  of  negotiable  paper  has  at  length  become  a  science 
which  can  be  studied  with  infinite  advantage  in  the  various  codes, 
treatises,  and  judicial  decisions,  for  in  them  every  possible  view  of  the 
doctrine  in  all  its  branches  has  been  considered,  its  rules  established, 
and  its  limitations  accurately  defined."  But  when  Chancellor  Kent 
wrote  his  Commentaries,  such  a  thing  as  a  coupon  bond  was  unknown 
in  the  United  States.  When  Story  sent  forth  his  treatises  on  Bills  and 
Notes  from  Cambridge,  it  was  yet  a  feeble  adventurer,  timidly  feeling 
its  way  on  the  stock  exchange.  And,  although  when  Professor  Par- 
sons published  his  work  m  1862,  it  had  been  recognized  as  a  negotiable 
instrument,  and  was  becoming  familiar  to  the  public  eye,  the  law 
concerning  it  was  yet  in  such  an  inchoate  state  that  a  few  pages 
comprehended  all  that  he  saw  fit  to  say  about  it.  Now  there  is  no 
more  important  figure  in  financial  circles  than  a  coupon  bond.  There 
is  scarcely  a  to^\^l  or  county  in  the  United  States  that  has  not  become 
interested  in  it,  and  the  law  relatmg  to  it  has  grown  mto  an  important 
title,  which  would  fully  justify  its  embodiment  in  a  separate  and  mde- 
pendent  work.  We  find,  also,  an  increashig  disposition  to  impart 
certaui  negotiable  qualities  to  mstruments  and  documentary  evidences 
of  title,  which,  by  the  common  law,  are  as  devoid  of  such  qualities  as 
any  chattel  sold  behind  the  counter  of  a  merchant.  In  some  of  the 
States,  bonds  are  placed  on  the  same  footing  as  promissory  notes. 
In  some  of  them  deeds  to  real  estate  and  docketed  judgments  are  just 
as  negotiable  as  bills  of  exchange;  and  in  all  of  them,  so  to  speak,  the 
spirit  of  negotiability  is  enlargmg  its  bounds,  extending  its  mfluence, 
and  impressing  itself  upon  mercantile  transactions. 

These  reflections  have  led  to  the  production  of  this  work.  It  is 
the  first  effort  to  embrace  in  one  treatise  a  classification  of  all  nego- 
tiable instruments,  with  an  exposition  of  the  law  touchmg  each  variety 
of  them.  And  this  has  seemed  to  us  the  most  convenient  and  philo- 
sophical mode  of  presentmg  and  expounding  the  law,  notwithstanding 
the  views  expressed  by  that  great  jurist  and  author.  Justice  Story, 
who  followed,  as  he  favored,  a  different  plan.  To  him  it  seemed 
(as  he  states  ui  the  preface  of  his  work  on  Bills  of  Exchange),  that 
"great  practical  mconvenience  "  would  result  "from  uniting  and  m- 


Xll  PREFACE   TO   THE   FIRST  EDITION 

termixing  the  doctrines  respecting  bills  of  exchange  and  promissory 
notes  in  one  and  the  same  treatise";  and  if  his  idea  be  accepted,  still 
greater  practical  inconvenience  would  result  from  gathering  under  one 
roof  all  the  members  of  the  negotiable  family.  But  his  own  learned 
productions,  to  our  mind,  rebut  his  theory.  While  sections  and  pages 
— and,  indeed,  we  may  almost  say  chapters — of  his  treatise  on  Bills 
are  literally  transcribed  in  the  succeeding  one  on  Notes.  And  while 
there  are  certain  distinctions  always  to  be  observed  between  the  two 
classes  of  papers,  there  are  more  identities  in,  than  differences  be- 
tween, them;  and  the  differences  can  always  be  readily  recognized  and 
defined.  To  use  Tennyson's  phrase,  they  are  "alike  in  difference." 
Indeed,  not  only  may  bills  and  notes  be  conveniently  treated  in  con- 
junction with  each  other  (as  in  fact  they  have  been  most  success- 
fully treated  by  Bayley,  Byles,  Thomson,  and  Parsons),  but  their  kin- 
dred, which  are  "bone  of  the  same  bone  and  flesh  of  the  same  flesh," 
are  like  the  sciences,  which,  Lord  Bacon  says,  "dwell  sociably  to- 
gether." Checks,  so  closely  assimilated  to  bills  of  exchange  that  they 
are  sometimes  called  "peculiar  kinds  of  bills,"  may  be  fully  treated 
under  the  same  cover  with  bills,  by  simply  pointing  out  their  peculiar 
differences  and  uses. 

Coupon  bonds,  so  nearly  identical  with  promissory  notes  that  they 
might  be  fitly  termed  "peculiar  kinds  of  notes,"  may  be  thoroughly 
explained  by  exhibiting  their  peculiar  variations  from  them  in  form, 
and  in  the  functions  which  they  fulfil.  And  every  species  of  instru- 
ment, really  or  quasi  negotiable,  may  be  either  thoroughly  expounded 
or,  at  least,  aptly  illustrated  by  a  delineation  of  its  lines  of  departure 
from  the  general  principles  which  apply  to  these  two  great  species  of 
the  negotiable  genus,  bills  of  exchange  and  promissory  notes. 

Such,  at  least,  have  been  the  considerations  which  inspired  the 
midertaking,  the  fruit  of  which  is  now  with  difl5dence  submitted  to 
a  practical  and  critical,  but  liberal  profession.  Composed  in  hours 
snatched  from  other  exacting  labors  of  the  office  and  the  bar,  the 
author  can  not  hope  that  it  will  be  found  free  from  many  crudities 
of  style  and  other  more  serious  imperfections;  but  if  it  contain  aught 
of  merit,  he  feels  sure  that  an  enlightened  profession  will  not  fail  to 
discern  it,  nor  to  apply  it  as  equitable  offset  to  those  defects  which 
only  the  amplest  resources  of  leisure  and  learning  could  avoid. 

To  Mr.  P.  C.  Nicholas,  Librarian  of  the  Supreme  Court  of  Ap- 
peals of  Virginia,  the  author  is  much  indebted  for  many  courtesies 
extended  and  many  facilities  afforded  him,  while  pursuing  his  in- 
vestigations, in  the  ample  collection  of  books  under  his  charge;  and 


PREFACE  TO  THE  FIRST  EDITION  Xlll 

he  begs  leave  here  to  acknowledge  his  obligation  and  record  his 
thanks.  He  would  be  lacking  in  appreciation  and  gratitude  did  he 
not  also  here  express  to  his  publishers,  Messrs.  Baker,  Voorhis 
&  Co.,  of  New  York,  his  sense  of  the  liberal  and  unremitting  kindness 
with  which  they  have  aided  and  encouraged  his  work.  They  have 
been  lacking  in  nothing  that  fairness  could  ask  of  them,  or  that  an 
accommodating  spirit  could  suggest  to  them;  and  he  only  trusts  that 
the  result  may  leave  them  no  cause  to  regret  their  own  generous 
course. 

J.  W.  D. 
Lynchburgh,  Va.,  April,  1876. 


TABLE  OF  CONTENTS  OF  VOL.  I 


BOOK  I 

THE  MAKING  OF  THE  INSTRUMENT 


CHAPTER    I.  PAGE 

Nature,  History,  and  Uses  op  Negotiable  Instruments,  .  1 

Section     I.     Nature,  origin,  and  history  of  bills  and  notes,    . 
II.     Foreign  and  inland  bills,  .... 

III.  The  effect  of  a  bill  of  exchange;  whether  or  not  it 

assignment,     ...... 

IV.  Donatio  mortis  causa,       ..... 


CHAPTER  II. 

Definition  and  Essential  Requisites  of  Bills  and  Notes,  . 

Section    I.  The  paper  must  be  opened,  that  is,  unsealed,    . 

II.  Certainty  as  to  the  engagement  to  pay,    . 

III.  Certainty  as  to  the  fact  of  payment, 

IV.  Certainty  as  to  the  amount  to  be  paid,     . 
V.  Certainty  as  to  the  medium  of  payment,  which  must  be 

money,  ....••• 

VI.     The  contract  must  be  only  for  the  payment  of  money,  . 

VII.     DeUvery, 


1 

7 

15 
28 


37 

40 
43 
49 
69 

74 
79 
90 


CHAPTER  III. 

Formal  Requisites  of  Bills  and  Notes, 108 

Section     I.     Formality  in  respect  to  style  and  material,        .  .         .108 

II.     Formal  elements  and  phrases  of  bills  and  notes,  .         .       128 

III.     The  several  parts  of  a  foreign  bill  called  a  set,  .  .         .       162 

CHAPTER   IV. 

Stamps  upon  Negotiable  Instruments, 165 

XV 


XVI 


TABLE   OF  CONTENTS 


CHAPTER  V. 

Irregxtlar,  Ambiguous,  and   Fictitious   Instruments;  and   Instru- 
ments Executed  in  Blank,        ..••••• 
Section    I.    Irregular  and  ambiguous  instruments,       .         .         .         • 
II.     Bills  and  notes  to  which  there  are  fictitious  or  nonexisting 
parties,  ..■•••• 

III.     Negotiable  instruments  executed  in  blank, 

CHAPTER  VI. 

Memoranda  upon  Bills  and  Notes,  and  Collateral  Agreements,      . 

Section     I.     Memoranda  upon  bills  and  notes,     .          .         .         .         • 
II.     Collateral  agreements, 


PAQll 

175 
175 

183 
188 


201 

201 
207 


CHAPTER  VII. 

Consideration  op  Negotiable  Instruments, 

Section     I.     What  instruments  import  a  consideration,         .         .         . 

II.     By  what  laws  the  legaUty  of  consideration  is  determined 

— Confederate  obligations,         .         .  .  .         • 

III.  Between  what  parties  the  consideration  is  open  to  inquiry,  . 

IV.  What  are  sufficient  and  legal  considerations, 

V.     What  are  illegal  considerations,        ..... 
VI.     Partial  want,  failure,  and  illegaUty  of  consideration,  . 
VII.    Renewal  bills  and  notes;  how  illegahty  may  be  purged, 


214 
214 

223 
227 
239 
272 
290 
300 


BOOK  II 

WHO  MAY  BE  PARTIES 


CHAPTER  VIII. 

Persons  Partially  or  Wholly  Disqualified, 
Section     I.     Lunatics,  imbeciles,  and  drunkards, 


II.  AUens  and  alien  enemies, 

III.  Infants,         ..... 

rV.  Married  women,     .... 

V.  Persons  under  guardianship,  and  in  bankruptcy, 


307 

307 
314 
319 
330 

348 


CHAPTER  DC. 

Fiduciaries  as  Parties  to  Bills  and  Notes, 


350 


TABLE   OF   CONTENTS  XVU 

CHAPTER  X.  P^QB 

Agents  as  Parties  to  Negotiable  Instruments,  .361 

Section     I.     Competency  and  authority  of  the  agent — Express  authority 

and  general  principles  of  liabiUty,       ....       361 
II.     Implied  authority  of  agent,      ......       373 

III.  How  agent  should  sign;  and  how  instrument  construed  and 

parties'  liabiUties  determined,    .....       382 

IV.  Liability  of  agent  who  draws  on  account  of  his  principal,  or 

indorses  to  him,        .......       393 

V.     Ratification  by  principal  of  unauthorized  acts,  .  .       398 

CHAPTER   XI. 

Banks  and  other  Agents  for  Negotiation  or  Collection,    .         .       403 

Section     I.     Banks  as  collecting  agents.    What  constitutes  agency,  and 

of  whom  they  are  agents,  .....       403 

II.     Rights  and  duties  of  banks  or  other  collecting  agents,  411 

III.  The  manner  of  placing  commercial  paper  in  bank  for  collec- 

tion; the  rights  of  the  collecting  bank;  and  the  rights 

of  the  depositor,        .  .  .  .  .  .  .421 

IV.  How  far  bank  liable  for  default  of  a  notary,  sub-agent,  or 

correspondent  bank,  ......       431 

V.     Remedy  of  the  holder  against  collecting  agent,  .         .       436 


CHAPTER  XII. 

Partners  as  Parties  to  Negotiable  I.nstruments, 

Section     I.  Nature  and  varieties  of  copartnership, 

II.  The  authority  of  a  copartner  to  bind  the  firm,  . 

III.  Formal  signature  of  the  firm's  name, 

IV.  Accommodation,  private,  and  prohibited  transactions, 
V.  The  effect  of  a  dissolution  of  the  firm, 


440 

440 
444 
451 

458 
466 


CHAPTER   XIII. 

Private  Corporations  as  Parties  to  Negotiable  Instruments,      .  478 

Section     I.     Authority  of  the  corporation  to  execute  the  instrument,  478 
II.     Authority  of  the  agent  in  law  and  in  fact  to  bind  the  cor- 
poration,        ........  490 

III.     Interpretation  of  the  instrument,     .....  507 

CHAPTER  XIV. 

Municipal  Corporations  as  Parties  to  Negotiable  Instruments,  420 

CHAPTER  XV. 

Drafts  or  Warrants  op  one  Corporate  Officer  upon  Another,        .  538 

Section     I.     Drafts  or  warrants  of  private  corporations,        .  .  538 

II.     Drafts  or  warrants  of  municipal  corporations,    .         .  .  540 


Xviii  TABLE   OF  CONTENTS 

CHAPTER   XVI.  PAGE 

The  Federal  and  State  Governments  as  Parties  to  Negotiable 

Instruments,      ....••••••       S'*' 

Section     I.     General  principles  of  governmental  liability,  and  liability 

of  agents,         .....•••       547 
II.    State  securities  made  receivable  for  taxes,         .         .         .      557 


BOOK  III 

THE  NEGOTIATION  OF  THE  INSTRUMENT 


CHAPTER  XVII. 

Presentment  for  Acceptance, 560 

Section     I.     Nature  of,  and  necessity  for,  presentment  for  acceptance,  .  560 

II.     Formalities  of  presentment  for  acceptance,        .          .         .  563 

III.    Time  of  presentment  for  acceptance,         ....  569 

CHAPTER  XVIII. 

Acceptance  op  Bills  of  Exchange, 579 

Section     I.     The  nature  of  acceptance, 579 

II.  What  bills  require  acceptance,  and  by  whom  and  when  they 

should  be  accepted,           ......  581 

III.  Form  and  varieties  of  acceptance.     Express  and  implied 

acceptance,     .....•••  591 

IV.  Verbal  and  written  acceptance, 601 

V.     Absolute,  conditional,  variant,  and  qualified  acceptance,     .  604 

VI.     Acceptance  for  honor,  or  supra  protest,      ....  615 

VII.     The  effect  of  acceptance;  what  it  admits,           .         .         .  622 

VIII.     Extingui^ment  of  acceptor's  obligation,            .         .         .  630 

CHAPTER  XIX. 

Promises  to  Accept  Bills  op  Exchange.     How  Affected  by  the 

Statute  of  Frauds,            ........  637 

Section     I.     Written  and  verbal  promises  to  accept  existing  and  non- 
existing  bills,  ....••••  637 

II.    How  parol  acceptance  is  affected  by  the  Statute  of  Frauds,  .  650 

CHAPTER  XX. 

Presentment  for  Payment,      ......••  655 

Section     I.     By  whom  presentment  for  payment  must  be  made,    .         .  656 

II.     To  whom  presentment  for  payment  must  be  made,    .         .  670 

III.  Time  of  presentment  for  payment,            ....  676 


TABLE   OF  CONTENTS 


XIX 


IV.    Days  of  grace,  and  computation  of  fime, 
V.     Place  of  presentment  for  payment,  ..... 
VI.     Mode  of  presentment  for  payment,  .... 

CHAPTER  XXI. 
Transfer  of  Bills  and  Notes  bt  Indorsement,      .... 
Section    I.     Nature  of  the  contract,  and  liabilities  of  indorser, 

II.     By  whom,  and  to  whom,  indorsement  or  assignment  may 
be  made,  ........ 

III.  Form  and  varieties  of  indorsement,  .... 

IV.  Whether  or  not  the  party  is  indorser,  maker,  or  guarantor, 
V.     How  far  parol  evidence  is  applicable  to  ascertained  indorse- 
ments,   ......... 

VI.    The  time  and  date  of  transfer,         ..... 

CHAPTER  XXII. 

Transfer  of  Bills  and  Notes  by  Assignment,        .... 
Section     I.     Liability  of  the  assignor  of  the  legal  title, 

II.     Liabihty  of  the  maker  on  assignment,  of  the  equitable  title, 

CHAPTER  XXIII. 
The  Sale  and  Discount  of  Bills  and  Notes,  and  the  Amount  of 
Recovery,  .......... 

Section     I.     The  validity  of  the  original  negotiation,    .... 

n.     The  amount  of  recovery  against  the  maker  or  acceptor, 
in.     The  validity  of  the  transfer,  and  amount  of  recovery  against 
transferrer,      ........ 


CHAPTER  XXIV. 
Bona   Fide   Holder 


OR  Purchaser  of 


Nature   and   Rights  of 

Bills  and  Notes,       ...... 

Section     I.     Bona /ides,  and  gross  negligence, 

What  is  meant  by  "valuable  consideration," 
The  ordinary  or  usual  course  of  business. 
The  phrase  "before  maturity," 
What  is  meant  by  "purchaser  without  notice," 
When  purchaser  or  holder  stands  on  same  footing 
transferrer,      ...... 

The  burden  of  proof  as  to  bona  fide  ownership,  . 


II. 
III. 
IV. 

V. 
VI. 

VII. 


as  his 


CHAPTER  XXV. 
Holder  of  Bills  and  Notes  Transferred  to  Him  as  Collateral 
Security;  and  Holder  of  Bills  and  Notes  Secured  by  Mort- 
gage, ........... 

Section     I.     Rights  and  duties  of  holder  of  negotiable  instnmient  as 
collateral  security  for  a  debt,     ..... 

II.     Holder  of  negotiable  instruments  secured  by  mortgage, 


PAQB 

691 
704 
721 


731 
735 

753 
760 
789 

812 
822 


834 

835 

852 


862 
862 
867 

879 


885 
890 
901 
910 
915 
925 

955 
962 


981 

981 
1006 


XX  TABLiB  OF  CONTENl^g 

CHAPTER  XXVI.  paob 

Rights  op  a  Bona  Fide  Holder  or  Purchaser  op  Negotiable  Instru- 
ments Originating  in  Fraud,  Duress,  or  Violation  op  Authority,     1012 

Section     I.     Holder  of  negotiable  instruments  completed,  but  not  de- 
livered,   1012 

II.     Holder  of  negotiable  instruments  incomplete  and  imde- 

livered, 1016 

III.  Holder  of  negotiable  instruments  intrusted  to  another  with 

blanks, 1018 

IV.  Holder  of  negotiable  instruments  written  over  blank  sig- 

natures, ........     1020 

V.     Holder  of  negotiable  instruments  procured  by  imposition  on 

infirm  or  illiterate  persons,         .....      1022 

VI.     Holder  of  negotiable  instruments  executed  under  mistake 

and  misrepresentation,      ......      1026 

VII.     Holder  of  negotiable  instruments  deUvered  by  third  party 

in  violation  of  instructions,        .....      1034 

VIII.     Holder  of  negotiable  instruments  executed  under  duress,     .     1040 
IX.     When  holder  of  negotiable  instruments  is  protected  by 

estoppel  in  pais,       .......     1043 

CHAPTER  XXVII. 

The  Conflict  op  Laws.    The  Law  op  Place  Applicable  to  Nego- 
tiable Instruments,  .........     1048 

Section     I.  General  principles  of  the  law  of  place,       ....  1048 

II.  Lex  loci  contractus,  .......  1051 

III.  Lex  domicilii,         ........  1060 

IV.  Lex  loci  solutionis,  ......  1062 

V.  Lexfori, 1066 

VI.     Lex  loci  rei  sitce,      ........      1073 

VII.     By  what  law  the  liabiUty  of  the  maker,  acceptor,  drawer,  or 

indorser  is  determined,     ......     1075 

VIII.     By  what  law  the  validity  and  effect  of  transfer,  and  the 

rights  of  the  holder  are  determined,   ....     1084 

IX.     By  what  law  the  formalities  in  respect  to  presentment,  pro- 
test, and  notice  are  governed,    .....     1087 

X.     Revenue  laws  of  other  countries.    Law  appUcable  to  stamps 

upon  negotiable  instruments,     .....     1093 

XI.     Law  applicable  to  the  currency  of  payment,  and  interest  and 

1095 


TABLE  OF  CASES  CITED 

References  are  to  paragraphs  marked  §. — Volume  I  contains  sections  1-926; 
Volimie  n,  sections  926-1800. 


Abat  V.  Rion,  987. 

Abbe  V.  Eaton,  1729,  1729a. 

Abbevill  Trading  Co.  v.  Butler,  Stevens 

&  Co.,  214. 
Abbey  v.  Chase,  307. 
Abbott  V.  Agr.  Bank,  1692. 

V.  Bailey,  246. 

v.  Douglas,  88. 

V.  Hendricks,  81a,  174,  199a. 

V.  McKinley,  252,  253. 

V.  North  Andover,  422, 

V.  Rose,  844. 

V.  Striblem,  1473. 
Abeel  i'.  Seymour,  296. 
Abel  V.  Alexander,  1317,  1317a,  1319. 

V.  Sutton,  370a,  371,  371a,  683. 
Ablowich  V.  Greenville  Nat.  Bank,  742. 
Abmeyer  v.  First  Nat.  Bank,  815. 
Aborn  v.  Bosworth,  1173,  1464,  1478. 
Abraham  v.  Dubois,  14. 

V.  Michell,  532,  702,  720a. 
Abraham   Lincoln   Building  &   Home- 
stead A.ss'n.  V.  Zuelk,  157. 
Abrams  v.  Union  Nat.  Bank,  1607a. 
Absolem  v.  Marks,  683. 
Ackland   v.   Pearce,   674,    1051. 
Acme  Food  Co.  v.  Older,  203. 

V.  Tousey,  1219. 
Acraman  v.  Cooper,  1708a. 
Adair  v.  England,  1373,  1378,  1417. 

t'.  Lenox,   1233a. 
Adams  v.  Adams,  196. 

V.  Addington,  10a,  62a. 

V.  Ashman,  205. 

V.  Bartell,  814. 

V.  Blethem,  688^,  692. 

V.  Boyd,  51a,  452. 

V.  Cordis,  917,  1454. 

V.  Darby,  452,  1076. 

V.  East  River  Sav.  Inst.,  1524. 

V.  Faircloth,  1373,  1384,  1411. 

V.  First  Nat.  Bank  of  Winston,  326b. 

V.  Flanagan,  291. 

V.  Frye,  1392. 

V.  Gregg,    543. 

V.  Hackensack    Commission,    326, 
326a. 


Adams  v.  Hayes,  1340. 

V.  Hugging,  715,  1760. 

V.  Illinois    Life    Ins.    Co.,    1458a. 

V.  Jones,     667,    721,    748,    1785a, 
1797a. 

V.  King,  99. 

V.  Leland,  1145. 

V.  I^ng,  357,  366. 

V.  Oakes,  1230. 

V.  Otterback,  623,  661. 

V.  Pratt,  922. 

V.  Reeves,  1226. 

V.  Robinson,  748a,  1644. 

V.  Seaman,  62. 

V.  Soule,  187. 

V.  Torbert,  996. 

t;.  Tucker,  1251. 

V.  Wilson,  81. 

V.  Wordley,  517. 

i;.  Wright,  1017,  1038. 
Adams  &  Westlake  Co.  v.  Robinson, 

90o,  1326. 
Adams  Bank  v.  Anthony,  1339. 

V.  Jones,  1190. 
Adams  County  Bank  v.  Hainline,  812, 

815. 
Adams  Oil  Co.  v.  Christmas  &  Hughes, 

999. 
Addy  V.  Grix,  688a. 
Aden  v.  Doub,  41,   156. 
Adair  v.  Lenox,  1233a. 
Adle    V.    Metroger,    1335a. 
Adler  v.  Sargent,  834,  834a,  8346. 
Adrian  v.  McCaskill,  795a,  1202a. 
Aebi  V.  Bank  of  Evansville,  1587,  1594, 

1596. 
iEtna  Bank  v.  Winchester,  1384. 
.^tna  Indemnity  Co.  v.  Altedena  Min. 

&  Inv.  Syndicate,  1227. 
.(Etna  Nat.  Bank  v.  Fourth  Nat.  Bank, 
326a,  1611a,  1636. 

V.  Insurance  Co.,  386. 

II.  Water  Power,  1743. 
African  Society  v.  Varick,  399. 
Agan  V.  McManus,  1163. 
Agawam  Nat.  Bank  v.  Do\\Tiing,  1623. 
Agens  V.  Agens,  36a. 

xxi 


XXll 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Agnel  V.  Ellis,  533,  537. 
Agnew  V.  Alden,  203. 

V.  Bank  of  Gettysburg,  455. 
Agra   V.    Mastcrman's    Bank,    In    re, 

1798. 
Agricultural    Bank   v.   Burr,    1708a. 

V.  Commercial  Bank,  343. 
Ahem  j'.  Goodspeed,  753a. 
Ahlstrong  v.  Fitzpatrick,  41. 
Aiken  v.  Marine  Bank,  685. 
Aillet  V.  Woods,  205. 
Ainis    V.    Ayres,    1730. 
Ainslie  v.  WiLson,  1687. 
Ainsworth  t'.  Creke,  318. 
Airey  v.   Pearson,    1099. 
Airy  v.  Nelson,  997. 
Aistley  v.  Johnson,  354. 
Akers  v.  Demond,  SG9,  924. 
Akin  V.  Jones,   334. 
Alabama  Co.  v.  Brainard,  75,  412,  683. 
Alabama,  etc.,  Co.  v.  Robinson,  1490a, 

1.505,  1506. 
Alabama  Great  Southern  Ry.  Co.  v. 

Norris,  1728. 
Alabama  Grocery   Co.   v.   Fu^t   Nat. 

Bank,  779?>. 
Alabama  Nat.  Bank  v.  C.  C.  Parker  & 
Co.,  164,  204,  807. 
V.  Halsey,  205,  207. 
V.  Rivers,  669,  1147,  1147a,  1372, 
1372a. 
Alabama  Terminal  &  Improvement  Co. 

V.  Knox,  1191,  1199,  1201. 
Albans  v.  Gilliland,  831c. 
Albany    Furniture   Co.   v.   Mer.   Nat. 
Bank,   403.  ^^^^ 

Albany  County  Bank  v.  Amt,  779f>. 
V.  People's  Co-operative  Ice  Co., 
779b. 
Albeitz  V.  Mellon,  373. 
Albert  v.  Hoffman,  832,  1578. 
Albertype  Co.  v.  Kent  &  Stanley  Co., 

159. 
Albraith  v.  Shepard,  571. 
Alcock  V.  Alcock,  93. 

V.  Hill,  1311,  1319,  1339. 
V.  Hopkins,  1275. 
Alden  v.  Barbour,  643. 
Aldermen  v.  Eastern  R.  R.  Co.,  1734&, 
Alderson,   Ex  parte,  23. 

V.  Langdale,  1411. 
Alderton  v.  Williams,  576. 
Aldine  Mfg.  Co.  v.  Warner,  1116. 
Aldis  V.  Johnson,  611. 
Aldous  V.  Cornwell,  88,  1389. 
Aldred's  Estate,  In  re,  714. 
Aldrich  V.  Grimes,  234. 

V.  Jackson,   731,   738,    1676. 
V.  Peckham,  156,  776. 
V.  Smith,  1373a. 


Aldrich  v.  Stockwcll,  176. 

V.  Whitaker,    81a. 
Aldridge  v.  Branch  Bank,  69. 
Alexander  v.  Bank,  S3  la,  866. 
V.  Burchfield,  332,  1587. 
i-.  Dutcher,  1229. 
V.  Mackenzie,  280,  299. 
V.  McDow,  62a. 
r.  Munroe,  161. 
V.  Rollins,  1230. 
t;.  Scott,  940. 
V.  Springfield,  728. 
V.  Tnomtus,  42. 
V.   Wilkes,   68. 
Alexander  &  Co.  i-.  Hazelrij^g,  106,  199. 
Alexandria  Canal  Co.  v.  Swann,  393. 
Alexandria,   Ixiudoun,  etc.,   R.  Co.  v. 

Burke,  833,  1517. 
Alexandria  Sav.  Inst.  v.  McVeigh,  1060. 
Alger  V.  Scott,  23. 
Allaire  v.  Hartshome,  749,  757,  758a, 

831a,    832«. 
Allan  t'.  Eldred,  971,  1276. 

V.    Maw.son,    133. 
Allegheny  Bank's  .\ppeal,  1615. 
.\lleman"('.  Manning,  1221. 
Allen  v.  .\merican  Nat.  Bank,  1637. 
V.  Ayres,  1197. 
V.  Berrvhill,  1306a. 
V.   Bratton,  889. 
V.  Brown,    1192b. 
V.  Burgener,  1099. 
V.  Chambers,  189,  710. 
V.  Clark,  731a. 

Corn  Exch.  Bank,  684. 
Culver,  1251. 
Deming,  69. 
Doman,  1389. 
Dundas,  261,  1615. 
Dunn,  53,  156. 

Edmundson,  1016,  1038,  1049. 
First  Nat.  Bank,  .392. 
Fourth  Nat.  Bank,  1360,  1369. 
V.  Frazee,  860. 
V.  Furbush,  157. 
V.  Haley,  849. 
V.  Harris,   573,   769a,  827. 
V.  Hart,  1422,  1423,  1426. 
V.  Hearn,  19.5a. 

I'.  Herrick  Hardware  Co.,  81,  156. 
V.  Inhabitants  of  Jay,   1522. 
V.  Keeves,  1578. 
V.  Kemble,  898,  920,  1451. 
V.  King,  1082. 
V.  Leavens,  27. 
V.  Merchants'  Bank,  327,  328,  341, 

345,  656,  910,  930. 
V.  Miles,  656. 
V.  Newbury,  1197. 
V.  O'Donald,  1311. 


TABLE   OF   CASES 
References  are  to  paragraphs  marked  § 


XXIU 


Allen  V.  Olympia  Light  &  Power  Co., 

394. 
V.  Pegram,  1708a. 
1-.  Rightmere,  1769,  1786,  1787. 
V.  Rundle,  1769. 
V.  Sea  Fire,  etc.,  Ins.  Co.,  36,  42b, 

1581. 
V.  Sharp,  1369. 
V.  Sisson,  407. 
V.  State  Bank,  1465,  1479,  1696^ 

1-.  Suydam,  329,  330,  454,  465,  4/b, 

564. 
V.  Tarrant  &  Co.,  1623. 
t».  Tate,  255,  llH3a. 
V.  Union  Hank,  1439. 
V.  WilliamH,  1736,  1743.  ^ 

Allen,  Mcintosh  &  Co.  i'.  Farmers    & 

Traders'  Nat.  Bank,  1470. 
AUenman  r.  Wheel.r,  1354.  _ 

Allentown  Nat.  Bank  v.  KmieH,  Mia. 
V.  Clav  Product  .Supply  Co.,  779/^, 
1266. 
AUerton  v.  Beld.n,  727. 
AUe.sbrook  v.  Roach,  1219. 
Alley  V.  Hopkin.s  1312,  1316. 

'v.  Rogers,  325,  335. 
Allin  r.  Williams.  722. 
Allison  «■.   Juniata  County,   431,   4J-, 

434. 
AUnutt  V.  AUnutt'fl  Executrix,  185. 
Allumu.  Perry,  741. 
AlUvood  V.  Ha«ledon,  99t),  1172. 
Almy  I'.  R<H'd,  1480. 
Alnutt  I'.  .\.shendcn,  l<t>4,  1770. 
Alpena  Nat.  Bank  i'.  Crecnbaum,  205. 
ALsop  V.  Goodwin,  SI. 
Alston  V.  Hartman,  1187. 

V.  Orr,  1236. 
Altman  v.  Anton,  80,  156. 
V.  Fowler,  62. 
t'.  Rittershoeffer,  62. 
Alton  r.  First  Nat.  Bank,  1226. 
Alton  Mfg.  Co.  V.  Garrett  Bibhcal  Inst., 

382,  741. 
Alves  I'.  Ho<lgson,  914. 
Amberg  v.  Nachtway,  1317. 
Ambrose  r.  Evans,  1708(7.  . 

American   Agricultural   Chemical  LX). 

r.  Graham,  .573,  12.30. 
American  Bank  r.  Jennes,  783. 
American  Boiler  Co.  r.  Fontham,  50. 
American  Can  Co.  r.  Erie  Preserving 

Co.,  1713a. 
American  Car  Co.  v.  Railway  Co.,  20o. 
American  Cent.  Ins.  Co.  v.  Chicago  & 

Alton  Ry.  Co.,  1471. 
American  Emigrant  Co.  r.  Clark,  1584. 
American    Exchange    Bank   v.   Bank, 
.328a. 
t;.  Blanchard,  41. 


American  v.  N.  Y.  Belt  Co.,  775,  791, 
815,  819,  824. 
V.  Ulm,  792,  793,  793a. 
American   Exch.   Nat.   Bank  v.  Ulm, 
792,  793,  793a.  . 

t;    American  Hotel  Victoria  Co., 

1017. 
V.  First  Nat.  Bank,  394. 
American  Freehold  Land  &  Mort.  Co. 

V.  Sewell,  894,  922. 
American  Gas  Co.  i'.  Wood,  155. 
American  Ins.  Co.  v.  Oakley,  393. 

i;.  Stratton,  443a. 
American   Life   Ins.   Co.   v.  Emerson, 

1045.  _       ^   _ 

American  Machinery  &  Export  Co.  v. 

Druge  Bros.,  62.  . 

American  Nat.  Bank  t;.  American  Wood 
Paper  Co.,  1491a,  1500,  1501b. 
t'.  Bangs,  13H3. 
I'.  lianks,  1379. 
I .  Cruger  et  al.,  177. 
I'.  Fountain,  819. 
r.  Georgia  R.  Co.,  1733a. 
V  .]  S.  Minor  <t  Son,  781fc,  831a. 
, '.  Junk  Bros.,  1(K)2,  10S2,  1085. 
V.  Klock,  8^i5. 
V.  IjOVc,  159. 
t'   National    Fertilizer    Co.,    y»ti, 

1017,  1.W7.  ^       ^^^ 

r.  Omaha  Cofhn  Mfg.  Co.,  403. 
I'.  Sprague,  60,  1.50. 
V.  Wat  kins,  203. 
American  Sav.   Bank  &  Trust  Co.  v. 

Helgesen,  700,  769a,  831a. 
American    Seeding    Machine    Co.    v. 

Slocum,  203.  .    ^ 

American  Soda  Fountain  Co.  t;.  Hogue, 

1181a.  .      ^         ^     . 

American  Sugar  Refining  Co.  v.  Eurip- 
ides, 1741.  .       ^         „ 
American  Tr.  &  Bankmg  Co.  v.  Boone, 

O09  210. 
American  Trust  Co.  v.  Canevin,  714, 

719 
American  Valley  Co.  v.  Wyman,  777, 

812 
Americaii  W^ood  Working  Machinery 

Co.  V.  Norment,  390. 
Ames  V.  Brown,  1415. 

V.  Meriam,  1634. 
Amherst  Academy  v.  Cowles,  741,  743, 

1197. 
Amis  r.  Witt,  24a. 
Amison  t'.  Ewing,  414. 
Ammidown  v.  Woodman,  62b,  IZW. 
Ammon  v.  Gamble-Robinson  Com.  Co., 
1714. 

t'.  Martin,  24. 
Amner  i;.  Clark,  8,  9. 


XXIV 


TABLE    OF    CASES 
References  are  to  paragraphs  marked  § 


Amoskeag  Bank  v.  Moore,  1 106. 
Amoskeag  Mfg.  Co.  v.  Gibbs,  8OO1. 
Amsbaugh  v.  Gcarhart,  1780. 
Amsinck  v.  Rogers,  867,  898,  908. 
Amy  V.  Dvihuque,  1513,  1510. 
Anchor  v.  Bank  of  England,  698. 
Ancona  v.  Marks,  1653. 
Anderson  v.  Bank,  1611a. 
V.  Bullock,  32. 
V.  Cleveland,  546. 
V.  Dc  Soer,  16a,  21,  451,  1644. 
1;.  Drake,  460,  639,  640,  656,  1145, 

1146. 
V.  Dundee  St.  Bank,  138,  141. 
V.  First  Nat.  Bank,  377,  499,  1702. 
V.  Gill,  605,  1590,  1593. 
t;.  Hall,  1328. 
t;.  Heath,  500. 
V.  Hick,  504a,  508. 
t'.  Kreidler,  834a. 
t'.  Langdale,  1377. 
V.  Magruder,  81. 
V.  Pearce,  36a,  305. 
V.  Penick,  1326. 
V.  Perkins,  1251,  1252. 
V.  Robson,  1478. 
V.  Rodgers,  328a,  1586,  1592. 
V.  Royal  Ex.,  etc.,  Co.,  612. 
V.  Thero,  81fi. 
V.  Walter,  851. 
V.  Warne,  1309. 
V.  Weston,  65. 
Anderson    County    Comrs.    v.    Beal, 

1537. 
Anderson  &  Co.  v.  Jones,  479. 
V.  Stapel,  193,  410,  770,  782. 
Anderton  v.  Beck,  1124. 
Andes  v.  Ely,  1537. 
Andover  Bank  v.  Grafton,  273,  422, 

435,  809. 
Andover  Sav.  Bank  v.  Adams,  1186a. 
Andrew  v.  Blachly,  1574,  1578. 
Andrews  v.  Baggs,  513,  514. 
V.  Boyd,  1104,  1159. 
V.  Calloway,  1373a 
V.  Congar,  713a,  1436. 
V.  Franklin,  46. 

V.  German  Nat.  Bank,  1590,  1603. 
V.  Hagadon,    1317?). 
V.  Herriott,  867,  885. 
V.  Hoxie,   11. 
V.  Keeler,  1458a. 
V.  Kramer  et  al.,  669a,  677. 
V.  Marrett,  1328. 
V.  Pond,  788,  867,  879,  917,  923, 

924,  925. 
V.  Robertson,  805. 
V.  Russell,  1565. 
V.  Schmidt,  183. 
V.  Simmons,  144. 


Andrews  v.  Simms,  694. 
Andrews  &  Co.  v.  Hess,  81b. 
Androscoggin   Bank    v.    Kimball,    83, 

142. 
Angaletos  v.   Meridian  Nat.   Bank  of 

Ind.,  409,  005,  1173,  1587. 
Angel  V.  Felt  on,  1482. 
i;.  McClellan,  224. 
V.  Miller,  1312. 
Angier  v.  Smith,  197. 
Angle  V.  \.  W.  Alut.  Life  Ins.  Co.,  142, 
788,  795*1,  1373,  1386,  1408,  1411. 
Anglo-American     Land     &c.     Co.     v. 

Lombjud,    1500. 
Angus  I'.  Chicago  Tr.  &  Sav.  Bank, 

1623. 
Aniba  v.  Yeomans,  688c. 
Ankeny  v.  Henry,  669a. 
Anketel  v.  Converse,  1252. 
Anniston  Loan  &  Tr.  Co.,  v.  Stickney, 

1206,  1200a. 
Annifiton  Pipe  Works  v.  Furnace  Co., 

1198,   1227. 
Annon  v.  Houck,  725, 1436. 
Annville  Nat.  Bank  v.  Kettering,  1093. 
Anon.  t'.  Harrison,  288. 
Ansel  V.  Baker,  548. 

V.  Olson.  635. 
AnBon  V.  Bailey,  1162. 
Ansted  i-.  Sutter,  867. 
Anstell  V.  Rice,  1966. 
Antelope    County    Bank    v.    Wright, 

1181a. 
Anten  t;.  Gruner,  778. 
Anthony  v.  County  of  Jasper,   1538, 

1544. 
Anthony   &   Dakota  Elevator  Co.   v. 

Dawson  &  Byfield,   1713a. 
Antoni  V.  Wright,'448,  1726. 
Apperson  v.  Bynum,  640,  1119,  1180. 
V.  Pritchard,  640. 

V.  Union  Bank,  656,  1059,  1060, 
1065,  1070. 
Apple    V.    Lesser,    1035,    1039,    1040. 
Appleby  v.  Beddolph,  41. 

V.  Biddle,  41. 
Applegarth  v.  Abbott,  959,  1103. 

V.  Robinson,  203. 
Appleton  V.  Parker,    1260,   1267. 
Aragon  Coffee  Co.  v.  Rogers,  805. 
Arayo  v.  Currill,  891a. 
Arbouin  v.  Anderson,  175,  774. 
Arbucle  v.  Templeton,  94,   1332. 
Arcangelow  v.  Thompson,  1052. 
Archer  v.  Bamford,  193. 

V.  McCray,  207. 
Archibald  v.  Argall,  1260. 
Arden  Lumber  Co.  v.  Henderson  Iron 

Works  &  Supply  Co.,  866. 
Arend  v.  Smith,  1316. 


^TABLE   OF   CASES 


XXV 


References  are  to  paragraphs  marked  § 


Arents  v.  Commonwealth,  441,  724a, 
782,     1489,     1490,     1490a,     1493, 
1496a,    1500,    1501a,    1505,    1507, 
1508,     1513,     1753,     1754,     1769, 
1774a,  1777, 1798. 
Argenbright  v.  Campbell,  32. 
Argo  Steamship  Co.  v.  Seago,  1742. 
Arlington  v.  Hinds,  1187. 
Armat  v.  Union  Bank,  1479. 
Armendiaz  v.  Sana,  867. 
Armfield  v.  Allport,  128,  688. 

t'.  Tafo,  234. 
Armijo  v.  Henry,  183. 
Armington  v.  Gas  Light  Co.,  327. 
Armistead  v.  ArmLstead,  643,  645. 

V.  Brooke,  1252. 

V.  Butler,  1428. 

t'.  Ward,  1260,  1272,  1317,  1329. 
Armitt  r.  Braeme,  83. 
Armour  v.  McMichael,  867. 

V.  Michigan  Cent.  R.  Co.,  1733a, 
1736. 
Armour  Bros.  v.  Riley  County  Bank, 

698</,  717. 
Armour  Packing  Co.  v.  Davia,  3406. 
Arms  V.  A.shley,  1687. 
Armsinck  r.  Rogers,  1566. 
Armstrong  r.  .\nicrican  Exch.  Bank,  9. 

V.  Armstrong,  180. 

V.  Brolaiiki,  l.')9r). 

V.  Cache   Valley    Land  Co.,  262, 
1292. 

V.  Chadwick,  1048,  1147. 

V.  Chemical  Nat.  Bank,  3346. 

V.  Christiana,  983. 

V.  Gibson,  759,  764. 

V.  Harshman,  145,  703,  7076. 
In  re,  496. 

I'.  Johnston,  1183a. 

V.  Kirkpatrick,  400. 

V.  Nat.  Bank,  139. 

V.  Noble,  725. 

V.  Pratt,  1432. 

V.  Scott,  80,  790. 

t'.  Southern  Express  Co.,  196a. 

V.  Steams,  775. 

r.  Thurston,  1172. 

I'.  Toler,  200,  866. 
Arm.strong,   Recr.,  v.  Warner,   1435a, 

1437. 
Armsworth  v.  Scotten,  1672,  1672a. 
Amau  17.  First  Nat.  Bank  of  Florida, 

795a. 
Amd  V.  Allesworth,  776,  819. 

V.  Sjoblom,  199,  789. 
Amett  f.  Pinson,  164,  879,  895. 
Arnold  r.  Camp,  1299. 

V.  Cheque  Bank,  13726. 

V.  Dresser,   455,  594,   654,   1149, 
1161. 


Arnold  v.  Hopper,  274. 

t'.  Jones,  1398. 

V.  Kinloch,  954,  983. 

r.  Lane,  790,  812,  819. 

V.  Potter,  894. 

V.  Revonet,  254. 

V.  Richmond  Iron  Works,  213. 

V.  Rock  River,  51a. 

V.  Ruggles,  1708a. 

t;.  Sprague,  108,  186,  305,  663. 

V.  Stackpole,  303,  305. 

V.  WUts,  203. 
.\rnot  «'.  Bingham,  336. 

V.  Erie  R.  Co.,  386. 

V.  Symonds,  688,  7\3d. 

V.  Woodbum,  725. 
Arnott  f.  Redfeme,  917. 
Arpin  v.  Owens,  174a. 
Artisans'  Bank  v.  Viirk  Bank,  899. 
Ash  V.  Clark,  195a,  808. 
Ashby  V.  Ashby,  102. 
Ashe  V.  Beasley  &  Co.,  926,  927,  955, 

992. 
.Vshford  t'.  Robinson,  1764. 
.\shley   V.    Bd.   of   Supervisors,    1531, 
1540. 

V.  Dowling,  357. 

V.  Gunton,  1019. 
Ashpitel  V.  Brvan,  1352a. 
Ashton  t;.  Fre«"stun,  1290,  1291. 

t'.  P>'e,  1286. 
Ashuelot  Mfg.  Co.  t-.  Marsh,  393. 
Ashurst  V.  Bank  of  Au.stralia,  680,  1505. 

V.  Roval  Bank,  724a. 
Askegaard  v.  Dalen,  815. 
Askell  I'.  Lambert,  150. 
Aspinall  f.  Wake,  262,  535. 
Aspinwall  v.  Commissioners,  1524. 
Assurance  Society  v.  Edmonds,  709. 
Atcheson  v.  Scott,  49. 
Atchison  r.  Butcher,  1496a,  1500,  1533. 
Atherton  v.  Marcy,  185. 
Atkins  V.  Blake,  775,  1468. 

V.  Cobb,  699. 

I'.  Owens,  1288. 

V.  Plympton,  122. 
Atkinson  v.  Bennet,  712,  714. 

I'.  Brooks,  829a,  831a. 

V.  Hawden,  1411. 

V.  Manks,  161,  514. 
Atlanta  Guano  Co.  v.  Hunt,  8316. 
.\tlanta   Nat.   Bank  v.   Burke,    1369, 
1370. 

p.  pougla.s,  1311. 
Atlantic    Bank    i'.    Merchants'    Bank, 

1607,  1610. 
Atlantic  City  St.  R.  Co.  t;.  American 

Car  Co.,  205. 
Atlantic,   etc.,  M.  Ins.  Co.   t;.  Boies, 

833. 


XXVI 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Atlantic  Nat.  Bank  v.  Fertilizing  Co., 
1799. 

V.  Franklin,  831c. 

V.  George,  1643. 
Atlantic  Guano  Co.  v.  Hunt,  8316. 
Atlantic  State  Bank   v.   Savery,  365, 

366. 
Atlantic  Tr.  Co.  v.  Kinderhook  &  Hud- 
son Ry.  Co.,  1489. 
Atlas  Bank  v.  Doyle,  818,  832a. 
Atlas  Nat.  Bank  v.  Holm,   196,   197, 
774,  775. 

V.  Savery,  365. 
Atlas    Steamboat    Co.    v.    Columbian 

Land  Co.,  1221. 
Attenborough  v.  McKenzie,  480. 
Attorney -General  v.  Continental   Life 
Ins.  Co.,  lOo,  1644. 

V.  Life  &  Fire  Ins.  Co.,  382. 
Attoyac  River  Lumbf>r  Co.  v.  Payne,  59. 
Atwater  v.  Farthing,  704. 

V.  Walker,  894. 
Atwood  V.  Bank  of  Chillicothe,  1682. 

V.  Crowdie,  183a. 

V.  Dumas,  382. 

V.  Hazledon,  996. 

V.  Little  Bonanza  Quicksilver  Co., 
80. 

V.  Munnings,  276,  280,  290,  299, 
487. 

V.  Rattenbury,  1182. 

t'.  Weeden,  195a. 
Aubert  v.  Maze,  200. 

V.  Walsh,  1648. 
Aud  V.  Magruder,  1316. 
Auerbach  v.  Le  Soeur  Mill  Co.,  32a, 
1537. 

V.  Pritchett,  55. 
August  V.  Creque,  403. 
Augusta  Bank  v,  Augusta,  1495,  1523. 
Augusta  Nat.  Bank  v.  Hewins,  1458. 
Augusta  Wine  Co.  v.  Weippert,  357. 
Aukland  v.  Arnold,  1294. 
Aultman  &  Co.  v.  Teeple,  724a. 
Aultman  &  Taylor  Co.  v.  Gunderson, 
91. 

V.  Smith,  1316. 
Aultman  Co.  v.  Heffner,  1789. 
Aultman,  Miller  &  Co.  v.  Hawk,  81. 

V.  Leichting,  177,  183. 
Aultman  Threshing  &  Engine  Co.  v. 

Knoll,  81a. 
Auriol  V.  Thomas,  1438. 
Aurora  City  v.  West,  807,  1500,  1513, 

1514,  1522,  1523,  1550,  1557. 
Aurora  Nat.  Bank  v.  Dils,  717,  1612a. 
Aurora  State   Bank   v.   Hayes-Eames 

Elevator  Co.,  1631. 
Austen  v.  United  States  Nat.  Bank, 

812. 


Austin  V.  Boyd,  713. 

V.  Bunyard,  1578. 

i;.  Curtis,  1329. 

V.  Dorwin,  1317. 

V.  Hamilton,  1758. 

V.  Imus,  917,  920. 

V.  Papanti,  1221,  1227. 

V.  Rodman,  1076. 

V.  Vandenmark,  365. 

V.  Whit  look,  32. 
Au.stin,    'romlin.son    &    Webster    Mfg. 

Co.  V.  Heiser,  672. 
Auten   V.    Manistee   Nat.   Bank,    331, 
390,  392,  636. 

V.  United  States  Nat.  Bank,  392, 
394,  769a,  1421a,  1431. 
Averett's  Admr.  v.  Booker,  50,  104,  161, 

162. 
Averill  v.  Second  Nat.  Bank,  724a. 
Avery  v.  Miller,  721. 

I'.  Stewart,  ()20,  627. 
Avon  Springs  Sanitarium  Co.  v.  Kel- 
logg, 188a. 
Awde  V.  Dixon,  854. 
Ayer  v.  Hutchins,  775. 

I'.  Hutchinson,  1233. 
Ayers  v.  Bums,  225. 

V.  Doying,  791. 

V.  Farmers'  Bank,  333. 
Aymar  «;.  Beers,  454,  466,  478,  1125. 

V.   Sheldon,   899,    908,    909,    910, 
919. 
Ayrault  v.  McQueen,  827,  831c. 

V.  Pacific  Bank,  341,  342. 
Ayres,  In  re,  448. 
Ayres  v.  Milroy,  854. 
Ayrey  v.  Fearnsides,  60. 


B 


Babcock  v.  Beman,  302,  415,  855. 

V.  Blanchard,  1343. 

I'.  Bryant,  17856. 

V.  Stone,  354. 

V.  Young,  834,  834a. 
Babcock,  In  re,  1339. 
Babylon  v.  Duttera,  1215. 
Bacchus  V.  Richmond,  1206. 
Bach  V.  Brown,  1213. 

V.  Zimmerman,  1319. 
Bachelor  v.  Priest,  454,  465,  572,  573, 

987,  1201,  1223,  1230,  1230a,  1399. 
Bacigalupo  v.  Parrilli,  1596. 
Backers  v.  Shepherd,  1104. 
Backhouse  v.  Harrison,  773,  1503. 

V.  Selden,  895,  921. 
Backman  v.  Charlestown,  1550,  1555. 
Backus  V.  Danforth,  620,  743. 

V.  Shipherd,  1096. 

V.  Spauling,  187. 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


XXVll 


Farmers' 


Bacon  v.  Bacon,  89,  3265,  334b,  604, 
607,  1318,  1327,  1328. 
V.  Dodge,  131,  154. 
V.  Fitch,  99. 
V.  Hanna,  1115. 
V.  Harris,  607,  612,  726. 
V.  HoUoway,  187. 
V.  Leo,  197. 
r.  Miss.  Ins.  Co.,  384. 
V.  Montauk  Brewmg  Co.,  loo,  6m. 
V.  Page,  88. 
V.  Pomeroy,  1230. 
V.  Searles,  1237. 
Bacon,    Dawson   &    Co.    v 

Bank,  386. 
Badcock  v.  Steadman,  68a. 
Bade  v.  Feay,  177. 
Badger  v.  Stephens,  I9bb. 

V.  Sutton,  1491a. 
Badnall  i'.  Siimuel,  1318. 
Baerr.  L«i)iKTt,_1109a,  1115,  1149. 

V.  Terrv,  867.  t^     i  • 

Baeschlin     v.    Chamberlain    Bankmg 

House,  .564. 
Bivclev  V.  Cohen,  1759. 
Bailey  v.  Bidwell,  166,  167,  808,  815. 
i-.  Birkhofer,  90. 
V.  Bodenhani,  ir)90,  1599. 
I-  County  of  Buchanan,  15095. 
V.  Devine,  870,  HOla. 
t;.  Dozier,  926,  940. 
t..  Edwards,  1337. 
V.  Finch,  1612a. 
V.  Gilman  Bank,  1373,  1398. 
V.  Heald,  898. 
V.  Hill,  7.52. 
V.  Pardridge.  1623. 
V.  Porter,  636. 
V.  Rawley,  292. 
V.  Smith,  758a,  779a. 
V.  Smock,  108. 

I'.  Southwestern  Bank,  1088a. 
V.  Taber,  63. 
V.  Talbreath  Bros.,  740o. 
V.  Taylor,  1418,  1420,  1421a. 
V.  Wood,  532. 
Bailev  Loan  Co.  f.  Hall,  351. 
Bailie  v.  Augusta  Sav.  Bank,  328a,  341, 

342   1623. 
Bain  v.  Whitehaven,  etc.,  R-.po.,  887. 
Bainbridge  v.  City  of  Louisville,  1234, 
1461,  1470.  1480. 
V.  Wilcocks,  896. 
Baine  v.  Williams,  1252. 
Baines  v.  Coos  Bay,  etc.,  R.  &  Nav 

Co.,  183,  392a. 
Baird  v.  Blagrove,  32. 
V.  Cochran,  488. 
V.  Vines,  62. 
Baker  v.  Arnold,  745. 


Baker  v.  Baker,  268. 

t..  Birch,  1143,  1082. 

V.  Chambers,  443a. 

V.  Chambliss,  406. 

V.  Collins,  176. 

V.  Denning,  688a. 

V.  Flower,  1305. 

V.  Jabber,  4976. 

t'.  Leland,  1707. 

V.  Martin,  1236 

I'.  Morris,  1023. 

V.  Robinson,  713a. 

V.  Scott,  1095a. 

I'.  Stackpole,  1253. 

V  Union  Stock  Yards  Nat.  Bank, 

790. 
r.  Union  Trust  Co.,  726. 
v.  Wahrmund,  1760. 
r.  Walker,  827,  1329. 
r.  Wheaton,  1228. 
V.  Williamson,  1646. 
Baker,  Admr.,  v.  Burkett,  832a. 
I   Balbach   v.    Frelmghuyscn,   33b,   6W, 
3406. 
Balcetti  v.  Serani,  1350. 
Balch,  Ex  parte,  1316. 
Balcombe  I'.  Northrup,  443. 
Baldwin  v.  Bank  of  Louisiana,  341,  6*6. 
V.  Bank  of  Newburg,  1188. 
V.  Barrows,  849n. 
t-.  Brickcr,  849,  849a. 
1-.  Daly,  1290. 
V.  Fagan,  851. 
V.  Farnsworth,  638. 
V.  Hale,  1283. 
I'.  Hall,  875. 

V.  Hart,  183.  ,     ^^^^ 

V.  Haskell  Nat.  Bank,  1385. 
V.  Richardson,  1047,  1120. 
V.  Shuter,  130,  815. 
V.  Van  Deusen,  734. 
Baldwin's  Estate,  In  re,  1703. 
Baldwin  FertiUzer  Co.  v.  Carmichael, 

669,  1754.  ^        ^ 

BaUour  v.    Sea,   Fire,   etc.,   Ins.   Co., 

185. 
Balk  V.  Simmons,  1.596. 
Balknap  v.  Nat.  Bank  of  North  Amer- 
ica, 1660. 
Ball  t;.  Allen,  96,  1.584. 
V.  Greaud,  1095a. 
V.  Powers,  69,  70. 
i;.  Putman,  195. 
V.  Warden,  612. 
Ballard  v.  Bank,  llGSd. 
V.  Barton,  185. 
V.  Burnside,  119. 
V.  Burton,  1699. 
V.  Fuller,  1629. 
t;.  Insurance  Co.,  1373a,  1378. 


XXVlll 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


r,.illingalls  V.  Gloster,  104,  671,  669a, 

919,  1213. 
l'>;illinger  v.  Edwards,  764. 
l'.allouv.  Earlc,  1741. 

V.  Talbot,  306,  307. 
r..illston  Spa  Bank  v.  Marine  Bank, 

392. 
Pialme  v.  Wambaugh,  326. 
liiilsam  V.  Mutual  Alliance  Trust  Co. 

of  N.  Y.,  1639. 
Haltes  Land  Stone  &  Oil  Co.  v.  Sutton, 

571. 
Baltimore,  etc.,  R.  Co.  v.  First  Nat. 

Bank  of  Alexandria,  497b. 
Baltimore  &  Ohio  R.  v.  Wilkins,  1733. 
Baltzer  v.  Kansas  P.  R.  Co.,  643. 
Bamford  v.  Boynton,  714. 
Banard  v.  Barton,  185. 
Banbury  v.  Lissett,  509. 
Bancroft  t'.  Hale,  1016. 
Bane  v.  Gridley,  1458a. 
Bange  v.  Flint,  835. 
Banghcr  v.  Nelson,  1565. 
Bangor  Bank  v.  Hook,  1439,  1455. 
Bangor  Sav.  Bank  v.  City  of  Stillwater, 

420. 
Bangs  V.  Mosher,  1329. 
Banister  v.  Kenston,  174a. 

V.  Kenton,  742,  1192. 
Bank  v.  Alexander,  1590. 

V.  Arnold,  195o,  198. 

V.  Bank,  327,  340d,  340e,  341,  698d, 
995,  995a. 

V.  Barling,  130. 

V.  Bayley,  17346,  1734c. 

V.  Board  of  Commissioners,  1540, 
1553. 

V.  Booze,  45a. 

V.  Bradley,  995,  1039,  1171. 

V.  Brewing  Co.,  22. 

V.  Brooking,  972. 

V.  Burgwyn,  815,  819. 

V.  Butler,  343. 

V.  Cason,  795b. 

V.  Chattanooga  Pulley  Co.,  833. 

V.  Chicago  Title,  etc.,  Co.,  41. 

V.  Chillicothe,  1529,  1530. 

V.  Coal  Co.,  7796. 

V.  Commercial  Bank,  341. 

V.  Cook,  305. 

V.  Cooper,  894. 

V.  Couch,  1311,  1312,  1321. 

V.  Cummings,  1624,  17346. 

V.  Davis,  7586. 

V.  Dibrell,  991. 

V.  Durfee,  741. 

V.  Edholm,  789. 

V.  Elis,  62a. 

V.  Flanders,  688a. 

V.  Frederickson,  189. 


Bank  v.  Good,  1266,  1267,  1332. 

V.  Groome,  1633,  1634. 

V.  Hadley,  422a. 

V.  Hayden,  689a. 

V.  Hughlett,  292. 

V.  Humphrey,  854,  1190. 

V.  Hunt,  790. 

V.  Hysell,  1199. 

V.  Jefferson,  175. 

V.  Keith,  194. 

V.  King,  336. 

V.  Kowalsky,  20. 

V.  Lanier,  1708,  1708/,  1709. 

«;.  Layne,  175,  1312. 

V.  Lewis,  1209. 

V.  Loan  &  Trust  Co.,  532. 

V.  Looney,  271,  7796,  816,  1328. 

V.  Lumber  Co.,  709. 

V.  McNair,  758. 

V.  Mallan,  1200. 

V.  Mann,  198,  880. 

V.  Manning,  80. 

V.  Matson,  1324,  1328. 

V.  Millard,  334. 

V.  Morrison,  1421a. 

V.  Mudgett,  3696. 

V.  Myers,  1391. 

V.  Nat.  Union  Trust  Co.,  1643. 

V.  Nimocks,  1311. 

V.  Nixon,  713c. 

I'.  Pegram,  710. 

V.  Penland,  797,  802. 

V.  Rasmessen,  62. 

V.  Rider,  7956. 

V.  Rohrer,  834. 

V.  Sammer,  1312. 

V.  Sargent,  819. 

V.  Schneidermeyer,  326a. 

V.  Sherer,  663. 

i;.  Shook,  1289a. 

V.  Simmons,  63. 

V.  Simpson,  1322. 

V.  Slaughter,  1007. 

V.  Sneed,  182. 

V.  Stillwell  &  Co.,  1405. 

V.  Stockell,  824. 

V.  Supervisors,  87. 

V.  Swink,  1312. 

V.  Trudeau,  769a. 

V.  Union  Tr.  Co.,  1623,  1625. 

V.  Urich,  1100. 

V.  Wade,  1405,  1406. 

V.  Whitehead,  802. 

V.  Wing,  262. 

V.  Wolff,  1385,  1398,  1399. 

V.  Wood,  1339. 

V.  Zom,  643. 
Bank     Commissioners     v.     Lafayette 

Bank,  1682. 
Banker  v.  Coons,  46. 


TABLE    OF   CASES 


XXIX 


References  are  to  paragraphs  marked  § 


Bankers'  Iowa  State  Bank  v.  Mason 

Hand  Lathe  Co.,  189,  790,  13n. 
Bankhead  v.  Owen,  73L 
Banking  Co.  v.  Morehead,  263. 

V.  Saving  Bank,  713a. 
Bank  of  Albion  v.  Smith,  719a. 
Bank  of  Alexandria  v.  Swann,  979a, 

983,  1036,  1030. 
Bank  of  America  v.  Indian  Banking 
Co.,  1637. 

V.  Shaw,  1022. 

V.  Waydell,  698d. 

V.  Wilson,  703. 

V.  Woodworth,  1383. 
Bank  of  Antigo  Union  Trust  Co.,  1638. 
Bank  of  Atchison  County  v.  Bohart 
Commission  Co.,  551. 

V.  Durfee,  1709. 
Bank    of    Attica    v.     Manufacturers' 

Bank,  llOSd. 
Bank  of  Baraboo  v.  Laird,  769a. 
Bank  of  Batavia  v.  N.  Y.,  L.  E.  W.  R. 

Co.,  1733a. 
Bank  of  Bengal  v.  Pagan,  284,  1634. 

V.  McLeod,  284. 
Bank  of  Bennington  v.  Raymond,  454. 
Bank  of  Benson  i'.  Jones,  68a. 
Bank  of  British  Columbia  v.  Jeffs,  1317, 

1318. 
Bank  of  British  N.  Am.  v.  Ellis,  174, 
189,  669,  694o,  728,  812. 

V.  Hooper,  410. 

V.  Merchants'  Nat.  Bank,  1370. 
Bank  of  Cahfomia  v.  Union  Packing 

Co.,  62,  1202. 
Bank  of  Cape  Fear  v.  Seawell,  985. 
Bank  of  Carroll  v.  Taylor,  60. 
Bank  of  Cartersville  v.  Gunter,  68a. 
Bank  of  Chadron  v.  Anderson,  741,  821. 
Bank  of  Charleston  v.  Chambers,  1192. 
Bank  of  Charlotte  v.  Hart,  1689. 
Bank  of  Chenango  v.  Hyde,  1190. 

V.  Hide,  793. 

V.  Root,  999a. 
Bank  of  Chillicothe  v.  Dodge,  1699. 
Bank  of  Clark  County  v.  Oilman,  336. 
Bank  of  Columbia  v.  Lawrence,  1015, 
1016,  1018,  1022,  1033,  1058. 

V.  Magrader,  622,  1023. 

V.  Patterson,  Admr.,  388. 
Bank  of  Commerce  v.  Baird  Min.  Co., 
292,  392a,  396. 

V.  Barrett,  797,  1394. 

V.  Bemero,  322. 

V.  Bogy,  16a,  20,  21. 

V.  Bright,  392. 

V.  Broyles,  177. 

t;.  Chambers,  1005,  1024,  1027. 

V.  Fuqua,  62. 

t;.  Scofield,  183. 


Bank  of  Commerce  v.  Selden,  366. 

V.  Union    Bank,    349a,    533,   540, 
1362,  1363,  1654a,  1659,  1661. 

V.  Wright,  184,  827,  830,  831a. 
Bank  of  Commerce  of  West  Superior  v. 

Ross,  1760. 
Bank  of  Commonwealth  v.  Curry,  86a, 
142,  490,  854. 

V.  Letcher,  1266. 

V.  Mudgett,  637,  964. 
Bank  of  Covington  v.  Cannon,  375. 
Bank  of  Cumberland  v.  McKinley,  69. 

V.  May  berry,  69. 
Bank  of  Decatur  v.  Hodges,  940,  958. 
Bank  of  Deer  Lodge  v.  Hope  Mining 

Co.,  290. 
Bank  of  Duncan  v.  Brittain,  62. 
Bank  of  England  v.  Anderson,  16066. 

I'.  Newman,  588,  739,  1264. 

V.  Vagliano  Bros.,  1663. 
Bank  of  Fort  Madison  v.  Alden,  355, 

365. 
Bank  of  Gallipolis  v.  Trimble,  890. 
Bank  of  Genesee  v.  Patchin  Bank,  298, 

385,  386,  1188,  1398. 
Bank    of   Geneva   v.    Howlett,    1016, 

1022,  1025. 
Bank  of  Georgia  v.  Lewin,  868,  922. 
Bank  of  Ountersville  v.  Jones  Cotton 

Co.,  51. 
Bank  of  Hamburg  v.  Flynn,  7956. 

V.  Johnson,  294. 
Bank  of  Herington  v.  Wangerin,  1373. 
Bank  of  Horton  v.  Brooks,  1316. 
Bank  of  Houston  v.  Day,  85,  144. 
Bank  t;.  Hubbell,  336. 
Bank  of  Indian  Territory  v.  First  Nat. 

Bank,  532,  698d,  775. 
Bank  of  Ireland  v.  Archer,  556. 

V.  Beresford,  790. 

V.  Evans'  Trustees,  1405. 

V.  Evans,  842a. 
Bank  of  Jamaica  v.  Jefferson,  709,  710, 

9956. 
Bank  of  Kansas  City  v.   Mills_,   576, 

1198,  1229,  1245. 
Bank  of  Kentucky  v.  Adams  Express 
Co.,  1729a. 

V.  Garey,  581,  583. 

V.  Hickey,  1685. 

V.  Pursley,  945,  946. 

V.  Thomberry,  1682. 

V.  Wister,  729. 

t;.  Wisert,  1665. 

V.  Wooster,  10a. 
Bank  of  Laddonia  v.  Bright-Coy  Com- 
mission Co.,  565,  867,  891a,. 
896. 

V.  Friar,  1181a,  1230a. 
Bank  of  Le  Roy  v.  Hardin,  1612. 


XXX 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Bank  of  Limestone  v.  Penick,  86a. 

V.  Perrick,  142. 
Bank  of  Lindsborg  v.  Ober,  341,  960. 
Bank  of  Lock  Haven  v.  Smith,  1311, 

1343. 
Bank   of   Louisiana   v.   City   of   New 
Orleans,  1505. 

V.  Mansaker,  1017. 

V.  Tournillon,  1028. 
Bank  of  Louisville  v.  Ellery,  491. 

V.  First  Nat.  Bank,  341. 
Bank  of  Luvernc  v.  Birmingham  Fer- 
tilizer Co.,  789a. 
Bank   of   Malvern   v.    Burton,    1266a, 

1274. 
Bank  of  Manchester  v.  Glasen,  687, 947. 

V.  Slason,  1024. 
Bank  of  Maridian  v.  Strauss,  336. 
Bank  of  Marietta  v.  Pindall,  666,  667. 
Bank  of   Marysville  v.   Brewing  Co., 

1643. 
Bank  of  Memphis  v.  White,  1685. 
Bank  of  Metropolis  v.  First  Nat.  Bank 
of  Jersey  City,  336. 

V.  Jones,  1217. 

V.  New  England  Bank,  183a,  336, 
337,  338. 
Bank  of  Michigan  v.  Ely,  561,  558. 
Bank  of  Middlebury  v.  Bingham,  1190. 
Bank  of  Missouri  v.  Hull,  1217. 

V.  Phillips,  854. 

V.  Wright,  1454. 
Bank  of  Mobile  v.  Brown,  927. 

V.  Brunn,  1570,  1651. 

V.  Hudgins,  343. 

V.  Meagher,  1694. 
Bank  of  Monette  v.  Hale,  789a,  819. 
Bank  of  Monongahela  Valley  v.  Wes- 
tern, 367,  3696,  779. 
Bank  of  Monroe  v.  E.  C.  Drew  Inv. 
Co.,  357,  371. 

V.  Mining  Co.,  815. 
Bank  of  Montgomery  v.  Walker,  1335a. 
Bank  of  Monticello  v.  Dooly,  163,  189. 
Bank  of  Montpelier  v.  Montpelier  Lum- 
ber Co.,  714,  929,  1311. 
Bank  of  Montreal  v.  Buchanan,  262. 

V.  Clark,  1706. 

V.  Ingerson,  326. 

V.  Page,  370,  373. 

V.  Recknagel,  551. 

V.  Thomas,  551a,  1799. 
Bank  of  Morgan  City  v.  Herwig,  189, 

193. 
Bank  of  New  Hanover  v.  Bridgers,  814, 

1266,  1272. 
Bank  of  Newton  v.  Simmons,  769a. 
Bank  of  New  York  v.  American  Dock  & 
Trust  Co.,  284. 

V.  Bank  of  Ohio,  417,  1188. 


Bank  of  New  York  v.  Vanderhorst,  824. 
Bank  of  Niagara  v.  McCraken,  1685. 

V.  Roosevelt,  1691. 
Bank  of  North  America  v.  Bangs,  1622a. 

V.  Barriere,  611. 

V.  Meredith,  1251. 
Bank  of  North  Carolina  v.   Bank  of 

Cape  Fear,  647. 
Bank  of  Ohio  Valley  v.  Lockwood,  174, 

183,   189,  205,   1272,  1275,   1378, 

1401. 
Bank  of  Old  Dominion  «;.   McVeigh, 

972,  973. 
Bank  of  Ontario  v.  Hoskins,  1966. 
Bank  of  Orange  County  v.  Colby,  908. 
Bank  of  Orleans  v.  Merrill,  1699,  1703. 

V.  Smith,  341,  344. 

V.  Whittemore,  1180. 
Bank  of  Ozark  v.  Hanks,  196,  775,  819. 
Bank  of  Paris  v.  Pearson,  729,  812. 
Bank  of  Pcidmont  v.  Smith,  1192. 
Bank  of  Peru  v.  Farnsworth,  1703. 
Bank  of  Pittsburg  v.  Neal,   142,  483, 

775,  814,  1503. 
Bank  of  Port  Gibson  v.  Baugh,  370. 
Bank  of  Port  Jefferson  v.  Darling,  713e, 

1001,  1182. 
Bank  of  Ravenswood  v.  Wetzel,  395, 

1000. 
Bank  of  Red  Oak  v.  Orris,  996. 
Bank  of  Repubhc  v.  Baxter,  1608. 

V.  Carrington,  832. 

V.  Millard,     1636,     1636a,     1638, 
1639. 
Bank  of  Richland  v.  Nicholson,  161, 

970. 
Bank  of  Rochester  v.  Bowen,  365. 

V.  Gould,  979a. 

V.  Gray,  909,  948,  960. 

V.  Mintent,  304. 

V.  Monteath,  363. 
Bank  of  Rome  v.  Village  of  Rome,  1500, 

1537,  1550,  1553. 
Bank  of  Rutland  v.  Buck,  1190. 

V.  Woodroof,  501. 
Bank  of  St.  Albans  v.  Gilliland,  184, 

369,  831c. 
Bank  of  St.  Louis  v.  Rice,  552. 
Bank  of  St.  Mary's  v.  St.  John,  1682. 
Bank  of  Saginaw  v.  Title  &  Trust  Co. 

of  Western  Pennsylvania,  10. 
Bank  of  Salina  v.  Babcock,  827,  831c. 
Bank  of  Saline  v.  Wingfield,  643. 
Bank  of  Sampson  v.  Hatcher,   795a, 

797,  815. 
Bank   of   Sandusky    v.   Scoville,    184, 

831c. 
Bank  of  Santa  Cruz  v.  Bartlett,  427. 
Bank  of  Scotland  v.  Dominion,  347. 

V.  Hamilton,  477. 


TABLE    OF   CASES 


XXXI 


References  are  to  paragraphs  marked  § 


Bank  of  Seaford  v.  Conneway,  1085, 

1172. 
Bank  of  Seneca  v.  First  Nat.  Bank, 

1797a. 
Bank  of  Sherman  v.  Apperson,  41,  104, 

775. 
Bank  of  Sonoma  County  v.  Gove,  726a. 
Bank  of  South  CaroUna  v.  Flagg,  657. 

V.  Humphreys,  371. 

V.  M'WilUe,  291. 

V.  Myers,  1130,  1326. 
Bank  of  Sparta  v.  Butts,  1713a. 
Bank  of  Spartonburg  v.  Mahon,  713a, 

1311. 
Bank  of  Spearfish  v.  Graham,  789. 
Bank  of  Springfield  v.  First  Nat.  Bank, 

1606a. 
Bank  of  State  t;.  Muskingum  Branch 

Bank,  687. 
Bank  of  State  of  Missouri  v.  Vaughn, 

991. 
Bank  of  Stockton  v.  Jones,  742. 
Bank  of  Stratton  v.  Dixon,  301. 
Bank  of  S>Tacuse  v.  HoUister,  600,  656. 
Bank  of  Tennessee  v.  Barksdale,  1767. 

V.  Smith,  1154. 
Bank  of  Troy  v.  Topping,  263,  270. 
Bank  of  Ukiah  v.  Mohr,  283. 
Bank   of   United   States   v.    Bank   of 
Georgia,  334,  533,  1225,  1360, 
1655,  1656. 

V.  Beirne,  275,  703,  999a. 

V.  Carneal,  656,  985,  1022,  1028. 

V.  Corcoran,  1003,  1018. 

V.  Dandridge,  388. 

V.  Daniel,  1260. 

V.  Davis,  391. 

V.  Donallv,  882,  885,  902. 

V.  Dunn,  395,  1217. 

V.  Goddard,  331,  987,  992. 

V.  Hatch,  1019,  1305,  1307,  1320, 
1327. 

V.  Lane,  1024. 

V.  Leathers,  926,  1149. 

V.  Lyman,  1159,  1165,  1189. 

V.  Macalister,  3266,  3346. 

V.  Norwood,  1015. 

V.  Russell,  1373a. 

1-.  Sill,  1479,  1482,  1695. 

V.  Smith,  644,  962. 

V.  United   States,    576,    898,   920, 
1230,  1439,  1446,  1458. 
Bank  of  University  v.  Tuck,  832a,  1227. 
Bank  of  Utica  v.  Bender,  1033,  1058, 
1115,  1121. 
V.  Davidson,  1032. 
V.  Hillard,  1217. 
V.  Ives,  1316,  1328. 
V.  M'Kinster,  324,  346. 
V.  Phillips,  1032. 


Bank  of  Utica  v.  Smalley,  1708e. 

V.  Smedes,  324. 

V.  Smith,  455,  572,  576,  600,  991, 
1230. 

V.  Wager,  614. 
Bank  of  Vergennes  v.  Cameron,  365, 

369,  654,  953,  961,  1236. 
Bank  of  Virginia  v.  Ward,  1479,  1695, 

1697. 
Bank  of  Washington  v.  Triplett,  324, 

329,    340,    344,    345,    449,    452, 

589,  614,  634,  908,  931,  932. 
Bank     of    Williamson    v.     McDowell 

County  Bank,  1655. 
Bank  of  Winona  v.  Wofford,  130,  693. 
Banks  v.  Marshall,  1243. 
Bankston  i'.  Kennesaw  Guano  Co.,  32. 
Banner,  Ex  parte,  1343. 
Bant  V.  Donly,  1325. 
Bantz  I'.  Adams,  1230. 
Barbaroux  v.  Waters,  658,  962,  1085. 
Barber  v.  ^tna  Fuel  Co.,  184. 

V.  Backhouse,  201,  756. 

V.  Baker,  1426. 

t;.  Bochm,  203. 

V.  Gingell,  296,  299,  1353. 

V.  Johnson,  509. 

V.  McHenry  County  Hedge  Fence 
Co.,  63,  81. 

V.  Mechanics'  Ins.  Co.,  382. 

V.  Stroub,  1181a. 

V.  Van  Horn,  356,  999. 
Barbour  v.  Bank,  1431. 

V.  Banker,  1426. 

V.  Bayen,  617. 
Barclay  v.  Bailey,  602,  603. 

V.  Weaver,  671,  1093,  1106. 

Ex  parte,  987,  990. 
Barco  v.  Taylor,  193. 
Barcroft  v.  Denny,  504. 
Barden  v.  Hornthal,  7136. 
Bardsley  v.  Delp,  832. 

t;.  Sternberg,  428,  1221. 

V.  Washington  MUl  Co.,  90,  571, 
635. 
Barger  v.  Farnham,  69,  90a,  177,  183, 

710,  879. 
Baring  v.  Clark,  526. 

V.  Reeder,  1217. 
Barkalow  v.  Johnson,  1149,  1152,  1163. 
Barker  v.  Barker,  190,  1107,  1124. 

V.  Barth,  742. 

V.  Clarke,  1146. 

V.  Hall,  1014. 

V.  Lichtenberger,  184,  782. 

V.  Loring,  933,  1457. 

V.  Mechanics'  Ins.  Co.,  386,  405. 

V.  Prentiss,  199a. 

V.  Sartori,  53. 
V.  Sterne,  65,  870. 


XXXll 


l^ABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Barker  v.  The  Swallow,  1741. 

V.  Valentine,  724a,  725. 
Barley  v.  Freeman,  1767. 
Barling  v.  Bank,  130. 
Barlow  v.  Bishop,  242,  681,  1231. 
V.  Coggan,  593. 
V.  Congregational     Society,     298, 

405,  407. 
V.  Cooper,  1306,  1326. 
V.  Gregory,  629. 
V.  Planters'  Bank,  626. 
V.  Scott,  725,  725a. 
Barraby  v.  Wolfe,  749,  758a,  832a. 
Barnaby  v.  Barnaby,  234. 
Barnard  v.  Backhaus,  195a. 
V.  Campbell,  1727,  1750a. 
V.  dishing,  151,  159. 
V.  Guslin,  719. 
Barnard  State  Bank  v.  Fesler,  729. 
Barnes  v.  Bank,  392. 

V.  Century  Sav.  Bank,  1309. 

V.  Gorman,  60. 

V.  Hedley,  207. 

V.  McCullers,  1312. 

V.  McMuUin,  1435a. 

V.  Ontario   Bank,   382,  390,    391, 

392. 
V.  Reynolds,  1000,  1001. 
V.  Sammons,  1339. 
t;.  Town  of  Lacon,  1551. 
V.  Van  Keuren,  1387,  1389. 
V.  Vaughn,  654a,  658. 
Barnet  v.  Smith,  497, 1606, 1606a,  1623. 
Barnett  v.  Allen,  627. 
V.  Brandao,  831a. 
V.  Cecil,  1342. 
V.  Denison,  1543. 
V.  Elwood  Grain  Co.,  654. 
V.  Lichenstein,  248. 
V.  Nolte,  713a. 
V.  Offerman,  174. 
V.  Ringgold,  574. 
V.  Wing,  569,  1770. 
Barnett  Baking  Co.,  In  re,  1343. 
Barney  v.  Earle,  832. 

V.  Newcomb,  896,  897,  1188,  1756. 
Barnhart  v.  Goldstein,  196. 
Barnsdall  v.  Waltemeyer,  18,  508,  553. 
Barnum  v.  Phenix  County,  769a. 

V.  Reed,  264. 
Barnum  Grain  Co.  v.  Great  Northern 

Ry.  Co.,  1740a. 
Barnwell  v.  Mitchell,  1030. 
Barr  v.  Boyer,  1311. 

V.  Mitchell,  713a. 
Barrett  v.  Allen,  627. 
V.  Armstrong,  1340. 
V.  Barrett,  883. 
V.  Charlston  Bank  1133. 
V.  County  Court,  1500,  1545,  1548. 


Barrett  v.  Dodge,  895. 

V.  Evans,  1015 

V.  Juday,  94. 

V.  Goddard,  1279a. 

t;.  Hinckley,  748a,  834. 

V.  Mahnken,  177,  183. 

V.  Russell,  683. 

V.  Skinner,  94. 

V.  Weber,  857. 
Barrick  v.  Austin,  163,  392,  728. 
Barringer  v.  Wilson,  717. 
Barrington  v.  Bank,  388. 

V.  Skinner,  205. 
Barroll  v.  Foreman,  769a,  795a,  1230a, 

1231,  1612a. 
Barron  t'.  Cady,  1338. 

V.  How,  1267. 
Barrow  v.  Blassingame,  769. 

1-.  Coles,  1745. 

V.  Pike,  173. 
Barry  v.  Clark,  527. 

«;.  Equitable  Life  Assn.,  858. 

V.  Merchants'  Exchange  Co.,  382, 
383 

V.  Morse,  719,  719a,  1093. 

V.  Mutual  Life  Ins.  Co.,  63. 

V.  Stover,  879. 
Barry  Co.  v.  McGlothlin,  1185. 
Barson  v.  Huntington,  68. 
Barstow  v.  Hiriart,  985. 

V.  Savage  Mining  Co.,  1708,  1708^. 

V.  Stone,  1230. 
Barthe  v.  LacroLx,  188. 
Bartholomew    v.    First     Nat.     Bank, 
648. 

i;.  Leaman,  1215. 
Bartlett  v.  Benson,  724a. 

V.  Eddy,  742. 

V.  First  Nat.  Bank,  296. 

V.  Isbell,  349,  992. 

V.  Leathers,  627. 

V.  Pitman,  1316. 

V.  Robinson,  1023. 

V.  Same,  63,  63a. 

V.  Tucker,  141,  304,  307. 
Bartlett  Estate  Co.  v.  Fraser,  94,  741. 
Bartley  v.  State,  427,  1621. 
Barto  V.  Schenck,  715. 
Barton  v.  American  Nat.  Bank,  711. 

V.  Baker,  1131,  1137,  1172. 

V.  Bennett,  1772. 

V.  Farmers'  Nat.  Bank,  62a. 

V.  Haltom,  1340. 

V.  Trent,  731,  737. 

V.  Wilkins,  80. 
Barton  County  v.  Walker,  1560,  1564. 
Bartrum  v.  Caddy,  783. 
Bartsch  v.  Atwater,  731,  874. 
Bascom  v.  Young,  368. 
Bascom  et  al.  v.  Toner  et  al.,  1470. 


TABLE    OF    CASES 


XXXlll 


References  are  to  paragraphs  marked  § 


Bashford  v.  Shaw,  1786,  1788. 
Baskerville  v.  Harris,  1149. 
Basket  v.  Hassell,  24,  24a,  25,  26. 
Baskin  v.  Crews,  1788. 

V.  Wayne,  1411. 
Baskins  v.  Valdosta  Bank  &  Trust  Co., 

784 
Bass  V.  Clive,  535. 

V.  Columbus,  1560. 

V.  Glover,  17336. 

V.  Inhabitants  of  Wellesley,  205. 

V.  O'Brien,  303,  411. 

V.  Sanborn,  80. 
Bassenhorst  v.  Wilby,  610,  611,  612, 

1171. 
Basset  v.  Garthwaitc,  800a. 

V.  Hains,  497a. 
Bassett  v.  Avery,  726a,  803. 
Bastian  v.  Drey  or,  194. 
Batavian  Bank  v.  McDonald,  1312. 
Batchelder  v.  White,  1384. 
Batchellor  v.  Priest,  576. 
Bateman  v.  Joseph,  460,  1114. 

V.  Kingston,  224. 

t;.  Mid-Wales  R.  Co.,  380. 
Bates  t'.  Butler,  663a. 

V.  Cain,  1227. 

V.  First  Nat.  Bank,  1612. 

V.  Forcht,  369. 

V.  Kemp,  725,  725a. 

V.  Kempton,  1181a. 

V.  New  York  Ins.  Co.,  1708(i. 

V.  Rosekrans,  1266a. 

V.  Todd,  1729,  1729a. 
Bates  County  v.  Winters,  1523a. 
Batesville  Bank  v.  Lehner,  775,  814, 

815. 
Bath  County  v.  Amy,  1523. 
Bathe  v.  Taylor,  1375,  1377,  1401. 
Batley  v.  Carswell,  291. 
Batterton  v.  Roopea,  971,  1277a. 
Battle  I'.  Weems,  726. 
Battles  V.  Laudenslager,  819. 
Baugh  V.  Ramsey,  81 
Baum  V.  Palmer,  180. 
Baumeister  v.  Kuntz,  714,  714a,  971, 

1093,  1094,  1103. 
Baumgardner  v.  Reeves,  1118. 
Bausmann  v.  Kelley,  574. 
Bauzer  v.  Richter,  156. 
Baxendale  v.  Bennett,  842a,  1405. 
Baxter  v.  Duren,  731b,  735. 

V.  Earl  of  Portsmouth,  212. 

V.  Ellis,  814. 

V.  Graves,  1084. 

V.  Little,  724,  725,  1233,  1437. 

V.  Stewart,  60. 
Baxter  Nat.  Bank  v.  Talbot,  899. 
Bay  V.  Coddington,  831c. 
V.  Freazer,  73. 


Bayard  v.  Shunk,  737, 1269, 1662, 1677, 

1678. 
Bayle.ss  v.  Marbut,  654. 
Bayley  v.  Greanleaf,  1281. 

V.  Heald,  920. 

V.  Taber,  85,  197,  807. 
Bayley,  Admr.,  v.  Chubb,  1027. 
BayUes  v.  Peterson,  443a. 
Bays  V.  Connor,  358a. 
Beach  v.  Brown,  867. 

V.  Moser,  341. 

V.  Nevins,  81&. 

V.  Wakefield,  1221. 
Beacon  Trust  Co.  v.  Robbins  189,  790, 
832o. 

V.  Souther,  386,  394a. 
Beadier  v.  McEbath,  195a. 
Beal  V.  Nat.  Bank,  340e. 
Beale  v.  Parrish,  987,  1058a. 
Beall  V.  Hudson  County  Water  Co., 
748. 

V.  Leverett,  785. 
Bealfl  V.  Lewis,  1266. 

V.  Peck,  979,  999a,  1000. 

V.  See,  210,  685. 
Beaman  v.  Ward,  573. 
Beaman's  Admr.  v.  Russell,  1421a. 
Bean  v.  Arnold,  1099. 

V.  Briggs,  891,  1703. 

V.  Brown,  1251. 

«;.  Keen,  1478. 

V.  Pioneer  Mining  Co.,  307. 
Beard  v.  First  Nat.  Bank,  741. 

V.  Dedolph,  741,  745. 

V.  Root,  1328,  1.329. 

V.  Webb,  250. 

V.  Westerman,  1133. 

V.  White,  81. 
Bearden  v.  Moses,  174a. 
Beardslee  v.  Horton,  797. 
Beardslcy  v.  Baldwin,  41. 

V.  Cook,  509. 

V.  Hawes  et  al.,  1787. 

V.  Hill,  86a. 

V.  Warner,  1304,  1305,  1339. 
Bearman  v.  Board  Police,  422. 
Beattie  v.  Nat.  Bank,  672,  1225. 
Beatty  v.  Western  College,   46,   51a, 

180,  188a. 
Beatty ville  Bank  v.  Roberts,  80,  156, 

205. 
Beaty  v.  Grim,  1763. 
Beauchamp  v.  Cash,  978. 
Beaumont  v.  Reeve,  195. 
Beauregard  v.  Knowlton,  1596. 
Beaver  v.  Beaver,  24,  1612&. 
Beaver   County   v.   Armstrong,    1489, 

1491a,  1500,  15096,  1513. 
Bechtel's   Appeal,    1404. 
I  Beck  V.  Haas,  1215,  12S1,  1252. 


XXXI V 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Beck  V.  Mailer,  812,  819. 

v.Robley,  1239,  1240,  1241. 

V.  Thompson,  616,  1148. 
Becker  f.  Fischer,  1343. 

V.  Hallgiulen,   1730. 

V.  Hart,  761,777,  1227. 

V.  Horowitz,   612. 
Beckerdike  v.  Bollman,  1074. 
Bookford  v.  First  Nat.  Bank,  1590. 
Beckham  v.  Hague,  1181a. 
Beckhaus  v.  Commercial   Bank,  827, 

832a. 
Beckstrom  v.  Krone,  51a,  104,  1245. 
Beckwith  v.  Angell,  713c. 

t'.  Corrall,  772,  1462,  1463. 

V.  P^arnum,  738. 

V.  Mace,  363. 

V.  Smith,    1028. 

V.  Webber,    769a. 
Becnel  v.  Tournillon,  1024. 
Bedell  v.  Hering,  849. 

V.  Scarlett,  305. 
Bedford  v.  Deakin,  1300,  1328,  1395, 
1396. 

V.  Hickman,  1034. 
Bedford  Bank  v.  Acoam,  326a. 
Bedford  Com.  Ins.  Co.  v.  Covell,  305. 
Bedford's  Ex'r  v.  Chandler,  185. 
Beebe  v.  Brooks,  611,  996. 

V.  Hutton,  122. 

V.  Wells,  185. 
Beecher  v.  Dunlap,  80,  81. 
Beeching  v.  Gower,  648,  5679a. 
Beeker  v.  Saunders,  1788. 
Beeler  v.  Frost,   1093. 

V.  Young,  226. 
Beem  v.  Farrell,  1354. 
Beeman    v.    Duck,    538,    1351,    1354, 

1365,    1366. 
Beer  v.  Clifton,  611. 
Beers  v.  Phoenix  Glass  Co.,  382. 
Beeson  v.  Lipman,  1198. 

V.  Shively,  1181a. 
Begbi  V.  Levi,  494. 
Begley  v.  Combs,  81. 
Beh  V.  Bay,  1310. 
Behrens  v.  McKenzie,  210. 
Being  v.  Bank  of  Kingston,  161. 
Beirne  v.  Dunlap,  55. 
Beissner,  Admr.,  v.  Weeks,  713a,  995. 
Beland  v.  Brewing  Assn.,  851. 
Belcher  v.  Smith,  1782. 
Belden  v.  Burke,  769a. 
V.  Carter,  68. 
V.  Hann,  693,  694. 
V.  Lamb,  751,  758a,  766,  1058. 
Belderback  v.  Burlingame,  161. 
Belger  v.  Dinsmore,  1740a. 
Belknap  ?'.  Davis,  533. 
V.  Nat.  Bank,  1347. 


Bell  V.  Alexander,   1587,   1589,   1596, 
1638. 

V.  Bean,  832a. 

V.  Beller,  389,  391,  394. 

V.  Bruen,  1755. 

V.  Buckley,  1369. 

I'.  Cafferty,  731. 

V.  Campbell,  1205. 

V.  Dagg,  672,  731,  7316,  732,  740a. 

V.  Farmville  R.  Co.,  1559,  1.560. 

V.  First  Nat.  Bank,  454,  614,  633. 

V.  Hagerstown  Bank,  1012,  1023. 

V.  Hall's  Exrs.,  1060. 

V.  Kellar,  249. 

t;.  Lord  Ingestre,  721. 

V.  Mahin,  1387. 

t'.  Morrison,  374,  1215a. 

V.  Moss,  1727. 

V.  Norwood,  1206. 

«;.  Packard,  868. 

V.  Pitman,  1289a. 

V.  Riddell,  196a. 

I'.  San  Francisco  Savings  Union, 
157. 

V.  Sheridan,  193. 

V.  State  Bank,  1015. 

V.  Tilden,  1192b. 

V.  Waudby,  322. 

V.  Young,  1470. 
Bellamy  v.  Majoribanks,  1571a,  1585a, 

1636. 
Bellasis  v.  Hester,  492,  624,  626. 
Belle  V.  Bidgood,  79. 

V.  Bruen,  879. 
Bellemire  v.  Bank  of  the  United  States, 

341,  343. 
Belleville  Bank  v.  Bomeman,  68a,  1267. 
Belleville  Savings  Bank  v.  Bomman, 

1266. 
Bellinger  v.  Brockway,  1091. 
Bellis  V.  Lyons,  812. 
Bellows  V.  Lovell,  1311. 
Bellows  Falls  Bank  v.  Rutland  County, 

1703,  1707,  1707a. 
Belmont  v.  Hoge,  775. 
Belmont  Branch  Bank  v.  Hoge,  769a, 

814. 
Beloit  V.  Morgan,  1560. 
Belote  V.  Wynne,  374. 
Beltzhoover  v.  Blackstock,  775,  779a, 

1462. 
Beman  v.  Wessels,  67. 
Bemis  v.  McKenzie,  996. 
Benard  v.  Barry,  891. 
Bend  v.  Wietze,  7956. 
Bender  v.  Bahr  Trucking  Co.,  714. 

V.  Been,  1289. 
V.  Blessing,  374. 
Benecke  v.  Haebler,  1799. 
Benedict  v.  Caffee,  1135,  1172. 


TABLE    OF   CASES 


XXXV 


References  are  to  paragraphs  marked  § 


Benedict   v.   Cowden,    149,    152,    153, 
1397,  1407. 

V.  Cox,  1332,  1338. 

V.  Miner,  319,  1377. 

V.  Olson,  1326. 

V.  Schmieg,  594,  1005. 

V.  Smith,  321. 
Benham  v.  Bishop,  231,  234. 

V.  Smith,  418. 
Benhap  f .  Bishop,  234. 
Benjamin  v.  Arnold,  1338. 

V.  McConnell,  1290. 

V.  Rogers,  339,  790. 

V.  Ver  Nooy,  816. 
Benn  v.  Kutzschan,  62,  669. 
Bennell  i-.  Wilder,  1251. 
Benners  v.  Clements,  916. 
Bennett  v.  Bennett,  242. 

V.  Farnell,  137. 

V.  Lubv,  177. 

t;,  Taylor,  1311. 

V.  Young,  966. 
Bennett'8  Estate  v.  Taylor,  1458. 
Bennett  Shoe  Co.,  In  re,  382. 
Bennitt  v.  Mo.  Pacific  R.  Co.,  1741. 
Benoin  v.  Paquin,  798. 
Benson  v.  Abbott,  664a. 

t^.  Adams,  1209. 

t;.  Carmel,  432. 

V.  Drake,  70. 

V.  Dublin   Warehouae   Co.,    195a, 
7136. 

i;.  Keller,  193. 

V.  Mayor,  1523. 
Benthall  v.  Judkins,  715,  1757. 
Bentnick  v.  Dorrien,  549. 
Benton  i-.  Ger.-Am.  Nat.  Bank,  757, 
802,  830,  867. 

t'.  Gibson,  611. 

V.  Martin,  68a,  816,  722,  1173. 

V.  Marvin,  1101. 

V.  Roberts,  358a. 

V.  Sikyta,  199a,  214,  776,  832a. 
Berdsell  i;.  Russell,  1399,  1499a. 
Bereich  v.  Marj-e,  1708^^. 
Berenson  v.  London  &  Lancashire  Fire 

Ins.  Co.,  47. 
Berge  v.  .\bbott,  1118. 
Bergmann  v.  Salmon,  177,  789. 
Berkley  f.  Cannon,  213. 

V.  Tinsley,  190,  757,  832a. 

f.  Wat  ling,  1729. 
Berkling  v.  Watling,  1727. 
Berkshire    Bank   v.   Jones,    656,    657, 

1096. 
Berliner  v.  Town  of  Waterloo,  1535. 
Bernard  v.  Barrj',  891. 

t;.  Union  Trust  Co.,  50a. 
Bernard,    .\dmr.,    v.    \VTiitney    Bank, 

1643. 


Bemd  v.  Lynes,  1306,  1789. 
Bemey  v.  Steiner  Bros.,  698<i,  II8I0 
Bemheimer  v.  Herrmann,  1623. 

V.  Marshall.  1361. 
Berridge  v.  Banks,  248. 

V.  Fitzgerald,  1016. 
Berrien  v.  Wright,  922. 
Berry  i'.  Berry,  857,  858. 

V.  Bridges,  1276. 

V.  Griffin,  1267,  1268. 

V.  Pullen,  1316,  1317. 

V.  Robinson,  611,  996. 

t'.  Southern  Bank,  1060. 
Berry  man  v.  M  anker,  1387. 
Bertig-Smythe  Co.  v.  Bonsack  Lumber 

Co.,  81c. 
Bertrand  v.  Barkman,  184,  831a. 
Besant  v.  Cross,  517. 
Besshears  v.  Rowe,  568. 
Best  V.  Crall,  822,  824,  1228. 

V.  Hoppie,  713a. 

V.  Krey,  296. 

V.  Nakomis  Nat.  Bank,  1198. 

t'.  Rocky    Mountain    Nat.   Bank, 
164,  llSla. 
Bethune  v.  McCrary,  181. 
Bcttanier  v.  Smith,  780. 
Betterton  v.  Roope,  828,  1276. 
Bettis  V.  Bristol,  274. 

V.  Schreiber,  960,  1050. 
Betts  f.  Kimpton,  256. 
Bevan  v.  Atlanta  Nat.  Bank,  1219. 

r.  Eldridge,  122. 
Beveridge    v.    Richmond,    546,    1326, 

1335. 
Bibbf.  Peyton,  1165. 
Bibbs  I'.  Hitchcock,  196a. 
Bick  V.  Clarke,  28. 
Bickerdike  v.  BoUman,  1170,  1074. 
Bickford  i-.  First  Nat.  Bank,  1626. 

V.  Gibbs,   1759,   1588. 

V.  Mattocks,  181. 
Bickley    v.    Conmiercial    Bank,    1700, 

1704. 
Bicknall  v.  Waterman,  738. 
Biddeford  Nat.  Bank  v.  Hill,  193,  1347. 

V.  McAllister,  851. 
Biegler   v.   The    Merchants'    Loan    & 

Trust  Co.,  108,  797. 
Bier>'  v,  Haines,  1391. 
Bigbie  v.  Levy,  69,  70. 
Bigelow  t',  Benedict,  195a. 

t'.  Benton,  1755. 

V.  Bumham,  877,  922,  923. 

V.  Colton,  707a,  715. 

V.  Grannis,  233. 

V.  Henniger,  802. 

V.Stephen,  1373a,  1411. 
Bigelow  Co.   V.   Automatic   Gas  Pro- 
ducer Co.,  184. 


XXXVl 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Biggerstaff  v.  Marston,  1233. 
Biggs  V.  Merrill,  781. 

V.  Piper,  83. 
Bigler  v.  Waller,  1248. 
Bignold,  Ex  parte,  1109. 
Big  Rapids  Nat.  Bank  v.  Peters,  1322. 
Big    Sandy    Nat.    Bank    v.   Chilton, 

331. 
Bilbie  v.  Lumley,  1148. 
Bill  V.  Stewart,  815. 
Billgerry    i'.    Branch,    217,    218,    669, 

678a,  1060,  1062,  1067,  1070,  1071. 
Billing  t).  Collins,  781. 

V.  Devaux,  25,  491,  498,  499,  503, 
16186. 
Billings  V.  Billings,  80. 
Billings'  Estate,  In  re,  lOoSa. 
Billingsley  v.  Benefield,  1266. 

t'.  Clelland,  196a,  741,  742. 
Billington  v.  Wagoner,  1317. 
Bilson  V.  Hodd,  975. 
Binford  v.  Adams,  1221,  1222. 

V.  Binford,  730,  1221. 
Bing  t'.  Bank  of  Kingston,  188a. 
Bingham  v.  Noyes,  247. 

V.  Reddy,  1373a. 

V.  Stanley,  177. 

V.  Stewart,  305. 
Binney  v.  Globe  Nat.  Bank,  93,  142, 
241. 

V.  Plumley,  63,  65,  1187. 
Birch  V.  Fisher,  1702a,  1703. 
Birchard  i-.  Bartlett,  705. 
Birckhead  i'.  Brown,  1797a. 
Bircleback  v.  Wilkins,  162. 
Bird  V.  Brown,  318. 

V.  Daggett,  386. 

V.  Kay,  1085. 

V.  Le  Blanc,  1091,  1195a. 

V.  Louisiana  State  Bank,  327. 
Birdsall  v.  Russell,  775. 

V.  WTieeler,  808. 
Birkett  v.  Elward,  831a. 
Birmingham    Nat.    Bank   v.   Bradley, 

1363,  1369,  1662. 
Birmingham  Trust  &  Sav.  Co.  v.  Curry, 
807. 

V.  Whitney,  1390,  1402. 
Bisbee  v.  Torinus,  203. 
Bisbing  v.  Graham,  1473. 
Bishop  V.  Chase,  574,  690,  7266. 

V.  Corning,  16126. 

V.  Dexter,  611,  996. 

V.  Dillard,  80. 

V.  Eaton,  1312,  1321,  1753. 

V.  Hay  ward,  1202a. 

V.  Matney,  196a. 

V.  People's  Bank,  357. 

V.  Rowe,  130,  301,  548,  748a,  1266, 
1278. 


Bishop  V.  Seaman's  Bank  for  Savings, 
16126. 

V.  Yeazle,  1304. 
Bishop's  Estate  v.  Bank's  Appeal,  1312. 
Bissell  V.  Adams,  1215a. 

V.  Campbell,  1729a. 

V.  City  of  Kankakee,  1550,  1544, 
15556. 

V.  Dickerson,  757,  758a,  790. 

V.  First  Nat.  Bank,  392. 

V.  Gowdy,  725a,  726a. 

V.  Jcffersonville,    317,    389,    1537, 
1540,  1564,  1799. 

V.  Lewis,  561,  587. 

t'.  Morgan,  814a. 
Bissinger  v.  Guiteman,  816. 
Bitzer  v.  Utica  Lime  Co.,  177. 

V.  Wager,  1191. 
Bixby  V.  Deemar,  1741. 
Bizzell  V.  Stone,  1432. 
Black  t'.  Duncan,  63. 

V.  Epstein,  149,  177. 

t'.  First  Nat.  Bank,  156,  396,  789, 
790,  7956,  805,  831a. 

V.  Holland,  1215. 

V.  Peele,  543. 

I'.  Rav,  382. 

V.  Strickland,  1198. 

V.  Tarbell,  726. 

V.  Ward,  56,  58. 

V.  Zacharic,  1272,  1208€. 
Blackbume,  Ex  parte,  1262,  1264. 
Blacker  v.  Dunbar,  93. 
Blacker  &  Co.  t^.  Ryan,  614. 
Blackham  v.  Doren,  1075,  1076. 
Blackie  i'.  Bidding,  1464,  1482. 
Blackman  v.  Green,  663. 

V.  Lehman,  41,  99,  420,  663a,  1500, 
1501a. 
Blackmore  v.  Granbery,  1252. 
Black  River  Sav.  Bank  v.  Edwards, 

164. 
Blackstone  Bank  v.  Hill,  1251,  1319. 
Blackwell  v.  Denic,  123. 

V.  Hamilton,  34. 
Blade  v.   Grant  County   Dep.   Bank, 
1637. 

V.  Noland,  1482. 
Blaffer  v.  Louisiana  Nat.  Bank,  1622a. 
Blain  v.  Hitch,  196a. 
Blaine  v.  Bourne,  336,  698. 
Blair  v.  Bank,  392. 

V.  Bank  of  Mansfield,  687,  1187. 

V.  Bank  of  Tennessee,  643,  1303, 
1398. 

V.  Carpenter,  1251. 
V.  Hagemeyer,  791. 
Blair  &  Hoge  v.  Wilson,  1064,  1065, 

1572,  1587,  1590,  1623. 
Blairsville  Nat.  Bank  v.  Crabbs,  831a. 


TABLE   OF   CASES 


XXXVU 


References  are  to  paragraphs  marked  § 


Blaisdell  Jr.  Co.  v.  Citizens'  Nat.  Bank, 

174a. 
Blake  v.  Coleman,  151,  1396. 
V.  McMillen,  594,  996. 
V.  Third  Nat.  Bank,  359. 
Blakeley  v.  Adams,  1342. 
Blakely  v.  Grant,  664o,  1017,  1782. 

V.  Johnson,  1373a. 
lilukemore  v.  Wood,  80. 
Hhikcslee  t-.  Hewitt,  325,  704,  713e. 
Hlukey  v.  Johnson,  1373a,  1405. 
Blanc  I'.  Gerraania  Nat.  Bank,  392a, 
1713a. 
V.  Mutual  Nat.   Bank,  327,  329, 
1006,  1099,  1108. 
Blanchard  v.  Blanchard,  1339. 
V.  KauU,  405,  406. 
V.  Page,  1727. 
V.  Stevens,  830,  831o. 
I-  Tittavawasse  Boom  Co.,  1276. 
V.  Wood,  1099. 
Blanckenhagen  i'.  Blundell,  103. 
Blund  V.  O'lIaRan,  148. 
BliindinK  v.  Burr,  1556. 

V.  Wilsey,  1789. 
Blaney  v.  Pelton,  812. 
Blanckenship   v.   Rogers,    1429,    1080, 

1596. 
Blanks  f.  Ripley,  203. 
Blankshan  i'.  Russell,  187a,  188. 
Bla.sdell  f.  Locke,  246. 
Blatchford  v.  Harris,  189,  929,  1095a, 
1090. 
V.  Milliken,    716. 
Blazer  t'.  Baudy,  1317a. 
Blazo  t'.  Cochrane,  181. 
Bleaden  r.  Chitrlcs,  1468a. 
Bleckley  v.  Goodwin,  196a. 
Blenderman  r.  Price,  1085. 
Blenn  v.  Lvford,  726. 
Blessard  r.   Hurst,    1154,   1158. 
Blesse  v.  Blackburn,  741. 
Blethen  v.  Lovering,  670. 
Blevins  v.  Fairley,  93. 
Blinn  Lumber  Co.  v.  McArthur,  1227. 
Bliss  V.  Covington,  1473. 

V.  Houghton,  890. 
Block  r.  Bell,  131. 

V.  Wilkcrson,  497. 
Blodgett  V.  .\merican  Nat.  Bank,  369a. 
t'.  Durgin,  879,  880,  908. 
V.  Jackson,  139. 
Blood  V.  Maveuse,  392a. 

t;.  Northrup,  45,  1703. 
Bloom  V.  Helm,  365. 

r.  Warder,    1769. 
Bloomington    School    v.    Nat.    School 

Furnishing  Co.,  422. 
Blossom  V.  Dodd,  1711. 
Blount  t'.  Bcstland,  257. 


Blount  V.  Edison  Gen.  Elec.  Co.,  205. 

I'.  Windley,  1689. 
Blow  I'.  Mavnard,  1342. 
Blum  V.  Bidwell,  1149. 

V.  Loggin,  802,  812. 
Blumenthal  v.  Jassoy,  834. 
Blum,  Jr. 'a  Sons  v.  Whipple,  386. 
Blythe  v.  Cordingly,  183. 
Boalt  V.  Brown,  1385. 
Boardman  v.  Paige,  1294. 

I'.  Smith,  1432. 
Board  of  Commissioners  v.  JEina.  Life 
Ins.   Co.,    1537. 
V.  National  Life  Ins.  Co.,  1537. 
V.  Tollman,  1526. 
Board  of  Comrs.  of  Lake  Co.  v.  Sutliff, 

803. 
Board  of  Education  v.  Fonda,   1260, 

1330. 
Board  of  Missions   v.  Mechanic   Sav. 

Bank,  24,  16126. 
Board  of  Sunervisors  v.  Hall,  1188. 
Boatman's  Sav.  Bank  v.  Grewe,  834. 
t'.  Johnson,  1310. 
!'.  West  Atl.  R.  Co.,  17336. 
Boatman's  Sav.  Inst.  v.  Mead,  365. 

V.  Bank  of  Mo.,  1686. 
Bobe  V.  Stickney,  1251,  1252. 
Bobo  V.  Hansel,  231. 
Bock  I'.  Gorrisseau,  3346. 

I'.  Lauman,  751. 
Bockville  Nat.  Bank  i-.  Citizens'  Gas 

Light  Co.,  388. 
Boddington  v.  Schlencker,  332,  1590. 
Bodley  v.  Higgin.s,  67. 

I'.  National  Bank,  803. 
Boehm  t'.  Garcias,  507a. 

V.  Sterling,  725a,  1567,  1595,  1634. 
Boeka  r.  Nuella,  741. 
Boemer  v.  Traders'  Nat.  Bank,  759a. 
Bogart  V.  M'Clurg,  1150,  1164. 
Bogarth  r.  Breedlove,  1386. 
Bogerau  f.  Gueringer,  370a. 
Bogert  V.  Hertell,  266,  268. 
Boggess  V.  Goff,  1251. 

t'.  Lilly,  200. 
Bogie  V.  Nolan,  164. 
Bogy  V.  Keil,  1083,  1172.  . 

Bohart  Commission   Co.  v.   Bucking- 
ham, 698<i. 
Bohn  V.  Building  &  Loan  Assn.,  383. 
Bohons,  A.ssignee,  v.  Brown,  197,  199a. 
Boissat  t'.  Sullivan,  170. 
Boit  I',  ^^^litehead,  805. 
Bolen  V.  Wright,  815. 
Boles  V.  Harding,  141,  769a,  1219. 
Bolin,  Matter  of,  16126. 
Boline  v.  Wilson,  1181a. 
Bolitho,  Ex  parte,  363,  364. 
BoUes  V.  Perry  Co.,  1551. 


xxxvm 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Bolt  V.  Dawkins,  1259. 
Bolte  V.  Sparks,  199a. 
Bolton  V.  Dugdale,  53. 

V.  Harrod,  470. 
Bonanza    Mining    &    Smelter    Co.    v. 

Ware,  393. 
Bonbonus,  Ex  parte,  365,  366. 
Bond  V.  Bragg,  968. 

V.  Farnham,     1128,     1131,     1137, 

1138. 
V.  Fitzpatrick,  1437. 
V.  Kidd,  177. 
V.  Storrs,  1229. 
V.  Vandergrift,  80. 
V.  Warden,  1592. 
V.  Whitfield,  1472. 
Bond,  Admr.,  v.  HoUoway,  701a. 
Bondot  V.  Rogers,  803. 
Bonds-Foster  Lumber  Co,  v.  Northern 

Pac.  R.  Co.,  1731. 
Bondurant  v.  Everett,  1015. 
Bone  V.  Tharp,  825. 
Bonedon  v.  Page,  898. 
Bonesteel  v.  Bowie,  1266b. 
Boneton  v.  Welsh,  982,  983. 
Bonham  v.  Needles,  1537. 
Bonman  v.  Van  Kuren,  7956. 
Bonnell  v.  Prince,  1319,  1325. 

V.  Mawha,  506. 
Bonner  v.  City  of  New  Orleana,  14996, 
1508. 
i;.  Nelson,  854. 
Boody  V.  Lincoln  Nat.  Bank,  lQV2(i. 
Booher  v.  Allen,  724a. 
Booker  v.  Robbins,  200. 
Bookheim  v.  Alexander,  183a,  831c. 
Bool  V.  Mix,  229. 
Boom  V.  City  of  Utica,  1538. 
Boomer  v.  Koon,  1375. 
Boon  V.  Murphy,  1281. 
Boone  v.  Boone,  1966. 
Boord  V.  M.  Ferst's  Sena  &  Co.,  292. 
Booth  V.  Dexter  Fire  Engine  Co.,  161. 
t;.  Grove,  287. 
V.  Huff,  94,  7136. 
V.  Powers,    1395,    1410a,   1411. 
V.  Quin,  3696,  375,  803. 
V.  Smith,  1267,  1276. 
V.  Storrs,  1202. 
V.  Wallace,  86a. 
Boozer  v.  Anderson,  62. 
Borden  v.  Clark,  700,  797. 
Borgess  Investment  Co.  v.  Vett,  775. 
Borneman  v.  Sidlinger,  24. 
Borough  V.  Perkins,  926. 

V.  White,  608. 
Borough  of  Montvale  v.  People's  Bank, 

776,  1501. 
Borradaile  v.  Lowe,  1091,  1163. 
Borroughs  v.  Ploof,  832. 


Borst.  V.  Spclman,  255. 

Borup  ('.  fs'iningor,  329,  347. 

Bo.san(juet  v.  Dudman,  183a. 

Bosch  V.  Ciussing,  787a. 

Boss  V.  Hewitt,  724a,  787,  1506. 

Bossangc  v.  Ross,  751. 

Bosswell  V.  Thigpen,  833. 

Boston  Bank  v.  Hodges.  658,  1212. 

Boston  Safe  Deposit  &  Trust  Co.  v. 

Manning,  1181a. 
Boston   Steel   &   Iron   Co.   v.   Steucr, 

144,  805,  832. 
Bostwick  V.  Dodge,  832. 
Boswell  V.  Citizens'  Sav.  Bank,  1566, 

1643. 
Boteler  v.  Dexter,  710,  995, 1473. 
Bothell  V.  Fletcher  &  Stobaugh,  156, 
769a,  789. 

t;.  Schweitzer,  1409. 

V.  Whitley  Brothers,  812,  814. 
Bothwell  V.  Corum,  27,  776,  777. 
Botsford  V.  In.surancc  Co.,  1741. 
Bottomley  v.  Brooke,  1431. 

V.  Fisher,  402. 
Bottomly  i'.  Goldsmith,  198,  808. 
Bouchell  V.  Clary,  224,  225. 
Boughncr  v.  Meyer,  195a,  1503. 
Boughton  V.  Flint,  1707a. 
Bouler  v.  Mayor,  1322. 
Boultbee  v.  Stubbs,  1322. 
Boulton  V.  Welsh,  983. 
Boulware  v.  Newton,  170,  1534. 
Bourgh  V.  Leggc,  1047. 
Bourke  v.  Spaight,  673. 
Bourne  v.  Ward,  162,  163. 
Boutelle  v.  Carpenter,  1398. 
Bouton  V.  Cameron,  189. 

t'.  Hill,  203,  1215. 
Bovard  v.  Dickinson,  812,  11926. 
Bovier  v.  McCarthy,  807. 
Bowen  v.  Bradley,  868. 

V.  Byrne,  122. 

V.  E.  A.  Waxelbaum,  81,  177. 

V.  Julius,  1234. 

V.  Laird,  1405. 

V.  Needles  Nat.  Bank,  386. 

V.  Newell,    622,    634,    908,    1568, 
1571a,  1572,  1573,  1574,  1576. 

V.  Stoddard,  295,  1450. 

V.  Van  Gundy,  ^1623. 
Bower  v.  Hastings,  726. 

V.  Hoffman,  1701. 
Bowerbank  v.  Monteiro,  79,  517. 
Bowers  v.  Dierker,  1376. 

V.  Evans,  340e. 

V.  Hurd,  179. 

V.  Jewell,  1401,  1403. 

V.  Rineard,  1377. 

V.  Still,  1301. 

V.  Thomas,  849. 


TABLE   OF   CASES 


XXXIX 


References  are  to  paragraphs  marked  § 


Bowery  Bank  v.  Gerety,  1238,  1321. 

Bowes  V.  Howe,  1172. 

Bowie  I'.  Duvall,  576,  1197,  1229. 

V.  Hall,  62. 

t;.  Hume,    149,    150,    152,    999a, 
1092a. 
Bowker  v.  Childs,  1289a. 

V.  Haight  &  Freese  Co.,  1643. 
Bowles  V.  Elmore,   1293. 

V.    Lambert,    100. 
Bowlin  V.  Creel,  1352a.      • 
Bowling  I'.  Arthur,  341,  343. 

t;.   Chambers,    1339. 

V.  Harrison,  1005,  1007,  1013. 
Bowlley  v.  Kline,  383. 
Bowman  v.  First  Nat.  Bank,  334. 

t;.  Hiller,  675,  858. 

V.  McChesney,  88,  89,  604. 

V.  Metzgcr,  777,  795b. 

V.  Neely,  1513,  1514. 

V.  Xichol,  1401. 

t'.  St.  Louis  Times,  1227. 

I'.  Van  Kurcn,  824,  825a,  830. 

V.  Wood,  llSIu,  1192. 
Bowser  v.  Spiesshofcr,  815. 
Bowyer  t'.  Bampton,  673. 
Boyce  v.  Edwards,  551,  559,  560,  561, 
896,  917,  1797a,  1799. 

V.  Geyer,  799. 

V.  Tubb,  169.  172,  173. 
Boyd  I'.  Hunk  of  Toledo,  1103,  1104, 
1107. 

V.  Brothcrson,  1404. 

V.  City  Sav.  Bank,  1005. 

V.  Cleveland,    1093. 

r.  Cochrane,  196,  1316. 

V.  Corbitt,  1192,  1193. 

V.  Cummings,   831c. 

I'.  Emerson,  1621. 

V.  Hitchcock,  1265,  1267. 

t'.  Johnson,  263. 

i'.  McCann,  174a,  803. 

V.  Mclvor,  815. 

V.  Na.smith,  1601a. 

V.  Orton,  999a. 

V.  Parker,  834a. 

V.  Plumb,   365. 

V.  Vanderkemp,  802. 
Boyd's  Admrs.  v.  City  Sav.  Bank,  591, 

972,  1000,  1011. 
Boydell  v.  Harkness,  519,  642. 
Boyer  v.  Boogher,  713a. 

V.   Chandler,    1506. 
Boykin  v.  Bank,  3406,  340J,  698J. 

r.  Bank  of  Mobile,  76,  793a. 
Boylan  v.  Huguet,  1708a. 
Boyle  V.  Skinner,  363. 
Boylston  Nat.  Bank  v.  Richards,  1369. 
Boyman  v.  McChesney,  89. 
Boynton  v.  Pierce,  7i3c. 


Bozeman  v.  Rushing,  1966. 
Brabrook  i-.  Boston,  24a,  246. 
Brabston  v.  Gibson,  895. 
Bracken  v.  Griffen,  1534. 
Brackett  v.  Mountfort,  1392. 
Bracton  i-.  Willing,  532. 
Bradburg,  In  re,   188. 
Bradbury  v.  Davenport,  68. 

V.  Van  Pelt,  1221. 
Braden  v.  Lemnon,  1221. 
Bradford  t-.  Corey,  708a,  1099. 

V.  Fox,   1617,   1623. 

!'.   Prescott,  713a. 
Bradford    &    Carson   v.    Montgomery 

Furniture  Co.,  203. 
Bradford   Nat.   Bank  v.  Taylor,    142, 

694,  1376. 
Bradlaugh  v.  De  Rin,  867,  906. 
Hradlee  v.  Boston  Glass  Co.,  298,  300, 

401. 
Bradley  v.  Anderson,  81. 

V.  Andrus,  1587. 

V.  Ballard,  423. 

«■.  Brown,  714,  719. 

V.  Bush,  720a,  1290. 

V.  Carey,  17856. 

V.  Cassels,   700. 

V.  Davis,  979,  1003,  1019. 

V.  Delaplane,    1572. 

f.  Harrington,  1574. 

V.  Hunt,  24,  1672. 

r.  Lill,   54. 

I'.  Mann,  1373a. 

t'.  Marshall,  726a. 

V.  Northern  Bank,  588,  945,  947, 
964. 

V.  Phelps,  713c. 

V.  Pratt,  224,  226. 

V.  Root,  23. 
Bradley    Engineering,    etc.,    Co.,    v. 

Heyburn,   386,   790. 
Bradshaw  v.  Iledge,  962. 

V.  Van  Valkenburg,  197. 
Bradwell  v.  Pryor,  775. 
Brady  v.  Brady,  1227,  13.35,  1340. 

V.  Chandler,  36a. 

V.  The  Major,  318. 

V.  White,   1198. 
Brage  v.  Netter,  1290. 
Bragg  V.  Greenleaf,  1197. 
Braham  v.  Bubb,  41. 

V.  First  Nat.  Bank  of  Clarksville, 
62. 
Braid  v.  Cochran,  366. 
Brailsford  v.  Williams,  988,  990,  992, 

1054. 
Brainard  v.  Cappella,  186. 

«;.  Davis,  831a. 

V.  N.  Y.  C.  &  H.  R.  R.  Co.,  1487, 
1496. 


xl 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Brainard  v.  Reavis,  724a. 
Braithwait  v.  Gardner,  535. 
Braker  v.  The  Gloaming,  1741. 
Braley  v.  Buchanan,  9956. 
Braly  v.  Henry,  789. 
Braman  v.  Hawk,  1317. 

V.  Hess,  7G0,  766. 
Bramhall  v.  Beckett,  831a. 

V.  Van  Campen,  69. 
Branch  v.  Commissioners,  838. 

V.  Howard,  174. 

V.  National  Bank,  339,  698(/. 
Bran(!h  Bank  v.  Gafifrey,  996. 

V.  James,  1338. 

V.  Knox,  331. 

V.  Pierce,  1031. 

V.  Tillman,  1484. 
Branch  of  State  Bank  v.  McLeran,  592. 
Brancroft  v.  Halle,  1033. 
Brum  las  v.  Barnett,  3346. 
Brandenstein  v.  Ebensberger,  183. 
Brandler  v.  Bradley,  1321. 
Brandon  v.  Scott,  354. 
Brandt  v.  Bowlby,  17346. 

V.  Krank,    185. 

V.  Mickle,  1135. 
Brandt  Mercantile  Co.  v.  Lang,  1181a. 
Brannin  v.  Henderson,  512. 
Brannock  v.  Magoon,  174,  748a. 
Brannons  v.  Irons,  1312. 
Brannum  Lumber  Co.  v.  Pickard,  1377. 
Brant  v.  Barnett,  67a,  1294. 
Brantley  Co.  v.  Lee,  1260. 
Bratton  v.  Lowery,  248. 
Brauer  v.  Campania,  etc.,  Co.,  1739. 
Braxton  t'.  Braxton,  803,  804. 
Bray  v.  Bray,  1227. 

V.  Hadwen,  1043,  1044. 

V.  Manson,  1305. 

V.  Marsh,  1099. 
Braynard  v.  Fisher,  1436. 

V.  Marshall,  875,  881,  917. 
Brazleton  v.  McMurray,  132. 
Breckinridge  v.  Lewis,  775,  843,  844. 
Breckenridge  v.  Ralls,  56. 
Breed  v.  Cook,  1262,  1264. 

V.  Hillhouse,  1786. 
Brefogle  v.  Beckley,  1458. 
Breitengross  v.  Farr,  189. 
Breitung  v.  Lindauer,  1260. 
Breneman  v.  Furness,  717,  720a,  722. 

V.  Mayer,  775,  800. 
Brengle  v.  Bushey,  1328. 
Brennan  v.  Brennan,  1191,  1200. 

V.  Carl,  Vogt  &  Son,  627. 

V.  Merchants'  Bank,  1230,  1636. 

V.  Vogt  &  Son,  627,  945. 
Brenneke  v.  Smallman,  1317. 
Brent  v.  Bank  of  Washington,  1708c. 

V.  Ervin,  1478,  1481. 


Brent  r.  Miller,  305,  1731. 

Brent's  Exrs.  v.  Bank  of  Metropolis, 

635,  639. 
Bresee  v.  Crumpton,  51a,  729. 

v.  Stanly,  231. 
Bresthcnthal  v.  Williams,  35. 
Brett  V.  Marston,  1780. 
Brevoort  t'.  Huglios,  203. 
Brewer  t'.  Atkeison,  834. 

I'.  Bowersox,  680. 

V.  Boynton,  719. 

r.  Brewer,  36a. 
Brewing  Ass'n  v.  Klett,  201. 
Brewing  Co.  v.  Manaseo,  834. 
Brewster  v.  Arnold,  983. 

I'.  Baker,   183,   185. 

V.  Burnett,  1372a. 

V.  Doane,  1057. 

V.  Hobart,  277. 

t'.  McCardel,  85,  630. 

V.  Shradcr,  831a. 

V.  Silence,  1767,  1779. 

V.  Sime,  1730. 

V.  Syracuse,  1556. 

V.  Wakefield,  1458a. 

V.  Williams,  49. 
Brewton  r.  Spire,  1537. 
Breyfogle  v.  Addison,  726. 
Bricket  v.  Spalding,  649. 
Brickley  v.  Edwards,  93. 
Bricleback  v.  Wilkins,  162. 
Bridge  v.  Bachelder,  736,  1269. 
Bridge  Co.  v.  Savings  Bank,  1277a. 
Bridgeford  v.  Masonville  Co.,  1478. 
Bridgeport  v.  Housatonic  R.  Co.,  1523. 
Bridgeport  Bank  v.  Dyer,  465. 

r.  N.  Y.  R.  Co.,  1708(7. 
Bridgeport     City     Bank     v.     Empire 

Stone  Dressing  Co.,  386. 
Bridges  v.  Berry,  548,  971. 

V.  Hawkesworth,  1674. 
Briel  v.  Exchange  Nat.  Bank,  418. 
Briggs  I'.  Boyd,  792,  1190. 

V.  Briggs,  1429. 

V.  Cent.  Nat.  Bank,  333. 

V.  Downing,  67a. 

V.  Ewart,  851. 

V.  Hervey,  1051. 

V.  Holmes,  1623. 

V.  Latham,  867,  868,  876. 

V.  Norris,  13176. 
Brigham  v.  Peters,  299. 

V.  Potter,  204. 
Bright  V.  Judson,  896. 
Brighton   Market  Bank  v.  Philbrick, 

1121. 
Brill  V.  Crick,  153,  154. 

V.  Hoile,  1260. 

V.  Tuttle,  16a,  50. 
Brill  Co.  V.  Norton,  etc.,  St.  R.  Co.,  386. 


TABLE    OF   CASES 


xU 


References  «u"e  to  paragraphs  marked 


Brim  v.  Fleming,  1385. 
Brindley  i^.  Barr,  1012. 
Bringman  v.  Von  Glahn,  164. 
Brink  v.  Stratton,  205. 
Brinkley  v.  Bovd,  713d,  716. 

V.  Going,  576,  1227,  1229. 
Brinkman  v.  Hunter,  496,  560,  561. 
Briscoe  v.   Bank  of  Kentucky,   1715, 
1720. 

V.  Huff,  1215. 

V.  Kenealy,  1458a. 
Bri.sendine  v.  Nlartin,  1339. 
Bristol  V.  Sprague,  3696,  371,  375. 

V.  Warner,  161. 
Brifltol  Knife  Co.  v.  First  Nat.  Bank, 

1618a. 
Bristow  V.  Sequeville,  914. 
British  &  .\merican  Mtg.  Co.  v.  Bates, 

923. 
British  &  American  Mortgage  Co.  v. 
Smith,   782. 

V.  TibbalLs  1625. 
British  Columbia  Mill  Co.  v.  Neatle- 

ship,  1733. 
British  Linen  Co.  v.  Drummond,  884. 
Britt  V.  Lawson,  594. 
Brittain  v.  .\nderson,  800a. 

V.  Murphy,  1147. 
Britain    Dry   Goods   Co.   v.   Yearout, 

1770. 
Brittan  v.  Bank,  843. 
Britton  v.  Bishop,  724,  725. 

V.  Dierkcr,  1376. 

V.  Nicholls,  341,  640. 
Britton  &  Koontz  v.  Harvey  Co.,  834z. 
Broadfoot  v.  Fayetteville,  1491a. 
Broadway   Sav.    Bank   r.   Shumacker, 

1306',  1310. 
Broadway  Sav.  Inst.  t'.  Town  of  Pel- 
ham,  436,  440,  1520,  1533,  1540, 

1542,  1552. 
Broadway  Trust  Co.  v.  Manheim,  769a. 
Hrobston  v.  Penniman,  802. 
Hrocchus  v.  Morgan,  336. 
Brock  I'.  Thompvson,  766. 
Brockwav  v.  .\llen,  403. 

I'.  Am.  Ex.  Co.,  867. 

V.  Comparree,  704. 

V.  Gadsden    Klineral    Land    Co., 

fri3,  1215. 
t'.  Reynolds,  68. 
Broderick  v.  Andrews,  202. 
Brogess  Investment  Co.  v.  Vett,  775. 
Bromage  v.  Llovd,  64,  267. 
Brombridge  v.  Osborne,  1228. 
Bromley  v.  Com.  Nat.  Bank,  1620. 

V.  Hawley,  185,  775. 
Bromwick  i'.  Lloyd,  6. 
Bronaugh  v.  Scott,  1304. 
Bronson  v.  Alexander,  713<i. 


Bronson  t;.  Rhodes,  1247. 
Bronston's  Adm'r  v.  Lakes,  164. 
Brook  V.  Hook,  1352a. 

V.  Latimer,  81a. 

V.  Smith,  1421. 

i;.  Teague,  193,  770,  789,  810,  815. 

V.  Vannest,  831a,  899. 
Brooke  i-.  N.  Y.  &  L.  E.  R.  Co.,  1733a. 

V.  Struthers,  156,  835. 
Brooke,    Recr.,    r.    Tradesman's    Nat. 

Bank,   1642. 
Brookline  Nat.  Bank  v.  Moers,  739a. 
Brooklyn  Trust  Co.  v.  Toler,  135,  1608. 
Brookman  v.  Metcalf,  833,  1495. 
Brooknard  v.  Woodley,  1219. 
Brooks  V.  Bigelow,  333. 

V.  Boyd,  1458. 

f.  Day,  965. 

V.  Elgin,  1277. 

r.  Hanover  Nat.  Bank,  1714. 

V.  Hargreaves,  41. 

r.  Hatch,  Itia. 

r.  Hey,  791,  793. 

f.  Higby,  635. 

V.  Holt,  573,  812. 

V.  James,  573,  812. 

V.  Martin,  200,  859. 

V.  Mitchell,  606,  608. 

V.  Owen,  179. 

V.  Stackpole,  709. 

V.  Stuart,  1294. 

V.  Sullivan,  831a. 

V.  Wage,  183. 

t^.  White,  1289a. 
Brophy  Grocer>'  Co.  v.  Wilson,  783. 
Brotherton  v.  Street,  688c. 
Broughton  r.  Fuller,  1.390,  1401. 

V.  M.  &  S.  Water  Works,  377,  380. 

V.  West,  1390. 
Brougton  Bros.  v.  Summer,  366. 
Brouwer  f.  Appleby,  395. 
Brower  v.  Carpenter,  13176. 

r.  Peabody,  1750a. 
Brown  Ex  parte,  680. 

Matter  of,  io80,  1617a,  1620,  1638, 

1649. 
V.  Ambler,  550. 
r.  Baker,  303. 

r.  Bank  of  Abingdon,  1014. 
t'.  Barber,  62. 
r.  Barrv',  930. 
V.  Brown,  1181a. 
V.  Butchers'  Bank,  74,  688a. 
V.  Butler,  715. 
V.  Callaway,  832a. 
V.  Chancellor,  617. 
V.  Citizens'  State  Bank,  68. 
V.  Citv  of  Newburyport,  420. 
V.  Claxk,  373. 


xlii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Brown  v.  Cow  Creek  Sheep  Co.,  1646, 

1651. 
V.  Crofton,  970,  1085. 
V.  Croy,  1306. 
V.  Curtis,  1763,  1779,  1786. 
V.  Darrah,  728. 
V.  Davies,  1505. 
V.  De  Winton,  130. 
V.  Dickinson,  684,  701a. 
V.  Donnell,  290. 
V.  Dunbar,  986. 
«;.  Foldwert,  769a,  1398. 
V.  Ferguson,   9,   972,   995a,    1045, 

1172. 
V.  Finley,  194. 
t>.  First  Nat.  Bank,  1,  859,  1311, 

1404. 
t;.  Fisher,  663. 

V.  Flocrsheim  Mercantile  Co.,  1731. 
V.  Fowler,  1326. 
V.  Gardner,  923. 
V.  Gates,  865. 

V.  Gilman,  102,  1274,  1281. 
V.  Harraden,  616,  617. 
V.  Hoffelmeyer,  796,  850. 
V.  Hull,   81,   90a,   644,   669,    724, 

728,  1095,  1095a. 
V.  Ingalls  Tp.,  1537. 
V.  Jackson,  698. 
V.  James,  205,  7816. 
V.  Johnson  Bros.,  161,  164,  1181a. 
V.  Jones,  644,  936,  979,  1385. 
V.  Jordhal,  32. 
V.  Kinsey,  195. 
V.  Kirk,  1316. 
V.  Lacy,  1251. 
V.  Ladd,  183. 
V.  Langley,  81. 
V.  Leavitt,  183a,  831c,  832. 
V.  Leckie,  1626,  1627,  1628,  1637. 
V.  Lusk,  1569,  1595. 
V.  Maffey,  1077,  1083. 
V.  Mechanics   &    Traders'    Bank, 

1165. 
V.  M'Dermott,  588. 
V.  Melrose,  422a. 
V.  Messiter,  1473,  1475. 
V.  Missouri,  K.  &  T.  Ry.  Co.,  1729. 
V.  Montgomery,  1269. 
V.  Mott,  181,  726,  766. 
V.  Olmsted,  1260. 
V.  Parker,  294,  304. 
V.  Penfield,  11926. 
V.  People's  Bank,  671. 
V.  Pergain,  199a. 
V.  Phillpot,  166. 
V.  Powell,  1729a. 
V.  Reed,  1405,  1409. 
V.  Roberts,  203. 
V.  Rouse,  273,  279. 


Brown  v.  Schintz,  1590. 

V.  Shelby,  1260. 

V.  Smedley,  81«,  189,  724a. 

V.  Spofford,  80,  81,  719,  769a,  812. 

V.  Spohr,  184. 

V.  Straw,  1376,  1395. 

V.  Summers,  730. 

I'.  Taylor,  575. 

I'.  Todrell,  210. 

V.  Turner,  592,  725a,  999. 

V.  Van  Bruum,  1438. 

V.  Vosson,  4,5a,  53. 

V.  Ward,  833. 

V.  Weldon,  176,  203. 

V.  Whittington,  1223. 

V.  Wilcox,  674. 

V.  Wiley,  80. 

V.  Wilson,  316,  928. 

V.  Wintcrjiort,  422a. 
Brown  Carriage  Co.  v.  Dowd,  189. 
Browne  r.  Cuit,  513. 

V.  Fidelity  &  Deposi^  Co.,  680. 
Brownell  v.  Bonney,  1047. 

V.  Winnie,  13SS. 
Browning  v.  Kinnear,  1117,  1120. 

V.  Merritt,    7l3d. 

V.  Porter,  1343. 
Brownlec  v.  .\rnold,  835. 
Brown's  Admr.  r.  Garland,  1433. 
Brown's  Rstate,  In  re,  1417. 
Bruce  i'.  Bruce,  672. 

V.  Burr,  739a. 

V.  Lord,  412. 

V.  Lytic,  1104,  1144,  1157. 

V.  Wescott,  1395. 

I'.  Wright,  717,  722. 
Bruck  I'.  Smith,  673. 
Brueggestradt  v.  Ludwig,  177. 
Bruen  v.  Marquand,  1321. 
Brumah  v.  Roberts,  358a. 
Brumback  v.  German  Nat.  Bank,  854. 
Brummagin  v.  Tallant,  1703,  1707. 
Brummel   v.   Enders,    145,    146,    175, 

752. 
Brunsen  v.  Napier,  1135. 
Bnmswick  v.  Boutelle,  305. 
Brush  V.  Barrett,  1596. 

V.  Reeves,  663a. 

V.  Scribner,  775,  832. 
Brust  V.  Barrett,  1589. 
Brutt  V.  Piccard,  1403. 
Bruyn  v.  Receiver,  1691. 

V.  Russell,  163,  164. 
Bryam  t'.  Hunter,  1162. 
Bryan  v.  Berry,  276. 

V.  Duflf,  81c. 

V.  Primm,  725a. 

V.  Wilcox,  1104. 

V.  Windsor,  717. 
Bryans  v.  Nix,  1733. 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


xliii 


Bryant  v.  Christie,  194. 

V.  Damariscotta  Bank,  1685. 
V.  Edson,  634,  908. 
V.  La  Banque,  280. 

V.  Lord,  1092. ^ 

V.  Merchants'  Bank,  1092,  1094. 
V.  Vix,  834. 
Bryden  v.  Taylor,  945. 
Brynjolfson  v.  Osthus,  573. 
Bryon  i'.  Carter,  1708d. 
Bryson  v.  Lucjia,  305,  307. 
Buchanan  v.  Drovers'  Nat.  Bank,  JOU, 
868. 
V.  Findley,  790. 
V.  Kimcs,  1281'^. 
1-.  Litchfield,  1537,  1538. 
V.  Marshall,  1096. 
t;.  Sav.  In.st.,  371a,  372,  832,  832a. 
V.  Wren,  775,  795b,  797,  812. 
Bucher  V.  Jarratt,  1483. 
Buck  V.  Bank  of  State  of  Ga.,  1312, 
1336. 
V.  Harri.s,  54,  54a. 
V.  Kent,  1227,  1483. 
V.  Merrick,  407. 
V.  StefTey,  201,  1312. 
V.  Troy  Aqueduct  Co.,  241,  388, 

1191. 
V.  Wood,  205.  835a,  1351,  1352. 
Buckalew  v.  Smith,  1316.    ^     ^  ^     , 
Buckeye  Saw  Mfg.  Co.  v.  Rutherford, 

777. 
Buckhouse  v.  Selden,  880. 
Buckinfcham's  .Vppeal,  24a. 
Bucklen  V.  Hubl),  1397. 

V.  lIutT,  1373a. 
Buckley  V.  Beardsley,  1764. 
V.  Bri^.-^,  382,  384. 
Ex  parte,  1613. 
V.  Jackson,  6986. 
V.  Seymour,  583. 
Buckner  v.  Finley,  9. 
V.  Jones,  775. 
V.  Lee,  357,  363. 
r.  Savre,  IS. 
Buehler  v.  McCormick,  729. 
Bucttner  i'.   Stcinbrecher   &    Hertzler, 

S-'i".  ^59.  ,^.   .  XT  * 

Buffalo  German  Ins.  Co.  v.  Third  Nat. 

Bank,  1708a,  1708f. 
Buffalo  Nat.  Bank  v.  Sharpe,  249. 
Buffington  v.  Curtb^,  1743. 
Buffum  V.  Chadwick,  415. 
Buggf.  Holt,  204. 
Bugh  V.  Crum,  1317. 
Buhrman  v.  BaylL>^,  832. 
Building  .\s.sn.  v.  Lt>eds,  710. 
Bulger  V.  Gleason,  13526. 

V.  Roche,  884. 
Bulkley  v.  Butler,  142. 


Bull  V.  Bank  of  Kasson,  56,  67,  611, 
783,  1248,  1567,  1570,  1587, 
1590,  1595a,  1634. 
V.  Latimer,  1190. 
V.  Mitchell,  1227. 
V.  Read,  1557. 
V.  Sims,  429,  433. 
Bullard  v.  Bell,  lOa,  1672,  1683. 
i^.  Randall,  1611a,  1636. 
1-.  Smith,  62,  164,  183. 
V.  Thompson,  877,  923. 
I'.  Wilson,  1056. 
BuUer  v.  Crips,  5,  6,  32. 

t;.  Heane,  1711. 
BuUett  t;.  Bank  of  Penna.,  1478,  14/9, 

1695. 
Bullfin  V.  Clarke,  247. 
Bullock  r.  Lloyd,  1205. 

V.  Taylor,  62. 
Bumm  V.  Commercial  Bank,  1319. 
Bumpa^s  v.  Taggart,  122,  126. 

V.  Timms,  65. 
Bunch  f.  Fluvanna  Co.,  1531,  1555a. 
Bundrant  v.  Boyce,  156. 
Bundv  I'.  Jack.son,  139. 

V.  Town  of  Monticello,  1612a. 
Bunker  v.  Barron,  1260. 
t;.  Langs,  669,  1221. 
V.  O.sborn,  703,  7();ia. 
Bunn  V.  Commercial  Bank,  1319. 

V.  Grav,  196. 
Bunney  r.  Voyntz,  1279a,  1280. 
Bunting  v.  Camden  R.  Co.,  1500. 

V.  Mick,  819. 
Bunzell  V.  Maafl  &  Schwarz,  770,  ni, 

790,  814. 
Burbank  v.  Beach,  951. 

V.  Posey,  403. 
Burbridge    v.    Manners,    1036,    1037, 

1233,  1235,  123.5a. 
Burch  V.  Daniel,  llSla,  1395. 

V.  Tebbutt,  1252. 
Burchard  v.  Frazer,  1267. 
Burchell  i'.  Slocock,  104. 
Burchett  v.  Fink,  181,  780. 
Burchfield  v.  Moore,  1378,  1379. 
Burden  v.  Southerland,  148. 
Burdick  v.  Green,  1260. 
Burge  V.  Dishman,  81. 

t;.  Duden,  1339. 

Burgess  v.  Chapin,  738. 

V.  Dewey,  1317. 

V.  Merrill,  238. 

i;  Northern    Bank   of   Kentucky, 

1358. 
t;.  Vreeland,  983,  985,  1039   1041. 
Burgettstown  Nat.  Bank  v.  Hill,  1147. 
Burgh  V.  Legge,  1107. 
Burgin  v.  Smith,  422. 
Burhana  i'.  Hutcheson,  8346. 


xliv 


TABLE   OP  CASES 
References  are  to  paragraphs  marked  § 


Rurk  V.  Gray,  1281. 
Burke  v.  Allen,  682. 

V.  Bishop,  24,  26,  16186. 

V.  Buck,  807. 

V.  Dulaney,  68a,  Slo. 

V.  McKay,   586,   926,   928,  934a, 

991. 
V.  Napier,  174. 

V.  Utah  Nat.  Bank,  503,  509. 
V.  Wilbur,  365. 
Burkhaltcr  v.  Perry  &  Brown,  303,  305. 
Burkhain  v.  Trowbridge,  983. 
Burkhaus  v.  Ilutcheson,  834. 
Burkhokler  v.  Farmers'  Bank,  203. 
Burleigh  v.  Stott,  12156. 
Burlingame  v.  Brewster,  403,  1399. 

V.  Foster,  1024. 
Burlington  Township  v.  Beasley,  1522. 
Burmesterr.  Barron,  1023,  1029a,  1030. 

V.  Hogarth,  (jij'.ia. 
Burnett  t'.  Ilawpe,  249. 
Burney  v.  Ball,  24/*. 
Burnham  v.  Allen,  86a,  164. 
V.  Barth,  340(',  1612a. 
V.  Gosnell,  17.57. 
V.  Merchants'  Bank,  831c. 
V.  Webster,  1096,  1099. 
V.  Wood,  728. 

V.  W.  S.  McCormick,  etc.,  605. 
Burnham-Hanna-Munger   Dry   Goods 

Co.  V.  Carter,  241. 
Burnley  v.  Tufts,  52. 
Burns  v.  Kahn,  1578,  1651. 
ti.  Moore,  69. 
V.  Scott,  80,  174a. 
I'.  True,  1230,  1233. 
V.  Weesner,  203,  204. 
V.  Yocum,  1091,  1590. 
Burr  V.  Smith,  1222. 
Burrall  v.  Bushwick  R.  Co.,  1708g. 
Burrill  v.  Grossman,  1738. 
V.  Parsons,  769a. 
V.  Smith,  674  675,  1112,  1113. 
Burroughs  i'.  Bank  of  Charlotte,  1683. 
V.  Moss,    254,    686,    1184,    1430, 

1436. 
V.  Ploof,  832. 

V.  Tradesman's  Nat.  Bank,  1642. 
Burrow  v.  Zapp,  1788. 
Burrows  i'.  Hanegan,  1135,  1180. 
V.  Jemimo,  872. 
V.  Keays,  748a. 
V.  Million,  1480. 
V.  State,  1623. 

V.  Western  Union  Tel.  Co.,  1663. 
Burrus  v.  Cook,  1342. 

V.  Davis,  185,  1316. 
Burson  v.  Huntington,  122,  838. 
Burt  V.  Horner,  1769a. 
V.  Walker,  112. 


Burton  v.  Bridgeport,  24. 
V.  Brooks,  57. 
r.  Curyoa,  1748. 
t'.  Dewey,  1769. 
V.  Payne,  1483,  1649. 
.;.  Slaughter,  264,  1223,  1342. 
Burton's  Appeal,  1708ff. 
Bury  t'.  Woods,  3346. 
Buse  V.  First  State  Bank,  1233. 
Bush  V.  Abraham,  1623. 
V.  Baldrey,  1249. 
t;.  Brandecker,  1227. 
V.  Brown,  857. 

V.  Export  Storage  Co.,  1713a. 
t'.  Foote,  16a. 
V.  Groomes,  7956. 
t'.  Litchfield,  1543a. 
V.  Livingston,  760. 
V.  Peckard,  832. 
Bushnell  v.  Kennedy,  10a,  729. 

V.  Loomis,  177. 
Bushong  t'.  Taylor,  271. 
Bushworth  v.  Moore,  903. 
Bussard  v.  Levering,  627,  1005,  1021, 

1043,  1051. 
Bussy  V.  Whitaker,  112. 
Butcher  v.  Carlisle,  55. 
V.  Churchill,  1342. 
Butler  V.  Carns,  849. 
V.  Dubois,  444. 

r.  Dunham,  1523,  1524,  1536a. 
V.  Duval,  992,  995a. 
V.  Gambs,  1311. 
V.  Horwitz,  1247. 
V.  Jovce,  1484. 
V.  Kimball,  1210. 
V.  Mitchell,  725,  1436. 
V.  Munson,  725a. 
V.  Paine,  56. 
V.  Prentiss,  567. 
t'.  Stocking,  367. 
f.  Webb,  1057. 
Butterfield  t^.  Davenport,  90,  857. 

V.  Town  of  Ont.,  803. 
Buttler  V.  Play,  939. 
Button  V.  Belding,  83. 

V.  Trader,  800a. 
Buttrick  Lumber  Co.  v.  Collins,  51. 
Butts  V.  Dean,  1267. 
Buxton  V.  Jones,  590. 
Buzzell  V.  Tobin,  7816,  838. 
Buzzini  &  Co.,  In  re,  970,  1090. 
Byars  v.  Doore,  306. 
Byers  v.  Harris,  314,  1316. 

V.  The   Bellamy   Price  Inv.   Co., 

693. 
V.  Trich,  713a,  1417. 
Bynum  v.  Apperson,  1060,  1070,  1118, 
1119. 
V.  Hobbs,  576. 


TABLE   OF   CASES 


xlv 


References  are  to  paragraphs  marked  § 


BjTium  V.  Rogers,  764. 
Byram  v.  Hunter,  1162. 
Byrd  v.  Campbell  Printing  Press  Mfg. 
Co.,  203. 

V.  Holloway,  263. 
Byrd  Printing  Co.  v.  Whitaker  Paper 

Co.,  1566. 
Byrom  v.  Thompson,  1395. 


Cabbell  i-.  Knote,  834. 
Cabot  Bank  v.  Morton,  731,  7316,  740a, 
1358. 

V.  Russell,  1024. 

V.  Warner,  1003,  1005. 
Cadillac  v.  Sav.  Bank,  1531,  1537. 
Cadwalader  v.  Hartley,  800a. 
Cadwallader  v.  Hirehfield,  710. 
Cady  t;.  Bradsluuv,  1103,  1106. 

t^.  Nat.  Bank,  326c. 

V.  Shepard,  TOO,  704,  713d. 
Cagle  V.  Lane,  Mo,  769a. 
Cahal  t'.  Kriirsoii,  704. 
Cahill  Iron  Worka  r.  Pemberton,  1759, 

1764. 
Cahn   V.   Pochetts,    etc.,    Co.,    1734a, 

1749. 
Cahokia  School  Trustees  v.    Rauten- 

burg,  443a. 
Cahoun  i-.  Moore,  265. 
Cairo  I'.  Zane,  1497,  1513,  1537. 
Cake  V.  Pott.sville  Bank,  719. 
Calder  v.  Provan,  187a. 
Calderon    v.     Atlas    Steamship    Co., 

1741. 
Caldwell  V.  Ball,  1737. 

V.  Ca.sHiday,  643,  645,  1685. 

V.  Diinuskes,  725. 

V.  Evan.s,  326. 

V.  Hall,  812,  1260. 

V.  Hurley,  1340. 

V.  LawTvnce,  1181a. 

V.  Niush,  241. 
Calendar  Sav.  Bank  r.  Loos,  857. 
Calfee  v.  Burge.s^s,  170. 
Calhoun  i-.  Albin,  727. 

V.  Calhoun,  172. 

V.  Davis,  81. 
CaUfomia   Nat.   Bank  v.  Ginty,  205, 
12.50,  1316. 

I'.  Weldon,  1586. 
Callahan  v.  Crow,  67,  68a,  181,  777, 
782 

V.  Kentucky    Bank,    669a,    1002, 
1227. 
Callanan  v.  Williams,  643. 
Callawav  Count  v  v.  Foster,  1524. 
Callendar  v.  Callender,  179. 

V.  Kirkpatrick,  1387. 


CallLster,  Matter  of,  1623. 

Callow  V.  LawTence,  1198,  1237,  1241, 

1242. 
Calvert  v.  Williams,  207. 
Calvert  Bank  v.  J.  Katz  &  Co.,  357. 
Calvin  v.  Free,  181. 

V.  Sterrett,  205,  741. 
Camas  Prairie  State  Bank  v.  Newman, 

366,  1641,  1646. 
Cambidge  v.  AUenby,  452. 
Camden  v.  Doremus,  661,  1769a. 

V.  M'Coy,  707a,  710,  713c,  1757. 

V.  Mulen,  250. 
Cameron  v.  Thompkins,  182. 
Camidge  i-.   Allenby,  7316,   736,   740, 

1262,  1264,  1078,  1679,  1679a. 
Cammer  v.  Harrison,  617,  1211. 
Camp  V.  Bates,  1048. 

V.  First  Nat.  Bank,  1199. 

V.  First  Nat.  Bank  of  Ocala,  713a. 

V.  Knox  County,  427. 

V.  Rundle,  918. 

t;.  Southern  Banking  Co.,  3696. 

V.  Sturdevant,  805. 
Campbell  r.  Alfonl,  1731. 

V.  Allen,  1222. 

t;.  Baldwin,  1281. 

V.  Brown,  758c. 

V.  Butler,  713<i. 

V.  Collins,  1226. 

t'.  Equitable    Securities    Co.,    43, 
1227,  1230. 

V.  Fourth    Nat.    Bank,   812,   819, 
831a,  S.32. 

V.  P>ench,  610,  932. 

V.  Hanney,  1623. 

V.  Hodgson,  81. 

V.  Hoff,  815. 

V.  Huffines,  366. 

V.  Hughes,  1338, 

V.  Humphreys,  1229. 

V.  Jones,  197,  198,  199. 

t'.  Kenosha,     1523,     1525,     1560, 
1.561. 

I'.  Knapp,  1759. 

V.  McCormack,  164. 

V.  MLss.  Union  Bank,  1671. 

V.  Morgan,  1342. 

V.  Nichols,  861,  868,  917. 

t;.  Patton,  166. 

V.  Pettengill,  513,  1077,  1082. 

t'.  Robins,  719. 

r.  Sloan,  207. 

V.  Tate,  1338. 

V.  Upshaw,  80. 

V.  Webster,  1158. 

V.  Weister,  56. 

I'.  Wilcox,  124,  125. 
Campbell,   etc.,   Mfg.  Co.  v.  Reoder, 

834,  1221. 


xlvi 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Campbell  Press  Co.  v.  Jones,  1458. 
Campion  v.  Colvin,  1729. 
Camp's  Appeal,  24,  24a. 
Can  V.  Read,  1615. 
Canaan  v.  Bryce,  200. 
Canadian  Bank  of  Commerce  v.  John  J. 
Sesnon  Co.,  832a. 

V.  Northwood,  1322. 
Canadian,  etc.,  Mortgage  &  Tr.  Co.  v. 

Keyser.  145Sa. 
Canady,  Gillium  &  Key  v.  Webb,  161. 
Canajoharie  Nat.  Bank  i'.  Diefendorf, 

775,  779,  815,  819. 
Canal  Bank  v.  Bank  of  Albany,  349a, 

533,  538,  1361,  1362,  1364,  1372, 

1663. 
Canham  v.  Piano  Mfg.  Co.,  203. 
Cannun  v.  Bryce,  200. 

V.  Farmer,  243. 
Canney  v.  Corey,  176. 
Cannon  v.  Canfield,  779a. 

V.  Gibbs,  1787. 

V.  Grigsby,  1401. 

V.  Lindsay,  849a. 

V.  Moore,  777,  850. 
Canon  v.  Farmers'  Bank  of  Cook,  775, 

777. 
Canterbury  i'.  Bank  of  Sparta,  67. 
Canton,  etc.,  Assn.  v.  Weber,  1198. 
Cape  Fear  Bank  v.  Steinmetz,  960. 
Caphart  v.  Dodd,  406. 
Capital  City  Brick  Co.  v.  Jackson,  795c. 
Capital  City  Ins.  Co.  v.  Quinn,  632, 

751. 
Capital  Co.  v.  Merriam,  1221. 
Capital  Nat.  Bank  v.  Am.  Exchange 
Bank,  627. 

V.  Robinson,  1221. 
Capital   Sav.   Bank   &   Trust   Co.    v. 
Montpelier     Sav.     Bank     & 
Trust  Co.,  775,  815. 

V.  Swan,  407. 
Capp  V.  Lancaster,  1685. 
Capps  V.  Gorham,  725a. 
Capron  v.  Capron,  43. 
Capwell  V.  Machon,  724,  1222. 
Caras  v.  Thalmann,  879. 
Card  V.  Miller,  1387,  1388. 
Cardell  v.  McNeil,  739a,  1763. 
Cardwell  v.  Allen,  995,  1090,  1151. 
Caren  v.  Liebovitz,  203. 
Carey  v.  Green,  1694. 

V.  McDougal,  1703. 

V.  Miller,  849a. 
Cariss  v.  Tattersall,  1395, 1401, 1402. 
Carlisle  v.  Chambers,  902. 
V.  Hill,  753. 
V.  Hooks,  514. 
V.  Wishart,  832. 
Carlisle  Deposit  Bank  v.  Rheem,  1037. 


Carlon  v.  Kenealy,  48. 
Carlton  v.  Bailey,  204,  783. 

V.  Ireland,  1585a. 

t'.  Reed,  1378. 

V.  Smith,  724a,  741,  1227. 

I'.  White,  571. 

V.  Woods,  204. 
Carlton  Steamship  Co.  v.  Castle,  etc., 

Co.,  1738. 
Carman  v.  Garrison,  1431. 
Carmichael  v.  Bank  of  Penn.,  454,  462, 

1100. 
Camahan  v.  Lloyd,  573,  812. 
Came  v.  Brigham,  382. 
Carnegie  v.  Morrison,  560,  897. 
Camer  v.  Cameron,  369. 
Carnwright  v.  Gray,  46,  162,  163. 
Carolina   Locust   Pin   &    Mica  Co.  v. 

Chattanooga  Machinery  Co.,  576. 
Carolina  Nat.  Bank  v.  Wallace,  1000, 

1003,  1013,  1175. 
Carolina  Sav.   Bank  v.   Florence  To- 
bacco Co.,  710. 
Carpenter  i'.  Farnsworth,  103. 

t;.  Hoadley,  832. 

V.  Longan,  834,  834a. 

V.  McClure,  194. 

V.  McLaughlin,  716,  1215a. 

V.  Murphee,  1290. 

V.  National  Bank  of  the  Republic, 
831a. 

t'.  Northborough  Nat.  Bank,  1369, 
1657. 

t'.  Oaks,  713a. 

V.  Page,  186. 

V.  Reynolds,  1095a. 

t'.  Snelling,  122. 

V.  Thompson,  1753,  1760,  1779. 
Carr  v.  Eastabroke,  1286. 

V.  Howard,  1339. 

t;.  Jones,  81c,  1227. 

V.  LeFevre,  1496.  1509. 

V.  Nat.  Sec.  Bank,  1606a,  1636. 

V.  Rowland,  7136. 

V.  Shaw,  903. 
Carraway  v.  Odenhall,  1317b. 
Carrie  v.  Child,  112. 
Carrington  v.  T\rmer,  1221. 

V.  Waff,  81a,  81c. 
Carrol  f;.  Peters,  726. 
Carroll  v.  Bank,  3345,  336. 

V.  Hayward,  775. 

V.  Hutchinson,  80. 

V.  Nodine,  700. 

V.  Sweet,  1587,  1590,  1596. 

V.  Warren,  1395. 

t;.  Weld,  713c. 
Carroll  Bank  v.  First  Nat.  Bank,  1643. 
Carrollton  Bank  v.  Tayleur,  550,  560. 
Carroway  t>.  Odeneal,  1289. 


TABLE   OF   CASES 


xlvii 


References  are  to  paragraphs  marked  § 


Carruth  v.  Walker,  664. 
Carruthers  v.  West,  726,  786. 
Carson  v.  Bank  of  Alabama,  1015. 

V.  Bank  of  State,  1056. 

V.  Porter,  815. 

V.  Russell,  454,  481. 
Carson,  Pirie,  Scott  &  Co.  v.  Fincher, 

328a,  1587,  1596. 
Carstairs,  Ex  parte,  1322. 

V.  Rolleston,  1334. 
Cartan  &  Jeffrey  v.  Wm.  Thackberry 

Co.,  1623. 
Carter  v.  Bradley,  979a,  980. 

V.  Brown,  581. 

V.  Burley,  9,  10-53,  928,  945,  946, 
947,  1039,  1045. 

t;.  Dickson,  248. 

V.  Flower,   465,  475,    1047,  1083, 
1084,  1113a,  1170. 

V.  Grecnhow,  448. 

V.  Hamilton,  81. 

V.  Long,  1297. 

V.  Martin,  1612a. 

V.  Mitchell,  359. 

V.  Moulton,  67. 

V.  Odom,  185,  793a,  971.  1005. 

V.  Penn,  56. 

V.  Saunders,  262,  263. 

V.  Sprague,  693,  1147. 

t'.  Steele,  357. 

V.  The  Mascotte,  1742. 

V.  Thomas,  262. 

V.  Union   Bunk,  9,  586,  657,  909, 
926,  936,  1023. 

t'.  Whalley,  369a. 

V.  Zenblin,  1290. 
Carter-Battle   Grocer   Co.   v.   Clarke, 

1321. 
Carthage  Nat.  Bank  f.  Butterbaugh, 

1219. 
CartwTight  v.  Williams,  664a,  1335a. 

I'.  Wilmerding,  1731a,  1734a,  1747, 
1750,  1750a. 
Caruthers  v.  West,  786. 
Carver  v.  Forrey,  1227. 

V.  Hayes,  38. 

V.  Steele,  1326. 
Carvick  v.  Vicker>',  684. 
Carville  v.  Crane,  569. 
Carv  V.  White,  1328. 
CasDorne  v.  Button,  39. 
Casco  Bank  i'.  Keene,  1351,  1352a. 
Casco  Nat.  Bank  v.  Clark,  262. 

V.  Shaw,  1022,  1054. 
Case  V.  Beyer,  68a. 

V.  Burt,  492. 

V.  Espenschied,  242,  254. 

V.  Henderson,  1637. 

V.  Hawkins,  1311. 

V.  Morris,  1586. 


Case  t'.  Smith,  196. 

V.  Spaulding,  720a. 
Case  Threshing  Mach.  Co.  v.  Barnes, 
68a. 

V.  Hall,  795&. 

V.  Peterson,  1417. 
Cash  t;.  Kennon,  916,  1454. 

V.  Taylor,  297. 
Cashman  v.  Harrison,    80,    81a,    1073, 
1081. 

V.  Haynes,  53. 
Cason  t;.  Grant  County  Deposit  Bank, 

1405. 
Cass  I'.  Dillon,  1524. 
Cass  County  t;.  Gillett,  800a,  1524, 

V.  Johnson,  1535a. 
Cass  County  Bank  v.  Bricker,  196a. 
Cas-sebeer  v.  Kalbfleisch,  752. 
Cassel  V.  Dows,  550,  560,  561. 

I'.  Regierer,  1037. 
Cassidy  r.  First  Nat.  Bank,  1703. 

V.  Krearaer,  1033. 
Castle  V.  Belfast  Foundry  Co.,  400. 

f.  Com  E.xch.  Bank,  339,  344. 

V.  Ix)gan,  156. 

V.  Rickley,  1257,  1754. 
Casto  V.  Evinger,  1181a,  1373,  1398. 
Castor  V.  Peterson,  93,  227,  242. 
Castrique  t;.  Battigieg,  717. 

V.  Bernabo,  1212. 
Gate  V.  Patterson,  1702,  1703,  1707. 
Gates  V.  Thaver,  1312,  1319. 
Cathcart  v.  Gibson,  1147. 
Catlin  r.  Gunter,  751. 
Caton  I'.  I^nox,  5. 

V.  Shaw,  1785b. 
Gator,  In  re,  1311. 
Catskill  Bank  v.  Stall,  368,  488. 
Catterlin  r.  Lusk,  193,  203. 
Gatton  V.  Simpson,  1387. 
Cattron  v.  First  Univerealist  Society, 

381,  387. 
Caudle  v.  Ford,  81ft. 
Caulkins  r.  Whisler,  845,  846. 
Gaunt  t-.  Thompson,  972,  985,   1087, 

1175. 
Causey  v.  Snow,  606,  812. 
Gavallaro  v.  Texas  &  Pacific  Ry.  Co., 

1728,  1750. 
Cavaness  v.  Ross,  1289. 
Cavazos  v.  Trevins,  712. 
Gavenah  v.  Somerville,  725a. 
Gaverick  v.  Vickery,  701a. 
Caviness  v.  Rushton,  36. 
Gawein  v.  Browinski,  1590. 
Cayuga  Bank  v.  Daniels,  17346. 

V.  Warden,  979. 
Cayuga    County    Bank    v.    Bennett, 
1000. 

V.  Dill,  1106,  1107. 


xlviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Cayuga  County  Bank  «-.   Hunt,  464a, 

592,  593,  602,  787a,  940,  951, 1038. 

V.  Warden,  978,  979a,  980. 
Cayuga  Nat.  Bank  v.  Dunkin,  713a. 

V.  Purdy,  62. 
Cazet  V.  Field,  199. 

V.  Kirk,  54a. 
Cecil  V.  Hicks,  1458a. 

V.  Mix,  713. 
Cecil  Bank  v.  Farmers'  Bank,  336. 

V.  Heald,  831a,  1652. 
Cedar  County  v.  Jenal,  1245. 
Cedar  Falls  Co.  v.  Wallace,  1075. 
Cedar  Rapids  Bank  v.  Hendrie,  183. 
Cedar  Rapids  Nat.  Bank  v.  Beckham, 
1219. 

V.  Mottle,  1405. 

V.  Myhre  Bros., "815. 

V.  Rhodes,  850. 
Cellers  v.  Meachem,  1312. 
Centourier  v.  Hastie,  314. 
Central  Bank,  Ex  parte,  369a. 

i>.  Allen,  615,  1119,  1145. 

t;.  Davis,  694,  1109. 

V.  Hammett,  78b,  753a,  769a,  7816. 

V.  Theim,  326a,  1425. 
Central  Banking  &  Trust  Co.  v.  Pusey, 

1294. 
Central  City  Bank  v.  Rice,  664a. 
Central  Investment  Co.  r.  Miles,  1769. 
Central  Nat.  Bank  v.  Adams,  1115. 

V.  Charlottesville,  32a. 

t;.  Connecticut     Mut.     Ins.     Co., 
1612a,  1638. 

V.  Cooper,  879. 

V.  Copp,  205,  316. 

V.  Frye,  365. 

V.  North  River  Bank,  1652. 

V.  Pipkin,  796. 

V.  Stoddard,  643,  1051. 
Central    Nat.    Bank   of    Brooklyn    v. 

Hammett,  812. 
Central  R.  Co.  v.  First  Nat.  Bank  of 

Lynchburg,  336. 
Central  Sav.  Bank  v.  Mead,  365. 

t'.  O'Connor,  81,  203. 

V.  Richards,  496,  551a. 

V.  Shine,  1785&. 
Central  Trust  Co.  v.  Burton,  751,  895. 

V.  N.  Y.  Equipment  Co.,  156,  834, 
1343. 
Central  Univ.  of  Ky.  v.  Walters'  Ex'rs, 

203. 
Chaddock  v.  Van  Ness,  710,  715,  717, 

720a,  721,  1093. 
Chadsey  v.  McCreery,  415. 
Chadwell,  Admr.,  v.  Chadwell,  74. 
Chadwick  v.  Allen,  99,  102. 

V.  Eastman,  1414. 

V.  Kirkman,  819. 


Chadwick  v.  Menard,  1317. 
Chaffee  t-.  Middlesex  R.  Co.,  1490a. 
Chafoin  v.  Rich,  643. 
Challi-sr.  McCrum,  670,  731,  733. 
Challoner  i'.  Boyington,  71,  1264. 
Challmers  v.  Lanier,  803. 

V.  Lanion,  726^1. 

V.  McMurdo,  703,  704. 
Chamberlain  v.  Gorham,  163. 

V.  Hewson,  243. 

I'.  McClurp,  1352/;. 

I.  Pacific  W.  G.  Co.,  403. 

v.  Townsend,  862. 

t'.  Walker,  354. 

V.  Young,  27. 
Chamberlain  Bkg.  House  v.  Noble,  845 

V.  Woolsey,  1266. 
Chamberlin  v.  White,  1289a. 
Chambers  v.  Custer  County,  1590. 

f.  Davidson,  1279a. 

V.  George,  1245. 

V.  Hill,  466,  472. 

V.  Hubbard  &  Co.,  1713. 
Chambers  County  i-.  Clews,  1503. 
Champion  v.  Gordon,  1569,  1573,  1574, 

1576. 
Champion  Funding  &  Foundry  Co.  v. 

Heskett,  193. 
Chandler  v.  Calvert,  54,  55,  59. 

V.  Carev,  41. 

V.  Glover,  233. 

V.  Johnson,  196a,  204. 

V.  Kennedy,  62. 

V.  Mason,  1113. 

V.  Parkes,  238. 

V.  Westfall,  7136. 
Chandler  &  Taylor  Co.  v.  Norwood, 

713a,  715. 
Chanoine  v.  Fowler,  946,  988,  992. 
Chanter  v.  Hopkins,  733a. 
Chapek  v.  Oak  Creek  Valley  Bank,  356. 
Chapell  V.  Sppencer,  1388. 
Chapeze  v.  Young,  710,  1338a. 
Chapin  v.  Vt.  &  Mass.  R.  Co.,  1500. 
Chaplin  v.  SulUvan,  1424. 
Chapman  v.  Annett,  1158. 

V.  Black,  206,  760. 

V.  Chapman,  80. 

V.  Commonwealth,  1250,  1251. 

V.  Cotterell,  870. 

V.  Cowles,  1245. 

V.  Durant,  1260. 

V.  Foster,  249. 

V.  Keen,  987,  990. 

V.  Lipscombe,  1115. 

V.  Niantic  Nat.  Bank,  1229. 

t;.  Ogden,  183,  777,  1050. 

V.  Remington,  797. 

V.  Robertson,  879,  922,  923. 

V.  Robinson,  894. 


TABLE    OF   CASES 


xlix 


References  are  to  paragraphs  marked  § 


Chapman  t;.  Rose,  672,  848,  850,  851a. 

V.  Steiner,  59. 

V.  Wager,  1310. 

V.  Wagner,  326. 

V.  White,  1636. 

V.  Wright,  41. 
Chappalear  v.  Martin,  1230. 
Chappell  V.  McKoough,  1222,  1341. 
Chappin  v.  Taylor,  448. 
Chappie  V.  Durston,  1214. 
Chariton  Plow  Co.  v.  Davidson,  805. 
Charles  v.  Blackwell,  1571a. 

V.  Denis,  719. 

V.  Marsden,   724,    726,   754,   786, 
790. 

V.  Remick,  371. 
Charleston  v.  Gann,  1312. 
Charleston  Sav.   Inst.  v.  Farmers'  & 

Merchants'  Bank,  790,  1202. 
Charlotte  v.  Shepard,  1522. 
Charlston  v.  Reed,  42. 
Charlton  v.  Reed,  43,  44. 
Charnley  v.  Dallas,  1703,  1705. 
Charnock  v.  Jones,  1223. 
Chartres  r.  Caimes,  895. 
Chase  !'.  Alexander,  16a. 

V.  Belirman,  51a. 

V.  Brundage,  1300,  1701. 

t;.  Dow,  917. 

V.  Redding,  24,  26. 

V.  Tavlor,  959. 

V.  Whitemore,  62,  724a,  170Sff. 
Chase  Nat.  Bank  v.  Faurot,  32a,  284, 
1.500,  1501. 

t'.  Meholin,  1454. 
Chaters  v.  Bell,  939,  940,  1196. 
Chatfield  i-.  Pa.\ton,  1148. 
Chattahoochee  Nat.   Bank  v.  Schley, 

286a. 
Chattanooga  Grocery  Co.  v.  Livingston, 

161,  534. 
Chaudron  v.  Hunt,  1478. 
Chaumette  r.  Bank  of  England,  1383. 
Chautauqua  County    Bank  v.  Davis, 

576. 
Cheek  r.  Roper,  456. 
Cheer  Sav.  Bank  r.  Mowerv,  1734c. 
Cheever  i-.  P.  S.  &  L.  E.  R.  Co.,  81c, 
775. 

V.   Pitt.sburg   R.   Co.,   791,  795a, 
7956. 

I'.  Schall,  570,  1197a. 
Chelsea  Sav.  Bank  v.  Ironwood,  14916. 
Cheltenham  Stone  Co.  v.  Gates  Iron 

Works,  1260,  1276. 
Chemical    Co.    v.    Lackawanna    Line, 

17.34a,  1739. 
Chemical  Light  Co.  v.  Howard,  174a. 
Chemical  Nat.  Bank  of  New  York  v. 
Kellogg,  728. 


Chemung  Canal  Bank  v.  Supervisors, 

422,  427. 
Chenault  v.  Bush,  203. 
Cheney  v.  Bilby,  643. 

V.  Cooper,  807. 

V.  Janssen,  800a. 

V.  Libby,  326. 

V.  Stone,  812. 
Chenowith  v.  Chamberlain,  9,  365,  581, 

582,583. 
Cherry  v.  First  Texas  Chemical  Mfg. 
Co.  795c. 

V.  Sprague,  62*,  713a,  868. 
Cherrv  Valley  Iron  Works  v.  Florence 

River  Iron  Co.,  1221. 
Chesapeake  &  Ohio  R.  Co.  v.  Paine, 

1708a. 
Chcsborough  v.  Wright,  831c. 
Cheshire  v.  Barrett,  230,  234. 

i^.  Taylor,  11 48,  1149. 
Cheshire  "Provident  Inst.  t;.  Guesner, 

1230. 
Chesmer  v.  Noyes,  968. 
Chester  v.  Day,  1227. 

V.  Dorr,  726,  786. 
Chester,  etc.,  R.  Co.  v.  Lickiss,  63. 
Cheater  Glass  Co.   v.    Dewey,    1708a. 
Chestertown    Bank    of    Maryland    r. 

Walker,  62. 
Chestnut    i'.   Chestnut,   86,    86a,    143. 
Chestnut  St.  Trust  &c.   Fund  Co.  v. 

Record  Pub.  Co.,  303,  795c. 
Chew  I'.  Bank  of  Baltimore,  259. 
Chewing  r.  Singleton,  1478. 
Chicago  r.  People,  1514. 
Chicago  Cottage  Organ  Co.  i'.  Swart- 

zell,  80,  81. 
Chicago  &c.  R.  Co.  v.  Loewenthal,  834. 
Chicago  Heights  Lumber  Co.  v.  Miller, 

.'>66. 
Chicago   Marine   Ins.   Co.   v.   People, 

1514. 
Chicago    Marine,    etc.,    Ins.    Co.    v. 

Stanford,  16.37. 
Chicago  R.  Co.  v.  Edson,  814. 

V.  Sloan,  1741. 

V.  West,  128. 
Chicago  Title  &  Trust  Co,  t;.  Brugger, 
795a. 

V.  Ward,  164. 
Chicago  Tr.  &  Sav.  Bank  v.  Kinnare, 
357,  371. 
V.  Nordgren,  713r/. 
Chick  V.  Pittsburg,  1039,  1041. 
Chicopee  Bank  v.  Chapin,   181,  824, 
831a,  8.32a. 
V.  Eager,  1013. 

V.  Philadelphia  Bank,  67,  656,  657. 
Child  t'.  Hudson  Bay  Co.,  1708<f. 
Childera  v.  Boulnois,  36a. 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Childa  V.  Laffin,  653. 

V.  Monins,  262,  263. 

V.  Pellett,  355. 

V.  Wyraan,  700a,  713a. 
Chillicothp  V.  Oronsdorff,  795. 
Chilton  V.  Whippin,  1205. 
Chipman  v.  Martin,  1274. 

V.  Tucker,  855. 
Chism  V.  Toomor,  1418,  1420. 
Chism,  Churchill  &  Co.  v.  Bank,  139, 

1618. 
Choate  v.  Kimball,  202. 

V.  Stevens,  51a,  52. 
Choisser  v.  People,  1538. 
Cholmeley  v.  Darloy,  151. 
Chorm  v.  Merrill,  713/). 
Chouteau  v.  Allen,  45a,  282,  316,  779. 

V.  Merry,  240,  246. 

t'.  Webster,  1025,  1027. 
Chouteau    Land    &    Lumber    Co.    v. 

Chrisman,  1227. 
Choteau    Trust    &    Banking    Co.    r. 

Smith,  761,  779b,  1202. 
Chrisman  r.  Tuttle,  70. 
Christian  v.  Highlands,  1339. 

V.  Keen,  532. 

;;.  Miller,  1429. 

V.  Parrott,  33. 
Christian  County  Bank  v.  Good,  54, 

1195. 
Christian    Feigenspan    r.    McDonald, 

369,  781&,  815,  969. 
Christie  v.  Pearlj  491. 
Christina  v.  Cusimans,  815. 
Christler  v.  Williams,  1623. 
Christman  v.  Pearson,  1219. 
Christmas  v.  Russell,  16a,  23. 
Christopherson  r.  Common  Council,  90. 
Chrysler  v.  Rendis,  56,  831c. 
Church  V.  Barlow,  992. 

V.  Clapp,  782. 

V.  Clark,  601. 

V.  Fields,  68a. 

V.  Fowle,  1373a,  1393. 

V.  Howard,  1386. 

V.  Maloy,  1317. 

V.  Swope,  95,  532. 
Church's  Estate,  In  re,  1219. 
Churchill  v.  Bielstein,  815. 

V.  Gardiner,  63,  65. 
Churchman  v.  Martin,  62. 
Chute  V.  Pattee,  1317a. 
Cicero  v.  Clifford,  15096. 
Cicotte  V.  Gagnier,  834. 
Cidne  v.  Chidester,  44. 
Cilley  V.  Dearbome,  995. 
Cincinnati  R.  Co.  v.  Pontius,  1729a, 

1740a. 
Citizens'  Bank  v.  Adams,  809. 

V.  Bank  of  Waddy,  832a. 


Citizens'  Bank  v.  Burrus,  1339. 
V.  Ferry,  748. 

t'.  First  Nat.  Bank,  1590,  1599. 
«;.  Fredrickson,  790. 
V.  Jones,  717. 
V.  Lay,  1210,  1222,  1235. 
t'.  Leonhart,  79.5a,  815. 
V.  Moorman,  131S. 
Citizens'   Banking  Co.   v.  Peacock  & 

Carr,  1713a. 
Citizens'  Bank  of  Paris  v.  Houston,  327. 
Citizens'  Bank  of  Stanton  v.  Emley, 

1480. 
Citizens'  Bank  of  Wakita  v.  Gamett, 

742. 
Citizens'  &  Marine  Bank  i;.  Southern 

Ry.  Co.,  1740a. 
Citizens'  Bank  &  Trust  Co.  v.  Thornton, 

394. 
Citizens'  Commercial  &  Savings  Bank 

V.  Piatt,  683,  964. 
Citizens'  Nat.  Bank  v.  Alexander,  1612. 
V.  Berry  &  Co.,  393. 
V.  Brown,  1481. 
V.  Harter,  1623. 
V.  Hooper,  775. 
V.  Importers  &  Traders  Nat.  Bank, 

1636. 
V.  PioUet,  150. 
V.  Richmond,  1413,  1415. 
V.  Smith,  850. 

V.  Third  Nat.  Bank,  327,  329,  454, 
467,476,600,1082,1171,1172. 
V.  Walton,  684. 
V.  Wilson,  1310. 
V.  Wintler,  812. 
Citizens'   Nat.  Bank  of  Los  Angeles, 

Cal.,  V.  Ariss,  298. 
Citizens'  Sav.  Assn.  v.  Perry  County, 

1537,  1538. 
Citizens'    Savings    Bank    v.    City    of 
Newburyport,  680. 
V.  Halstead,  1373,  1387. 
t;.  Hays,  926,  960,  970,  999. 
V.  Houchens,  164. 
V.  Michell,  24a. 
V.  Newburyport,  420. 
Citizens'  State  Bank  v.  Cowles,  7796. 

V.  Nore,  198,  807. 
Citizens'    State    Bank    of    Lankin    v. 

Garceau,  68a. 
Citizens'  Trust  &  Sav,  Bank  v.  Stack- 
house,  769a,  775,  815. 
City  V.  Alexander,  1523. 

V.  Lamson,  1489. 
City  Bank  v.  Cutter,  622,  629,  658, 
1048,  1212. 
V.  Dearborn,  3696. 
V.  Farmers'  Bank,  1680. 
V.  McChesney,  3696. 


Table  of  cases 


U 


References  are  to  paragraphs  marked  § 


City  Bank  v.  Perkins,  392,  11926. 

V.  Taylor,  1230. 
City  Bank  of  Sherman  t;.  Weiss,  336, 

698. 
City  Bank's  Appeal,  361. 
City  Deposit  Bank  v.  Green,  81c,  94, 

203,  7796,  815,  819. 
City  Elec.  St.  Ry.  Co.  v.  First  Nat. 

Bank,  394,  790,  1201. 
City  Loan  &  Trust  Co.  v.  Sterner,  1312. 
City  Nat.  Bank  v.  Bums,  1596,  1621. 
V.  Goodloe  McClelland  Com.  Co., 

1233. 
t;.  Goodrich,  713a. 
V.  Jordan,  819. 
V.  Kusworm,  177,  857. 
V.  Mahan,  1723. 
V.  Stout,  1658. 
V.  Thomas.  284,  390,  573. 
City  Nat.  Bank  of  Columbus,  Ohio,  v. 

Jordan,  177. 
City  Nat.  Bank  of  Dayton,  Ohio,  v. 

Kusworm,  177. 
City  Nat.  Bank  of  Lafayette  v.  Mason, 

815. 
City  Nat.  Bank  of  Roanoke  v.  Hund- 
ley, 776. 
City  Sav.  Bank  v.  Hopson,  1094,  1095a, 
1769. 
V.  Reel,  1311. 
Claflin  V.  Briant,  665. 

t;.  Farmers'  Bank,  389,  812,  1607, 

1609,  1611. 
V.  Wilson,  319,  698,  698<i. 
Claflin  Co.  i-.  Fiebelman,  644,  707a. 
Clapctt  V.  Salmon,  1322. 
Claiborne  Co.  i-.  Brooke,  420,  421,  422, 

1532. 
Clair  r.  Barr,  1172. 
Clanin   v.   Esterly   Harvesting   Mach. 

Co.,  51a,  68,  150. 
Clanton  r.  Barnes,  899. 
Clapp  V.  County  of  Cedar,  1500,  1524. 

V.  Rice,  703,  707,  7076,  1189. 
Clapper  v.  Frederick,  181. 
Claremont  Bank  v.  Wood,  1332,  1335a, 

1338 
Claridge  r.  Dalton,  1074,  1076,  1077, 

1307. 
Clark  V.  Adair,  23. 

V.  Am.  Coal,  1708. 

V.  Bank,  1.586. 

V.  Barnes,  62. 

V.  Barnwell,  1729. 

V.  Benton  Man.  Co.,  388. 

r.  Blackstock,  1390. 

V.  Bovd,  64,  267. 

V.  Caldwell,  214. 

t;.  Clark,  24a,  246. 

V.  Conner,  884, 


Clark  V.  Deaderick,  724a. 

V.  Des  Moines,  420,  422,  427,  1550. 

V.  Devlin,  1303,  1305,  1321. 

V.  Draper,  1279a. 

I'.  Ducheneau,  816. 

V.  Eldridge,  983. 

V.  Eltinge,  891. 

V.  Evans,  1469. 

V.  Farmers'  Woolen  Mfg.  Co.,  32, 

32a  383. 
V.  Gramling,  80. 
t'.  Iowa  City,  1489,  1514,  1516. 
V.  Janesville.  1489,  1500,  1524. 
«;.  Jones,  156. 
V.  Loomis,  751. 
V.  Merriam,  713c. 
V.  Mundal,  1260. 
V.  Nat.  Metropolitan  Bank,  1587, 

1590. 
i;.  Nat.  Shoe  &  Leather  Co.,  1367. 
I'.  Peace,  177. 
V.  Pigot,  686,  695. 
V.  Polk  County,  422,  427,  435. 
V.  Read,  32,  1312 
V.  Reed,  14S1. 

t'.  Ricker,  196,  196a,  200,  204. 
V.  Saugerties    Sav.     Bank,     1612, 

1711a. 
V.  Seabright,  917. 
V.  Sigoumey,  64. 
f.  Sisson,  862. 
r.  Skeen,  48,  .58a. 
V.  Statesville,  1535a. 
r.  Tanner,  769a,  866. 
V.  Thayer,  790,  798. 
I'.  Toronto  Bank,  1643. 
V.  Trueblood,  1470. 
V.  Tyler,  448. 
V.  Wallace,  365. 
t;.  Whitaker,  745,  789. 
V.  Young,  1260. 
Clark  County  v.  Rice,  199a. 
Clarke  v.  Cock,  550. 

V.  Des  Moines,  428,  1520. 

V.  Gordon,  505,  516. 

V.  Gurley,  181. 

V.  Hawkins,  1691. 

t;.  Johnson,  837. 

V.  Lazarus,  201. 

V.  Marlow,  Admr.,  99. 

V.  Martin,  162. 

V.  Morey,  222. 

V.  Percival,  50,  53. 

V.  Quince,  1473,  1482. 

V.  Russell,  930. 

V.  Scott,  1250. 

f.  Sharp,  1029a,  1030. 

1-.  Shea,  1469. 

V.  Sigoumev,  66,  267. 

V.  State,  1346. 


lii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Clarke,  In  re,  361. 

Clarke  County  v.  Gilman,  341. 

Clark  Nat.  Bank  v.  Bank  of  Albion, 

77%,  1607,  1610. 
Clarkson  v.  London  Co.,  334. 
Clasey  v.  Sigg,  834. 
Clason  V.  Bailey,  74. 
Clause  V.  Printing  Press  Co.,  1423. 
Clauser  v.  Stone,  54. 
Claxon  V.  Dcmaree,  81c. 

V.  Swift,  1284. 
Clay  V.  Cottrell,  359,  725,  1436. 

V.  Crowe,  1484. 

V.  Edgerton,  1786. 

V.  Guge,  1481. 

V.  Layton,  188. 

V.  Oakley,  998. 
Clay  County  v.  Soc.  of  Savings,  1537, 

1545. 
Claybrook    v.    Commissioners,     1520, 

1540,  1553. 
Clayton  v.  Cavender,  193. 

V.  Clark,  1289a. 

V.  Gosling,  89,  108,  1215. 
Clegg  V.  Cotton,  1075,  1082,  1170. 

V.  Lemesurier,  32. 

V.  Levy,  914. 
Clemens  v.  Conrad,  126. 
Clement  v.  Clement,  3696. 

V.  Conrad,  122. 

V.  Reppard,  174. 
Clements  v.  Hull,  61. 
Clendennin  v.  Southerland,  728. 
Gierke  v.  Martin,  5. 
Cleveland  v.  Sherman,  1714. 

V.  Worrell,  1484. 
Cleveland  Co.  v.  Chittenden,  693. 
Clevenger  v.  Lewis,  62. 
Clews  V.  Bank  of  New  York  Nat.  Bank- 
ing Assn.,  1606a. 
Clifford  Banking  Co,  t;.  Donovan  Com- 
mission Co.,  1369,  1405. 
Clift  V.  Rogers,  1132. 
Clifton  V.  Bank  of  Aberdeen,  62,  62a. 
Clifton  Forge  v.  Allegheny  Bank,  1550. 

V.  Brush  Elec.  Co.,  1550. 
CUne  V.  Farmers'  Oil  Mill,  81. 

V.  Guthrie,  852. 

V.  Templeton,  176. 
Clinton  Bank  v.  Ayres,  1190. 
Clinton  Nat.  Bank  v.  Graves,  70. 

V.  Stiger,  1478. 
Clippinger  v.  Hepbaugh,  188. 
Clode  V.  Bayley,  992,  995a. 
Clodfelter  v.  Hulett,  193. 
Clokey  v.  Evansville  &  T.  H.  R.  Co., 

1489. 
Clomston  v.  Barbiere,  716. 
Clopper  V.  Union  Bank,  1260,  1335a. 
Clopton  V.  Elkin,  204. 


Clopton  V.  Spratt,  1311. 

Closson  V.  Stearns,  74,  688a. 

Closz  &  Mickelson  v.  Miracle,  594,  598, 

1149. 
Clothier  v.  Adriance,  831c. 
Cloud  V.  Book  News  Co.,  812. 

V.  Scarborough,  1311. 

V.  Whiting,  859,  860. 
Clough  V.  Davis,  69. 

V.  Holden,  600,  601,  603,  635. 

V.  Seay,  1411. 
Glower  v.  Wynn,  146,  843. 
Clowes  V.  Chaldecott,  1036. 
Cloyes  V.  Cloyes,  180,  1646. 
Clusseau  v.  Wagner,  730. 
Clute  V.  Frazier,  782. 

V.  Small,  1401,  1404,  1410a,  1411. 

V.  Warner,  1425. 
Glutton  V.  Attenborough,  139. 
Clymer  v.  Terry,  812. 
Coakley  i;.  Christie,  812. 
Coal  Mining  Co.  v.  Mattingly,  161. 
Coates  V.  Donnell,  392. 

V.  Doran,  1637. 

t;.  Preston,  1428. 
Coats  V.   Mutual  Alliance  Trust  Co., 

1181a. 
Cobb  V.  Bryant,  812,  1191. 

V.  Titus,  766. 

V.  Wm.  Kenefick  Co.,  196. 
Coburn  v.  Omega  Lodge,  403. 

V.  Webb,  142,  1375. 
Cocheco  Bank  v.  Haskell,  395. 
Cochituate  Bank  v.  Colt,  1681. 
Cochran  v.  Atchison,  669a,  672,  677. 

V.  Nebeker,  1373a,  1418. 

V.  Perkins,  205. 

V.  Priddy,  775. 

t;.  Stein,  782,  815. 

V.  Zachery,  81. 
Cochrane  v.  Dickinson,  769a. 
Cock  V.  Coxwell,  1375. 

V.  Fellows,  99. 
Cocke  V.  Dickens,  1187. 
Cockrill  V.  Kirkpatrick,  56,  81. 

V.  Loewenstine,  966. 
Cocks  V.  Borradale,  1196. 

V.  Masterman,  1371,  1372. 
Cocksshott  V.  Bennett,  194. 
Coddington  v.  Bay,  831c. 

V.  Davis,  929,  1095a. 
Coddington  Sav.  Bank  v.  Anderson, 

700. 
Codman  v.  Lubbock,  1672a. 

V.  Vermont    &  Canada    R.    Co., 
667. 

V.  Vt.  R.  Co.,  1458,  1514. 
Cody  t;.  City  Nat.  Bank,  336. 
Coe  V.  Cayuga  Lake  R.  Co.,  10a,  729. 

V.  Wallace,  81. 


TABLE    OF   CASES 


liii 


References  are  to  paragraphs  marked  § 


Coffee  V.  Planters'  Bank,  678. 
Coffin  V.  Board  of  Commissioners,  1538, 
1551. 
V.  HydrauUc  Co.,  1187. 
V.  Spenser,  41. 
V.  Trustees,  183. 
Cofiing  V.  Hardy,  174a. 
Coffman  v.  Campbell,  496,  505. 

V.  Wilson,  795b. 
Coge  I'.  Palmer,  766. 
Coggill  V.  American  Exch.  Bank,  538, 

672,  1356,  1366. 
Coghlan  v.  May,  725a,  786. 
Cohen  v.  Hunt,  600,  656. 
Cohn  V.  Dutten,  713a. 
Coimfcld  V.  Tancnbaum,  795a. 
Colbum  V.  Averill,  1759. 

V.  Chattanooga,  etc.,  R.  Co.,  1532, 
1533. 
Colby  V.  Copp,  1252. 

V.  Parker,  815. 
Coldstone  v.  Tovey,  253. 
Cole  V.  Cushing,  694a. 
I'.  Handley,  81. 
V.  Hills,  1398. 
V.  Merchants'  Bank,  1777. 
V.  Pennell,  230,  238. 
V.  Sackett,  1260, 1266a,  1275, 1299. 
V.  Sa.\bv,  2.33. 
I'.  Smith,  721. 

V.  Withers,  1252,  1281a,  1293. 
Colo  Hanking  Co.  v.  Sinclair,  812. 
Colt'ham  V.  Cook,  46. 
Coleman  v.  Biedman,  1197. 
V.  Broad  River  Tp.,  1523. 
t'.  Carpenter,  1036, 1043, 1209. 
V.  Dunlap,  1238. 
V.  Ewing,  1208,  1209. 
V.  First  x\at.  Bank,  1699,  1700. 
1'.  Forbes,  1215a. 
1-.  Riches,  1733. 
V.  Sayer,  617,  626. 
V.  Smith,  965. 
V.  Stocke,  386. 
Coler  t;.  Barth,  834a. 

I'.  Dwight  School  Tp.,  1537. 
Coles  t'.  Jones,  743. 

t'.  Trecothick,  277. 
Colgate  V.  Penn.  R.  Co.,  1731. 
Colgin  V.  City  Nat.  Bank,  759a. 

V.  Henley,  1765. 
Coliger  v.  Francis,  758,  778. 
Colket  V.  Freeman,  1036. 
CoUett  V.  Haigh,  1333. 
ColUer  V.  Gray,  88. 
V.  Mahan,  679. 
V.  Nevill,  759,  764. 
CoUingwood  v.  Merchants'  Bank,  605, 

1170. 
CoUina  v.  Blantcm,  196a. 


Collins  V.  Bradbury,  51a. 

V.  Buckeye  State  Ins.  Co.,  305. 

V.  Busch,  1262. 

V.  Butler,  1118. 

t'.  Central  Bank,  1682. 

V.  Dawley,  205. 

V.  Denning,  1685. 

I'.  Gilbert,  728,  776,  812,  814,  815. 

V.  Johnson,  687. 

I'.  Lincoln,  56. 

V.  Makepiece,  1415. 

V.  Martin,  831a. 

t'.  Panhandle  Nat.  Bank,  1198. 

V.  Trotter,  88,  604. 

t;.  Westbury,  857. 

Ex  parte,  1612. 
Collis  f.  Emett,  136,  137,  138. 
CoUom  V.  Bixby,  719. 
Collyer  v.  Cook,  103,  1183a. 
Colms  t'.  Bank,  627. 
Coloma  V.  Eaves,  1520,  1537,  1542. 
Colombies  u.  Slim,  1199. 

1636. 
Colonial  Nat.  Bank  v.  Duerr,  899,  970. 
Colonial   Nat.   Bank   of   Cleveland   v. 

Duerr,  879. 
Colonial  Press  v.  Carter,  156. 
Colorado  Nat.  Bank  v.  Boettcher,  499a, 

1636. 
Colson  t'.  Amot,  677,  1469. 
Colt  t'.  Barnard,  996. 

t'.  Miller,  1048. 

I'.  Noble,  992. 
Columbia  Distilling  Co.  v.  Reich.  1385. 
Columbia  Falls  Brick  Co.  v.  Glidden, 

1238. 
Columbia  Finance  &  Trust  Co.  v.  Pur- 
cell,  710,  899,  908,  909. 
Columbian  Banking  Co.  v.  Bowen,  601, 

612,  969,  1590. 
Columbian  Conservatory  of  Music  v. 

Dickenson,  164. 
Columbian  County  Bank  v.  Emerson, 

199a. 
Columbus   V.    Dennison,    1537,    1545, 

1547. 
Columbus  Ins.  A:  Banking  Co.  v.  First 

Nat.  Bank,  128,  130. 
Colvin  V.  Peck,  319. 
Colwell  i^.  Weybosset  Nat.  Bank,  360, 

361. 
Coman  i-.  The  State,  1317. 
Combs  I'.  Bays,  1260. 

V.  xMiller,  197. 
Comer  r.  Dufour,  1587,  1591,  1593. 
Comings  t;.  Lcedy,  203,  775. 
Cominsky  v.  Coleman,  726. 
Commack  v.  Conrad,  1475. 
Commercial  &  Savings  Bank  t'.  Pott, 
1294. 


Uv 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Commercial  Bank   r.   Biirksdale,  5S1, 
586,  934,  940. 

V.  Ben(xlict,  14G5,  1478, 1695, 1690. 

t'.  Hur^wyn,  166. 

V.  Cheshire  Provident  Institution, 
1777. 

V.  Chicago  Ky.  Co.,  1734a,  17346. 

V.  Chilbcrg,  21,  1617a. 

V.  Claiborne,  1190. 

V.  Clark,  11.57,  1220. 

V.  Crenshaw,  1.56. 

V.  Davy,  748. 

t;.  Flowers,  1713a. 

V.  French,  399,  1188. 

V.  Gove,  1017. 

V.  Hamer,  tiOO,  656. 

V.  Hart,  1.57. 

V.  J.  K.  Armsby  Co.,  1731. 

V.  Kinji,  1041. 

V.  Kortrif^ht,  MOSg. 

V.  Law,  714. 

V.  McDounall,  758. 

V.  Newport   Man.  Co.,   382,  383, 
400. 

V.  Norton,  277,  283,  290. 

V.  Paton,  1402. 

V.  Pfeiffer,  1731. 

V.  Strong,  1016,  10.54. 

V.  Union  Hank,  341,  344. 

V.  Varnum,  581,  582,  586,  934. 

V.  Waters,  300. 

V.  Wood,  159,  1303. 
Commercial  Bank  of  Albany  v.  Clark, 
1159. 

V.  Hughes,  3346,  1170,  1596,  1611a. 
Commercial  Bank  of  Charlotte  v.  First 

Nat.  Bank,  1636a. 
Commercial  Bank  of  Clyde  v.  Marine 

Bank,  339. 
Commercial  Bank  of  Dawson  v.  Ma- 

guire,  1373,  1385. 
Commercial  Bank  of  Essex  v.  Paddick, 

815. 
Commercial  Bank  of  Pennsylvania  v. 

Union  Bank,  341. 
Commercial  Bank  of  Selma  v.  Hurt, 

1713. 
Commercial  Exchange  Bank  v.  Nassau 

Bank,  1663. 
Commercial  Nat.  Bank  v.  Armstrong, 
336,  340rf. 

V.  Brill,  388,  389. 

V.  Citizens'  State  Bank,  184. 

V.  Clarke,  1328. 

V.  First  Nat.  Bank,  775,  1585a. 

V.  Hamilton  Nat,  Bank,  334a. 

V.  Henninger,  3266. 

V.  Tola,  1522. 

V.  Proctor,  371. 

V.  Waggeman,  1225. 


ConiniiTcial  Xat.  Bank  v.  Zimmerman, 

612,  10.50. 
C4)nirnfnM:d  Xat.  Bank  of  Chicago  v. 

Hiin.i,  1642. 
Commercial  State  Bank  v.  Judy,  850. 
Commiskey  v.  Pike,  1260.  _ 
Commissioners  v.  .lEtna  Life  Ins.  Co., 
1537. 

V.  Bolles,  1503,  1537,  1539. 

V.  Chandler,  1522. 

V.  Clark,  803,  812,  814,  815,  1503. 

V.  Januarv,  1537,  1539,  1544, 1547. 

V.  Ko.ss.  1311. 

V.  SutlitT,  1537. 
Commissioners  of   Craven   County   v. 

A.  &  N.  R.  Co.,  925. 
Commissioners    of    Floyd    County    v. 

Day,  428,  431. 
Commissioners  of   Iredell   v.   Wiisson, 

717. 
Commissioners    of    Knox    County    v. 
Aspinwall,   3S9,   1489,    15096, 
1.539,  1.5.50,  15.53. 

V.  Nichols,  1.524,  1.5.37,  1.5.50,  1554. 
Commissioners  of  Leavenworth  v.  Kel- 
ler. 432,  434. 
Commissioners    of    Manor    v.    Clark, 

1.500. 
Commissioners  of  Shawnee  County  v. 

Carter,  1.5.5S,  1563. 
Commonwealth  v.  Allegheny  County, 
389. 

V.  Beaumurchais,  87. 

V.  Butterick,  130. 

V.  Chandler,  1345. 

V.  Clune,  1350. 

V.  Donovan,  181. 

V.  DuUinger,  130. 

t'.  Emigrants'  Bank,  1400. 

t'.  Emigrants'  Ins.  Co.,  86,  1489. 

V.  Foster,  1345. 

V.  Gallagher,  1664. 

V.  H'aab,  1311. 

t;.  Industrial   Emigration   Savings 
Bank,  1399,  1499a. 

V.  .Johnson,  196. 

V.  Kendig,  69. 

V.  McCuUough,  448. 

t;.  McKie,  164. 

V.  McWilliams,  1523. 

V.  Parmenter,  76. 

V.  Pease,  196a. 

V.  Pittsburg,  382,  389,  1527a. 

V.  Powell,  667,  709,  713a. 

r.  Sankey,  1348. 

V.  Simonds,  1664. 

V.  Spilman,  666. 

V.  Stone,  1676. 

t'.  ITiomas,  1664. 

V.  Ward,  1396. 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Iv 


Commonwealth  v.  Watmough,  1/OSe 
Commonwealth  Nat.  Bank  i-.  Baugh- 

man,  1373,  1373a,  1375,  1385. 
Comparree  v.  Brockway,  709,  710,  716. 
Compress  &  Warehouse  Co.  v.  Meridian 

Cotton  Co.,  769a. 
Comptoir    D'Escompte   v.    Dusebach, 

1229,  1623. 
Compton  t'.  Blair,  1074. 
V.  CJilman,  15S6,  1.587. 
V.  Patterson,  1266,  12666. 
V.  Smith,  1338. 
Comstock  V.  Buckley,  805,  1236. 
t'.  Hannah,  775. 
t;.  Hier,  791,  794. 
V.  Smith,  12(57. 
Conant  v.  .\lvonl,  311. 
Coneoni  r.  Bill.shury,  1431. 

V.  Port.sniouth  Sav.  Bank,  lo24. 
V.  Robinson,  1.532. 
Condon  v.  Barnuiii,  748a. 
V.  Pearce,  r)72,  694. 
V.  Rice,  S-I9a. 
Cone  V.  Baldwin,  775. 
V.  Brown,  573. 
V.  Eldridge,  1758. 
Confederate  Note  Caae,  87. 
Congan  v.  Bankes.  920. 
Congaree  Con.st.  Co.  v.  Columbia  Ip., 

1.520,  1.523. 
Conger  v.  Bahbett,  17S9. 

V.  Crabtrw^  1406. 
Conine  v.  Junetion  A  B.  R.  Co.,  32a. 
Conklin  v.  Young,  7S4,  1317a. 
Conkling  r.  C'.andall,  1.586. 

V.  King,  12t)8. 
Conlev  V.  Winsor.  815a. 
Conlin  V.  Cantrell,  248. 
Conn  f.  Cobum,  225,  1314. 

V.  Thornton,  46. 
Connable  v.  Smith,  1401.  .,    .  ^  ^  ,, 
Connecticut  In«.  Co.  v.  C.  C.  &  C.  C  K. 

Co.,  149f..  ^        ^, 

Connecticut  Mut .  Life  Ins.  Co.  t-.  Cleve- 
land, etc.,  R.  Co.,  1495,  1497, 
1500,  1513. 
V.  WesterhofT,  1458a. 
Connecticut  Tru.st  &  Safe  Deposit  Co. 

r.  Trumbo,  824,  1230. 
Connell  r.  McLaughlin,  292 
Connelly  .•.  McKean,  492,  1646,  1648. 
Conner  v.  Bellamont,  894. 
V.  Blo<lKet,  62a. 
V.  Clark,  271. 
Connolly  v.  Dammann,  850. 

I'.  Union  Sewer  Pipe  Co.,  196. 
Connor  r.  Donnell,  759,  764,  86.5. 
V.  Ho<lgcs,  274,  7136,  995. 
V.  Martin,  242,  681. 
V.  Root,  24. 


Connor  t'.  Routh,  76,  1404. 
ConoUy  r.  Goodwin,  947. 
Conover  v.  Earl,  686. 
Conrad  r.  Atlantic  Ins.  Co.,  1<43. 
.'.  Clarke,  81a,  189. 
V.  Fisher,  831a,  1713a,  1731. 
V.  Kinzie,  69. 
V.  Smith,  1236a,  1237. 
Conrad  S.  S.  Co.  v.  Kelley,  1729a 
Conrad  Seipp  Brewing  Co.  v.  McKit- 

trick,  62. 
Conro  V.  Port  Henry  Iron  Co.,  399,  409. 
Conroe  v.  Case,  304. 
Conroy  i-.  Warren,   1081,  1586,   1587, 

1588,  1596,  1652. 
Conseoua  v.  Willings,  917. 
Consohdateil  A.><sn.  v.  Avegno,  1500. 
Con.solidaH-d  Lumber  Co.  i'.  Fidehty  & 

1).  po.sit  Co.  of  Maryland,  189. 
Consolidated    Nat.     Bank    o.    Hayes, 
1192a. 
V.  Cunningham,  819. 
Constcrdine  i'.  Moore,  700,  1227. 
Consumers'  Brewing  Co.  v.  Tobin,  193. 
Continental      Bank     r.     Tradesmen  s 

Bank,  1362,  1369. 
Continental  Bank  of  Memphis  v.  Clark, 

VMi'xi,  1337. 
Continental  Gin  Co.  v.  Benton,  1227. 
Continental  Ins.  Co.  v.  Dorman,  156, 

12.59,  1271. 
Continental   Life  Ins.  Co.  v.  Barber, 

UYJ'xi,  1313. 
Continental  Nat.  Bank  i-.  Bell,  832a. 
f.  EUot  Nat.  Bank,  1708e. 
t'.  Folsora,  986. 
t;.  McGooch.  .52,  62. 
!•.  Town.send,  787a,  793a. 
I    Weems,  3346,  336,  340d,  698. 
I.  Wells,  .59. 
Continental  Nat.  Bank  of  Chicago  v. 

McGoech,  1289. 
Converse  t;.  Cooke,  1339. 

V.  Johnjwm,  88. 
Conway  v.  Case,  1647. 
Cony  V.  Price,  375. 

r.  Wheelock,  683. 
Cook  c.  American  Tubing  &  Webbing 
Co.,  386,  79.5c,  819,  970. 
V.  Baldwin,  497,  497a. 
V.  Barnes,  1274. 
V.  Be<'ch,  1262. 
I'.  Buck,  1277. 

t;.  Citizen.s'  Mut.  Ins.  Co.,  871. 
I'.  Cla>'worth,  214. 
V.  Crawford,  11. 
V.  Darling,  616,  617. 
t'.  Forker,  69,  70,  762a,  767,  1021. 
V.  Gilman,  1226. 
V.  Googins,  970a, 


ivi 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Cook  V.  Gray,  616. 

V.  Helms,  814,  831a. 

V.  Jadis,  1503. 

V.  Lantlrum,  1321. 

V.  Larkin,  803. 

V.  Lillo,  S7,  169. 

V.  Litchfield,   868,   899,  925,  976, 
977,  979,  983. 

V.  Martin,  646    1084. 

t;.  Merchants'  Nat.  Bank  of  Vicks- 
burg  969. 

V.  Miltenberger,  550 

V.  MolTat,  868. 

V.  Norwood,  728. 

V.  Sattorlee,  60. 

V.  Seeloy,  1613. 

V.  Shipnuin,  196. 

t'.  Shull,  1342. 

V.  Southwick,  7136. 

V.  Tullis,  33(). 

V.  Wolfendale,  .WJ. 
Cooke  I'.  liranch  Bank,  358a. 

V.  Brown,  80,  812. 

V.  Colehan,  46. 

V.  Darwin,  1483. 

V.  Nathan,  1769a. 

V.  Pearce,  174a. 

V.  Pomeroy,  1215. 

V.  State  Nat.  Bank,  1607,  1610. 

V.  United  States,  436. 
Cookendorfer  v.  Preston,  622,  623. 
Coolbroth  i-.  Purrington,  86a. 
Cooley  V.  Allen,  195a. 

V.  Rose,  1213. 
Coolidge  V.  Brigham,  731,  731&. 

V.  Payson,  551,  560,  1799. 

V.  Ruggles,  41. 

V.  Wiggin,  703. 
Coon  V.  Pruden,  354,  707. 
Coons  V.  Clifford,  1343. 
Cooper  V.  Bailey,  668. 

V.  Curtis,  385,  392. 

V.  Dedrick,  1777. 

V.  Earl  of  Waldergrave,  896. 

V.  German  Nat.  Bank,  80. 

i;.    Hocking    Valley    Nat.    Bank, 
787. 

V.  Jones,  532. 

V.  King,  203. 

V.  Meyer,  535,  538,  1365. 

V.  Poston,  128,  130. 

V.  Smith,  834. 

V.  The  German  Nat.  Bank  of  Den- 
ver, 724. 

V.  Town  of  Thompson,  10a,  729, 
1490a. 
Coore  V.  Callaway,  487. 
Coors  V.  German  Nat.  Bank,  698d. 
Coosley  v.  Reynolds,  10. 
Cope  V.  Daniel,  1195. 


Copp  V.  M'Dugall,  669a,  1113. 

V.  Sawyer,  179. 
Coppedge  V.  Weaver,  189. 
Copper  V.  Mayor,  etc.,  l.')03. 
Coppman  v.  Bank  of  Kentucky,  1233a. 
Coppock  !'.  Bower,  2(K). 
Corbet  V.  Bank  of  Smyrna,  737,  1675, 
1676,  1677. 

I'.  Rocksbur>',  1542,  1554. 
Corbett  v.  Clark,  50,  51,  108,  110. 

i;.  Clute,  81a. 

V.  Fetzer,  717,  721. 

V.  Hughes   1245. 

V.  State  of  Georgia,  41,  50. 

V.  Steinmetz,  47. 

V.  Waller,  1230. 
Corbin  v.  Planters'    Nat.    Bank,    887, 
928,  959,  1039,  1044. 

V.  Soulhgate,  547. 

V.  Warhorst,  200. 
Corby  v.  Weddle,  851. 
Corbyn  v.  Brokmeyer,  713c. 
Corcoran  v.  Dale,  1419. 

V.  Powers,  751. 
Corgan  v.  Frew,  86,  S6a,  688a,  1580. 
Corieller.  Allen,  1317. 
Cork  V.  Bacon,  97,  98,  100,  1587,  1590. 
Corlctt  V.  Conway,  4976. 
Com  I'.  Levy,  714. 
Comay  i-.  Da  Costa,  1083,  1128,  1131, 

1141. 
Comeille  v.  Pfeiffer,  94,  1203. 
Cornell  t'.  Hichens,  834. 

V.  Moulton,  88,  604. 

V.  Nebeker,  1407. 

V.  Pratt,  1107. 
Comer  Stone  Bank  v.  Rhodes,  322. 
Comett  V.  Hafer,  716. 
Com   Exch.    Bank   v.    Farmers'    Nat. 
Bank,  333,  341. 

V.  Nassau  Bank,  349a. 
Com  Exchange  Ins.  Co.  v.  Babcock, 

248,  1266a. 
Coming  V.  Pond,  750. 
Cornish  v.  Friedman,  202. 

V.  Woolverton,  51a,  53,  62,   156, 
741. 
Com  Nat.  Bank  v.  Hennings,  3266. 
Comthwaite  v.  First  Nat.  Bank,  262. 
Comu  V.  Blackboume,  221. 
Cornwall  V.  Gould,  1266. 
Comwell  V.  Orton,  1343. 

I'.  Pumphrey,  56. 
Corp  V.  McComb,  1043. 
Corser  v.  Craig,  16a,  19,  451,  742. 

V.  Paul,  392. 
Cortland  Wagon  Co.   v.  Lynch,  301, 

303,  305. 
Cortelyou  t'.  Maben,  497. 
Cory  V.  Scott,  1047,  1077,  1172. 


TABLE    OF   CASES 


Ivii 


References  are  to  paragraphs  marked  § 


Corydon   Deposit    Bank   v.    McClure, 

12666,  1312. 
Cosgrave  v.  Boyle,  1001. 
Cosgrove  v.  Faneburst,  1421. 
Cosmos  Cotton  Co.  v.  First  Nat.  Bank, 

1734c. 
Costa  V.  Davis,  867. 
Costello  V.  Crowell,  41,  150. 
Coster  V.  Thomason,  592,  999. 
Costigan  v.  Hawkins,  733. 
Costin  I'.  Burton-Lingo  Co.,  1090,  1326. 
Costallo  V.  Laths,  1735. 
Cota  V.  Buck,  45. 
Cotes  V.  Davis,  242,  252. 
Cotten  V.  McKenzie,  204. 
Cottle  v.  Cleaves,  815. 
Cotton  V.  Evans,  368 
V.  Graham,  180. 
V.  John  Dtcre  Plow  Co.,  742. 
V.  McKenzie,  204. 
V.  Simp.s(jn,  i3S9. 
I'.  Sterling,  S03,  804. 
Cotton  Mills  I'.  Comrs.,  1535a. 
Cottrell  V.  Conklin,  713</. 
Couch  I'.  Meeker,  68,  855. 
r.  Sherrill,  9t>0,  1051. 
i;.  Waring,  13(M),  1329. 
Coulpiui:  V.  Clcmen.ston,  1770a,  1789. 
Coulter  I'.  Richmond,  713<-. 
Councilman    v.    Towson    Nat.    Bank, 

1480. 
Countv  I'.  McWilliams,  196<i. 
County  Judge  v.  Shelby  R.  Co.,  1556. 
Countv  Nat.  Bank  v.  Hohn,  299. 
Countv  Savings  Bank  r.  Scoggin  Drug 

Cb.,  741. 
Courcamp  v.  Weber,  1385,  1421a. 
Course  v.  Shackleford,  611,  996. 
Court  V.  Peppard,  81a. 

V.  Valhalla,  193. 
Court    Harmony    t-.    Court    Lincoln, 

183    382. 
Courtney  r.  Doyle,  162,  715. 

f.  Hogan,  719. 
Court  of  Common  Pleas  in  Reynolds  v. 

Wheeler,  703a. 
Cousins  V.  Partridge,  1215. 
Coventr>'  v.  Gladstone,  1734b. 
Cover  f.Mvers,  769a. 
Covert  r.  Rhodes,  22,  1643. 
Covington  v.  Com.stock,  653. 

V.  Threadgill,  204. 
Cowan  V.  Hallack,  5,  39,  104,  161. 
t'.  Jack.><on,  469. 
V.  Radford  Iron  Co.,  88. 
Cowan,  McClung  &  Co.  v.  Cunningham 

&  Ward,  33. 
Cowden  v.  Elliott,  1428. 
Cowee  t'.  Cornell,  180. 
Cowgill  V.  Linville,  1343. 


Cowgill  V.  Long,  1561. 
t;.  Petifish,  850. 
V.  Robberson,  1221,  1245. 
Cowhick  V.  Shingle,  1215. 
Cowie  V.  Cornell,  188. 

V.  Halsall,  1378,  1379. 
Cowing  V.  Altman,  83,  783,  1632,  1633. 
Cowles  V.  Harts,  985. 

t;.  McVicker,  750,  764,  765. 
V.  Peck,  1769. 
Cowper  V.  Smith,  1789. 
Cowperthwaite  v.  Sheffield,  16a,  18,  21, 

22,  50,  991,  1636. 
Cowton  V.  Wickersham,  535. 
Cox  I'.  Alexander,  146. 

V.  Bank  of  Westfield,  724. 

V.  Boone,  1587,  1590,  1592. 

V.  Bruce,  1729. 

V.  Central  Vt.  R.  Co.,  1727. 

i>.  Citizens'     State     Bank,     1198, 

1587. 
V.  Cline,  193,  812. 
V.  Coleman,  504a. 
I'.  Cox's  Ex'r,  64. 
t;.  Earle,  1254. 
t».  Fenwick,  1281a. 
r.  Hayes,  1623. 
V.  Nat.    Bank,  90,  479,  571,  635, 

639,  640,  643,  644. 
I'.  Peterson,  1729a. 
I'.  Reinhardt,  1209. 
V.  Sloan,  161,  184,  407,  1251. 
V.  Smith,  1458a. 
V.  Troy,  63,  490,  493. 
i-.  Walker,  180. 
Coxe  I'.  State  Bank,  1672a,  1689. 
Coxen  V.  Lyon,  85. 
Coy  t'.  Stiner,  1192a. 
Coye  t'.  Palmer,  1702a. 
Coykendall    v.    Constable,    316,    322, 

1222. 
Coyle  I'.  Smith,  1596. 
Coyne  v.  Anderson's  Exrs.,  789a. 
Cozens  V.  Middleton,  793a. 
Crabtree  v.  Atchison,  859,  862. 
V.  May,  237. 
V.  Sisk,  1227. 
Craddock  t;.  Dwight,  1221. 
Craft  t'.  Fleming,  7CiO. 

V.  Lsham,  17856. 
Crafts  V.  Beale,  1330. 
Cragin  i-.  Lovell,  303. 
Craig  t'.  Brown,  694a. 

V.  City  of  Vicksburg,  1500. 

1-.  Dimock  125,  126. 

II.  Graig,  25. 

i;.  Miller,  1250. 

V.  Palo   Alto   Stock   Farm,   664a, 

1181a. 
t'.  Price,  617. 


Iviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Craig  I'.  Sibbett,  174a. 

V.  State  of  Missouri,   1715,   1718, 
1719,  1720. 

V.  Twomey,  1191. 
Craighead   t'.    McLoney,    1376,    1385, 
1412. 

V.  Peterson,  291,  316. 

I'.  Swartz,  1339. 
Crain  v.  Bode,  620. 

V.  Cold  well,  1163. 
Cram  i'.  Hendricks,  766. 

V.  Sherburne,  1106,  1155. 
Cramer  v.  Eagle  Mfg.  Co.,  933. 

V.  Munkres,  513. 

t'.  Redman,  1343. 
Cramlington  v.  Evans,  616,  1185,  1231. 
Crampton  v.  Newton,  183,  187. 

V.  Perkins,  166,  789,  815. 

V.  Zabriskie,  1522a. 
Crandall  v.  Rollins,  305. 

V.  Schroeppel,  654,  1228. 
Crandell  r.  Vicker>',  758c,  789a. 
Crane  v.  Brigham,  382. 

t'.  Clearing  House  Assn.,  1712. 

V.  Dexter,  Hortun  Co.,  1219. 

V.  Fourth  Street  Nat.  Bank,  1712a. 

r.  McDonald,  1262. 

V.  Williamson,  513,  517. 
Cranson  r.  Goss,  65,  70. 
Craven  t'.  Bates,  922. 

V.  Rvder,  1730a. 
Craven  County  v.  A.  &  N.  C.  R.  Co., 

1533. 
Cravens  v.  Gillilan,  229. 
Crawford  v.  Aultman  &  Co.,  834a. 

V.  Branch  Bank,  10,  52,  898,  920, 
983,  991,  1448. 

r.  Johnson,  725,  784,  803. 

V.  Millspaugh,  1295,  1316. 

V.  Roberts,  1260,  1294. 

V.  Royal  Bank,  1680. 

V.  Simonton  &  Co.,  1385. 

V.  Spencer,  195a,  832. 

V.  Tumbaugh,  1753. 

i'.  West   Side   Bank,    1376,    1578, 
1618a,   1660,   1711a. 
Crawford  County  i'.  Wilson,  428,  432, 

434. 
Crawford     County     State     Bank     v. 

Stegemann,   187. 
Crawshay  v.  Collins,  3705. 
Craythom  r.  Swinburne,  1340. 
Creamer  v.  Perrj-,   1100,   1131,   1140, 

1162. 
Crears  v.  Hunter,  185. 
Creasy  r.  Gray,  62. 
Credit  Co.  t'.  Howe  Machine  Co.,  386, 

389,  392a,  775,  814. 
Creditors'  Union  v.  Lundy,  161,  164. 
Cregler  v,  Durham,  369o. 


Crelle  v.  Loxen,  713a. 
Cremer  v.  Higginson,  1771. 
Crenshaw  v.  Collier,  248. 

V.  M'Kiernan,  616,  1209. 
Cresap  r.  Manor,  719,  1281. 
Crescent  Bank  v.  Hernandez,  187. 
Creston   Nat.    Bank   v.   Salmon,   775, 

879. 
Creswell  v.  Lanahan,  317,  388. 
Creteau  t-.  Glass  Co.,  599. 
Creveling  r.   Bloomsbury   Nat.   Bank, 
1636. 

V.  Saladino,  183. 
Cribbs  V.  Adams,  581,  586,  617,  618, 

908,  934. 
Crider  r.  Shclbv,  46. 

r.  Wagers,"  1259,  1260. 
Crilly  V.  Gallice,  717,  787. 
Crim  V.  Crim,  849a,  850. 

t'.  Fleming,  1311. 

V.  Starkweather,  89,  609,  1215. 
Crippen  v.  Nat.  Bank,  1618. 
Cripps  V.  Davis,  728,  783. 
Crisman  v.  Leonard,  248. 
Crisp  V.  Griffiths,  1270. 
Crissev  v.  Interstate  Loan  &  Tr.  Co., 

1777. 
Croker  v.  Coldwell,  364. 

V.  GetcheU,  719,  984,  992. 

V.  Gilbert,   1767. 
Crocker-Woolworth    Nat.    Bank    v. 

Carle,  44. 
Crockett  v.  Thomaaon,  1373a. 

V.  Trotter,  1266. 
Crofoot  t'.  Thacher  &  Josselj-Ti,  867, 

882 
Croft  f.Bunster,  748,  834. 
Crofts  V.  Beale,  185. 
Crogster  v.   Bayfield   County,    1522a, 

1524. 
Crobc  V.  Sibbett,  7956. 
Crombie  v.  McGrath,  185. 
Cromell  v.  Hj-nson,  943. 
Cromer  v.  Piatt,  983. 
Crompton  v.  Spencer,  703,  703a. 
Cromwell  v.  County  of  Sac,  7586,  803, 
1458a,   1506,   1517a. 

V.  Hewitt,  709. 

V.  Hynson,  590,  1017,  1145. 

V.  Rankin,  1311. 

V.  Tate's  Exrs.,  32. 
Crone  v.  Stinde,  8346. 
Cronin  v.  Patrick  County,  la,  99,  1496, 

15016. 
Cronise  v.  Kellogg,  790,  1335a. 
Cronk  V.  Frith,  112. 
Cronkhite  v.  Nebeker,  144. 
Crook  V.  Jadis,  773. 
Crooker  v.  Hamilton,  80,  81d,  193. 
i;.  Hohnes,  44. 


Table  of  cases 


lix 


References  are  to  paragraphs  marked  § 


Crooks  r.  Tully,  713c,  724a,  995,  996. 

Crookahank  v.  Roso,  206. 

Cropley  v.  Eyster,  728,  784,  812,  1215. 

Cropsey  v.  Averill,  814. 

Crosby  r.  Grant,  7S7a. 

V.  New  London,  etc.,  R.  Co.,  1512. 

V.  Roub,  689a,  690,  835. 

V.  Ritchey,  164. 

r.  Tanner,  7266. 

v.  Woodburj',  7136,  1338. 

V.  Wyatt,  1317,  1789. 
Croskey  v.  Skinner,  1195. 
Crosley  v.  Re\-nold8,  819. 
Cross  r.  Hollister,  717. 

r.  Moffat,  748. 

V.  Wood,  1317. 
Crossan  r.  Mav,  90,  859. 
Crosse  r.  Smith,  972,  998,  1016,  1038, 

1119. 
Crossen  v.  Hutchinson,  1172. 
Crossley  v.  Ham,  788. 
Crossman  r.  Fuller,  158. 
Crossmore  r.  Pa^je,  48,  89. 
Crosthwait  r.  Misener,  1200. 

r.  Ross,  358a. 
Croswell  r.  .\ssociation,  1586. 
Croton  r.  Dalheim,  1083. 
Croughton  r.  Duvall,  1339. 
Crouse  v.  First  Nat.  Bank,  330. 

r.  Wagner,  1338a. 
Crout  r.  De  Wolf,  859,  1351,  1353. 
Crow  V.  Eichinper,  20i3. 
Crowderr.  Reed,  19Ca,  316. 
Crowe  V.  Heem,  1398. 

r.  Clay,   1475,   14^. 
Crowell  r.  Plant,  508.  517. 
Crowford  v.  Johnson,  726. 
Crowley  v.  Bany,  592,  1023. 
Crowningshield  v.  Crowningshield,  164. 
Croxon  r.  Worthen.  1153,  1158,  1162. 
Cruette  r.  Jenkins,  SOOa. 
Cruger  r.  Amistronp,  1073,  1567,  1586, 

1571,  1595,  1620,  1652. 
Crura  r.  Corby,  8346. 
Crump  r.  Berdan,  824. 
Cnimrine  r.  Estate  of  Cnimrine,  74, 

573,  680,  6.S6,  812. 
Crutchers  r.  Wolf,  1149. 
Crutchfield  r.  Martin,  532,  535. 
Crutchley  r.  Clarence,  145,  IIW. 

r.  NIann,  870. 
Cn,-st  r.  Crjst,  265. 
Cnstal  Plate  Glass  Co.   r.   National 

Bank,   1699. 
Cudahy  Packing  Co.  r.  National  Bank, 
16,59. 

r.  State  Nat.  Bank,  62. 
Culbertson  r.  Nebon,  27,  54,  108. 

r.  Salinger  &  Brigham,  164. 

V.  Wilcox,  719,  1314. 


Cullinan  r.  Union  Surety  &  Guaranty 

Co.,  1604. 
CuUum  V.  Branch  Bank,  831a. 
Culver  f.  Ashlev,  319. 

V.  Lea\-^•,  6^,  704. 

V.  Marks,  1588. 
Cumber  v.  Wane,  1266,  1281. 
Cumberland  Bank  r.  HaU,  1387,  1418. 
Cimaing  v.  Brown,  1749. 

r.  French,  1167. 

r.  Roderick.  713^,  1115. 
Cumings  t.  Wagner,  326. 
Cummings  v.  Freeman,  36a,  38,  39. 

r.  Hurd,  1230. 

f .  Kent,  80,  1093. 

t.  Kohn,  69S<i,  1181a. 

t.  Morris,  11926. 

f.  Thompson,  814,  815. 
Cumpston  v.  McNair,  1769. 
Cunard  S.  S.  Co.  v.  KeUev,  1728. 
Cundy  r.  Marriott,  669,  674,  1113. 
Cunningham  r.  Bank,  195a. 

I.  Davenport,  16126. 

r.  dans,  195a. 

f.  Holmes,  782. 

r .  McDonald,  1230,  1233. 

V.  Morris,  193. 

r.  Scott,  166,  777a. 

t .  Smithson,  360,  363. 

r.  Tove,  7956. 

r.  Ward  well,  128,  482. 
Cxmvus  V.  Guenther,  177. 
Cur^  I.  WLssler,  1227. 
CuriewLi  V.  Corfield,   1160. 
Curran  r.  Arkansas,  1724,  1725. 

V.  \Mtter,  1703. 
Currey  r.  Harden,  203. 
Carrie  r.  Boroman,  741. 

r.  Donald,  856. 

r.  Misa,  1623. 
Currier  r.  Clark.  185,  1966. 

r.  Fellows,  1341. 

r.  Hale,  81. 

r.  Hodgdon,  747. 

V.  Lockwood,  36a    39,  899. 
Curr\'  r.  Bank  of  Mobile,  694a,  1043, 
1218. 

r.  La  Fon,  1236,  1238. 

r.  Reynolds,  4S6. 

r.  Van  Wagner,  1104. 

r.  White,  370. 
Curtin    r.    Salmon    River    Hvdraulic 

Gold  Min.,  etc.,  Co.,  274,  394a. 
Ctirtis  r.  Bemis,  1199. 

r.  Clark,  203. 

r.  Douglass,  1181a. 

r.  Hazen,  104. 

r.  Horn,  43. 

t.  Lea\-itt,  382,  1565. 

f.  Martin,  1105.  1110.  1165. 


k 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Curtis  V.  Mohr.  824. 

V.  Portland  Sav,  Bank,  24. 

V.  Rush,  1274. 

V.  Sniallman,  1769. 

V.  State  Bank^^  1012,  1049. 
Curtis,  Jones  &  Co.  v.  Smelter  Nat. 

Bank,  382. 
Curtton  I'.  Moore,  258. 
Cushinti  V.  Field,  41,  1398. 

V.  Gore,  1583,  1.596. 
Cushman  v.  Dement,  713c. 

V.  Thayer  Mfg.  Co.,  1708/,  1708^;, 
1709. 
Cushwa  V.  Improvement  Assn.,  1265, 

1266,    1267,    1268. 
Custard  v.  Hodge,  775,  1235a. 
Cuthbert  v.  Bowie,   156. 

V.  Haley,  207. 
Cutler  V.  Cook,  1435a. 

V.  Parsons,  179,  1260. 

V.  Welsh,  200. 
Cutter  V.  Roberts,  856. 
Cutting  V.  Whittemore,  1266. 
Cuttle  V.  Cleaves,  815. 
Cutts  V.  Perkins,  16a,  21,  23,  451,  491, 

498a,   16186. 
Cuylas  t;.  N.  Y.  &  S.  R.  Co.,  1555. 
Cuyler  v.  Merrifield,  290. 

V.  Nellis,  1022. 

V.  Stevens,  972,  1043. 


Dabney  v.  Campbell,  629. 

V.  Stidger,  999a. 
Daby  v.  Ericsson,  1229. 
Da  Costa  v.  Cole,  1244. 

V.  Jones,  195. 
Daggett  V.  Simonds,  68. 

V.  Whiting,  790. 
Dahl  V.  Stakke,  203. 
Dailey  t'.  Sharkey,  644. 
Daily  v.  Bartholomew,  666. 

r.  Coker,  122,  125. 
Dair  v.  United  States,  856. 
Dakin  v.  Graves,  966. 
Dale  V.  Gear,  719,  720a,  721,  722. 

V.  Moffit,  707,  713d,  716. 

V.  Pope,  81. 
Dale,  Ex  parte,  336. 
Daley  v.  Brennan,  1226. 
Dalrymple  v.  Hilenbrand,  676. 

V.  Whittingham,  422,  430,  434. 

V.  Wyker,  161. 
Daly  V.  Butchers  &  Drovers'  Bank,  341. 

V.  Slater,  992. 
Dana  v.  Brown,  1708<i. 

V.  Kemble,  1019. 

V.  National  Bank  of  the  Republic, 
1370. 


Dana  v.  San  Francisco,  422,  427,  431. 

V.  Sawyer,  602,  603. 

V.  Third  Nat.  Bank,  1636. 
Dane  v.  Kirkall,  212. 
Daneri  v.  Gazzola,  1321. 
Danforth  v.  Crookshanks,  202. 
Dangerfield  r.  Wilby,  1275. 
Daniel  v.  Brewton,  1326. 

V.  Cartony,  760. 

V.  Daniel,  1418. 

V.  Glidden,  177,  305. 

t'.  Kyle,  1586,  1587,  1588. 

t;.  Learned,  202. 

t;.  McRae,  703. 

V.  St.  Louis  Nat.  Bank,  336. 

V.  Smith,  24. 

V.  Wharton,  1312. 
Daniels  f.  Empire  St.  Sav.  Co.,  278, 
802. 

V.  Wilson,  758. 
Danker  t'.  Jacobs,  1343. 
Dann  v.  Norris,  667. 
Danville  v.  Pace,  1565. 

V.  Southerlin,  1533,  1534. 
Darbishire  v.  Parker,  612,  911,  1033, 

1037,  1039,  1044,  1046. 
Darby  v.  Bemey  Nat.  Bank,  101,  1326. 
Darey  v.  Jones,  1021a. 
Darlard  v.  Taylor,  246,  25. 
Darling  r.  Blazek,  970,  1203,  1326. 

V.  March,  370,  1109a. 

V.  Osborne,  724a 
Darlington  v.  Atlantic  Tr.  Co.,  1550, 
1555a. 

V.  Mayor,  1528. 
Darnell  v.  Smith,  249. 

V.  Williams,  201. 
Darrach  v.  Savage,  452,  971. 
Darrington  v.  Alabama,  1723,  1725. 
Darst  V.  Gale,  318. 
Dartmouth  College  v.  Woodward,  378, 

379,  1519a,  1520. 
Darwin  i'.  Rippey,  1386. 
Da  Silva  t-.  Fuller,  1233,  1461, 1618a. 
Daskam  v.  Ulman,  732. 
Dauber  v.  Blackney,  739a,  1763. 
Daubuz  t'.  Morehead,  219. 
Daugherty  v.  Eastbum,  699. 
Davega  v.  Moore,  105. 
Davenport  v.  City  Bank,  1681. 

V.  Schram,  700. 

V.  Sleight,  148. 

V.  State  Banking  Co.,  1311. 

V.  Woodbridge,  742. 
Davenport    Nat.    Bank    v.    Homeyer, 

1727. 
Davenport  Sav.  Fund  Assn.  v.  N.  A. 

Fire  Ins.  Co.,  321. 
Davey  Bros  v.  Waughtal,  1788. 
Davey  v.  Jones,  341. 


TABLE   OF  CASES 


Ixi 


References  are  to  paragraphs  marked  § 


David  V.  Philips,  1245. 
Davidson  v.  Cooper,  1373a,  1379. 

V.  Jordon,  193. 

V.  Lanier,  142,  147. 

V.  Powell,  688c,  730. 

V.  Ramsey  County,  1521. 

V.  Stanley,  294,  299. 
Davies  v.  Dodd,  1196. 

V.  Humphreys,  1341. 

V.  Stainback,  1336. 

V.  Watson,  1371. 
Daviess   County   v.   Dickinson,    1532, 

1537,  1545,  1555. 
Daviess    County    Bank,    etc.,    Co.    v. 

Wright,  1312,  1316,  1319. 
Daviess  County  Court  v.  Howard,  422, 

1533. 
Davis  V.  Allen,  39,  350a,  352,  353,  369a, 
3696. 
V.  Anable,  1266a. 
V.  Baker,  532. 

V.  Bank  of  Tennessee,  1023. 
V.  Barger,  70. 
V.  Bartlett,  812,  814,  819. 
V.  Bly,  81c. 
V.  Boa!dy,  53. 
V.  Bowsher,  831a. 
V.  Bradley,  725a. 
V.  Briggs,  354,  1183. 
V.  Bowsher,  337. 
r.  Brown,  719a,  1217. 
V.  CarlLsle,  137;ia,  1395. 
t'.  Clarke,  97,  98,  362,  485,  486. 
V.  Clemson,  868,  894. 
V.  Coleman,  868,  917,  1387. 
t'.  Cook,  369. 
V.  Davi.s,  195a. 
I'.  Desauque,  373. 
t'.  Dodd,  1475,  1479. 
V.  Dudley,  234. 
V.  Emerson,  1340. 
I'.  England,  80,  403. 
V.  Eppinger,  1209. 
f.  Eppler,  640,  1390. 
V.  Erickson,  834. 
V.  Evans,  81a. 
t'.  First  Nat.  Bank,  341. 
V.  Francisco,  1177. 
V.  French,  262. 
V.  Gallagher,  71. 
V.  Garr,  101. 

V.  Gowen,  1005,  1085,  1148. 
V.  Graham,  1316. 
V.  Gray,  8o4. 
I'.  Gyde,  1274. 
V.  Hanly,  1041. 
V.  Helm,  104. 
V.  Henr>',  1385. 
r.  Investment  Co.,  390. 
V,  Jenney,  1418,  1421o. 


Davis  V.  Jones,  68a,  83. 

V.  Keyes,  3696. 

t^.  King,  341. 

V.  Lee,  1245. 

I'.  Marvine,  752,  924. 

V.  McCready,  7956. 

V.  Meisner,  185. 

i;.  Miller,  5,  724,  724a,  725,  775, 
782,  786,  10926,  1227,  1228, 
1233,  1436,  1437. 

V.  Morgan,  703,  717. 

t;.  Neligh,  725. 

I'.  Noll,  725,  1435a,  1436. 

V.  Notioare,  1429. 

I'.  Parsons,  1623. 

V.  Pawlette,  800a. 

V.  Peck,  ti86. 

V.  Poland,  370. 

V.  Proprietors'  Meeting  House, 
383. 

I'.  Ramsey  County,  1523. 

t;.  Richardson,  122. 

V.  Richerson,  125,  126. 

V.  Schmidt,  202. 

r.  Seeley,  775. 

V.  Sittig,  194,  741. 

V.  Smith,  366. 

V.  Staats,  1306a. 

r.  Stems,  81a. 

t'.  Steuben  School  Township,  427. 

r.  Stout,  80,  81,  1316. 

r.  Thomas,  859,  860. 

V.  Turner,  360. 

V.  Vice,  1221. 

V.  Wait,  789a. 

I'.  Welch,  12666. 

V.  Wells,  Fargo  &  Co.,  1785,  1785a. 

V.  West  Saratoga  B.  Union,  383. 

V.  W.  J.  West  &  Co.,  926. 
Davis,  Estate  of,  1260,  1300. 
Davis  &  Co.  t'.  Howell  Cotton  Co.,  356, 

357. 
Davis  Machine  Co.  v.  Best,  795a,  842. 
Davis  Sewing  Machine  Co.  v.  Gibbons, 

1752. 
DavLson  v.  City  Bank,  1623. 

I'.  Robertson,  114. 
Dav^^  V.  Kelley,  80. 
Dawdy  v.  Dawdy's  Estate,  188. 
Dawson,  In  re,  16a. 
Dawson  v.  Bank  of  Ilhnois,  80. 

V.  Goodyear,  793a. 

V.  Morgan,  1449,  1459. 

V.  Real  Estate  Bank,  3266. 

V.  Wombles,  161,  177,  1181a. 
Dawson  Town  &  Gas  Co.  v.  Woodhull, 

812. 
Day  V.  Ehnore,  1767. 

V.  Long,  188a. 

V.  Nix,  203. 


Ixiv 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Dille  V.  White,  57,  203,  1651. 
Dillenbeck  v.  Dygert,  1236. 
DiUingham  v.  Hook,  906. 

V.  Parks,  326. 
Dillman  v.  Nadelhoffer,  1759,  1769. 
Dillon  I'.  Dudley,  1458. 

V.  Rimmer,  1273. 

I'.  Russell,  1311. 
Dils  V.  Bank  of  Pikeville,  68a. 
Dimond  v.  Harris,  724a. 

V.  Sanderson,  241. 
Dingley  v.  McDonald,  1221. 
Dingwall  v.  Dunster,  543,  544,  545,  546. 
Dinlay  v.  McCullagh,  180. 
Dinsmore  v.  Duncan,  441,  1495. 

V.  Stimbert.  850. 
Dirimple  v.  St.  Bank  of  Philips,  21. 
Dishor  v.  Disher,  63. 
Dispatch  Line  of  Packets  v.  Bellamy 

Man.  Co.,  404. 
Dispatch     Printing    Co.    v.    National 

Bank  of  Commerce,  293,  803. 
District  of  Col.  v.  Cornell,  420,  436, 

783a,  788,  1235a,  1502. 
Ditch  V.  Weston  Nat.  Bank,  340,  340b, 

340c. 
Ditchburn  v.  Goldsmith,  195a. 
Ditmar,  Guardian  of  West,  v.  West,  185. 
Dittl  V.  Slaughter,  177. 
Ditty  V.  Dominion  Nat.  Bank,  386a. 
Dively  v.  Cedar  Falls,  420,  1520. 
Diven  i'.  Phelps,  1690,  1691. 
Dixon  V.  Bovill,  55. 

V.  Dixon,  832,  1190. 

V.  Elliott,  1158,  1163,  1164,  1167. 

V.  Nuttall,  89,  619,  621. 

V.  Spencer,  1789. 

V.  Yates,  1280. 
DLxon  County  v.  Field,  1543a. 
Doane  v.  King,  769a. 
Dob  V.  Halsey,  366. 
Dobbins  v.  Com.  of  Erie,  126. 

V.  Etowah  Mfg.  Co.,  387. 

V.  Oberman,  28,  43,  769a. 

V.  Parker,  156,  835. 
Dobree  v.  Eastwood,  1003,  1009,  1045. 
Dobson  V.  Espie,  542. 

V.  Moore,  290. 
Dockery  v.  Faulkner,  363. 
Dod  V.  Fourth  Nat.  Bank,  339. 
Dodd  V.  Bishop,  370. 

V.  Denny,  88. 

V.  Doty,  83. 

V.  Dunne,  838. 

V.  Lee,  800a. 
Doddrill's  Exrs.  v.  Gregory's  Admr., 

1227. 
Dodge  V.  Bank,  748. 

V.  Bank  of  Ky.,  999a. 

V.  Birkenfeld,  1230,  1233. 


Dodge  V.  Emerson,  53,  1260,  12666. 

V.  Haskell,  1418.      . 

V.  Meyer,  1734. 

V.  Nat.  Exch.  Bank,  575,   1571a, 
1618,  1663. 

V.  Gates,  203. 

t;.  Perkins,  1458. 
Dodson  r.  Baskin,  357. 

I'.  Clark,  1221. 

t;.  Taylor,  1000,  1001,  1328. 
Doe  V.  Burnham,  198,  808. 

V.  Callow,  1230. 

V.  Catamore,  1418. 

i;.  Newton,  1219. 

V.  Suckermore,  1219. 
Doebling  r.  Lo.ss,  1260. 
Dogan  t'.  Dubois,  795. 
Doherr  v.  The  Etona,  1741. 
Doherty  v.  Perry,  797. 
Dohoney  v.  Dohonev,  69. 
Dolan  t;.  Mitchell,  1215. 
Dole  V.  Lincoln,  246. 
Dolinski  v.  First  Nat.  Bank  of  Pitts- 
burg, 94. 
Dollar  Sav.  &  Trust  Co.  t'.  Crawford, 

108,  271,  700,  797. 
Dollfus  «'.  Frosch,  292,  576,   622,  634, 

1081,  1198. 
Dolman  v.  Cook,  867. 

V.  Orchard,  362,  370,  488. 
Dolson  V.  De  Ganahal,  80. 
Don  V.  Lippman,  878,  896. 
Donaldson  i'.  Grant,  53,  60. 

V.  Means,  1162. 
Donallv  v.  Wilson,  1250. 
Done  V.  Walley,  1341. 
Donegan  v.  Wood,   9,    581,    614,   946, 

947,  1050. 
Donelly  v.  Howie,  1147. 
Donelson  v.  Taylor,  1480. 
Donkle  v.  Milem,  1312,  1389. 
Donley  v.  Tindall,  87,  170. 
Donlon  v.  Davidson,  1590. 
Donnell    v.   Sav.    Bank,    392,     1074, 

1172. 
Donner  v.  Madison  Coxmty  Bank,  341. 

V.  Remer,  1016. 
Donnerberg  v.  Oppenheimer,  726a,  803, 

1339. 
Donohoe-Kelly  Banking  Co.  v.  South- 
em  Pac.  Co.,  1644. 
Donohue  v.  Gamble,  833. 
Donohue  Banking  Co.  v.  Sav.  Bank, 

714. 
Donovan  v.  Frazier,  1250. 

V.  Pitcher,  866. 

V.  Standard  Oil  Co.,  1729a,  1732. 
Donovan   Real  Estate  Co.   v.   Clark, 

1316. 
Dooley  v.  Houston  Land,  etc.,  Co.,  183. 


TABLE    OF   CASES 


Ixv 


References  are  to  paragraphs  marked  § 


Dooley  v.  Smith,  1248. 
DooUttle  V.  Ferry,  717,  718,  719. 
Doom  et  al.  v.  Sherwyn,  670,  717. 
Doppelt  V.  National  Bank,  1652. 
Dorchester,  etc.,  Bank  v.  Milton  Bank, 

623,661. 
Dorchester,  etc.,  Bank  t>.  New  England 

Bank,  341. 
Dom  V.  Parsons,  812. 
Dorr  t'.  Davis,  271. 

V.  New  Jersey  Co.,  1729a. 
Dorris  v.  Cronan,  205,  1332a. 
Dorsey  v.  Abrams,  1607. 

t;.  Wat.son,  1157. 

V.  Wolf,  62,  62a. 
Doss  V.  Peterson,  80. 
Doty  v.  Batcs^^361,  369. 

V.  Knox  County  Bank,  204. 

V.  WiLson,  747. 
Douai  V.  Lutjens,  196,  815. 
Doubleday   f.    Kress,   573,   574,   575, 

1230a. 
Doud  V.  Nat.  Bank,  1785a. 
I)..UK:d  V.  Cowles,  362,  482,  1260,  1268. 
Dougherty  i'.  Deeney,  1221,  1222. 

V.  Savage,  194. 

V.  The  Bank,  326a,  7796. 

V.  We.stern  liank,  647,  1685. 
Doughtv  V.  Tunk,  1201. 
Douglai  V.  Bank,  656,  899,  945,  955, 
987,  991. 

V.  County  of  Pike,  l.')25,  1535a. 

I'.  Rowland,  1767,  17856. 

r.  Matting,  850. 

V.  Oldham,  885. 

V.  Rej-nolds,    1755,    1773,    1785a, 
17856,  1787. 
Douglas  County  v.  Minnesota  T.  Co., 

1740a. 
Douglass  v.  Richards,  193. 

V.  Scott,  144,  713a. 

V.  Wilkeson,  102,  104. 
Douthart  v.  Congdon,  204. 
Dove  V.  Fansler,  1412. 
Doveray  v.  Kellogg,  375. 
Dow  V.  Moore,  407. 

V.  Rowell,  899. 

I'.  Sperrj',  1351. 

I'.  State  Bank,  798. 

V.  Tuttle,  158. 
Dowdy  V.  McClallan,  172. 
Dower.  Schutt,  187,860. 
Dowell  V.  Banking  Assn.,  1643. 

V.  Brown,  1199. 
Dow-Hayden  Grocery  Co.  v.  Muncy, 

142. 
Dow  Law  Bank  t-.  Godfrey,  94. 
Down    i^.    Hailing,    783,    1468,    1595, 

16.33,  1634. 
Downer  v.  Cheeseborough,  887. 


Downer  v.  Reed,  859. 

V.  Remer,  979a,  980,  1024. 
Downes  &  Co.  v.  Church,  464,  482. 
Downes  v.  Richardson,  191,  1401. 
Downey  v.  Hicks,  12G0,  1262. 
Downing  v.  Backenstoes,  620. 

V.  Donegan,  1227. 

V.  Lee,  183. 

V.  Neeley  &  Stephens,  795a,  1219, 
1227. 

V.  Wheeler,  1181a. 
Downs  V.  Planters'  Bank,  1039,  1041. 

V.  Webster,  81,  81c. 
Dows  V.  Greene,  1731,  17.50a. 

V.  National  E.xchange  Bank,  1734a, 
17346,  1734c. 

I'.  Perrin,  1735,  1750a. 

t'.  Town  of  Ehiiwood,  1560. 
Dowse  V.  Master,  1260. 
Dowvey  v.  O'Keefe,  714. 
Doxy  V.  Exchange  Bank  of  Perry,  183, 

185. 
Doyle  V.  First  Nat.  Bank  of  Birming- 
ham 624. 

r.  Ungli.sn,  534. 
Dracachi  v.  Anglo-Egj'ptian  Nav.  Co., 

1743. 
Drage  v.  Ibberson,  196a. 

V.  Netter,  1291. 
Drake  v.  Chandler,  207. 

1-.  Elwyn,  361,  362. 

V.  Flewcllon,  403. 

V.  Henly,  1217. 

!'.  Markle,  56,  713d,  1703,  1706. 

r.  Mitchell,  1274. 

V.  Pueblo  Nat.  Bank,  1.57. 

V.  Rogers,  69,  83. 

I'.  Stuart,  1215. 
Draper  v.  demons,  588,  590,  654. 

V.  Cowles,  832. 

V.  Hill,  1289a. 

V.  Jackson,  255,  256,  1184. 

V.  Mass.  Steam  Co.,  307,  400. 

V.  Rice,  80,  1230. 

V.  Snow,  1757,  17.59,  1767,  1779. 

i;.  Springport,  14916,  1495a. 

V.  Weld,  713a. 

V.  Wild,  1297. 

V.  Wood,  855,  1373a,  1385,  1390. 
Drayton  v.  Dale,  93,  227,  242,  260,  536. 
Dresus  v.  Union  Nat.  Bank,  361. 
Drennan  v.  Bunn,  670. 
Dresler  v.  Ward,  87. 
Dresser  v.  Missouri,  etc.,  R.  Co.,  758c, 

7796,  789a. 
Drew  I'.  Hagerty,  24a 

V.  Phelps,  573 

V.  Towle,  203. 
Drexel  v.  Piisey,  710,  713a. 
Drexler  v.  McGljTin,  991,  1000. 


Ixvi 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Drexler   v.   Smith,    366,    1375,    1377, 

1435a. 
Driggs  V.  Rockwell,  725. 
Drilling  v.  First  Nat.  Bank,  7796. 
Drinkall  v.  Movins  State  Bank,  573, 

679. 
Drinkwater  v.  Tebbets,  1096. 
Driscoll  V.  West  Bradley  &  C.  M.  Co., 

1708a,  1708(/,  170S/. 
Drovers'  Bank  v.  Roller,  1612a. 
Drovers'  Nat.  Bank  v.  Albany  County 
Bank,  1771. 
V.  Blue,  779b. 

t;.  Provision  Co.,  654,  1603. 
Druke  v.  lleiken,  24. 
Drum  V.  Benton,  64,  267,  16186,  1623. 
Drumm  v.  Bradfute,  964. 
Drummond  v.  Drummond,  131. 

V.  Prestman,  1755. 
Duanesburg   v.    Jenkins,    1523,    1550, 

1552. 
Dubois  V.  Del.,  etc.,  Canal  Co.,  298. 

t;.  Mason,  130,  707a,  7076. 
Du  Boise  v.  Wheddon,  226. 
Dubreys  v.  Farmer,  622. 
Dubuque  County  v.  R.  Co.,  1523. 
Du  Carry  v.  Gill,  275. 
Ducarse  v.  Keyscr,  748a. 
Duckert  v.  Von  Lilienthal,  956,  963. 
Duckett    V.    Bank    of    Balto.,    1533, 
1612a. 
V.  Nat.  Mechanics'  Bank,  1612a. 
Du  Clos  V.  Batcheller,  193. 
Dudgeon  v.  Haggart,  1267. 
Dudley  v.  Board  of  Comrs.,  11926. 
Dudman  v.  Earl,  1478. 
Duerson's  Admr.  v.  Alsop,  629,  814, 

815,  896,  899,  970a. 
Duerson  v.  Alsop,  815,  817,  1229. 
Dufaur  v.  Oxenden,  497,  4976. 
Duff  V.  East  India  Co.,  1614. 
Duffield  V.  Elwes,  24. 
Duffy,  In  re,  92,  143a. 
V.  Hobson,  122. 
V.  O'Connor,  688c,  996,  1092a. 
Dufourv.  Morse,  1130,  1142. 
Dugan  V.  Campbell,  56. 

V.  U.  S.,  443,  576,  687, 1189a,  1198, 
1227,  1229,  1230,  1230a. 
Dugane  Hvezda  Porokn,  99,  479. 
Duggan  V.  Champlin,  62. 
V.  King,  1125,  1126. 
V.  Monk,  1306. 
Dugin  V.  Bartol,  105. 
Duhammel  v.  Pickering,  221. 
Duke  V.  Cahawba  Co.,  1708^. 
V.  Christy,  1341. 
V.  Clark,  7266. 
Duke  of  Norfolk  v.  Howard,  654. 
Duker  t;.  Franz,  1403. 


Dulaney  v.  Payne,  1186a. 
Dulling  V.  Weeks,  1340. 
Dumbrow  v.  Gelb,  1385. 
Dumont  v.  Pope,  470,  474,  966. 

V.  WiUiamson,  670. 
Dunbar  v.  Dunbar,  24,  246. 
V.  Marden,  112. 
t;.  Smith,  568. 
V.  Tyler,  1070,  1076. 
Duncan  v.  Anderson,  720a. 
t;.  Berlin,  1636,  1644. 
V.  Course,  9. 
t;.  Hodges,  148. 
V.  Jaudan,  1612a. 
V.  Kirtley,  303. 
V.  Louisville,  51a,  834. 
t;.  McCuUough,  1144. 
V.  Nells,  307. 

v.  N.  &  S.  Wales  Bank,  1343. 
V.  Pope,  856. 
V.  Scott,  857,  858. 
V.  Sparrow,  899. 
Duncan  &  Sherman  v.  Gilbert,   792, 

832a. 
Dundas  v.  Bowler,  899. 
Dundee  Mort.  &  Trust  Co.  v.  Nixon, 

869. 
Dunham  i'.  Downer,  1338. 
V.  Packing  Co.,  842. 
f.  Peterson,    832. 
Dunkerson,  In  re,  1708<i. 
Dunkle  v.  Nichols,  617. 
Dunlap  V.  Hales,  232. 
V.  Kelly,   812,    1458. 
V.  Smith,  1689. 
V.  Thompson,  1032. 
Dunn  V.  Adams,  5,  891. 
V.  Clements,  1400. 
V.  Ghost,  719,  757. 
V.  National  Bank  of  Canton,  777a. 
V.  O'Keefe,  454. 
V.  Parsons,  1311. 
V.  Snell,  748. 

V.  Weston,  726,  786,  790,  793a. 
V.  Whalen,  1604. 
Dunnegan  v.  Stevens,  867,  873,  902. 
Dunning  v.  Heller,  6886. 
Dunovan  v.  Flynn,  504. 
Dupays  v.  Shepherd,  488. 
Dupeau  v.  Waddington,  827. 
Dupont   V.   Mt.   Pleasant   Ferry   Co., 

1188. 
Dupont   De   Nemour  Powder  Co.   t;. 

Rooney,  1003. 
Duramus  v.  Harrison,  1428. 
Duran  v.  Aver,  1458a. 
Durant  v.  Banta,  762a,  763,  767. 
V.  Iowa  County,  800a,  1500. 
Durbin     v.     Northwestern     Machine 
Works,  1319. 


TABLE    OF   CASES 


Ixvii 


References  are  to  paragraphs  marked  § 


Durbin  v.  Northwestern  Scraper  Co., 

1316,  1321. 
Durden  v.  Smith,  1060,  1070. 
Durein  v.  Moeser,  781a,  812. ' 
Durgin  v.  Bartol,  105. 
Durham  v.  Manrow,  1779. 

V.  Price,  1133. 
Durkin  v.  Cranston,  114. 
Durland  v.  Durland,  164. 
Dumford  v.  Patterson,  633. 
Durrum  v.  Hendrick,  1084. 
Durvee  i'.  Dennison,  1147. 
Dusenbury  v.  Albright,  94,  1388. 

V.  ElHs,  306. 
Dutch  V.  Boyd,  101. 
Dutcher  v.  Porter,  71. 
Dutchess  Cotton  Mfg.  Co.  v.  Davis, 

620. 
Dutchess  County  v.  Davis,  47. 
Dutchess  County  Bank  v.  Ibbottson, 

959. 
Dutton  t'.  Bratt,  1103. 

V.  Ives,  834. 

V.  Marsh,  406,  408. 

V.  Merchants'  Nat.  Bank,  1712a. 
Duvall  V.  Farmers'  Bank,  1002b,  1130, 

1135. 
Dwight  V.  Emerson,  611,  996. 

V.  Newell,  266,  680. 

V.  Scovil,  1087. 
Dwinnell  v.  McKibbcn,  1312,  1325. 
Dwycr  v.  Railroad  Co.,  17336. 
Dyar  v.  Shenkberg,  1325,  1326. 
Dyas  j;.  Hanson,  406,  605,  1590. 
Dye  V.  Scott,  1093. 
Dyer  i'.  Covington  Township,  432,  434. 

f.  Gilson,  1763. 

V.  Sebrell,  687,  1181a. 
Dygert  v.  Vermont  L.  &  T.  Co.,  879, 

923. 
Dykers     v.     Leather    Manufacturers' 
Bank, 1584, 1617a. 

I'.  Townsend,  303. 
Dykman  t;.   North   Bridge,   183,   656, 

7796. 
Dymock  v.  Mo.  Ry.  Co.,  795a,  1749. 


Eadie  v.  Ashbaugh,  318,  319,  321. 
Eagle  V.  Kohn,  197,  807,  1496,  1551. 
Eagle  Bank  r.  Chapin,  1039,  1051. 

V.  Hathaway,     992,     995,     1005a, 
1006,  1011,  1014. 

V.  Smith,  740,  1675. 
Eagle   Mining  &   Imp.   Co.   v.   Lund, 

1181a. 
Eakin  t-.  Citizens'  State  Bank  of  Ness 

City,  1567. 
Eames  v.  Crosier,  663a,  724a,  815,  819. 


Eames  Brake  Co.  v.  Proaer,  1289. 
Earhart  v.  Grant,  781. 
Earl  V.  Peck,  180. 

Earl  of  Shrewsbury  v.  North  Stafford- 
shire R.  Co.,  377. 
Earle  v.  Enos,  80,  790. 

V.  Foster,  713d. 

V.  Reed,  226. 

V.  Robinson,  177,  205,  206. 
Early  v.  Preston,  970,  1052,  1053. 

V.  Wilkinson  &  Hunt,  298,  300. 
Earnest  i'.  Barrett,  668,  669a,  730. 

V.  Taylor,  1116. 
Easeley  v.  Crockford,  774. 
Eason  v.  Isbell,  635. 
Easterly  v.  Barber,  703. 
Eastern  Bank  v.  Brown,  1023. 
East  Haddam  Bank  v.  Scovill,  341. 
East    Hartford    v.    Hartford    County, 

1519a. 
East  India  Co.  v.  Tritton,  672,  676. 
East  Lincoln  v.  Davenport,  1537,  1550. 
Eastman  v.  Commonwealtn,  1664. 

V.  Plumer,  1221,  1222,  1236. 

V.  Shaw,  751,  758. 

V.  Turman,  983,  995. 
East   Oakland   Township   v.   Skinner, 

1538,  1544a. 
Easton    v.    German-American    Bank, 
1277a, 1278a. 

V.  Hyde.  1706. 

V.  Pratchett,  174,  179,  180. 

V.  Strothcr,  354. 
East  River  Bank  t^.  Butterworth,  1266. 
East  River  Nat.  Bank  v.  Gove,  388. 
Eastwood  V.  Kenyon,  182,  240. 
Eaton  t'.  Alger,  11926. 

V.  Boissonault,  1458a. 

V.  Carey,  187 

V.  Emerson,  80. 

V.  Libbey,  179. 

V.  McMahon,  719,  1145. 

I'.  WTiitmore,  1316. 
Eaton  &  H.  R.  Co.  v.  Hunt,  1496. 
Eaves  t'.  Henderson,  81. 
Eberhart  v.  Page,  710. 
Ebersole  v.  Ridding,  1233. 
Ebert  v.  Gitt,  126,  775. 
Eccles  f.  Ballard,  612,  663a. 
Ecker  v.  First  Nat.  Bank,  392. 
Eckert  v.  Louis,  1373,  1373a,  1390. 

V.  Pickel,  1411,  1412. 
Eckhert  v.  Ellis,  726a,  805. 
Eckman  v.  Scott,  248. 
Ecpert  V.  Condres,  611. 
Eddy  V.  Bond,  1392. 
Edelen  r.  White,  1303. 

V.  Worth,  154. 
Edelman  i'.  Ram.",  130. 
Edgecomb  t;.  Rodd,  196. 


Ixviii 


TABLE    OF   CASES 
References  are  to  paragraphs  marked 


Edgefield    t'.     Farmers'     Co-operative 

Mfg.  Co.,  832a. 
Edgerly  v.  Lawson,  7136,   1754,   1/76. 

V.  Shaw,  230. 
Edie  V.  East  India  Co.,  623,  698. 
Edis  V.  Bury,  131. 
Edison  Electric  Co.  v.  Blount,  205. 
Edison  v.  Edison,  1340. 
Edisto  Phosphate  Co.  v.  Sandford,  164. 
Edmonds  v.  Groves,  177. 
Edmonson  v.  Potts,  1339. 
Edmonston    v.    Ascough,    156,    713a, 
1326. 
V.  Gilbert,  330,  1005a. 
Edmunds  v.  Gates,  983. 

V.  Digges,  737,  1672,  1675,  1677. 
V.  Rose,  675. 
Edmundson  v.  Drake,  1785a. 
Edney  v.  Willis,  725,  782. 
Edon  V.  Smyth,  1286. 
Edson,  In  re,  9956. 

V.  Angell,  336,  340d. 
V.  Fuller,  550. 
V.  Jacobs,  1017. 
Edward  Mine's  Lumber  Co.  v.  Ander- 
son, 567,  569. 
Edward   Knapp   &   Co.   v.  Tidewater 

Coal  Co.,  383,  790. 
Edwards  v.  Bates  Co.,  1509. 
V.  Bohannon,  12816. 
V.  Brewer,  1730a. 
V.  Brown,  850. 
V.  Chair  Co.,  1319. 
V.  Dick,  674. 
V.  Jones,  758. 
V.  McKee,  1478. 
V.  Moses,  1586,  1620. 
V.  Ramsey,  59. 
V.  Sartor,  1385,  1411. 
V.  Scull,  1195. 
V.  Tandy,  1149. 
V.  Thomas,    283,    284,    292,    775, 

7956. 
V.  Wagner,  741. 
V.  White,  724a,  797. 
Edwin  V.  Lancaster,  1334,  1337. 
Effinger  v.  Richards,  150. 
Egerton  v.  Fulton  Nat.   Bank,  3266. 
Egg  V.  Barnett,  1648. 
Eggan  V.  Briggs,  1191. 
Eggemann  v.  Henschen,  1310. 
Eggleston  v.  Mason  &  Co.,  359. 
Ehle  V.  Chittenango  Bank,  56. 
Ehrichs  v.  De  Mill,  16a,  50. 
Ehrlich  v.  Jennings,  1469. 
Ehrmen  v.  Union  Cent.  Life  Ins.  Co., 

93. 
Eichelberger  v.  Bank,  815,  843,  1181a. 
V.  Finley,  1078,  1586,  1588,  1596, 
1597. 


Eichner  v.  Bowerv  Bank,  1571. 
Eighth    Ward    Bank    of    Brooklyn   v. 

McLoughlin,  5.")(J. 
Eilbert  v.  Finkbeimcr,  713f/. 
Eisenger  v.  Lefkowitz,  819. 
Eisner  v.  Kellcy,  1329. 
Elbert  v.  McClelland,  1418. 
El  Dorado  Imp.  Co.  v.  Citizens'  Bank, 

386. 
Eldred  v.  Malloy,  41,  195a. 
Eldridge  v.  Kay,  86a,  812. 
Elford  V.  Teed,  464a,  600. 
Elgin  V.  Hill,  72.'5a. 
Elgin  City  Banking  Co.  v.  HaJl,  177, 

693,  700,  777,  7796,  795a. 
Elias  V.  Finnegan,  780. 
Eliot  Nat.  Bank  v.  Woonsocket  Electric 

&c.  Co.,  392a. 
Elizabeth  v.  Force, -1399,  1499a,  1500, 

1503. 
Elkhart    HydrauUc    Co.   v.    Turner, 

394. 
EUerslaw  v.  Magniac,  1734a. 
Ellett  V.  Britton,  51. 
Ellicott  V.  Martin,  165,  775,  814. 

V.  Nichols,  1215. 
EUinger's  Appeal,  94. 
Elliott  V.  Abbott,  392,  1190. 
V.  Armstrong,  741. 
V.  Brady,  193. 
V.  Chestnut,  146. 
V.  Deason,  67,  145,  725. 
V.  Dudley,  367. 
V.  Giese,  1764. 
V.  Ince,  210. 
V.  Lcvings,  1406. 
V.  Moreland,  710. 
V.  Quails,  1198,  1317. 
V.  White,  965. 
Ellis  V.  Ballou,  1266a. 

V.  Blackberby,  1198,  1227. 

V.  Commercial    Bank,    582,    962, 

1021,  1118. 
V.  Ellis,  40. 
V.  Francis,  277. 
V.  Hahn,  104. 
V.  Littlefield,  262. 
V.  Mason,  40. 
V.  McLemore,  103. 
V.  Ohio  Life  Ins.  Co.,  533,  1361, 
1362,  1367,  1371,  1372,  1657. 
V.  Randle,  159. 
V.  Wheeler,  96,  1584. 
V.  Wild,  7316. 
Ellison  V.  CoUingridge,  35,  1581. 
V.  Jackson  Water  Co.,  316. 
V.  Simmons,  161,  174,  769o. 
Ellsworth  V.  Brewer,  694a,  1204,  1223. 
V.  Fogg,  1289a. 
V.  Hopkins,  241. 


TABLE    OF   CASES 


Ixix 


References  are  to  paragraphs  marked  § 


Elmer  v.  Loper,  185. 
Elminger  v.  Drew,  202,  203. 
Elmore  v.  Rugely,  62,  741. 
Elmwood  Township  v.  Many,  1525. 
Elson  V.  Denny,  1243. 
Elting  V.  Brinkerhoff,  1571. 
Elwell  V.  Dodge,  394  416. 

V.  Puget  Sound  R.  Co.,  387. 
V.  Tatum,  805. 
V.  Turney,  816. 
Elwood  V.  Deifendorf,  1266a. 
Ely  V.  Clute,  94. 
t'.  James,  1260. 
V.  Kilborn,  81. 
Elyton  &  Co.  v.  Hood,  1312. 
Emanuel  v.  WTiite,  832. 
Emblen  v.  Dartnell,  642, 
Emerson  v.  Crocker,  782. 
V.  Cutts,  694a. 
V.  Murray,  1421. 
V.  Opp,  1388. 
«;.  Providence  Hat  Mfg.  Co.,  277, 

294,  400,  401. 
V.  Sheffer,  164,  185. 
Emery  v.  Clough,  24a. 

V.  Hobson,  1090,  1587,  1589. 

V.  Irving  Nat.  Bank,   1730,  1731, 

1734a,  1734c,  1736,  1750. 
V.  Lowe,  1966. 
V.  Mariaville,  435. 
V.  Vinall,  65. 
Emery  Mfg.  Co.  v.  G.  H.  Tiemey  &  Co., 

1734a. 
Emley  v.  Perrine,  742. 
Emly,  Ex  parte,  360. 
V.  Lye,  350,  739. 
Emmatt  v.  Kearns,  1766. 
Emmett  v.  Tattenham,  1192a,  1199. 
Emmons  v.  Meeker,  143. 
Emory  i'.  Clough,  26a. 
Empire  i'.  Darlington,  1536. 
Empire  Mut.  Annuity  &  Life  Ins.  Co. 

t^.  Avery,  769. 
P^mpire  Trans.  Co.  v.  Steele,  1731. 
Emporia  Nat.  Bank  v.  Shotwell,  139, 

1663. 
Endora  Min.  &  Co.  v.  Barclay,  74. 
Engelbert  v.  Taylor,  1227. 
Englehart  v.  Peoria  Plow  Co.,  282. 
English  V.   Darley,   1305,   1307,   1326, 
1327. 
V.  Schlesinger,  68a,  790,  793a. 
V.  Trustees,  425. 
V.  Wafles,  8346. 
V.  Wall,  454,  481,  1073. 
English  &  Scottish  American  Mortg.  & 
Inv.  Co.  V.  Globe  Loan  &  Trust 
Co.,  403. 
Enneking  v.  Woebkenberg,  63. 
Ennis  v.  Reynolds,  9956. 


Enterprise   Brewing   Co.   v.   Canning, 

176,  703. 
Enthoven  v.  Hoyle,  102,  148. 
Entwistle,  In  re,  110. 
Epler  V.  Funk,  725,  1436. 
Eppens  V.  Forbes,  7136. 
Eppert  V.  Hall,  63,  1767. 
Epps  V.  Dillaye,  1272. 

V.  Waring,  81c. 
Epting  V.  Jones,  1185. 
Equitable  Marine  Ins.  Co.  v.  Adams, 

694,  740a. 
Equitable  Nat.  Bank  v.  G.  &  S.  Co., 

1623. 
Equitable  Trust  Co.  of  New  York  v. 
Lyons,  144. 
V.  Taylor,  51a. 
V.  Torphy,  249. 
Eretwell  v.  Carter,  145. 
Erhart  i;.  Dietrich,  1206,  1227,  1229. 
Erickson  v.  First  Nat.  Bank,  1390. 
t;.  Inman,  18,  480,  504. 
V.  Roehm,  859. 
Erie  Boot  &  Shoe  Co.  v.  Eichenlaub, 

769a. 
Erie   Dispatch  Co.  v.   St.   Louis  Co., 

1747a. 
Ern  V.  Rubinstein,  815. 
Ernst  V.  Steckman,  44. 
Erskine  v.  Steele  County,  377,  427. 
Erwin  v.  Adams,  119. 
V.  Carroll,  262. 
V.  Downs,  592,  675. 
V.  Lynn,  696a. 
t;.  Sanders,  158. 
Erwin  Lane  Paper  Co.  v.  Nat.  Bank, 

101. 
Esau  V.  Green  &  Button  Co.,  812. 
Esdaile  v.  Lanauze,  281,  292. 

V.  Sowerby,  1172. 
Esley  V.  People  of  Illinois,  101. 
Esmisten  v.  Herpolshemer,  1590. 
Espy  V.  Bank  of  Cincinnati,  559,  1568, 

1569,  1603,  1606a,  1661. 
Essex  Co.  V.  Edmunds,  715. 
Essex  County  Nat.  Bank  t-.  Bank  of 
Montreal,  335,  1603,  1604,  1636. 
Estabrook  v.  Smith,  683,  1183. 

V.  Swett,  1226. 
Estes  V.  Kyle,  884. 

V.  Tower,  1209,  1210. 
Etheridge    v.    Gallagher,    174a,    769a. 
V.  Ladd,  654. 
V.  Parker,  742. 
Ething  V.  Schuylkill  Bank,  983. 
Etna  Ins.  Co.  v.  Alton  City  Bank,  341. 

V.  Mayor,  1223. 
Etten  V.  Howell,  80. 
Etting  V.  Schuylkill  Bank,  984,  1045, 
1053. 


Ixx 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Etting  V.  Vanderlyn,  827. 
Ettlinger  v.  Carpet  Co.,  1509. 
Etz  V.  Place,  81/>,  1379,  1757. 
European  Bank,  In  re,  7266. 
Evans  v.  Anderson,  867. 

V.  Baker,  156. 

V.  Cranilington,  685,  698a. 

V.  Drummond,  1295,  1299. 

V.  Evans,  1613. 

V.  Foreman,  1411. 

V.  Freeman,  81d,   688c,   700,   728, 
812 

V.  Gale,  1226. 

t;.  Gee,  669,  694. 

V.  Gordon,  1198. 

V.  Kneeland,  1309. 

V.  Kymer,  790,  855a. 

V.  M.  C.  Lily  &  Co.,  361a. 

V.  Partin,  13176. 

V.  Prosser,  1425. 

«;.  St.  John,  656. 

t;.  Secrcst,  242. 

V.  Specr  Hardware  Co.,  792. 

V.  Stuhrberg,  739a. 

V.  Underwood,  46. 

V.  Whyle,  1755. 
Evans,  etc.,  Co.  v.  Holder,  278. 
Evansville  v.  City  of  Dennett,  1537. 

V.  Dennett,  1537,  1540,  1543. 
Evansville   Bank  v.   American   Bank, 

336. 
Evansville  Nat.  Bank  v.  Kaufman,  189. 

V.  Metropolitan  Nat.  Bank,  1708d. 
Evansville  Public  Hall  Co.  v.  The  Bank 

of  Commerce,  394. 
Everard  v.  Watson,  983. 
Everett  v.  Collins,  1623. 

V.  Sullivan,  664a. 

V.  Tidball,  663,  664a. 

V.  United  States,  392. 

V.  Vendryes,  896,  898. 
Eversole  v.  MauU,  725,  725a. 
Everson  v.  Carpenter,  233. 

V.  Gere,  1775. 
Evertsen    v.    National    Bank,     1489, 

1490a,  1494,  1496a,  1500,  1505. 
Ewald  V.  Faulhaber  Co.,  1596. 
Ewart  V.  Bank  of  Monroe,  326c. 
Ewen  V.  Templeton,  164,  1191. 

V.  Wilbor,  572,  635,  926,  959, 1786. 
Ewin  V.  Lancaster,  1334,  1337. 
Ewing  V.  Clark,  155,  165. 
V.  Clarke,  1760. 
V.  Ewing,  246,  1227. 
Exchange  &   Banking  Co.   v.   Boyce, 

1025. 
Exchange  Bank  v.  Appalachian  Land  & 
Lumber  Co.,  62,  866. 
V.  Bank  of  North  Am.,  1622a. 
V.  Butner,  824. 


Exchange  Bank   v.   County  of  Lewis, 
298  422. 

V.  Hubbkrd,  .504,  867. 

V.  Knox,  1681,  1689,  1691. 

V.  McDill,  1612a. 

V.  McMillan,  1326,  1328. 

V.  Monteith,  284. 

V.  Morrall,  1479,  1480. 

V.  Sutton  Bank,  1566,  1587. 

t;.  Thrower,  292,  294. 

V.  Tiddy,  1689. 
Exchange  Nat.  Bank  v.  Bank  of  Little 
Rock,  286. 

V.  Coe,  831a. 

t;.  Johnson,  1230. 

i;.  Third  Nat.  Bank,  341,  413. 
Exeter  Bank  v.  Sullivan,  374. 
Exon  V.  Russell,  1379. 
Eyerman  v.  Piron,  728,  1215. 
Eyrich  t-.  Capitol  State  Bank,  62,  3266. 


Fabens  v.  Mercantile  Bank,  324,  341. 
Fahey  v.  Eastcrley  Machine  Co.,  203. 
Fair  v.  Cranston,  267. 
Fairbanks  v.  Sargent,  1487. 

V.  Snow,  857. 
Fairchild  v.  Adams,  1187, 1188. 

«;.  Feltman,  4976. 

t;.  Holly,  1253. 

V.  Ogdensburgh,  etc.,  R.  Co.,  424, 
1088. 
Faircloth-Byrd  Mercantile  Co.  v.  At- 
kinson, 4976,  504. 
Fairclough  v.  Pavia,  726a. 
Fairex  v.  Bier,  1503,  1506. 
Fairfield  i^.  Adams,  687,  1195. 
Fairlee  v.  Herring,  503,  504a,  510,  552, 

563. 
Fairley  v.  Roch,  1254. 
Fairly  v.  Nash,  292,  305. 
Fairthorne  v.  Blaquire,  243. 
Faison  v.  Grandy,  807. 
Faith  V.  Richmond,  361,  362. 
Fake  v.  Eddy,  919. 
Falconer  v.  Railroad  Co.,  1524. 
Fales  V.  Russell,  1478,  1480. 
Falk  V.  Moebs,  410,  415,  416. 
Falke  v.  Brule,  673. 
Fall  V.  Glover,  174. 
Fallows  V.  Taylor,  196. 
Fall  River  Union  Bank  v.  Willard,  454, 

462,  463,  654. 
Falsken  v.  Farington,  1625. 
Fambro  v.  Keith,  80,  1321. 
Famous  Shoe  Co.  v.  Crosswhite,  1651, 

1652. 
Fancourt  v.  Thome,  51a. 
Fane  v.  Filler,  Sid. 


TABLE    OF   CASES 


Ixxi 


References  are  to  paragraphs  marked  § 


Fanning  v.  Consequa,  879. 

Fanshawe  v.  Peet,  85. 

Fant  V.  MiUer,  189,  867,  868,  887,  914. 

V.  Wickes,  812,  1181a. 
Faneuil  Hall  Nat.  Bank  v.  Meloon,  683, 

1290. 
Farbell  v.  Sturtevant,  181. 
Farber  t;.  National  Forge  &  Iron  Co., 

174a,  180,  187,  758. 
Fareira  v.  Gabell,  195a. 
Farer  v.  People's  Trust  Co.,  1786. 
Fargo  V.  Jennings,  1250. 
Farina  v.  Home,  1713. 
Faris  v.  Wells,  664a. 
Farkas  v.  Monk,  177. 
Farley  Nat.  Bank  v,  Henderson,  790, 

792. 
Farmeloe  v.  Bain,  1712a. 
Farmer  v.  Etheridge,  769a,  1713a,  1714. 

V.  First  Nat.  Bank,  51a,  829a,  830, 
831a. 

V.  Manhattan     Sav.     Institution, 
1711a. 

V.  Perrv,  80. 

t;.  Rand,  1390. 

V.  Sewall,  766. 
Farmers    &    Citizens'    Nat.    Bank    v. 

Noxon,  791. 
Farmers'  &  Mechanics  Bank  v.  Butch- 
ers, etc..  Bank,  .391,  1552. 

V.  Bank  of  Rutherford,  532,  672. 

V.  Bennett  Co.,  1713a. 

V.  Daikcr,  787. 

V.  Farris,  1033. 

t^.  Germania  Life  Ins.  Co.,  775. 

V.  Hawn,  205. 

V.  Humphrey,  1190. 

V.  Kercheval,  370. 

V.  Needles,  93. 

V.  White,  1669. 
Fanners'  &  Klerchants'  Nat.  Bank  v. 

Novich,  1385. 
Farmers'  &  Traders'  Bank  v.  Eubanks, 
241,  247. 

V.  Fidelity  &  Deposit  Co.,  271. 
Farmers'  Bank  v.  Allen,  953. 

V.  Battle,  1014,  1023. 

V.  Butler,  858,  1012,  1015,  1034. 

V.  Butchers'  Bank,  390. 

V.  Colby,  403. 

V.  Duvall,  598,  658,  1039,  1057, 
1092,  1092a. 

V.  Ewing,  150,  1.52,  1092,  1092a. 

V.  Goddin,  1689,  1691. 

V.  Gunnell,  970a,  1021,  1060, 1070. 

V.  Harris,  1032. 

V.  Iglehart,  1708c,  17086. 

V.  Johnson,    King    &    Co.,    1566, 
1567. 

V.  Mutual  Ass.  See.,  205. 


Farmers'  Bank  v.  Oliver,  205. 

V.  Reynolds,     1311,     1465,     1470, 
1479,  1695. 

I'.  VaU,  331. 

V.  Vanmeter,     703,     1074,     1083, 
1113,  1113a. 

V.  Waples,  1103,  1106. 

i;.  Wasson,  1708fc,  1708d. 

V.  Whitehill,  1219. 
Farmers'  Bank  &  Trust  Co.  v.  New- 
land,   324,   335,   341,   342,    1245, 

1625. 
Farmers'  Bank  of  Lyons  v.  Dixon,  815. 
Farmers'    Bank    of    Roff   v.    Nichols, 

156. 
Farmers'   Bank  of   Virginia  v.  Owen, 

344. 
Farmers'  Bank  of  Wicklifife  v.  Wick- 

liffe,  80,  1312,  1317,  1318. 
Farmers'  Exch.  Bank  v.  Altura,  etc., 
Co.,  1092a,  1109. 

V.  Morse,  94. 
Farmers',  etc.,  Bank  v.  Bank  of  Allen 
County,  1603,  1606a. 

V.  Butchers,  etc.,  Bank,  1610a. 

V.  Hathaway,  793a. 

V.  Kercheval,  1788. 

V.  King,  1615. 

V.  Rathbone,  1335. 

t'.  Troy  City  Bank,  392,  417. 
Farmers'  Loan  &  Tr.  Co.  v.  Toledo, 

etc.,  R.  Co.,  1506a. 
Farmers'  Nat.  Bank  v.  Dreyfus,  1590, 
1595,  1634. 

I'.  Fletcher,  834. 

t'.  McCall,  62,  62a,  829a. 

V.  Rasmusson,  62,  62a. 

V.  Sahna  Paper  Mfg.  Co.,  1209. 

I'.  Sutton  Mfg.  Co.,   10,  62,  808, 
868. 

I'.  Thomas,  142,  143,  1385,  1408. 

V.  Venner,  606,  643. 
Farmers'  Packing  Co.  v.  Brown,  1713. 
Farmers'  Savings  Bank  t'.  Arispe  Mer- 
cantile Co.,  1312. 

V.  Newton,  1227. 
Farmers'  Sav.  Inst.  v.  Garresche,  392. 
Farmers'  State  Bank  of  Solomon  City 

V.  Belvins,  832a. 
Farmington  Sav.  Bank  v.  Fall,  386a. 
Famham  v.  Fox,  782. 
Famsworth  v.  Allen,  602. 

t'.  Drake,  139. 

i;.  Fraser,  188. 

V.  Mullen,  637. 

I'.  Sharp,  1418. 
Famum  v.  Brooks,  211. 

V.  Fowle,  1172. 
Farquhar  v.  Fidelity  Ins.  Co.,  53. 

V.  Southey,  545,  .546,  1398. 


Ixxii 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Farquhar  &  Co.  v.  Higham,  571,  714, 

970. 
Furr  V.  Nichols,  156. 
V.  Ricker,  717. 
V.  Stevens,  1260. 
Farra  v.  AdamS;  1729. 
Farrar  v.  Bank  of  New  York,  33. 
V.  Deflime,  369a. 
V.  Oilman,  392. 
V.  Peterson,  322. 
Farrell  v.  Lovett,  775. 

V.  Reed,  271. 
Farrington  v.  Brown,  1149. 

V.  Frankfort  Bank,  831c,  1266o. 
Far  Rockaway  Bank  v.  Norton,  3266, 

714. 
Farthing  v.  Dark,  770,  789. 
Farwell  v.  Curtis,  1586, 1590, 1599. 
V.  Ensign,  703. 
V.  Hilliard,  1203. 
V.  Kennett,  56. 
V.  Tyler,  1197. 
Faasctt  v.  BoswcU,  163. 
Fassin  v.  Hubbard,  700a,  998. 
Fast  I'.  Canton,  etc.,  R.  Co.,  1750. 
Faulder  v.  Silk,  213. 
Faulkner  v.  Bailey,  12156. 
V.  Faulkner,  268,  1119. 
V.  Ware,  812. 
V.  White  &  Son,  837,  843. 
Faurot  v.  Yates,  1340. 
Favorite  v.  Stidham,  1387,  1388. 
Fawcett  v.  Freshwater,  1317a. 

V.  Powell,  815. 
Fawell  V.  Heelis,  1281a. 
Fawsett  v.  National  Life  Ins.  Co.,  698, 

6986. 
Fay  V.  Fay,  194. 

V.  Hunt,  183,  1191. 
V.  Jenlcs,  713a. 
V.  Noble,  382,  383. 
V.  Smith,  1373a. 
V.  Tower,  1317. 
Fayette  County  Sav.  Bank  v.  Steffen, 

849,  850. 
Fayetteville  v.  Lutterloh,  640. 
Fayle  v.  Bird,  642. 
Fealy  v.  Bull,  796. 
Feamster  v.  Withrow,  1267. 
Fear  v.  Dunlap,  709,  713d. 
Fearing  v.  Clark,  68. 
Fearing's  Estate,  In  re,  1703. 
Fearn  v.  Filica,  809. 
Featherston  v.  Wilson,  81. 
Federal  Bank  v.  Northwood,  365. 
Federal  Discount  Co.  v.  Becker,  1219. 
Federal  Nat.  Bank  v.  Cross  Creek  & 

Pittsburg  Coal  Co.,  386. 
Fegley  v.  Jennings,  1761,  1769,  1786. 
Feiner  v.  Puetz,  290. 


Feldmun  v.  McGraw,  205. 
Fell  I'.  Cook,  260. 

V.  Dial,  996,  1147. 
Fell's  Point  Sav.  Inst.  v.  Weedon,  1703, 

1707,  1707a. 
Fellers  i'.  Penrod,  174,  177. 
Fellows  V.  Cress,  1229. 

V.  Prentiss,  1319,  1329. 
V.  Steamer  Powell,  1733. 
V.  Wyman,  370a. 
Felt  V.  Bush,  831a. 
Felton  V.  Smith,  12816. 
Fender  t'.  Hclterbrandt,  183. 
Fenn  v.  Dugdale,  1238. 

V.  Harrison,  278,  279,  689a,  736. 
Fenno  v.  Gay,  89,  1215. 
Fenonille  v.  Hamilton,  829a. 
Fenton  v.  Robinson,  848,  850. 

V.  White,  225. 
Fentum  v.  Pocock,  1319,  1333,  1334, 

1335. 
Fenwick  v.  Bowling,  202. 
Fera  v.  Wickham,  1425. 
Ferdon  v.  Jones,  824. 
Ferguson  v.  Coppeau,  1733. 
V.  Harris,  248,  1267. 
V.  Landram,  1545. 
V.  Oliver,  203. 
v.  Turner,  1311. 
Femald  v.  Bush,  1590. 
Feman  v.  Doubleday,  1317. 
Fernandez  t'.  Lewis,  466,  470. 
Fernekes  v.  Borgcnthal,  196a,  204. 
Ferner  v.  Williams,  644. 
Ferrel  v.  N.  Y.  Sec.  &  Tr.  Co.,  1221. 
Ferris  v.  Bond,  91. 

V.  Johnson,  1317a. 
V.  Saxton,  614. 
V.  Shaw,  361a. 
V.  Tavel,  797,  831a. 
Fesenmayer  v.  Adcock,  36a. 
Fessenden  v.  Summers,  713c,  714. 
Fetrich  i'.  Woodrow,  713o. 
Fetters  v.  Muncie  Nat.  Bank,  790,  793a. 
Feurt  V.  Brown,  359. 
Fidelity  &  Deposit  Co.  v.  Nat.  Bank  of 

Commerce,  1651. 
Fidelity    Loan    &    Guarantee    Co.    v. 

Baker,  197. 
Fidelity  Loan  &  Trust  Co.  v.  Hogan,  356. 
Fidler  v.  Paxton,  775. 
Field  V.  Anderson,  1471. 
V.  Lelean,  1279a. 
V.  Mayor  of  New  York,  23. 
V.  Nickerson,  607,  609,  611,  612, 

1211. 
V.  SchiefTelin,  271. 
V.  Sibley,  606. 
V.  Tibbetts,  787. 
Fielden  v.  Lahens,  753. 


TABLE    OF   CASES 


Ixxiii 


References  are  to  paragraphs  marked  § 


Fielder  v.  Marshall,  485. 
Fielding  &  Co.  v.  Corry,  331. 
Fields  V.  Fields,  62. 

V.  Tunston,  724a,  725. 
Fifield  V.  Cluse,  122. 
Fifth  Nat.  Bank  v.  Armstrong,  336. 
V.  Ashworth,  334,  1625. 
V.  Central  Nat.  Bank,  139. 
V.  F.  S.  S.  &  G.  S.  F.  R.  Co.,  388, 

390. 
V.  Providence      Warehouse      Co., 

1714. 
V.  Woolsey,  1343,  1772. 
Filby  i;.  Turner,  1481. 
Fillebrown  v.  Haywood,  776. 
Fillmore  v.  Hayes,  742. 
Finan  v.  Babcock,  305. 
Finch  V.  Galighcr,  1295. 

i;.  Skilton,  183,  606,  1215. 
Findlay  v.  Hall,  923,  1458a. 

V.  Pott,  62. 
Findley  v.  Hill,  1319. 
Fine  v.  Highbridge  M.  E.  Church,  1197. 
Fini'gan  v.  Green,  815. 
Finger  v.  McCaughey,  1458a. 
Fink  I'.  Chambers,  163. 

V.  Fox,  179. 
Finkney  i'.  Roynous,  200. 
Finley  v.  Green,  707,  719. 
Finleyson   v.   International   Harvester 

Co.  of  America,  62a. 
Finney  v.  Bennett,  1691. 
V.  Callcndar,  69,  70. 
V.  Shirley,  39. 
Fiore  v.  Ladd  &  Tilton,  141. 
Fire  Ins.  Co.  v.  Memphis,  etc.,  R.  Co., 

1740a. 
Fireman's  Ins.  Co.  v.  Ely.  384. 
First  Muni(;ipulity  v.  Orleans  Theater 

Co.,  1551,  7562. 
First  Nat.  Bank,  Ex  parte,  361. 
First  Nat.  Bank  v.  Abilene  Hotel  Co., 
383. 
V.  Adamson,  1090,  1788. 
t;.  Alexander,  52,  61,  156. 
V.  American     Bangor    Slate    Co., 

392a. 
V.  Am.    Exch.    Nat.    Bank,    139, 

169a. 
i;.  Anderson,  679,  769a,  775,  812. 
V.  Andrews,  834. 
t'.  Babcock,  62,  713c. 
V.  Badham,  51a,  62a. 
V.  Bank  of  Wyndmere,  1655a. 
V.  Bensley,  508. 
V.  Bentley,  827. 
t;.  Bevin,  802. 
V.  Bickel,  189,  714. 
V.  Bradley,  1789. 
V.  Briggs,  959. 


First  Nat.  Bank  v.  Buckhannon  Bank, 
1592,  1625. 
V.  BuUard,  1296. 
V.  Busch,  831a. 
V.  Buttery,  47. 
t;.  Bynum,  62. 
V.  Canatsey,  62,  62a. 
t;.  Carpenter,  369. 
V.  Carson,  60,  1385. 
V.  Case.  1266a. 
V.  Cecil,  94,  1312,  1318. 
V.  Chaffin,  1220. 
V.  ChUsom,  1230. 
t;.  City  Bank,  328a,  341. 
V.  City  Nat.  Bank,  669,  1657. 
V.  Clark,  496,  551a,  560,  1704. 
V.  Coates,  16a,  20,  1643. 
V.  Collins,  262. 

V.  Commercial  Sav.  Bank,  503. 
V.  Cook,  Treaa.,  420. 
V.  CouncQ   Bluffs   W.   Wks.   Co., 

394. 
V.  County  Comrs.,  1505,  1506. 
V.  Crabtree,  1734a. 
t'.  Craig,  341. 
V.  Crittenden,  6.56. 
t;  Curr   1594. 

i'".  Currie,  1587,  1.596,  1604,  1608. 
V.  Davis,  340e. 
r.  Dawson,  790,  819. 
V.  Day,  1291. 
V.  Deal,  851. 
V.  Dean,  769a. 
V.  Dubuque  St.  Ry.  Co.,  16a,  18, 

20,  54. 
V.  Ege,  1734,  1737. 
V.  Emmitt,  810,  812. 
V.  Engebret.son,  187. 
V.  Falkenham,  62,  664,  1095. 
V.  Farmers'   &   Mechanics'   Bank, 

669a,  672,  837. 
V.  First  Nat.  Bank,  672,  698,  698d, 

13.59,  1612,  1655. 
t..  Fourth   Nat.   Bank,   329,   330, 

345,  1590. 
V.  Fowler,  94,  832a. 
t'.  Freeman,  357. 
V.  Fults,  358a. 
V.  Gaines,  205. 
V.  Gay,  62,  282,  299,  316. 
r.  German  Bank,  341,  343. 
V.  Graham,  286a. 
V.  Grant,  726,  786. 
t;.  Greenville  Nat.  Bank,  1611a. 
V.  Gregg,  196a. 
v.  Gridley,    549,   672,   684,   9956, 

1091,  1266. 
V.  Grignon,  356. 
V.  Guardian  Tru.st  Co.,  713a. 
V.  HaU,  326a,  417,  849a,  1406. 


Ixxiv 


TABLE   OF   CASES 
References  are  to  paragraphs  marked  § 


First  Nat.  Bank  v.  Harris,  1227,  1312, 

1571, 1634. 
V.  Hartman,  1140. 
V.  Harvey,  815. 
V.  Hatch,  462,  960,  972,  983. 
V.  Henry,  184. 
V.  Hischkwitz,  240,  250. 
V.  Hogan,  392a. 
V.  Home  Ins.  Co.,  482. 
V.  Hunt,  5,  88. 
V.  Johns,  775,  812,  850. 
V.  Johnston,  827,  1309. 
V.  Keith,      1643,       1638,     1731a, 

1734c. 
V.  Kingsley,  70. 
V.  Larsen,  62. 
V.  Latton,  850,  852. 
V.  Laughhn,  1395,  1410a. 
V.  Leach,  1603,  1604. 
V.  Leavitt,  1317. 
V.  Leeper,  775. 
V.  Lierman,  849. 
V.  Lightner,  51. 
V.  Lillard,  1311. 
V.  Littleficld,  1266. 
V.  Lockstitch  Fence   Co.,  713a. 
V.  Lowther-Kaufman  Oil  &   Coal 

Co.,  1203. 
V.  Loyhed,  299,  802,  1200. 
V.  McAUister,  627. 
V.  McAndrews,  1731. 
V.  McConnell,  1480,  1586,  1623. 
V.  McCuUough,  418,  664a. 
V.  Marlow,  62. 
V.  Maxfield,  1236. 
V.  Miller,  62a,   1041,   1457,   1590, 

1594. 
f.  Mineral    Farm    Consol.     Min. 

Co.,  51a,  156,  783. 
V.  Missouri  Coal  Co.,  387. 
V.  Moore,  741,  819,  1181a. 
V.  Morgan,  368,  1266a. 
V.  Morris,  868. 

V.  Mount  Tabor,  1500,  1509&. 
V.  Needham,  783,  1633. 
V.  Newton,  1266. 
V.  Nordstorm,  54,  1398. 
V.  Northern  Pac.  R.  Co.,  1740a. 
V.  Northwestern  Nat.  Bank,  1364, 

1365,  1372. 
V.  Nugent,  81a. 
V.  Ocean  Nat.  Bank,  286a. 
V.  O'Connell,  1278a. 
V.  Owen,  600. 
V.  Parsons,  319. 
V.  Payne,  130,  707a,  713a. 
V.  Peace,  1618,  1655. 
V.  Pearsall,  7796. 
V.  Peck,  1372a,  1499&. 
V.  Pennington,  769a. 


First  Nat.  Bank  v.  Plankinton,  207, 

V.  Price,  617. 

V.  Remman,  720a. 

V.  Reno  County  Bank,  336,  338, 
344,  698,  698d,  1338. 

V.  Ricker,  1655,  1657. 

t;.  Ruddock  Co.,  108. 

V.  Ryerson,  970,990,  1106. 

V.  Security  Nat.  Bank,  725,  796, 
1702,  1702a. 

V.  Shaw,  1219,  1351,  1734a. 

V.  Sheiner,  1140. 

V.  Shue,  769a. 

V.  Skeen,  43. 

V.  Slaughter,  62. 

V.  Smith,  803,  808. 

V.  Sprague,  324,  341,  342,  1734a. 

V.  Stadden,  357,  368. 

V.  State  Bank,  1369,  1661. 

V.  Strauss,  831a. 

V.  Turner,  207,  1252. 

V.  Wallis,  403. 

V.  Watkins,  81c. 

V.  Watt,  1311. 

V.  Wells,  1092,  1266a. 

V.  Werst,  832a. 

V.  Weston,  365,  775,  1150. 

V.  Whitman,  1636,  1636a. 

V.  Whitmore,  500. 

t;.  Wilbem,  1309. 

V.  Wilder,  1478,  1480. 

V.  Wilkesbarre    Lace    Mfg.    Co., 
1731. 

t;.  Willis,  403. 

V.  Winnebago  County  Aggr.,  etc., 
Assoc,  292,  319,  1760. 

V.  Wood,  181,  725,  833,  1003,  1032, 
1050. 

V.  Woolery,  833. 
First  Nat.  Bank  of  Angelica  v.  Hale, 

1188. 
First  Nat.  Bank  of  Bellefonte  v.  Rogers, 

789. 
First  Nat.  Bank  of  Birmingham  v.  First 

Nat.  Bank  of  Newport,  324,  327, 

328,  329,  388. 
First  Nat.  Bank  of  Black  River  Falls  v. 

Jones,  1312. 
First  Nat.  Bank  of  Butte  v.  Weiden- 

beck,  1398. 
First  Nat.  Bank  of  Cameron  v.  Stanley, 

7956,  803,  8156,  849,  850. 
First   Nat.  Bank  of   Central  City  v. 

Hummel,  1612a. 
First   Nat.    Bank   of   Chattanooga   v. 
Behan,  1226. 

V.  Reid,  205. 
First  Nat.  Bank  of  Chicago  v.  Dean, 
1713. 

V.  Elgin,  427. 


TABLE    OF   CASES 


Ixxv 


References  are  to  paragraphs  marked  § 


First  Nat.  Bank  of  Cottage  Grove  v. 

Bank    of    Cottage    Grove,    1236, 

1567,  1657. 
First  Nat.  Bank  of  Council  Bluffs  v. 

Moore,  775. 
First  Nat.  Bank  of  CrawfordsviUe  v. 

First    Nat.    Bank    of    Lafayette, 

1361,  1362,  1372. 
First  Nat.  Bank  of  Creede  v.  Miner 

et  al.,  1266c. 
First  Nat.  Bank  of  Dalton  v.  Black, 

177,  179. 
First  Nat.  Bank  of  Decatur  v.  Johnson, 

143. 
First  Nat.  Bank  of  Dubuque  v.  Mc- 

Kibben,  812. 
First  Nat.  Bank  of  Durand  v.  Shaw, 

802,  1354,  1754. 
First  Nat.  Bank  of  Elgin,  111.,  v.  Rus- 
sell, 776. 
First  Nat.  Bank  of  Elkhart  v.  Arm- 
strong, 336,  340d. 

V.  Osborne,  443a. 
First  Nat.  Bank  of  El  Paso  v.  Miller, 

204. 
First  Nat.  Bank  of  Etowah,  Tenn.,  v. 

Mcsscr,  688,  812,  1181a. 
First  Nat.  Bank  of  Fall  City  v.  Edgar. 

748. 
First   Nat.   Bank   of    Farmersville    v. 

Greenville  Bank,  28. 
First  Nat.  Bank  of  Fort  Scott  v.  Elliott, 

812. 
First  Nat.  Bank  of  Frankfort  v.  Bremer, 

1363. 
First  Nat.  Bank  of  Gadsden  t-.  Sproull, 
800,  810,  812. 

V.  Winchester,  377. 
First  Nat.  Bank  of  Grafton  v.  Bab- 

bidge,  284,  790. 
First    Nat.    Bank    of    Hutchinson    v. 
Lightncr,  50,  51. 

V.  Mclnturff,  1252. 
First  Nat.  Bank  of  Indianapolis  v.  New, 

278,  1221. 
First  Nat.  Bank  of  Lancaster  v.  Hart- 
man,  109.5a. 
First  Nat.  Bank  of  Lapeer  v.  Sanford, 

340e. 
First  Nat.  Bank  of  Litchfield  v.  Cox, 

775. 
First  Nat.  Bank  of  Madison  v.  Sprout, 

1181a. 
First    Nat.    Bank     of    Marshalltown 

V.     Marshalltown     State     Bank, 
1655a. 
First  Nat.  Bank  of  Meadville  r.  Fourth 

Nat.  Bank,  3.30. 
First  Nat.  Bank  of  Mexico  v.  Ragsdale, 

1354. 


First  Nat.  Bank  of  Milan  v.  Wells,  157, 

1317. 
First    Nat.    Bank   of    Minneapolis   v. 

City  Bank  of  Holyoke,  698d. 
First  Nat.  Bank  of  Mishawaka  v.  Stapf, 

1326,  1702,  1706. 
First    Nat.    Bank   of    Mt.    Vernon   v. 

First  Nat.  Bank  of  Lincoln,  672. 
First  State  Bank  of  Montgomery  v. 

Schatz,  1317a,  1319. 
First  Nat.  Bank  of  New  York  v.  Morris, 

924. 
First  Nat.  Bank  of  Omaha  v.  First  Nat . 
Bank,  333,  334. 

t;.  WTiitmore,  465,  598, 
First  Nat.  Bank  of  Petersbiu-g  v.  Beach, 

199a,  742. 
First  State  Bank  of  Pleasant  Dale  v. 

Borchers,  775. 
First  Nat.  Bank  of  St.  Cloud  v.  Lang, 

189. 
First  Nat.  Bank  of  San  Francisco  v. 

Golden,  59. 
First  Nat.  Bank  of  Scribner  v.  Colder, 

179. 
First   Nat.  Bank  of  Sibley,   Iowa,  v. 

Doeden,  879. 
First  Nat.  Bank  of  Snohomish  v.  Sulli- 
van, 51. 
First  Nat.  Bank  of  Springfield  v.  Haul- 

enbeck,  7.58,  791,  855a. 
First  Nat.  Bank  of  Stanford  v.  Mat- 

tingly,  1309. 
First    Nat.    Bank    of    Starksville    v. 

Meyer  &  Co.,  1731,  1734a,  1734c. 
First  Nat.  Bank  of  Syracuse  v.  N.  Y. 

C.  &  H.  R.  R.  Co.,  1731a. 
First   Nat.    Bank   of   Union   Mills   v. 

Clark,  16.36. 
First  Nat .  Bank  of  Vicksburg  v.  Mayer, 

62a. 
First   Nat.   Bank   of   Wilkes-Barre   v. 

Bamum,  1378,  1409. 
First  Nat.  Bank  of  York  v.  Diehl,  1326. 
First  State  Bank  v.  Morton,  203. 
First  State  Bank  of  Corwith  v.  Ham- 
mond, 775. 

r.  Williams,  183,  13526. 
First  State  Sav.  Bank  t'.  Webster,  143. 
Firth  V.  Thrush,  992. 
Fischl  V.  State,  1344. 
Fish  V.  First  Nat.  Bank,  672,  673. 

v.  Jackman,  1034. 
Fishbum  i'.  Londerhausen,  1181a. 
Fisher  v.  Bcckwith,  462. 

V.  Bradford,  63a,  1201. 

V.  Briscoe,  156,  833. 

V.  Carroll,  1480. 

V.  Denver  Nat.  Bank,  1332a. 

V.  Diehl,  688. 


Ixxvi 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Fisher  v.  Ellis,  101,  1189. 

V.  Evans,  640,  1017,  1030. 

V.  Fisher,  164,  204,  832a. 

V.  Frank,  509. 

V.  Krutz,  222. 

V.  Leland,  782,  789,  1220. 

V.  Leslie,  36a 

V.  Marvin,  1266a. 

V.  Mershon,  1482. 

V.  Nat.  Bank,  1772. 

V.  Otis,  748,  834. 

V.  Price,  1095a. 

V.  Promfret,  99. 

V.  Rieman,  7316. 

V.  Shattuck,  858. 

V.  Simons,  815. 

V.  Stevens,  157. 

V.  Stockbrand,  1310. 

V.  United  States  Nat.  Bank,  394. 

V.  Von  Behren,  849a,  850,  852. 
Fisherdick  v.  Hutton,  1416. 
Fisher  Machine  Works  Co.  v.  Leaven- 
worth, 265. 
Fisk  V.  Brackctt,  883. 

V.  City  of  Kenosha,  1550. 

V.  McNeal,  86. 

V.  Miller,  714,  960. 

V.  Rescr,  717. 

V.  Williams,  156. 
Fiske  V.  Eldridge,  403,  405. 

V.  Pratt  44. 
Fitch   V.    Citizens'    Nat.    Bank,    995, 
1095a. 

V.  Eraser,  183. 

V.  Hammer,  1310,  1311. 

V.  Jones,  85,  153,  808,  815. 

V.  Lawton,  403. 

V.  McDowell,  741,  742,  790,  1221, 
1260. 

V.  Remer,  894. 

V.  Sutton,  1289. 
Fitchburg  Bank  v.  Greenwood,  700. 

V.  Perley,  1045. 
Fitchburg    Mutual    Life    Ins.    Co.    v. 

Davis,  983. 
Fitlery.  Morris,  1115,  1116. 
Fitzgerald  v.  Barker,  693,  831a,  832. 

V.  Noland,  1338. 

V.  Reed,  212. 

V.  Williams,  1084. 
Fitzharris  v.  Leggett,  54a. 
Fitzhugh  V.  Wilcox,  213. 
Fitzmaurice  v.  Mosier,  1233a. 
Fitzpatrick  v.  Hearne,  172. 
Flack  V.  Green,  1054. 
Flagg  V.  Baldwin,  866,  894. 

V.  Palmyra,  1551. 

V.  School  District,  54a,  814,  1537. 
Flanagan  v.  Brown,  1290. 
Flanigan  v.  Hambleton,  1266. 


Flanigan  v.  Meyer,  69. 

t;.  Phelps,  1373a. 
Planner  v.  Butler,  180. 
Flannery  v.  Coates,  333. 
Flat  V.  Mulhall,  504. 
Flats  V.  Mulhall,  891a. 
Flaum  V.  Wallace,  174. 
Fleckner  i;.  Bank  of  U.  S.,  52,  388,  392, 

687. 
Fleetwood  v.  Brown,  203. 
Fleitmann  v.  Ashley,  189,  201. 
Fleming  v.  Burge,  36a. 

V.  Fulton,  979. 

V.  Gilbert,  159. 

V.  Leiper,  1387. 

V.  McClain,  1646,  1648. 

V.  Mulligan,  751. 
Flemming  v.  Nail,  56. 

V.  Satterfield,  81a. 
Flentham    v.    Steward,     1326,     1769, 

1769a. 
Fletcher  v.  Arkansas  Nat.  Bank,  959. 

t;.  Blodgett,  150,  154. 

V.  Braddyll,  1052. 

V.  Cushee,  814. 

V.  Dana,  683. 

V.  Dysart,  319. 

V.  Dyte,  94. 

V.  Froggatt,  1168. 

V.  Heath,  1335a. 

V.  Jackson,  1340. 

V.  Manning,  1647. 

V.  Pierson,  1596. 

V.  Schaumberg,  686. 

V.  Simms  &  Graham,  509. 

V.  Thompson,  59,  60. 
Fletcher    &    Sons    v.   Alpena    Circuit 

Judge,  1533. 
Flight  V.  MacLean,  130. 

V.  Reed,  182. 
Flint  V.  Craig,  1395. 

V.  Flint,  74,  668,  688a,  724a,  725. 

t;.  Phipps,  164. 

V.  Rogers,  600,  1209. 
Florence  &  C.  C.  R.  Co.  v.  Jensen,  1731. 
Florence  Mining  Co.  v.  Brown,  1636, 

1643. 
Florence  Oil  &  Refining  Co.  v.  First 

Nat.  Bank,  643. 
Florence  R.  &  Imp.  Co.  v.  Chase  Nat. 

Bank,  386,  391,  856. 
Flour  City  Nat.  Bank  v.  Garfield,  19, 
1734a. 

V.  Grover,  812,  815. 

r;.  McKay,  1332a. 

V.  Shire,  185. 

V.  Traders'  Nat.  Bank,  769a,  1601a. 
Flournoy  v.  First  Nat.  Bank,  174a. 
Flower  v.  Noble,  769a. 

t;.  Sadler,  174a. 


TABLE    OF   CASES 


Ixxvii 


References  are  to  paragraphs  marked  § 


Flowers  v.  Billing,  74. 

Floyd  Acceptances,  809. 

Floyd  V.  Miller,  370. 

Flynn  v.  Bank  of  Mineral  Wells,  802. 

Foard  v.  Johnson,  1030. 

V.  Womack,  1074. 
Foden  v.  Sharp,  643,  878. 
Foerderer  v.  Moors,  1756,  1789. 
Foerster,  Succession  of,  1205. 
Fogarties  v.  State  Bank,  1637. 
Fogarty  v.  Wilson,  1222. 
Fogg  V.  Sawyer,  737,  1676a,  1678. 

V.    School    Dist.,    43,    43a,    769a, 
775,  1233. 

V.  Virgin,  405. 
Foland  v.  Boyd,  1086,  1087. 
Folcott  V.  Ogden,  883. 
Foley  V.  Emerald  Brewing  Co.,  604, 

606,  707,  1093. 
Foley-Wadsworth    Implement    Co.    v. 

Solomon  et  al.,  1407a. 
Folgor  V.  Chase,  417,  656,  657,  687, 

690,  1398. 
Follain  v.  Dupre,  1028. 
Follett  V.  Steele,  1267. 
Folhner  v.  Frommell,  366,  369. 
Folmar  v.  Siler,  81a,  1309. 
Foltz  V.  Mey,  760. 

V.  Pouree,  683. 
Fonner  v.  Smith,  1639. 
Fonseca  v.  Hartman,  1003. 
Fontaine  v.  Gunter,  1418. 
Foot  V.  Sabin,  365,  366. 

V.  Valentine,  164. 
Forbes  v.  Boston  &  L.  R.  Co.,  1731. 

V.  Cochrane,  866. 

V.  Espy,  139. 

V.  First  Nat.  Bank,  392. 

V.  Marshall,  361. 

V.  Omaha  Nat.  Bank,  1014. 

V.  Rowe,  1769. 

V.  Union    Central    Life    Ins.    Co., 
1260. 
Ford  V.  Anglerodt,  508. 

V.  Beech,  1291. 

V.  Buckeye  Ins.  Co.,  867. 

V.  Ford,  1375a. 

V.  Dalian,  1149,  1152. 

V.  H.  C.  Brown  &  Co.,  776. 

V.  Henderson,  713c. 

V.  McClung,  1084,  1588. 

V.  Mitchell,  56,  927,  1702,  1706. 

V.  People's  Bank,  1361,  1655. 

V.  Phillips,  232,  724a. 

I'.  Thornton,  326c,  3346,  1427. 

V.  Washington,  420. 
Fordyce  v.  Kosminski,  1406. 

V.  Nelson,  668. 
Foreman  i'.  Beckwith,  741. 
Fores  v.  Johnes,  196. 


Foresters  of  America  v.  Olson,  183. 
Forkner  v.  Dinwiddle,  1431. 
Forman  r.  Wright,  177,  201. 
Forner  t'.  Smith,  1635,  1637. 
Forrest  v.  Safety  Banking  &  Trust  Co., 
10,  1703. 

V.  Stewart,  1786. 
Forshay  v.  Fergerson,  857. 
Forster  v.  Clements,  326a. 
Forsyth  v.  Bonta,  1352a. 

V.  Kimball,  80. 
Forsythe  v.  Lexington  Banking  &  Trust 

Co.,  1227. 
Fortier  v.  Delgado  &  Co.,  1643. 
Fort    Edward    v.    Fish,  1533. 
Fort  Payne  Coal  &  Iron  Co.  v.  Webster, 

203. 
Fort  Scott  V.  Schulenberg,  1215. 
Fortune  v.  Stockton,  1230. 
Forty-Acre  Spring  Live  Stock  Co.  r. 

West  Texas  Bank  &  Trust  Co., 

386. 
Forward  v.  Thompson,  96. 
Foss  V.  Hildreth,  858. 

V.  Nutting,  883. 
Foster    v.    Andrews,    359,    367,    369. 

V.  Balch  &  Piatt,  1341. 

V.  Balmforth,  509. 

V.  Beam,  1458. 

i;.  Beau  de  Zart,   195a,   1103. 

V.  Callaway  Co.,  1557. 

V.  Chfford,  80,  517. 

V.  Cochran,  274. 

V.  Collncr,  672. 

V.  Dawber,  542. 

V.  Essex  Bank,  286a,  1565,  1708e. 

V.  Fuller,  265,  271. 

V.  Hoyt,  1431. 

V.  Jolly,  80,  199a,  720a. 

V.  Julicn,  1145. 

V.  Jurdison,  1096. 

V.  Mackay,  1470. 

I'.  Mackreth,  85. 

V.  McDonald,  1003. 

V.  Mills,  1966. 

V.  Parker,  1083,  1170. 

V.  Paulk,  1586,  1595. 

V.  Potter,  1708a. 

V.  Reduction  &  Mining  Co.,  392a. 

V.  Shattuck,  139. 

V.  Smcath,  1015. 

V.  Trustees,  1281. 
Foster's  Admr.  v.  Metcalfe,  665. 
Foster,  Rec,  v.  Rincker,  325,  336,  340e, 

1245,  1625. 
Foster  County  State  Bank  v.  Lammers, 

1387. 
Fouke  V.  Fleming,  891. 
Fountain  v.  Anderson,  271. 

V.  Bookstaver,  274,  690,  834. 


ixxviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Fourth  Nat.  Bank  v.  Cotton  Compresa 
Co.,  1713a. 

V.  Heuschuh,  592,  999. 

V.  Mahon,  573. 

V.  Mayer,  3406. 
Fourth  Nat.  Bank  of  Cadiz  v.  Craig, 

183. 
Fourth  Street  Nat.  Bank  t;.  Yardley, 

1636,  1636a,  1643. 
Fowle  V.  Outcalt,  1227. 
Fowler  v.  Allen,  68a. 

V.  Atkinson,  403. 

V.  Brantley,  622,  623,  788. 

V.  Brooks,  1325. 

V.  City  of  Superior,  1522a,  1524. 

V.  Clearwater,  1763. 

V.  Gates  City  Bank,  497,  532. 

V.  Henden,  1052. 

V.  Ludwig,  1267. 

V.  Palmer,  727. 

V.  Strickland,  1342. 
Fowles  V.  Jo.slyn,  1227. 
Fox  V.  Bank,  775,  7796,  787a. 

V.  Cipra,  688c. 

V.  Clifton,  356. 

V.  Drake,  443o, 

V.  Foster,  748. 

V.  Hartford,    etc.,   R.    Co.,   725a, 
1505,  1506,  1512,  1513. 

V.  Rural  Home  Co.,  386. 

V.  Smith,  203. 

V.  Whitney,  1217. 
Foxworthy  v.  Adams,  81a,  180,  188. 
Foyley  v.  Emerald  Brewing  Co.,  89. 
Fraker  v.  Cullum,  1369,  1402. 

V.  Little,  1369. 
Fralick  v.  Norton,  60. 
Francia  v.  Joseph,  831c. 
Francis  v.  Evans,  340e. 

V.  Rucker,  1438,  1449. 
Frank  v.  Blake,  815. 

V.  Butler  Co.,  1544. 

V.  Irgens,  161,  163. 

V.  Kuigler,  668. 

V.  Lanier,  1369. 

V.  Lilienfield,   142,   143,  145,  248, 
249,  707c,  712,  775,  845. 

V.  Longstreet,  674. 

V.  Quast,  792. 

V.  Wessells,  47,  57,  1703. 

V.  Williams,  1312,  1321. 
Frankland  v.  Johnson,  273,  306,  307, 

408. 
Franklin  v.  Baker,  Exr.,  1417. 

V.  Browning,  717,  1090. 

V.  Johnson,  403. 

V.  March,  38. 

V.  Twogood,  748a. 

V.  Vanderpool,  1586,  1596. 
Franklin  Bank  v.  Freeman,  1583,  1584. 


Franklin   Bank    v.   Lynch,  496,  551a, 

560,  562. 
Franklin   Life   Ins.   Co.   v.   Courtney, 

1385. 
Franklin  Nat.  Bank  v.  Newcombe,  833. 

t'.  Whitehead,  377,  1713a. 
Franklin  Phosphate  Co.  v.  International 

Harvester   Co.    of   America,    205. 
Franklin  Sav.  Inst.  v.  Heinsman,  769a, 
775. 

V.  Ree<l,  150. 
Franklin   Trust   Co.    v.    Philadelphia, 

B.  &  W.  R.  Co.,  1733a. 
Franks,  Ex  parte,  246. 
Fraser,  In  re,  369a. 

V.  Charleston,  1708^. 

V.  Jordan,  1324. 
Frasier  t'.  Massey,  227,  682. 
Frazer  v.  Jordon,  1324. 
Frazer's  Admr.  i-.  Frazer,  728. 
Frazier  v.  Gas  Bank,  341. 

t;.  Massey,  93. 

t;.  State  Bank  of  Decatur,  1373. 

t;.  Troy  Printing  Co.,  85. 

t;.  Warfield,  896. 
Frayzer  v.  Dameron,  1177. 
Freaklcy  v.  Fox,  1285, 
Freeh  t;.  Yawger,  185. 
Fredd  v.  Eves,  681. 
Fred  Rueping  Leather  Co.  v.  Watke, 

177,  183.  196a. 
Fredrick  v.  Clemens,  850. 
Frederick  v.  Cotton,  105. 

V.  Winans,  667. 
Frederick    Institute   v.    Michael,   247, 

740,  1311. 
Fredonia  Nat.  Bank  v.  Tommel,  7796. 
Free  v.  Hawkins,  80,  719,  1172. 
Freehold  Bank  v.  Kennedy  &  Weight 

Co.,  728,  8.50. 
Freeman  v.  Bailey,  271,  725a. 

V.  Boynton,    455,    460,    572,    654, 
1124,  1148,  1228,  1478,  1480. 

v.  Britton,    750,    762a,    763,   767, 
1217. 

V.  Ellison,  63. 

V.  O'Brien,  1103,  1149. 

V.  Ross,  88. 
Freeman's  Bank  v.  Perkins,  991. 

V.  Rollins,  1326. 

V.  Ruckman,  90a,  649,  667,  748, 
879. 
Freeman's  Nat.  Bank  v.  National  Tube 
Works,  698d. 

V.  Savery,  775. 
Freeport  Bank  v.  Hagemeyer,  750,  751. 
Freese  v.  Brownell,  90,  868,  879,  896, 

898. 
Freiberg  v.  Moffett,  1289. 
Freittenberg  v.  Rubel,  725a,  814,  819. 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Ixxix 


French  v.  Andratte,  1428. 

V    Bank  of  Columbia,  189,  1074, 
1076,  1078,  1083,  1085,  1170. 
V.  French,  196b. 
V.  Gordon,  128. 
V.  Grindle,  766. 
V.  Hall,  271. 
V.  Jarvis,  1238,  1241. 
V.  Price,  1300. 
V.  Talbot  Pav.  Co.,  196. 
V.  Turner,  689a,  690,  748a. 
Fretwellr.    Carter,    672,    831a,    1325, 

1351,  1354. 
Freund  v.  Importers,  etc..  Bank,  IbUd, 

1607a,  1618. 
Frevert  v.  Henry,  1340. 
Frey  v.  Kirk,  875. 
Frick  V.  Moore,  195,  196a. 
Frick  Co.  V.  Hoff,  164,  1760 
Friedlander  v.  Tex.  Pac.  R.  Co.,  1733. 
Friedman,    Keller    &    Co.    v.    Peters, 

1713a. 
Friend  v.  Duryee,  358a,  764. 
V.  Harri-son,  195. 
V.  Miller,  196,  196a. 
V.  Smith  Gin  Co.,  1769. 
V.Wilkinson,     992,     1021,     1043, 
1051,  1053. 
Frierson  v.  Galbraith,  896. 

V.  Williams,  894a. 
Frisbie  r.  Larncd,  1260. 
Frith  V.  Thrush,  1047,  1120. 
Fritsch  V.  Heesless,  69. 
Fritts  V.  Kirchdorfer,  995b. 
Fritz  V.  Kennedy,  1587,  1589. 
Froclich  v.  Trading  Co.,  271. 
Frois  t;.  Mayfield,  1329. 
Frontier  Bank  v.  Morse,  1676,  1676a. 
Frost  V.  Tracy,  1340. 

V.  Weatherbee,  1770. 
V.  Wood,  292. 
Froude  v.  Bishop,  1312,  1317. 
Frozier  v.  Wariicld,  881. 
Fry  V.  Dudley,  56,  57. 
t'.  Evans,  268,  1432. 
V.  Hill,  466,  471. 
V.  Patterson,  1260. 
V.  Rosseau,  56. 
Frye  v.  Tucker,  384. 
Fuch  V.  Yawger,  185. 
Fudge  r.  Marquell,  789,  1219,  1418. 
Fuhrman  v.  Fuhrman,  1343. 
Fuke  V.  Smith,  732. 
Fulerton  v.  Hill,  713c. 
Fulford  V.  Johnson,  1268. 
Fuller  V.  Green,  815,  1086,  1392, 1398. 
V.  Hooper,  410. 
V.  Hutchings,  815,  1652. 
V.  Kemp,  1289. 
V.  Lambert,  179. 


Fuller  r.  Law,  81.  ,^^„ 

V.  McDonald,  719,  1091,  1093. 
V.  Scott,  713c,  1788. 
V.  Smith,  7316. 
Fuller   Buggy   Co.   v.   Waldron,    959, 

1050,  1227,  1266,  1623. 
FuUerton  v.  Bank  of  the  U.  S.,  656,  657, 
1039. 
I'.  Hill,  709,  714. 
V.  Sturgiss,  142,  843. 
FuUerton    Lumber    Co.    v.    Snouffer, 

1312,  1324.  1338. 
Fulton  V.  Loughlin,  185,  356. 
V.  McCracken,  949. 
V.  Vamey,  51,  106. 
Fulton  Bank  v.  N.  Y.  &  Sharon  Canal 
Co.,  1616. 
t;.  Phoenix  Bank,  1671. 
Fulton  County  v.  Wabash  &  Miss.  R. 

Co.,  1535. 
Fulton  Nat.  Bank  v.  Goshne,  340c. 
Fultz  V.  Walters,  1703. 
Fund  V.  Lewis,  1233,  1490. 
Funk  V.  Babbitt,  128,  129. 
V.  Hossack,  185,  679. 
Furber  v.  Dane,  1587,  1593. 

V.  Fogler,  180,  203. 
Furgcrson  v.  Coppeau,  1733. 
t'.  Harris,  182. 
V.  Staples,  669a,  672. 
Furman  i-.  Nichol,  447. 
Furman  Farm  Imp.  Co.  t;.  Long,  197. 
Fumiss  V.  Gilchrist,  385. 
Furz  V.  Nicholls,  69. 
Furze  v.  Sharwood,  983,  985. 
Fydell  v.  Clark,  739,  1264. 


Gaar  v.  Louisville  Banking  Co.,  62. 
Gaar,  Scott  &  Co.  v.  Taylor,  1311. 
Gadbury,  In  re,  255. 
Gadden  v.  Savings  Bank,  333. 
Gaffney  v.  Bradford,  800a. 
Gafford   v.   American    Mortgage   Co., 
392a. 

V.  Hall,  812.     , 
Gage  t^.  Anesilly,  83. 

t'.  Averill.  769a. 

V.  Jaquetn,  1732. 

t'.  Kendall,  11926. 

t;.  McDermid,  833. 

V.  McSweeney,  90. 

V.  Mechanics*  Nat.  Bank,  1784. 

V.  Morse,  1738. 

V.  Sharp,  775,  854. 
Gage  Hotel  Co.  v.  Union  Nat.  Bank, 

1590,  1638,  1643. 
Gahn  v.  Niemeewicz,  1317. 
Gaines  v.  Dorsett,  49. 


Ixxx 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Gaines  v.  Shelton,  60. 

Gaither  v.  Farmers',  etc.,  Bank,  760, 

762o. 
Galbraith  v.  Fullerton,  1316. 

V.  McLaughlin,  815. 

V.  Shepard.  598,  970,  971. 
Galceron  t-.  Noble,  720a. 
Gale  V.  Birmingham,  775. 

V.  Chase  Nat.  Bank,  392,  1607. 

V.  Corey,  1514. 

V.  Kemper,  656. 

V.  Mayhew,  688c,  700a,  1181a. 

V.  Miller,  366,  369,  370,  371a. 

V.  Walsh,  926,  930,  971. 
Galen  v.  Niemcewiez,  1329. 
Galena  v.  Corwith,  1527a. 
Galena  Nat.  Bank  v.  Ripley,  186. 
Galladiiy  v.  Bank  of  Union,  963. 
Gallagher  v.  Kiley,  164. 

V.  Nichols,  16o. 

V.  Roberts,  658,  1262,  1277. 
Gallery  v.  Prindle,  513. 
Galliher  v.  Galliher,  1435a. 
Galloway  v.  Bartholomew,  94,  1418. 

V.  Gleason,  271,  795a. 
Gall  way  v.  Mathew,  94,  358a,  361. 
Galveston  R.  Co.  v.  Cowdrey,  1543. 
Galvin  v.  Syfers,  68,  856. 
Gamble  v.  Hatton,  56. 

V.  Rural,  etc.,  School  Dist.,  1517a. 

V.  Wilson,  834. 
Gambrill  v.  Brown  Hotel  Co.,  296,  505. 
Gamer  v.  Thomson,  480. 
Gammon  v.  Everett,  646. 

V.  Kentner,  1221. 

V.  SchmoU,  508. 
Gammon     Theological     Seminary     v. 

Robins,  24,  63,  63a,  180. 
Gandy  v.  Bissell,  65,  68,  1219. 

V.  Weckerly,  81a. 
Gannon  v.  Cooke,  1266a. 

V.  Northwestern  Nat.  Bank,  800a. 
Gano  V.  Frisk,  24. 

V.  Heath,  1335,  1389. 

V.  McCarthy,  741. 
Gansevoort  v.  Williams,  367. 
Gansevoort  Bank  of  City  of  New  York 

V.  Gilday,  1266a. 
Gantt  V.  Duffy,  1423. 
Ganz  V.  Weisenberger,  8156.    • 
Garden  v.  Bruce,  1650. 
Garden  Grove  Bank  v.  Railroad  Co., 

1731. 
Gardner  v.  Bank  of  Tennessee,  964. 

V.  Barger,  44. 

V.  Beacon  Trust  Co.,  724,  724a. 

V.  Connecticut,  1300. 

V.  First    Nat.    Bank    of    Billings, 
3266. 

V.  Gardner,  25. 


Gardner  v.  Gorham,  1267,  1273. 

V.  Howland,  1731. 

V.  Matthews,  80. 

V.  Maxey,  196,  196a,  200. 

V.  Maynard,  1238,  1239,  1240. 

V.  Nat.  City  Bank,  21. 

V.  Pitcher,  1203. 

V.  Walsh,  163,  1379,  1389. 

V.  Watson,  1319. 

V.  Welsh,  1387. 

V.  Wiley,  292. 
Garforth  v.  Bradley,  254. 
Garland  v.  Jacomb,  358a. 

V.  Pamplin,  249. 
Garlock  v.  Geortner,  1468o,  1483. 
Garner  v.  Fite,  68. 

t;.  Hall  and  P^arley,  43. 
Gamett  t;.  Myers,  1227,  1230. 

V.  Woodcock,  600,  603,  1038. 
Garr  v.  Louisville  B.  Co.,  53,  62,  693. 
Garrard  v.  Haddan,  1405,  1406,  1407, 
1408,  1409. 

t;.    Lewis,    86,    842a,    844,    1405, 
1406,  1407,  1408,  1409. 
Garrett  v.  Ferguson,  1338. 

V.  Findlater,  573. 

V.  Williams,  748. 
Garrettson    v.    Garrettson    Bank,    54, 
867,  1567. 

t'.  North  Atchison  Bank,  496,  551a, 
1603,  1799. 
Garretson  v.  Purdy,  62. 
Garrigue  v.  Keller,  205,  865,  867,  1266. 
Garrigus,  Admr.,  v.  Home  Frontier  & 

Foreign  Missionary  Soc,  46,  65, 

188a. 
Garrison  v.  O'Donald,  283,  289. 
Garthwaite  v.  Bank  of  Tulare,  67,  1566. 
Garton  v.  Union  City  Bank,  1188. 
Garver  v.  Pontius,  62. 
Garvier  v.  Downie,  1114. 
Garvin  v.  Linton,  207. 

V.  Wiswell,  104,  663a,  1469,  1496. 
Gascoyne  v.  Smith,  608. 
Gasco  Nat.  Bank  v.  Shaw,  1005a. 
Gaskins  v.  Wells,  1260. 
Gass  V.  Simpson,  24. 
Gaston  &  Ay  res  v.  J.  I.  Campbell  Co., 

795c 
Gate  City  Nat.  Bank  v.  Thrall,  753. 
Gaters  v.  Madeley,  254,  256. 
Gates  V.  Beecher,  455,  594,  635. 

V.  Eno,  500. 

V.  McKee,  1773. 

V.  Morton    Hardware    Co.,     164, 
184. 

V.  Parker,  551. 
Gatschell  &  Co.  v.  Foster,  800a. 
Gaul  V.  Willis,  752,  757,  762a,  767,  862, 

1217. 


TABLE    OF   CASES 


Ixxxi 


References  are  to  paragraphs  marked  § 


Gaunt  V.  Harkness,  1219. 

V.  Taylor,  1615. 
Gawtry   v.    Doane,    584,    1057,    1115, 

1149. 
Gay  V.  Kingsley,  241,  686. 
V.  Lander,  130. 
V.  Rainey,  868. 
V.  Rooke,  36a. 
V.  Ward,  1770,  1789. 
Gaylard  t'.  Nat.  Sav.,  etc..  Bank,  664a. 
V.  Neb.  Sav.  Bank,  741. 
V.  Van  Loan,  88. 
Gaytes  v.  Hubbard,  47. 
Gazway  v.  Moore,  81. 
Gazzam  v.  Armstrong,  523,  524,  625, 

526,  531. 
Geary  v.  Physic,  74. 
Gee  V.  Saunders,  769a. 
Geer  v.  Bd.  of  Commissioners,  1537. 

V.  Higgins,  802. 
Geib  V.  Reynolds,  1260. 
Geier  v.  Shade,  196a. 
Geiger  v.  Clark,  713c,  995. 
Geilfiss  V.  Corrigan,  1713a. 
Goill  I'.  Jeremy,  1041,  1044. 
Gelpoke  v.  City  of  Dubuque,  10,  389, 
391,  1497,   1500,   1513,  1514, 
1523,  1524,  1525,  1527,  1537, 
1560. 
V.  Quentrell,  1756. 
Gemmcl  v.  Hueben,  1435a. 
General  Con.  Assn.  of  7th  Day  Adven- 
tist  V.  Mich.  Sanitarium  &  Benev. 
Assn.,  1181a. 
General  Electric  Co.  i'.  Nassau  Elec- 
tric R.  Co.,  183. 
General   South   America   Co.,    In   re, 

1449. 
Goneser  i'.  Wissner,  670,  719. 
Genoa  v.  Woodruff,  1513,  1514,  1537, 

1552. 
George  i'.  Bacon,  704. 

V.  Surrey,  74,  688a. 
Georgia  Nat.  Bank  v.  Henderson,  327, 

1568,  1572,  1574. 
Geralopulo  v.   Wieler,   9.39,  940,  941, 

1258. 
Gerard  v.  McCormick,  282,  283. 
Gerard  Bank  v.  Bank  of  Penn  Town- 
ship, 1603. 
Gordnrr  v.  Gibbons,  1393. 
Gerhardt  v.  Boatman's  Sav.  Inst.,  343. 
Gerli  v.  National  Mill  Supply  Co.,  80. 
Gorman  v.  Ritchie,  933. 
German  Bank  v.  De  Shon,  130,  197. 

t'.  Edwards,  1734a. 
German-American  Bank  v.  Carondelet 
Real  Estate  Co.,  279. 
V.  City  of  Brcnham,  1506,  1527a. 
V.  Martin,  62. 


German-American  Bank  v.  Milliman, 
1235. 

V.  Mills,  612. 

V.  Niagara  Cycle  Co„  1311,  1312. 

V.  Scribner  Lumber  Co.,  833. 
German-American  Sav.  Bant  v.  Hanna, 

790,  1092,  1339,  1754. 
German-American  Security  Co.  v.  Mc- 

Culloch,  81a,  203. 
German  Fire  Ins.  Co.  Bank  v.  Kimball, 

333. 
German  Nat.  Bank  v.  Beatrice  Nat. 
Bank,  933,  1457,  1567. 

V.  Burns,  654. 

V.  Butchers'  Hides  &  Tallow  Co., 
386a. 

V.  Coors,  336. 

V.  Farmers'  Nat.  Bank,  1622a. 
Germania  Nat.  Bank  v.  Mariner,  418. 

V.  Taaks,  551. 
German  Nat.  Bank  of  Ripon  v.  Prince- 
ton State  Bank,  737. 
German  Sav.  Bank  v.  Franklin  County, 
1544. 

V.  Geneser,  184, 

V.  National  Bank,  1654a. 
German  Sav.  Bank  of  Baltimore  City 

V.  Renshaw,  1708(7. 
German  Sav.  Ins.  v.  Adae,  1638,  1643. 
Ger.  Security  Bank  v.  Jefferson,  1708c. 

V.  McGarry,  1051. 
Germania  Bank  i'.  Trapnell,  571. 

V.  Distler,  83. 
Germania  Fire  Ins.  Co.  v.  Memphis, 

etc.,  R.  Co.,  1740a. 
Germania  Sav.  Bank  v.  Town  of  Darl- 
ington, 1524. 
Germany  v.  Lawton,  80. 
Gerow  V.  Riffe,  50. 
Gerrish  v.  Bragg,  199a. 

V.  Glines,  1407. 

i;.  New    Bedford    Institution    for 
Savings,  24b. 
Gerth  v.  Engler,  80. 
Gerwig  v.  Sitterly,  1274. 
Gery  v.  Physic,  688a. 
Gettler  v.  Pickett,  850. 
Getto  V.  Pinkert,  80. 
Getty  V.  Bin.sse,  1298. 

V.  Srhantz,  1753,  1769,  1789. 
Gibb  V.  Mather,  519,  642. 
Gibbes  Machinery  Co.  v.  Roper,  812. 
Gibbon  v.  Coggen,  1158. 

V.  Scott,  79,  159. 
Gibbons  v.  Railroad  Co.,  1523. 
Gibbs  t'.  Brj'ant,  1296. 

V.  Fremont,    898,   917,   920,   921, 
1451. 

V.  Guaraglia,  714. 

V.  Howard,  890. 


Ixxxii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Gibbs  V.  Linabury,  851. 
Giberson  v.  JoUey,  819. 
Gibert  v.  W.  C.  V.  M.,  etc.,  R.  Co., 

1293,  1491a,  1513. 
Gibson  v.  Carruthers,  1730. 

t;.  Cooke,  16a,  17,  21,  22,  451,  743. 

V.  Feeney,  177. 

V.  Finley,  22. 

V.  Hawkins,  60,  150. 

V.  Hunter,  136,  137. 

V.  Lenhart,  1500. 

V.  Miller,  706,  712,  781a. 

V.  Minet,  17,  102. 

V.  Nat.  Park  Bank  of  N.  Y.,  802. 

V.  Pari  in    1304. 

V.  Powell,  688. 

V.  Rains,  427. 

V.  Smith,  508,  515. 

V.  Tobey,  1262,  1264. 

V.  Wallace   1338. 
Giddinga  v.  Coleman,  1644. 

V.  Giddings,  68,  182. 
Giffcrt  V.  West,  731,  731&,  733,  733a, 

734. 
Gifford,  Ex  parte,  1322. 

V.  Fosc,  81c. 

V.  Fox,  81a. 

«;.  Harden,  1586,  1587,  1595. 
Gift  t'.  Hall,  149,  150. 
Gilbert  v.  Adams,  89. 

t;.  Brown,  186,  240,  249. 

V.  Dennis,  654,  656,  972,  974,  979, 
982,  983,  1473. 

t;.  Garber,  1230. 

V.  Guignon,  1734&, 

V.  Iron  Mfg.  Co.,  17086. 

t;.  Manchester  Mfg.  Co.,  1708e. 

V.  Nantucket  Bank,  663a. 

V.  Nelson,  741. 

V.  Vanchon,  70. 

V.  Walker,  333,  1468a. 

V.  Wilbur,  185. 
Gilbough  V.  Norfolk,  etc.,  Co.,  1506. 
Gilby  V.  Farnsworth,  1147. 
Gilchrist  r.  Donnell,  1003,  1031,  1115, 

1117. 
Giles  V.  Bourne,  66,  83. 

V.  Canary,  1296. 

V.  Mauldin,  34. 

V.  Perkins,  333,  336,  340&. 
Gilette  v.  Hodge,  68a,  787. 
Gill  V.  Cubitt,  772,  796,  1503. 

V.  Gen.   Iron   Screw   Collier   Co., 

1741. 
V.  Morris,  205,  1306. 
V.  Palmer,  978. 
Gillden,  etc.,  Co.  v.  National  Bank,  289. 
Gillespie  v.  Campbell,  703. 
V.  Hester,  193,  1219. 
V.  Kelley,  90,  144. 


Gillespie  v.  Neville,  979. 

V.  Salmon,  177. 

t;.  Wheeler,  713e. 
Gillet  V.  Bank  of  America,  832a. 

V.  Taylor,  1312,  1335,  1338. 
Gillett  V.  Averill,  656,  657. 

r.  Smith,  1411. 

V.  Sweat,  1387. 
Gilley  v.  Harrell,  106,  742. 
Gilliam  v.  Davi.s,  1328. 
Gilliatt  r.  Lynch,  1429. 
Gillighan  v.  Boardman,  1759,  1764. 
Gillipsier.  Hannahan,  1144,  1145,  1146. 

V.  Wheeler,  713c. 
Gilly  V.  Springer,  643. 
Gilman  v.  Douglass  Co.,  1249. 

V.  First  Nat.  Bank  of  N.  Y.,  926. 

V.  New  Orleans  R.Co.,  790,  795, 
1503. 

i;.  Peck,  1676,  1676a. 
Gilmore  v.  Bussey,  1260. 
Gilpin  I'.  Marley,  713a. 

V.  People's  Bank,  52,  53. 

V.  Netograph  Mach.  Co.,  205. 

V.  Savage,  654,  662. 
Gilstrah  v.  St.  Louis,  etc.,  R.  Co.,  424. 
Gilstrap  t-.  Smith,  1310. 
Giman  v.  New  Orleans  R.  Co.,  815. 
Gilmore  v.  Hurst,  61,  79. 
Gimbell  &  Sons  v.  King,  186. 
Gimmi  v.  Cullen,  752,  757,  762a. 
Gindrat     v.     Mechanics     Bank,     992, 

1007,  1013. 
Gingnon  v.  Union  Tru.st  Co.,  917,  921. 
Ginn  v.  Weissenberg,  1563. 

V.  Dolan,  164. 
Ginsberg  v.  Shurman,  819. 
Giselman  v.  Starr,  67,  1181a. 
Gist  V.  Evans,  1412. 

V.  Feitz,  1.306a,  1332a,  1334. 

t'.  Lybrand,  1012,  1015,  1145. 
Givens  v.  Merchants'  Nat.  Bank,  703, 

1147,  1148,  11.55. 
Gladstone    v.    Throop,    1550,    1527a, 

1545. 
Gladstone   Baptist   Church    v.    Scott, 

1184. 
Glascock  V.  Smith,  371a. 
Glaser  v.  Rounds,  636,  1123,  1149. 
Glasgow  V.  Copeland,  454. 
V.  Pratte,  972,  990. 
V.  Sands,  257. 
Glass  V.  Adone  &  Lobit,  156. 

V.  Murphy,  204. 
Glasscock,  V.  Glasscock,  162,  164. 

V.  Rand,  175. 
Glat  V.  Forttmann,  326. 
Glaze  V.  Furguson,  1103,  1106. 
Glazebrook  t-.  Ragland,  1429,  1431. 
Gleason  v.  Henry,  13526. 


TABLE    OF   CASES 


Ixxxiii 


References  are  to  paragraphs  marked 


Gleason  v.  Sanitary  Milk-Supply  Co., 
403. 

V.  Wright,  748. 
Gleeson  v.  Lichty,  971. 
Glen  Cove  Mutual  Ins.  Co.  t;.  Harrold, 

17G7,  1779. 
Glendinning,  Ex  parte,  1322. 
Glenn  v.  Augusta  Drug  Co.,  1294. 

V.  Burrows,  1262. 

V.  Farmers'  Bank,  197. 

V.  Hill,  68. 

V.  Porter,  76. 

V.  Smith,  1260,  1267,  1268. 
Glenney  Glass  Co.  v.  Taylor,  880. 
Click  V.  CriHt,  121.56. 
Glickauf  v.  Kaufman,  713c. 
Glicksman  v.  Early,  974,  976,  1021. 
Glidden  i-.  Chamborline,  676,  899,  1148, 
1160,  1163. 

V.  Ma.ss.  Hospital  Life  Ins,  Co., 509. 
Glines  V.  State  Sav.  Bank,  815. 
Glo.ssup  V.  Jacob,  494,  405. 
Gloucester  Bank  i-.  Salem  Bank,  1361, 
1371,  6157,  1669,  1675,  1688. 

U.Worcester  1310,  1321. 
Gloucester  Ins.  Co.  i'.  Younger,  10a. 
Glover  V.  Cheatham,  69,  182. 

V.  Gentry  et  al.,  1401,  1417,  1421. 

V.  Green,  1410a. 

V.  Robbins,  1.385. 

V.  Thompson,  1475. 
Glj-n  V.  Baker,  1504. 
Glynn  v.  Bank  of  England,  1475. 
Gobbin  v.  Scott,  159. 
Goble  V.  Gale,  1282. 
Goddard,  In  re  Estate  of,  557,  567,  568. 

V.  Cox,  1250. 

t;.  Cutts,  81. 

V.  Lyman,  684,  1183. 

V.  Mallory,  1739. 

V.  Merchants'    Bank,    533,    1225, 
1361, 1368, 1372. 

V.  O'Brien,  1289a. 

V.  Sawyer,  894. 
Goddard-Peck  Grocerj'  Co.  v.  McC\me, 

366,  369. 
Goddin  i-.  Crump,  1523,  1557. 

V.  Shipley,  622,  879,  908. 
Godfrey  i'.  Crisler,  1260,  1266. 

V.  Wingert,  1326. 
Godin    V.    Bank    of    Commonwealth, 

1618a. 
Godwin  v.  Crowell,  196a. 
Goette  V.  Sutton,  720a. 
Goetting  V.  Day,  7816. 
Goetz  V.  Bank  of  Kansas  City,  174a, 
533, 1734(f. 

V.  Piel,  1252. 
Gogarties  v.  State  Bank,  1637. 
Gogerty  v.  Cuthbert,  721. 


Goggill  V.  American  Exch.  Bank,  1366. 

Colder  f.  Foss,  1197. 

Gold  Glen  Min.,  Mill  &  Tunnehng  Co. 

V.  Dennis,  386,  832a. 
Golding  V.  McCall,  186. 
Golding  Sons  Co.  v.  Cameron  Pottery 

Co.,  713a. 
Goldman  v.  Blum,  79,  149. 

t'.  Oppenhcim,  196. 

V.  Uhlman,  752. 
Goldschmidt  t;.  New  Orleans,  422,  428, 

431. 
Goldsmid    v.     Lewis    County    Bank, 

777. 
Goldsmidt  v.  First  M.  Church,  833. 
Goldsmith  v.  Blane,  1016. 
Goldstein  v.  Winkelman,  742. 
Goldthwaite  v.  National  Bank,  1425. 
Golinsky  v.  Allison,  281. 
GoU  V.  Fehr,  185. 
GoUaday    v.    Bank    of   Union,    1074, 

10S4. 
Golsen  v.  Golsen,  463. 
Gompertz  v.  Burtlett,  732. 
Gon.slin  v.  Commander,  etc.,  148. 
Gooch  V.  Bryant,  1418. 

V.  Faucett,  866. 

V.  Gooch,  179. 
Good  V.  Elliott,  195a. 

t;.  Martin,  710,  712,  713,  713a,  715, 
728. 
Good  &  Co.  V.  Isaacs,  1738. 
Goodale  v.  Holdridge,  196. 
Goodall  V.  Dolley,  449,  1154. 

V.  Polhill,  526. 
Goode  V.  Harri.'^on,  237. 
Goodell  V.  Harrington,  213. 

V.  T.  M.  Sinclair  &  Co.,  293,  296. 
Goodenow  v.  Tyler,  1260. 
Goodfellow  V.  Landis,  290. 
Goodin  v.  Buhler,  815. 

t;.  Plugge,  1421a. 
Gooding  v.  Morgan,  1260. 

V.  Underwood,  362,  488. 
Goodloe  V.  Godley,  600,  656. 

V.  Taylor,  43. 
Goodman  i'.  Eastman,  1373a,  1384. 

V.  Goodman,  1186a. 

r.  Harvey,    774,    788,    943,    986, 
1230,  1503,  1631. 

t'.  Munks,  884. 

i;.  Simonds,   142,  391,   769a,  775, 
814,  831a,  1.503. 
Goodnow  i^.  Warren,  1000,  1001. 
Goodrich  i'.  Gordon,  550,  551,  561. 

I'.  McDonald,  196. 

t'.  Stanton,  700a,  717. 

V.  Tracy,  12666,  1269,  1274. 
Goodsell  V.  "Myers,  229,  230,  233. 
Goodson  V.  Johnson,  782. 


Ixxxiv 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Goodwin  v.  American  Nat.  Bank,  1572. 

V.  Coates,  1278. 

V.  Conklin,  831c. 

V.  Creamer,  1235. 

V.  Davenport,  (ill. 

V.  Davis,  1342. 

V.  East  Hartford,  316  319,  427. 

V.  Jones,  883. 

V.  McCoy,  517. 

V.  Niekerson,  156. 

V.  Roberts,  1504. 

V.  Scannell,  1714. 
Goodwin  &  McFarland  i'.  Burton,  769a, 

1203. 
Goose   River  v.   Willow   Lake  School 

Township,   427. 
Goostrey  v.  Mead,  940. 
Gordan  v.  Montgomery,  1094. 

V.  Phelps,  919. 
Gorden   v.    Lansing  &  State  Savings 

Bank,  1577. 
Gordon  v.  Adams,  63a. 

V.  Anderson,  99. 

V.  Brown,  1423. 

V.  Gomila,  3266. 

V.  Irvine,  730,  736. 

V.  Levine,    70,    783,    1587,    1593, 
1596. 

V.  Mulcher,  1637. 

V.  Price,  1260,  1262,  1264,  1268. 

V.  Sutherland,  1390. 

f.  Wansey,  725o,  1238. 
Gore  V.  Gibson,  214,  215. 

V.  Wilson,  703. 
Gorgier  v.  Melville,  1504. 
Gorham  v.  Carroll,  1217. 
Gorman  v.  Ketcham,  709. 
Gormley  v.  Hartray,  571. 
Gorrell  v.  Home  Life  Ins.  Co.,  81. 
Goshen  i'.  Stonington,  1565. 

V.  Turpin,  47. 
Goshen  Nat.  Bank  v.  Bingham,  741, 
1607a,  1618. 

V.  The  State,  366. 
Goslin  V.  Griffin,  831a. 
Goss  V.  Nelson,  46. 

V.  W^hitney,  69. 
Gothrupt  V.  W'illiamson,  145. 
Gottberg  v.  U.  S.  Nat.  Bank,  775. 
Gottstein  v.  Simmons,  815. 
Gotzian  &  Co.  v.  Heine,  1311. 
Goudy  V.  Gillam,  12156. 
Gough  V.  Findon,  25. 

V.  Staats,  1578. 

V.  Tindon,  63. 
Gould  V.  Combs,  1387. 

V.  Norfolk  Lead  Co.,  294. 

V.  Robson,  1305,  1327. 

V.  Segee,  777,  831c,  840. 
V.  Stevens,  775,  778. 


Gould  V.  Town  of  Sterling,  1523,  1532, 

1550, 1552,  1555a. 
Goulding,  Ex  parte,  366. 
Goupy  V.  Harden,  314,  465,  466,  467, 

471,612. 
Govef.Vining,  1103, 1147. 
Governor  v.  Carter,  1672. 

V.  Dailev.  272. 
Gowan  v.  Jackson,  471,  999,  1086. 
Gowdey  v.  Robbins,  1417. 
Gower  r.  Moore,  591,  1175. 
Grable  v.  Beattv,  833. 
Grace  v.  Adams,  1729o,  1732. 

V.  Lynch,  1317,  1729a,  17.32. 
Grace  NIethodist  Episcopal  Church  v. 

Richards,  769a. 
Gracie  v.  Stanford,  452. 
Graff  V.  Adams,  812. 

V.  Logue,  854. 
Grafton  Bank  v.  Cox,  1116,  1117,  1144, 
1145. 

r.  Kent    1338. 

V.  Woodward,  158,  159. 
Grafton  Nat.  Bank  v.  Wing,  306. 
Graham  v.  Adams,  56. 

V.  Alexander,  180. 

V.  Campbell,  305. 

V.  Cox,  1646. 

V.  Gillespie,  1409. 

!'.  Keyes,  196a. 

t'.  Larimer,  803. 

V.  McGuiere,  674. 

r.  McGuier,  173. 

V.  Marks  &  Co.,  858. 

V.  Mercantile  Town  Mut.  Ins.  Co., 
193. 

V.  Negus,  1260. 

V.  Remmel,  816. 

V.  Robertson,  1215. 

V.  Rush,  1387. 

V.  Sangston,  656,  969,  983,  1019, 
1027. 

V.  Smith,  780,  831a. 

V.  U.  S.  Savings  Inst.,  294. 

V.  Wilson,  709. 
Gramer  v.  Joder,  7G. 
Grammel  v.  Carmer,  16o,  20,  22. 
Grand  Bank  v.  Blanchard,  658. 
Grand  Chute  v.  Winegar,  1537,  1540, 

1541,  1543. 
Grand  Gulf  Bank  v.  Wood,  741,  748a. 
Grandin  v.  LeRoy,  726,  790. 
Grand   Island   Banking  Co.  i'.  Shoe- 
maker, 1219. 

V.  Wright,  248. 
Grand  Lodge  A,  O.  U.  W.  v.  Young, 

1417. 
Grand  Lodge  of  Free  Masons  v.  Wad- 
dill,  384. 
Grand  Rapids  R.  Co.  v.  Sanders,  1517a. 


TABLE    OF   CASES 


Ixxxv 


References  are  to  paragraphs  marked  § 


Grand    River   Cottage   v.    Robertson, 

174a. 
Grange  v.  Rcigh,  1590,  1591. 
Granite  Bank  v.  Ayres,  637,  1118. 

V.  Ellis,  1190. 
Granite  Nat.  Bank  v.  Fitch,  1237, 1260, 

1758. 
Grant  v.  Da  Costa,  108. 

V.  Ellicott,  790. 

V.  Ennis,  573,  1196,  1198. 

V.  Hawks,  369. 

V.  Healy,  916,  1454. 

V.  Hunt,  503. 

V.  Isett,  850. 

V.  Kidwell,  831a. 

V.  Mills,  1281. 

V.  Norway,  1733,  1733a. 

V.  Shaw,  490,  504,  505,  550. 

V.  Spencer,  1108. 

V.  Treadwell  Co.,  387,  394. 

V.  Vaughan,  5,  104,  1503. 

V.  WaLsh,  815. 

V.  Wood,  41. 
Grapengether  v.  Fejervary,  248. 
Graton  &  Knight  Mfg.  Co.  v.  Redel- 

schimer,  292. 
Gratton  Tp.  v.  Chilton,  1537. 
Grauel  v.  Soeller,  859. 
Graul  V.  Strutzel,  290,  611,  996. 
Graves  v.  American  Exchange  Bank, 
677,  1229,  1469. 

V.  Clark,  80. 

V.  Johnson,  710. 

V.  Kav,  724. 

V.  Mining  Co.,  104,  724a,  1708. 

V.  Saline  County,  1537. 

V.  Shulman,  71. 

V.  Smith,  1340. 
Graw  I'.  Hannah,  265. 
Gray  t'.  Anderson,  1598. 

V.  Bank  of  Ky.,  790. 

V.  Baron,  68. 

V.  Bell,  612,  996. 

V.  Bowden,  39. 

V.  Bovle,  197,  198,  776. 

V.  Brown,  1321. 

V.  Donahoe,  56. 

V.  Farmers'  Bank,  392,  395,  1326. 

V.  Gray,  94. 

V.  Merriam,  1611a. 

V.  Milner,  96,  97,  486. 

V.  Robinson,  807. 

V.  Wood,  85. 

f.  Worden,  56,  57. 
Grayson  County  Bank  v.  Elbert,  986. 
Gray  Tie  &  Lumber  Co.  v.  Farmers' 

Bank,  6,  187,  296,  482,  666,  741. 
Graziani  v.  Hall,  1341. 
Great  Falls  Bank  v.  Farmington,  422, 

434,  435. 


Greathead  o.  Walton,  70,  899. 

Greatlake  v.  Brown,  455. 

Great  Northern  Moulding  Co.  v.  Bone- 

wur,  81o,  816. 
Greatorex,  Exr.,  v.  Gerish,  1646. 
Great  Western  Elevator  Co.  i'.  White, 

296. 
Great  West.  R.  Co.  v.  McDonald,  1729. 
Great  Western  Tel.  Co.,  In  re,  800a. 
Greel  v.  Louthain,  926. 
Greele  v.  Parker,  503,  550,  551,  560, 

561. 
Greeley  v.  Hunt,  996. 

V.  People,  1522. 

V.  Thruston,    1208,     1209,     1210, 
1212. 

V.  Whitehead,  325,  397. 
Green  v.  Bickford,  769a. 

V.  Burroughs,  1578,  1777. 

V.  Clark,  173. 

V.  County  of  Niagara,  1630. 

V.  Davies,  102. 

f.  Deakin,  366. 

V.  De  Moss,  12816. 

V.  Dodge  &  Cogswell,  1786. 

V.  Drebillis,  88. 

t;.  Farley,  1005a. 

V.  Green,  234. 

V.  Holway,  123,  125. 

t'.  Lake,  1317. 

V.  Lonthain,  725a. 

V.  McAuley,  1191. 

V.  Neal,  1525. 

V.  Raymond,  508,  515,  616. 

V.  Sarminto,  875. 

V.  Shepherd,  1760. 

V.  Sizer,  169. 

V.  Skcll,  303. 

V.  Skinner,  1335a. 

V.  Sneed,  1373. 

V.  Spires,  62a. 

V.  Steer,  667. 

V.  Van  Buskirk,  907. 

V.  Wilkie,  847,  848,  849. 

V.  Young,  1770a. 
Green  Co.  v  Shortell,  1538,  1542. 
Green  County  Bank  v.  Chapman,  835. 
Greenbaum  v.  Megibben,  1747a. 
Greene  v.  Beckner,  1373. 

V.  Duncan,  517. 

V.  Farley,  1005a,  1007. 

V.  Holway,  122. 
Greene  County  v.  Daniel,  1508a. 
Greenfield  Bank  v.  Crafts,  1351,  1352a. 
Greenfield  Sav.  Bank  v.  Stowell,  1373, 

1373a,  1406,  1407a. 
Greenfield's  Est.,  849a. 
Greenhow  v.  Boyle,  145. 
Greening,  Ex  parte,  744. 

V.  Patten,  1221. 


Ixxxvi 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Greenough  v.  McClelland,  1334,  133G. 

V.  Smcad,  455,  712,  715. 
Greonshiolds  v.  Crawford,  1218. 
Greenslade  v.  Dower,  355,  358a. 
Grecnstreet  v.  Carr,  1470. 
Greenville  v.  Ormand,  790. 
Greenwalt  v.  McDowell,  1327. 
Greenway,  Ex  parte,  1475,  1476,  1479. 

V.  Orthwein,  824. 

V.  Williams,  790. 
Greenwell  v.  Haydon,  782. 
Greenwich  Bank  v.  Do  Groot,   1008, 
1115. 

V.  Oppcnheim,  185. 
Greenwich  Ins.  Co.  v.  Oregon  Imp.  Co., 

1587,  1623. 
Greer  v.  La  Fayette,  833. 

V.  Laws,  1623. 

V.  Perkins,  1669,  1685. 
Greeser  v.  Sugar  man,  769a. 
Gregg  V.  George,  1587. 

V.  Union  Nat.  Bank,  1702o. 

V.  Weston,  lOo. 
Gregory  v.  Allen,  1091. 

V.  Higgins,   800a. 

V.  Lee,  226. 

V.  Leigh,  262,  403. 

V.  McCormic,  156. 

V.  McXealy,  1192. 

V.  Merchants  Nat.  Bank,  1636. 

V.  Paul,  245. 

V.  Sturgis  Nat.  Bank,  698d. 

V.  Thomas,  1266. 

V.  Walcup,  529. 

V.  Wendell,  195a. 
Grenaux  v.  Wheeler,  775,  796,  814. 
Grenier  v.  Ulery,  93. 
Gresham  v.  Morrow,  207. 

V.  Ragsdale,  174a. 
Greusel  v.  Hubbard,  7076,  713a. 
Grew  V.  Burditt,  1437. 
Grey  v.  Cooper,  93,  227,  682. 
Gribben  v.  Clement,  1339. 
Grier  v.  Irwin,  1788. 
Grierson  i'.  Sutherland,  97. 
Griffin  v.  Central  Bank,  1682. 

V.  Chase,  326. 

V.  Chriswisser,  196a. 

V.  City  Bank,  1506. 

V.  Colonial  Bank,  369. 

V.  Goff,  598,  1163. 

V.  Harris,  1217. 

V.  Hasty,  724a. 

V.  Kemp,  1587,  1592,  1600. 

V.  Long,  1266. 

V.  Ranney,  122. 
Griffith  V.  Burden,  1533. 

V.  Conway,  724a,  725a. 

V.  Cox,  1376. 

V.  Lewin,  812,  1200,  1227. 


Griffith  V.  Osawkee  Township,  1522. 

V.  Reed,  95,  1236. 

V.  Shipley,  815. 

V.  Short,  204. 

V.  Sitgreaves,  177,  1309. 
Griffiths  I'.  Hcrzog,  7136. 

i-.  Kellogg,  849. 

V.  Owen,  1270,  1272. 

V.  Perry,  17126. 
Griggs  V.  Corson,  53. 
Grimes  v.  Hillenbrand,  197. 

V.  Ililliary,  1227,  1470. 

V.  Piersol,  694o,  1390. 

V.  Tait,  899,  1171. 

V.  Talbot,  1470. 
Grimshaw  v.  Bender,  867,  878,  1438. 
Grimison  v.  Russell,  41. 
Grimstead  v.  Briggs,  1401. 
Grinman  v.  Walker,  1016. 
Grinnell  t;.  Hill,  193. 

V.  Suydam,  1636. 
Grissom   v.   Commercial   Bank,   326a, 

3266. 
Griswald  v.  Buechle,  804. 

V.  Davis,  65,  824,  1233. 

V.  Slocum,  709. 

V.  Waddington,    216,    222,    678a, 
1062. 
Griswold,     Hallette     &     Pearsons     v. 

Davis,  7796,  1230. 
Grizewood  v.  Blair,  195a. 
Grocer  Co.  v.  Bank,  1636,  1636a. 
Grocers'   Bank   v.  Penfield,   185,  791, 

814. 
Groesbeck  v.  Marshall,  196a. 
Grommes  v.  Sullivan,  381. 
Grooms  v.  Oliff  &  Co.,  769a. 
Gross,  In  re,  1612a. 

V.  Arnold,  63. 

V.  Bennington,  156,  741,  795. 

V.  Steinle,  1316. 
Grosvenor  v.  Stone,  998,  1076. 
Grover  v.  Grover,  24,  1181a. 
Groves  v.  Ruby,  668. 

V.  Sentell,  94. 
Grubbs  v.  Barber,  203. 
Grudgeon  v.  Smith,  983. 
Gruenther  v.  Bank  of  Monroe,  1645. 
Grumback  v.  Hirsch,  534. 
Grutacup  v.  Frisbie,  53. 

V.  Woulloise,  53,  54,  1453,  1454. 
Guarantee  &  Trust  Co.  v.  Haven,  535, 

1755. 
Guaranty  Trust  Co.  v.  Grotrian,  509. 
Guckian  v.  Newbold,  787. 
Guelich  v.  National  State  Bank,  341. 
Guerguin  v.  Boone,  1317,  1326. 
Guerin  v.  Patterson,  812. 
Guernsey  v.  Imperial  Bank  of  Canada, 

899,  908,  910. 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Ixxxvii 


Guernsey  v.  Marks,  1339. 
Guidon  v.  Robson,  1182. 
Guigom  V.  Nat.  Bank,  340e. 
Guigown  V.  Union  Tr.  Co.,  995, 
Guild  V.  Belcher,  201,  204. 
V.  Butler,  1335a. 
V.  Eager,  1242. 
Guild  &  Co.  V.  Conrad,  570. 
Guilford  v.  Sup.  of  Chenango  County, 
1.556.  „    ,    ^ 

Guillaume   v.  Hamburg,   etc.,   I'acket 

Co.,  1740. 
Guinan's  Appeal,  24a. 
Guion  V.  Doherty,  1260.    _    ^    ^ 
Gulf,  Colorado  &  Santa  Fe  R.  Co.  v. 

Nelson,  1729a. 
Gullett  V.  Hoy,  725. 
Gumaer  v.  Cripple  Tunnel,  etc.,  Co., 
382. 
V.  Jackson,  576. 
V.  Sowers,  741. 
Gumbel  &  Co.  v.  Ryan,  769a. 
Cunningham  v.  Scott,  775. 
Gunnis  v.  Weiglcy,  1303,  1306. 
Gunnison  County  Bank  v.  Rollms,  803, 

1.543a. 
Gunson  v.  Metz,  1110,  1158. 
Guntersville  v.  Jones  Cotton  Co.,  1734f . 
Guptill  I'.  Home,  681. 
Gurney  v.  Behrend,  1727,  1730,  17346. 
1746,  1750a. 
t'.  Langlands,  1219. 
V.  Womcrsleyj  731a,  1269. 
Gurnsey  v.  Imperial  Bank  of  Canada, 

10. 
Gustine  v.  Union  Bank,  1322. 
Guthrie  v.  Huntington  Chair  Co.,  81a. 
V.  Imbrie,  408. 
V.  Murphy,  224. 
Guthrie  &  W.  R.  Co.  v.  Rhodes,  193. 
Gutta  Percha  &  Rubber  Mfg.  Co.  t'. 

Cleburne,  164. 
Gutwillig  V.  Stumes,   725. 
Guy  V.  Biebend,  185. 
V.  Harris,  36a. 
V.  Hull,  1217. 
Gwathmay  v.  Clisby,  90a. 
Gwin  V.  Anderson,  1378,  1385. 
Gwinnell  v.  Herbert,  663a,  705,  714a 
Gymnasium  Co.  v.  Bank,  7266. 


Haas  V.  American  Nat.  Bank,  795a. 

V.  Hall  &  Farley,  177. 

V.  Kansas  City  R.  Co.,  1750. 

V.  Sackett,  665.  .„  „„. 

Haber  v.  Brown,  590a,  635,  640,  664. 
Habersham  v.  Lehman,  696,  1195. 
Habil  t;.  U.  S.  Fidelity,  etc.,  1339. 


Hacker  v.  Brown,  203. 

Hackett  v.  First  Nat.  Bank,  1405. 

V.  Reynolds,  3346. 

V.  Watts,  1343. 
Hackettstown     Nat.     Bank    v.     Rea, 

924 
Hackleyi'.  Patrick,  370. 
Hackley    Nat.    Bank    v.  Barry,    868, 

1338 
Hackney  v.  Jones,  105,  664. 
Hadden  v.  Dooley,  1259. 

V.  Rodkey,  664a. 
Haddock  v.  Crochcron,  370,  371,  373. 
V.  Murray,  1124. 

V.  Woods,  56.  XT    ij     1 

Haddock,  Blanchard  &  Co.  v.  Haddock 

189,  532,  703,  710,  714. 
Haden  v.  Lehman,  832. 
Hadlock  v.  Brooks,  262. 
Haeberle  v.  O'Day,  504,  566. 
Haeer  v.  National  German-American 
Bank,  7956,  799,  802,  867. 
V.  Rice,  302,  412,  415,  418,  487. 
Hagerman  v.  Sutton,  834,  12816. 
Hagerthy  v.  Phillips,  703a. 

V.  Baldwin,  1592. 
Hagev  V.  Hill,  1322. 
Haggard  v.  Bothwell,  1181a. 
Hague  V.  French,  66. 
Hahn  i-.  Bradley,  814,  815. 
Haigh  t^.  Brooks,  1766. 
Haight  V.  Joyce,  807. 

I'.  Naylor,  302. 
Haile  i-.  Pierce,  418. 
Haille  v.  Smith,  1736,  1745a. 
Haines  v.  Cadwell,  81a,  183. 
V.  Dennett,  1217. 
V.  Dubois,  688,  978. 
t;.  Goodlander,  1470. 
t'.  Pearce,  1277a. 
V.  Tannant,  226. 
i;.  Thompson,  741. 
Hains,  Admr.,  v.  Tannant,  226. 
Hair  v.  Edwards,  574,  741. 

V.  La  Bronse,  81. 
Hakes  v.  Russ,  68a,  1398. 

V.  Thayer,  177,  775,  7956. 
Halbert  v.  Rosenbalm,  1468    1468a. 
Halderman  v.  Woodward,  13176. 
Hale  t;.  Burr,  1144,  1179. 
V.  Danforth,  703,  1103. 
V.  Gerrish,  231,  232. 
V.  Harris,  69,  185. 
V.  Hitchcock,  688c. 
V.  Houghton,  1522. 
V.  Milwaukee  County,  1747o. 
V.  Wall,  222. 
Hale,  Admr.,  v.  Aldaffer,  789. 
Haley  v.  Congdon,  725. 

V.  Vandiver,  1373,  1395. 


ixxxviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Ilalford  V.  Cameron's  Coalbrook,  etc., 

Co.,  387. 
Flulifax  V.  Lyle,  535. 
Hall  V.  Allen,  643,  812. 

V.  Appel,  1245. 

V.  Auburn  Turnpike  Co.,  386. 

V.  Bank  of  the  State,  324. 

V.  Bradbury,  305. 

V.  Capital  Bank,  532,  1312. 

V.  Coats,  725a, 

V.  Featherstone,  815,  817. 

V.  FuUer,  1408,  1658. 

V.  Grayson    County    Nat.    Bank, 
193. 

V.  Hale,  775. 

V.  Henderson,  187. 

V.  Jameson,  271. 

V.  Keese,  173. 

V.  Keller,  1226. 

V.  Mayo,  1733. 

V.  McHenry,  1387. 

V.  Milwaukee  Dock  Co.,  1714. 

V.  Mobile  &  M.  R.  Co.,  748,  1281, 
12816. 

V.  Newcomb,  709,  713d,  715. 

V.  New  Farmers'  Bank's  Tr.,  254. 

V.  Phelps,  112,  1220. 

V.  Railway  Co.,  1623. 

V.  Rodgers,  1763. 

V.  Shorter,  128,  130. 

«;.  Smith,  361,  611,  1613. 

V.  Tafts,  100. 

V.  Toby,  88,  6886. 

V.  Tyson   First    Nat.   Bank,   388, 
729. 

V.  Wilson,  750,  751,  752,  758,  775, 
807,  840. 
Hall  &  Tyson  v.  First  Nat.  Bank,  1181a. 
Hallam  v.  Tillinghast,  334. 
Hallenbach   v.   Dickinson,    1215a. 
Hallenbeck  v.  Hahn,  1523. 
Hallett  V.  Holmes,  1319. 
Halley  v.  Falconer,  700a. 

V.  Jackson,  1092a. 
Halliday  v.  Hart,  1327. 

V.  Martinet,  1057. 
Halliwell  Cement  Co.  v.  Stewart,  164. 
Hallock  V.  Jaudin,  122,  124,  125. 

V.  Young,  775. 
Hallowell,  etc..  Bank  v.  Howard,  1672a, 

1689,  1691. 
Hallowell  Nat.  Bank  v.  Marston,  1103, 

1104. 
Halls  V.  Bank  of  State,  324. 
Halsey  v.  Lange,  724a. 
Halstead  v.  Bilstad,  47. 

V.  Brown,  1317. 

V.  Skelton,  519,  642. 

V.  The   Mayor,  482. 

V.  Woods,  90a,  812. 


Haly  V.  Brown,   1116. 

V.  Lane,  241,  675,  803. 

V.  Smith,  196. 
Ham  V.  Smith,  196. 
Hambcr  v.   Roberts,   1218. 
Hamblen  v.  Folts,  12816. 
Hamblet  v.   Bliss,   1201. 
Hamburger  v.  Miller,  719,  720a,  721, 

722. 
Hamer  v.  Moore,  25. 
Hames  v.  Stroud,   769a. 
Hamilton  v.  Breman,  753. 

V.  Catchings,  532. 

V.  Cunningham,  1277,  1277a. 

V.  Hooper,  1387. 

V.  Lumber  Co.,  1590. 

V.  Marks,  775,  796. 

V.  Mingo  Coal  &  Coke  Co.,  1204. 

V.  Newcastle  R.  Co.,  382,  383,  402. 

V.  Prouty,  1317. 

V.  Scull's  Admr.,  194. 

V.  Seaman,  370,  373. 

V.  Summers,  369. 

V.  Vought,  775,  7956. 

V.  Watson,  1309. 

V.  Wilson,  795a. 
Hamilton  &  Co.  v.  Stewart,  1289. 
Hamilton  Gin  Co.  v.  Sinker,  62,  62a, 

1209. 
Hamilton  Nat.  Bank  v.  Nye,  294,  1225. 

V.  Upton,  795a. 
Hamiter  v.  Brown,  184,  790. 
Hamlin  v.  Abell,  740a. 

V.  Simpson,  1588,  1590,  1592. 
Hammett  v.  Barnum,  859. 
Hammill  v.  First  Nat.  Bank,  770. 
Hammond  v.  Barclay,  491,  498a. 

V.  Dufrene,  1076,  1078. 

V.  Hopping,  207. 
Hammond,  In  re,  736a. 
Hammond's  Case,  1219. 
Hammond,  Snyder  &  Co.  v.  American 

Express  Co.,  598,  908. 
Hamper,  Ex  parte,   351. 
Hampton  v.  Miller,  598,  612. 
Hamrick  v.  Barnett,  1339. 
Hanauer  v.  Anderson,  1066. 

V.  Doane,  200,  204,  789. 

V.  Gray,  199. 

V.  Woodruff,  171. 
Hance  v.  Miller,  694,  1195,  1788. 

V.  Wabash  Western  Ry.  Co.,  1741. 
Hancock  v.  Bank  of  Tifton,  1309. 
Hancock  Bank  v.  Joy,  252,  681. 
Hand  v.  Armstrong,  172,  1458a. 
Handley  v.  Barrows,  1385. 
Handy  v.  Sibley,  832a. 
Hanger  v.  Abbott,  218. 
Hanish  v.  Kennedy,  1342. 
Hankey  v.  Downey,  799. 


TABLE    OF   CASES 


Ixxxix 


References  are  to  paragraphs  marked 


Hankey  v.  Hunter,  1251. 

V.  Trotman,  612. 
Hannay  v.  Guaranty  Trust  Co.  of  New 

York,  50,  479. 
Hannibal,    etc.,    R.    Co.    v.    Marion 

County,  1545,  1548,  1560,  1564. 
Hannon  v.  Allegheny   Bellevue  Land 
Co.,  1590. 

V.  Sullivan,  574,  575. 
Hannum  v.  Richardson,  670,  672. 
Hanold  v.  Kaj's,  832. 
Hanover  Nat.  Bank  v.  Am.  Dock  &  Fr. 
Co.,  271,  795a,  1714. 

V.  Blake,  1289. 

V.  Johnson,  197. 
Hanrick  v.  Andrews,  920. 

r;.  Farmers'  Bank,  1450, 
Hansard  v.  Robinson,  1228,  1475, 1476, 

1477,  1482,  1623. 
Hansbcrger  ;;.  Geigher,  1318. 
Hansborough  t'.  Gray,  1335a. 
Hanselman  v.  Doyle,  1425. 
Hansford  v.  Freeman,  855. 
Hanson  v.  Crawley,  1400. 

V.  Nelson,  185. 

V.  Verno,  1523. 
Hapgood  t'.  Watson,  354. 

V.  Wellington,  833. 
Hapgoods  V.  Barrett,  197. 
Harbeck  v.  Craft,  1587,  1588,  1652. 

V.  Vanderbilt,  1491a. 
Harber  v.  Brown,  62. 
Harbert  t;.  Dument,  1317,  1322. 
Harbison  v.  Bank,  815,  819. 

V.  Bank  of  Indiana,  815. 
Harbury  v.  Kumpf,  1316,  1317a. 
Hardeman  v.  Bank  of  Middleton,  359. 
Harden  v.  Boyce,  1060. 
Hardester  v.  Tate,  81c. 
Hardford  Bank  v.  Stedman,  1005a. 
Hardin  v.  Olson,  62. 
Hardin  County  v.  McFarlan,  1555a. 
Harding  v.  Edgecumbe,  12156. 

V.  Rockford,  etc.,  R.  Co.,  1551. 

V.  State,  145. 

V.  Waters,  7136. 

V.  Wormley,  1250,  1251,  1252. 
Hardison  v.  Davis,  177,  1226. 
Hardman  v.  Bellhouse,  1289a. 
Hardy  v.  Boyer,  1338. 

V.  Chesapeake  Bank,  1370,  1655. 

V.  First  Nat.  Bank  of  Newton,  803. 

V.  Merriman,  382. 

V.  Merriweather,  384,  385. 

V.  Norton,  142. 

V.  O'Brien,  90. 

V.  Pilcher,  418,  487. 

V.  Waters,  227,  682. 

V.  White,  721. 

V.  Woodroofe,  635. 


Hardy  i'.  Worthen,  1311. 

Hare  v.  Henty,  332,  601,  1592,  1599. 

V.  Robinson,  195a. 

V.  Wallace,  1317. 
Harger  v.  Wilson,  752,  758,  766. 

V.  Worrall,  165,  814. 
Hargous  v.  Lahens,  1455. 
Hargreave  v.  Smee,  1755. 
Harick  v.  Jones,  760. 
Harker  v.  Anderson,  1567,  1595,  1600, 

1607. 
Harlam  v.  Ely,  1625. 
Harlan  v.  Brown,  1468a. 

V.  Gladding,  McBean  &  Co.,  771. 
Harley  v.  Thornton,  737,  1676a. 
Harman  v.  Howe,  86a. 
Harmer  v.  Killing,  235. 

V.  Steele,  1285. 
Harmon  v.  Hale,  710,  1338. 
Hamer  v.  Dipple,  223. 
Harness  v.  Home,  202. 
Harnett  v.  Holdrege,  130,  707a,  713a, 

1386,  1392. 
Harpending  v.  Daniel,  1181a. 

V.  Gray,  1230. 
Harper  v.  Butler,  883,  904. 

V.  Calhoun,  392. 

V.  Clark,  124,  125. 

V.  Davis,  46,  161,  182. 

i;.  Hampton,  891. 

t-.  Nat.  Bank,  308a. 

V.  O'Neil,  240. 

V.  Peoples,  729,  1219. 

V.  West,  497. 

V.  Young,  807. 
Harrah  v.  Dougherty,  703. 
Harrel  v.   Bixler,  616. 
Harrell  v.  Broxton,  782. 

V.  National  Bank,  815. 

t;.  Nat.  Bank  of  Commerce,  832. 

V.  Parrott,  1385. 
Harrigan  i-.  Advance  Thresher  Co.,  741. 
Harriman  v.  Hill,  1190. 

V.  Sanborn,  50. 
Harrington  v.  Baker,  366. 

V.  Brown,  85. 

V.  Butte  &  Boston  Min.  Co.,  775, 
815. 

V.  Claflin  &  Co.,  1506. 

V.  Dorr,  726,  786. 

V.  Findley,  1309. 

V.  Fry,  1218. 

V.  Stratton,  202. 
Harris  v.  Bank  of  Jackonsville,  1400, 
1417,  1421. 

V.  Bradley,  672,  676. 

V.  Brooks,  1309,  1332,  1336. 

V.  Buchanan,  164. 

V.  Clark,  18,  19,  21,  22,  25,  50,  451, 
455,  594. 


X6 


TABLE    OF   CASES 
References  are  to  paragraphs  marked 


Harris  v.  Firth,  41,  196. 
V.  Fowler,  832. 
V.  Harris,  185. 
V.  Jones,  704. 
V.  Lewis,  49. 
V.  Lindsay,  1267,  1273. 
V.  Memphis  Bank,  1032,  1033. 
V.  Nicholls,  7956,  797. 
V  Pate  28,  775. 

v  P.  h'.  &  'W.  D.  Brandon,  193. 
V.  Robinson,  991,  1058,  1115. 
V.  Shipway,  1274. 
V.  Tinder,  322. 
V.  Wall,  236. 
V.  Woodward,  262. 
Harris  Mfg.  Co.  v.  Aufinson,  62. 
Harrisburg  Bank  v.  Meyer,  789. 
Harrisburg  Tr.  Co.  v.  Shufeldt,  1435a. 
Harrison  v.  Bailey,  1048. 
V.  Black,  271a. 
V.  Close,  1294. 
V.  Courtauld,  1334. 
V.  Crowder,  600. 
V.  Edwards,  889,  895. 
V.  Field,  1298. 
V.  Firth,  805. 
V.  McClelland,  262,  263. 
V.  McKim,  719. 
V.  Morrison,  80. 

V.  Nat.  Bank  of  Monmouth,  1203. 
V.  Nicollet  Nat.  Bank,  1566,  1572, 

1574. 
V.  Pike,  1202. 
V.  Powers,  70. 
V.  Richardson,  209. 
V.  Robinson,  1055,  1115,  1116. 
V.  Ruscoe,  979,  981,  988,  989,  990, 

991. 
V.  Sheirburn,  698. 
V.  Smith,  336. 
t;.  Stacy,  884. 
V.  State,  80. 

V.  State  Bank  of  Monticello,  185. 
V.  Thackaberry,  94. 
V.  Walden,  193,  850. 
V.  Williams,  20. 
V.  Wortham,  1425. 
Harrison  County  Justices  v.  Holland, 

1557. 
Harrop  v.  Fisher,  744. 
Harrow  v.  Dugan,  1189. 
Harsh  v.  Klepper,  1385,  1411. 
Harshman   v.    Bates   County,    1523a, 

1524,  1535a. 
Hart  V.  Alexander,  369&. 

V.  Bank  of  Russellville,  1338. 
V.  Boiler,  1268,  1273. 
V.  Church,  184. 
V.  Clouser,  1385. 
V.  Deamer,  213. 


Hart  V.  Eastman,  996. 
V.  Hudson,  1789. 
V.  Livemore  Foundry  Machine  Co., 

197,  807,  808. 
V.Long,  1109a,  1148,  1162. 
V.  McClellan,  1115. 
V.  Mo.,  etc.,  F.  &  M.  Ins.  Co.,  386. 
V.  Penna.  R.  Co.,  1740a. 
V.  Potter,  369. 
r.  Smith,  617. 
V.  Stevens,  254,  257,  1184. 
r.  Stickney,  787. 
V.  U.  S.  Trust  Co.,  793a. 
V.  Wills,  868. 
Harter    v.    Kernochan,    1521,    1523a, 
1550. 
V.  Moore,  1317a. 
Hartford  Bank  v.  Barry,  392,  572,  624. 
V.  Green,  654a. 
V.  Stedman,  572,  1005a,  1039. 
Hartford  F.  Ins.  Co.  v.  Wilcox,  275. 
Hartley  v.  Case,  983,  1036,  1235. 
V.  Manton,  1290,  1291. 
V.  Rice,  196. 
j;.  Wharton,  231. 
V.  Wilkinson,  60,  79,  151. 
Hartman  v.  First  Nat.  Bank,  1769. 
V.  Greenhow,  448. 
V.  Redman,  1316. 
V.  Shaffer,  180. 
Harts  V.  Emery,  1181a. 
Hartshorn  v.  Hartshorn,  69. 
Hartwell  v.  Hemenway,  666. 
Hartzell  v.  McClurg,  1199,  1200,  1201. 
Harvard  Pub.  Co.  v.  Benjamin,  249. 
Harvey  v.  Archibald,  923. 
V.  Cane,  92,  143a,  490. 
V.  Effinger,  154. 
i;.  First  Nat.  Bank,   1221,   1266c, 

1788,  1789. 
V.  Girard    Nat.    Bank,    571,    654, 

1223. 
V.  Irvine,  94. 
V.  Kay,  128. 
V.  Martin,  499a. 
V.  Nelson,  1095a. 
V.  Smith,  1406. 
V.  Towers,  166,  808. 
V.  Troupe,  1149,  1165,  1167. 
Harvey  Blair  &  Co.  v.  Johnson,  249. 
Harwood  v.  Brown,  80. 

V.  Jarvis,  1086. 
Hasbrook  v.  Palmer,  56. 
Hasbrouck  v.  Milwaukee,  1556,  1563. 
Hascall  v.  Life  Assn.  of  America,  485. 

V.  Whitmore,  803. 
Haseltine  v.  Dunbar,  174a. 

V.  Siggers,  1708o. 
Hasey  v.  White  Pigeon  Beet  Sugar  Co., 
424,  482. 


1"ABLE   OF   CASES 


XCl 


References  are  to  paragraphs  marked 


Haskell  v.  Avery,  698d,  1181a. 

V.  Boardman,    1040,    1041,    1131, 
1139. 

V.  Champion,  1387. 

V.  Cornish,  406. 

V.  Jones,  199a,  797. 

V.  Lambert,  60. 

V.  Mitchell,  741,  745. 
Haskins  v.  Throne,  356,  357. 
Haslack  v.  Wolfe,  54,  728. 
Haslett  V.  Ehrick,  1043. 

V.  Kunhardt,  1111. 
Hass  V.  Lobstein,  1312. 
Hassoullier  v.  Harkenck,  51a. 
Hastings  v.  Pepper,  1729,  1742. 
Hatch  V.  Atkinson,  24,  24&. 

V.  Barrett,  688c,  858. 

V.  Burroughs,  197,  807. 

V.  Calvert,  784a. 

V.  First  Nat.  Bank  of  Dexter,  1703. 

»'.  Fourth  Nat.  Bank,  366,  1612b. 

V.  Frays,  108. 

V.  Gillette,  36. 

V.  Searles,  147. 
Hatcher  v.  McMorine,  908. 

V.  National  Bank,  689a. 

V.  Stalworth,  503. 
Hatcher  &  Co.  v.  Nat.  Bank  of  Phila., 

832a. 
Hatchett  v.  Baddeley,  243,  246. 
Hatchett  &  Large  v.  Sunset  Brick  & 

Tile  Co.,  357. 
Hately  v.  Pike,  415,  416,  717. 
Hatfield  v.  Griffith,  149,  150. 

V.  Phillips,  1731a. 
Hathaway  v.  Haynes.  1734c. 
Hathorn  v.  Wheelright,  203. 
Hathwick  v.  Owen,  99. 
Hattan  v.  Holmes,  1370. 
Hatten  v.  Robinson,  1687. 
Hatzel  V.  Moore,  203. 
Hauer  v.  Patterson,  719. 
Hauerwas  v.  Goodloe,  69. 
Hauesslcr  v.  Greene,  725. 
Haug  V.  Riley,  Admr.,  664a,  729,  741, 

787a,  1223. 
Haughton  v.  Ewbank,  296. 
Havana  Cent.  R.  Co.  v.  Knickerbocker 

Trust  Co.,  533,  535,  573,  789. 
Havemeyer  v.  Iowa  County,  1523, 1525. 
Haven  v.  Grand  Junction  R.  Co.  1491a. 

V.  Hobbs,  299. 
Havens  v.  Talbott,  1105. 
Haverhill,   etc.,   Ins.  Co.   v.  Newhall, 

403. 
Haverin  v.  Donnell,  81,  517. 
Hawes  v.  Blackwell,  1636. 

V.  MulhoUand,  156,  834,  835. 
Hawkes  v.  Hinchleff,  1266a. 
V.  Phillips,  713o,  1760. 


Hawkes  v.  Salter,  1041,  1054. 

V.  Saunders,  182. 
Hawkey  v.  Borwick,  635. 
Hawkin  v.  Windhorst,  183. 
Hawkins  v.  Cardy,  668. 

V.  Collier,  174. 

V.  Neal,  174a. 

V.  Rutt,  1024. 

V.  Shields,  611,  612,  669a. 

V.  Watkins,  56. 
Hawkins,  Rec,  v.  Fourth  Nat.  Bank, 

394,  748,  834. 
Hawley  v.  Bibb,  195a. 

V.  Foote,  1260. 

r.  Jette,   1170,   1771,   1172,   1276, 
1568,  1572. 

V.  Sloo,  917. 
Haworth  v.  Crosby,  1309. 
Hawse  v.  Crowe,  1269. 

V.  First  Nat.  Bank  of  Piedmont, 
812. 
Haxtun  v.   Bishop,   645,   647,    1181a, 

1685,  1691. 
Hay  V.  Ayling,  204. 

V.  Goldsmidt,  292,  293. 

V.  Jaickle,  792,  815,  819. 
Hayden  v.  Lauffenburger,  1221. 

V.  Nicolletti,  684. 

V.  Stone,  894a. 

V.  Thrasher,  1339. 

V.  Weldon,  713d. 
Haydock  v.  Lynch,  50,  161. 
Hayes  v.  Allen,  81c. 

V.  Blaker,  357,  365,  369,  819. 

V.  Brubaker,  403. 

V.  Caulfield,  667,  748. 

V.  Kingston,  782. 

V.  Ward,  1311. 

V.  Warren,  182. 
Hayman  v.  Lambden,  94. 
Haynes    v.    Birks,    992,    1036,    1039, 
1043,  1235. 

V.  Foster,  282. 

V.  Rudd,  196a. 
Hays  V.  Bank,  1567. 

V.  Bostick,  193. 

V.  Citizens  Sav.  Bank,  999,  999a, 
1086. 

V.  Crutcher,  403. 

V.  Dickey,  573. 

V.  Hathorn,  813,  11926. 

V.  Lapeyre,  7956. 

V.  Mathews,  1399. 

V.  McClurg,  1275. 

V.  MjTick,  1320. 

t).  N.  W.  Bank,  970. 

V.  Odom,  1373a. 

V.  Plumber,  203,  748a. 

V.  Southgate,  1192b. 

V.  Stone,  1268. 


XCll 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


HavB  V.  Walker,  199a. 

Hayward  v.  Bank  of  England,  655. 

V.  Burke,  371a. 

V.  Empire  State  Sugar  Co.,   571, 
1092a,  1094. 

V.  French,  357. 

V.  Hayward,  256, 

V.  Pilgrim  Soc,  383. 
Haywood  v.  Seeber,  782. 
Hazard  v.  Cole,  424. 

V.  Spencer,  166,  640,  644,  649,  812. 

V.  White,  1093,  1147,  1156,  1136. 
Hazlehurst  v.  Kean,  898. 

V.  Franklin,  921. 
Hazeltine  v.  Keenan,  271,  795a. 
Hazleton  v.  Union  Bank,  1702. 
Hazzard  v.  Duke,  721. 
Head  v.  Hornblower,  1604. 
Headlcy  v.  Reed,  1646. 
Heald  v.  Davis,  1227. 
Healey  v.  Dolson,  1266,  1312. 

V.  Story,  402. 
Healy   v.   Oilman,    1588,    1596,    1646, 
1647. 

V.  Gorman,  919,  923. 
Heane  v.  Rogers,  1220. 
Heaps  V.  Dunham,  196&. 
Heard  v.  Bank,  689a. 

V.  Dubuque   County    Bank,   51a, 
52,  62,  1781. 

V.  Shedden,  789a. 

V.  Stanford,  258. 

V.  Tappan  &  Merritt,  1393. 
Heart  v.  State  Bank,  1708d. 
Heartt  v.  Rhodes,  1587,  1623. 
Heath,  Ex  parte,  1077,  1085,  1170. 

V.  Achey,  1312. 

V.  Blake,  1373,  1385. 

V.  New  Bedford  Safe  Deposit  &c. 
Co.,  294. 

V.  Paul,  293. 

V.  Sansom,  165,  369a. 

V.  Silverhorn  Lead  Min.  Co.,  832. 

V.  Vancott,  713d. 
Heaton  v.  Ainley,  1250,  1396. 

V.  Dickson,  236,  713a,  1204. 

V.  Hulbert,  1781,  1786. 

V.  Knowlton,   193. 

V.  Myers,  157,  303,  403. 
Hecht  V.  Batcheller,  737. 

V.  Shenners,  1375,  1377. 
Hecker  v.  Boylan,  741,  1227. 

V.  Mahler,  1338. 
Heckman  v.  Manning,  1294. 
Hcddrick  v.  Huffaker,  1394. 
Hedger  v.  Steavenson,  982,  983. 
Hedges  v.  Dixon  Co.,  15556. 

V.  Sealy,  741. 
Hedley  v.  Bainbridge,  358a. 
Heebner  v.  Shephard,  203. 


Heenan  v.  Nash,  362,  488. 
Heffelfinger  v.  Shutz,  1420. 
Hefferlin  v.  Krieger,  792,  1326. 
Hefferman  v.  Boteler,  1227,  1230a. 
Hefiington  v.  Jackson,  225. 
Hefflebower  v.  Detrick,  869. 
Heffner  v.  Brownell,  80,  403,  751. 

V.  Wenrich,  1418. 
Hefford  v.  Morton,  1305. 
Heflfron  v.  Daly,  197. 

V.  Hanaford,  365. 
Hefner  v.  Dawson,  1351. 
Hegeman  v.  Moon,  28,  46. 
Heidelbach   v.    National    Park    Bank, 

1425,  1612a. 
Heidenheimer  r.  Blumenkron,  707,  711. 
Heinbach  v.  Doubleday,  Page  &  Co., 

156. 
Heise  v.  Bumpass,  70,  131,  713a,  1209. 
Heiskell  v.  Farmers,  etc..  Bank,  1731a, 

1734a,  17346,  1734c. 
Heisler,  Admr.,  v.  Lyon,  156. 
Heist  V.  Hart,  80. 
Heitman  v.  Carter,  68a. 

V.  Commercial  Bank,  816,  156. 
Held  V.  Caldwell-Ea^ston  Co.,  186. 
Helena    Nat.    Bank    v.    Rocky    Mt. 

Telegraph  Co.,  292,  293,  297. 
Helfenstein's  Estate,  25. 
Heller  v.  Goslin,  896. 

V.  Mois,  834. 
Hellerman  v.  Schwartz,  1652. 
Hellings  v.  Hamilton,  1676. 
Helm  V.  Swiggett,  1708c. 
Helmer   v.    Conunercial    Bank,    689a, 
824. 

V.  Kroliek,  43,  770. 
Helms  V.  Agricultural  Co.,  1354. 
Helmsley  v.  Loader,  287,  1220. 
Helper  v.  Aid  en,  32. 
Helvie  v.  McKain,  185. 
Helzer  v.  Helzer,  1473. 
Heman  v.  Francisco,  91. 
Hemmenway  v.  Stone,  94,  1390. 
Hemphill  v.  Bank  of  Alabama,  147. 

V.  Hamilton,  268. 
Hempstone  &  Co.  v.  Sarratt,  174. 
Hemrich  v.  Wist,  81c. 
Henchman  v.  Lybrand,  1282. 
Henderson  v.  Anderson,  1217. 

V.  Case,  782. 

V.  Cummings,  321. 

V.  Davisson,  573. 

V.  Ford,  742. 

V.  Fox,  225. 

V.  Holcomb,  1203. 

V.  Irby,  1469. 

V.  Johnson,  1437,  1764. 

V.  Louisville  &  N.  R.  Co.,  1733. 

V.  Palmer,  196a. 


TABLE    OF   CASES 


XCUl 


References  are  to  paragraphs  marked 


Henderson  v.  Pope,  1572,  1574. 

V.  Shaffer,  1223. 

V.  U.  S.  Nat.  Bank,  1620,  1638. 

V.  Waggoner,  200. 
Henderson  Mercantile  Co.  v.  First  Nat. 

Bank,  392a,  394. 
Hendricks  v.  Franklin,  921,  1438. 

V.  Judah,  728. 
Hendricks,  Admr.,  v.  Thornton,  100. 
Hendrie  v.  Berkowitz,  753. 

V.  Kinnear,  713e. 
Henehan  v.  Hart,  159,  1312. 
Henerson  v.  Da\'isson,  576. 
Henley  v.  Holzer,  724a,  803,  1233. 
Henman  v.  Dickinson,  1418. 
Hennessy  Bros.  &  Evans  Co.  v.  Mem- 
phis Nat.  Bank,  392a. 
Henry  v.  Allen,  802,  1634. 

V.  Bishop,  112. 

V.  Colman,  150,  151,  154. 

V.  Conley,  1260. 

V.  Gilliland,  1319. 

V.  Heeb,  1351,  1352a. 

V.  Jones,  626. 

V.  Lee,  603. 

V.  Martin,  340e,  1612a. 

V.  Ritenour,  184,  185. 

V.  Sansom,  752. 

V.  Sneed,  784a,  799,  802,  815,  819. 

V.  State    Bank   of   Laurens,    177, 
184,  198. 

V.  Thompson,  1458a. 
Henry  County  v.  Nicolay,  1524, 1537. 
Henschel  v.  Mahlen,  46. 
Henshaw  v.  State  Bank,  795a. 
Hensinger  v.  Dyer,  177,  857,  1352a. 
Hensley  v.  Mitchell,  81. 
Henton  v.  Henton,  182,  183. 
Hentz  V.  Jewell,  195a. 
Hepburn  v.  Griswold,  1248. 

V.  Toledano,  1180. 
Heralds  of  Liberty  v.  Hurd,  1590. 
Herbage  v.  McEntee,  713a. 
Herbelback,  Ex  parte,  898. 
Herbert  v.  Servin,  1317&. 

V.  Winters  et  al.,  1731. 
Hereth  v.  Merchants  Nat.  Bank,  797, 
803,  804. 

V.  Meyer,  51a. 
Herider  v.   Phoenix  Loan  Co.,    1586, 

1592. 
Herieh  v.  Merchants'  Nat.  Bank,  1394. 
Herman  v.  Gray,  203. 

V.  Gregory',  144. 

V.  Gunter,  174a,  803,  811. 
V.  Williams,  1312. 
Hern  v.  Nicols,  391. 
Herndon  v.  Givens,  1470. 

V.  Lewis,  710. 
Herrick  v.  Baldwin,  1145,  1146. 


Herrick  v.  Bennett,  88. 

V.  Borst,  1339. 

V.  Carman,  713d. 

V.  Edwards,  59,  598,  688,  710,  970, 
1203. 

V.  MaUn,  1418. 

V.  Woolverton,  608,  783,  1215. 
Herriman  v.  Shoman,  1245. 
Herrimann  Lvunber  Co.  v.  Bjiirstrom, 

986. 
Herring  v.   Kesee,    1567,   1568,    1569, 
1573. 

V.  Sanger,  1273. 

V.  WoodhuU,  688. 
Herron  v.  Frost,  241. 
Herron  &  Co.  v.  Mawby,  328a. 
Hersey  v.  Elhott,  260,  685. 
Hert  V.  Oehler,  1385. 
Hertel  v.  Bogert,  266. 
Herter  v.  Goss,  508. 
Hertfelder  &  Cochran  v.  Clark,  180. 
Heshp  V.  Anderson,  74. 
Hesse  v.  Dille,  12666. 
Hestone  v.  Williamson,  664a. 
Hetherington  v.  Kemp^  1054. 
Heth  Township  v.  Lewis,  427. 
Heugh  V.  Jones,  248. 
Heuertennatte  v.  Morris,  163,  532,  534. 
Heuriet  v.  Morris,  903. 
Hevey's  Case,  1345. 
Hewins  v.  Cargill,  1384. 
Hewitt  V.  Bank  of  Indian  Territory, 
917. 

V.  Goodrich,  1318,  1327. 

V.  Kaye,  24a. 

V.  Thompson,  1042. 
Heylin  v.  Adamson,  669a. 
Heywood  v.  Perrin,  79,  150,  154,  1410a. 

V.  Pickering,  1599. 

V.  Stearns,  725. 

V.  Waring,  1279. 
Hibbard  v.  Holloway,  36. 
Hibblewhite  v.  McMowrie,  148. 
Hibbs  V.  Brown,  51. 
Hibernia  Bank  &  Trust  Co.  v.  Smith, 

646. 
Hibernian  Bank  v.  Everman,  368,  7266. 
Hickerson  v.  Raiguell,  790. 
Hickhgg  V.  Hardey,  450. 
Hickok  V.  Bunting,  51a,  106,  161. 
Hicks  V.  Brown,  921. 

V.  Hinde,  302,  311. 

V.  Marshall,  213. 

V.  Randolph,  1306a. 
Hickson  v.  Early,  789. 
Hidden  v.  Bishop,  790. 

V.  German  Sav.  &  Loan  Soc,  1248. 
Hier  v.  Staples,  248. 
Higginbotham  v.  McGready,  195a. 
Higgins  V.  B.  R.  &  Aw.  &  M.  Co.,  1247 


StClV 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Higgins  V.  Briggs,  262. 

V.  Bullock,  667. 

V.  McPherson,  1317. 

V.  Morrison,  999a. 

V.  Nichols,  642. 

V.  Ridgway,  81a,  174,  189,  856. 

V.  Senior,  303,  740a. 

V.  Watson,  716,  1776. 
Highmore  v.  Primrose,  108. 
Hightower  v.  Henry,  Sid. 

V.  Ivey,  1093,  1172,  1327. 

V.  Maull,  87. 

V.  Mobile  &  R.  Co.,  193. 
Higley  v.  Newell,  76. 

V.  O'Donnell,  156. 
Higley  &  Co.  v.  B.  C.  R.  &  N.  Ry.  Co., 

1729a. 
Hilborn  v.  Alford,  74. 

V.  Artus,  663a. 

V.  Pennsylvania  Cement  Company, 
99. 
Hildeburn  v.  Turner,  955. 
Hilder  v.  Seelye,  1476. 
Hill,  In  re,  777,  814a. 
Hill  V.  Alexander,  742. 

V.  Alford,  41. 

V.  Allen,  643. 

V.  Barnes,  1418. 

V.  Bostick,  1266,  1327. 

V.  Buchanan,  703. 

V.  Buckminster,  179. 

V.  Calvin,  17856. 

V.  City  of  Memphis,  422,  1532. 

V.  Cooley,  1379. 

V.  Coombs,  189,  1203. 

V.  Denniston,  1311,  1343. 

V.  Dunham,  69. 

V.  Ely,  721,  722. 

V.  Gaw,  80. 

V.  Halford,  41. 

V.  Hall,  81b. 

V.  Heap,  450,  1105. 

V.  Henry,  1211. 

V.  Kraft,  784a,  800a. 

V.  Lewis,  104,  105,  622,  663a,  669, 
743. 

V.  Martin,  899,  1170. 

V.  Mo.  Pac.  Ry.  Co.,  1741. 

V.  Murray,  775. 

V.  Norris,  1079,  1082. 

V.  Norvell,  626,  1027. 

V.  Pine  River  Bank,  1708d. 

V.  Planters'  Bank,  992. 

V.  Shields,  699,  717,  726&. 

V.  Southerland,  1250,  1251. 

V.  Stevenson,  24a,  246. 

V.  Thixton,  862. 

V.  Todd,  54. 

V.  Trust  Co.,  1608,  1610a. 

V.  Varrell,  1030,  1117. 


Hill  V.  Waight,  1227. 

V.  Ward,  197,  726a,  803,  814,  815. 

V.  Whidden,  163. 

V.  Wilker,  891,  891a. 
Hillard  v.  Taylor,  789a,  803,  812. 
Hillegas  /'.  Stephenson,  703. 
Hillenbrand  v.  Shippen,  183. 
Hillman  v.  Stanley,  643. 
Hill    Man.    Co.    v.    Providence,    etc. 

Steamship  Co.,  1740a. 
Hills  V.  Banister,  271. 

V.  Place,  643. 
Hilsingcr  v.  Georgia  R.  Bank,  1707. 
Hilton  V.  Houghton,  69. 

V.  Shepherd,  987,  1067,  1125. 
Himmelman    v.    Hotaling,    612,    783, 

1590,  1634. 
Himrod  v.  Gillman,  834. 
Hinckley  v.  Merchants'   Bank,   1461, 
1470,  1505. 

V.  Pfister,  1339,  1533. 

V.  Union   P.   R.   Co.,    782,    1461, 
1470,  1478,  1500,  1505. 
Hindlaugh  v.  Blakey,  4976,  504. 
Hindley  v.  Marean,  886. 
Hine  v.  AUely,  1036,  1119,  1235. 
Hinely  v.  Margaritz,  234,  235. 
Hines  v.  Patterson,  1468a. 
Hinesburgh  v.  Summer,  196. 
Hines    Supply    Company    v.    Parker, 

1219. 
Hinkley    v.   Fourth    National    Bank, 

643. 
Hinsdale   v.    Bank   of   Orange,    1478, 
1479,  1482,  1693,  1695. 

V.  Jerman,  156. 

V.  Larned,  1685. 

V.  Miles,  1464. 
Hinsdill  v.  Safford,  800a. 
Hinton  v.  Bank  of  Columbus,  532. 

V.  Duff,  1209. 

V.  Jones,  787. 
Hipp  V.  Fidelity  Mut.  Life  Ins.  Co., 

635,  1398. 
Hipp  &  Co.  V.  So.  R.  Co.,  1731a. 
Hireen  v.  R.  W.  English  Lumber  Co., 

394a. 
Hirsch  v.  Kaufman,  719. 
Hirschfield  v.  Smith,  1390. 

V.  Ludwig,  16a. 
Hisford  v.  Stone,  104. 
Hitchcock  V.  Buchanan,  411. 

V.  City  of  Galveston,  1520. 

V.  Sawyer,  124. 
Hitchings  v.  Edmunds,  89. 

V.  St.  Louis,  etc.,  Company,  293, 
390. 
Hixon  V.  Hetherington,  186. 
Hoag  V.  Nanstad,  177. 

V.  Town  of  Greenwich,  394,  1537. 


I'ABLE    OF   CASES 


XCV 


References  are  to  paragraphs  marked 


Hoagland  v.  Erck,  50. 
Hoar  V.  Da  Costa,  655. 
Hoare  v.  Cazenove,  521,  527. 

V.  Graham,  79,  159,  517,  719. 
Hobart  v.  Dodge,  89. 

V.  Penny,  769a. 
Hobart   Nat.    Bank   v.   McMurrough, 

1567. 
Hobbs  V.  Chemical  Nat.  Bank,  960, 
961,  962,  964. 

V.  Straine,  1016. 
Hobson  V.  Davidson,  1266. 

V.  Hassett,  185,  403. 

V.  Marsh,  183. 
Hochmark   v.   Richler,    1294,    1389. 
Hocknell  v.  Sheley,  1410o. 
Hodge  V.  Farmers  Bank  of  Frankfort, 
Ind.,  417,  1373,  1387. 

V.  Mason,  203. 

V.  Smith,    68a,    193,    7796,    7816, 
789a,  815,  819,  838. 

V.  Wallace,  787. 
Hodgens  v.  Jennings,  1202. 
Hodges  V.  Black,  832. 

V.  City  of  Buffalo,  1519a. 

V.  Eastman,   112. 

V.  Elyton  Land  Co.,  1322. 

V.  First  Nat.  Bank,  395. 

«;.  Gait,  1029a. 

V.  Hunt,  233. 

V.  Nash,  726,  786,  790. 

V.  Runyan,  443a. 

V.  Shuler,  52,  156,  976,  977. 

V.  Steward,  104,  663a. 

V.  Traux  et  al.,  193,  1289. 
Hodges'  Exr.  v.  First  Nat.  Bank,  393. 
Hodgin  V.  Bank,  3266. 
Hodgson  V.  Dexter,  445,  1564. 

V.  Shaw,   1236. 
Hodson  V.  Eugene  Glass  Co.,  779,  796, 

815. 
Hoey  V.  Jarman,  1418. 
Hofer  V.  Cowan,  McClung  &  Co.,  69. 
Hoff  V.  Baldwin,  1056. 
Hoffecker  v.  Moon,  1203. 
Hoffman    v.    American    Exch.    Bank, 
1663. 

V.  Butler,  1332a,  1389. 

V.  First  Nat.  Bank,  336. 

V.  Foster,  726. 

V.  Hollingsworth,  925,  926,   1144. 

V.  Molly,  1411. 

V.  Planters'  Nat.  Bank,  1390. 

V.  Smith,  1082. 
Hoffman  &  Co.  v.  Bank  of  Milwaukee, 

174a,  175,  479,  533,  534,  803. 
Hofheimer  v.  Loesen,  995. 
Hofrichter  v.  Enyeart,  455,  572,  991. 
Hogan  V.  Brown,  205. 

V.  Cuyler,  615. 


Hogan  V.  Globe  Mut.  B.  &  L.  Assoc, 
509. 

V.  Kaiser,  1623. 

V.  Moore,  803. 
Hogarth  v.  Latham,  367. 
Hoge  V.  Lansing,  753a. 

V.  Wilson,   1566,   1567. 
Hogg  V.  Skene,  369. 

V.  Snaith,  292,  293. 

V.  Thurman,  199a,  769a,  777,  789a, 
807,  815. 
Hogshead   v.   Williams,  1341. 
Hogue  V.  Davis,  703. 
Hoil  V.  Rathbone,   1481. 
Hoit  V.  Underbill,  233. 
Holbrook  v.  Basset,  385. 

V.  Camp,  713c. 

V.  Lackey,  1428. 

V.  Mix,  775. 

V.  New   Jersey   Zinc    Co.,    1708/, 
1708ff. 

V.  Payne,  499a. 

V.  Vibbard,  899. 
Holcomb  V.  Wyckoff,  757,  758. 
Holden  v.  Cosgrove,  168,  177,  205. 

V.  O'Brien,  69. 

V.  Phenix  Rattan  Co.,   814a. 

V.  Trust  Co.,  1458a. 
Holders  v.  Bank  of  Tennessee,  1499a. 
Holdsworth  v.  Hunter,  114,  115,  116. 
Holeman  v.  Hobson,  181,  751,  814. 
Holfordy.  Wilson,  1165. 
Holiday  v.  Patterson,  183. 

V.  Sigil,  1468,  1470. 
Holladay  v.  Atkinson,  174,   179,   180, 

227. 
Holland  v.  Barnes,  215. 

V.  Hatch,  1398. 

V.  Smit,  800a. 

V.  Turner,  1134. 

V.  Van  Beil,  284. 
Holland  Trust  Co.  v.  Waddell,  1266c. 
HoUen  v.  Davis,  86,  86a. 
Hollenberg  v.  Lane,  1227. 
Holley  V.  Adams,  25. 
HoUiday  State  Bank  v.  Hoffman,  47. 
Hollier  v.  Eyre,  1334,  1336. 
Holliman  v.  Rogers,  1342. 
Hollimon  v.  Karger,  339,  803, 1326. 
Hollingshead  v.  American  Nat.  Bank  of 

Macon,  850. 
Hollingsworth  v.  City  of  Detroit,  1513. 

V.  Moulton,  197. 
Hollins  V.  Fowler,  13726. 
Holloway  v.  Wabash  Ry.  Co.,  1729a. 
Holly  V.  Holly,  575. 
Hokn  V.  Atlas  Nat.  Bank,  802. 

V.  Jamieson,  1769. 

V.  Sandberg,  185. 
Holman  v.  Gilliam,  94. 


XCVl 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Holman  v.  Holsom,  758,  778. 

V.  Langtree,  1296. 

V.  Whiting,  1135,  1185. 
Holme  V.  Karsper,  812,  814,  816. 
Holmes  v.  Bank  of  Ft.  Gaines,  891a, 
1378. 

V.  City  of  Shreveport,  1531. 

V.  Crane,  1730a. 

V.  F&TTia,  81a,  164,  203. 

V.  First  Nat.  Bank,  717. 

V.  Gardner,  758. 

V.  Holmes,  257. 

V.  Hooper,  Q9Sd. 

V.  Horn,  81a,  164. 

V.  Jacques,  101. 

V.  Jamieson,  1769. 

V.  Kerrison,  619. 

V.  Kidd,  725. 

V.  McGintry,  748. 

V.  Preston  et  al.,  713a,  970,  1786. 

V.  Roe,  1590,  1592. 

V.  Seashore  Electric  Ry.  Co.,  15096. 

V.  Sinclair,  94. 

V.  Trumper,  1406. 

V.  Williams,  1789. 
Holohan  v.  Mix,  812. 
Holroyd  v.  Whitehead,  1186. 
Holt  V.  Bacon,  392. 

V.  Moore,  81. 

V.  Ross,  538. 
Holton  &  Winn  v.  Hubbard  &  Co.,  787a, 

1209. 
Holtz  V.  Boppe,  455,  591. 
Holz  V.  Woodside  Brewing  Co.,  713e, 

715. 
Home  Bank  v.  Dromgoole,  41. 
Home  Fire  Ins.  Co.  v.  Fitch,  1458a. 
Home  Ins.  Co.  v.  Daubinspeck,  203. 

V.  Green,  978. 
Home  Land  Co.  v.  Osbom,  1181a. 
Home  Nat.  Bank  v.  Estate  of  Water- 
man, 1312. 

V.  Hill,  852. 

V.  Newton,  326a. 
Home  Sav.  Bank  v.  Hosie,  606. 

V.  Stewart,  1230. 
Homer  v.  WalUs,  1392,  1410a. 
Homes  v.  Smith,  832,  1057. 
Homewood  People's  Bank  v.  Heckett, 

80. 
Honaker  v.  Jones,  156. 
Honore  v.  Blakewell,  1281. 
Hood  V.  Hallenbeck,  407,  418,  1095o. 

V.  Morgan,  1340. 

V.  Robbins  &  Smith,  144,  175. 
Hoodlessj;.  Reid,  1261. 
Hood's  Appeal,  1417. 
Hook  V.  Pratt,  195,  698. 
Hooker  v.  Blount,  1235a,  1236. 

V.  Gallagher,  683. 


Hooks  V.  Anderson,  713e. 

V.  State,  69. 
Hooper  i-.  Keay,  1250,  1251,  1253. 

V.  Rathbone,  1741. 

V.  Williams,  130. 
Hoopes  V.  Collingwood,  143,  1385. 
Hoover  v.  Kilander,  859. 

V.  McCormick,  1311,  1326,  1328. 
Hoover,  Assignee,  v.  Wise,  344. 
Hope  V.  Barker,  53,  54a. 

V.  Cust,  366. 
Hopes  r.  Alder,  1158,  1162. 
Hopkins  v.  Adams,  1478,  1481. 

V.  Beebee,  22. 

V.  Crittenden,  1458a. 

V.  Detwiler,  1260,  1262. 

V.  Haliburton  &  Parr,  62,  62a. 

V.  Hawkeye  Ins.  Co.,  849a. 

V.  Insurance  Co.,  81c. 

t'.  Kent,  728. 

V.  Liswell,  1162. 

V.  Mehaffy,  307. 

V.  Merrill,  719,  971. 

V.  Railroad  Co.,  32. 

t'.  Richardson,  1763. 
Hopkinson  v.  Foster,  1567,  16366,  1637, 

1638,  1639,  1645. 
Hopku-k   V.   Page,    664a,   748a,    1074, 

1076,  1080. 
Hopley  V.  Dufresne,  1152,  1155. 
Hopper  V.  Eiland,  63. 
Hopper-Morgan  Co.,   In  re,   10,  776, 

789,  795,  802,  831a. 
Hopping  V.  Quin,  787a,  1209. 
Hopps  V.  Savage,  92,  142,  843. 
Horah  v.  Long,  1187,  1189. 
Horn  V.  Bank  1387,  1413. 

V.  Bennett,  835. 

V.  Fuller,  175. 

V.  McKinney,  207,  761. 
Hornblower  v.  Prond,  827. 
Hombrooke  v.  Lucas,  1260. 
Home  V.  Planters  Bank,  1252. 

V.  Redfeame,  40. 

V.  Rouquette,  911. 
Horner  v.  Amick,  1219. 

V.  Missouri  Pac.  R.  Co.,  1743. 

V.  Simpson,  196. 
Homes  v.  Hale,  850. 
Homstein  v.  Cifuno,  1385. 
Hornthal  v.  Steamboat  Co.,  1740a. 
Horowitz  V.  Wollowitz,  669,  673. 
Horrigan  v.  Wyman,  8156. 
Horst  V.  Wagner,  1415. 
Horton  v.  Bayne,  796,  812,  815. 

V.  Town  of  Thompson,  1532,  1562. 
Hortons  v.  Townes,  291,  322. 
Hortsman  v.  Henshaw,  533,  534,  538, 

1354,  1356,  1363,  1366. 
Iloskinson  v.  Bagby,  810,  812,  1181a. 


TABLE    OF   CASES 


XCVU 


References  are  to  paragraphs  marked 


Hosier  v.  Beard,  209,  212,  806a. 
Hosstater  v.  Wilson,  52. 
Hotchin  v.  Secor,  1267. 
Hotchkiss  V.  Marion,  1491c. 

V.  Mosher,  39,  1703. 

V.  Plaster  Co.,  830,  831,  831a. 
Hotel  Lanier  Co.  v.  Johnson,  88,  1385. 
Hotham  v.  Berry,  1340. 
Houck  V.  Graham,  81c,  710,  714,  1341, 

1.387. 
Hough  V.  Barton,  1472,  1484. 

V.  Gray,  1779. 

V.  State    Bank    of    New   Smyrna, 
1202,  1203. 
Houghton  V.  Adams,  1676a. 

V.  City  of  Boston,  1623. 

V.  Ely,  713a. 

V.  Francis,  1398. 
Houk  V.  Walker   354. 
Housatonic  Bank  v.  Laflin,  979,  983. 
House  V.  Adams,  1059, 1060,  1070, 1017. 

V.  Kountz,  1636. 

V.  Martin,  177. 

V.  Vinton  Bank,  1002. 
Housego  V.  Cowne,  972,  1017. 
Houston  V.  Bruner,  712. 

V.  Keith,  797,  812,  867,  879. 
Housum  V.  Rogers,  1689. 
Houts  V.  Sioux  City  Brass  Works,  80, 

393. 
Houx  r.  Russell,  1687. 
Hovov  V.  Bannister,  403. 

V.  Magill,  404. 

V.  Sebring,  1192a. 
Hovorka  v.  Hemmer,  41,  1373. 
Howard  v.  Bowman,  643. 

V.  Central  Bank,  1453. 

V.  Duncan,  1352a. 

V.  Ives,  331,  992,  1039,  1043. 

V.  Johnson,  1309. 

V.  Jones,  1757,  1760. 

V.  McCall,  1250. 

V.  Mississippi  Valley  Bank,  1359. 

V.  Oakes,  254. 

V.  Palmer,  105. 

V.  Shepherd,  1745a. 

V.  Simpkins,  52. 

V.  Stratton,  81c. 

V.  Van  Geierson,  713e. 

V.  Windham   Coimty  Sav.   Bank, 
24b,   1185. 
Howard  &  Co.  v.  Walker,  335,  342. 
Howard  Bank  v.  Carson,  959. 
Howe  V.  Bowes,  1119. 

V.  Bradley,  979,  983,  1018,  1019, 
1186a. 

V.  Carpenter,  125. 

V.  Hale,  1483. 

V.  Hartness,  56,  1703. 
V.  Klein,  205. 


Howe  V.  Litchfield,  194. 

V.  Merrill,  672,  707,  719,  1760. 

V.  Ould,  63,  63a,  800a. 

V.  Potter,  758. 

V.  Purves,  1390. 

V.  Raymond,    203. 

V.  Starkweather,  1708a. 

V.  Taggart,  185. 

V.  Wildes,  240. 
Howe,  Knox  &  Co.  v.  Ould  &  Carring- 

ton,  63a. 
Howe  Mach.  Co.  v.  Hadden,  1201, 1202. 
Howell  t;.  Adams,  1707a. 

i;.  Crane,  174a,  726a,  786,  803. 

V.  Dimock,  833. 

V.  Jones,  1789. 

V.  Mfg.  Co.,  3706. 

V.  Merchants'  T.  &  S.  Co.,  775, 
819. 

V.  Ware,  816. 

V.  Wilson,  736,  899. 

V.  Wright,  182. 
Howes  V.  Austin,  1587. 
Howey  v.  Gessler,  62, 
Howrv  V.  Eppinger,  51a,  775. 
Hoyland  v.  Nat.  Bank,  598,  1480. 
Hoyt  V.  Adee,  213. 

V.  Kountze,  1182, 

V.  LjTich,  73. 

V.  Macon,  204, 

V.  Quint,  1769. 

V.  Seeley.  1586,  1587,  1596,  1652. 

V.  Thompson,  317,  392,  395. 

V.  Wilkinson,   1204. 
Hubbard  v.  Chapin,  758c,  808. 

V.  Exch.  Bank,  867. 

V.  Freiburger,  196. 

I'.  Gumey,  1329,  1338. 

V.  Harrison,  62,  62a. 

V.  Jackson,  1237,  1242. 

V.  Manhattan  Tr.  Co.,  1709. 

V.  Matthews,  222,  592,  861,  998, 
999,  999a. 

V.  Moseley,  41,  44, 

V.  Rankin,  850, 

V.  Tod,  674. 

V.  Town  of  LjTidon,  422. 

V.  Troy,  926. 

V.  University  Bank,  1202. 

V.  Williams,  800a. 

V.  Williamson,   1402. 
Hubbell  V.  Flint,  200,  1250. 
Hubbersty  v.  Ward,  1729,  1733. 
Hubble  V.  Forgartie,  108. 

V.  Morristown  Land  Co.,  879,  898. 
Hubbly  V.  Brown,  1305. 
Huber  v.  Egner,  741. 

V.  Steiner,  884. 
Huber  Mfg.  Co.  v.  Silvers,  1294. 
Hubner  v.  Richardson,  206, 


XCVlll 


^ABLE    OF   CASE^ 
References  are  to  paragraphs  marked  § 


Hubner  v.  Crane,  1182. 
Huckins  v.  Hunt,  194. 
Hudson  V.  Best,  797. 

V.  Equitable  Mtg.  Co.,  812. 

V.  Goodwin,   1195. 

V.  Matthews,  616. 

V.  Wolcott,  720a,  722,  1147. 

V.  Wright,  1478. 
Hudson   Bros.   Com.   Co.   v.  Glencoe 

Sand  &  Gravel  Co.,  1310. 
Huey  V.  Macon  County,  1514. 
Huff  V.  Slife,  1326,  1769. 

V.  Wagner,  758,  766. 
Huffaker  v.  Nat.  Bank,  656,  946. 
Huffmans  v.  Walker,  1221. 
Hughes  V.  Bowen,  1147,  1148. 

V.  Crooker,  816. 

V.  Fisher,  79,  508. 

V.  Heyman,  1786,  1787,  1788. 

V.  Kearney,  1281. 

V.  Kiddell,  668. 

V.  Large,  725,  1436. 

V.  Nelson,  260,  743,  744,  745. 

V.  Treadway,  262. 

V.  Wheeler,   108,  1274. 
Hughes  Bros.  v.  Rawhide  Gold  Min. 

Co.,  504. 
Hughes    County    v.    Livingstone,    43, 

803,  1537,  1540,  1542. 
Hughes  &  Co.  V.  Flint,  789. 
Hughitt  V.  Johnson,  54a,  61. 

V.  Hayes,    1425. 
Huidekoper     v.    Buchanan     County, 

1553. 
Huie  V.  Allen,  394. 
Hulbert  v.  Douglas,  7956. 
Huling  V.  Hugg,  99. 
Hulings  V.  Hulings  Lumber  Co.,  1643. 
Hull  V.Angus,  41,  7816. 

V.  Blake,  800a. 

V.  Conover,  574,  741,  1197. 

V.  Missouri  Pacific  Ry.  Co.,  1728. 

V.  Myers,  89,  9956. 
Hulme  V.  Tenant,  247. 

V.  Turner,  207. 
Humbert  v.  Larson,  203. 
Humble  v.  Curtis,  823,  824. 

V.  Mitchell,  1708a. 
Humboldt  Township  v.  Long,  1542. 
Humbolt  Savings  &  Loan  Soc.  v.  Dowd, 

205. 
Hume  V.  Mazelin,  1458a. 

V.  Watt    999. 
Humfreville'  Matter  of,  16186. 
Hummel  v.  First  Nat.  Bank,  1612a. 
Humphrey  v.  Beckwith,  59. 

V.  Clement,  1247. 

V.  Hitt,  1311,  1339. 
Humphrey  Hardware  Co.  v.  Herrick, 

1405. 


Humphreys   v.    Bicknell,    1586,    1587, 
1596. 

V.  Chastain,  370a,  683. 

V.  Guillow,  1390,  1402. 

V.  Nat.  Bank,  1289a. 

V.  Smith,  183. 

V.  Sutcliffe,  1209. 
Humphrey ville  r.  Culver,  II8I0, 1198. 
Humphries  v.  Nix,  32. 
Hungerford  v.  O'Brien,  1786. 
Hunleth  v.  Leahy,  725,  725a,  7266. 
Hunnicutt  v.  Perot,  995. 
Hunt  V.  Adams,   74,  94,   1332,   1404, 
1763. 

V.  Aldrich,  1190. 

V.  Bell,  195a. 

V.  Bessey,  1227. 

V.  Boyd,  1260. 

V.  Bridgham,  12156. 

V.  Divine,  56,  1707. 

V.  Gray,  1413. 

V.  Higman,  1262. 

V.  Johnson,  891. 

V.  Listenberger,  298,  300,  322. 

V.  Massey,  230. 

V.  Maybee,  656,  1144. 

V.  Memphis  Gas  Light  Co.,  382, 
385 

t;.  Miss.  Central  R.  Co.,  1733. 

V.  Northwestern  Mortg.  &  Trust 
Co.,  394a. 

V.  Rumsey,  205. 

V.  Sanford,  775,  778. 

V.  Standart,  879,  898,  899,  901. 

V.  Stewart,   1218. 

V.  Wadleigh,  1172. 

V.  Williams,   174a. 
Hunt's  Exr.  v.  Hall,  918. 
Hunter,  Ex  -parte,  1612. 

V.  Allen,  1181a. 

V.  Bacon,  367. 

V.  Blodgett,  136. 

V.  Clark,  62a. 

V.  Clarke,  61,  834. 

t;.  Cobb,  126. 

V.  First  Nat.  Bank,  68a,  816,  1321. 

V.  Fitzmaurice,  1354. 

V.  Hempstead,  694. 

V.  Hook,  1103, 1149. 

V.  Hunter,  1470. 

V.  Ingraham,    514. 

V.  Jeffrey,  136. 

t;.  Jett,  1321. 

V.  Johnson,  156,  1230. 

V.  Robertson,   12156. 

V.  Van  Bomhorst,  969. 

V.  Wilson,  174a. 

V.  Wood,  1458. 
Huntington  v.  Branch  Bank,  147,  843. 

V.  Finch,  1390,  1420. 


TABLE    OF   CASES 


XCIX 


References  are  to  paragraphs  marked  § 


Huntington  v.  Harvey,  1304,  1147. 

V.  Lombard,  202,  741,  748a. 

V.  Shute,  164. 

V.  Wellington,  1763. 
Huntley  v.  Hitchinson,  573. 

V.  Sanderson,  1045. 
Hunt's  Appeal,  1699. 
Huntzinger  v.  Jones,  1646. 
Huot  V.  Ely,  800a. 
Hurd  V.  Hall,  732,  733. 

V.  Little,  1328. 

V.  St.  Alban,  422a. 

V.  Spencer,   1311. 
Hurlburt  &  Sons  v.  Straub,  769a,  807. 
Hurlbut   V.   Hall,    1385,    1410a,    1411, 

1417. 
Huron  v.  Second  Ward  Sav.  Bank,  1537. 
Hurrah  v.  Doherty,  703. 
Hurry  v.  Kline,  798. 
Hurst,  In  re,  1260,  1267. 

V.  Chambers,  731,  731a. 

V.  Pearce,  803. 
Hurt  V.  Ford,  855. 
Husband  v.  Epling,  41. 
Huse  V.  Alexander,  1266. 

V.  HambUn,  56,  57,  1706. 
Hussey  V.  Freeman,  1106. 

V.  Hill,  748,  834. 

V.  Jacob,  6,  521,  525. 

V.  Sibley,  731,  7316,  734. 

V.  Winslow,  38,  73. 
Huston  V.  Fatka,  1326. 

V.  Newgass,    532. 

V.  Noble,  1245. 

V.  Tyler,  7316,  740a. 

V.  Weber,  1276. 

V.  Young,  83,  630. 
Hutcheson  v.  King,  800a. 
Hutchings  v.  Da  Costa,  1631. 

V.  Evans,  800a. 

V.  Olcutt,  1260,  1279a. 

V.  Reinalter,  1181a,  1191. 
Hutchins  v.  Langley,  769a,  776,  781. 

V.  McCann,  766. 

V.  State  Bank.  1708a. 
Hutchinson  v.  Benedict,  834. 

V.  Bogg,  177,  815. 

V.  Brown,  68,  855. 

V.  Crane,  1182. 

V.  Crutcher,  1119. 

V.  Dornin,  196a. 

V.  Manhattan  Co.,  3406. 

V.  Simon,  668. 

V.  Woodwell,  1260. 
Hutchinson  &  Wilson  v.  Powell,  356, 

1109a. 
Huttig,  etc.,  Co.  V.  Gough,  366. 
Huttig  Sash  &  Door  Co.  v.  Gitchell, 

669a. 
Hutton  t;.  Eyre,  1291. 


Huyck  V.  .Meador,  38,  39. 

Hyde  v.  First  Nat.  Bank,  341,  344. 

V.  Franklin     County,     422,     427, 
434. 

V.  Goodnow,  867,  868,   879,  882, 
899. 

V.  Hazel,  725. 

V.  Kitchen,  24a. 

V.  Page,  303,  305. 

V.  Planters'  Bank,  341. 

V.  Price,  243. 

V.  Stone,  1159. 
Hyde  &   Leather   Nat.  Bank  v.  Alex- 
ander, 8156. 
Hyer  v.  York  Mfg.  Co.,  205. 
Hyland  v.  Blodgett,  55. 

V.  Bohn  Mfg.  Co.,  1318. 

V.  Habich,  1789. 
Hyman  v.  Doyle,  606. 

V.  Kain,  226. 
Hymes  v.  Weld,  358a. 
Hjme  V.  Downey,  40. 
Hynes  v.  Plastino,  193. 
HjTjes  V.  Griffin,  305,  308a,  405,  418. 
Hyslop  V.  Clark,  204. 

V.  Jones,  1003. 


Iberia  Cypress  Co.  v.  Christen,   185, 

1339. 
Ide  V.  Ingraham,  374. 
Iglehart  v.  Moore,  800a. 
Ihl  V.  Bank  of  St.  Joseph,  1612,  1612a. 
Ihmsen  v.  Negley,  357. 
IlUnois  Cent.  R.  Co.  v.  Nelson,  1729. 

V.  Owens,  1732. 
Illinois    Conference   v.    Plagge,    1191, 

1195. 
Illinois  Match  Co.  v.  Chicago,  R.  I.  & 

P.  Ry.  Co.,  1728. 
Ilsey  V.  Stubbs,  1730a. 
Ilsley  V.  Jones,  562,  564. 
Imboden  v.  Perrine,  1644. 
Implement  Co.  v.  Schieck,  282. 
Importers  Bank  v.  Littell,  764. 
Importers,  etc..  Bank  v.  Peters,  336. 
Importers'  &  Traders'  Nat.  Bank  v. 

Shaw,  1022,  1032. 
Indell  V.  Goldfield  Realty  Co.  392a. 
Independent  Brewing  Assn..  v.  Klett, 

81a. 
Indiana  v.  Gates,  193. 
Indiana,  etc..  Bank  v.  Colgate,  1731, 

1734. 
Indiana,  etc.,  R.  Co.  v.  Davis,  424. 

V.  Sprague,  1506. 
Indiana  Nat.  Bank  v.  Holtzclaw,  809. 

V.  Weckerly,  850,  852. 
Indiana  Trust  Co.  v.  BjTam,  63a. 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Indian  Head  Nat.  Bank  v.  Clark,  284, 

790. 
Indig  V.  Nat.  City  Bank,  326a,  327. 
Industrial  Tr.  Co.  v.  Weakeley,  1587, 

1590. 
Ingalls  V.  Lee,  669,  674,  7G1,  766. 
Ingels  V.  Sutliff,  13176,  1339. 
IngersoU  v.  Long,  899. 
Ingham  v.  Dudley,  59. 

V.  Primrose,  842a. 
Ingraham  v.  Gibbs,  114. 
Ingram  v.  Foster,  492. 
Inhabitants  v.  Weir,  422. 
Innes  v.  Munro,  159. 

V.  Stephenson,  1612. 
Insurance  Co.  v.  Bruce,  1537. 

V.  Burkett,  305. 

V.  Homer,  81. 

V.  Wilson,  643,  644,  950,  959,  960, 
991,  1005,  1039,  1057,  1151. 
Insurance   Co.   of   North   America   i'. 

Martin,  1215. 
International    Bank   v.    Enderle,    68a, 
713a. 

V.  Gorman  Bank,  108,  1706a. 
International  Harvester  Co.  v.  Smith, 

1230. 
Interstate  Nat.  Bank  v.  Ringo,  1621, 

1623,  1625. 
Iowa  County  v.  Foster,  1267. 
Iowa  Loan  &  Tr.  Co.  v.  Holderbaum, 

262. 
Iowa  Nat.  Bank  v.  Carter,  47,  776,  819. 

V.  Cooper,  1343. 

V.  Sherman,  165,  202. 

V.  Sherman  &  Bratager,  394,  832. 
Iowa   Valley   State   Bank   v.   Sigstad, 

694,  1092. 
Ireland  v.  Kip,  1014,  1016. 

V.  Scharpenberg,   819,    1181a. 

V.  White,  209. 
Irish  V.  Cutter,  715,  1757. 

V.  Nutting,  25. 

V.  Webster,  443. 
Iron  City  Nat.  Bank  v.  Peyton  &  Co., 
1654a,     1655,     1655a,     1656, 
1657. 

V.  Rafferty,  1311. 
Ironclad  Mfg.  Co.  v.  Sackin,  635. 
Iron  Mt.  R.  Co.  v.  Knight,  1729. 
Iron  Works  v.  Paddock,  371a,  709. 

_  V.  Smith,    827. 
Irvin  V.  Garner,  1281. 

V.  Maury,  5. 

V.  Villiar,  195a. 
Irvine  v.  Adams,  1317,  1338. 

V.  Lowry,  56. 
Irving   Bank  v.  Wetherald,   135,  493, 

1608,  1610a,  1622,  1655a. 
Irving  Nat.  Bank  v.  Alley,  136. 


Irwin  V.  Brown,  31. 

V.  Deming,   693^    1225. 

I'.  Lombard  Universitj',  188a. 

V.  Planters'  Bank,  1479. 

V.  Reeves  Pulley  Co.,  341. 
Isaac  V.  Daniel,   1319. 
Isaac  Eberly  Co.  v.  Gib.son,  741. 
Isaacs  V.  Cohn,  790,  791. 
Isbell  V.  Lewis  &  Co.,  1017. 
Isbery  v.  Bowden,  1429. 
Iselin  V.  Rowlands,  698(/. 
Iser  V.  Cohen,  710. 
Isham  V.  McClure,  1103,  1106. 

V.  Post,  795a. 
Isnard  v.  Towes,  1405. 
Israel  t;.  Douglas,  23. 

V.  Gale,  790. 

V.  Israel,  36a. 
Ives  V.  Bosley,  710,  713a. 

V.  Farmers  Bank,  142,  146. 
Ivory  V.  Bank  of  Missouri,  327,  328a, 
1572,  1574. 

V.  Michael,  142,  1385,  1408. 
Izzo  V.  Ludington,  21,  4976. 


Jaccard  v.  Anderson,  1094,  1095a. 
Jack  V.  Morrison,  713rf. 
Jacks    V.    Darrin,    1049,    1105,    1425, 
1473,  1596. 

V.  Moore,  1425. 

V.  Nichols,  923. 
Jackson  v.  Adams,  1219. 

V.  Am.  Mtg.  Co.,  923. 

V.  Augusta  Southern  R.  Co.,  32. 

V.  Bank,  294,  574. 

V.  Boyles,  1399. 

V.  Brown,  382,  1272,  1273. 

V.  City  Nat.  Bank,  195a,  200. 

V.  Claw,  398. 

V.  Day,  1418. 

r.  First  Nat.  Bank,  792,  793a. 

V.  Gumaer,  213. 

V.  Henderson,  622. 

V.  Hudson,  98,  485. 

V.  Jackson,  162,  1470,  1479. 

V.  Jones,  799. 

V.  King,  209. 

V.  Love,  573,  575,  812. 

V.  Mclnnis,  588. 

V.  Newton,  598. 

V.  Packer,  650,  1217. 

;;.  Parks,  241. 

V.  Phillips,  1219. 

V.  Pigot,  490,  491. 

V.  Ri^chards,  1035,  1083,  1172. 

V.  Sell,  98,  100. 

V.  Tribble,  74. 

V.  Union  Bank,  341. 


TABLE    OF   CASES 


CI 


References  are  to  paragraphs  marked  § 


Jackson  v.  Van  Dusen,  209. 

V.  Vicksburg,  etc.,  R.  Co.,  14966, 
1501. 

V.  Walker,  196. 

V.  West,  II8I0. 

V.  Wood,  1335. 

V.  Y.  &  C.  R.  Co.,  1511. 

V.  Yendes,  1785. 
Jackson  Bank  v.  Irons,  7136,  1092a, 

1321. 
Jackson  County  v.  Hall,  14916. 
Jackson  Paper  Mfg.  Co.  v.  Commercial 

Nat.  Bank,  292,  293,  392a. 
Jacob  7>.  Hart,  1376. 
Jacobs  V.  Ballenger,  1252. 

V.  Benson,  100. 

V.  Gibson,  688c,  692,  1092. 

V.  Gilreath,  1401,   1402. 

V.  Hart,  1376,  1404. 

V.  Maloney,  264. 

V.  Mitchell,  156. 

V.  Town,  1017. 
Jacobs  Pharmacy  Co.  v.  Trust  Co.,  386. 
Jacoby  v.  Ross,  693. 
Jacoby  &  Co.  v.  Payson,  293. 
Jacquin  v.  Warren,  36a,  119. 
Jagger    Iron    Co.    v.    Walker,    1266a, 

1266c. 
Jaffray  v.  Brown,  713e. 

V.  Crane,  13176. 

V.  Davis,  1281,  1289. 

V.  Dennis,  919. 

V.  Freban,  238. 

V.  Krauss,  713e. 
James  v.  Badger,  1327. 

V.  Blackman,  812. 

V.  Calder,  175.  7136. 

V.  Catherwood,  913,  914. 

V.  Dalvey,  1398. 

V.  E.  G.  Lyons  Co.,  551,  560. 

V.  Johnson,  1433,  1491a. 

V.  Rogers,  78. 

V.  Taylor,  250. 

V.  Tilton,  1387. 

V.  Wade,  1060,  1070,  1147. 

V.  Yaeger,  782. 

Matter  of,  26,  288. 
James  &  Harvestock  v.  Dalbey,  857. 
Jameson   v.   Swinton,   601,   987,   990, 

1038,  1044. 
Jamestown  Business  College  Ass'n  v. 

Allen,  816. 
Jamieson  v.  Potts,  867,  878,  882,  884. 
Jamieson  &  McFarland  v.  Helm,  381, 

769a. 
Jamison  v.  Auxier,  1398. 
Janin  v.  Bank,  1654a. 
Janis  V.  Roetgen,  185. 
Jansen  v.  Grimshaw,  1266. 

V.  Paxton,  703a. 


Jansen  v.  Thomas,  617. 
January  v.  Goodman,  112. 
Jaqua  v.  Montgomery,  862. 
Jarnagin  v.  Stratton,  1296. 
Jarrell  v.  Crow,  181. 
Jarrolt  v.  Moberly,  15356, 
Jarvis  v.  Garrnett,  636. 

V.  Manhattan    Beach    Co.,    775, 
1708. 

V.  Rogers,  1708. 

V.  St.  Croix  Mfg.  Co.,  1033. 

V.  Wilkins,  40. 

V.  Wilson,  35,  110,  496,  504,  532, 
534. 
Jasper  County  v.  Ballou,  1537. 
Jasper  Tr.  Co.  v.  Railroad  Co.,  1750a. 
Jaster  v.  Currie,  717. 
Jefferson  v.  Century  Sav.  Bank,  832a, 

1339. 
Jefferson  Bank  v.  Chapman,  1685. 

V.  Chapman- White-Lyons  Co.,  386, 
394,  761,  776,  1469. 

V.  Merchants'    Refrigerating   Co., 
769a. 
Jefferson  County  v.  Railroad  Co.,  189. 
Jefferson  County  Bank  v.  Chapman, 

1672a,  1690. 
Jeffersonville  v.  Patterson,  1507,  1513, 

1514. 
Jeffrey  v.  Rosenfeld,  1411,  1413. 
Jeffries  v.  Austin,  174. 
Jefts  V.  York,  307. 
Jenckes  v.  Rico,  41. 
Jenkins  v.  Bass,  94. 

V.  Brown,  1734o. 

V.  Daniel,  1328. 

V.  Hart,  32. 

V.  Hutchinson,  307,  485. 

V.  Jenkins,  1219. 

V.  Jones,  769a. 

V.  Morris,  362. 

V.  Phillips,  262. 

V.  Planters'  &  Mechanics'  Bank, 
795c. 

V.  Reynolds,  1764. 

V.  Schaub,  824. 

V.  Sherman,  271,  1181a,  1192. 

V.  Shinn,  1230. 

V.  Temples,  196. 

V.  Wilkinson,  664a. 
Jenks  V.  Barr,  1289. 

V.  Doylestown  Bank,  656. 
Jenners  v.  Howard,  214. 
Jenness  v.  Cutler,  13176. 
Jenney  v.  Hearle,  50. 
Jennings  v.  Carluci,  805. 

V.  First  Nat.  Bank,  41. 

V.  Grand  Trunk  Ry.  Co.,  1740a. 

V.  Law,  196a. 

i;.  Moore,  8I0,  1335,  1458. 


cu 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Jennings  v.  Neville,  24b,  979,  989,  1227. 

V.  Roberts,  979,  989. 

V.  Thomas,  710,  716. 

V.  Todd,  79r,b,  796,  860. 
Jennison  v.  Parker,  826,  1276. 

V.  Stafford,  827. 
Jenys  v.  Fawler,  533. 
Jerome  v.  Commissioners,  427. 
Jersey  City  Sav.  Bank  v.  Bank,  783. 
Jett  V.  Standafer,  7816,  1225. 
Jeune  v.  Ward,  499a,  500,  682,  1619. 
Jewell  V.  Purr,  1206. 

V.  WriRht,  SOS,  908  924. 
Jciwett  V.  West  Somerville  Co-Operative 
Bank,  382. 

V.  Smith,  261. 
Jobes  V.  Wilson,  163,  201,  814a,  819. 
Jocque  V.  McRae,  618. 
Jocrgenson  v.  Joergenson,  47. 
Johannessen  v.  Monroe,  831c,  1790. 
John  V.  City  Nat.  Bank,  1005,  1016, 
1118. 

V.  Farmers  Bank,  93. 

t;.  Selma  Bank,  1016. 
Johns  V.  Johns,  1708a. 

V.  Wilson,  8346. 
Johnson  v.  Acme  Harvesting  Mach.  Co., 
742. 

V.  Bank,  326a,  1225. 

V.  Bank  of  FuUerton,  933. 

V.  Bank  of  United  States,  1395. 

V.  Barney,  1701. 

V.  Bentley,  1565. 

V.  Berlizhcimer,  370&. 

V.  Blasdale,  147. 

V.  Brown,  959,  1005a,  1039. 

t;.  Buffalo     Center    State     Bank, 
392a,  776. 

V.  Butler,  777a. 

V.  Carpenter,  834. 

V.  Catlin,  1187. 

V.  Chadwell,  211. 

V.  Clark,  1734a. 

V.  Cleaves,  1268. 

V.  Cobb,  769a,  812. 

V.  Collins,  555,  558,  559. 

V.  Conklin,  93. 

V.  Crossland,  62. 

V.  Dooley,  56,  1245. 

V.  Eaton,  63. 

Ex  parte,  1172. 

V.  First  Nat.  Bank,  1364,  1657. 

V.  Frisbie,  53,  54. 

V.  Gilbert,  739a,  1763. 

V.  Glover,  717. 

V.  Gulledge,  832o. 

V.  Haith,  1175. 

V.  Hanover  Nat.  Bank,  769o. 

V.  Heagan,  150,  1397. 

V.  Henderson,  56. 


Johnson  v.  Hibbard,  742. 

t'.  Hollcnsworth,  1181a. 

V.  Hoovw,  1378. 

V.  Johnson,  834,  1250,  1403. 

V.  Johnson  Bros.,  386. 

V.  Josey,  728. 

V.  Kennion,  1237. 

V.  Kent.  1429. 

V.  Lane  8  Trustees,  71. 

t'.  Lasker,  etc.,  Assn.,  207. 

V.  Lassiter,  106. 

t'.  Lockhart,  1229. 

V.  McMurray,  812,  815,  819. 

V.  Mangum,  680. 

V.  Martinus,  717. 

V.  Medlicott,  214. 

V.  Meeker,  198,  808. 

V.  Mitchell,  663a,  694,  696,  698, 
1784. 

V.  Mo.  Pac.  Ry.  Co.,  799. 

V.  Nisbit,  80. 

I'.  Noble  Machine  Co.,  879. 

r.  Offut,  117. 

V.  Parker,  1092a. 

V.  Parker  Sav.  Bank,  3266. 

V.  Parshley,  174. 

V.  Parsons,  1095a. 

V.  Ramsay,  703,  717,  1093. 

V.  Realty  Co.,  7956. 

V.  Redwine,  183. 

V.  Schnabaum,  721. 

V.  Searcy,  1094. 

V.  Smith,  307,  404. 

V.  Stark  County,  317,  663,  1496, 
1497,  1500,  1509,  1511, 1512a, 
1514,  1524. 

V.  Success  Brick  Machinery  Co., 
1306. 

V.  Thayer,  21. 

V.  Titue,  202. 

V.  Underbill,  17086. 

V.  Vickers,  834. 

V.  Way,  769a,  776. 

V.  Weed,  1273. 

V.  Willard,  81c. 

V.  Wright,  1652. 
Johnson  &  Co.  v.  Central  Vermont  Ry. 

Co.,  1734. 
Johnson,   Berger  &   Co.   v.   Downing, 

833,  1085. 
Johnson-Brinkman  Com.  Co.  v.  Bank, 

1623. 
Johnson  County  Savings  Bank  v.  Cap- 
itol, 812. 

V.  Chase,  789. 

V.  Greeg,  819. 

V.  Kemp  Mercantile  Co.,  814. 

V.  Kramer,  6,  174a,  896. 

V.  Mills,  814a. 

V.  Rapp,  163,  775. 


TABLE    OF   CASES 


cm 


References  are  to  paragraphs  marked  § 


Johnson  County  Savings  Bank  v.  Red- 
fearn,  156. 

V.  Scroggin   Drug   Co.,   574,   741, 
1200. 

V.  Walker,  761,  819. 

V.  Wooten,  814. 
Johnson,  etc..  Bank  v.  Lane,  669,  929, 

1094. 
Johnson  School  Township  v.  Citizens' 

Bank,  38,  403. 
Johnston  v.  Allen,  196a. 

V.  Barrills,  1260. 

V.  Commercial  Bank,  533. 

V.  Hoover,  144. 

V.  Laflin,  17086,  1708^. 

V.  Loar,  728,  812. 

V.  McDonald,  713,  1760. 

V.  Schnabaum,    698,    698<i,    720a, 
1223. 

V.  Speer,  62. 
Johnston  Harvester  Co.  v.  Clark,  62. 

V.  McLean,  142,  843,  844,  1405. 
Joliet  Iron  Co.  r.  Scioto  F.  B.  Co.,  833. 
Joliffe  ;;.  Higgins,  161. 
Jolly  V.  Huebler,  1181a,  1230. 
Jones,  Ex  parte,  22. 

V.  Albee,  719. 

V.  Ashford,  1769a. 

V.  Babbitt,  1222. 

V.  Bacon,  1763. 

V.  Bangs,  1385. 

V.  Bank  of  Iowa,  552. 

V.  Bank  of  Pine  Bluff,  713a. 

V.  Berryhill,  790. 

V.  Broadhurst,  1237,  1239,  1240. 

V.  Brown,  88,  1317a. 

t;.  Burden,  819. 

V.  Chesebrough,  1612a. 

V.  Cottrell,  1319. 

V.  Crostwaite,  1306a. 

V.  Darch,  93,  227,  535,  536. 

V.  Deyer,  24. 

V.  Evans,  814. 

V.  Fales,  55,  56,  150, 154,  616,  658, 
1048,  1383,  1410a,  1478,  1481. 

V.  Fort,  576,  1229. 

V.  Goodwin,  713c. 

V.  Hanna,  166. 

V.  Heiliger,  1600. 

V.  Hibbert,  756. 

V.  Hook,  884. 

V.  Hurst,  1282. 

V.  Ireland,  1401. 

V.  Jackson,  799. 

V.  Jones,  64,  68,  182,  1215b,  1218. 

V.  Kilbreth,  326. 

V.  Lane,  1199. 

V.  Lathrop,  312. 

V.  Le  Tombe,  439. 

V.  Lewis,  1015,  1022. 


Jones  V.  Littledale,  740a. 

V.  Lynch,  713a. 

V.  McNearly,  1458. 

V.  Mars,  287. 

V.  Middleton,  611,  996. 

V.  Miners'    &    Merchants'    Bank, 
1369. 

V.  Nellis,  663. 

V.  Nicholl,  1215. 

V.  Norton,  1181a. 

V.  O'Brien,  1158. 

V.  Peterson,  177,  183. 

V.  Phenix  Bank,  234. 

V.  Piening,  1435a. 

V.  Radatz,  62. 

V.  Rittenhouse,  183. 

V.  Roberts,  1100. 

V.  Ryde,  731a,  7316,  1675. 

V.  Savage,  1149,  1159,  1275. 

V.  Shaw,  68a,  80,  81. 

V.  Shelbyville  Ins.  Co.,  142. 

V.  Simpson,  53. 

V.  Smith,  62a. 

V.  State,  55. 

V.  Steamboat  Co.,  1428. 

V.  Stoddart,  394,  795c. 

V.  Strawhan,  1260. 

V.  Taylor,  80. 

V.  Thayer,  1760. 

V.  Thorn,  3706,  683. 

V.  Tumour,  1218. 

V.  Warden,  1053. 

V.  Weakley,  24,  24a. 

V.  Wheeler,  265,  812. 

V.  Wiesen,  780,  803,  814,  824. 

V.  Witter,  741,  748. 

V.  Wood,  90a. 

V.  Yokum,  196. 
Jones  Co.  v.  Board  of  Education,  857. 
Jordaine  v.  Lashbrooke,  14,  1217. 
Jordan  v.  Bell,  1458. 

V.  Dobbins,  1770a,  1789. 

V.  Harrison,  731. 

t'.  Jordan,  68a,  854. 

I'.  Reed,  1141,  1149. 

V.  Tarkington,  534. 

V.  Tate,  43. 

V.  WTieeler,  472. 
Jordon  v.  Grover,  815. 

V.  Harrison,  731. 
Joseph  V.  Carton,  46. 

V.  Nat.  Bank,  142. 

V.  Salomon,  9,  579,  995. 
Joseph  Township  v.  Rogers,  1537. 
Joseph  Wolf  Co.  V.  Bank  of  Commerce, 

382 
Joslin  V.'  Miller,  922. 
Josb-n  V.  Smith,  1215a,  12156. 
Josselyn  v.  Lacier,  50. 
Jossey  V.  Ruskin,  664. 


CIV 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Journal  Printing  Co.  v.  Maxwell,  769a, 

810. 
Journey  v.  Pierce,  984. 
Jourolmon  v.  Evving,  1458. 
Joveshof  V.  Rockey,  812. 
Joy  V.  Diefendorf,  750,  789. 
Joyce  V.  Auten,  68a. 

V.  Cockrill,  68,  854,  856. 
Joyce  Co.  v.  Rohan,  196a. 
Judah  V.  Harris,  56. 
Judd  V.  Martin,  185. 

V.  Smith,  1586. 
Judge  V.  Vogel,  834. 
Judson  V.  Corcoran,  747. 
Judy  V.  Louderman,  827. 
Julian  V.   Calkins,   724a. 

V.  Shorbrook,  508,  509. 
Julliard  v.  Chaffee,  68a,  816. 
Jump  V.  Loon,  1191. 
Jumper  v.  Bank,  1700,  1704. 
Junction  R.  Co.  v.  Clenacy,  800a. 
Junge  V.  Bowman,  305. 
Jungk  V.  Holbrook,  1309. 
Juniata  Bank  v.  Hale,  591,  972,  988, 

1175,  1177. 
Jurden  v.  King,  1233. 
Jurgens  v.  N.  Y.  Life  Ins.  Co.,  1221. 

V.  Wichmann,  1037. 
Jury  V.  Barker,  41,  108. 
Justh  V.  HoUiday,  195a. 

V.  Nat.    Bank    of    the    Common- 
wealth, 366. 


Kagel  V.  Totten,  851. 
Kahn  v.  Overstolz,  366. 

V.  Walton,  195a,  1606a. 
Kahnweiler  v.  Anderson,  20,  21. 
Kain  v.  Bare,  195a,  205. 
Kaiser  v.  First  Nat.  Bank,  391. 

V.  Latimer,  1713. 
Kalamazoo  Nat.  Bank  v.  Clark,  151, 

847. 
Kaminski  v.  Schefer,  832a. 
Kamm  v.  Holland,  708a,  716. 
Kampman  v.  McCormick,  56,  81a,  164, 

741. 
Kampmann  v.  Williams,  605,  927. 
Kanaga  v.  Taylor,  867. 
Kankakee    Coal   Co.   v.   Crane    Bros. 

Mfg.  Co.,  711,  713c. 
Kansas  v.  Board  of  County  Comrs.  of 

Wichita  County,  800a. 
Kansas  City,  etc.,  R.  Co.  v.  Ivy  Leaf 

Coal  Co.,  289. 
Kansas  Loan  Tr.  Co.  v.  Gill,  834. 
Kansas  Nat.  Bank  v.  Bay,  307. 
Karner  v.  Ross,  81c. 
Karp  V.  Nat.  Bank,  800a. 


Karsh  v.  Pottier  &c.  Mfg.  &c.  Co.,  392a. 
Kaason  v.  Smith,  789,  794. 
Kastcr  v.  Pribilinski,  847. 
Katz  V.  Herrick,  802. 
Katzenberg  v.  Lehman,  1472. 
Katzenberger  v.  Aberdeen,  1561. 
Kaufman  v.  Barrenger,  497,  497&,  885, 
887 

V.  Robey,  802. 

V.  State  Saving  Bank,  684. 
Kavanagh  v.   Bank  of  America,  573, 

775,  1703. 
Kavanaugh  v.   Bank,  327,  336,  1170, 
1464,  1566,  1621,  1651,  1652. 
Kay  V.  Allen,  17856. 

V.  Brookman,  112. 

V.  Duchesse  de  Peinne,  245. 
Kayser  v.  Hodopp,  186. 

t;.  Hull,  716. 
Kealing  v.  Vansickle,  714,  715. 
Kean  v.  Davis,  410. 
Kearnev  v.  W.  Granada  Min.  Co.,  113. 

V.  king,  11,  1580. 

V.  Whitehead,  164. 
Kearslake  v.  Morgan,  1270,  1272. 
Kearsley  v.  Cole,  1295,  1322. 
Keating  v.  Morrissey,  161,  164,  196a. 
Keazer  v.  Colebrook  Nat.  Bank,  970, 

1202,  1226. 
Keck  V.  Bushway,  1758. 

V.  Sedalia  Brewing  Co.,  303. 

V.  State  ex  rel.  Nat.  Cash  Register, 
1260. 
Keckley  v.  Union  Bank,  207. 
Kedey  v.  Petty,  1266. 
Kedson  v.  Dilworth,  312. 
Keefe  v.  Volge,  1966. 
Keegan  v.  Rock,  814a,  819. 
Keel  V.  Construction  Co.,  644o. 

V.  Larkin,  1260. 
Keeler  v.  Alexander,  1194. 

V.  Bartine,  1290. 

V.  Com.  Printing  Co.,  722. 

V.  Hollweg,  1311. 
Keeman  v.  Blue,  139. 
Keen  v.  Beard,  1653. 

V.  Weeks,    1411. 
Keenan  v.  Blue,  156,  189,  663,  769a, 

802,  812,  1191. 
Keene  v.  Beard,  1567,  1587,  1638,  1652. 

V.  Behan,  197,  776,  814a. 

V.  Weeks,  1412. 
Keeton,  In  re,  62. 
Keidan  v.  Winegar,  305. 
Keim  v.  Vette,  812,  819. 
Keiser  v.  Jarrett,  204. 
Keith  V.  Clark,  447. 

V.  Jones,  56. 
Keith  Davis  &  Co.  t;.  Blanton,  834. 
Keithsburg  v.  Frick,  317,  1545,  1557. 


TABLE   OF   CASES 


6V 


References  are  to  paragraphs  marked  § 


Kellam  v.  Brodie,  1317. 

V.  McKoon,   940. 
Keller  v.  Alexander,  1181a,  1191. 

V.  Cohen,  156. 

V.  Hicks,  427,  429. 

V.  Home  Life  Ins.  Co.,  1090. 

V.  Ruppold,   851. 

V.  Singleton,  1260. 

V.  Weeks,   422. 
Kellerman  v.  Kansas  City  R.  Co.,  1729, 

1729a,  1735. 
Kelley  v.  Bronson,  50. 

I'.  Brown,  1149,  1584. 

r.  Burroughs,  703. 

V.  Chenango    Valley    Sav.    Bank, 
1612a. 

V.  Forty  Second  St.  R.  Co.,  1229. 

V.  Greenough,  479,  570. 

V.  Hemmingway,  46. 

V.  Keese,  1219. 

V.  Lawrence  Bros.,  1266. 

V.  Phenix  Nat.  Bank,  1509a. 

V.  Scripture,  1734a. 

V.  Telle,  868. 

V.  Whitney,    51a,    700,   748,   775, 
787,  797,  834. 
Kellock  V.  Robinson,  1327. 
Kellogg  V.  Budlong,  1687. 

V.  Curtis,     775,    780,     814,     815, 
819. 

V.  Douglas  County  Bank,  1781. 

V.  Dunn,  7lZd,  715. 

V.  Fancher,  800a,  832. 

V.  French,  801. 

V.  Schnaake,  725a,  782. 

V.  Steiner,  849. 
Kelly  V.  Collins,  1310. 

V.  Ford,  815. 

V.  Lawrence  Bros.,  1623. 

V.  Mayor  of  Brooklyn,  428,  430, 
433,  434,  1520. 

V.  Milan,  1532. 

V.  Stead,  724a,  1238. 

V.  Theiss,  986,  991. 
Kelsay  t'.  Taylor,  326. 
Kelsey  v.  Chamberlain,  80. 

V.  Hibbs,  76. 
Kelman  v.  Calhoun,  815. 
Kelmer  v.  Krolick,  834. 
Kelso  V.  Frye,  158. 
Kelty  V.  Bank,  1590. 
Kemble  v.  Lull,  517,  534. 

V.  Logan,  1227. 

V.  Mills,  1084,  1596. 
Kemp's  Estate,  In  re,  185. 
Kemp  V.  Balls,  1235. 

V.  Claus,  62. 

V.  Falk,  1730. 

V.  Finden,  1341. 

V.  Northern  Trust  Co.,  II8I0. 


Kempner  v.  Corner,  254,  681,  781a. 

V.  Jordon,  G9Sd. 
Kendall  v.  Eq.  Life  Ass.  Society,  832a, 
1623. 

V.  Galvin,  88,  108. 

V.  Parker,  62,  664. 

V.  Porter,  1458a. 

V.  Robertson,  197,  198. 

V.  Selby,  53. 
Kendrick  v.  Campbell,  551, 

V.  Forney,  1342. 

V.  Kyle,  385. 

V.  Lomax,  1266,  1329,  1458. 
Kennan  v.  Nash,  485. 
Kennard  v.  Cass  Co.,  15096,  1510. 

V.  Knott,  1319. 
Kennedy  v.  Bibber,  1741. 

V.  Geddes,  551,  552,  556,  1045. 

V.  Gelders,  268. 

V.  Gibson,  156,  815. 

V.  Goodman,  174. 

V.  Graham,  Admr.,  74. 

V.  Groves,  995. 

V.  Knight,  894. 

V.  Lancaster  County  Bank,  1418. 

t;.  Murdick,  196. 

V.  O'Connor,  736. 

V.  Rosier,  1277a. 

V.  Spilka,  819. 

V.  Thomas,  1209. 

V.  Welch,  196b,  197. 
Kenner  v.  Creditors,  508,  633. 
Kenney  v.  The  Jefferson  County  Bank, 

834a. 
Kennicott  v.  Supervisors,  1520,  1523, 

1537,  1550. 
Kenningham  v.  Bedford,  1317. 
Kennon  v.  Bailey,  995,  713a. 

V.  McRae,  611,  1048,  1110,  1148, 
1163,  1195. 
Kenny  v.  Hinds,  50. 

V.  Walker,  164,  810. 
Kenosha  v.  Lamson,  1496,  1497,  1509a, 

1516,  1523,  1525. 
Kent  V.  Dawson  Bank,  341. 

V.  Reynolds,  1243. 

V.  Rogers,  1431. 

V.  Warner,  1048. 
Kenton  Ins,  Co.  v.  McClelland,  249. 
Kentucky    Refining    Co.   v.   Bank   of 

Morilton,  1731. 
Kenworth  v.  Schofield,  303. 
Kenworthy  v.  Hopkins,  114. 

V.  Sawyer,  241,  243,  675,  1322. 
Kenyon  v.  Williams,  303,  305. 
Kenyon    Realty    Co,    v.    Commercial 

Nat.  Bank,  396. 
Keohane  v.  Smith,  748. 
Keokuk  County  State  Bank  v.  Hall, 

827,  1310. 


CVl 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Keokuk  Falls  Imp.  Co.  v.  Kingsland  & 

Douglas  Mfg.  Co.,  81c,  445. 
Kephart  v.  Butcher,  1277. 
Kerbaugh  v.  Nugent,  653. 
Kerby  v.  Ruegamer,  271. 

V.  Wado,  783. 
Kerhane  v.  Smith,  748. 
Kerne  v.  Van  Phul,  963,  1093. 
Kernan  v.B.&M.  Bank,  1352a. 
Kernodle  v.  Hunt,  203. 
Kernohan  v.  Durham,  7266. 

V.  Mauss,  677,  748,  834. 
Kerper  v.  Wood,  374. 
Kerr  v.  Anderson,  812,  819. 

V.  City  of  Corry,  1503. 
Kerrick  v.  Stevens,  1192a. 
Kerrigan  v.  Rautigan,  24b. 
Kerrison  v.  Cooke,  1333. 
Kersey  v.  Fuquay,  795. 
Kershaw  v.  Cox,  1395,  1402,  1404. 

V.  Ladd,  342,  1590,  1592,  1599. 
Kervan  v.  Tovvnsend,  517. 
Kerwin,  Ex  parte,  148. 
Kessler  v.  Armstrong  Cork  Co.,   117, 
879. 

V.  Clayes,  28,  36a,  37,  80,  81a,  99. 
Kessler  &  Co.  t>.  Parelius,  815. 
Ketchum  v.  City  of  Buffalo,  383,  1530. 

V.  Clark,  3696. 

V.  Duncan,  1222,  1491a. 

V.  Gray,  1779. 

V.  Packer,  803,  1222. 
Ketterson  v.  Inscho,  68,  203,  1326. 
Keuka  College  v.  Ray,  188a. 
Key  V.  Flint,  790. 

V.  Knott,  1671. 

V.  Usher,  68a. 
Keyes  v.  Bank,  324. 

V.  Fenstermaker,  88,  606,  1163. 

V.  Mann,  205. 

V.  Winter,  1085. 
Keymer  v.  Lawrie,  326a. 
Keys  V.  Keys'  Estate,  669,  1229. 

V.  Lardner,  156,  834. 
Keyser  v.  Hinkle,  1266,  1272. 

V.  Pickrell,    1219. 

V.  Shepherd,  1199. 

V.  Warfield,  145,  713a. 
Kiam  v.  Cummings  1331. 
Kidder  v.  Blake,  204. 

V.  Norris,    1252. 
Kidson  v.  Dilworth,  717. 
Kieffer  v.  Ehler,  800a. 
Kiel  V.  Choate,  669,  703,  704. 
Kiersted  v.  Rogers,  1195. 
Kiesewetter  v.  Kress,  164. 
Kiff  V.  Weaver,  24. 
Kilgore  v.  Bulkley,  622,  634,  1703. 

V.  Dempsey,  922,  923. 
Kilgour  V.  Finlayson,  292, 360, 370,  373. 


Kilkelly  v.  Martin,  1385. 

Killam  v.  Schoeps,  59. 

Killen's  Estate,  In  re,  211. 

Killian  v.  Ashley,  7136. 

Killough  V.  Alford,  1247. 

Kilpatrick   i'.    Home    Building   Assn., 

1623. 
Kimball  v.  Bittncr,  314. 

V.  Bowen,  963. 

V.  Bryan,  1074. 

V.  Cleveland,   392. 

V.  Huntington,  39,  163. 
Kimball  County  v.  Mellon,  48,  53,  62. 
Kimble  v.  Christie,  852. 
Kimbro  v.  Bank  of  Fulton,  1684. 

V.  Bullit,  358a,  308. 

V.  Lytic,   793a. 
Kimbrough  v.  Hornsby,  800a,  889. 

V.  Lane,  204. 
Kimmell  v.  Burns,  1458a. 
Kimpton  v.  Studebakcr  Bros.  Co.,  742. 
Kincaid  v.  Higgins,  44,  80. 
Kincheloe  v.  Holmes,  17856. 
Kine  v.  Beaumont,  1051. 
King,  In  re,  Estate  of,  1458. 

V.  Baldwin,  1311,  1313,  1339. 

V.  Bellamy,  1181a. 

V.  Buckley,  983,  985. 

V.  Capper,  1708a. 

t;.  Crowell,  638,  654,  1036. 

V.  Dedham  Bank,  1685. 

i;.  Doolittle,  832. 

t;.  Ellor,  35. 

V.  Faber,  358a. 

V.  Fleece,  1192. 

V.  Fleming,  69. 

V.  Gillet,  1288. 

V.  Gottschalk,   812. 

V.  Hamilton,  58. 

V.  Hoare,  94,  1294,  1296. 

V.  Holmes,  638,  654a. 

V.  Houre,  94. 

V.  Hurley,  974,  978,  979a. 

V.  Jamison,  235. 

V.  Johnson,  760. 

V.  King,  1186a. 

V.  Lambton,  63. 

V.  Mecklenburg,  366,  724a,  769a, 
782,  812. 

V.  Milsom,  1470. 

t;.  Morrison,  1294. 

V.  Nichols,    777. 

V.  Parks,  790,  1335a. 

V.  Perry  Ins.  Co.,  207. 

V.  Ridge,  753,  763. 

V.  Ritchie,  713d. 

V.  Sarria,  867,  873. 

V.  Sparks,  278. 

V.  Summitt,   739a. 

V.  Thorn,  262,  268,  270. 


TABLE    OF   CASES 
References  are  to  paragraphs  marked 


evil 


King  V.  Tyler,  1181a. 

V.  Westbrooks,  1458. 
Kingan  &  Co.,  Ltd.,  v.  Silvers^373a 
Kingman  &  Co.  v.  Cornell,   /09,  710, 

Kingsberry  v.  Pettis  County,  433. 
Kingsbury  v.  Butler,  89. 
Kingsland  v.  Koeppe,  712,  713c,  71/, 
719. 
V.  Pryor,  827,  832a. 
Kingsland  Land  Co.  v.  Newman,  1021. 
Kingston,  Ex  parte,  1612a. 

V.  Long,    41. 
Kingston  Bank  v.  Eltinge,  1363. 
Kingston    Sav.    Bank    v.    Bosserman, 

1373,  1398. 
Kinkell  v.  Harper,  775,  780. 
Kinney  v.  Flinn,  102. 
V.  Ford,  67. 
V.  Heald,  449. 
V.  Kruse,  803,  818,  819. 
Kinney  &  Co.  v.  Paine,  654. 
Kinsel  v.  Ballou,  48,  787. 

V.  Wieland,  715. 
Kinsey  v.  Ring,  1425. 
Kinsley  v.  Buchanan,  1282. 
V.  Evans,    800a. 
V.  Robinson,  1082. 
Kinyon  v.  Stanton,  1587,  1588,  1596. 

r.  Wohlford,  769a,  837. 
Kip  V.  Bank,  336. 
Kipp  V.  Smith,  776,  780,  795c 
Kipton  V.  Studdebaker  Bros.  Co.,  47. 
Kirby  v.  Berguin,  1966,  815. 

V.  Duke  of  Marlborough,  1250. 
V.  McDonald.  355. 
V.  Sesson,  1475. 
Kirk  i;.  Blurton,  361,  362. 

V.  Dodge  County  Mut.  Ins.  Co.,  52. 
V.  Strickwood,   196a. 
Kirkey's  Sons  v.  Crandall,  342 
Ku-kham  v.  Bank  of  America,  341, 1261. 

V.  Boston,  720. 
Kirkland  v.  Benjamin,  196. 
V.  Dinsmore,    1729a. 
V.  Dreyfus,  1259,  1268. 
Kirkland  Land  &  Imp.  Co.  v.  Jones, 

1335.  .       ^_ 

Kirkman  v.  Bank  of  America,  67. 
,;.  Benham,  262,  263. 
I'.  Boston,  722. 
Kirkner  v.  Conklin,  703. 
Kirkpatrick  v.  Bonsall,  195a. 
V.  Hawk,  1311. 
V.  McCullough,  56,  996. 
V.  Pviryear,  1587. 
Kirksey  v.  Bates,  946,  1238. 
Kirkwood  v.  First  Nat.  Bank,  1702a, 

1703,  1706. 
Kirsch  v.  Braun,  36,  50a,  1539. 


Kirtland  v.  Wanzer,  887,  928,  959. 
Kiskadden  v.  Allen,  43,  713a. 
Kistnor  v.  Peters,  688&. 
Kitchen  v.  Bartsch,  1231. 
V.  Holmes,   268. 
V.  Loudenback,  769a,  775,  777. 
V.  Place,    1406. 
Kittle  V.  De  Lamater,  782. 

V.  Wilson,  1317. 
Kittler  v.  Studbaker,  831a. 
Kittridge  v.  Stegmier,  1311,  1339,  1396. 
Klass  Com.  Co.  v.  Wabash  R.  Co.,  1741. 
Klauber  v.  BiggerstafT,  56,  1706. 
Klaus  V.  Moore,  729. 
Klein  v.  Boernstein,  1018. 
t;.  Buckner,  1191,  1192. 
V.  Currier,  713c,  1191,  1192,  1760. 
V.  German  Nat.  Bank,  790, 1306. 
t;.  Keyes,  174. 
.;.  Long,  1321. 
Kline  v.  Bank  of  Tescott,  418,  419. 

V.  Guthrie,  846. 
Kling  V.  Irving  Nat.  Bank,  1425. 

V.  Kehoe,  717. 
Klint  V.  Higgins,  1227. 
Klockenbaum  v.  Pierson,  991,  979. 
Klopfer  V.  Levi,  534, 1205. 
Klosterman  v.  Loose,  405. 

V.  Olcott,  1785. 
Knapp  V.  Alvord,  23. 
V.  CoweU,  326a. 
V.  Grant,  1560,  1561. 
t;.  Green,  1215. 
V.  McBride,   369. 
V.  Mayor  of  Hoboken,  420. 
Knapp  &  Co.  v.  Tidewater  Coal  Co., 

386, 644a. 
Knapstein  v.  Tinnette,  65. 
Knatchbull  v.  Hallett,  336. 
Knaup,  In  re,  1490. 
Knaus  i'.  Givens,  354,  369a,  370,  371, 

372a. 
Knecht  v.  Boshold,  606. 
Knefel  v.  Planner,  27. 
Knickerbocker  Life  Ins.  Co.  v.  Pendle- 
ton, 953,  960,  1054. 
Knight  V.  Hawkins,  1312. 
V.  Hunt,   194. 
V.  Jones,  99. 
V.  Leigh,  1468a,  1483. 
V.  Lord  Plymouth,  287. 
V.  McReynolds,   49. 
V.  Packard,  1217. 
V.  Pugh,  165,  814. 
;;.  St.  Louis,  etc.,  Ry.  Co.,  1727. 
V.  W.  T.  Walker  Brick  Co.,  81. 
Knights  V.  Putman,  759. 
Knights  &  Ladies  of  Security  v.  Hiber- 
nian Banking  Assn.,  41. 
Knill  V.  WilUams,  1394. 


cvm 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Knippenberg   v.    Greenwood    Min.    & 

Mill  Co.,  418. 
Knisely  v.  Sampson,  83. 

V.  Williams,  1281a. 
Kniss  V.  Holbrook,  769a. 
Knobelock    v.    Germania    Co.    Bank, 

802,  1612a. 
Knoblauch  v.  Foglesong,  719. 
Knoll  V.  Melone,  513. 
Knopf  V.  Morel,  714. 
Knott    V.    Tidyman,    177,    193,    214, 
857 

V.  Venable,  617,  1032. 
Knowlton  v.  Schultz,  166,  769a. 
Knox  V.  Clifford,  70,  832. 

V.  Eden    Musee    Co.,    775,    1708, 
1469. 

V.  Lee,  1248. 

V.  Reedside,  513,  514. 

V.  The  Nivella,  1729. 
Knox  County  v.  Aspinwall,  317,  1523, 
1537,  1539,  1540. 

V.  Nichols,  1540. 
Knoxville   Nat.   Bank  v.   Clark,   850, 

1406. 
Koch  V.  Howell,  499c. 
Kock  V.  Bringer,  1005. 
Koehler  v.  Dodge,  724a,  726a,  727. 
Koenig  v.  Bramlett,  1789. 
Kohler  v.  Smith,  1458a. 
Kohn  V.  Collison,  240,  241. 

V.  Consolidation  Butter  «fe  Egg  Co., 
174. 

V.  Watkins,  136,  139. 
Kohrs  V.  Smith,  303. 
Konig  V.  Bayard,  521,  524,  993. 
Koons  V.  Davis,  860. 

V.  Vancousant,  1215a. 
Koontz  V.  Central  Nat.  Bank,  1372. 
Kopelke  v.  Kopelke,  117. 
Korkemas  c.  Macksound,  1236. 
Koshkonong  v.  Burton,  1513,  1516. 
Kost  V.  Bender,  176,  805. 
Kountz     V.     Kennedy,     1412,     1415, 

1421a. 
Kraak  v.  Fries,  182. 
Kraemer  v.  Ward,  1219. 
Kraft  V.  Thomas,  39. 
Krakauer  v.  Chapman,  560,  1790. 
Kramer  v.  Grant,  1587. 

V.  Kramer,   185. 

w.  Sandford,     1130,     1134,     1137, 
1139,  1142. 
Krampt's  Exr.  v.  Hatz's  Exr.,  1753. 
Krask  v.  Fries,  182. 
Krathwohl  v.  Dawson,  859. 
Kraus  v.  Torry,  917. 
Krauss  v.  Flournoy,  203. 
Krebs  v.  Blatz,  1698,  1702. 
Kreibohm  v.  Yancey,  198. 


Kreiss  v.  Faron,  203. 

Krieg  v.  Palmer  Nat.  Bank,  57,  678, 

867,  1706a. 
Krouskop  V.  Shontz,  154. 
Krueger  v.  Klinger,  1191. 
Kruse  v.  The  Seffertt  &  Weise  Lumber 

Co.,  1221. 
Krumbaar  v.  Ludeling,  311. 
Kuch  V.  Cornett,  573,  790. 
Kuefel  V.  Flanner,  513. 
Kuenzi  v.  Elvers,  891. 
Kuflic  V.  Blasser,  1596. 
Kuhn  V.  McAllister,  1708a. 
Kuhnes  v.  Cahill,  1643. 
Kuhns  V.  Bankes,  834. 

V.  Gettysburgh  Nat.  Bank,  1652. 
Kulb   V.    United   States,    1373,    1405, 

1413. 
Kulenkamp  v.  Groff,  719,  720. 
Kulp  V.  Kulp,  1215. 
Kummel  v.  Germania  Sav.  Bank,  1711a. 
Kunezi  t'.  Elvers,  891,  898. 
Kuntz  V.  Temple,  627,  710. 
Kupferberg  v.  Horowitz,  964. 
Kuriger  v.  Joest,  1353. 
Kurth  V.  Farmers'  &  Merchants'  State 

Bank,    151. 
Kurtz  V.  Holbrook,  725a. 
Kuth  V.  Weston,  1021. 
Kyle  V.  Bostwick,  1317. 

V.  Chattahoochee  Nat.  Bank,  18. 

V.Green,  1133,  1135. 

V.  Thompson,  576. 
Kyner  v.  Shower,  713d. 
Kyser  v.  Miller,  807. 


Lacey  v.  Hutchinson,  174. 
Lachenmaier  v.  Hanson,  63,  65. 
Lachner  Bros.  v.  Adams  Express  Co., 

1732. 
Lackey  v.  Boniff,  182. 
Laclede  Bank  v.  Schuler,  1636,  1636a, 

1643. 
Lacoste  v.  Harper,  1079. 
Lacy  V.  Holbrook,  56. 

V.  Kinnaston,    1291. 

V.  Woolcot,  369a. 
Ladd  V.  Baker,  94. 

V.  Kenney,   1153. 

V.  Rogers,  141. 
La  Due  v.  First  Nat.  Bank  of  Kasson, 

725,  783. 
Lafayette  v.  Merchants'  Bank,  1366. 
Lafayette  Bank  v.  Ringel,  56,  1703. 

V.  St.  Louis  Stoneware  Co.,  386, 
1486. 

V.  State  Bank,  392. 

V.  Stoneware  Co.,  1500. 


•TABLE    OF    CASES 


CIX 


References  are  to  paragraphs  marked 


Lafitte  V.  Slatter,  1076. 

Laflin  &  Rand  Powder  Co.  v.  Sinshei- 

mer,  174a,  414. 
Lafort  V.  Carpenter,  336. 
Lafourche  Transportation  Co.  v.  Pugh, 

281,  294. 
La  France  Engine  Co.  v.  Town  of  Mt. 

Vernon,  377. 
Lagow  V.  Badollet,  1281a.    • 
Lagrue  v.  Woodruff,  552. 
Lahay  v.  City  Nat.  Bank  of  Denver, 

1618. 
Lahn  v.  Koep,  157,  1317a. 
Lalu-man  v.  Bauman,  815. 
Laidley  v.  Bright,  32. 
Laing  v.  Barclay,  110,  502,  1455. 

V.  Meader,    1228. 
Laird  v.  State,  56. 
Lake  v.  Haynes,  669a. 

V.  Little  Rock  Trust  Co.,  713a. 

V.  Reed,  775. 

V.  Stetson,  715. 

V.  Trustees,  422,  433. 

V.  Tysen,  71. 
Lake  Charles  Nat.  Bank  v.  J.  I.  Camp- 
bell Co.,  382,  795c. 
Lake  County  v.  Graham,  1537,  1543a, 

1544. 
Lake  Shore,  etc.,  Ry.  Co.  v.  National 

Bank,  1729a. 
Lake  Shore  Nat.  Bank  v.  Colliery  Co., 

289,  998. 
Lake   Side    Land    Co.    v.   Dromgoole, 

1195. 
Lake  St.  El.  R.  Co.  v.  Carmichael,  394a. 
Lamar  v.  Brown,  1385. 
Lamb  v.  Burke,  812. 

V.  Camden  &  Co.,  1740a. 

V.  Cecil,  392. 

V.  Durant,  1737. 

V.  Moberly,  1468a,  1483. 

V.  Morris,  3266. 

V.  Story,  53. 
Lambarde  v.  Older,  1432. 
Lambe  v.  Commonwealth,  448. 
Lamberson  v.  Love,  189,  1236. 
Lambert,  Ex  parte,  1255. 

V.  Clewly,  185. 

V.  Ghiselin,     1050,     1055,     1058a, 
1115. 

V.  Heath,    734a. 

V.  Jones,  18,  913,  914. 
Lambeth  v.  Caldwell,  946. 
Lamine  v.  Dorrell,  1372&. 
Lamkin  v.  Edgerly,  1018. 
Lammers  v.  Sewing  Machine  Co.,  1401. 
Lamon  v.  French,  514. 
Lamourieux  v.  Hewitt,  1782,  1784. 
Lampkin  v.  Nye,  620. 
Lampton  v.  Haggard,  56. 


Lamson  v.  Beard,  775. 

Lamwersick  v.  Boehmer,  369. 

Lan  V.  Blomberg,  1398. 

Lancaster  v.  Woodward,  1633,  1647. 

Lancaster  County  Bank  v.  Moore,  210. 

V.  Smith,  286a. 
Lancaster  County  Nat.  Bank  v.  Huver, 
326c,   7796. 

V.  Taylor,  706,  741,  745,  746. 
Lancey  v.  Clark,  1221. 
Land  v.  Cowan,  1428. 
Landa  v.  Latten  Bros.,  1731, 1750. 

V.  Mechler,  795c,  1227. 
Landauer  v.  Espenhain,  1198. 

V.  Sioux  Falls  Imp.  Co.,  819,  1421a. 
Landon  v.  Bryant,  611,  996. 
Landrum  v.  Trowbridge,  449,  454,  1152, 

1154. 
Landry  v.  Stansbury,  1177,  1179. 
Land  Title  &  Tr.  Co.  v.  Bank,  1663. 
Lane  v.  Bank  of  West  Tennessee,  1058, 
1070,  1119,  1177. 

V.  Evans,  775. 

V.  Hyder,  1312. 

V.  Jones,  1251,  1272. 

V.  Krekle,  93,  136,  139. 

V.  Pollard,  183. 

V.  Raikoad  Co.,  1508. 

V.  Salter,  94. 

V.  Schlemmer,   769a. 

V.  Stacey,  704. 

V.  Steward,  1093,  1162,  1165. 

V.  Union  Nat.  Bank,  81c. 
Lanfear  v.  Blossman,  775,  17346,  1734c. 
Lang  V.  Gale,  624. 

V.  Smith,  116,  1504. 
Langan  v.  Hewitt,  365. 

V.  Langan,   203. 
Langdale  v.  Trimmer,  992. 
Langdon  v.  Hulls,  1052. 
Lange  v.  Kohne,  56. 
Langenberger  v.  Kroeger,  81,  654. 
Langford  v.  Vamer,  184,  724a,  726a. 
Langhorne   v.   Robinson,    1556,    1557, 

1558. 
Langley  v.  Dennis,  1230. 

t'.  Palmer,  649,  650. 
Langston  v.  Corney,  508. 

V.  S.  C.  R.  Co.,  1489,  1500,  1507, 
1513,  1514. 
Langton  v.  Hughes,  200. 

V.  Lazarus,  540. 
Lanier  v.  Clarke,  1406. 

V.  OlUff,  248. 

V.  Union  Mort.,  etc.,  Co.,  201,  203, 
207. 
Lank  v.  Morrison,  713c?. 
Lannay  v.  Wilson,  1183a. 
Lanning  v.  Trust  Co.  of  America,  386. 
Lanning,  Antrim  &  Co.  v.  Burns,  201. 


-ex 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Lannum  v.  Patterson,  1373a, 
Lansing  v.  Gaine  &  Ten  Eyck,  63,  370, 
371,  372a,  375. 

V.  Lytle,    1506. 
Lantcrmann  v.  Travous,  1612a. 
Lanussa  v.  Massicot,  636. 
Lanusso  v.  Barker,  916. 
Lapeyre  v.  ^^'ilks,  680. 
Lapice  v.  Clifton,  775. 
Laplace  v.  Laplace,  427,  834a,  834b. 
Laporte  v.  Landry,  1163. 
Laprice  v.  Bowman,    172. 
Lamed  v.  liurlington,  1525,  1537,  1623. 
Larsen  v.  Breene,  1626. 
Larue  v.  Cloud,  1596. 
La  Rue  v.  Gilkyson,  212. 
Lary  v.  Young,  1104. 
La  Sall(^  Nat .  Bank  v.  Tola  Rock  &  Rye 

Co.,  418. 
Laschinaky  v.  Margolis,  789. 
Lash  V.  Edgerton,  1252. 
Lashmett  v.  Prall,  831a. 
La.ssa.s  v.  McCarty,  777. 
Laster  v.  Stewart,  247,  249. 
Latham  v.  Clark,  170. 

V.  Fk)ur  Mills  Co.,  94,  400. 

V.  Smith,  126. 
Lathrop  v.  Commercial  Bank,  866. 
Latzke  v.  Albrccht,  179. 
Laub  V.  Paine,  1390. 

V.  Rudd,  793a. 
Laubach  v.  Purscll,  192. 
Laugenberger  v.  Kroeger,  1373a. 
Laughlin  v.  Marshall,  56,  1703. 
Laumeir  ?;.  Hallock,  1312. 
Laumlier  v.  Hallock,  1106. 
Law  V.  Brinker,  174a. 

V.  Parnell,  1181a,  1192a. 
Lawatsch  v.  Cooney,  1468a. 
Lawrason  v.  Mason,  1797a. 
Lawrence  v.  American  Nat.  Bank,  1166, 
1369. 

V.  Bassett,  868,  895. 

V.  Clark,  831c. 

V.  Dobyn,  644,  700. 

V.  Dougherty,    55. 

V.  Fussell,  692. 

V.  Hammond,  1074,  1158. 

V.  Langley,  1175. 

V.  McCalmont,  1277a,  1755. 

V.  Miller,  1116. 

V.  N.  Y.,  etc.,  R.  Co.,  1732. 

V.  Phipps,  41. 

V.  Ralston,   1147. 

V.  Schmidt,  1587. 

V.  Stonington  Bank,  339,  721. 

V.  Thom,  1317. 

V.  Tucker,  802. 

V.  Wright,  261. 
Laws  V.  Rand,  1587. 


Law's  Ext.  v.  Sutherland,  207. 
Lawson  v.   Farmers'   Bank,  992,  995, 
1039,  1041,  1043,  1044. 

V.  First  Nat.  Bank  of  Fulton,  199. 

V.  Lawson,  25,  26. 

V.  Lovejov,  230,  234. 

V.  Miller,'l70,  173. 

V.  Sherwood,  1051. 

V.  Snyder,  1311. 

V.  Spencer,  156,  834,  835. 

V.  Townes,    1785&. 

V.  Weston,  771, 1461, 1462, 1503. 
Lawton  v.  Howe,  733. 
Laxton  v.  Peat,  1333. 
Lay  V.  Au.stin,  416. 

V.  Wissman,  752,  758,  758c  778. 
Lazard  v.  Merchants  &  Miners    Trans- 
portation Co.,  1733. 
Lazarus  v.  Cowie,  725a,  726,  786,  1237. 
Lazell    V.    Lazell,    1472,    1475,    1478, 

1481. 
Lazelle  t-.  Miller,  1317. 
Lazier  i'.  Horan,  326a,  643,  1230a. 

V.  Nevin,  1275,  1276. 
Lea  V.  Branch  Bank,  663. 

V.  Cassen,  176. 
Leabo  v.  Goode,  1300. 
Leach  v.  Buchanan,  497,  533,  1351. 

V.  County  of  Wilson,  427. 

V.  Hewitt,  1083,  1113a,  1172. 

V.  Hill,  156. 

V.  Nicholds,  850. 
Leadbetter  v.  Farrow,  300,  311. 
Leahy  v.  Haworth,  688c,  1754. 

V.  Leahy,  241. 
Lean  v.  Lozardi,  83. 

V.  Schultz,  243. 
Leaphart  v.  Commercial  Bank,  1611a. 
Leary  v.  Miller,  207,  1107. 
Leas  V.  Walls,  1406. 
Leask  v.  Dew,  549. 
Leather  Mfrs.'  Bank  v.  Morgan,  1370. 
Leatherman  v.  Hecksher,  775. 
Leathers  v.  Commercial  Ins.  Co.,  1061. 
Leaugue  v.  Wasing,  1262. 
Leavens  v.  Thompson,  303. 
Leavenworth  County  v.  Miller,  1523. 
Leavenworth,  etc.,  R.  Co.  v.  County 
Court,     1559. 

V.  Douglas  County,  1548. 
Leavitt  v.  Blatchford,  382. 

V.  Connecticut  Peat  Co.,  394,  685. 

V.  Putnam,   611,   698d,   724,   996, 
1242. 

V.  Simes,  658,  662,  1051. 

V.  Taylor,  177. 

V.  Thurston,  795a,  814a. 
Lebanon  Bank  v.  Mangan,  1705. 
Lebanon  Nat.  Bank  v.  Long,  189,  1266. 
Lebanon  Sav.  Bank  v.  Penney,  156. 


TABLE    OF   CASES 


CXI 


References  are  to  paragraphs  marked 


Lebel  v.  Tucker,  906. 

Le  Breton  v.  Stanley  Contracting  Co., 

1643. 
Lecaan  v.  Kukman,  714a. 
Lechmere  v.  Fletcher,  1296. 
Lederer     v.   Union    Sav.    Bank,    273, 

284. 
Ledger  v.  Ewer,  203,  760. 
Ledlie  v.  Vrooman,  248. 
Le  Due  V.  Moore,  802. 
Ledwick  v.  McKim,  842,  1498. 
Lee  V.  Alexander,  1373a. 

V.  Balcom,  38,  39. 

V.  Baldwin,  1277a. 

V.  Boak,  246. 

V.  Boyd,  195a,  200. 

V.  Chillicothe  Branch  Bank,  698. 

V.  Clarke,  12816. 

V.  Davis,  919. 

V.  Dock,  1755,  1785a. 

V.  First  Nat.  Bank,  358a. 

V.  Fried  &  Co.  v.  Brugman,  1312. 

V.  Green,  1260. 

V.  Hightower,  199a. 

V.  Jilson,  1199. 

V.  Levi,  1319. 

V.  Love,  1304. 

V.  Muggridge,  249. 

V.  Oppenheimer,  1289a. 

V.  Percival,  81c. 

r;.  Pile,  719,  749. 

V.  Robinson,  16a. 

V.  Rogers,  1525. 

V.  Selleck,  883,  899,  902,  910. 

V.  Smith,  812,  1610,  1611. 

V.  Starbird,  1385. 

V.  Turner,  1708^. 

V.  'WTieeler,  256. 

V.  Whitney,  796. 

V.  Wilcocks,  916,  1454. 

V.  Yandell,  1306a. 

V.  Zagury,  285. 
Lee  Bank  v.  Spencer,  1109. 
Lee,  Fried  &  Co.  v.  Brugman,  1312. 
Leech  r.  Hill,  713d. 
Leeds  v.  Lancashire,  60,  79,  151,  154. 

I'.  Vail,  681. 
Leeper  v.  Paschal,  1341. 
Lefargue  v.  Harrison,  560,  1799. 
Le  Fevre  v.  Loyd,  312. 
Leffingwell  r.  Warren,  1525. 

V.  White,  1103. 
Leffler  Co.  v.  Dickerson,  81c,  88. 
Leftlv  V.  Mills,  572,  580,  616,  926,  939, 

i036,  1208,  1466. 
Legett  V.  Jones,  54,  54a,  1708d, 
Leggt).  Legg,  254,  891. 

V.  Vinal,  933. 
Legge  V.  Thorpe,  1079. 
Leggett  V.  Raymond,  1759. 


Legier  v.  Sutherland,  725a. 
Legro  V.  Staple,  21,  53,  1644. 
Lehigh,  etc.,  Coal  Co.  v.  West  Superior, 

etc.,  Co.,  68. 
Lehman  v.  Jones,  1144. 

V.  Press,  775. 

V.  San  Diego,  1530,  1531. 

V.  Young,  1734d. 
Lehnard  v.  Sidway,  4976,  508. 
Leightman  v.  Kadetska,  70. 
Leighton  v.  Bowen,  177. 
Leitch  V.  Wells,  800a,  1708g'. 
Leitensdorfer  v.  Webb,  1200. 
Leith  V.  Elphiston,  1384. 
Leith  Banking  Co.  v.  Walker's  Trustees, 

607. 
Leland  v.  Famham,  728. 

V.  Parriott,  701. 
Lemerisc,  In  re,  196. 
Lemmert  v.  Guthrie  Bros.,  1754,  1788. 
Lemmon  v.  Strong,  1769. 

V.  Whitman,  1317. 
Lemon  v.  Dean,  112. 
Lenheim  v.  Fay,  789. 
Lennig  v.  Ralston,  12,  869,  898,  921, 

1439. 
Lenox  v.  Cook,  1213. 

V.  Leverett,  943,  1046. 

V.  Prout,  1311. 

V.  Roberts,  1036,  1039. 
Le  Neve  v.  Le  Neve,  802. 
Lennon  v.  Grauer,  669a,  1356. 
Lent  V.  Padelford,  1785. 
Leonard  v.  Chicago,  etc.,  Ry.  Co.,  1739, 
1741. 

V.  Dougherty,  850. 

V.  Draper,  673,  676,  714. 

V.  Gary^  1104. 

V.  Hastmgs,  1106. 

V.  Leonard,  213,  1231. 

V.  Mason,  73. 

V.  Olson,  1144,  1145. 

V.  PhilUps,  1385,  1398. 

V.  Vredenbiu-gh,  1764,  1767. 

V.  Walker,  108. 

V.  Wilson,  1400. 
Leonhardt    v.    Citizens'    Bank,    1761, 

1769,  1773. 
Lerch  Hardware  Co.  v.  Columbia  Bank, 

815. 
Lemed  v.  Johns,  303. 
Leroux  v.  Brown,  887. 
Le  Roy  v.  Beard,  885. 
Leschen  v.  Guy,  806a,  1303. 
Leslie  v.  Bassett,  831a,  831c. 

V.  Hastings,  497,  4976. 

V.  Merrill,  800a. 
Lesser  v.  Scholze,  1376,  1417. 
Lester  v.  Garland,  626. 

V.  Given,  1634,  1637. 


CXll 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Lester  v.  Snyder,  1230. 
Lester-Whitney    Shoe    Co.    v.    Oliver, 

1566,  1590,  1596. 
Le  Tourneux  v.  Gilliss,  769a,  815. 
Lett  V.  Morris,  16a,  23. 
Le  Tulle  Mercantile  Co.  t;.Rugeley,  184. 
Leverone  i'.  Hildreth,  185. 
Levi  V.  Earle,  249. 

V.  Mundell,  713d. 
Levin,  In  re,  1731. 
Levins  v.  Briggs,  62. 
Levy  V.  Allien,  205. 

V.  Bank  of  U.  S.,  334,  533,  1655, 
1656. 

V.  Cadet,  374. 

V.  Drew,  610. 

V.  Du  Bose,  800a. 

V.  First  Nat.  Bank,  1369. 

V.  Gadsby,  702a. 

V.  Gillis,  1646. 

V.  Huvver,  183. 

V.  Peters,  1165,  1586,  1634a. 

V.  Pyne,  358a. 

V.  Roth,  1317. 

V.  Wagner,  713b,  1339. 

V.  Webster,  1752. 

V.  Wilson,  287. 
Levy  &  Cohn  Mule  Co.  v.  Kauffman, 

184,  203,  790. 
Levy  &  Son  v.  Stegman,  196. 
Lewin  v.  Brunette,  525. 

V.  Greig,  504. 
Lewis  V.  Bakewell,  1000. 

V.  Bannister,  858. 

V.  Brehme,  314,  315,  1156. 

V.  Brown,  1309. 

V.  Commercial  Nat.  Bank,  1173. 

V.  Commissioners      of      Bourbon 
County,  1550,  1552. 

f.  Cosgrove,  193. 

V.  Davison,  1260. 

V.  Dunlap,  719,  720a,  721,  722. 

V.  First    Nat.    Bank,    Sid,    303, 
1713a,  1714. 

V.  Gompertz,  982,  983. 

V.  Hanchman,  1335a. 

V.  Harvey,  710. 

V.  Hodapp,  1351. 

V.  International  Bank,  16186, 1637. 

V.  Jones,  1289a,  1331. 

V.  Kramer,  552,  554,  1377. 

V.  Lady  Parker,  728. 

V.  Lee,  243. 

V.  Long,  726a,  1338. 

V.  McElvain,  1565. 

V.  M'Kee,  1745. 

V.  Monahan,  704. 

V.  Owen,  896. 

V.  Parker,  728. 

V.  Pead,  211. 


Lewis  V.  Pctayvin,  1470,  1478. 

V.  Pickering,  1425. 

V.  Pima  County,  1486. 

V.  Reilley,  370a,  372,  683. 

V.  The   Springville    Banking   Co., 
1731,  1732. 

V.  Tipton,  44,  88. 

V.  Traders'  Bank,  16a. 

V.  Warden,  1326. 

V.  Wilson,  32. 
Lewis,  Hubbard  &  Co.  v.  Montgomery 

Supply  Co..  1590,  1592,  1596. 
Lewis  IVIercantile  Co.  v.  Harris,  1225. 
Lewisohn  v.  Kent,  etc.,  Co.,  93,  100. 
Ijcwiston  Falls  Bank  v.  Leonard,  1029a. 
Lewistown  Bank  v.  L(>onard,  9G3. 
Lexington   t-.   Butler,    10a,   729,    1496, 

1497, 1505,  1516,  1537,  1542,  1550. 
Leyson  v.  Davis,  24,  24a. 
Libbyr.  Mikclborg,88. 

V.  Pierce,  997. 
Lick  V.  Faulkner,  1247. 
Lickbarrow  v.  Mason,  803,  1634,  1727, 

1730,  1733,  1735,  1744. 
Lieber  v.  Fourth  Nat.  Bank,  672. 

t'.  Goodrich,  56. 
Liebsoher  v.  Kraus,  400,  418. 
Lienkauf  Banking  Co.  v.  Hancy,  879. 
Life  Ins.  Co.  v.  Bd.  of  Education,  1537. 

!;.  Pendleton,  9,  1074. 
Liggett  V.  Weed,  454,  508. 
Liggett  Spring  &  Axle  Co.'s  Appeal, 

3346. 
Light  V.  Killinger,  1414. 

t;.  Kingsbury,  611,  996. 

f.  Lieninger,  1432. 

V.  Stevens,  1181a,  1227,  1250. 
Lightbody  v.  Ontario  Bank,  737,  1676a. 
Lightfoot  V.  Tenant,  200. 
Lightner  v.  Hill,  640. 
Lilley  v.  Miller,  1105,  1595,  1596. 

V.  Petteway,  1152. 
Lilly  V.  Barker,  707. 

V.  Petteway,  1149. 
Limerick  Bank  v.  Adams,  775. 
Limerick  Nat.  Bank  v.  Howard,  889. 
Lime  Rock  Bank  v.  Hewitt,  623. 

V.  Macomber,  1190. 
Lime  Rock  F.  &  M.  I.  Co.  v.  Hewitt,  53. 
Lincoln  v.  Bassett,  1328. 

V.  Fitch,  1217. 

t;.  Hinsey,  713c. 

V.  Iron  County,  1537. 

V.  Smith,  311. 
Lincoln,  etc.,  Co.  v.  Allen,  1289. 
Lincoln  &  Kennebec  Bank  v.  Hemmatt, 
658. 

V.  Page,  658. 
Lincoln  Nat.  Bank  v.  Schoen,  3G8,  369. 
Lindauer  v.  Fourth  Nat.  Bank,  336,  339. 


TABLE    OF   CASES 


CXIU 


References  are  to  paragraphs  marked  § 


Lindell  v.  Rokes,  183. 

Lindenberger     v.    Beall,    1021,    1043, 

1051. 
Lindenschmidt  v.  Vallee,  833. 
Linder  Hardware  Co.  v.  Pacific  Sugar 

Corpn.,  1181a. 
Linderman  v.  Farquharson,  186. 

V.  Guldin,  1001. 
Linders  v.  Bradwell,  1220. 
Lindh  v.  Crowley,  357. 
Lindley  v.  First  Nat.  Bank,  496,  560. 
V.  Hoffman,  849. 
V.  Sullivan,  62a. 
Lindo  V.  Unsworth,  628,  1041,  1043. 
Lindsay  v.  McClelland,  1706. 
V.  Button,  724a. 
V.  Price,  608. 

I'.  Sonora  Gold  Min.  &  Mill  Co., 
1227. 
Lindsey  v.  McClelland,  56,  1701. 
Lindus  v.  Bradwell,  252,  681. 

V.  Melrose,  402. 
Line  of  Packets  v.  Bellamy  Mfg.  Co., 

404. 
Lingg  t'.  Blummer,  1192. 
Lingle  V.  Cook,  1250,  1251. 
Link  V.  Jackson,  776,  814a,  819. 
Linkous  v.  Hale,  962. 
Linn  v.  Carson,  1284. 
Linnard's  Appeal,  827. 
Linnell  v.  Leon,  188a. 
Linthicum  v.  Caswell,  1147,  1149,  1165, 

1458. 
Linton   v.   Chestnut-Gibbons  Grocery 
Co.,  995. 
i;.  National  Life  Ins.  Co.,  1458a. 
Linville  v.  Savage,  8346. 

V.  Welch,  1586. 
Lionberger  v.  Kinealy,  1221,  1245. 

V.  Mayer,  392. 
Lippman  v.  First  Nat.  Bank,  294. 
Lipscomb  v.  De  Lemos,  1227. 
Lipsett  V.  Hassard,  80, 1290. 
Lipsmeier  v.  Vehlsage,  185,  1966. 
Liszman  v.  Marx,  713d. 
Litchfield  v.  Falconer,  80,  199a. 
Litchfield  Bank  v.  Peck,  781. 
Littauer  v.  Goldman,  732,  733,  733a, 

736. 
Littell,  In  re,  Estate  of,  790. 

V.  Hord,  764. 
Little  V.  Blunt,  1215. 
V.  Bradley,  1187. 
V.  Derby,  1407. 
V.  Duncan,  230. 
V.  Nabb,  1764. 
V.  Phoenix  Bank,  56,  1570,   1587, 

1588,  1651. 
V.  Slackford,  35. 
V.  Stokely,  195a. 


Little  V.  Sturgis,  725. 
Littledale  v.  Mayberry,  954. 
Littlefield  v.  Hodge,  51a,  800a. 
V.  Perkins,  201. 
V.  Shee,  182,  240,  249. 
Little  Miami,  etc.,  R.  Co.  v.  Dodds, 

1729. 
Little  Rock  v.  State  Bank,  422. 
Little  Rock  Tr.  Co.  v.  Martin,  1375, 

1385. 
Livaudais  v.  Denis,  329. 
Livermore  v.  Blood,  724a,  802. 

V.  Truesdalc,  354. 
Livingston  v.  Roosevelt,  488. 
Livingston  County  v.  First  Nat.  Bank 
of  Portsmouth,  1523a,  1537,  1539. 
Lizardi  v.  Cohen,  896. 
Llewellyn  v.  Winckworth,  299. 
Lloyd  V.  Harper,  1770a. 
V.  Howard,  667. 

V.  Keach,  753,  759,  760,  763,  767. 
V.  Lee,  240,  249. 
V.  McGarr,  961,  1055,  1439. 
V.  National  Bank,  3346. 
V.  OUver,  132. 
V.  Sandilands,  1648. 
V.  Scott,  760. 

V.  West  Branch  Bank,  423. 
Loan  Asso.  t-.  Topeka,  734a,  1520,  1522. 
Loan  &  Exchange  Bank  v.  Miller,  1630. 
Loan  &  Savings  Bank  v.  Farmers  & 

Merchants'   Bank,    1037. 
Lobdell  V.  Baker,  734. 
V.  Niphler,  1305. 
I'.  Slawson,  1425. 
Lochenmayer  v.  Fogarty,  1230a. 
Lock  V.  Tulford,  726a. 
Locke  V.  Huling,  581. 

V.  Leonard  Silk  Co.,  1198. 
V.  Locke,  1243. 

V.  Merchants'  Nat.  Bank,  76. 
Locker  v.  Kuecheumiester,  36a. 
Lockett's  Case,  1345. 
Lockhart  v.  Ballard,  175. 
V.  Hullinger,  195a. 
V.  Moss,  499,  499a. 
Lock  Haven  State  Bank  v.  Smith,  187. 
Locklin  v.  Moore,  1215. 
Lockner  v.  Holland,  205. 
Lockwood  V.  Coley,  1187. 
V.  Comstock,  370,  373. 
V.  Crawford,  654,  983,  996. 
V.  Lindsey,  62,  867. 
V.  Mechanics'  Bank,  1708<i. 
V.  Railroad  Co.,  1740a. 
V.  Twitchell,  189. 
Lodge  V.  Dicas,  1295,  1301. 
V.  Lewis,  741,  812,  1181a. 
t'.  Phelps,  907. 
V.  Spooner,  1454. 


CXIV 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Loeff  t;.  Tanssig,  1789. 
Loewen  v.  Forsec,  822,  831a. 
Loflan  I'.  Goben,  203. 
Loftin  V.  Hill,  7956. 
Log  V.  McClurc,  1230. 
Logan  V.  Attix,  1200. 

V.  Ca.ssell,  1 192. 

V.  Ogdcn,  709,  1757. 

V.  Pluinmer,  200. 

V.  Smith,  S34«,  S34fe. 
Logan  County  v.  Eagir,  1590. 
Lohman  r.  Crouch,  S7,  170. 
Loizcaux  v.  Krcindcr,  1230. 
Loniax  v.  Colorado  Nat.  Bank,  183,  IS.'j. 

V.  I'icot,    700. 
Lombardo  v.  IjOiiibardo,  1377. 
London    &    County    banking    Co.    v. 

Groomo,  1(333,  1034. 
London  &  S.  F.  Bank  v.  Mooro,  89S. 
London   Bank  of  Australia  v.  White, 

3346. 
London,  etc..  Banking  Co.  v.  London 

River  Platte  Branch    1708. 
London,   etc.,    Bank   v.   Parrot,   1321, 

1328,  1790. 
London  8.  W.  Bank  v.  Wentworth,  143. 
London  Sav.  Fund  Soc.  i'.  Hagerstown 

Savings  Bank,  1705,  1700. 
Lone  Star  Leather  Co.  v.  Nat.  Bank, 

Sla. 
Long  V.  Bailie,  1484. 

V.  Campbell,  713a. 

V.  Colburn,  298,  307,  406. 

V.  Crawford,  724. 

V.  Hoedle,  1219. 

V.  Johnson,  205,  800a. 

V.  Long,  923. 

V.  Moor,   1377. 

V.  N.  Y.  Cent.  R.  Co.,  1740a. 

r.  Patton,  1290,  1316. 

t'.  SpruU,  1269. 

V.  Storv,  370. 

V.  Strauss,  37,  1707a, 
Long  Bros.  v.  Eckert,  1587,  1588. 
Longchamp  v.  Denny,  1687. 
Long  Island,  etc.,  Co.  v.  Columbus  R. 

Co.,  68. 
Lonier  v.  Ann  Arbor  Savings  Bank,  293. 

V.  State  Savings  Bank,  1639,  1643. 
Lonsdale  v.  Brown,  9,  576. 

V.  Lafavette  Bank,  561,  897. 
Lookout  Bank  v.  AuU,  790,  1189a. 
LoomLs  V.  Fay,  1311. 

V.  Mowrv,  797. 

V.  Ruck,  858. 

V.  Spencer,  210. 
Loomis  Inst.  v.  Hard,  1769. 
Loose  V.  Loose,  1152,  1157. 
Lord  V.  Appleton,  1016. 

V.  Hall,  253,  277,  681. 


Ixjrd  V.  Ocean  Bank,  793a,  831a. 

I'.  Ru.ssell,  63. 
Loring,  Ex  parte,  1281. 

V.  Gumey,    89. 

V.  Hailing,    620. 

V.  Steini'man,  240. 
Ix)rimer  v.  Fairchild,  1317a. 
Lormer  v.  Bain,  833. 
Los    Angeles    Nat.    Bank    v.    Wallace, 

999a. 
Losec  r.  Dunkin,  608. 
Ix)ucks  r.  Johnson,  24. 
Loud  V.  Collins,  t)7. 
Loudcrmilk    v,    Loudermilk,    81,    ISO, 

122(). 
Ix)uis   De  Jonge  &  Co.  v.  Woodport 

Hotel  &  Land  Co.,  814a. 
Ixniisiana  v.  Wood    1309,  1491&. 
Louisiana  Bank  v.  Citizens'  Bank,  1003. 

V.  Laveillc,   1733. 

r.  U.  S.  Bank,  1680. 
Louisiana  Ins.  Co.  i'.  Shamburgh,  1146. 
Louisiana     Nat.     Bank     i'.     Citizens' 

Bank,    li'AWui. 
Louisiana  State  Bank  i'.  Buhler,  1074. 

V.  Ellery,  998. 

I'.  Gaennie,  824. 

V.  Orleans  Nav.  Co.,   1530,   1550, 
1555. 

I'.  Rowell,  1012,  1014. 
Louisville  V.  Sav.  Bank,  1550. 
Louisville  &  Na-shville  R.  Co.  v.  All- 
good,  1743. 

t'.  Barkhouse,   1727,   1730,   1730a, 
1731a,  17.')0. 

V.  Pferdmenges,  1733a. 
Ix)uLsville  Coal   Min.  Co.  v.  Interna- 
tional Trust  Co.,  665. 
Louisville,  etc.,  Co.  v.  Rogers,  1739. 
Louisville,  etc.,  Packet  Co.  v.  Rogers, 

1740. 
Louisville,   etc.,    R.   Co.   v.   Caldwell, 
161,  413,  .504,  566. 

t'.  County  of  Daverson,  1535a. 

V.  Louisville  Tr.  Co.,  1533,  1537. 
Louisville  Man.  Co.  v.  Welsh,  1785a, 

1788. 
Louisville  R.  Co.  v.  Louisville  Tr.  Co., 

389,  392. 
Louisville  Tobacco  Warehouse  Co.  v. 
Gist,    1181a. 

V.  Stewart,  81d. 
Louisville  Tr.  Co.  v.  Louisville  R.  Co., 

1776,  1777. 
Loury's  Admr.  v.  Western  Bank,  899. 
Louviere  v.  Laubray,  1205. 
Love  V.  Ardmore  Stock  Exch.,  1644. 

V.  Nelson,  615. 

V.  Peers,  187o. 

i;.  Wells,  69. 


TABLE    OF   CASES 


cxv 


References  are  to  paragraphs  marked  § 


Ix)veday  i'.  Anderson,  1092. 
Lovejoy  v.  Citizens  Bank,  720a. 

t;.  Inhabitants    of    Foxcroft,    422, 

422a. 
V.  Lee,  1673a. 
V.  Spafford,  128,  3696. 
V.  Whipple,  65,  69. 
Lovelace  v.  Lovelace,  184,  193. 
Loveland  v.  Shepherd,  1769. 
Lovoll  t;.  Evertson,  1182,  1192,  1195. 
V.  Hammond  Co.,  1468a. 
t;.  Hill,  36. 
V.  Martin,  1461. 
V.  Williams,   308a. 
Lovett  V.  Comwcll,  1587,  1596. 
Lovenburg  v.  Henry,  43. 
Loving  «;.  Anderson,  53. 
Lovinger  v.  First  Nat.  Bank,  1369. 
Low  V.  Argrove,  1594. 
V.  Blodgett,  1199. 
V.  Chifney,  814. 
V.  Copestake,  1193. 
V.  Howard,  1152,  1161. 
V.  People,   1664. 
V.  Treadwcll,    157. 
Lowden  v.  Nat.  Bank,  1405, 
Lowe  V.  Beckwith,  17856. 
V.  Bliss,  54. 
V.  Murphy,  38. 
t;.  Peers,  196. 
V.  Reddan,   1311. 
LoweU   V.   Bickford,    189,   205,   831a, 
1191,  1203. 
V.  Boston,  1522. 
I'.  Daniels,  243. 
I'.  Gage,  700a,  1757. 
Lowell  lYust  Co.  V.  Pratt,  43,  616, 1005, 

1025. 
Lowenstein  v.  Knoph,  104,  108. 

V.  Sorge,   1760. 
Lowenstein  &  Bros.  v.  Bresler,  1587, 

1623. 
Lowenthal,  Ex  parte,  943,  986. 

V.  Chappell,   1215a. 
Lowery  v.  Danforth,  573. 
V.  Murrell,  737,  1677. 
V.  Scott,  1030,  1031. 
V.  Steward,  16a. 
Lowes  V.  Mazaredo,  753,  670,  763. 
Lowndes  i'.  Anderson,  822,  1680. 
Lowrey  t-.  Danforth,  108,  164,  665,  742, 
1290. 
V.  Murrell,   1269. 
Lowrie  v.  Zunkee,  130. 
LowT>'  t'.  Adams,  17856. 
I'.  McLain,   1398. 
t;.  Milwaukee  Nat.  Bank,  1266. 
V.  Steele,  1092. 
Lowry  Nat.  Bank  v.  Fickett,  1266. 
V.  Hazard,  193. 


Lowry  Nat.  Bank  v.  Maddox,  664a. 
Loyd  V.  Kansas  City  N.  &  B.  R.  Co., 
1733a. 
V.  McCaffrey,  1644. 
t;.  Osborne,  1592. 
Loyd  &  Co.  V.  Matthews  &  Rice,  393. 
Lubbering  v.  Kohlbrecher,  1373a,  1416. 
Lucas  V.  Castelow,  196a. 
V.  Dorrien,   1713. 
I'.  Haynes,  695,  1468. 
t'.  Ladew,  449,  617,  622,  8916. 
V.  Marsh,  1195. 
V.  Pitney,  382,  383,  384,  385. 
V.  San  Francisco,  387. 
Luce  V.  Shaff,  85. 
Luck  V.  Faulkner,  1247. 
Luckbarrow  v.  Mason,  1730. 
Lucker  v.  Iba,  814a. 
Ludden  v.  Marstcrs,  1278a. 
Ludlow  V.  Van  Rensselaer,  913. 

I'.  Woodward,  803. 
Ludwick  V.  Hunsinger,  1458a. 
Ludwig  I'.  Inglehart,  1321. 
Luellen  v.  Hare,  144. 
Luff  f.  Pope,  451. 
Luke  V.  Koenen,  164. 

t'.  Lyde,  10. 
LuUey  v.  Morgan,  195a. 
Lumber  Co.  v.  Eldridge,  1362. 

I'.  Land  Co.,  796,  799. 
Lumberman's  Bank  i'.  Pratt,  370a. 
Lumberman's  Nat.  Bank  of  Portland  v. 

Campbell,  714,  790. 
Lumley  v.  Musgrave,  1266. 

V.  Palmer,  504. 
Lundie  v.  Robertson,  1158. 
Luning  v.  Wise,  595. 
Lunt  t'.  Adams,  603,  1210. 

V.  Bank  of  North  America,  1643, 

1644. 
V.  Silver,  1387. 
Luqueer  v.  Prosser,  1779. 
Lusk  V.  Smith,  370. 
Luflter  t'.  Robinson,  415. 
Luth  V.  Stewart,  1395. 
Luther  v.  Crawford,  53,  89. 
V.  Wheeler,  420,  1530. 
Lybrand  v.  Fuller,  787. 
Lycoming  v.  Union,  1556. 
Lyde  v.  County  of  Winnebago,  1497. 
Lyman  v.  Bank  of  U.  S.,  1273. 
V.  Gedney,  1232. 
V.  Warner,    1181a. 
Lynch  v.  Bragg,  1431. 
V.  Dodge,  259. 
V.  First  Nat.  Bank,  1607o. 
t'.  Goldsmith,  719,  1703. 
t-.  Hicks,  1404. 
V.  Kennedy,  859. 
V.  Levy,  713e. 


CXVl 


TABLE    OF    CASES 


References  are  to  paragraphs  marked  § 


Lynch  v.  Lyons,  1227. 

V.  Mead,  664. 

V.  Morse,  125. 

V.  Reynolds,  1307. 
Lynchburg  v.  Norvell,  1533,  1534. 
Lynchburg,  etc.,  R.  Co.  v.  Dameron, 

386,  1530. 
Lynchburg  Nat.  Bank  v.  Scott,   197, 

198,  769a,  807,  808. 
Lynde  v.  Winnebago  County,   1492a, 

1527, 1527a, 1529, 1530, 1537, 1550. 
Lyndon  Sav.  Bank  v.  International  Co., 

88,  394a,  679,  710,  7136. 
Lyndonville  Nat.  Bank  v.  Fletcher,  538, 

1364,  1369. 
Lynds  v.  Van  Valkenburgh,  164,  814. 
Lynn  Nat.  Bank  v.  Smith,  331,  995a. 
Lyon  V.  Aiken,  1290. 

V.  Ewing,  700,  824. 

V.  Holt,  1324. 

V.  Lyman,  1219. 

V.  Marshall,   100. 

V.  Martin,  61. 

V.  Robertson,  205. 
Lyon   County   v.   Saving   Bank,    148, 

1496,  1499. 
Lyon,  Potter  Co.  v.  First  Nat.  Bank, 

365,  386,  781a,  812. 
Lyons  v.  Holmes,  74,  112. 

V.  Miller,  284,  305,  731,  740a,  1358. 

V.  Union  Exch.  Nat.  Bank,  1604. 

V.  West  water,  189. 
Lysaght  v.  Bryant,  667a,  987,  989. 
Lytle  V.  Wheeler,  172. 

M 

Maas  V.  M.,  K.  &  T.  R.  Co.,  1502. 
Maber  v.  Massias,  161. 
Mabie  v.  Johnson,  775. 
Macaltimer  v.  Croasdale,  193. 
Macann  v.  Atchafalaya  Bank,  966. 
Macara  v.  Watson,   1390. 
Macaulay  v.  Holsten,  184,  191. 
MacDonald  v.  Piper,  1470. 
Mace  V.  Kennedy,  166,  789. 
Macey  v.  Williams,  24a. 
Macferson  v.  Thoytes,  1219. 
MacGregor  v.  Dover  R.  Co.,  377. 

V.  Rhodes,  1356. 
Machado  v.  Fernandez,  609,  1341. 
Macheath  v.  Haldimand,  445. 
Machell  v.  Kinnear,  1193. 
Macintosh  v.  EHot  Nat.  Bank,  1370. 
Mackay  v.  Holland,  859. 

V.  Peterson,  851. 

V.  Ramsay,  344. 

V.  St.  Mary's  Church,  265,  266. 
MacKenzie  v.  Barrett,  1646. 
Mackersy  v.  Ramsays,  341. 


Mackey  v.  Mackey,  1478,  1481. 

V.  Fulerton,  1250. 
Mackin  v.  Ballock,  742. 

V.  Shannon,  200. 
Mackintosh  v.  Gibbs,  47,  48,  62,  62a, 

671,  899,   1039. 
Macklin  v.  Crutcher,  363. 
Macky  v.  Craig,  574. 
Maclae  v.  Sutherland,  361. 
Macleod  v.  Snee,  51,  108. 
Macloon  v.  Smith,  621. 
Macon  County  v.  Rodgers,  1458a. 
MacRitchie  v.  Johnson,  789a. 
Macungie  Sav.  Bank  v.  Hattenstein, 

207. 
Madden  v.  Gaston,  65,  144. 
Maddox  v.  Duncan,  669,   688^,  708a, 
1090,  1113,  1781. 

V.  Graham,  1489. 

V,  Lewis,  1318. 

V.  Wyman,  154,  835. 
Maddur  v.  Bevan,  1245. 
Mader  v.  Cool,  180,  769a. 
Madeville  v.  Welch,  451. 
Madison    County    Bank    v.    Graham, 

789a,  795&. 
Madison,  etc.,  Plankroad  Co.  v.  Water- 
road  Co.  V.  Watertown  Plankroad 

Co.,  384,  386. 
Madison,  etc.,  R.  Co.  v.  Norwich  Sav. 

Society,  386. 
Madison  Square  Bank  v.  Pierce,  1237. 
Madry  v.  Sulphur  Springs,  etc..  Turn- 
pike Co.,  861. 
Maffat  V.  Greene,  786,  790,  1343. 
Magee  v.  Atkinson,  305,  740a. 

V.  Badger,  775,  814. 
Magel  V.  Milligan,  573. 
Magill  V.  Manson,  170. 

V.  Merrie,  350a. 
Magnin  v.  Dinsmore,  1740a. 
Magoffin  V.  Boyle  Nat.  Bank,  90a. 
Magoun  v.  Walker,  962,  969. 
Magruder  v.  Bank  of  Georgetown,  1177. 

V.  Peter,  1281. 

V.  Union  Bank,  591,  1175,  1179. 
Maguire  v.  Donovan,  1230. 

V.  Eichmeier,    417,    1410a,    1417, 
1418. 
Mahaiwe  Bank  v.  Douglass,  1378, 1387. 
Mahan  v.  Sherman,  80. 
Mahaska  County  Bank  v.  Christ,  156. 
Maher  v.  Brown,  1644. 

V.  First    Nat.    Bank   of   Laramie, 
1189. 

V.  Overton,  411. 
Mahier  v.  Le  Blanc,  630. 
Mahone  v.  Central  Bank,  142. 
Mahoney  v.  Ashlin,  8. 

V.  Fitzpatrick,  45a. 


TABLE    OF   CASES 


cxvn 


References  are  to  paragraphs  marked  § 


Mahoney  Mining  Co.  v.  Anglo  Cali- 
fornia Bank,  1616a,  1630. 

V.  Banks,  383. 
Mahorner  v.  Hooe,  866. 
Mahurin  v.  Pearson,  1431. 
Maiden  ;;.  Webster,  94. 
Maier  v.  Canovan,  1272,  1300a. 
Maillard  v.  Duke  of  Argyle,  1267. 
Main  v.  Casserly,  386. 

V.  Hilton,  130. 
Mainer  v.  Spurlock,  979. 
Mainwaring  v.  Newman,  354. 
Maitland  v.  Citizens'  Nat.  Bank,  775, 

831a,  832a. 
Major  V.  Symmes,  248. 
Makepeace  v.  Harvard  College,  154. 

V.  Moore,  265. 
Malbon  v.  Southard,  267,  680. 
Malcomson  v.  Malcomson,  485. 
Maiden  Bank  v.  Baldwin,  649. 
Male  V.  Roberts,  874,  892. 
Maledon  v.  Leflore,  1226,  1311,  1328. 
Mallett  V.  Thompson,  1296,  1333,  1334. 
Malone  v.  Keener,  1763. 

V.  Lebus,  181. 
Maloney  v.  Clark,  1663. 

V.  State,  741. 

V.  Stephens,  222. 
Mallory  v.  Fitzgerald,  80. 
Malott  V.  Jewett,  1051. 
Malpas  V.  Lowenstine,  1262. 
Maltz  V.  Fletcher,  81a,  203. 
Mammon  v.  Hartman,  710,  713a. 
Manchester    Bank    v.    Fellows,    1003, 

1005a,  1039,  1045,  1212. 
Manchet  v.  Cason,  1398. 
Mandeville  v.  Union  Bank,  107. 

V.  Welch,  15,  16a,  17,  18,  21,  22, 
1636. 
Manegold  v.  Dulan,  1183. 
Maness  v.  Henry,  1290,  1416. 
Manhattan  Ins.  Co.  v.  Warwick,  222. 
Manhattan  Liquor  Co.  v.  Joseph  A. 

Magnus  &  Co.,  389. 
Manhattan  Sav.   Inst.   v.   New  York 
Exch.  Bank,  145. 

V.  New  York  Nat.  Bank,  1501fe. 
Maniort  v.  Roberts,  139,  1194. 
Manistee  Nat.  Bank  v.  Seymore,  164. 
Mankey  v.  Hoyt,  1586. 
Manley  v.  Boycot,  721,  1336,  1337. 

V.  Geagan,  566. 

V.  Park,  1181a. 
Mann  v.  Brown,  1317. 

V.  Chandler,  403,  405. 

V.  King,  274. 

V.  Lent,  167. 

V.  Merchants'  Loan  &  Trust  Co., 
728,  769a,  831a,  850. 

V.  Moors,  1023,  1029o. 


Mann  v.  National  Bank,  779&,  812. 

V.  Sutton,  32. 
Manney  v.  Coit,  1109a. 
Manning  v.  City  of  Devil's  Lake,  1522. 

V.  Hayes,  369. 

V.  Lyon,  1261,  1264,  1276. 

V.  Maroney,  1105. 

V.  McClure,  829a  830,  832. 
Manning,  Gushing  &  Co.  v.  Alger,  1789. 
Manrow  v.  Durham,  1759. 
Mansfield  v.  Gorbin,  185. 

V.  Edwards,  720a. 

V.  Graham,  710,  1340. 
Mansfield  Hotel  Co.  v.  Bailey,  667. 
Manson  v.  Felton,  259. 
Manton  v.  Robinson,  833. 
Manufacturers    Bank   v.    Cont.    Nat. 
Bank,  336. 

V.  Thomson,  1622a. 
Manufacturers    &    Traders'    Bank    «;. 

Love,  303,  304. 
Manufacturers'  Com.  Co.  v.  Blitz,  664a. 
Manufacturers,   etc..  Bank  v.  Follett, 
716,  1398. 

V.  Winship,  363. 
Manufacturers  Nat.  Bank  v.  Barnes, 
288a. 

V.  Ewell,  7796. 

t;.  Swift,  1621. 

V.  Thompson,  1191. 
Manufacturing   Co.    v.   Railway   Co., 

1728,  1729a. 
Manzy  v.  Flint,  203. 
Mapes  V.  German  Bank  of  Tilden,  381, 

386. 
Marble  Falls  Ferry  v.  Spitler,  33. 
Marbourg  v.  Brinkman,  605,  1595a. 
March  v.  Barnet,  1341. 

V.  Foulton    County,    1532,    1538, 
1544,  1545. 
Marchington    v.    Vernon,     Guildhall, 

1797. 
Marcy  v.  Township  of  Oswego,  1537, 

1542. 
Mare  v.  Charles,  412. 
Margetson  v.  Aitken,  1167. 

V.  Glynn,  1740. 
Marienthal  v.  Taylor,  713. 
Maries  v.  Polleys,  1317. 
Marine  &  Fire  Ins.  Bank  v.  Jauncey, 

18. 
Marine  Bank  v.  Clements,  394. 

V.  Fulton  Bank,  325,  334. 

V.  Smith,  658. 

W.Wright,     1734,     1734a,     17346, 
1734c,  1748. 
Marine  Nat.  Bank  v.  Nat.  City  Bank, 

540,  6696,  1603,  1661. 
Marinette     v.     Tomahawk     Common 

Council,  1524. 


CXVlll 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Marion  v.  Logansport  R.  Co.,  425. 

V.  McClellan  71. 
Marion,  etc.,  R.  Co.  v.  Hodge,  425^  482. 
Marion  Gravel  Road  Co.  v.  Kessmger, 

688. 
Marion  Trust  Co.  v.  Crescent  Loan, 

etc.,  Co.,  383,  394a. 
Marion  Water  Co,  v.  City  of  Marion, 

1539. 
Market  &  Fulton  Nat.  Bank  v.  Sargent, 

142,  143. 
Markey  v.  Corey,  688c. 
Markham  v.  Cover,  360. 

V.  Hazen,  487. 
Markland  v.  McDaniel,  1103. 
Markle  v.  Hatfield,  731. 
Marks  v.  Bridges,  1713a. 

V.    First    Nat.    Bank,    184,    790, 
832. 
Marling  v.  Fitzgerald,  183. 

V.  Jones,  189,  726,  790,  1236. 

V.  Milwaukee  Realty  Co.,  1230. 
Marmion  v.  McClelland,  71. 
Marquardt  Sav.  Bank  t;.  Freund,  1221, 

1222. 
Marquette  Nat.  Bank  v.  Steams,  164. 
Marr  v.  Johnson,  987,  1027. 
Marrett  v.  Equitable  Ins.  Co.,  53. 
Marrigan  v.  Page.  36a,  38. 
Marryatts  v.  White,  1252. 
Mars  V.  Mars,  284,  573,  812,  1191. 
Marsh  v.  Chown,  81c,  189. 

V.  Fulton  County,  1538. 

V.  Gold,  358a. 

V.  Hayford,  1197. 

V.  Low,  174a. 

V.  Marshall,  782. 

V.  Maxwell,  1053. 

V.  Newell,  1199,  1201. 

V.  Pedder,  740,  1271. 

V.  Small,  775. 

V.  Ward  94. 
Marshall  v.  Bait.*  &  O.  R.  Co.,  188. 

V.  Bell,  195. 

V.  Bishop,  1326. 

V.  Clary,  513. 

V.  Drescher,  143. 

V.  Gougler,  1391. 

V.  Marshall,  1260. 

V.  Mitchell,  1104, 1110, 1133, 1135. 

V.  Miirphy,  403. 

V.  Myres,  265,  573,  1223. 

V.  Rutton,  243. 

V.  Russell,  69. 

V.  Silliman,  1557. 

V.  Sonneman,  972,  979a. 
Marshall  County  v.  Cook,  1551. 
Marshall  Field  Co.  v.  Oren  Ruff  com  Co., 

1219,  1316. 
Marshall  Mfg.  Co.  v.  Harkinson,  1251. 


Marshall  Nat.  Bank  v.  O'Neal,  386, 

713c,  713d,  774,  775. 
Marsh,  Merwin  &  Leinmon  v.  Wheeler, 

357. 
M  arson  v.  Petit,  1378. 
Marston  v.  Allen,  667,  748,  1468a. 
Martendale  v.  Follett,  1386,  1411. 
Martin  v.  Bacon,  507. 

V.  Bank,  3266,  1506,  1513. 

V.  Bank  of  U.  S.,  1479,  1695,  1696. 

t;.  Baugh,  1296. 

V.  Berry,  879. 

V.  Boure,  6. 

V.  Boyd,  713a. 

V.  Brown,  972. 

I'.  Chauntry,  60. 

V.  Cole,  719. 

V.  Coles,  1748. 

V.  Foster,  161,  164. 

t'.  Franklin,  917,  1454. 

V.  Funk,  24a. 

V.  Ger.-Am.     Nat.     Bank,     831a, 
832a. 

V.  Grabinsky,  1114. 

V.  Home  Bank,  1226,  1278a,  1590, 
1592,  1594. 

V.  Ingersoll,  993,  1041,  1043. 

V.  Jesse  French  Piano,  etc.,  Co., 
48,  1219. 

V.  Ku-k,  370,  373. 

V.  Lamb,  1188. 

V.  Lewis,  80,  88,  110. 

V.  Marshall,  720a. 

t;.  Martin,  891,  892,  1612&. 

V.  McReynolds,  1183a. 

V.  Morgan,  1226,  1596,  1630. 

V.  Muncy,  532. 

V.  Munroe,  1290. 

V.  O'Bannon,  748. 

V.  Pennock,  1269. 

V.  Perqua,  1104. 

V.  Shumatte,  41. 

V.  Smith,  418,  849a. 

V.  Smylle,  851. 

V.  Stone,  46,  108. 

V.  Suber,  248. 

V.  Trowbridge,  1436. 

V.  Turner,  203. 

V.  Wade,  196. 

V.  Walton,  3696,  373. 

V.  Webb,  392. 

V.  Winslow,  607,  609,  1147,  1155. 
Martina  v.  Muhlke,  837. 
Martindale  v.  Stotter,  795a. 
Martineau  v.  McCollum,  834. 
Martyn  v.  Lamar,  1787. 
Martz  V.  State  Nat.   Bank  of  North 

Tonawanda,  1181a. 
Marvin  v.  McCallum,  63,  758,  1190. 

V.  Stone,  1283. 


TABLE    OF   CASES 


CXIX 


References  are  to  paragraphs  marked  § 


Marvine  v.  Hymers,  385. 

Marx  &  Bliem  v.  Luling  Co-operative 

Assoc,  1399,  1785. 
Marye  v.  Parsons,  448. 
Maryland  Fertilizer  Co.  v.  Newman, 

62. 
Marzetti  v.  Williams,  479. 
Mascolo  V.  Montesanto,  180,  185. 
Maslin's  Exrs.  v.  Hiltt,  1062. 
Mason  v.  Barff,  499a. 

V.  Bradley,  1387. 

V.  Burton,  1202. 

V.  Campbell,  1289a. 

V.  Dousay,  552,  867,  888. 

V.  Eldred,  1296. 

V.  Franklin,  640,  651,  930. 

V.  Frick,  1500. 

V.  Gardiner,  63. 

V.  Hunt,  508,  509,  551. 

V.  Hyde,  67. 

V.  Jordan,  205. 

V.  Kilcourse,  963. 

V.  Mason,  80. 

V.  Metcalf,  41. 

V.  Morgan,  240,  254,  681. 

V.  Noonam,  728. 

V.  Peters,  1-327. 

V.  Pritchard,     640,     1030,     1124, 
1755,  1772. 

V.  Rumsey,  362,  488. 

V.  Waite,  1469,  1687. 

V.  Wickersham,  1300. 
Masonic  Sav.  Bank  v.  Banks,  3346. 
Maspero  v.  Pedcsclaux,  1000,  1001. 
Massachusetts  Bank  v.  Oliver,  1000. 
Massachusetts    Iron    Co.    v.    Hooper, 

1708d. 
Massachusetts    Loan   &    Tr.    Co.    v. 

Twichell,  664a. 
Massachusetts  Nat.  Bank  v.  Snow,  65, 

189,  573,  693,  776,  7Slb,  838,  1409. 
Massey  v.  Building  Assoc,  93. 

V.  Turner,  713a. 
Massie  v.  Belford,  46. 

V.  BjTd,  1215. 
Massman  v.  Holscher,  68a,  855. 
Mast  V.  Mathews,  59. 
Master  v.   MiUer,    148,   1373a,   1374, 

1376,  1379,  1410a. 
Masters  v.  Iberson,  803. 

V.  Miller,  23. 
Masterson  v.  Mansfield,  357,  358a. 
Mater  v.  Am.  Nat.  Bank  of  Denver, 

156,  1407. 
Mather  v.  Gordon  Bros.,  1734c. 

V.  Maidstone,  1353,  1371. 
Mathews  &  Co.  v.  Dubuque  Mattress 

Co.,  418. 
Mathewson  v.  Stafford  Bank,  1000. 

V.  Sprague,  716. 


Mathias  v.  Kirsch,  175,  790. 
Mathiesen  v.  McMahon,  210. 
Mathis  V.  Barnes,  265. 
Matlock  V.  Livingston,  199a. 

V.  Scheuerman,  187,  775,  776,  789, 
814a,  1590,  1593. 
Matson  v.  Alley,  803,  812. 
Matteson  v.  Ellsworth,  1413. 

V.  Morris,  741. 

V.  Moulton,   500. 
Matthews  v.  Allen,  1147,  1148. 

V.  Bloxsome,  95a,  143a,  714a. 

V.  Dare,  1275. 

V.  Haydon,  588. 

V.  Houghton,  55. 

V.  Matthews,  1485. 

V.  Poythress,  775,  814,  1462. 

V.  Redwine,  102. 
Matthews,  Finley  &  Co.  v.  Rutherford, 

758a. 
Matthey  v.  Gaily,  1096. 
Mattison  v.  Marks,  43. 
Mattox  V.  Leach,  63. 
Mauldin  v.  Branch  Bank,  366,  753,  812. 
Maule  V.  Crawford,  104. 
Maull  V.  Vaughn,  186. 
Mauney  v.  Coit,  1276. 
Maupin  t'.  Compton,  736. 
Mauran  v.  Bullus,  1755. 

V.  Lamb,  1652. 

V.  Lambert,    1230. 
Maurin  v.  Perat,  657. 
Maury  v.  Coleman,  860. 

V.  Rogers,  448,  1726. 
Maux  Ferry  Gravel  R.  Co.  v.  Branegan, 

424,  1088a. 
Mawson  v.  Blane,  236. 
Maxey  v.  Knight,  1458. 
Max  Simons  &  Co.  v.  McDowell,  769a, 

1373. 
Maxwell  v.  Agnew,  1703. 

V.  Morehart,  852. 

V.  Vansant,  728. 

V.  Wright,  1353. 
Maxwell  &  Putnam  v.  Southern  Pac. 

R.  Co.,  1741. 
May  V.  Babcock,  1729. 

V.  BoLsseau,  191,  256,  1109,  1128, 
1130,  1140,  1141,  1184. 

V.  Campbell,  751. 

V.  Chapman,  7956. 

V.  Coffin,  1144,  1170,  1172. 

V.  Cooper,  616. 

V.  Dyer,  689a,  729,  741. 

V.  First  Nat.  Bank,  724a. 

V.  Hewitt,  303. 

V.  Jones,  180,  644,  934,  952,  955, 
16186. 

V.  Kelly,  295,  362,  485,  521. 

V.  Martin,  831a. 


cxx 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


May  t>.  May,  241. 
V.  Miller,  92. 
V.  Newman,  1342. 
V.  Quimby,  832. 
V.  Reed,  1326. 
Mayberry  v.  Boynton,  1788. 

V.  Morris,  800a,  832. 
Maydole  v.  Peterson,  174,  1321. 
Mayer  v.  Ojlumbia  Sav.  Bank,  795a. 
V.  Eschback,  440. 
V.  Heidlbach,  832. 
V.  Isaac,  1755,  1770,  1772. 
V.  Jadis,  1196. 
V.  Mode,  831c. 
V.  Old,  93,  536,  812,  813. 
V.  Roche,  865,  868. 
V.  Thomas,  571. 
Mayers  v.  McRimmon,  664a,  665, 688a, 

769o,  1219. 
Mayes  v.  McElroy,  177. 

V.  Robinson,  775. 
Mayfield  Grocer  Co.  v.  Andrew  Price  & 

Co.,  724a. 
Mayhew  t^.  Boyd,  1311. 

V.  Crickett,  1311,  1340, 1789. 
V.  Prince,  311. 
Maykin  v.  Kirby,  747. 
Maynard  v.  Davis,  831a. 
V.  Fellows,  361. 
V.  Johnson,  125. 
V.  Maynard,  179. 
V.  National  Bank,  831a. 
Mayo  V.  Chcnoweth,  102. 
Mayor  v.  Hammond,  128. 

V.  Johnson,  1475,  1479,  1695. 

V.  Lord,  1537,  1542. 

V.  Potomac  Ins.  Co.,  1493,   1507, 

15096. 
V.  Ray,  420,  427. 
Mayor  of  Alexandria  v.  Patten,  1250, 

1251. 
Mayor  of  New  York  v.  Sands,  795a. 
Mayor   of    Wetumpka   v.    Wetumpka 

Wharf  Co.,  420,  815. 
Mays  V.  Callison,  670. 
Maze  V.  Miller,  1267. 
Mazuzan  v.  Mead,  766. 
McAtee  v.  Shade,  174. 
McArthnr  v.  Bloom,  245. 

V.  Magee,  832a. 
McArthur  Co.  v.  National  Bank,  1734&. 
McAuley  v.  Gordon,  363,  1395. 
McAyealt;.  GuUett,  1198. 
McBain  v.  Seligman,  795a. 
McBean  v.  Morrison,  400. 
McBlair  v.  Gibbes,  200. 
McBride  v.  American  Ry.  &  Lighting 
Co.,  16a. 
V.  Farmers  Bank,  339,  344. 
V.  Illinois  Nat.  Bank,  598, 644. 


McBride  t;.  Potter-Lovell  Co.,  1340. 
McBrown  v.  Corp.  of  Lebanon,  101. 
McCabe  v.  Raney,  859. 
McCain  v.  Lowthcr,  1587. 
McCall  V.  Clayton,  404. 

V.  Taylor,  92. 
McCalley  v.  Wilburn,  262. 
McCallum  v.  Driggs,   164,  713a,  717, 

1191. 
McCammon  v.  Shanyz,  775. 
McCampbell  v.  Fountain  Head  R.  Co., 
386. 

V.  McCampbell,  241. 
McCandler  v.  Canning  Co.,  403. 
McCann  i'.  City  of  Albany,  1799. 

V.  Lewis,  812. 

V.  Preston,   87. 

V.  Randall,  436,  744. 
McCarty  v.  Roots,  703,  831a. 
McCarty  &  Co.  i'.  Louisville  Banking 

Co.,  774,  775,  812. 
McCathern  v.  Bell,  721. 
McCauley  v.  Murdock,  769a. 
McCaughey  v.  Smith,  1388. 
McCaughy  v.  Berg,  678a. 
McCausland  v.  Ralston,  194. 
McCherd  i-.  Ford,  56. 
McClae  v.  Southerland,  94,  361. 
McClain  v.  Lowther,  1587. 
McClane  v.  Fitch  581,  583,  1043. 
McClaraghan  v.  Hines,  80. 
McClellan  v.  City  Nat.  Bank,  196. 

V.  Detroit  File  Works,  386. 

V.  Reynolds,  418. 

V.  Robe,   305. 
McClelland  v.  Bartlett,  1227. 

V.  Bishop,  594. 

V.  Coffin,  55. 

V.  Detroit  File  Works,  366. 

V.  Norfolk  &  S.  R.  Co.,  1496a,  1501. 
McClenathan  v.  Davis,  46. 
McCless  V.  Meekins,  1522. 
McClintock  v.  Cummins,  815. 

V.  State  Bank,  1421. 
McCluny  v.  Jackson,  1260. 
McClure  v.  Bennett,  306,  307.  405. 

V.  Corydon  Deposit  Bank,  292. 

V.  Little,  1403,  1404. 

V.  Livermore,  400. 

V.  McClure,   183. 

V.  Township  of  Oxford,  1498,  1503, 
1538,  1544,  1550. 
McCollum  V.  Broughton,  1338a. 
McComb  V.  Kittridge,  1317,  1317a. 

V.  Thompson,  713a. 
McComber  v.  Dunham,  1458a. 
McConkey  v.  Petterson,  207. 
McConnell  v.  Hector,  216. 

V.  Hodsan,   775. 

V.  McConnell,  24. 


TABLE    OF   CASES 


CXXl 


References  are  to  paragraphs  marked  § 


McConnell  v.  Muiry,  24a. 

V.  Thomas,  1189,  1189a. 
McCord,  In  re,  704. 

V.  Callaway  &  Co.,  365. 

V.  Ford,  1245. 

V.  McCord,  24. 

V.  National  Bank,  1603. 
McCorkle  v.  Miller,  787. 
McCormack  v.  Trotter,  56. 
McCormal  V.  Redden,  185,  186. 
McCormick  v.  Altneare  &  Co.,  1260. 

V.  Harvesting  Co.  &  Taylor,  319. 

V.  Hickey,  128. 

V.  Holmes,   854. 

V.  Kampman,  769a. 

V.  Kampmann,  814. 

V.  Littler,   212. 

V.  Molburg,   849a. 

V.  Peters,    1245. 

V.  Sawyer,  745. 

V.  Shea,  1290. 

V.  Stockton,  402,  1220. 

V.  Swem,  62a,  812. 

t;.  Williams,   781. 
McCormick  Harvesting  Mach.  Co.  v. 
Blair,  1373,  1385,  1411, 1412. 

V.  Williams,  203. 
McCormick  Machine  Co.  v.  Gustafson, 
203. 

V.  Jacobson,  164. 
McCosker  v.  Banks,  802,  815. 
McCoy  V.  Gilmore,  86a. 

V.  Gouvion,  850. 

V.  Green,  62. 

V.  Lockwood,  142,  1395. 

V.  Washington  County,  1491, 1726. 
McCracken  v.  German  Fire  Ins.  Co., 
834a. 

V.  San  Francisco,  318. 
McCrady   v.   Jones,    181,   766,    1204, 

1215a. 
McCramer  v.  Thompson,  854,  1387. 
McCrary  v.  Caskey,  76. 
McCraven  v.  Crislen,  1403. 
McCrea  v.  Murphy,  193. 
McCrillis  v.  How,  225. 
McCroskey  v.  Ladd,  203. 
McCrummen  v.  Campbell,  32. 
McCuUis  V.  Barlett,  212. 
McCulloch  V.  Hoffman,  174. 
McCullough  V.  Cook,  643. 

V.  Kervin,  1259. 

V.  Moss,  386a,  387,  389,  393. 

V.  State  of  Maryland,  126. 

V.  Virginia,  448. 

V.  Wainwright,  98. 
McCune  v.  Belt,  703,  980. 
McCurbing  v.  Tumbull,  1378. 
McCurdy  v.  Bowes,  50a,  730. 

V.  Prugh,  800a. 


McCurdy  v.  Sheawassee  County,  420. 
McCutchen  v.  Rice,  499,  504,  508. 
McDade  v.  Mead,  1424. 
McDaniel  v.  Cluninski,  833. 

V.  Mallary  Bros.  Machinery  Co., 
205. 

V.  Pressler,   1187. 
McDavid  v.  McLean,  1338. 
McDoal  V.  Yeomans,    1769a. 
McDonald  v.  Aufdengarden,  177,  205, 
812,  815. 

V.  Bailey,  899,  1099. 

V.  Beer,  206. 

V.  Huestis,   156. 

V.  Jackson,  1470. 

V.  Lee,  633. 

V.  Luckenback,  389,  714. 

V.  Mackenzie,  1437. 

V.  McGruder,  703,  703a,  1204. 

V.  McPherson,  1730. 

V.  Muscatine  Nat.  Bank,  850. 

V.  Randall,  802,  814. 

V.  Rankin,   267. 

V.  Whitfield,  703a,  1340. 
McDonnell  v.  Burnes,  607. 

V.  Keller,  56. 
McDonough  v.  Nowlin,  1342. 
McDougal  V.  Rutherford,  867. 
McDougall  V.  Walling,  1324. 
McDowall  V.  Chambers,  74. 

V.  Cook,   531. 
McDowell  V.    Bank  of   Willmington, 
3266. 

V.  Bank,  1708(f. 

V.  Goldsmith,  728. 
McDuffie  V.  Dame,  1436. 
McEldcry  v.  Chapman,  262. 
McElroy  v.  Albany  Sav.  Bank,  16126. 
McElvain  v.  Mudd,  127,  172,  173. 
McElwee  v.  Collins,  764. 

V.  Met.  Lumber  Co.,  1221. 
McElwee  Mfg.  Co.  v.  Trowbridge,  725a, 

782. 
McEowen  v.  Scott,  509. 
McEvers  v.  Mason,  503,  550,  552. 
McEwan  v.  Smith,  17126. 
McEwer  v.  Kirtland,  996. 
McEwen  v.  Gordon,  1390. 
McFall  V.  Murray,  85, 1578. 
McFarland  v.  Pico,  590a,  963,983, 1212. 

V.  Sikes,  63,  68a. 
McFarlane  v.  York,  156. 
McGahan  &  Co.  v.  Lockett,  21,  747. 
McGahey  v.  Commonwealth,  448. 
McGammon  v.  Shantz,  775. 
McGarry  et  al.  v.  Nicklin,  868,  922. 
McGavock  v.  Omaha  Nat.  Bank,  1321. 

V.  Piuyear,  200. 
McGee  v.  Connor,  713a. 

V.  Prouty,  1336. 


CXXll 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


McGee  V.  Riddlesgarber,  748a. 
McGeorge  v.  Chapman,  1115. 
McGhee  v.  National  Bank,  1785. 
McGill  V.  McGill,  3266. 

V.  Young,  815. 
McGlynn  v.  Scott,  183. 
McGoonw.  Shirk,  1247. 
McGough  V.  Jamison,  1707a. 
McGovern  v.  Hosenback,  125. 
McGowan  v.  Collins,  74. 
McGowen  v.  West,  39. 
McGrade  v.  German  Sav.  Inst.,  1637. 
McGrath  v.  Barnes,  80,  182. 

V.  Clark,  142,  1385,  1406,  1408. 
McGraw  v.  Gentry,  112. 

V.  Union  Trust  Co.,  74,  1437. 
McGregor  v.  Bishop,  201. 
McGregoryt;.  McGregory,  1185. 
McGruder  v.  Bank  of  Washington,  571, 

635,  654a,  1145,  1146. 
McGue  V.  Rommel,  203. 
McGuffin  V.  Coyle  &  Guss,  99,  196. 
McGuiness  v.  Kyle,  156. 
McGuire  v.  Allen,  720a,  721. 
V.  Bidwell,  1260. 
V.  Bosworth,  7136. 
V.  Gadsby,  1260,  1266. 
McGuirk  v.  Cummings,  90a. 
McHay  v.  Peterson,  812. 
McHenry  v.  Duffield,  307. 
V.  Hazard,  727. 
V.  Ridgely,  687. 
McHugh  V.  County  of  Schuylkill,  1352a, 

13526. 
Mclntire  v.  Oliver,  374. 
V.  Preston,  384,  385. 
V.  Yates,  184,  834. 
Mcintosh  V.  Haydon,  672,  1379. 
V.  Lytle,  102,  1571,  1571a. 
V.  Ransom,  1233. 
V.  Tyler,   1623. 
Mcintosh  &  Co.  V.  Farmers'  &  Traders' 

Nat.  Bank,  1743. 
Mclntyre  v.  Insurance  Co.,  643. 
V.  Kennedy,  1260. 
V.  Moore,    1338. 
McKany  v.  McNabb,  1317,  13176. 
McKay  v.  H.  A.  Hall  &  Co.,  1437. 
McKean  v.  Cook,  1227. 
McKee  v.  Vernon  Co.,  1492a. 

V.  Whitworth,    1339. 
McKeen  v.  Bank,    1654a. 
McKenna  v.  Kirkwood,  834. 
McKenney  v.  Bowie,  356. 
McKenny,  v.  Peters,    262. 

V.  Waller,   1311. 
McKenzie  v.  British  Linen  Co.,  1353. 
V.  Durant,  1209. 
V.  Hunt,  1437. 
V.  Scott,  314. 


McKenzie  v.  Wimberley,  710. 
McKeown  v.  Lacey,  241. 
McKesson  v.  Stanberry,  815. 
McKewer  v.  Kirtland,  611, 996. 
McKim  V.  King,  1505. 
McKinnell  v.  Robinson,  200. 
McKinney  v.  Bradbury,  362. 
V,  Crawford,  611,  996. 
V.  Hopwood,  249. 
V.  Whipple,  646. 
McKinnon  v.  Boardman,  1752. 
McKinster  v.  Bank  of  Utica,  327. 
McKinzie  v.  British  Linen  Co.,  1352a. 
McKleroy  v.  Southern  Bank  of  Ky., 

1362. 
McKnight  v.  Parsons,  776,  7796,  7956, 

819. 
McLachlan  v.  Evans,  1687. 
McLain  v.  Lohr,  725a. 
McLanahan  v.  Chamberlain,  185. 
McLane  v.  Sacramento,  etc.,  R.  Co., 

1506. 
McLaren  v.  Cochrain,  815. 
V.  Hall,  1260. 

V.    Watson's    Exrs.,    1774,    1775, 
1777. 
McLaughlin  v.  Ardmore  Loan,  etc.,  Co., 
197. 
V.  Braddy,  32,  32a,  694,  769a. 
McLean  v.  Bryer,  783. 
V.  Fleming,  1733. 
V.  Hertzog,  1482. 
V.  Nichlen,  88. 
V.  Ryan,  1056. 
McLemore  v.  Powell,  1316. 
McLeod  V.  Despain,  271, 1230. 
V.  Evans,  336,  340e. 
V.  Snyder,  1186a. 
McLin  V.  Harvey,  1340. 
McLughan  v.  Bovard,  1262,  1267. 
McMahon  v.  German-American  Nat. 
Bank,  1227,  1230. 
V.  Newton  Sav.  Bank,  246. 
McMann  v.  Walker,  808. 
McMarchey  v.  Robinson,  926. 
McMasters  v.  Reed,  382. 
McMean  v.  Little,  95,  1085. 
McMeekin  v.  Southern  Ry.  Co.,  1731. 
McMenomy  v.  Ferrers,  16a,  21. 
McMichau's  Estate,  In  re,  1227- 
McMicken  v.  Beauchamp,  1418. 

V.  Safford,  164. 
McMillan  v.  Hefferlin,  1376. 

V.  McNeil,  875. 
McMillen  v.  County  Judge,  1535, 1560. 
McMinn  v.  Richmond,  225. 
McMonigal  v.  Brown,  605,  1106. 
McMoran  v.  Lange,  7076. 

V.  Murphy,  1266. 
McMuUen  v.  Rafferty,  709,  1215. 


Table  of  cases 


CXXlll 


References  are  to  paragraphs  marked  § 


McMurchey  v.  Robinson,  624. 
McMurray  v.  Sisters  of  Charity  of  St. 

Elizabeth,  513. 
McMurtie  v.  Jones,  1019. 
McMurtrey  v.  Sparks,  1373. 
McNair  v.  Gilbert,  1472. 

V.  Moore,  571,  639,  1310. 
McNairy  v.  Bell,  643. 
McNamara  v.  Coudon,  205. 

V.  Gargett,  166,  204,  789. 

V.  Jose,  761,  777. 

V.  McDonald,  26. 
McNamee  v.  Carpenter,  1183a,  1191. 
McNaught  V.  McClaughry,  85. 
McNeal  v.  Wyatt,  995a. 
McNealy  v.  Gregory,  172,  173. 
McNeel  v.  Smith,  202. 
McNeelly  v.  Ford,  317. 
McNeil  V.  McCamley,  1260. 

V.  Shober,  etc.,  Co.,  415. 

V.  Tenth  Nat,  Bank,  1708,  1708f . 
McNeilage  v.  Holloway,  254,  1184. 
McNeill  V.  Bay  Springs  Bank,  177,  203. 
McNeilly  v.  Patchin,  1340. 
McNight  V.  Kinsley,  832. 
McNinch  v.  Northwest  Thresher  Co., 

81a. 
McNisch  V.  Ramsey,  49. 
McNulta  V.  West  Chicago  Park  Com- 
mission, 1612a. 
McPeters  v.  Blankinship,  427. 

V.  English,    81a. 

V.  Philips,  1454. 
McPhee  &  IMcGinnity  v.  Fowler,  23, 

551. 
McPherson  v.  Bondreau,  824,  827. 

V.  Weston,  718,  722,  1192. 
McPhilips  V.  Jones,  713e. 
McRae  v.  Rhodes,  1074. 
McShan  v.  Watlington,  1181a. 
McSherry  v.  Brooks,  724a. 
McSparran  v.  Neely,  85,  214,  775. 
McTighe  v.  McKee,  204. 
McVaughters  v.  Elder,  261. 
McVean  v.  Scoot,  1387,  1388. 
McVeigh  v.  Allen,  767o,  1032. 

V.  Bank  of  the  Old  Dominion,  90a, 
218,  1048,  1060,  1062,  1070, 
1085. 

V.  Howard,  88. 
McVey  v.  Cantrell,  248. 
McWhirt  v.  McKee,  721. 
Meacham  v.  Pinson,  62. 
Meacher  v.  Fort,  538,  1354,  1356. 
Meachum  v.  Dow,  196. 
Mead  v.  Caswell,  1590. 
V.  Engs,  331,  992. 
V.  Keller,  382. 

t;.  Merchants  Bank,  134,  390,  391, 
1610a. 


Mead  v.  Munson,  850. 

V.   National     Bank    of    Pawling, 
158. 

V.  Small,  1242. 

V.  Young,  692,  1345. 
Meade  v.  Sandidge,  789,  789a,  1410a. 
Meader  v.  Scott,  1428. 
Meadow  v.  Bird,  188. 
Meadowcraft   et   al.   v.   Walsh,    698d, 

1191,  1192b. 
Means  v.  Anderson,  847,  1318. 

V.  Kendall,  1480. 

V.  Subers,  203. 

V.  Swormtedt,  408. 
Mears  v.  Graham,  86,  403,  405. 

V.  Waples,  1731,  1734c. 
Mechanics'  Assn.  v.  Furguson,  824. 
Mechanics'  &  Farmers'  Sav.  Bank  v. 

Katterjohn,  27,  9956,  1147a,  1164. 
Mechanics  &  T.  Nat.  Bank  v.  Crow, 

831c. 
Mechanics'  Bank  v.  Bank  of  Columbia, 
299,  398,  419. 

V.  Chardavoyne,   832. 

V.  Earp,  312,  344,  345. 

V.  Griswold,  1132,  1170. 

V.  Huston,  1289a. 

V.  Livingston,  3696,  490. 

V.  Merchants     Bank,     598,     658, 
1708d. 

V.  N.  Y.  &  N.  H.  Co.,  273,  1503, 
1708. 

V.  Schaumburg,  282. 

V.  Straiton,  99,  1571. 

V.  Townsend,  862. 

V.  Valley  Packing  Co.,  698,  698c, 
698d. 

I'.  Yager,  4976. 
Mechanics'   Banking  Assoc,  v.  Place, 

1017. 
Mechanics',  etc..  Bank  v.  Barnett,  832a. 

V.  Crow,  183a,  814. 

V.  Farmers,  etc..  Bank,  1731. 

V.  Schuyler,  83,  630. 
Mechanics'  Nat.  Bank  v.  National  Fer- 
tilizer Co.,  971. 
Meckel  v.  State  Sav.  Inst.,  1421. 
Mecorney  v.  Stanley,  715. 
Medbury  v.  Watrous,  229. 
Meggadow  v.  Holt,  1170. 
Medlin  v.  Buford,  834a. 

V.  Platte,  etc.,  1373a. 
Medlock  v.  Wood,  999a. 
Medway  Cotton  Mfg.  Co.  v.  Adams, 

399. 
Mee  V.  Carlson,  775,  795a,  815. 
Meech  v.  Smith,  1763. 
Meeker  v  Jackson,  1478,  1480. 

V.  Shanks,  793,  1190. 
Meeks  v,  Meeks,  203. 


CXXIV 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Meggadow  v.  Holt,  1170. 
Meggett  V.  Baum,  1335a. 
Megginson  v.  Harper,  99. 
Meggotf.  Mills,  1252, 
Megrath  v.  Gilmore,  1623. 
Megowan  v.  Peterson,  271. 
Mehlberg  v.  Fisher,  1260,  1276. 
Mehlinger  v.  Harriman,  189. 
Meigs  V.  Bromley,  189. 
Meir  &  Co.  v.  Bank,  360,  361. 
Meise  v.  Doscher,  142,  713e,  1385,  1408. 
Meiswinkler  v.  Jung,  1317. 
Meitzlor  v.  Todd,  374,  1215. 
Melanotte  v.  Teasdale,  40. 
Meldrum  v.  Henderson,  20,  1612a. 
Mclendy  v.  Keen,  834. 
Melick  V.  First  Nat.  Bank,  1309. 
Melledge  v.  Boston  Iron  Co.,  399. 
Mellen  v.  Moore,  403,  404. 
Mellersh  v.  Rippen,  978,  983. 
Mellish  V.  Rawdon,  465,  473,  612. 

V.  Simeon,  484,  1448. 
Melton  V.  Brown,  713a. 

V.  Gibson,  99. 

V.  Pensacola  Bank  &  Trust  Co., 
130,    145,    769a,    812,    831o, 
II8I0,  1378. 
Meltzer  v.  Doll,  183. 
Melun  V.  Fitzjames,  886. 
Melvill  V.  Glendinning,  1331. 

V.  Hayden,   1770. 
Memphis  Bethel  v.  Bank,  832a,  1496, 

1503. 
Menagh  v.  Chandler,  1332. 
Menard  v.  Scudder,  1770a. 
Menaska  v.  Hazard,  1523a,  1537. 
Mendenhall  v.  Davis,  717. 

V.  Stewart,   1799. 

V.  Ulrich,  815. 
Mendez  v.  Carreroon,  576,  1229,  1230a. 
Mendizabel  v.  Machado,  509. 
Menifee  v.  Clark,  1319. 
Menkins  v.  Heringhi,  252,  254. 
Mentross  v.  Clark,  790. 
Mentsw.  Booth,  1221. 
Menzel  v.  Primm,  174. 
Menzie  v.  Smith,  573. 
Mercantile  Bank  v.  Boggs,  831a. 

V.  Busby,  9956. 

V.  Cox,  363. 

V.  McCarthy,  1017. 
Mercantile  Guaranty  Co.  v.  Hilton,  814. 
Mercer  v.  Lancaster,  1022. 
Mercer  County  v.  Hacket,  10,  389, 1495, 
1496,  1500,  1501,  1530,  1537, 
1541. 

y.  Hubbard,     1493,     1496,     1511, 
1512a,  1545,  1550. 

V.  Life  &  Tnast  Co.,  63. 

V.  Pittsburg,  etc.,  R.  Co.,  1535. 


Merchant  Loan  &  Trust  Co.  v.  Welter, 

782,  815. 
Merchants,  etc.,  Co.  v.  Cornforth,  1741. 
Merchants' &  Farmers'  Bank  v,  Cleland, 
177. 

V.  Johnston,  357. 

t'.  Wexson,   831c. 
Merchants'  &  Farmers'  Cotton  Oil  Co. 

V.  Lufkin  Nat.  Bank,  795c. 
Merchants'  &  Mfrs.  Bank  v.  Cumings, 

833. 
Merchants'    &    Manufacturers'    Nat. 

Bank  v.  Ohio  Val.  F.  Co.,  753a,  777, 

789. 
Merchants  &  Mech.  Sav.  Bank  v.  Fraxe, 

61. 
Merchants  &  Planters'  Bank  v.  Meyer, 

1572. 
Merchants'  &  P.  Nat.  Bank  v.  Trustees, 

812,  815,  1468a. 
Merchants'  Bank  v.  Bank  of  Columbia, 
392. 

1;.  Bank  of  Commonwealth,  1622a. 

V.  Birch,  1001. 

V.  Brown,  1400. 

V.  Busby,  714. 

V.  Bussell,  1322,  1324. 

V.  Central  Bank,  301,  392. 

V.  Eagle  Bank,  1622a. 

V.  Easley,  1084. 

V.  Elderkin,  656. 

V.  Evans,  643. 

V.  Goodman,  334. 

V.  Griswold,  278,  551. 

V.  Marine  Bank,  395. 

V.  McClelland,  184,  775,  780. 

V.  McKay,  1311. 

V.  McNutt,  1005. 

V.  Spicer,  74,  688a,  1567,  1586, 
1587,  1590,  1652. 

V.  Stafford  Bank,  329,  347. 

V.  State  Bank,  388,  389,  390,  391, 
392,  412,  1537,  1572,  1601a, 
1602,  1603,  1610. 

V.  Union  R.  Co.,  1747a. 
Merchants'  Bank  of  Canada  v.  Brown, 

867,  879,  1399. 
Merchants'    Exch.    Bank   v.   Fuldner, 
1435a. 

V.  Luckow,  68a,  815. 
Merchants  Ins.  Co.  v.  Hauck,  1319. 
Merchants'  Nat.  Bank  v.  Abernathy, 
834. 

V.  Bales,  1750a. 

V.  Baltimore  C.  &  R.  Steamboat 
Co.,  1731,  1740a. 

V.  Brisch,  164,  787. 

V.  Citizens  Gas  Light  Co.,  388. 

V.  Citizens'  St.  Bank,  1769. 

V.  Clark,  284,  802. 


TABLE    OF   CASES 


CXXV 


References  are  to  paragraphs  marked 


Merchants'  Nat.  Bank  v.  Comstock, 
177,  793a. 

V.  Eyre,  1312. 

V.  Goodman,  654a. 

V.  Greggs,  664. 

V.  Hanson,  775,  795a. 

V.  Lovitt,  802. 

V.  McAnulty,  1327,  1340. 

V.  Murphy,  1325. 

t;.  Nat.    Bank    of    the    Common- 
wealth,  1226. 

V.  New  Brunswick  Sav.  Inst.,  1652. 

V.  Norris,  789. 

V.  Prudential  Ins.  Co.,  1225. 

V.  Ritzinger,  1567,  1572. 

V.  Robinson  &  Co.,  326&. 

V.  Samuel,   1623. 

V.  School  District,  1612a. 

V.  Sevier,  62. 

V.  Stafford  Nat.  Bank,  327. 

V.  Tracy,  205,  802. 

V.  Wadsworth,  815. 
Merchants'  Nat.  Bank  of  Baltimore  v. 

Roxbury  Distilling  Co.,  62. 
Merchants  Nat.  Bank  of  Santa  Monica 

V.  Bentel,  88,  635,  644,  970,  972, 

1754. 
Merchants  Nat.  Bank  of  Savannah  v. 

Demers,  833. 
Merchants'  Sav.  Bank  v.  Moore,  688c. 
Merchants  State  Bank  v.  State  Bank  of 

Philips,  1069,  1277a. 
Merchants  Trust  Co.  v.  Bentel,  1203. 
Meriam  v.  Rundlett,  800a. 
Merick  v.  Boury,  1260. 
Meridian  Nat.  Bank  of  Indianapolis  v. 

First    Nat.    Bank   of   Shelby ville, 

136,  138.  1345,  1607a,  1608,  1652. 
Merill  v.  Anderson,  1643. 
Merillat  v.  Plummer,  193. 
Meritt  v.  Bagwell,  849a. 
Merle  v.  Wells,  1772. 
Merrell  v.  Duncan,  781a. 

V.  Springer,  742. 
Merriam  v.  Moody,  1527. 

V.  Rockwood,  854. 

V.  Solcott,  284,  731a,  7316,  740a, 
1369. 
Merrick  v.  Bourv,  1268,  1410a. 

V.  Butler,  724a. 
Merrill  v.  Carr,  196. 

V.  Duncan,  775. 

V.  First  Nat.  Bank,  793a. 

V.  Fleming,  196a. 

V.  Hole,  7956,  796. 

V.  Monticello,  422. 

V.  Muzzy,  62. 

V.  Peaslee,  196. 

V.  Sypert,  81c,  418. 

V.  Thome,  81c. 


Merrill  v.  Timbrell,  1490. 
Merriman  v.  Barker,  1330. 

V.  Miles,  Ext.,  1312. 
Merriman  &  Co.  v.  Knox,  807. 
Merritt  v.  Bagwell,  849a. 

V.  Benton,  933. 

V.  Dewey,  1403,  1421. 

V.  Duncan,  509,  812. 

V.  Gate  City  Nat.  Bank,  1587, 1787. 

V.  Jackson,  612. 

V.  Todd,  609,  1702a. 

V.  Woodbury,  972. 
Mersick  v.  Alderman,  726,  832a,  1181a. 
Mersman  v.  Werges,  1373,  1389. 
Mertens  v.  Winnington,  526,  1254. 
Merz  V.  Kaiser,  576. 
Meslin's  Exrs.  v.  Hiltt,  1290. 
Messenger  v.  Southey,  978,  983. 

V.  Vaughan,  67a,  1760. 
Metcalf  V.  Douglas,  1590. 

V.  Williams,  305. 
Metcalfe  v.  Richardson,  972,  985,  1158, 

1160. 
Metropolis  v.  Jones,  395. 
Metropolitan   Bank  v.   Muller  et  al., 
710,  1335a. 

V.  Taylor,  249. 
Metropolitan    Nat,    Bank    v.    Jones, 
1601a,  1604. 

V.  Mer.  Nat.  Bank,  1661. 

V.  Loyd,  336,  1621. 
Metropolitan  Sav.  Bank  v.  Murphy, 

24a. 
Metzerott  v.  Ward,  1272. 
Metzger  v.  Carr,  1260. 

i;.  Hubbard,  1769. 

V.  Waddell,  597. 
Meuer   v.  Phoenix   Nat.   Bank,    1604, 

1652. 
Meyer  v.  Brown,  1550. 

V.  Chas.  Rosenheim,  1225. 

V.  City  of  Muscatine,  1500,  1523, 
1532,  1537,  1540,  1547. 

V.  Doherty,  161. 

V.  Foster,    663,    672.    769a,    1038, 
1181a,  1191. 

V.  Graeber,  156. 

V.  Hasworth,  240. 

V.  Hibscher,  639,  640,  709,   1180. 

V.  Huneke,  1410a,  1411. 

V.  Koehring,  181. 

V.  Lovdal,  775,  819. 

V.  Peck,  1729,  1729a. 

V.  Richards,  734a. 

V.  Wegener,  319. 

V.  Weil,  73. 
Meyer  &  Co.  v.  Decroix,  517. 
Meyers  v.  Byington,  1289. 

V.  Huggins,  373. 

V.  Standart,  515. 


CXXVl 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Meyerstein  v.  Barber,  1731a,  1737. 
Meyron  v.  Abel,  370,  373. 
Merz  V.  Kaiser,  576,  1017,  1196. 
Michalitschke  Bros.  v.  Wells,  Fargo  & 

Co.,  1741. 
Michigan  Bank  v.  Eldred,   104,  367, 

368,  369,  843. 
Michigan  Ins.  Co.  v.  Leavenworth,  83, 

142,  267,  604. 
Michigan  Mut.  Life  Ins.  Co.  v.  Custer, 
1316. 

V.  Klatt,  1181a. 
Michigan  State  Bank  v.  Leavenworth, 
562,  831,  1329. 

V.  Pecks,  501. 
Mickles  v.  Colvin,  187. 
Micklewaitt  v.  Noell,  854. 
Middaugh  v.  ElHot,  1373. 

V.  Wilson,  156. 
Middleborough  Nat.  Bank  v.  Cole,  241. 
Middleport  v.  Etna  Life  Ins.  Co.,  1538. 
Middlesex  v.  Thomas,  1260,  1276. 
Middleton  v.  Alleghany  County,  1527a. 

V.  Griffith,  694,  1093,  1181a,  1196, 
1198,  1200. 

V.  McCarter,  703a. 

V.  Pollock,  1429. 
Middleton  Bank  v.  Morris,  1586,  1592. 
Midland    Nat.    Bank    v.    Brightwell, 
Assignee,  326,  233,  334,  335. 

V.  Missouri  Pacific  R.  Co.,  1730, 
1731,  1745a. 

V.  Roll,  mSd. 

V.  Schoen,  366,  367,  1300a. 
Midland   Steel   Co.  v.  Citizens'   Nat. 

Bank,  769a,  879. 
Midwood  Park  Co.  v.  Baker,  819. 
Miers  v.  Brown,  972,  985,  1175. 
Milan  v.  Tenn.  Central  Railroad,  1532. 
Milbank-Scampton     Milling     Co.     v. 

Packwood,  3706. 
Milberg  v.  Stoner,  1393. 
Milburn  v.  Guyther,  1421. 
Milenoy  v.  Keen,  748a. 
Miles  V.  Hall,  1019. 

V.  Williams,  681. 
Milius  V.  Kauffmann,  187,  831a. 
Milks  V.  Rich,  739a,  1763. 
Millard  v.  Barton,  779,  850. 
Millaudon  v.  Arnons,  1305. 
Millbank  v.  De  Riesthal,  389,  394. 
Miller  v.  Austen,  1703. 

V.  Biddel,  48. 

V.  Board  of  Education,  319. 

V.  Boyer,  815. 

V.  Boykin,  824,  831a. 

V.  Browning,  1326. 

V.  Burgess,  1219. 

V.  Butler,  497. 

V.  Cavanaugh,  1458. 


Miller  v.  Central  University  of  Ky.,  203. 
V.  Clendenin,  74. 
V.  Consohdated  Bank,  369. 
V.  Delamater,  252,  681. 
V.  Dill,  1219. 
V.  Finley,  214,  797,  1389. 
V.  Fletcher,  856. 
V.  Gaston.  1782. 
V.  Gilleland,  1377. 
V.  Gunderson,  80. 
V.  Hackley,  9,  960,  961, 1021, 1054, 

1055,  1056,  1110,  1163. 
V.  Hannibal  &  St.  J.  R.  Co.,  1729. 
V.  Helm,  265. 
V.  House,  294. 
V.  Hughes,  368. 
V.  Jeffrees,  24b. 
V.  Johnson,  1227. 
V.  Knight,  1328. 
V.  Kyle,  62a. 
V.  Larmon,  125. 

V.  Lamed,  726,  790,  793a,  834. 
V.  Lewiston,  Nat.  Bank,  94,  1786. 
V.  Lumsden,  1260,  1268,  1275. 
V.  McCan,  1317. 
V.  Miller,  24. 
V.  Morrow,  125. 
V.  Neihaus,  504. 
V.  Ord,  748. 
V.  Palmer,  117. 
V.  Poague,  50. 
V.  Pollock,  827. 
V.  Race,    771,    1503,    1672,    1674, 

1687. 
V.  Ray,  1520. 
V.  Reed,  1390. 
V.  Reigne,  261. 
V.  Reynolds,  307,  392a. 
V.  Ridgely,  714,  714o. 
V.  Roach,  400,  408. 
V.  Rutland,  etc.,  R.  Co.,  1491a. 
V.  Slade,  1411. 
V.  State,  1654. 
V.  Stem,  1319. 
V.  Swanton,  1290. 
V.  The  Bank,  831a. 
V.  The  Chicago  &  Alton  R.  Co., 

1733. 
V.  The    Farmers'    &    Mechanics' 

Bank  of  Carroll  County,  831a. 
v.  Thompson,  129,  481,  482. 
V.  Tiffany,  922,  923,  924. 
V.  TreviUian,  1250. 
V.  Weeks,  130. 

V.  Western  College  of  Toledo,  43. 
V.  White,  81. 
V.  Williamson,  265. 
V.  Wilson,  1221. 
Millhiser  Mfg.  Co.  v.  Galleygo  Mills 
Co.,  1713a. 


TABLE    OF    CASES 


CXXVU 


References  are  to  paragraphs  marked  § 


Milliagan  v.  Pollard,  209. 
Milliken  v.  Brown,  1290. 
V.  Chalmers,  7316. 
V.  Chapman,  737. 
Milling  &  Export  Co.  v.  Eastern  Mill- 
ing &  Export  Co.,  1643. 
Million  V.  Ohmsberg,  196. 
Mills  V.  Bank  of  U.  S.,  615,  622,  623, 
629,  661,  662,  979,  979o,  983, 
V.  Barber,  177,  814. 
V.  Barney,  1702,  1703. 
V.  Beard,  1098. 
V.  Charleston,  1556,  1563. 
V.  Davis,  1215. 
V.  Fowlkes,  1252. 
V.  Gleason,  1522,  1529,  1530. 
V.  Hyde,  1227. 
V.  Jefferson,  1514. 
V.  Kuykendalc,  50. 
V.  McMuUen,  1646. 
t;.  Mills,  188. 
V.  Porter,  781a. 
Millspaugh  v.  Putnam,  24a 
V.  Rense,  1106. 
V.  Stewart,  800a. 

V.  Town  of  Jefiferson,  1500,  1513, 
1514. 
Milmo  Nat.  Bank  v.  Cobbs,  161,  190, 
455,  503,  504,  532,  534,  597,  7796, 
812,  1203,  1601a. 
Miln  V.  Prest,  559. 
Milne  v.  Graham,  903. 
Milner  v.  Gray,  96. 
Milnes  v.  Dawson,  181. 

V.  Duncan,  1226. 
Milton  V.  De  Yamper,  713e. 
Milwaukee  Mason  &  Builder  Assn.  v. 

Niezerowski,  196. 
Milwaukee  Trust  Co.  v.  Van  Valken- 

burgh,  393,  573. 
Mims  V.  Macon,  etc.,  R.  Co.,  1281. 

V.  West,  800a. 
Minard  v.  Mead,  253. 
IVIindlin  i'.  Appelbaum,  780,  832. 
Minell  v.  Read,  800. 
Miner  v.  Bewick,  1192a. 
V.  Hamilton,  81a. 
V.  Ho^-t,  1437. 
V.  Vedder,  427. 
Mineral  Point  R.  Co.  v.  Barron,  884, 

890. 
Miners'  &  Merchants'  Bank  v.  Rogers, 

1317,  1322. 
Minet  v.  Gibson,  136. 
Minmg  Co.  v.  Bank,  728,  775. 
Minis  V.  Brook  &  Co.,  371. 
Minneapolis  Brewing  Co.  v.  Grathen, 

193. 
Minneapolis  Threshing  Mach.  Co.  v. 
Gib^th,  795a. 


Minor  v.  Mechanics  Bank  of  Alexander, 
304,  687. 
V.  Minor,  1432. 
Minot  V.  Curtis,  399. 

V.  Russ,  1604. 
Minter  v.  Chicago,  etc.,  Ry.  Co.,  1741. 
Minter  Bros.  v.  South  Kansas  Ry.  Co., 

1733a. 
Minturn  v.  Fisher,   1103,   1106,   1574, 

1576,  1634a. 
Miranda  v.  City  Bank,  1106. 
Miser  v.  Trooinger,  999a. 

V.  Trovinger,  1074. 
Misher  v.  Carpenter,  672. 
Missouri,  etc.,  Trust  Co.  v.  Krumseig, 

917. 
Missouri,  K.  &  T.  Ry.  Co.,  v.  Sealy, 

1733a. 
Missouri-Lincoln  Trust  Co.  v.  Long,  43. 
Missouri  Loan  Bank  v.  Garner,  1289. 
Missouri  Pac.  R.  Co.  v.  Atkinson,  68, 
156. 
V.  Councilman,  22. 
V.  McLiney,  1731. 
Mitchell  V.  Baldwin,  819. 

V.  Baring,  508,  523,  651,  652,  935. 
V.  Burlington,  1523,  1525. 
V.  Byrne,  63a. 
V.  Catchings,  783. 
V.  Cockburn,  200. 
V.  Cross,  1039,  1041,  1045. 
V.  Culver,  1376. 
«;.  Degrand,  454,  589,  619,  626. 
I'.  Eaton,  1707. 
t;.  Friedley,  1429. 
V.  Hewitt,  56. 
V.  Mitchell,  125. 
V.  Ostrom,  370. 
V.  Reed,  795a,  1375,  1378. 
V.  Rome  R.  Co.,  39,  386. 
V.  St.  Mary,  573. 
V.  Sellman,  1428. 
V.  Tomlinson,  815,  849. 
V.  Whaley,  369. 
V.  Wheeler,  1327. 
Mitchinson  v.  Hewson,  258. 
Mitford  V.  Walcot,  491,  529,  547,  724. 
Mittnacht  v.  Bache,  1612a. 
Mix  V.  Madison  Ins.  Co.,  924. 

V.  Ely,  1282. 
Mize  V.  Nat.  Bank,  24a,  829a,  832. 
Mizell  Live  Stock  Co.  v.  Banks,  81c. 
Moakley  v.  Riggs,  1769. 
Mobile  Bank  v.  Brown,  56. 
Mobile  Sav.  Bank  v.  McDonnell,  89, 

1215. 
Mobley  v.  Clark,  424,  1082. 

V.  Ryan,  728. 
Moddiev.  Breiland,  1421. 
Moers  v.  City  of  Reading,  1523. 


CXXVlll 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Moffat  V.  Edwards,  41. 
V.  McKissick,  361. 
V.  Van  Milligan,  354. 
Moffatt  V.  Blake,  157. 
Moffett  V.  Bickle,  674. 
Moffit  V.  Roche,  356. 
Mogadara  v.  Holt,  1170. 
Moge  V.  Herndon,  1416. 
Moggridge  v.  Jones,  203. 
Mohawk    Bank    v.    Brodcrick,    1578, 
1594,  1607,  1651. 
V.  Corey,  790,  793. 
Mohawk  Nat.  Bank  v.  Van  Slyck,  364. 
Mohawk  Nat.  Bank  of  Schenectady  v. 

Schenectady,  UOSd. 
Mohlman  v.  McKane,  184,  1031. 
Mohr  V.  Rickgauer,  182. 
Moies  V.  Bird,  85,  707,  1760.  1765. 

V.  Knapp,  92. 
Moise  V.  Chapman,  1689. 
Molbin  V.  Southard,  685. 
Moline,  Ex  parte,  1036,  1235. 
Molloy  V.   Delves,   4976. 
MoLson's  Bank  v.  Howard,  496. 
Molton  V.  Camroux,  210,  214. 
Monett  State  Bank  v.  Eubanks,  824, 
Money  v.  Ricketts,  782. 
Monongahela  Nat.  Bank  v.  Harmony 

Land  Co.,  394. 
Monroe  v.  Bonanno,  1226. 

V.  Cooper,  369,  816,  819. 

V.  Fohl,  1252. 

V.  Hoff,  737,  1265. 

V.  Martin,  156. 

V.  Whitehouse,  1431. 
Monroe  Mercantile  Co.  v.  Arnold,  387. 
Monseaux  v.  Urquhart,  222. 
Monson  v.  Drakely,  94,  1387. 
Montague  v.  Perkins,  143,  490,  517. 
Montana  Coal  &  Coke  Co.  v.  Cincin- 
nati Coal  &  Coke  Co.,  879. 
Montclair  v.  Ramsdell,  803,  804. 
Montelius  v.  Charles,  472,  605. 
Montford  v.  American  Guano  Co.,  205. 
Montgomery  v.  Budge,  918. 

V.  Elliott,  647. 

V.  Forbes,  399a. 

V.  Grenier,  183. 

V.  Hunt,  156. 

V.  Kellogg,  1785,  1785&,  1786. 

V.  Page,  156,  175. 

V.  Sayre,  1310,  1311. 

V.  Schenck,  713e. 

V.  Tutt,  643. 

V.  Whitbeck,  234. 
Montgomery  County  v.  Auchley,  67a. 
Montgomery  County  Bank  v.  Albany 
City  Bank,  341, 344,  345,  349a, 
492. 

t;.  Marsh,  1022,  1025. 


Montgomery  Nat.  Bank  v.  Armstrong, 

336. 
Montgomery  R.  Co.  v.  Trebles,  997, 

1238,  1242. 
Montjoy  v.  Delta  Bank,  196. 
Montpelier  Bank  v.  Dixon,  1311. 
Montrose  Sav.  Bank  v.  Claussen,  775, 

779b. 
Montross  v.  Boyd,  1300. 
Monument  Nat .  Bank  v.  Globe  Works, 

386. 
Moodalay  v.  East  India  Co.,  1527a. 
Moodie  v.  Morrall,  590,  640,  1031,  1180. 
Moody  V.  Findley,  703. 

V.  Mack,  1073,  1580. 

V.  Nat.  Bank,  mSd. 

V.  Rowell,  1219. 

V.  Threlkeld,  99,  490. 
Moon  V.  Foster,  217,  218. 
Moon  Bros.  Carriage  Co.  v.  Devenish, 

371. 
Moore  v.  Baird,  757,  767. 

V.  Barthrop,  1623. 

V.  Candell,  181. 

V.  Clopton,  867. 

V.  Coffield,  1123. 

V.  Cross,  713e. 

V.  Davis,  16a. 

V.  Denslow,  683. 

V.  Durnan,  1478,  1480. 

V.  Fall,  1482,  1484,  1485. 

V.  First  Nat.  Bank  of  Iowa  City, 
995. 

V.  Fu-st  Nat.  Bank  of  Ouray,  1242. 

V.  Gould,  161. 

V.  Greenhow,  448. 

V.  Hershey,  210,  213. 

V.  Holloman,  1209. 

V.  Holt,  1755. 

V.  Hubbard,  185,  664a. 

V.  Hutchinson,   1385,   1411. 

V.  Lackman,  370. 

V.  Louisiana  Nat.  Bank,  1734b. 

V.  Macon  Sav.  Bank,  1317a,  1397. 

V.  McClure,  305. 

V.  Metropolitan  Nat.  Bank,  1708^. 

V.  Moore,    24a,    122,    125,    1215, 
1708ff. 

V.  Pollock,  335. 

V.  Quu-k,  122,  125. 

V.  Reading,  1317a. 

V.  Robinson,  859,  1750a. 

V.  Ryder,  758,  791,  794,  831c. 

V.  Staser,  62,  62a. 

V.  Thompson,  205. 

V.  Vogel,  202. 

V.  Waitt,  658. 

V.  Wallace,  1770a. 

V.  Ward,  794. 

V.  Warren,  1262, 


TABLE    OF   CASES 


CXXIX 


References  are  to  paragraphs  marked  § 


Moore  v.  Whithy,  497. 

V.  Williams,  363. 
Moore  &  Tabb  v.  Johnson  County  Sav- 
ings Bank,  663. 
Moorehead  v.  Gilmer,  369. 
Moorman  v.  Bank  of  Alabama,  980. 

V.  Voss,  1339. 

V.  Wood,  717. 
Moose  V.  Marks,  1251,  1252. 
Moran  v.  Abbey,  1223. 
Moran  Bros.  Co.  v.  Wattson,  359. 
Mordecai  v.  Dawkins,  200. 
More  V.  Manning,  698d. 
Morehead  v.  Citizens'  Deposit  Bank, 
1317,  1325,  1335a,  1338. 

V.  Parkersburg    Nat.    Bank,    144, 
1378. 
Morehead  Bkg.  Co.  v.  Morehead,  262. 
Morehouse  &  Wells  Co.  v.  Schwabcr, 

970. 
Moreland's    Adm'r    v.    Citizens'    Sav. 

Bank,  89,  939,  1002. 
Moreland's  Assignee  v.  Citizens'  Sav. 

Bank,  325,  793. 
Morell  V.  Codding,  406. 
Morey  v.  Laird,  1965. 

V.  Wakefield,  608,  783. 
Morford  v.  DavLs,  674. 

V.  Farmers'  Bank,  386. 
Morgan  v.  Bank,  1663. 

V.  Bank  of  Louisville,  1060,  1070, 
1071. 

V.  Bank  of  N.  A.,  1708rf. 

V.  Bean,  724a. 

V.  Cedar  Rapids  Nat.  Bank,  769a. 

V.  Creditors,  1266a. 

V.  Davison,  603. 

V.  Edwards,  54,  54a,  62. 

V.  Jones,  1458a. 

V.  Reintzel,  1478. 

V.  Richardson,  203. 

V.  Thompson,  189,  704,  1342. 

V.  United  States,  441,  604,  605, 
606,  724a,  782,  1500,  1503, 
1505. 

V.  Van  Ingen,  960,  961. 

V.  Wickliffe,   1312. 
Morgner  v.  Bigelow,  724. 
Morlcy  i'.  Boothby,  1764. 

V.  Culverwell,  7816,  1233. 
Mornyer  v.  Cooper,  803. 
Morrell  v.  Cowan,  1770. 
Morrill  v.  Brown,  1672,  1673a. 
Morris  v.  Bacon,  8345. 

V.  Beaumont  Nat.  Bank,  1378. 

V.  Bethell,  1353. 

V.  Birmingham  Nat.  Bank,  1085. 

V.  Brown,  203. 
V.  Butler,  63,  316. 
V.  Cain,  151,  154. 


Morris  v.  Case,  815. 

V.  Cleasley,  314. 

V.  Cude,  1196. 

V.  Edwards,  56. 

V.  Eufaula  Nat.  Bank,  1587,  1590. 

V.  Faurot,  722. 

V.  First  Nat.  Bank,  356. 

V.  Georgia  Loan  Co.,  802. 

V.  Harvey,     1266,     1266a,     1267, 
1300. 

V.  Husson,  1023. 

V.  Lee,  35. 

V.  McMorris,  125. 

V.  Morton,  63,  792. 

V.  Norton,  195a. 

V.  Poillon,  1197. 

V.  Preston,  693. 

V.  Richards,  627. 

V.  Summerii,  330. 

V.  White,  195a,  834. 
Morris  Canal,  etc.,  Co.  v.  Fisher,  1500, 
1503. 

V.  Lewis,  1496,  1517. 
Morris  County  v.  Maddox,  357. 
Morris  County  Brick  Co.  v.  Austin, 

793a. 
Morris-Miller  Co.  v.  Von  Pressentin, 

68a,  1587. 
Morrison  v.  Bailey,  1568,  1569,  1574, 
1576,  1587,  1590,  1600,  1638. 

V.  Buchanan,  463,  492. 

V.  Farmers',  etc..  Bank,  6. 

V.  Garth,  1411. 

t'.  Hart,  188,  775. 

V.  Hartman,  1311. 

V.  Lamson,  21. 

V.  Lovell,  219,  733. 

V.  McCartny,  1587. 

V.  Ombaum,  62a. 

V.  Perry,  370. 

V.  Smith,  1401. 

V.  Taylor,  291. 

V.  Thistle,  249. 
Morrison  Lumber  Co.  v.  Lookout  Mt. 

Co.,  707. 
Morris  Run  Coal  Co.  v.  Barclay  Coal 

Co.,  200. 
Morriss  v.  Harvey,  1260,  1266,  1267, 
1300. 

V.  Walker,  807c. 
Morrow  v.  Whitesides,  258. 
Morse  v.  Chamberlain,  1029. 

V.  Chicago,  etc.,  R.  Co.,  1734a. 

V.  Clayton,  264,  265. 

V.  Green,  299. 

V.  Huntington,  1322. 

V.  Massachusetts      Nat.       Bank, 
1606a. 

V.  Wheeler,  235. 

V.  Woodworth,  1259. 


cxxx 


TABLE   Of   cases 
References  are  to  paragraphs  marked  § 


Mortee  v.  Edwards,  46,  49. 
Mortgage  Trust  Co.  v.  Elliott,   1470. 
Mortimer  v.  Cliambers,  163,  1219. 
Morton  v.  Burn,  827. 
V.  Cammack,   1005. 
V.  Naylor,  16o,  21,  451. 
V.  N.  O.  &  Selma  R.  Co.,  796, 1506. 
V.  Preston,   706. 
V.  Steward,  225. 
V.  Wescott,  1024. 
Moseley  v.  Hanford,  80. 
Mosely,  v.  Graydon,  266. 

V.  Selma  Nat.  Bank,  70. 
Moses  V.  Clark,  695. 
V.  Comstock,   853. 
V.  Ela,  1131. 

V.  Franklin  Bank,  1567, 1600, 1636. 
V.  Lawrence  County  Bank,  1767a. 
V.  McTerlar,  1369. 
j;.  Trice,    205,    1228,    1266,    1478, 
1482. 
Moshannon  Land  Co.  v.  Sloam,  395. 
Mosher  v.  Allen,  1197. 

V.  Indian  School  Dist.,  1542,  1563. 
Moskowitz  V.  Deutsch,  1409. 
Moss  V.  Adams,  1252. 
V.  Averill,  382. 
V.  Livingston,  413. 
V.  Maddux,  1373. 
V.  Oakley,  382,  428. 
V.  Stokeley,  19. 
Mossop  V.  Eadon,  1475, 1479, 1484. 
Mott  V.  Havana  Nat.  Bank,  51a. 

V.  Hicks,  302,  382,  383,  408,  700. 
V.  Rowland,  867. 
Mottram  v.  Heyer,  1731a. 
Moule  V.  Brown,  332,  1592,  1598. 
Moulton  V.  Boston,  1319. 
Moultrie    County    v.    Fairfield,    1524, 
1537. 
V.  Savings  Bank,  1537. 
Mount  V.  Dehaven,  186. 
Mountford  v.  Harper,  1648. 
Mount  Holly  Turnpike  Co.  v.  Ferree, 

1708?. 
Mount  Mansfield  Hotel  Co.  v.  Bailey, 

1458,  1514,  1516. 
Mount  Morris  v.  Gorham,  280,  296. 
Mountstephen  v.  Brooke,  98. 
Mount  Sterling  Nat.  Bank  i;.  Green, 

1572,  1617. 
Mount  Sterling  Turnpike  Co.  v.  Looney, 

395. 
Mount  Vernon  Bank  v.  Holden,  1054. 

V.  Porter,   377. 
Mowat  V.  Brown,  188. 
Mowbray,  Ex  parte,  260. 
Mowrey  v.  Mast,  1478. 
Mox  V.  State  Bank,  901. 
Moxon  V.  Pulling,  689o. 


Moye  V.  Cogdell,  1245. 
Moyer's  Appeal,  1107. 
Moynahan  v.  Hanford,  713a. 
Moyses  v.  Bell,  203,  7956,  805. 
V.  Schendorf,  1316,  1319. 
Mozingo  V.  Ross,  374. 
Mudd  V.  Reeves,  1675. 
Mudge  V.  Bullock,  251,  252. 
Mudgott  V.  Day,  335. 
Mueller,  Matter  of,  1611a. 
Mueller  i'.  Buch,  177. 
Muhling  V.  Sattler,  130. 
Muilman  v.  D'Eguino,  466,  467,  469, 

471,  1037,  1046. 
Muir  V.  Crawford,  1322. 
V.  Demaree,   1388. 
V.  Rand,    1687. 
Muirhead  v.  Kirkpatrick,  1966,  1311. 
Muldon  V.  Whitlock,  1267,  1268,  1300. 
Muldrow  V.  Bald  well,  1396. 

V.  Caldwell,  130,  663. 
Mulhall  Bros.  v.  Berg,  1227. 
Mull  V.  Van  Trees,  186. 
Mullen  V.  Hawkins,  203. 
V.  Jones,   1754. 
V.  Morris,  898,  901,  920,  945. 
MuUer  v.  National  Bank  of  Cortland, 
1663. 
t;.  Pondir,  67. 
V.  Swanton,    183. 
Mullick  V.  Radakissen,  465,  466,  470, 

473,  474,  475. 
Mullin  V.  Leamy,  196a. 
Mullins  V.  Brown,  1623. 
Mulnix  V.  Spratlin,  1306. 
Mumford  v.  Hawkins,  393. 
V.  Tolmon,  61,  81. 
V.  Weaver,  812. 
Munch  V.  Valley  Nat.  Bank,  3346. 
Muncy  Borough  School  Dist.  v.  Com- 
monwealth, 605,  612,  1596. 
Mundy  v.  Whitmore,  834. 
Monger  v.  Albany  City   Nat.   Bank, 
1707a. 
V.  Shannon,  16a,  50. 
Munn  V.  Baldwin,  1021. 

V.  Burch,  1571,  1637,  1638. 

V.  Commission  Co.,  383,  751,  760, 

766. 
V.  McDonald,  824. 
Munnerlyn    v.    Augusta    Sav.    Bank, 

1586. 
Munro  v.  King,  156. 
Munroe  v.  Bordier,  175,  178. 

V.  Weir,  1481. 
Munson  v.  Bank,  265. 
Munyon  v.  French,  1294. 
Murchie  v.  MacFarlane,  1373a. 

V.  Peck  Bros.,  80. 
Murchison  v.  Nies,  177,  725. 


TABLE    OF   CASES 


CXXXl 


References  are  to  paragraphs  marked  § 


Murchison   Nat.    Bank   v.   Dunn   Oil 

Mills  Co.,  184,  698o,  780. 
Murdoch  v.  Lee,  1377. 
Murdock  v.  Arndt,  719. 

V.  Clark,  1251. 
Mure,  Ex  'parte,  1311. 
Murphey  v.  Illinois  Trust  &  Sav.  Bank, 

185. 
Murphy  v.  Gumaer,  165,  284,  831a. 

V.  Keyes,  174. 

V.  Phelps,  1221. 

V.  Weems,  200. 
Murray  v.  Aull,  195a. 

V.  Ayer,  370a.  ^ 

V.  Beckwith,  775. 

V.  BurHng,  1483. 

V.  East  India  Co.,  290. 

V.  Glasse,  241. 

V.  Jones,  748,  834. 

V.  Judah,  672,  1081,  1335a,  1586, 
1587,  1596,  1620,  1652. 

V.  Lardener,  724a,  775,  1469,  1500, 
1503. 

V.  Lylboum,  800a 

V.  Pate,  1687. 

V.  Reed,  724a. 

V.  Snow,  1289. 

V.  Todd,  747. 
Murray  Show  Case  &  Fixture  Co.  r. 

SuUivan,  177,  183. 
Murrell  v.  Jones,  170. 
Murrill  v.  Handy,  86a. 
Murry  v.  East  India  Co.,  264. 

V.  W.  W.  Kimball,  68. 

V.  Lardner,  776,  814. 

V.  Peterson,    1373a. 
Murto  V.  Lemon,  728,  1227. 
Muscatine  v.  Sterneman,  122,  125. 
Muse  V.  Dantzler,  32,  859. 
Musgrave  v.  Drake,  369. 
Musselman  v.  Logansport,  1563. 

V.  Oakes,  103. 
Mussey  v.  Dempsey,  161. 

V.  Eagle  Bank,  1610,  1610a. 

V.  Rayner,  1755,  17856. 
Musson  V.  Lake,  654,  896,  898,  953,  970, 

983. 
Muth  V.  Goddard,  1752. 

V.  St.  Louis  Trust  Co.,  1603,  1608, 
1610,  1610a. 
Mutual  Benefit  Life  Ins.  Co.  v.  Hunt- 
ington,   834. 
Mutual  Building  &  Loan  Assn.  v.  Perry, 

1337,  1338. 
Mutual  Life  Ins.  Co.  v.  Hunt,  210. 
Mutual  Life  Ins.  Co.  of  New  York  v. 

Reid,  1754. 
Mutual  Loan  Assn.  v.  Brandt,  187. 

V  Lesser   1409. 
Mutual  Mill  ins.  Co.  v.  Gordon,  834. 


Mutual  Nat.  Bank  v.  Coco,  1326. 

V.  Rotge,  1604. 
Muzzy  V.  Knight,  156. 
Myatt  V.  Bell,  373, 1260,  1301. 
Myer  v.  Hart,  62. 

V.  Jacobs,  733a. 
Myers  v.  Beeman,  800a. 

V.  City  of  Jeffersonville,  1537. 

V.  Dimond  Joe  Line,  1738. 

V.  Farmers  St.  Bank,  1339. 

V.  Friend,  441,  663,  741. 

V.  Kessler,  70,  808. 

V.  Nell,  1401. 

V.  State  Bank,  1311,  1326. 

V.  Walker  Bros.  &  Co.,  283. 

V.  Willis,  1329. 

V.  York,  etc.,  R.  Co.,  747. 
Mynard  v.  SjTacuse,  etc.,  R.  Co.,  1740a. 
MjTick  i;.  Hasey,  l782. 
Myrick  Bros.  Co.  v.  Jackson,  573. 

N 

Naef  V.  Potter,  726. 
Nagal  V.  Lutz,  1183o. 
Nagel  V.  Mignot,  1470,  1478. 
Nagle  V.  Homer,  508. 

V.  Schnadt,  728,   1219. 
Naglee  v.  Lyman,  823. 
Nailor  v.  Bowie,  654,  969. 
Nail  V.  Smith,  1407. 
Nance  v.  Lary,  845. 

V.  Winship  Machine  Co.,  1788. 
Napier  v.  Elam,  831a. 

V.  Schneider,  1449. 
Narragansett  Bank  v.  Atlantic  Silk  Co., 

388 
Naser  t;.*First  Nat.  Bank,  334,  341. 
Nash  V.  Brown,  181. 

V.  Fugate,  856. 

V.  Gibbon,  54a. 

V.  Harrington,    611,    1152,    1157, 
1170,  1172. 

V.  Hodgson,  1252. 

t;.  Nash,  257. 

V.  Towne,  305. 
Nashua  Sav.  Bank  v.  Abbott,  1294. 

V.  Sayles,  679,  713a,  868. 
Nashville  v.  Ray,  1530. 
Nashville  Bank  v.  Bennett,  1005. 
Nashville  Lumber  Co.  v.  Fourth  Nat. 

Bank,  673. 
Nashville  Trust  Co.  v.  Smythe,  834. 
Nassau  Bank  v.  Campbell,  1311. 
Nassau  Trust  Co.  v.  Matherson,  795c. 
Nassoiy  v.  Tomlinson,  1289,  1623. 
Nathan  v.  Giles,  1730a. 

V.  Sloan,  713a. 
National    Bank    v.    American    Exch. 

Bank,  627,  1625. 


cxxxu 


TABLE   OF   CASES 


References  are  to  paragraphs  marked 


National  Bank  V.Atlanta  R.  Co.,  1731. 

V.  Bank,  335. 

V.  Berrott,  356,  357,  365. 

V.  Brewster,  241. 

V.  Brooks,  724. 

V.  Brush,  720a. 

V.  Cade,  1022. 

V.  City  of  lola,  1520. 

V.  Co.  of  Yankton,  1486. 

V.  Dorset  Marble  Co.,  707a,  713a. 

V.  Fassett,  322. 

V.  Fitze,  802. 

V.  Flanagan,  790. 

V.  Forbes,  1343. 

V.  Graham,  286a. 

V.  Gray,  59. 

V.  H.  R.  Snyder  Mfg.  Co.,  386. 

V.  Herold,  427,  438. 

V.  Howe,  802. 

V.  Insurance  Co.,  3346,  336,  1612a. 

V.  Johnson,  3266. 

V.  Jones,  1603. 

t;.  Jose,  1260,  1322. 

V.  Kirby,  1506. 

V.  Kirk,  196a. 

V.  Law,  365. 

V.  Leonard,  689a. 

V.  Lewis,  205,  1110. 

V.  Logan,  1592. 

V.  McNair,  777. 

V.  Matthews,  769a. 

V.  Merchants'    Nat.    Bank,    1727, 
1734a,  17346,  1734c. 

V.  Miller,  815. 

V.  Navassa  Phosphate  Co.,  394. 

V.  Nolting,  1654a,  1658,  1659. 

V.  Norton,  3696,  370,  373. 

V.  Second  Nat.  Bank,  1636. 

V.  Silke,  104. 

V.  Smith,  3266. 

V.  Smoot,  869. 

V.  Tappan,  1370. 

V.  Texas,  724. 

V.  Thomas,  386,  388,  391. 

V.  Wells,  386. 

V.  White,  790. 

V.  Wood,  62. 
National  Bank  of  America  v.  National 

Bank  of  lUinois,  1651,  1652. 
National    Bank    of    Barre    v.    Foley, 

819. 
National  Bank  of  Battle  Creek  v.  Dean, 

1252. 
National  Bank  of  Bellefonte  v.   Mc- 

Manigle,  287. 
National  Bank  of  Bristol  v.  Baltimore 

&  O.  R.  Co.,  1727,  1730,  1731. 
National  Bank  of  Chester  v.  Atlanta 
R.  Co.,  17336. 

V.  Gunhouse,  449. 


National  Bank  of  Cleburne  v.  Carper, 

205. 
National  Bank  of  Commerce  v.  Gallard, 
688c. 

V.  Kenney,  729,  891. 

V.  Mechanics'  Am.  Nat.  Bank, 
1566,  1657. 

V.  Nat.  M.  B.  Assn.,  349a,  1166, 
1361,  1369,  1654a. 

V.  Pick,  789. 

V.  Puget  Sound  Biscuit  Co.,  388. 

V.  Rockfellow,  201,  1260. 
Nat.  Bank  of  Commerce  in  St.  Louis  v. 
Morris,  769a,  831a. 

V.  Sancho  Packing  Co.,  386. 
Nat.  Bank  of  Fort  Edward  v.  Washing- 
ton   County    Nat.   Bank,    1698a, 

1702a. 
Nat.  Bank  of  Kennett  Square  v.  Shaw, 

156. 
Nat.  Bank  of  Michigan  v.  Green,  767, 

899. 
Nat.  Bank  of  Newbury  v.  Sayer,  183. 
Nat.  Bank  of  New  Jersey  v.  Berrall, 

1643. 
Nat.  Bank  of  Newport  v.  H.  P.  Snyder 

Mfg.  Co.,  386,  790,  815. 
Nat.  Bank  of  North  America  v.  Bangs, 
1361,  1367,  1369,  1657. 

V.  Kirby,  787. 
Nat.   Bank   of   Phocnixville   v.   Buck- 
waiter,  1203. 
Nat.  Bank  of  Pittsburg  v.  Wheeler,  674. 
Nat.  Bank  of  Rolla  v.  First  Nat.  Bank 
of  Salem,  698d,  1657,  1752. 

V.  Rominc,  769a,  814,  815. 
Nat.  Bank  of  Rondout  v.  Byrnes,  812. 
Nat.  Bank  of  St.  Joseph  v.  Dakin,  824, 

855,  856. 
Nat.  Bank  of  the  Republic  v.  City  of  St. 
Joseph,  1550. 

V.  Delano,  241,  713a. 

V.  Young,  382,  386,  775. 
Nat.  Bank  of  Webb  City  v.  J.  H.  Ever- 
ett &  Son,  1734c. 
Nat.  Building  Assn.  v.  Aehworth,  923. 
National  Butchers'  &  D.  Bank  v.  Hub- 
bell,  MOd. 
National  Citizens'  Bank  v.  Bowen,  81a. 
National  Citizens'  Bank  of  Mankato  v. 

Bowen,  189. 
National  City  Bank  v.  Wescott,  349a. 
National  Commercial  Bank  v.  Miller, 

1603,  1636. 
National  Eagle  Bank  v.  Hunt,  1770a. 
National  Exch.  Bank  v.  Hartford  R.  Co., 
1489,  1500,  1509,  1510,  1513. 

V.  Lester,  1409. 

V.  Lubrano,  714,  1203. 

V.  McElfresh  Clay  Mfg.  Co.,  1781. 


TABLE   OF   CASES 


CXXXlll 


References  are  to  paragraphs  marked  § 


National  Exch.  Bank  v.  United  States, 
1372. 
V.  Venneman,  850. 
V.  White,  369,  843. 
V.  Wilder,  1714. 
Nat.  Exch.  Bank  of  Baltimore  v.  Rock 

Granite  Co.,  899. 
Nat.  Exch.  Bank  of  Lexington  v.  Wil- 

gus,  363. 
Nat.  Fence  Mach.  Co.  v.  Highleyman, 

293. 
Nat.  Fire  Ins.  Co.  v.  Eastern  B.  &  L. 

Asso.,  28. 
Nat.  German-American  Bank  v.  Lang, 

51a. 
National    Gold    Bank    v.    McDonald, 

1622,  1623. 
National  Hudson  River  Bank  v.  K.  & 

H.  R.  Co.,  609. 
Nat.  Improvement  &  Construction  Co. 

V.  Maiken  322. 
National  Ins.  Co.  v.  Bowman,  93a. 

V.  Goble,  1221,  1260,  1262. 
National  Lead  Co.  v.  Montpelier  Hard- 
ware Co.,  1310,  1339. 
Nat.  Life  Ins.  Co.  v.  Bd.  of  Education, 

1503. 
National  Life  Stock  Commission  Co.  v. 

Thero,  1316. 
National  Lumberman's  Bank  v.  Miller, 

247. 
National  Mechanics  Bank  v.  National 

Bank,  284. 
National  Newark  Bkg.  Co,  v.  Second 

Nat.  Bank,  472. 
National  Park  Bank  v.  Eldred,  1369. 

V.  German  Security  Co.,  386. 

V.  Koehler,  1266. 

V.  Levy  Bros.,  1623,  1644. 

V.  Ninth  Nat.  Bank,  1361,  1661, 
1654a. 

V.  Porter,  386a,  769a. 

V.  Remsen,  795a. 

V.  Saitta,  163,  174a,  465,  497&. 

V.  Seaboard  Bank,  349a. 

V.  Security  Co.,  365. 

V.  Toplitz,  1312. 
National  Pemberton  Bank  v.  Longee, 

713a. 
National     Revere     Bank     v.     Morse, 
815. 

V.  National  Bank  of  the  Republic, 
573. 
National  Safe  Dep.  Sav.  &  Tr.  Co.  v. 

Grey,  1708J?. 
National   Salt   Co.   v.   Ingraham,   43, 

775,  1703. 
National  Sav.  Bank  t;.  Cable,  51. 
National  Security  Bank  v.  McDonald, 

365. 


National  Shoe  &  Leather  Bank  v.  Herz, 

369&. 
National  Spraker  Bank  v.  Treadwell 

Co.,  394. 
National  State  Bank  v.  Rising,  1401. 
National  State  Cap.  Bank  v.  Noyes, 

358a. 
National  Union  Bank  v.  Shearer,  1713a, 

1714. 
Nave  V.  First  Nat.  Bank,  101. 

V.  Richardson,  588,  953. 
Naylor  v.  Moody,  1317. 
Nazro  v.  Fuller,  137,  1378,  1379. 
Neal  V.  Coburn,  533,  1655,  1656. 

V.  Erving,  299. 

V.  Gray,  1181a. 

V.  Hanson,  12276. 

V.  Irving,  296. 

V.  Rouse,  1250. 

V.  Wilson,  llZd. 

V.  Wood,  1097. 

V.  Wyatt,  992. 
Neale  v.  Turton,  354. 
Neate  v.  Harding,  1372&. 
Nebeker  v.  Cutsinger,  850,  852. 
Nebraska  v.  State  Bank  of  Wahoo,  326c. 
Nebraska  Moline  Plow  Co.  v.  Fueh- 

ring,  1643. 
Nebraska  Mut.  Bond  Ass'n  v.  Klee,  177. 
Nebraska  Nat.  Bank  v.  Furguson,  386. 

V.  Logan,  1587. 
Needhams  v.  Page,  713d. 
Needles  v.  Needles,  254. 

V.  Shafer,  1395. 
Neeley  v.  Bee,  1341. 

V.  Black,  700. 
Neff  V.  Homer,  1385. 
Neff's  Appeal,  1311. 
Negley  v.  Lindsay,  1352a. 
NeiiTer  v.  Bank  of  Knoxville,  393. 
Neil  V.  Case.  1421a. 

Neill  V.  Produce  Co.,  1731,  1734a,  1743. 
Neiman  v.  Bacon  Tr.  Co.,  1615. 
Nelson  v.  Brown,  1312,  1317, 1324. 

V.  Cowing,  70,  145. 

V.  Dubois,  1765,  1767. 

e;.  First    Nat.    Bank,    561,    567, 
1468a,  1606a,  1799. 

V.  Flagg,  1312. 

V.  Fotterall,   457,   586,   588,   602, 
945,  955,  959,  964. 

V.  Grondahl,  635,  969. 

V.  Kastle,  966,  1588. 

V  Larmer,  812. 

V.  Manning,  49. 

V.  Nordlinger,  1741. 

V.  Stollenwerck,  680. 

V.  Webster,  1343. 

V.  Wellington,  833,  1185. 

V.  Whittall,  112. 


CXXXIV 


TABLE    OF   CASES 


References  are  to  paragraphs  marked 


Nelson  v.  Woodruff,  1729,  1742. 
Neosho  Milling  Co.  v.  Farmers  Co-op. 

Warehouse  Stock  Co.,  714. 
Neptune,  Admr.,  v.  Paxton,  Recr.,  418. 
Nesmith  v.  Drum,  1644. 
Nesson  v.  Millen,  189. 
Nethercutt  v.  Hopkins,  722. 
Neuhoff  V.  O'Reilly,  1708^. 
Neumann  v.  Schroeder,  504. 
Nevada  Bank  v.  Luce,  496,  551a. 
Nevins  v.  Bank  of  Lansingburgh,  1016, 
1782. 

V.  DeGrand,  1415. 
Nevius  V.  Moore,  598,  654,  970, 1149. 
New  V.  Swain,  1280. 

V.  Walker,  197,  198,  663. 
New  Albany  Woolen  Mills  v.  Myers, 

728,  784. 
New  Bank  of  Eau  Claire  v.  Kleiner,  51o. 
Newberry  v.  Armstrong,  1764. 

V.  Detroit,  etc..  Iron  Co.,  1708e. 

V.  Trowbridge,  1149,  1163,  1165. 
New  Birdsall  Co.  v.  Stordalen,  780. 
New  Blue  Springs  Milling  Co.  v.  De- 
Witt,  697,  1203. 
Newbury  v.  Rand,  1190. 
Newburyport    v.    Fidelity    Mut.    Life 

Ins.  Co.,  386. 
Newcomb  v.  Boston,  17346. 

V.  Raynor,  1303,  1307. 

V.  Wood,  334. 
Newell  V.  Gregg,  787. 

V.  Mayberry,  1410a. 

V.  Salmons,  1431. 

V.  Williams,  719. 
New  England  Bank  v.  Lewis,  1212. 
New  England  Loan  &  Trust  Co.  v.  Rob- 
inson, 573. 
New  England  Mortgage  Co.  v.  Gray, 

802. 
New  England  Mortgage  Security  Co. 

V.  Casebier,  834,  835. 
New  England   Nat.   Bank  of  Kansas 

City,  Mo.,  V.  Dick,  1221. 
New  England  Trust  Co.  v.  New  York 

Belting  &  Packing  Co.,  1340. 
New  Farmers'  Bank's  Tr.  v.  Young, 

1437. 
Newgass  v.  New  Orleans,  10a. 
Newgrass  v.  Shulhof,  68a. 
Newhall  v.  Central  Pac.  R.  Co.,  1730, 
1731. 

V.  Clark,  517. 

V.  Dunlap,  311,  411. 

V.  Field,  1298. 

V.  Wyatt,  366. 
New  Hampshire  Sav.  Bank  t;.  Colcord, 

1325. 
New  Haven  County  Bank  v.  Michell, 
1052,  1056. 


New  Haven  Mfg.  Co.  v.  New  Haven 

Pulp,  etc.,  1181a,  1198. 
New  Hope  D.  &  V.  Co.  v.  Perry,  646, 

1680a. 
New  Jersey  v.  Wilson,  446. 
New  London  Credit  Syndicate  v.  Neale, 

159. 
New  Madrid  Banking  Co.  v.  Poplin, 

815,  849a,  851. 
Newman  v.  Curiel,  857. 

V.  Frost,  187. 

V.  Gozo,  1450. 

V.  Kaufman,  1569,  15856. 

t;.  Kerson,  894. 

V.  King,  1376. 

V.  Newman,  247. 

V.  Tillman  et  al.,  795a,  7956. 

V.  Wilhams,  750,  762a,  767. 
New  Market  Savings  Bank  v.  Gillet, 
403. 

V.  Hansom,  187,  573. 
New  Orleans  v.  Benjamin,  10a. 

V.  Clark,  1562. 

V.  Quinlan,  10a. 
New  Orleans  Bank  v.  Harper,  1152. 
New    Orleans    Canal    v.    Templeton, 

728. 
New  Orleans,  etc.,  v.  Montgomery,  728, 

784,  834a. 
New  Providence  v.  Halsey,  1544. 
Newsom  v.  Thornton,  1731,  1748. 
Newton  v.  Clarke,  728,  812,  1219. 

V.  Jackson,  157. 

V.  Kennerly,  1458a. 

V.  Porter,  14686. 

V.  Snyder,  24. 
Newton   Wagon   Co.    v.    Dyers,    51a, 

1787. 
New  York  &  N.  H.  R.  Co.  v.  Schuyler, 

278,  390,  391,  1611,  1708g,  1733a. 
New  York  &  Va.  State  Bank  v.  Gilson, 

19. 
New  York  Bank  v.  Gibson,  1636. 
New  York,  etc.,  Co.  v.  Meyer,  1086. 

V.  Selma  Sav.  Bank,  998,  1086. 
New   York,   etc.,   R.   Co.   v.   Hawks, 
1674. 

V.  National  Steamship  Co.,  1729a. 

V.  Schuyler,  390,  1733a. 
New  York  Fireman's  Ins.  Co.  v.  Ely, 

384. 
New  York   Iron   Mine  v.   First   Nat. 

Bank,  392a,  812. 
New  York  Life  Ins.  Co.  v.  Martindale, 
303,  1375,  1385. 

V.  Smucker,  81d. 
New   York    Marbled    Iron   Works   v. 

Smith,  831c. 
New  York  Metal  Ceiling  Co.  v.  Leon- 
ard, 164. 


TABLE    OF   CASES 


CXXXV 


References  are  to  paragraphs  marked  § 


New   York   Millinery   &   Supply    Co. 

V.    Hamburg,  etc.,    Gessellschaft, 

1733a. 
New  York  Nat.  Bank  v.  Kennedy,  662. 
New    York    Produce    Exch.    Bank    v. 

Twelfth  Ward  Band  Bank,  672. 
New  York  Security  &  Trust  Co.  v.  Lip- 
man,  1713a. 

V.  Storm,  28,  708,  1757. 
New  York  v.  Vanderhorst,  831c. 
Neyens  v.  Hossack,  53. 

V.  Worthington,  795c. 
Niagara  Bank  v.  Roosevelt,  1689. 
Niagara  District  Bank  v.  Fairman,  etc., 

Tool  Mfg.  Co.,  515,  1380,  1381. 
Niblack  v.  Champeny,  1312. 

V.  Park    Nat.    Bank,    3346,    600, 
1643. 

V.  Sprague,  68a,  816. 
Nicely  v.  The  Winnebago  Nat.  Bank 

of  Rockford,  31,  35,  41,  53,  54a, 

62,  63. 
Nichol  V.  Bate,  142, 1266. 

V.  Mayor  of  Nashville,  1523. 
Nicholas  v.  Cheairs,  1299. 
Nicholas  Bank  v.  State  Nat.  Bank,  341. 
Nicholay  v.  Fritschle,  1192. 
Nicholls  V.  Diamond,  413. 

V.  Lefevre,  1730a. 
Nichols  V.  Allen,  1764. 

V.  Blackmore,  472,  474. 

V.  Cross,  1187. 

V.  Diamond,  489. 

V.  Frothingham,  76. 

V.  Goldsmith,  636,  656,  1057. 

V.  Lumpkin,  195a. 

V.  Nichols,  183. 

V.  Norris,  1322,  1334. 

W.Pearson,   750,   759,   760,   762a, 
767. 

V.  Pool,  644. 

V.  Ruggles,  51. 

V.  State,  1611a. 

V.  State  Bank,  283. 

V.  Webb,  945,  967,  968,  1057. 
Nichols  &  Shepard  Co.  v.  First  Nat. 

Bank,  68. 
Nichol's  Exr.  v.  Porter,  902. 
Nicholson  v.  Barnes,  1180. 

V.  Combs,  1389. 

V.  Gouthit,  1172. 

V.  Paget,  1755,  1770. 

V.  Patton,  775. 

V.  Revill,  1290,  1294,  1295. 

V.  Sedgwick,  1698a. 
Nickell   V.   Citizens   Nat.   Bank,   90a, 

995,  1312. 
Nickerson  v.  Rockwell,  1186a. 
NicoUs  V.  Rodgers,  884. 
Niemeyer  v.  Brooks,  1215. 


Nightingale  v.  Chafee,  1260. 

V.  Meginnis,  1317. 

V.  Withington,  179,  227,  682. 
Niler  v.  Kelly,  1708a. 
Niles  V.  United  States  Ozocerite  Co., 

161. 
Nimick  v.  Martin,  617. 
Nimocks  v.  Woody,  16a,  19,  550. 
Nixon  V.  Beard,  1260,  1341. 

V.  EngUsh,  1437. 

V.  First  State  Bank,  81. 

V.  Palmer,  291,  319. 
Noble  V.  Doughten,  1586. 

V.  McClintock,  366. 

V.  Walker,  753,  763,  766. 
Nobles  V.  Bates,  196. 
Noe  V.  Christie,  16a. 

V.  Hodges,    81. 
Noel  V.  Murray,  1262,  1264. 
Noll  V.  Smith,  1407. 
Non-Magnetic  Watch  Co.,  Matter  of, 

1731a. 
Nonotuck  Silk  Co.  v.  Flanders,  340e. 
Nordlinger  v.  Nelson,  1741. 
Norfolk  Nat.  Bank  v.  Griffin,  130. 

V.  Nenow,  795a,  7956,  855,  955a. 

V.  Schwenk,  759a. 
Norlin  v.  Becker,  156,  775,  812. 
Norman  v.  Cole,  188. 
Norris  v.  Aylette,  1273. 

V.  Badger,  576,  1195,  1227. 

V.  Crummey,  1321. 

V.  Gumming,  1318. 

V.  Despard,  713a,  1060, 1070, 1596, 
1600. 

V.  Langley,  808. 

«;.  Merchants'  Nat.  Bank,  68a. 

V.  Solomon,  73. 

V.  Ward,  1149. 
Northam  v.  Latouche,  808. 
Northampton   Bank  v.   Pepoon,   394, 

416. 
Northampton   Nat.   Bank  v.   Kidder, 
1505. 

V.  Smith,  1226. 
North  Atchison  Bank  v.  Garrettson, 
1606a. 

V.  Gray,  68. 
North  Ave.  Sav.  Bank  v.  Hayes,  1311. 
North  Bank  v.  Abbott,  650,  658,  1048. 
North  British  Ins.  Co.  v.  Loyd,  1309. 
North  British  &  Mercantile  Ins.  Co.  v. 

Cent.  Vt.  R.  Co.,  1739. 
North  CaroUna  Corp.    Com.  v.  Mer- 
chants, 1625. 
Northeastern  Coal  Co.  v.  Tyrell,  403. 
Northern  v.  Hawkins,  995. 
Northern  Bank  v.  Farmers'  Nat.  Bank, 
1310. 

V.  Porter  Township,  1543a. 


CXXXVl 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Northern  Lib.  Co.  Market  v.  Kelley, 

1266. 
Northern  Nat.  Bank  v.  Hooper,  10. 

V.  Lewis,  1187. 
Northern  Pac.  R.  Co.  v.  Hobnes,  183. 
North  Penn.  R.  Co.  v.  Adams,  1513, 
1514,  1515. 

V.  Commercial  Bank,  17336. 
Northern  State  Bank  v.  Bellamy,  1752, 

1753,  1789. 
Northfield  Nat.  Bank  v.  Arnt,  7796. 
North  River  Bank  v.  Aymar,  280,  283, 

284. 
Northrop  v.  Sanborn,  86a,  1580. 

V.  Chambers,  999a. 
North  Star  Boot  &  Shoe  Co.  v.  Stebbins, 

3266,  392. 
Northumberland  Bank  v.  McMichael, 

1636. 
Northumberland  County  Bank  v.  Eger, 

1776. 
Northup  V.  Cheney,  959,  979a. 
Northwall  Co.  v.  Osgood,  248,  795a. 
Northwestern   Coal   Co.    v.   Bowman, 

466,  1022,  1100,  1568,  1572. 
Northwestern  Life  Ins.  Co.  v.  Sturdi- 

vant,  1221,  1625. 
Northwestern   Nat.    Bank   v.   Kansas 

City  Bank,  698d,  1359. 
Northwestern  Sav.  Bank  v.  Centreville 

Station,  1539. 
Norton  v.  Brownsville,  1524. 

V.  Dyersburg,  1532. 

V.  Eastman,  1789,  17856. 

V.  Knapp,  497. 

V.  Lewis,  616,  1040,  1048. 

V.  Norton,  800a. 

V.  Paragon  Oil  Can  Co.,  1268. 

V.  Pickering,  1077. 

V.  Rose,  5. 

V.  Seymour,  361,  1613. 

V.  Stroud  State  Bank,  182. 

V.  Waite,  832. 
Norvell  v.  Hudgins,  789,  795. 
Norwich  Bank  v.  Hyde,  86a. 
Norwich  Town  Co.,  In  re,  1616. 
Norwood   V.    Bank   of   Commerce   of 
Lincoln,    775. 

V.  Leeves,  787. 
Noteboom  v.  Watkins,  831a. 
Note  Holders  v.  Bank  of  Tennessee, 

1669,  1695. 
Nott  V.  Beard,  953. 

V.  Thomson,  248. 
Nottingham  v.  Ackiss,  7956. 
Novelty  Mfg.  Co.  v.  Connell,  1260. 
Nowack  V.  Lehmann,  180. 
Nowland  v.  Martin,  1339. 
Noxon  V.  De  Wolf,  728. 
Noyes  v.  Landon,  724o,  725, 824. 


Noyes  v.  Price,  1687. 

V.  Smith,  163. 
Nugent  V.  Laduke,  265. 
Nunemaker  v.  Lanier,  1590. 
Nunez  v.  Dautel,  45. 
Nunnemacher  v.  Poss,  398. 
Nurre  v.  Chittenden,  710,  713d. 
Nuso  Vaumer  v.  Becker,  369a. 
Nutt  V.  Morse,  24. 
Nutter  V.  Stover,  831a. 
Nutting  V.  Burked,  605. 
Nye  V.  Chace,  186. 
Nyhart  v.  Kubach,  199a. 


Oakdale    Mfg.    Co.    v.    Clarke,    800a, 

1181a. 
Oakes  v.  Merrifield,  204. 
Oakey  v.  Beauvais,  635. 

V.  Wilcox,  1379. 
Oakland    Cemetery    Assn.    v.  Lakins, 

816. 
Oakley  v.  Carr,  995,  1039,  1044, 

V.  Ooddeen,   799. 
Oaks  V.  Miller,  17856. 
Oaste  V.  Taylor,  6. 
Oates  V.  Nat.  Bank,  10,  90a,  763a,  768, 

827 
Obbard  'v.  Betham,  203. 
Ober  V.  Gallagher,  834a. 

V.  Goodridge,  670,  728,  1199. 
Ober  &  Sons  Co.  v.  Drane,  1310. 
Oberle  v.  Schmidt,  812. 
O'Brannon  Co.  v.  Curran,  1091,  1171. 
O'Brien  v.  Gilchrist,  1729. 

V.  Patterson   Brewing  &    Malting 
Co.,  80. 

V.  Smith,  1590. 
O'Callaghan  v.  Thomond,  883. 
Ocean  Nat.  Bank  v.  Carll,  1057. 

V.  Faut,  833. 

V.  Wniiams,  581,  587,  926,  934. 
Ocean  Tow  Boat  Co.  v.  Ship  Opheha, 

1623. 
Ocoll  Bank  v.  Hughes,  929. 
O'Connell  v.  McQueen,  1248. 
O'Conner  v.  Hurley,  1260. 
O'Connor  v.  Brandt,  1425. 

V.  Jones,  855a,  1468a. 

V.  Kleiman,  81a,  204,  814a. 

V.  Klennan,  196. 

V.  Mechanics'  Bank,  1638. 

V.  Morse,  1310,  1312,  1313. 

V.  Slatter,  664a. 
Odam  V.  Beard,  719. 
O'Day  V.  Sanford,  354. 
Odbert  v.  Marquet,  205,  213. 
Odd  Fellows  v.  First  Nat.  Bank,  299, 

387. 


TABLE    OF   CASES 


CXXXVll 


References  are  to  paragraphs  marked  § 


Oddie  V.  National  City  Bank,  1621, 
O'Dell  V.  Carpenter,  1296. 

V.  Clyde,  139. 

V.  Cormack,  362a. 

V.  Gallup,  1418. 

V.  Gray,  la. 
Odiorne  v.  Sargent.  155. 

V.  Woodman,  725,  746. 
Odon  V.  New  England  Mortgage  Co., 

922. 
Oexner  v.  Loeher,  713a,  1338. 
Ofenstein  v.  Bryan,  1402,  1409,  1375. 
Offerd  V.  Davies,  1770a. 
Officer  V.  Marshall,  1316,  1317. 
Ogden  V.  Astor,  350. 

V.  Conley,  1049. 

V.  Dobbin,  656,  991,  992. 

V.  Marchand,  322,  769a. 

V.  Pattee,    1489. 

V.  Saunders,   614,   616,   671,  672, 
874. 
Ogden  Ry.  Co.  v.  Wright,  271. 
Ogilby  V.  Wallace,  1185. 
Ogilvie  V.  Moss,  267. 
Oglander  v.  Baston,  257. 
Ogle  V.  Graham,  1384. 
Oglesby  v.  Steamboat  Co.,  1148. 
O'Hara  v.  Haas,  1343. 
Ohio  V.  Frank,  1458a,  1514. 
Ohio  County,  Ky.,  v.  Baird,  422. 
Ohio  Ins.  Co.  v.  Edmundson,  866. 
Ohio  Life  &  T.  Co.  v.  Debolt,  1525. 
Ohio  Nat.  Bank  v.  Gill  Bros.,  1219. 

V.  Hopkins,  196,  933. 
Ohm  V.  Young,  76. 

Oil   Well   Supply  Co.  v.  Exch.   Nat. 
Bank,  571. 

V.  Wolfe,  1300. 
O'Keefe  v.  Dunn,  724a,  932. 
O'Keeflfe  v.  First  Nat.  Bank  of  Frank- 
fort, 812. 
Okey  V.  Sigler,  1312. 
Okie  V.  Spencer,  1328,  1329. 
Olcott  V.  Rathbone,  1195,  1266,  1266a, 
1623. 

V.  Supervisors,  1521,  1523. 

V.  Tioga  R.  Co..  383. 
Oldham  v.  Brown,  1338a. 
Old  Nat.  Bank  v.  Marcy,  814. 
Olendorf  v.  Swartz,  1110. 
Oleson  V.  Wilson,  604,  606. 
Oliphant  v.  Vannest,  699. 
Oliver  v.  Andry,  672. 

V.  Bank  of  Tennessee,  1074,  1076. 

V.  Miller,  789. 
Olmstead  v.  Winstead,  1680a. 
Olney  v.  Chadsey,  395. 
Olpherts  v.  Smith,  271a. 
Olson  V.  Day,  1227. 
Olvey  V.  Jackson,  833, 1260. 


Omaha  Loan  &  Tr.  Co.  v.  Hanson, 

1458a. 
Omaha  Nat.  Bank  v.  City  of  Omaha, 
1543. 

V.  Johnson,  1317. 

V.  Walker,  1782. 
O'Meara  v.  McDermott,  63. 
Omohundro  v.  Crump,  56,  86. 

V.  Omohundro,  88. 
Oneida  Bank  v.  Ontario  Bank,  14916. 
O'Neill  V.  Magner,  89,  1215. 

V.  O'Neill,  1478. 
Onondaga  County  Bank  v.  Bates,  580, 
584,  936. 

V.  De  Puy,  357. 
Onondaga  County  Sav.  Bank  v.  United 

States,  349a. 
Ontario  v.  Hill,  1503. 
Ontario  Bank  v.  Petrie,  984. 

V.  Worthington,  831c. 
Oppenheim  v.  Bank,  62,  777. 

V.  First  Nat.  Bank  of  Butte,  1643, 
1644. 

V.  Simon  Reigal  Cigar  Co.,  386. 
Oppman  v.  Steinbrenner,  1215. 
Orchard  v.  School  Dist.,  1527a. 
Orcutt  V.  Rickenbrodt,  1259. 
Ordt>.  Portal,  1193. 
Ordeman  v.  Lawson,  1764. 
Orear  v.  McDonald,  1076,  1082. 
Oregon  v.  Jennings,  1537. 
Organ  Co.  v.  Boyle,  814. 
Oridge  v.  Sherborne,  599,  617,  621. 
Oriental  Bank  v.  Blake,   1000,   1177, 
1179. 

i;.  Gallo,  672. 
Oriental  Commercial  Bank,  Ex  parte, 

7266. 
Orleans  v.  Pratt,  1537,  1543. 
Ormsbee  v.  Howe,  7956. 
Ormsby  v.  Kendall,  306. 
Orner  v.  Sattley  Mfg.  Co.,  54a,  1221, 

1623. 
Orono  Bank  v.  Wood,  963. 
O'Rourke  v.  O'Rourke,  69,  891a. 
Orr  V.  Lacey,  1217. 

V.  Maginnis,   454,   926,  940,  942, 
1081. 

V.  Sparkman,  62a. 

V.  South  Amboy  Terra  Cotta  Co., 
795c. 
Orrick  v.  Colston,  144,  147,  666,  709, 
713a,  843. 

V.  Durham,  8346. 
Ort  V.  Fowler,  139,  850. 
Ortmeier  v.  Ivory,  1230. 
Orvis  V.  Kimball,  231. 
Ory  V.  Wilson,  895. 
Osborn  v.  Bryce,  1437. 

V.  Doherty,  185. 


CXXXVlll 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Osborn  v.  Hall,  1403. 

V.  Hamilton,  1181a. 

V.  Hawley,  61. 

V.  Kistler,  34. 

V.  Low,  1317. 

V.  McClelland,  782,  784a,  1200. 

V.  Moncure,  787a,  1209. 

V.  Nicholson,  170,  172. 

V.  Robbins,   1306a. 

V.  Rogers,  1210. 

V.  Wood,  370. 
Osborne  v.  Adams  Co.,  1522. 

V.  Lawson,  1761,  1769,  1788. 
Osgood  V.  Artt,  690,  741. 

V.  Pearson,   103. 
O'Shea  v.  Collier,  194. 
Osmond  v.  Fitzroy,  211. 
Osteopathy  v.  Turner,  868. 
Osterhoudt   v.   Southern   Pacific   Co., 
1739. 

V.  Shoemaker,  213. 
Ostrander  v.  Scott,  1289a. 

V.  Snyder,  816. 
Oswego  Bank  v.  Knower,  1106. 
Other  V.  Iveson,  1298. 
Otis  V.  Bonstorch,  1311. 

V.  Cullum,    734a. 

V.  Hussey,  1149. 

V.  Stockton,  422. 
Otis  Mfg.  Co.  V.  EUems,  1739. 
Otisfield  V.  Mayberry,  1226,  1227,  1228. 
Otsego  County  Bank  v.  Warren,  955, 

1140. 
Ott  V.  Anderson,  1316. 

V.  Seward,  717. 
Ottawa  V.  Casey,  1532. 
Ottow.  Bedden,  1118. 

V.  Halff,  1272,  1413. 
Ouachita  County  v.  Wolcott,  427. 
Ouachita  Nat.  Bank  v.  Weiss  &  Co., 

1748. 
Oulds  V.  Harrison,  725,  1436. 
Oulton  V.  Savings  Inst.,  334. 
Outhouse  V.  Outhouse,  1468a. 
Outhwaite  v.  Luntley,  1376,  1377. 
Overend,  In  re,  1255. 
Overland  Min.  Co.  v.  McMaster,  90. 
Overman  v.  Hoboken  City  Bank,  492, 

1619. 
Overseers  of  the  Poor  v.  Bank  of  Vir- 
ginia, 326c,  336. 
Overton  v.  Bolton,  868,  1458a. 

V.  Hardin,  750,  751,  753. 

V.  Matthews,  62a,  143,  1376,  1401. 

V.  Tyler,  1,  61. 
Owen  V.  Barrow,  1230. 

V.  Branch  Bank,  1725. 

V.  Bray,  1319. 

V.  Evans,  724a,  782,  8346. 
V.  Hall,  1411. 


Owen  V.  Homan,  1322. 

V.  Iglanor,  513,  514. 

V.  La  vine,  514. 

V.  Moody,  883. 

V.  Van  Uster,  488,  489. 
Owen   &  Co.  v.  Storms  &  Co.,   386, 

1181a. 
Owens  V.  Dickinson,  248. 

V.  National  Hatchet  Co.,  161. 

V.  Snell,  573,  812. 
Owensboro  Savings  Bank  &  Trust  Co.'s 

Receiver  v.  Haynes,  1326. 
Owensboro  Wagon  Co.  v.  D.  A.  Wilson 

&  Co.,  81a. 
Owenson  v.  Morse,  1272,  1672a,  1679a. 
Owings  V.  Arnott,  1376. 

V.  Baker,  710,  713a. 

V.  McKenzie,  1316. 

V.  Speed,  388. 
Owsley  &  Co.  v.  Louisville  Banking  Co., 

775,  812. 
Oxford  Bank  v.  Haynes,   1787,   1788. 

V.  Lewis,  1328. 
Oxford  Iron  Co.  v.  Spradley,  200. 
Oxnard  v.  Varnum,  90,  1147. 
Oyler  v.  McMurray,  95. 
Oyster  &  Fish  Co.  v.  Bank,  1566,  1601, 

1604. 
Ozan  Lumber  Company  v.  Union  Nat. 

Bank,   199a. 
Ozanne  v.  Haber,  196,  196a. 


Pace  V.  Gilbert  School,  62,  1227. 

V.  Robertson,  1342. 
Pacific  Bank  v.  Mitchell,  1221,  1222. 
Pacific  Guano  Co.  v.  HoUeman,  1187. 
Pacific  Imp.  Co.  v.  City  of  Clarkdale, 

420. 
Pack  V.  Thomas,  81,  1586,  1587. 
Packard  v.  Dunfee,  262,  1238. 

V.  Lyon,  637,  1115. 

V.  Nye,  406. 

V.  Richardson,  1764. 

V.  Windholz,  672,  790. 
Packham  v.  Hendren,  1966. 
Packwood  v.  Gridley,  801. 
Paddock  v.  Missouri  Pacific  Ry.  Co., 

1741. 
Paddon  v.  Taylor,  831c. 
Padget  V.  O'Connor,  204. 
Padgett  V.  Lewis,  205. 
Paese  v.  Hirst,  1197. 
Pagal  V.  Nickel,  156. 
Pagan  v.  Wylie,  1409. 
Page  V.  Cook,  45a. 

V.  Geiser  Mfg.  Co.,  203. 

V.  Gilbert,  982. 

V.  Morrel,  143. 


TABLE    OF   CASES 


CXXXIX 


References  are  to  paragraphs  marked  § 


Page  V.  Newman,  112. 

V.  Page,  898,  1478. 

V.  Prentice,  1031. 

V.  Warner,  1460. 

V.  Webster,  649,  650,  1316. 
Page  Woven  Wire  Fence  Co.  v.  Pool, 

1461. 
Paige  V.  Carter,  83. 

V.  Stone,  294,  305. 
Pain  V.  Packard,  1339. 
Paine  v.  Cent.  Vt.  R.  Co.,  783. 

V.  Levy,  1227. 

V.  Noelke,  713e. 

V.  Ringold,  81c. 
Pake  V.  Wilson,  556,  570. 
Palfrey  v.  Baker,  1274. 
Palmer  v.  Carpenter,  1478. 

V.  Courtney,  672. 

V.  Dodge,  370,  373. 

V.  Fahnestock,  54a. 

V.  Field,  94,  361. 

V.  Grant,  94,  1780. 

V.  Hill,  917. 

V.  Hughes,  643. 

V.  Hummer,  44. 

V.  Largent,  850,  1407. 

V.  Logan,  1470. 

V.  McFarlane,  1203. 

V.  Marshall,  769a, 

V.  Minor,  199a. 

v.  Nassau  Bank,  693,  812,  1191. 

V.  Poor,  63,  858,  1385. 

V.  Pratt,  41. 

V.  Richards,  831a. 

V.  Stephens,  74,  688a. 

V.  Ward,  47. 

V.  Whitney,  812. 

V.  Yarrington,   867. 
Palo  Alto  Stock  Farm  v.  Brooker,  193. 
Panhandle    Nat.    Bank    v.   Alexander 

et  al.,  812. 
Pannell  v.  Hurley,  1612a. 
Papple  V.  Day,  185. 
Paramore  v.  Lindsey,  1408,  1419. 
Parcel  v.  Barnes,  422. 
Parcher  v.  Saco  Sav.  Inst.,  24. 
Pardee  v.  Fish,  56,  1702,  1702a,  1703, 

1706,  1707a. 
Pardoe  v.  Iowa  State  Nat.  Bank,  207. 
Parham  v.  Murphee,  1197. 
Parham  Sewing  Machine  Co.  v.  Brock, 

1260. 
Paris  V.  Moe,  1230. 
Parish  v.  Stone,  25,  201. 
Park  V.  Brooks,  182,  1215. 

t;.  Brandt,  775. 

V.  Buxton,  775. 

V.  Ensign,  1306. 

t;.  Exum,  664a,  7816. 

V.  Funderburk,   812. 


Park  V.  McDaniels,  1226. 

V.  Nichols,  534. 

V.  Ross,  443. 

V.  Winsor,  775,  815. 
Park  Bank  v.  Watson,  827,  831c. 
Parke  v.  Smith,  1217. 
Parker  v.  Burgess,  368. 

V.  Carter,  179. 

V.  City  of  Syracuse,  16a,  21. 

V.  Cousins,  370,  373,   1297,  1300, 
1300a. 

V.  Davis,  1248. 

V.  Enslow,  183. 

V.  Gordon,    464a,   508,   600,   601, 
1021,  1038. 

V.  Greele,  561. 

V.  Kellog,  638. 

V.  Leigh,  545. 

V.  McDowell,  793. 

V.  Macomber,  370a,  372a,  373,  683. 

V.  Marston,  24. 

V.  Nations,  1305. 

V.  Pitts,  70. 

V.  Reddick,  470,  605,  1586,  1587. 

v.  Roser,  1661. 

V.  Stroud,  609,  644. 

V.  Sutton,  793. 

V.  Taylor,  1312. 

V.  Young,  68. 
Parkersburg  Nat.  Bank  v.  Als,  1653. 
Parkhurst  v.  Vail,  1316,  1759,  1760. 
Parkin  v.  Carruthers,  353,  369b. 

V.  Moon   728. 
Parks  V.  Duke,  32. 

V.  Evans,  869. 

V.  Smith,  1226,  1259. 
Parlin  &  Orendorff  Co.  v.  Hutson,  1312, 

1321. 
Parmelee  v.  Lawrence,  1565. 

V.  Williams,  532,  1312. 
Parnell  v.  Price,  1319. 
Parr  v.   City  Trust,   Safe   Deposit  & 
Surety  Co.,  1147. 

V.  Eliason,  760. 

V.  Erickson,  199a,  728,  769a,  812. 

V.  Jewell,  726. 
Parrott  v.  Colby,  1266a. 
Parry  v.  Spikes,  1764. 
Parshley  v.  Heath,  1092a. 
Parsons  v.  Alexander,  197. 

V.  Frost,  185. 

V.  Guarantee  Investment  Co.,  394. 

V.  Harrold,  1338. 

V.  Jackson,  53,  14966,  1506. 

V.  Phipps,  1217. 

V.  Randolph,  196. 

V.  Utica  Cement  Co.,  819. 
Partridge  v.  Badger,  382,  392a. 

V.  Bank  of  England,   1570,   1651, 
1710a. 


cxl 


TABLE    OP   CASES 


References  are  to  paragraphs  marked 


Partridge  v.  Colby,  94. 
V.  Court,  268. 
V.  Davis,  1781. 
V.  Stocker,  250. 
V.  Williams,  824. 
Passmore  v.  North,  85. 
Passumpsic  Bank  v.  Goss,  854. 
Pastene  v.  Pardini,  65. 
Pate  V.  Gray,  1425,  1429. 

V.  McClure,  1148,  1151. 
Paterson  v.  Hardacre,  1483. 
Pates  V.  St.  Clair,  1431. 
Patience  v.  Townley,  1060,  1068. 
Patillo  V.  Alexander,  970,  971,  1035. 

V.  Mayer,  532. 
Paton  V.  Coit,  198,  808. 

V.  Lent,  1012. 
Patrick  v.  Beazley,  1014. 
Patridge  v.  Colby,  1388. 

V.  Davis,  688. 
Pattee  v.  McCrillis,  963. 
Patten  v.  Ash,  1646,  1648. 
V.  Gleason,  7956. 
V.  Merchants'  Ins.  Co.,  802. 
V.  Moses,  1191. 
V.  Pearson,  717. 
V.  State  Bank,  1695. 
Patterson  v.  Bank,  191. 
V.  Fagan,  1418. 
V.  Hardacre,  167. 

V.  Kansas  City,  etc.,  R.  Co.,  1729a. 
V.  McNeely,  1385. 
V.  Marine  Bank,  1612. 
V.  Poindexter,  35,  1703,  1705. 
V.  Todd,  611,  669. 
V.  Wright,  787,  1422,  1437. 
Pattison  v.  Hull,  1250,  1251. 
V.  Supervisors,  1524. 
V.  Syracuse  Nat.  Bank,  286a. 
Patton  V.  Bank  of  La  Fayette,  934,  959. 
V.  Cooper,  1326. 
V.  Melville,  101. 
V.  Shanklin,  1317. 
V.  State  Bank,  1482. 
Patts  V.  Bell,  221. 
Paul  V.  Berry,  318. 
V.  Draper,  1611a. 
V.  Leeper,  1421. 
V.  Rider,  703. 
Paulette  v.  Brown,  829a. 
Paulman  v.  Claycomb,  1230a. 
Paul's  Episcopal  Church  v.  Fields,  33. 
Paulson  V.  Boyd,  68a. 
Pauly  V.  Murray,  85,  707,  1760,  1765. 
Pavenstedt  v.  N.  Y.  Life  Ins.  Co.,  426, 

1445. 
Pavey  v.  Stauffer,  252,  260,  850. 
Pawcatuck  Nat.  Bank  v.  Barber,  908. 
Paxton  V.  State,  1701. 
Payne  v.  Albany  City  Nat.  Bank,  698d. 


Payne  v.  Bensley,  822,  831a. 
V.  Caswell,  1458a. 
V.  Clark,  86. 
V.  Commercial  Bank,  1311,  1316, 

1328. 
V.  Cutler,  831c. 
V.  Elliot,  1708o. 
V.  First  Nat.  Bank,  271,  795a. 
V.  Flournoy,  268. 
V.  Gardiner,  1707a. 
V.  Jenkins,  36a. 
V.  Liebee,  812. 
V.  Long,  1375,  1397. 
V.  Mutual  Life  Ins.  Co.,  80. 
V.  Raubinek,  195a. 
V.  Zell,  831a. 
Paysant  v.  Ware,  83. 
Pazton  V.  State,  1702a. 
Peabody  v.  Harvey,  1156. 
V.  Munson,  679. 
V.  Peters,  1436. 
V.  Rees,  726a,  803. 
Peachy  v.  Witter,  1316. 
Peacock  v.  Purcell,  828,  971,  993,  1276, 
1277a. 
V.  Rhodes,  693. 
Peak  V.  Ellicott,  336. 
Peals  V.  Peck,  983. 
Pearce  v.  Austin,  1185,  1200. 
V.  Davis,  1623,  1646,  1648. 
V.  Dill,  336. 

V.  Langfit,  1005a,  1054. 
V.  Madison,  etc.,  R.  Co.,  377. 
V.  Wren,  1765. 
Pearl  v.  Cortright,  713a,  1311. 

V.  McDowell,  212,  213. 
Pearsall  v.  Dwight,  866,  867,  883. 
Pearsoll  v.  Chapin,  1352a. 
Pearson  v.  Bank  of  MetropoUs,  661. 
V.  Brown,  177,  179. 
V.  Crallan,  1015,  1033,  1034,  1457. 
V.  Cummings,  123. 
V.  Garrett,  41. 
V.  Gooch,  509. 
V.  Hardin,  1351. 
V.  Pearson,  179. 
V.  Stoddard,  76,  715. 
Pease  v.  Cornish,  430,  433. 
V.  Dwight,  706,  1404. 
V.  Francis,  1250. 
V.  Gloahec,  1750a. 
V.  Hirst,  741. 
V.  Landauer,  23,  1638. 
V.  Morgan,  287. 
V.  Pease,  303. 
V.  Tilt,  1311. 
Pease  &  Dwyer  Co.  ?;.  State  Nat.  Bank, 
1639,  1643. 
V.  Warren,  326,  575,  1230a. 
Peaslee  v.  Robins,  93,  536. 


TABLE    OF   CASES 


cxli 


References  are  to  paragraphs  marked  § 


Peasley   v.   Boatwright,    32,   34,    161, 

162. 
Peatman  v.  Light,  Heat  &  Power  Co., 

394. 
Peavey  v.  Hovey,  1227. 
Peck  V.  Cochran,  505. 

V.  Dyer,  812,  834a. 

V.  First  Nat.  Bank,  698d. 

V.  Hozier,  886. 

V.  Mayo,  901,  917,  920. 

V.  Regua,  1966. 
Pecker  v.  Sawj^er,  1217. 
Peckham  v.  Oilman,  713a. 

V.  Van-Bergen,  183. 
Peden  v.  Moore,  202. 
Peele  v.  Northcote,  314. 
Peele  &  Copeland  v.  Atlantic  Coast 

Line  R.  Co.,  1729. 
Peet  t;.  Zanders,  1121. 
Peets  V.  Bratt,  63. 
Peetsch  v.  Sommers,  775. 
Peevey  v.  Tapley,  1219. 
PehrerLs  v.  Poetker,  184. 
Peigh  V.  Huffman,  855. 
Pekin  V.  Reynolds,  1514. 
Peking  v.  Rejmolds,  1497. 
Pelly  V.  Naylor,  815. 

V.  Onderdonk,  815. 
Pelt  V.  Marlar,  1591,  1599. 
Pelton  V.  Spider  Lake  Sawmill,  etc.,  Co., 

142,  205,  386,  392a,  795c. 
Pender  v.  KeUy,  853. 
Pendergast  v.  Bank  of  Stockton,  1708d. 
Pendleton  v.  Bank  of  Kentucky,  392. 

V.  Knickerbocker    Life    Ins.    Co., 
598. 

V.  Smissaert,  1200. 
Pendleton  County  v.  Amy,  1520,  1523, 

1537,  1545,  1547. 
Pendleton  Hardware  Co.,  In  re  Assign- 
ment of,  139,  140,  394. 
Penfield  Inv.  Co.  v.  Bruce,  815. 
Penkwil  v.  Connell,  298. 
Penn  v.  Edwards,  1199. 

V.  Hamlet,  148. 

V.  Harrison,  1678. 
Penn.  Bank  v.  Prankish,  831a. 
Penn   Mutual   Life   Ins.   Co.   v.   Con- 

noughy,  305. 
Pennell  v.  Deffell,  336. 

V.  Ennis,  1645. 
Penniman  v.  Alexander,  29. 

V.  Meigs,  875. 
Pennington  v.  Baehr,  74,  1492a. 
Pennington  County  Bank  v.  First  State 

Bank,  775. 
Pennock  v.  Coe,  1491a. 
Penny  v.  Graves,  81. 

V.  Innes,  95a,  705,  714a,  1202a. 
Penobscot  R.  Co.  v.  Mayo,  1222. 


Pennsylvania  Bank  v.  Farmers'  Nat. 

Bank,  326a. 
Pennsylvania  R.  Co.  v.  Shay,  849a. 
Penton  v.  Wilhams,  74,  1219. 
Pentz  V.  Simeon,  248. 

V.  Stanton,  303,  305. 
People  V.  American  Steam  Boiler  Ins. 
Co.,  394. 

V.  Baker,  1623,  1648. 

V.  Bank  of  Dansville,  336. 

V.  Batchellor,  1556. 

V.  Bird,  1350. 

V.  Bostwick,  856. 

V.  Brigham,  1346. 

V.  City  Bank,  334. 

V.  Cole,  1344. 

V.  Crockett,  1708d. 

V.  Dickie,  1344. 

V.  Dole,  1347. 

V.  Elliott,  1345. 

V.  Garner,  1535a. 

V.  Gates,  122. 

V.  Getchell,  1348. 

V.  Gorham,  145,  1571. 

V.  Gray,  422,  427. 

V.  Hall,  427. 

V.  Hayes,  195. 

V.  Holden,  1555a. 

V.  Howell,  1648. 

V.  Johnson,  427. 

V.  Jones,  1654. 

V.  Kemp,  1567. 

V.  Laird,  1344. 

V.  Lawrence,  1556,  1557. 

V.  Lee,  1345. 

V.  Lewinger,  1344. 

V.  Lundin,  1345. 

V.  McDermott,  108. 

V.  Mead,  1495,  1552,  1555a. 

V.  Merchants'  Bank,  336. 

V.  Mitchell,  1349,  1350,  1557. 

V.  North  River  Bank,  1003. 

V.  Rimington,  16a. 

V.  St.  Nicholas'  Bank,  326a,  337, 
1425,  1601a,  1636. 

V.  Sanders,  1344. 

V.  State  Treasurer,  1685,  1686. 

V.  Stupp,  427. 

V.  Supervisors  El  Dorado  County, 
422,  427,  1536. 

V.  Tazewell  County,  1497,  1514. 

V.  Township  Board  of  Salem,  1523. 

V.  Warfield,  1535a. 

V.  Waynesville,  1536. 

V.  Weant,  1535a. 

V.  Whiteman,  1344,  1350. 
People's   Bank  v.    Bogart,    731,    736y 
736a. 

V.  Brooke,  952,  698d. 

V.  Gridley,  1708e. 


cxlii 


TABLE    OF   CASES 
References  are  to  paragraphs  marked 


People's  Bank  v.  Jefferson  County  Sav. 
Bank,  337. 

V.  Keech,  999,  999a. 

V.  Legrand,  3266,  1319. 

V.  Lutterloh,  635. 

V.  Pearson,  1317,  1332. 

V.  Scalzo,  960,  962,  1003. 

V.  School  DLst.,  337,  377. 
People's  Bank  of  Minneapolis  v.  Reid, 

776.  ,  ^    . 

People's  &   Drovers'   Bank  v.   Lraig, 

698d. 
People's  Nat.  Bank  v.  Freeman's  Nat. 
Bank,  347. 
V.  Hazard,  769a. 
V.  Schepflin,  189,  240. 
People's  Sav.  Bank  v.  Capps,  1654a. 
V.  Gifford,  195a,  1623. 
V.  Smith,  366. 
People's  State  Bank  v.  Ruxer,  193,  852. 
Peoria  Mfg.  Co.  v.  Huff,   189,    1332, 

1335. 
Peoria  &c.  R.  Co.  v.  Tazewell,  1535. 
V.  Thompson,  834. 
V.  U.  S.  Rolling  Stock  Co.,  1741. 
Peoria  R.  Co.  v.  Neill,  533. 
Pepoon  V.  Stagg,  39,  1395. 
Pepper  Distributing  Co.  v.  Alexander, 

1713a. 
Percival  v.  Framton,  165,  183a. 
Perez  v.  Bank  of  Key  West,  1227. 
Perfect  v.  Murgrave,  1336. 
Perkins  v.  Barstow,  713o,  716,  1215a. 
V.  Catlin,  1765. 
V.  Challis,  796. 
V.  Clements,  1184. 
V.  Commonwealth,  1346. 
V.  Cumming,  204. 
V.  Franklin  Bank,  622,  633,  1671. 
V.  Hawkins,  1429. 
V.  Lyman,  196. 
V.  Prout,  815. 
V.  Trinity  Realty  Co.,  386. 
V.  White,  789a,  1113. 
Perkins  Bros.  v.  Gumbel,  834. 
Perkins'  Wind  Mill,  etc.,  Co.  v.  Tillman, 

1373a. 
Perley  v.  Perley,  164. 
Perot  V.  Cooper,  812. 
Perreia  v.  Jopp,  116,  463. 
Perrin  v.  Broadwell,  1304. 
V.  Keene,  370. 
V.  Noyes,  815. 
Perring  v.  Hone,  361,  1390. 
Perry  v.  Bamett,  1753. 
V.  Bigelow,  51a,  149. 
V.  Bray,  688. 
V.  Crammonds,  64. 
V.  Friend,  713d. 
V.  Green,  607,  609. 


Perry  v.  Hadnett,  1338. 
V.  Harrington,  513. 
V.  Mays,  1437. 

V.  German  &  Blaebaum,  1225. 
V.  Sumrall  Lumber  Co.,  389. 
V.  Taylor,  1458a. 
V.  Van  Norden  Trust  Co.,  1236. 
V.  Wheeler,  1181a. 
Perry  Co.  v.  Taylor  Bros.,  714,  971. 
Perry  State  Bank  v.  Elledge,  164. 
Persifull  v.  Pineville  Banking  Co.,  1327. 
Persons  v.  Hawkins,  816. 

V.  Kruger,  995a,  998,  1054,  1056. 
Perth  Amboy  Mut.  Loan,  H.  &  B.  Assn. 

V.  Chapman,  775,  799,  822. 
Peru  V.  Farns worth,  56. 
Peru  Plow  &  Wheel  Co.  v.  Ward,  1401. 
Peruvian  R.  Co.  v.  Thames  &  Mersey 

Mut.  Ins.  Co.,  380. 
Peters  v.  Anderson,  1252. 
V.  Barnhill,  1339. 
i;.  Beverley,  1260. 
t;.  Gay,  790. 
V.  Hobbs,  1023. 
V.  Nolan  Coal  Co.,  713a. 
Peterson  v.  FuUcrton,  1233. 
V.  Homan,  305. 
t^.  Hubbard,  497b. 
V.  Mayor  of  New  York,  317. 
V.  Stoughton  State  Bank,  62. 
V.  Tillinghast,  81a. 
V.  Union  Nat.  Bank,  1596. 
Petillon  V.  Noble,  834. 
Petingale  v.  Barker,  240. 
Petit  V.  Benson,  508,  516. 
Peto  V.  Reynolds,  96,  97. 
Petrie  v.  Feeter,  1309. 
V.  Hannay,  200. 
V.  Miller,  831a,  832. 
Petrie,  Matter  of,  316. 
Petrue  v.  Wakem  &  McLaughlin,  1470. 
Pettee  v.  Prout,  1200,  1431,  1436. 
Petty  V.  Douglas,  13176. 
V.  Fleispel,  86. 
V.  Gacking,  1753. 
V.  Hinman,  758,  778. 
Pettyjohn    v.    National   Exch.    Bank, 

1351. 
Peymen  v.  Bowery  Bank,  1425. 
Peyser  v.  Cole,  62. 
Peyton  v.  Hallett,  16a,  21,  23. 
V.  Harman,  76. 

V.  Planters'  Compress  Co.,  742. 
Pfiel  V.  Vanbatenberg,  1206,  1227. 
Pharr  v.  Stevens,  714. 
Phelan  v.  Moss,  773,  775,  779a,  1407, 

1409. 
Phelps  V.  Alfred  Bank,  1535. 
V.  Borland,  305. 
V.  Church,  1777. 


TABLE    OF   CASES 


cxliii 


References  are  to  paragraphs  marked  § 


Phelps  V.  Mayers,  156. 
V.  Moomaw,  49. 
V.  Northrup,  504. 
V.  Phelps,  179. 

V.  Stocking,  1005,  1021,  1037. 
V.  Town,  56. 

V.  Vischer,  709,  713d,  713e. 
V.  Yates,  1495. 
V.  Younger,  196&. 
Phetteplace  v.  Bucklin,  1226. 
Philadelphia  v.  Field,  1556. 

V.  Stewart,  1262.  ^.      ^ 

Philadelphia  &  R.  R.  Co.  t^.  Fidehty  & 
Tr.  Co.,  1509,  1513. 
V.  Smith,  1509,  1513. 
Philadelphia  Bank  v.  Newkirk,  54. 
Philadelphia,  etc.,  R.  Co.  v.  Northam, 

1738. 
Philadelphia  Loan  Co.  v.  Towner,  384. 
Philadelphia  Nat.  Bank  v.  Dowd,  336. 
Philadelphia  R.  Co.  v.  Knight,  1513. 
Philipe  V.  Haberlee,  1007. 
Philip  Semmer  Glass  Co.,  In  re,  260. 
Philler  v.  Patterson,  1712a. 

V.  Yardley,  1712o. 
Phillip  &  William  Ebbing  Brewing  Co. 

V.  Reinheimer,  1018. 
PhiUips  V.  Alderson,  1016. 
V.  Astberg,  590. 
V.  Buliard,  1623. 
V.  Cripps,  1401. 
V.  Dipps,  1092. 
V.  Dugan,  1247. 
V.  Frost,  497. 
V.  Giflford,  168. 
V.  Gould,  972,  983. 
V.  Inthun,  136,  908. 
V.  Knight,  300. 
V.  Lindley,  1789. 
t;.  McCurdy,  930,  1154. 
V.  Mercantile  Nat.  Bank,  140. 
V.  M.  &  N.  Bank,  392. 
V.  Moily,  81c. 
V.  Paget,  227. 
V.  Plato,  1340,  1753. 
t;.  Poindexter,  964. 
V.  Preston,  187,  703. 
V.  Sanger  Lumber  Co.,  274. 
V.  Thurn,  528. 
V.  Trowbridge,  1154. 
Philliskirk  v.  Pluckwell,  254,  256,  686, 

1184. 
Philpot  V.  Temple  Banking  Co.,  1698. 
Philpott  V.  Bryant,  454,  591,  1316. 

V.  Jones,  1250. 
Phinney  v.  Baldwin,  1458a. 

V.  State,  1645. 
Phipps  V.  Chase,  1146. 

«;.  Harding,  868,  895,  899,   1171, 
1172. 


Phipps  V.  Millbury  Bank,  331. 

V.  Tanner,  86a. 
Phipson  V.  Kneller,  1094,  1103. 
Phoenix  Assur.  Co.  v.  Fristoe,  1181a. 
Phoenix  Bank  v.  Hussey,  9,  926. 

V.  Risley,  334. 
Phoenix  Ins.  Co.  v.  AUen,  472,  1272, 
1276. 
V.  Church,  831c,  1266c. 
V.  Gray,  472. 
t'.  Landis,  1326. 
V.  Owens,  81c,  177. 
Phoenix  Nat.  Bank  v.  Saucier,  729. 
Pickard  v.  Bankes,  1687. 
Pickens  v.  Post,  812. 
Pickens  County  v.  Daniel,  1508a. 
Pickens  Township  v.  Post,  800a,  803, 

1537,  1542. 
Picker  v.  Harlan,  1177. 
Pickering  v.  Cameron,  18. 
V.  Cording,  130,  6886. 
Pickett  V.  Stewart,  1195. 
Pickin  V.  Graham,  1158. 
Pickle  I'.   People's  Nat.   Bank,   1618, 

1636,   1647,   1663. 
Pickslay  v.  Starr,  180. 
Picquet  v.  Curtis,  576,  643. 
Pidcock  V.  J.  Crouch  &  Son,  81a. 

V.  Merchants'  Nat.  Bank,  777. 
Piedmont  Bank  v.  Hatcher,  815. 
Piedmont  Guano  Co.  v.  Morris,  1753. 
Piemental  v.  Marques,  1321. 
Pier  V.  Heuxrichsoffen,  1068a. 
Pierce  v.  Gate,  1144,  1210. 
V.  Drake,  1269. 
V.  Gilson,  1227. 
V.  Goldberry-,  1317a. 
t^.  Indseth,  879,  908,  945,  947. 
V.  Kennedy,  713c. 
V.  Kibbe,  196a. 
V.  Kittredge,  504. 
11.  Merrill,  1769. 
V.  Pendar,  1005. 
V.  Schader,  973. 
V.  So.  Pac.  Ry.  Co.,  1741. 
V.  Stolhand,  164,  188. 
V.  Strathers,  1030. 
V.  United  States,  440. 
V.  Whitney,  1109. 
Pierce  City  Nat.  Bank  v.  Hughlett, 

1310. 
Piercy  v.  Piercy,  1391,  1418. 
Pierpont  v.  Johnson,  741. 
Piersol  v.  Grimes,  1373a. 
Pierson  v.  Dunlop,  503,  552,  554,  555. 
V.  Huntington.  775,  814. 
V.  Hutchinson,  1475,  1482. 
V.  W^allace,  1672. 
Pike  j;.  Irvin,  568,  569. 
V.  Street,  717,  720a. 


cxliv 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Pilkinton  v.  Commissioners  of  Claims, 
1244. 
V.  Woods,  449. 
Pillans  V.  Van  Mierop,  176,  529,  553, 

567. 
Pillow  V.  Hardeman,  1000. 
V.  Helm,  12816. 
V.  Roberts,  947. 
Pilmer  v.  Branch  Bank,  56. 
Pimental  v.  Marques,  1338. 
Pinard  v.  Klockman,  115. 
Pinckney  v.  Keyler,  1428. 
Pindall  v.  Bank  of  Marietta,  1250. 

V.  N.  W.  Bank,  1675. 
Pindar  v.  Barlow,  145. 
Pine  V.  Smith,  787a,  894. 
Pine  Grove  Township  v.  Talcott,  10, 

423,  1521,  1523,  1524,  1526. 
Piner  v.  Clary,  604,  605,  928. 
Pinkerton  v.  Bailey,  728. 

V.  Manchester  &  L.  R.  Co.,  1708e. 
Pinkerton's  Estate,  In  re,  1417. 
Pink  Front  Bankrupt  Store  v.  G.  A. 

Mistrot  &  Co.,  1590. 
Pinkham  v.  Macy,  983. 
Pinkney  v.  Hall,  6,  488. 
Pinnel's  Case,  1289. 
Pinnes  v.  Ely,  688c. 
Pinney  v.  First  Nat.  Bank  of  Concordia, 

199a. 
Pintard  v.  Tackington,  1472,  1484. 
Pioneer  Fuel  Co.  v.  McBrier,  1738. 
Piper  V.  Hayward,  591. 

V.  Neylon,  776. 
Pirie,  In  re,  1219. 
Pirkle  v.  Chamblee,  1338. 
Pitcher  v.  Barrows,  354. 
Pitkin  V.  Clayton,  741. 
Pitman  v.  Breckenridge,  970. 
V.  Crawford,  50. 
V.  Kintner,  306,  402,  408. 
Pitt  V.  Chappeow,  242,  535. 

V.  Little,  80,  185,  1290,  1398. 
V.  Purssord,  1340,  1341. 
V.  Smith,  214. 
Pitts  V.  Foglesong,  793a,  830,  831a. 

V.  Keyser,  1198. 
Pittsburg,  C,  C.  &  St.  L.  R.  Co.  v. 

Am.  Tobacco  Co.,  1729a. 
Pittsburg,  etc.,  Ry.  Co.  v.  Lynde,  854, 

1491a,  1506. 
Plain  V.  Roth,  1252. 
Plankinton  v.  Gorman,  1311. 

V.  Hilderbrand,  1708d. 
Plant  V.  Voeglin,  859. 
Planters'  Bank  v.  Bradford,  1032. 
V.  Douglas,  532. 
V.  Erwin,  387. 
V.  Evans,  128,  668. 
V.  Housen,  719a. 


Planters'   Bank  v.  Kesee,  1567,  1568, 
1569,  1587,  1636. 
V.  Markham,  600. 
V.  Merrit,  1636. 
V.  Sharp,  385. 
V.  White,  1000. 
V.  Union  Bank,  200. 
Planters'  &  Merchants'  Bank  v.  Goet- 

ter,  751. 
Planters,  etc.,  Nat.  Bank  v.  Roberston, 

1326. 
Planters'  Fertilizer  &  Mfg.  Co.  v.  Elder, 

1729a. 
Planters'  Ins.  Co.  v.  Tunstall,  748a. 
Planters'  Rice  Mill  Co.  v.  Merchants' 

Nat.  Bank,  1714. 
Planters'     State    Bank     v.    Schlamp, 

1311. 
Plasterstein  v.  Hoes,  24. 
Piatt  V.  Beebe,  183a. 
V.  Drake,  983. 

V.  Hitchcock  Co.,  1539,  1542. 
V.  Jerome,  861. 
V.  Koehler,    Dickey   &   Co.,   357, 

366,  369. 
V.  Sauk  County  Bank,  56. 
V.  Smith,  1383. 
V.  Snipes,  174. 
Platzer  v.  Norris,  73. 
Plets  V.  Johnson,  130,  139. 
Plock  V.  Cobb,  441,  437a,  1400,  1500, 

1506. 
Plover  Savings  Bank  v.  Moodie,  1599. 
Plummer  v.  Farmers'  Bank,  859. 

V.  Lyman,  566. 
Plyler  v.  Eliot,  1385. 
Pochin  V.  Knoebel,  1230. 
Podmore  v.  South  Brooklyn  Sav.  Inst., 

24. 
Poess  V.  Twelfth  Ward  Bank,    1603, 

1631. 
Pogue  V.  Clarke,  94. 
Pohlman  v.  Wilcox,  509. 
Poindexter  v.  Greenhow,  448. 

V.  McDowell,  193,  850. 
Poirier  v.  Morris,  827,  1192. 
Poland  V.  Love,  1644. 
Polhemus  v.  Prudential  Realty  Corp., 

63,  189,  703,  1198. 
Polhill  V.  Walter,  307,  362,  485. 
Police  Jury  v.  Britton,  420,  422. 
Polk  V.  Spinks,  1064. 
Polkinghorne  v.  Hendricks,  713a. 
Pollard  V.  Bowen,  1586,  1600. 
V.  Herries,  54,  1453. 
V.  Huff,  1781. 
V.  Reardon,  1727. 
V.  Vinton,  1733. 
Policy  V.  Hicks,  24a. 
Pollock  V.  Bradbury,  721. 


TABLE   OF   CASES 


cxlv 


References  are  to  paragraphs  marked  § 


Pollock  V.  Carolina  Interstate  Bldg., 
Loan  Assn.,  1612a. 

V.  Glassel,  34. 

V.  Helm,  1797a. 
Pollock  &  Bernheimer  et  al.  v.  Simmons 

Bros,  et  al,  832. 
Polo  Mfg.  Co.  V.  Parr,  151. 
Pomeroy  v.  Ainsworth,  879. 

V.  Rice,  835a,  12666,  1267. 

V.  Tanner,  1312,  1329. 
Pompton  V.  Cooper  Union,  1523a,  1537, 

1550. 
Poncin  v.  Furth,  812. 
Pond  V.  Underwood,  1615, 

V.  Waterloo   Agricultural  Works, 
775. 
Pons  V.  Kelly,  1082. 
Poock  V.  Lafayette  Bank,  386a. 
Pool  V.  Anderson,  5,  709,  714,  1095a. 
Poole  V.  Dicas,  580. 

V.  Rice,  305,  1260. 

V.  Tolleson,  611. 
Pooley  V.  Harradine,  1334,  1335,  1336, 

1337. 
Poore  V.  Magruder,  284. 
Poorman  v.  Mills,  1195,  1703. 
Pope  V.  Askew,  1219. 

V.  Bank    of    Albion,    392,    1606a, 
1610,  16106. 

V.  Burnset,  119. 

V.  Hanke,  197,  808,  866. 

V.  Huth,  23,  513. 

V.  Linn,  69,  70. 

V.  Peterson,  81a. 
Poplewell  V.  Wilson,  108,  186. 
Popley  V.  Ashlin,  736,  1269. 
Porteous  v.  Muri,  80. 
Porter  v.  City  of  Janesville,  10a,  99, 
1496. 

V.  Cummings,  287. 

V.  Cushman,  574,  694a,  1230a. 

V.  Havers,  196. 

t;.  Hine,  703. 

V.  Jones,  196. 

V.  Judson,  1116. 

V.  Kemball,  1094,  1095a. 

V.  Neckervis,  687,  1429. 

V.  Pittsburg  Steel  Co.,  803. 

V.  Porter,  88. 

V.  Roseman,  1230. 

V.  Talcott,  1264. 

«;.  Thom,  654,   1149,   1150,   1162, 
1165,  1166,  1168. 

V.  Waltz,  710. 

V.  Woods,  303. 
Poi-thouse  V.  Parker,  1086. 
Portland,  etc.,  R.  Co.  v.  Hartford,  1551. 
Portsmouth  Sav.  Bank  v.  Wilson,  713, 

7136,  1092a. 
Posey  V.  Decatur  Bank,  508,  654,  1478. 


Potter  V.  Earnest,  80. 

V.  Merchants'  Bank,  392. 

V.  Ray  worth,  1110,  1158. 

V.  Sheets,  174a. 

V.  Stransky,  748. 

V.  Tallman,  922. 

V.  Tyler,  663. 
Pottlitzer  v.  Wesson,  1289. 
Potts  V.  Blackwell,  834a. 

V.  Coleman,  1227. 

V.  Mayer,  831c. 

V.  Reed,  6986,  699. 
Poucher  v.  Scott,  1646. 
Povall  V.  Danville  Cigar  Mfg.  Co.,  1590. 
Powell  V.  Bank,  1376. 

V.  Charless,  1299,  1300. 

V.  Commonwealth,  1344. 

V.  Duff,  142. 

V.  Feeley,  125. 

V.  Hogue,  1429. 

V.  Hurt,  264. 

V.  Jones,  506. 

V.  Monnier,  532,  1466. 

V.  Patison,  833. 

V.  Roach,  1475. 

V.  Waters,  65,  630,  726,  750,  751, 
752,  790,  793,  1190. 
Power  V.  Finnic,  698. 

V.  First  Nat.  Bank,  342. 

V.  Hambrick,  161,  183,  724a. 

V.  Hathaway,  884. 

V.  Silberstein,  1313. 
Powers  V.  Briggs,  403,  405. 

t;.  Bumcranz  17856. 

V.  French,  175. 

V.  Lynch,  678. 

V.  Manning,  45a,  46. 

V.  Neeson,  724. 

V.  Provident  Ins.  Co.,  246. 

V.  Woolfolk,  326,  1230,  1321,  1436. 
Poydras  v.  Delamere,  22,  23. 
Prall  V.  Tilt,  1708^. 
Pranell  v.  Davenport,  183. 
Prather  v.  Gammon,  13176. 
Pratt  V.  Beaupre,  305,  418. 

V.  Chase,  875,  1283,  1331. 

V.  Coman,  183a,  831c. 

V.  Foote,  1266a,  1620, 

V.  Johnson,  202. 

V.  Parkman,  1731. 

V.  Topeka,  1188. 
Pratt  &  Whitney  Co.  v.  American  Pneu- 
matic Tool  Co.,  68a,  816. 
Preas  v.  Vollintine,  81a,  164. 
Prehn   v.  Royal   Bank   of   Liverpool, 

1449. 
Prentice  v.  Zane,  803,  831a. 
Prentiss  f.  Danielson,  1143. 

V.  Graves,  831a. 

V.  Savage,  879,  921. 


cxlvi 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Prentiss  v.  Sinclair,  3696, 

V.  Strand,  803. 
Presbrey  v.  Thomas,  358a,  365,  367, 

999. 
Prescost  v.  Flinn,  290,  296. 

V.  Hixon,  80,  403. 

V.  Hull,  741. 

V.  Ward,  187a. 

V.  Williamsport  &  Co.,  1478. 
Prescott  Bank  i;.  Caverly,  242,  466, 467, 

472,  675,  719. 
Prescott  Nat.  Bank  v.  Butler,  69,  70, 

1181a. 
Press    Co.   v.   City   Bank,    197,    199, 

810. 
Preston  v.  Canadian   Bank  of  Com- 
merce, 1622a. 

V.  Dozier,  995. 

V.  Dunn,  46. 

V.  ElUngton,  719. 

V.  Gould,  710. 

V.  Hull,  148,  1496,  1499. 

V.  Jackson,  206. 

V.  Mo.,  etc.,  Lead  Co.,  387. 

V.  Morris,  834. 

V.  Northwestern  Cereal  Co.,  386. 

V.  Whitney,  51a. 
Prestwick  v.  Marshall,  242,  252,  681. 
Prettyman  v.  Supervisors,  1523,  1524, 
1536a. 

V.  Tazwell  Co.,  1497. 

V.  The    Board   of   Supervisors   of 
Tazwell  County,  1497. 
Prewett  v.  Citizens  Nat.  Bank,  193. 
Price  V.  Barker,  1295. 

V.  Cannon,  1289. 

V.  Dime  Sav.  Bank,  1311,  1317&. 

V.  Dunlap,  1481,  1484. 

V.  Edmunds,  1319,  1336. 

V.  Gatliff,  879. 

V.  Horton,  1342. 

V.  Jones,  46. 

V.  Keen,  174a. 

V.  Lavender,  713e,  715,  716. 

V.  Mitchell,  1316. 

V.  Neal,  533,  1225,  1360,  1361. 

V.  Page,  898. 

V.  Price,  1260,  1270,  1272,  1475. 

V.  Taylor,  402. 

V.  Teal,  53,  54. 

V.  Torrington,  1057. 

V.  Trusdell,  703. 

V.  Warner,  986. 

V.  White,  188. 

V.  Winnebago    Nat.    Bank,    573, 
812. 

V.  Wisconsin  Co.,  1747a. 

V.  Young,  591,  1036,  1111. 
Price  County  Bank  v.  McKenzie,  1311. 
Prideaux  v.  Collier,  1075,  1107,  1163. 


Prideaux  v.  Criddle,  1599. 
Pridgen  v.  Andrews,  1458a. 

V.  Cox,  502. 
Priest  V.  Watson,  1305,  1311. 
Prieto  V.  Leonards,  262. 
Prigeon  v.  Smith,  170. 
Prim  V.  Hammel,  86,  142,  1230,  1384. 

V.  Mcintosh,  742. 
Prince  v.  Brunatte,  242,  681. 
Bring  v.  Clarkson,  1328,  1329. 
Pringle  v.  Phillips,  775,  814. 
Prins  V.  South  Branch  Lumber  Co., 

795a. 
Pritchard  v.  Norwood,  1468. 

V.  Norton,  865. 

V.  Scott,  1014. 

?;.  Smith,  1268. 
Pritchett  v.  Sheridan,  164. 
Proctor  V.  Baldwin,  62,  831a. 

V.  Blanchard,  189. 

V.  Cole,  778. 

V.  Sears,  233. 

V.  Webber,  404. 

V.  Whitcomb,  793. 
Produce  Bank  v.  Bache,  185. 
Produce  Exch.   Trust  Co.   v.   Bieber- 

bach,  403. 
Proseus  v.  Porter,  16126. 
Protection  Ins.  Co.  v.  Hill,  47. 
Prouty  r    Wilson,  1321. 
Providence  County   Savings   Bank   v. 

Vadnais,  1203. 
Provident  Nat.  Bank  v.  C.  D.  Harnett 

Co.,  17. 
Provident  Trust  Co.  v.   Mercer  Co., 

la,  68,  1520,  1537. 
Provines  v.  Wilder,  1316. 
Prussing  v.  Lancaster,  1317,  1321. 
Pruyne  v.  Milwaukee,  1458a. 
Pryce  v.  Jordan,  1200. 
Pryibil  v.  Altemeyer,  1181a. 
Pryor  v.  Bowman,  996. 

V.  Ludden  &  Bates  Southern 
Music  House,  202. 

V.  Storke,  790. 
Puffer  V.  Smith,  849. 
Puget  de  Bras  v.  Forbes,  174,  177,  178, 

855a. 
Pugh  V.  Cameron,  880,  895,  923. 

V.  Moore,  Hyams  &  Co.,  305. 
Pulaski  V.  Gilmore,  1532. 
Pullen  V.  Chase,  1458. 

V.  Placer  County  Bank,  180. 

V.  Shaw,  1420. 

V.  Ward,  834,   835. 
PuUy  V.  Pass,  1340. 
Pulsifer  v.  Hotchkiss,  203. 
Pundmann  v.  Schoenich,  1612a. 
Purcell  V.  Allemong,  1567,  1586,  1587, 

1596,  1636. 


TABLE   OF   CASES 


cxlvii 


References  are  to  paragraphs  marked  § 


Purcell  V.  Armour  Packing  Co.,  68a, 

81a,  1646,  1652. 
Purchase  v.  Mattison,  792,  1049,  1105, 

1596. 
Purdy  V.  Lansing,  1544. 
Purviance  v.  Jones,  63. 
Puryear  v.  McGavock,  200. 
Putnam  v.  Crymes,  105. 

V.  Dike,  884. 

V.  Lewis,  1272,  1273,  1267. 

V.  Schuyler,  1309. 

«;.  SuUivan,    143,    147,    843,    847, 
850,  1144. 

V.  Tash,  1758. 
Putnam  Nat.  Bank  v.  Snow,  504,  560. 
Putney  v.  Farnham,  567. 
Pyle  V.  Gallaher,  163,  174,  203,  1252. 
Pym  V.  Campbell,  68a. 
Pyron  &  Son  v.  Ruohs,  52. 


Quaintance  v.  Goodrow,   1090,   1091, 

1093. 
Quaker  City  Bank  v.  Showacre,  869. 
Quebec  Bank  v.  Hellman,  855a. 
Queen  v.  Silverlock,  1219. 
Queensbury,  Tovm  of,  v.  Culver,  1489, 

1521,  1523,  1556. 
Quiggle  V.  Herman,  197. 
Quigley  v.  Mex.  So.  Bank,  664a,  781a. 
Quimby  i'.  Buzzell,  112. 

V.  Stoddard,  725a,  782. 

V.  Vamum,  714,  1204,  1236a. 
Quin  V.  Hanford,  569. 

V.  Sterne,  688,  710,  716. 
Quinby  v.  Merritt,  55,  103. 
Quincey,  etc.,  R.  Co.  v.  Morris,  1523. 
Quinlan  v.  Fairchild,  816,  1226,  1243. 
Quinn  v.  Hard,  793a,  814,  1190. 

V.  Tuller,  190. 


Raborg  v.  Peyton,  534. 
RadcUffe  v.  Biles,  849a. 
Radford's  Adm'rs  v.  Harris,  1219. 
Rae  V.  Halbert,  1426. 
Raesser  v.  Nat.  Exch.  Bank,  1643. 
Ragget  V.  Axmore,  1333. 
Ragsdale  v.  Gresham,  164,  174a,  532, 
534  567. 

V.  Southern  R.  Co.,  1470. 
Rahm  v.  Philadelphia  Bank,  656. 
Railroad  Co.  v.  Bank,  1636. 

V.Buckley,  1623. 

V.  Chamberlain,  176,  186. 

V.  County  of  Otoe,  1523. 

V.  Evansville,  382,  1527a. 

V.  FraloflF,  1740a. 


Railroad  Co.  v.  Howard,  383,  1708. 

V.  Johnson,  1248. 

V.  Lickiss,  63. 

V.  Nat.  Bank,  10,  831&. 

V.  Otoe  County,  1521. 

i;.  Schutte,  441,  673,  758&,  1517a. 

V.  Stout,  1370. 

V.  Tieman,  397. 

V.  Yeager,  1733. 
Railroad  Nat.  Bank  v.  Lowell,  422a. 
Railway  Co.  v.  Citizens'  Nat.  Bank, 
390. 

V.  Cleneay,  1489,  1500. 

V.  Lynde,  33,  800a. 

V.  Sprague,  1506. 
Rainbolt  v.  Eddy,  1406. 
Raine  v.  Rice,  962. 
Raleigh  &  Gaston  v.  Lowe,  1727, 1747a, 

1750a. 
RaUi  V.  Sarell,  508. 
Ralls  County  v.  Douglass,  1543. 
Ralston  t^.  BuUitts,  1083,  1106. 
Rait  V.  Watson,  1484. 
Ramboy  v.  Stansburg,  394. 
Ramdulloday  v.  Darieux,  1083. 
Ramish  v.  Kirschbraum,  17346. 
Ramsay  &  Bro.  v.  Capshaw,  81rf. 
Ramsdale  v.  Horton,  1675. 
Ramsdell  v.  Morgan,  807. 
Ramsey  v.  Anderson,  1189. 

V.  Thomas,  62. 

V.  Young,  81a. 
Ramuz  v.  Growe,  1484. 
Rand  v.  Barrett,  1221,  1343. 

V.  Dovey,  32a,  664a,  1196. 

V.  Hale,  403. 

V.  Hubbard,  261. 

V.  Reynolds,  1028. 

V.  State  of  N.  C,  797. 
Randahl  v.  Lindolm,  1203. 
Randall  v.  Fox,  382. 

V.  Lee  &  Randall,  358a. 

V.  Rhode  Island  Lumber  Co.,  396, 
827. 
Randall  Co.  v.  Glendenning,  742. 
Randle  v.  Davis  Coal  Co.,  713a,  715, 

717,  719. 
Randolph  v.  Cooke,  1209. 

t;.  Hudson,  30,  53,  1470. 

V.  Parish,  128. 
Randolph  County  v.  Post,  1523,  1548. 
Randolph  Nat.  Bank  v.  Homblower, 

1604. 
Raney  v.  Winter,  298,  411. 
Ranger  v.  Carey,  746,  783. 

V.  Sargent,  1771. 
Rankin  v.  Childs,  1785&. 

i;.  Knight,  187. 

V.  Roler,  32. 

V.  Weguelin,  24. 


cxlviii 


^ABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Ransom  v.  Mack,  984,  1014,  1115. 

Ranson  v.  Sherwood,  713c. 

Rapelye  v.  Bailey,  17856. 

Raper  v.  Birkbeck,  549. 

Raphael  v.  Bank  of  England,  774,  1680. 

Rapp  V.  Phoenix  Ins.  Co.,  1770a. 

Rasmussen  v.  State  Nat.  Bank,  1289. 

Rastell  V.  Draper,  1580. 

Ratcliff  V.  Everman,  268. 

V.  Planters'  Bank,  1144. 
Rathborne  v.  Railroad  Co.,  1740a. 
Rathbun  v.  Citizens'  Steamboat  Co., 

1625. 
Rathfon  v.  Locher,  205. 
Rattlemiller  v.  Stone,  1760. 
Rauer  v.  Broder,  598. 
Raught  V.  Black,  1319. 
Rawlings  v.  Robson,  305. 
Rawlinson  v.  Stone,  242,  680. 
Rawson  v.  Davidson,  32. 

V.  Walker,  80,  81. 
Rawstone  v.  Parr,  81c. 
Ray  V.  Anderson,  90,  1181a. 

V.  Baker,  156. 

V.  Faulkner,  513. 

V.  Indianapolis  Ins.  Co.,  93. 

V.  McMillan,  764. 

V.  Morgan,  534. 

V.  Pease,  1213. 

V.  Simmons,  24a. 

V.  Smith,  1128,  1143. 

V.  Tubbs,  224. 
Ray  County  v.  Van  Sycle,  1523a,  1545. 
Raymond  v.  Baar,  1675. 

V.  Holmes,  898,  901,  909,  910. 

V.  McNeal,  710. 

V.  Mann,  128. 

V.  Merchant,  1275. 

V.  Middleton,  106. 

V.  Palmer,  326&. 

V.  Sellick,  25. 
Rayne  v.  Dillo,  670. 
Raynor  v.  Laux,  1272. 
Rea  V.  Dorrance,  1083. 

V.  Owens,  1289. 
Read  v.  Adams,  930. 

V.  Bank  of  Kentucky,  934a. 

V.  Cutts,  1786. 

V.  Marine   Bank  of  Buffalo,  654, 
1228. 

V.  McNulty,  54. 

V.  Marsh,  552,  553. 

V.  Norris,  1342. 

V.  Wheeler,  36a,  39. 

V.  Wilkinson,  508,  1162. 
Reading  v.  Beardsley,  1198. 
Reakert  v.  Sanford,  253,  681. 
Real  Estate  Trust  Co.  v.  Union  Trust 

Co.,  1491a. 
Reamer  v.  Bell,  692. 


Reapers'  Bank  v.  Williard,  1686. 
Reardan  v.  Cockrell,  725,  1230. 
Reardon  v.  Moriarty,  81c. 
Reavis  v.  Blackshear,  170. 
Reboulin  Fils  &  Co.,  In  re,  1731. 
Receivers  v.  Grant,  1712a. 
Recke  v.  Sayers,  149. 
Red   V.    Mattapan   Deposit   &c.   Co., 

1571. 
Redd  V.  Supervisors,  1560. 
Redden  v.  First  Nat.  Bank,  730,  1284. 

V.  Lambert,  666,  713a,  7136,  926. 
Reddick  v.  Jones,  832. 

r.  Young,  142,  1651. 
Redenbaugh  v.  Kilton,  1300. 
Redding  v.  Redding,  163. 
Redington   v.    Wood,   672,    677,    815, 

1661,  1654a. 
Redhch  v.   Doll,   124,   143,  842,  843, 

1406,  1498. 
Redlow  V.  Churchill,  368. 
Redman  v.  Adams,  51. 

V.  Deputy,  1317. 

V.  Murrell,  1310. 
Redmayne  v.  Burton,  1696. 
Redmond  v.  Stansburry,  1200. 
Red  River  Nat.  Bank  v.  Bray,  1312. 
Reed  v.  Bacon,  369. 

V.  Bank  of  Ukiah,  197. 

t;.  Batchelder,  223,  230. 

V.  Boardman,  1251. 

V.  Boshears,  231,  233,  235. 

V.  Evans,  1764. 

V.  First  Nat.  Bank,  187,  812,  833. 

V.  Fleming,  408,  418. 

V.  McCready,  1181a. 

V.  Payne,  1025. 

V.  Roark,  1400. 

V.  Spear,  988. 

V.  Stapp,  724a. 

V.  Tiemey,  1317a. 

V.  Tioga  Mfg.  Co.,  90a. 

V.  Trentman,  792. 

V.  White,  1299. 

V.  Whitney,  1428. 

V.  Wilson,  600,  622,  627. 
Reeder  v.  Nay,  1260. 
Reeds  v.  Spear,  591,  971. 
Reedv  v.  Brunner,  859. 

V.  Elevator  Co.,  680. 

V.  Siexas,  979a. 
Rees  V.  Abbott,  94. 

V.  Berrington,  1336. 

V.  Conococheauge  Bank,  145,  663, 
694,  695,  1195. 

V.  Warwick,  503,  506. 
Reese  v.  Bank  of  Commerce,  1708d. 
Reeve  v.  First  Nat.  Bank,  403. 

V.  Pack,  643. 
Reeve's  Estate,  In  re,  63,  63a,  67. 


TABLH    OF   CASES 


cxlix 


References  are  to  paragraphs  marked  § 


Reeves  v.  Howe,  995. 

V.  Letts,  776,  769a,  832,  1262. 

V.  Pierson,  1385,  1394. 

V.  ScuUy,  834. 

V.  State  Bank,  328,  341,  344. 
Regan  v.  Jones,  1183a. 

V.  Williams,  1316. 
Regenia  v.  Coulsen,  1348. 
Regensburg  v.  Notestine,  193. 
Regent's  Canal  Iron  Works  Co.,   In 

re,  1491a. 
Regester's  Sons  Co.  v.  Reed,  815. 
Regina  v.  Coulsen,  1348. 

V.  Harper,  92. 

V.  Hawkes,  96. 

V.  Keith,  1346. 

V.  Sewel,  207. 

V.  Watts,  1649. 

V.  Wilson,  1344. 
Regina   Flour   Mills   Co.   v.   Holmes, 

1187. 
Regis  Paper  Co.  v.  Tonawanda  Board 

&  Paper  Co.,  1601a. 
Reichert  v.  Koerner,  726a. 
Reid  V.  Bank  of  Mobile,  815,  829a,  832, 
1500,  1501b. 

V.  Coats,  971. 

V.  Furnival,  181,  668. 

V.  Kellogg,  1230. 

V.  Morrison,  1144,  1145. 

V.  Payne,  1022. 

V.  Reid,  1595. 

V.  Rigby  &  Co.,  322. 

V.  Smart,  1254. 
Reid's  Admr.  v.  Windsor,  130,  1183. 
Reid,  Murdoch  &  Co.  v.  Sheflfy,  800a. 
Reigart  v.  White,  1753. 
Reinbath  v.  Pittsburgh,  1527a,  1532. 
Reinhart  v.  Schall,  703. 
Reinheart  v.  Dorsey  Coal  Co.,  812. 

V.  Schall,  704. 
Reinke  v.  Wright,  637,  1114. 
Reints  &  De  Buhr  v.  Uhlen,  1310. 
Relyea   v.    N.   H.   RolUng  Mill    Co., 

1733a. 
Remington  v.  Dental  Mfg.  Co.,  81c, 

174,  185. 
Rendell  v.  Harriman,  80,  402,  403. 
Renfro  v.  Merchants'  Bank,  1706a. 
Renick  v.  Robbins,  991. 
Renner  v.  Bank  of  Columbia,  622,  623, 
1472,  1473.  1481. 

V.  United  States,  622. 
Renshaw  v.  Richards,  643. 

V.  Triplett,  987. 
Renwick  v.  Williams,  725a. 
Requa  v.  Collins,  1032. 
Revel  V.  Revel,  256. 
Revell  V.  Thrash,  1317,  1318,  1319. 
Revere  v.  Chambliss,  1643. 


Rew  V.  Barber,  1264. 
Rex  V.  Atkinson,  1347. 

V.  Beckett,  1350. 

V.  Begg,  688. 

V.  Box,  101,  104. 

V.  Burke,  1346. 

V.  Carter,  1219. 

V.  Elliott,  86a,  1580. 

V.  Hales,  1344. 

V.  Hall,  1346. 

V.  Hart,  1344. 

V.  Hunter,  133. 

V.  Lambton,  67,  667a. 

V.  Palmer,  1350. 

V.  Parke,  1345. 

V.  Pateman,  1346. 

V.  Plumer,  1052. 

V.  Post,  76,  1346,  1347,  1350. 

V.  Randall,  145. 

V.  Reculist,  1346. 

V.  Richards,  1346. 

V.  Rogers,  1345. 

V.  Shukard,  1350. 

V.  Treble,  1346,  1378. 

V.  Webb,  1345. 

V.  Wilcox,  56,  57. 
Rey  V.  Kinnear,  481. 

r.  Simpson,  703,  710,  712,  713a, 
715. 
Reyburn  v.  Queen  City  Sav.  Bank  & 

Trust  Co.,  189. 
Reynes  v.  Dumont,  3346. 
Reynolds  v.  Appleman,  969,  979,  984. 

V.  Chettle,  588,  656. 

V.  Douglass,  1147,  1788. 

V.  French,  1468a. 

V.  Kent,  1191. 

V.  Middleton,  703a. 

V.  Peto,  96,  506. 

V.  Robinson,  68a. 

V.  Roth,  175,  769a. 

V.  Schade,  1266,  1338. 
Rhemstron  v.  Cone,  124. 
Rhett  V.  Poe,  999,  999a,  1058,  1081, 

1086,  1788. 
Rhinehart  v.  Schall,  815. 
Rhoades  v.  Leach,  1387. 
Rhoades,  Ex  parte,  1144. 
Rhode  V.  Alley,  728. 

t;.  Proctor,  1002. 
Rhodes  v.  Beall,  198. 

V.  Guhman,  164. 

V.  Lindley,  55. 

V.  Newhall,  1729a. 

V.  Seymour,  608,  713c. 

V.  Webb-Jameson  Co.,  1260,  1282. 
Ribner  v.  Kleinberg,  193. 
Rice  V.  Barrington,  776. 

V.  Dudley,  22,  1623,  1644. 

V.  Gove,  401. 


cl 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Rice  V.  Grange,  187. 

V.  Hogan,  128. 

V.  Maxwell,  194. 

V.  Ragland,  80. 

V.  Rice,  36,  46,  1181a,  1187. 

V.  Shealey,  1489. 

V.  Stearns,  700. 
Rich  V.  Errol,  422. 

V.  Lambert,  1729. 

V.  Starbuck,  99,  145. 

V.  Topping,  1217. 

V.  Warren,  1339. 
Richards  v.  Daily,  663,  725. 

V.  Darst,  63. 

V.  Doe,  1741. 

V.  Frankum,  112,  688&. 

V.  Globe  Bank,  922. 

V.  Jefferson,  359. 

V.  Market  Exch.  Bank  Co.,  1302, 
1312,  1375. 

V.  Munroe,  775,  789a. 

V.  Richards,  254,  256,  686,  1184. 

V.  Waller,  1225,  1227. 

V.  Warring,  709. 
Richardson  v.  Ashby,  833. 

V.  Campbell,  1458a. 

V.  Carpenter,  50. 

V.  Dagget,  255. 

V.  Daily,  663. 

V.  Denegre,  340e. 

V.  Ellett,  83. 

V.  Foster,  710. 

V.  French,  359. 

V.  Kulp,  970. 

V.  Lincoln,  63a,  66,  700,  1201. 

V.  Mellish,  196. 

V.  Merrill,  250. 

V.  New  Orleans  Coffee  Co.,  3406, 
340c. 

V.  Parker,  1432. 

V.  Richardson,  179,  180. 

V,  Rickman,  1260. 

V.  Schirtz,  850. 

V.  Scobee,  751. 

V.  Wren,  184. 
Richburg  v.  Sherwood,  252. 
Richie  v.  McCoy,  1082. 
Richmond  v.  Diefendorf,  777a. 

V.  Heapy,  354. 

V.  West  Point,  1530. 
Richmond  &  D.  R.  Co.  v.  Payne,  1740a. 
Richmond,  etc.,  R.  Co.  v.  Snead,  383, 

418. 
Richmond    Locomotive    &     Machine 

Works  V.  Moragne,  300,  305,  418, 

419. 
Richmond  Mfg.  Co.  v.  Davis,  1387. 
Richter  v.  Selin,  1140,  1142,  1148. 
Richwine  v.  Heim,  257. 
Ricker  v.  Crosby,  694. 


Ricketson  v.  Wood,  1304. 
Ricketts  v.  Harvey,  196a,  204. 

V.  Pendleton,  721,  959. 
Rickey  v.  Dameron,  707. 
Rickford  v.  Ridge,  1590,  1592. 
Ricord  v.  Bettenham,  221. 
Riddell  v.  Prichard,  1187. 
Ridden  v.  Thrall,  24. 
Riddle  v.  Bank  of  Montreal,  1566. 

V.  Fu-st  Nat.  Bank,  1707a. 

V.  Russell,  1222. 
Rideout  v.  Bristow,  80,  827. 
Rider  ?;.  Gulp,  1221. 
Ridgely    Nat.   Bank    v.  Patton,    51a, 

1566. 
Ridgeway  v.  Day,  1096,  1106. 
Ridgway  v.  Farmers'  Bank,  392,  397. 
Ridley  v.  Heightower,  7136,  995. 

V.  Taylor,  366. 
Riegel  v.  Cunningham,  726a,  786. 
Rigby,  Ex  -parte,  1615. 

V.  Norwood,  1764. 
Riggan  v.  Grain,  316. 
Riggin  V.  CoUier,  11. 
Riggins  V.  Joseph  D.  Boyd  Mfg.  Co., 

1266. 
Riggs  V.  Hatch,  1029. 

V.  Lindsay,  565,  1450. 

V.  Neuenham,  603. 

V.  Powell,  1219. 

V.  Trees,  854. 

V.  Waldo,  713c. 
Riker  v.  Crosby,  694. 

V.  Sprague  Mfg.  Co.,  43. 
Riley  v.  Cheesman,  326a,  643. 

V.  Dickens,  86. 

V.  Hampshire  County  Nat.  Bank, 
832a. 

V.  Schawhacker,  803. 
Rindscoff  v.  Barrett,  56,  1706. 
Ringgold  V.  Tyson,  1217. 
Ringling  v.  Kohn,  1486,  1500. 
Ringo  V.  Trustees,  1682. 
Rio   Grande  Extension  Co.  v.  Goby, 

424. 
Ripley  v.  Greenleaf,  624,  1328,  1329. 
Ripley  Nat.  Bank  v.  Latimer,  1637. 
Risher  v.  Risher  &  Crump,  1250. 
Rising  V.  Teabout,  1200. 
Risley  v.  Brown,  1298. 

V.  Gray,  203. 

V.  Howell,  1537. 

V.  Phoenix  Bank,  1618,  1643,  1644. 

V.  Smith,  16a. 
Ristine  v.  Clements,  196. 
Ritchie  v.  Bradshaw,  1590. 

V.  Deposit  &  Tr.  Co.,  1646. 

V.  Moore,  694a,  1428,  1429. 
Ritchie  County  Bank  v.  Bee,  322. 
Rittenhouse  v.  Anunerman,  263. 


TABLE    OF   CASES 


cli 


References  are  to  paragraphs  marked  § 


Ritter  v.  Singmaster,  205,  12666,  1274, 

1369. 
River  Plate  Bank  v.  Carr,  946. 
Rivers  v.  Brown,  81. 
V.  Campbell,  89. 
V.  Moss,  170. 
V.  Thomas,  713d,  715. 
Riverside  Bank  v.  Jones,  793a. 

V.  Land  Co.  340b,  1572,  1647. 
Riverside  Iron  Works  v.  Hall,  1260. 
Rives  V.  Parmley,  960,  962. 
Rixey  v.  Pearre,  62,  62a. 
Rizer  v.  Callen,  1339. 
Roach  II.  Carr,  849a. 
V.  Ostler,  128,  482. 
V.  Roanoke  Classical  Seminary,  80. 
V.  Sanborn  Land  Co.,  663,  728. 
Roache  v.  Woodall,  677,  1354,  1469. 
Roads  V.  Webb,  41,  55,  62,  717,  737, 

738,  883. 
Roanoke   G.  &  M.   Co.,  v.  Watkins, 

7135,  714,  715. 
Roark  v.  Turner,  767. 
Robarts  v.  Tucker,  326a,  1571,  1618, 

1663. 
Robb  V.  Bailey,  683,  1182. 

V.  Letcher,  1198. 

V.  Ross  County  Bank,  392. 
Robbins  v.  Brooks,  185. 
v.  Eaton,  231,  234. 

V.  Gibson,  1078. 

V.  Pinckard,  1057. 

V.  Richardson,  793a. 

V.  Swinburne   Printing   Co.,   775, 
815. 
Roberts  v.  Austin,  16a,  19,  312,  1567, 
1638,  1639,  1643. 

V.  Bethel,  63,  491,  494. 

V.  Bolles,  1496,  1557. 

V.  Bradshaw,  1051,  1160. 

V.  Bruce,  1343. 

V.  Coffin,  1342. 

V.  Eden,  790. 

V.  Fisher,  737. 

V.  Hall,  781. 

V.  Hardy,  216. 

V.  Hawkins,  1786. 

V.  Jacks,  51a. 

V.  Lane,  726a,  803,  815. 

V.  McGrath,  855. 

V.  Mason,  1119. 

V.  Masters,  707,  713d. 

V.  Parrish,  1181a. 

V.  Peake,  41. 

V.  Pepple,  366. 

V.  Roberts,  196. 

V.  Sholes,  193. 

V.  Smith,  55. 

V.  Snow,  48,  62,  1181a,  1191. 

V.  Thompson,  1277a. 


Roberts  v.  Wood,  855. 

Roberts,   Throp   &   Co.   v.   Laughlin, 

1769. 
Robertson  v.  Allen,  675. 

V.  Angle,  1339. 

V.  Banks,  262,  271. 

V.  Burdekin,  905. 

V.  City  of  Rockford,  1524. 

V.  Coleman,  139,  769a,  1663. 

V.  Cooper,  197. 

V.  Kensington,  697,  698. 

V.  Merriam,  203. 

V.  Nat.  Steamship  Co.,  1740. 

V.  Smith,  1294,  1296. 

V.  Steward,  101. 

V.  Williams,  189,  790. 
Robins  v.  Bacon,  16a  ^3),  17,  21,  22. 

V.  Gibson,  940,  943,  1076. 
Robinson,  Ex  parte,  314. 

V.  Ames,  454,  469,  1076,  1213. 

V.  Bank  of  Darien,  1478,  1693. 

V.  Barnett,  1102,  1107,  1352b. 

V.  Bartlett,  713a. 

V.  Beall,  1682. 

t;.  Berryman,  1387. 

V.  Bland,  128,  204,  866,  867,  879. 

V.  Blen,  598. 

V.  Campbell,  748,  834. 

V.  Chemical  Nat.  Bank,  293. 

V.  Cheney,  643. 

V.  Gardiner,  1681,  1691. 

V.  Hamilton,  1030. 

V.  Hawks,  1587,  1638. 

V.  Kanawha    Valley    Bank,    301, 
305. 

V.  Lain,  1781. 

V.  Lair,  184. 

V.  Law,  123. 

V.  Leavitt,  1491a. 

V.  Little,  721. 

V.  McDowell,  1338,  1340. 

V.  Memphis  R.  Co.,  1733. 

•;.  Powers,  815,  11926. 

V.  Queen,  867. 

V.  Read,  740,  1271. 

V.  Reed,  1412. 

V.  Reynolds,  174a,  803. 

V.  Robinson,  183. 

V.  St.  Louis,  1522. 
V.  Taylor,  373. 
V.  Wilkinson,  1197. 
r.  Yarrow,    290,    537,    538,    539, 
1225,  1364, 1365. 
Robinson's  Admrs.  v.  Allison,  1252. 
Roblee  v.  Rankin,  800a. 

V.  Union  Stock  Yards  Nat.  Bank, 
63,  471,  800a,  1332. 
Robson  V.  Bennett,  992,  1590. 
V.  Curlewis,  983. 
V.  Early,  1198. 


clil 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Roche  V.  Crigler,  1713a. 
Rochester  Printing  Co.  v.  Loomis,  831c. 
Rochford  v.  Barrett,  775,  815. 
Rock  County  Nat.  Bank  v.  Hollister, 
698d,  721,  1181a. 

V.  Luman,  392. 
Rock  Creek  Township  v.  Strong,  1537. 
Rockefeller  v.  Ringle,  780. 
Rockfield  v.  First  Nat.  Bank,  714,  971. 
Rockhill  V.  Moore,  722. 
Rockville  Nat.  Bank  v.  Citizens'  Gas 
Light  Co.,  386,  389,  394, 831a, 
832,  1500. 

V.  Holt,  1322. 
Rockwell  V.  Hunt,  122. 

V.  Wilder,  354,  724a. 
Rocky  Mountain  Nat.  Bank  v.  McCas- 

kill,  356,  369b. 
Rodabaugh  v.  Pitkin,  1787. 
Rodecker  v.  Littauer,  197,  924. 
Roden  v.  Ryde,  1218. 
Rodes  V.  Patillo,  170. 
Rodick  V.  Gandelle,  1645. 
Rodney  v.  Wilson,  719,  1093. 
Rodocanachi  v.  Buttrick,  715. 
Rodriguez  v.  Merriam,  728,  803,  1198. 
Roe  V.  Bank  of  Versailles,  81d. 

V.  Hallett,  709. 

V.  Kiser,  81c. 
Roehner  v.  Knickerbocker  Life  Ins.  Co., 

624. 
Roessle  v.  Lancaster,  177,  714. 
Roffey  V.  Greenwell,  46. 
Rogers  v.  Bachelor,  366,  369. 

V.  Bedell,  81c,  157. 

V.  Blythe,  196a. 

V.  Burlington,    1522,    1523,    1532, 
1547. 

V.  Colt,  688a. 

V.  Detroit  Sav.  Bank,  1204,  1326. 

V.  Gibson,  101. 

V.  Hackett,  1110,  1162. 

V.  Hadley,  193,  770. 

V.  Huntingdon  Bank,  1708c. 

V.  Jewel  Belting  Co.,  386. 

V.  Keokuk,  1560,  1562. 

V.  Langford,  1119,  1679a. 

V.  McGuire,  812. 

V.  Mercantile  Adjuster  Pub.  Co., 
183,  202. 

V.  Miller,  1484. 

t;.  Morton,  177,  777,  816. 

V.  Posters,  1382. 

V.  Rogers,  161,  209,  211. 

V.  Shaw,  1415. 

V.  Squires,  265. 

V.  Stephens,  942,  971,  986,  1162. 

V.  Tapp,  1387. 

V.  Walker,  213. 

V.  Walsh,  734a. 


Rogers  v.  Ward,  248. 

V.  Ware,  136,  138,  139,  140,  163. 
V.  Warner,  1770. 
V.  Waters,  186. 
Rogerson  v.  Hare,  991. 
Roger  Williams  Nat.  Bank  w.  Groton 

Mfg.  Co.,  271,  305. 
Roges  V.  Ware,  136,  138,  139,  140. 
Rogett  V.  Merrit,  1269. 
Rohan  v.  Hanson,  1252. 
Rohrbacher  v.  Aitken,  1966. 
Rohrer  v.  Morning  Star,  1217. 
Roland  v.  Logan,  254. 
Rolfe  V.  Wyatt,  1334. 
Rolin  V.  Stewart,  1638. 
RoUa  State  Bank  v.  Pezoldt,  959,  995, 

1005,  1005a  1038,  1050. 
Roller  V.  McKinney,  1182. 
Rolleston  v.  Hibbert,  744. 
Rollin  V.  Stewart,  1642. 
Rolling  V.  El  Paso  &  S.  W.  R.  Co.  1225. 
Rollins  V.  Bartlett,  1393. 

V.  Bd.  of  Commissioners,  803. 

V.  Chaffee  County,  10a. 

V.  Gilson,  986. 

V.  Lashus,  1188. 
Rolls  V.  Pearce,  26. 
Rolt  V.  Watson,  1475. 
Rome  V.  Cabat,  1522. 
Romero  &  Bayard  v.  Newman,  833, 

1227,  1228. 
Romine  v.  Romine,  1339. 
Rominger  v.  Keyes,  90. 
Ronald  v.  Bank  of  Princeton,  62,  62a. 
Rondot    V.    Rogers    Township,    1537, 

1542. 
Roney  v.  Dunleary,  174. 
Rood  V.  Wright,  241. 
Roof  V.  Stafford,  229. 
Roosa  V.  Crist,  663a,  904. 
Roosevelt  v.  Draper,  1528. 

V.  Woodhull,  1066. 
Root  V.  Franklin,  640. 

V.  Merriam,  195a. 

V.  New    Haven    Trust    Co.,    183, 
1181a. 

V.  Taylor,  1432. 
Roquette  v.  Overman,  898,  908. 
Rosaf.  Brotherton,  831c. 

V.  Butterfield,  674. 
Roscoe  V.  Hardy,  1224. 
Rose  V.  City  of  Bridgeport,  1489,  1512. 

V.  Hurley,  859. 

V.  Laffan,  1187,  1189. 

V.  Learned,  81. 

V.  McCracken,  639,  640,  643. 

V.  Munford,  1458a. 

V.  San  Antonio  R.  Co.,  183. 

V.  Sims,  187,  744. 

V.  Williams,  1316,  1338. 


TABLE    OF   CASES 


cliii 


References  are  to  paragraphs  marked  § 


Roselle  Park  v.  Montgomery,  16a. 
Rosenbaum  v.  Hazard,  1587. 

V.  Meridian  Nat.  Bank,  1251. 
Rosenbaum  Bros.  v.  Levitte,  196,  196a. 
Rosenstein  v.  Barman,  775. 
Rosenthal  v.  Martin  Bank,  1636. 

V.  Parson,  7816. 

V.  Rambo,  728,  742. 
Rosher  v.  Kieman,  990. 
Ross,  Ex  parte,  1424. 

V.  Bedell,  165,  198,  814,  909,  1085. 

V.  Doland,  850. 

V.  Drinkard,  815. 

V.  Espy,  703,  716. 

V.  Hurd,  1147,  1147a. 

V.  Jones,  1339. 

V.  Planters'  Bank,  979a. 

V.  Skinner,  1266. 

V.  Terry,  731,  7315,  732. 

V.  Webster  812. 
Rossi  t).  National  Bank,  192, 6695,  698d. 

V.  Schawacker,  713a. 
Rossiter  v.  Loeber,  166,  167. 

V.  Rossiter,  281,  306,  308. 
Ross-Meehan-Brake,     Shoe     Foundry 

Co.  V.  Pascagoula  Ice  Co.  748. 
Rosson  V.  Carroll,  611,  992,  996,  1039, 

1051. 
Rosville  State  Bank  v.  Heslet,  47. 
Roswell  Mining  Co.  v.  Hudson,  88. 
Rotan  v.  Maedgen,  7586,  775,  803. 
Roth  V.  Colvin,  775. 

V.    Donnelly    Grocery    Co.,    145, 
177. 
Rothschild  v.  Corney,  1633,  1634, 1505. 

V.  Currie,  908,  911,  920,  936,  970. 

V.  Grix,  713a. 

V.  Moslaker,  1289. 
Rounds  V.  Smith,  1626. 
Roundtree  v.  Baker,  172. 
Rouquette  v.  Overman,  970a. 
Rouse  V.  Wooten,  9956,  1302. 
Rouse,  Hempstone  &  Co.  v.  Sarratt, 

203. 
Rouss  V.  King,  1753. 
Routh  V.  Robertson,  984. 
Rouvant  v.  San  Antonio  Nat.  Bank, 

1361. 
Row  V.  Dawson,  16a,  23. 
Rowan  v.  Chenoweth,  64. 

V.  Odenheimer,  979a. 
Rowe  V.  Bowman,  124,  1303,  1398. 

V.  Gohlman,  688c,  832. 
V.  Putnam,  139. 
V.  Tipper,  988,  1044,  1045. 
V.  Young,  459,  519,  641,  643,  1381. 
Rowland  v.  Bigelow,  1746. 

V.  Fowler,  758a,  775,  795a. 
V.  Rorke,  1763. 
V.  Sprinjett,  983. 


Rowland  v.  Watson,  157. 

Rowley  v.  Ball,  1478,  1484. 

Rowlinson  v.  Stone,  265. 

Rowse  V.  Johnson,  8346. 

Rowi;  V.  Kyle,  1219. 

Roxborough  v.  Messic,  831a. 

Roy  &  Roy  v.  Northern  Pac.  Ry.  Co., 

1733. 
Royal  V.  Lindsay,  13176. 

V.  Virginia,  448. 
Royal  Ins.  Co.  v.  Davis,  1770a. 
Royce  v.  Nye,  1197,  1198. 
Royse  v.  State  Nat.  Bank,  1398. 
Royster  Guano  Co.  v.  Marks,  1227. 
Rubelman  v.  McNichol,  1191. 
Rubey  v.  Watson,  1311. 
Rublee  v.  Davis,  202. 
Rucker  v.  Dearing,  1245. 

V.  Hiller,  971,  1076,  1081. 

V.  Wadlington,  263. 
Rudd  V.  Mathews,  1351. 
Ruddell  V.  Landers,  728. 

V.  Phalor,  849a,  850. 
Rudderow  v.  Huntington,  193. 
Rude  V.  Harvey,  357. 
Rudell  V.  Dillman,  852. 
Rudelle  v.  Phalor,  852. 
Rudgear  v.  United  States  Leather  Co., 

1470. 
Ruff  V.  Montgomery,  1340. 

V.  Webb,  35. 
Ruffin  V.  Armstrong,  762a. 
Rugby  V.  Davidson,  611. 
Ruggles  V.  Patten,  643,  1296. 
Ruiz  V.  Renald,  550. 
Rulo  First  Nat.  Bank  v.  Gordon,  506, 

556. 
Rumball  v.  Ball,  1685. 

V.      MetropoUtan     Bank,      1504, 
1708^. 
Rumley  Co.  v.  Wilcher,  1311,  1312. 
Rumsey  v.  Briggs,  358a,  360. 

V.  Laidley,  1277a. 

V.  People's  R.  Co.,  833. 
Rundel  v.  Keeler,  224. 
Rundell  v.  Moore,  330. 
Runnion  v.  Crane,  1418. 
Runyon  v.  Clark,  1222. 

V.  Mountford,  1025. 
Ruohs  V.  Bank,  673,  1533. 
Rush  V.  First  Nat.  Bank,  1278. 

V.  Haggard,  102. 

V.  Rush,  335. 
Rushforth,  Ex  parte,  1342. 
Rushton     V.    Dierk's    Lumber     Co., 

1789. 
Ruskin  v.  Tharpe,  1468a. 
Russ  V.  Sadler,  703,  704,  793. 
Russell  V.  Bosworth,  104. 

V.  Brown,  1316,  1318. 


cllv 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Russell  V.  Cassidy,  383. 

V.  Clarke,  1785a. 

V.  Close's  Estate,  41. 

V.  Drummond,  294. 

V.  Folsom,  387. 

V.  Hadduck,  775. 

V.  Hankey,  1624. 

;;.  Kidd,  195a. 

V.  Klink,  1777. 

V.  LangstafT,   142,   144,   145,  372, 
694,  843,  1037,  1172. 

V.  Lee,  224. 

V.  McNab,  1376. 

V.  Moseley,  1766. 

V.  Phillips,  450,  479,  508,  516. 

V.  Rood,  203. 

V.  Russell,  54. 

V.  Swan,  664a,  683,  684. 

V.  Whipple,  38. 

V.  Wiggin,    550,    551,    561,    897, 
1797a,  1799. 
Russell  &  Erwin  Mfg.  Co.  v.  Carpenter, 

1284. 
Russell  Electric  Co.  v.  Bassett,   179, 

203. 
Rust  V.  Gott,  195a. 
Rutherford  v.  Mitchell,  1187. 
Ruthland  Bank  v.  Buck,  793a. 
Rutland,  etc.,  R.  Co.  v.  Cole,  1187, 

1188,  1189. 
Ryan  v.  Bank  of  Montreal,  1369. 

V.  First  Nat.  Bank,  1398. 

V.  Great  Northern  Ry.  Co.,  1731. 

V.  Holliday,  833,  834. 

V.  McKerral,  185. 

V.  Paine,  326c. 

V.  Sullivan,  81,  163. 

V.  West,  1181a. 
Ryhiner  v.  Feickert,  103,  290,  684. 
Ryland  v.  Brown,  775,  789. 
Rylee  v.  Bank  of  Statham,  62a. 


Sabin  «;.  Bank  of  Worcester,  1708e. 

V.  Harris,  1787. 
Sackett  v.  Keller,  797,  861. 

V.  Montgomery,  741. 

t;.  Palmer,  46. 

V.  Spencer,  38. 
Sackley  v.  Furse,  221. 
Saco  Nat.  Bank  v.  Sanborn,  1024, 1032, 

1050. 
Sacrider  v.  Brown,  581,  582,  586,  934. 
Safe  Deposit  &  Trust  Co.  v.  Bank,  265. 

V.  Wright,  186. 
Saffer  v.  Lambert,  81d. 
Saffold  V.  Banks,  268. 
Safford  v.  Wyckoff,  382,  389,  411,  991. 
Sage  c- Burton,  294,  1230, 1623. 


Sage  V.  Wilcox,  1764. 

Sager  v.  Tupper,  74. 

SahUen  v.  Bank,  342. 

St.  Amand  v.  Bank  of  Commerce,  1636, 

1636a. 
St.  Charles  Sav.  Bank  v.  Edwards,  776. 
St.  Joe  &  Mineral  Mining  Co.  v.  Bank, 

386. 
St.  John  V.  Romans,  1587,  1595,  1620. 
V.  McConnell,  1217. 
V.  Redmond,  297. 
V.  Roberts,  997,  1238. 
St.  Joseph  F.  &  M.  Ins.  Co.  v.  Hauck, 

1317. 
St.  Joseph  Township  v.  Rogers,  1520, 
1523,    1535a,    1537,    1550,    1557, 
1561. 
St.  Louis  V.  Alexander,  1559. 
St.  Louis  &  San  Francisco  R.  Co.  v. 

Hurst,  1739. 
St.  Louis  &  Santa  Fe  R.  Co.  v.  Adams, 

1740a. 
St.  Louis  &  S.  F.  R.  Co.  v.  Jameson, 

1729a. 
St.  Louis  Bank  v.  Altheimer,  999,  1016. 

V.  Harrison,  195a. 
St.  Louis,  etc.,  Ins.  Co.  v.  Homer,  81. 
St.  Louis,  etc.,  Ry.  Co.  v.  Edwards, 
1732. 
V.  James,  500. 

V.  Johnston,  340,  340d,  1621,  1636. 
V.  Citizens'  Bank  of  Little  Rock, 
1728,  1729a,  1731,  1733. 
St.  Louis  Nat.  Bank  v.  Flanagan,  793a, 

1309. 
St  Louis  P.  Ins.  Co.  v.  Goodfellow, 

1708d. 
St.  Louis  R.  Co.  V.  Camden  Bank,  36a. 

V.  Perkins,  336. 
St.  Louis  Roller  Mill  Co.  v.  Despatch 

Co.,  1730a. 
St.  Marie  v.  Polleys,  1317. 
St.  Paul  Roller  Mill  Co.  v.  Despatch 

Co.,  1734b. 
St.   Regis   Paper   Co.   v.   Tonawanda 

Board  &  Paper  Co.,  1604. 
Salander  v.  Lockwood,  838,  850. 
Salem  v.  Bank  of  State  of  New  York, 

1652. 
Salen  v.  Bank  of  State  of  New  York, 

795a. 
Salinas  v.  Wright,  41. 
Salisbury  v.  Bartleson,  640. 
V.  First  Nat.  Bank,  713a. 
V.  Renick,  1147,  1149. 
V.  Stewart,  62,  62a. 
Salley  v.  Terrill,  63. 
Salmon  Falls  Bank  v.  Leyser,  384,  751, 

753. 
Salmons  v.  Hoyt,  90a. 


TABLE    OF   CASES 


clv 


References  are  to  paragraphs  marked  § 


Salomon  v.  Hopkins,  94,  252,  303,  304, 

361. 
Saloy  V.  Bank,  1503. 
Salter  v.  Burt,  627,  1578. 
Saltmarsh  v.  Planters,  etc.,  Bank,  751, 
753,  763. 
V.  Tuthill,  983,  1217. 
Saltsman  v.  N.  Y.,  L.  E.  &  W.  R.  Co., 

1729a. 
Salt  Springs  Bank  v.  Syracuse  Sav.  Ins., 

528. 
Salt  Springs  Nat.  Bank  v.  Burton,  600, 

602. 
Sammon  v.  Kimball,  334. 
Sammons  v.  Halloway,  122. 
Sample  v.  Cochran,  1311. 
Samples  v.  Samples,  1230. 
Sampson  v.  People,  1538. 
Samson  v.  Ward,  199,  824. 
Samstag  v.  Conley,  62. 
San  Antonio  v.  Lane,  1500,  1513,  1514, 
1523,  1537. 
V.  Meharty,  1495a,  1537. 
Sanborn  v.  Neal,  406. 
Sand  V.  Edmonds,  448. 
Sanders  v.  Anderson,  75. 
V.  Bacon,  152. 

V.  Bagwell,  1383,  1385,  1401. 
V.  Blain,  266. 

V.  Chartrand,  297,  316,  317. 
V.  Gillespie,  723. 
V.  Smith,  183. 
V.  Vanzeller,  1745a,  1748. 
Sanderson  v.  Bowes,  519,  642,  645. 
V.  Coleman,  533. 
V.  Judge,  635,  642,  1021. 
V.  Oakey,  1119. 
V.  Reinstadler,  1016. 
V.  Sanderson,  1140. 
Sandford  v.  Sandford,  255. 

V.  Seaboard    Air    Line    Ry.    Co., 
1733a. 
San  Diego  v.  San  Diego,  etc.,  R.  Co., 

282 
Sands  t;."  Clark,  1119. 
V.  Smith,  894. 
V.  Wood,  688c. 
Sanford  v.  Allen,  1769a. 
V.  DiUaway,  1172. 
V.  Mickles,  370,  370a,  683. 
V.  Norton,  775. 
V.  Sanford,  255. 
Sanford  Cattle  Co.  v.  Williams,  392a. 
Sanger  v.  Stimson,  56,  979. 
San  Jose  Sav.  Bank  v.  Stone,  80. 
Sansome  v.  Bell,  1771. 
Saratoga  County  Bank  v.  Pruyn,  248. 
Sargent  v.  Appleton,  1306. 

V.  Essex  Marine  R.  Co.,  1708e. 
V.  FrankHn  Ins.  Co.,  1708(i. 


Sarraille  v.  Calmon,  1227. 
Sarsfield  v.  Witherly,  6. 
Sasportas  v.  Jennings,  857. 
Sasscer  v.  Farmers'  Bank,  969. 

V.  W^hitley,  1031. 
Sater  v.  Hunt,  1241. 
Sathre  v.  Rolfe,  748a. 
Satterlee  v,  Mathewson,  1565. 
Satterwhite  v.  Melczer,  1636. 
Saul  V.  Creditors,  875. 

V.  Jones,  519. 

V.  Southern  Seating,  etc.,  Co.,  174, 
185,  408,  769a. 
Saunders  v.  Bank  of  Mecklenburg,  185. 

V.Wakefield,   1764. 

V.  White,  1689,  1691. 
Saunderson  v.  Jackson,  74. 

V.  Judge,  656,  657,  1049. 

t;.  Piper,  86. 

V.  Saunderson,  1039,  1129. 
Savage  v.  Aldren,  697. 

V.  Fox,  185. 

t>.  Goldsmith,  775,  815. 

V.  King,  242,  681. 

V.  Merle,  1221. 

V.  O'Neill,  891,  891a. 

V.  Walshe,  385. 
Savannah  &  Memphis  R.  Co.  v.  Lan- 
caster, 382,  15016. 
Savings  Assn.  v.  Barber,  1200. 
Savings  &  Loan  Soc.  v.  Burnett,  748, 

1221,  1260. 
Savings  Bank  v.  Atchison,  etc.,  R.  Co., 
1733a. 

V.  Benton,  393. 

V.  Central  Market  Co.,  403,  1221, 
1226,  1266c. 

V.  Hughes,  392. 

V.  Libby,  834. 

V.  McCarthy,  24a. 

V.  Nat.  Bank,  342,  775. 

V.  Newburyport,  10. 

V.  Schott,  802,  834,  834a,  8346. 

V.  Scott,  197,  198. 

.;.  Shaffer,  1411. 

V.  Strother,  54,  62,  1789. 

V.  Terry,  1339. 

V.  Webster,  358a. 
Savings  Bank  of  Kansas  v.  Nat.  Bank 

of  Commerce,  108,  197. 
Savings  Co.  v.  New  London,  391. 
Sawtelle  v.  Muncy,  247. 
Sawyer  v.  Bradford,  1311. 

V.  Brownell,  707,  996. 

«.  Campbell,    1312,    1322,    1377, 
1397. 

V.  Cleveland  Iron  Co.,  1733a. 

V.  Hoovey,  725a. 

V.  McCauley,  1198. 
t;.  Parker,  124,  125. 


clvi 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


Sawyer  v.  Prickett,  834,  834a. 

V.  Wiswell,  176,  205,  805. 
Saxton  V.  Stevenson,  54a. 
Sayers  v.  First  Nat.  Bank,  101. 
Sayles  v.  Cox,  334. 

V.  Sims,  1338a. 
Saylor  v.  Bushong,  1636a. 
Sayre  v.  Frick,  684,  999a. 

V.  Mohney,  203. 

V.  Nicholas,  411. 

V.  Wheeler,  69. 
Scaife  v.  Byrd,  65. 

V.  Tobin,  1738. 
Scammon  v.  Adams,  721. 

V.  Kimball,  334. 
Scandinavian  American  Bank  v.  John- 
son, 769a,  776,  7816,  819. 
Scanland  v.  Porter,  713a. 
Scanlon  v.  Wallach,  183,  995. 
Scarborough  v.  Harris,  1083. 
Scarbrough  v.  City  Nat.  Bank,  670, 

972,  1203. 
Scard  v.  Jackson,  92. 
Scarpellini  v.  Atcheson,  257. 
Schaeffer  v.  Fowler,  831a. 
Schaffner  v.  Erham,  1642. 

V.  Kober,  203. 
Schaller  v.  Chicago  &  N.  W.  R.  Co., 

1740a. 
Scharf  v.  Moore,  1290. 
Scheie  v.  Wagner,  358a. 
Schell  City  Bank  v.  Reed,  1343. 
Schenley  v.  Commonwealth,  1560. 
Schepp  V.  Carpenter,  83c,  184,  791,  792, 

793a. 
Scherer  &  Co.  v.  Everest,  758,  8316. 
Scheurman    v.    Monarch    Fruit    Co., 

1747a. 
Schieber  v.  Trandt,  1317. 
Schierl  V.  Baumel,  1149,  1260,  1276. 
Schimmelpennick  v.  Bayard,  451,  524, 

551,  .560,  561,  1799. 
Schindel  v.  Gates,  1215a. 
Schirm  v.  Wieman,  196a. 
Schlandecker's  Appeal,  1708. 
Schlemmer  v.  Schendrof,  1482. 
Schlesinger  v.  Arline,  62. 
V.  Gilhooly,  199. 
V.  Kelly,  199. 
V.  Kurzork,  1604. 
V.  Lehmaier,  769a. 
V.  Schultz,  612,  969,  1119. 
Schlessman  v.  Kallenberg,  1343. 
Schley  v.  Merrit,  713a. 
Schlussel  V.  Warren,  1317. 
Schmelz  v.  Rix,  1401. 
Schmidt  v.  Garfield  Nat.  Bank,  293, 
294. 
V.  Limehouse,  1458. 
V.  Pegg,  52,  60,  1181a. 


Schmidt  v.  Schmaelter,  74. 

V.  Spencer,  248,  249. 
Schmidt  Matting  Co.  v.  Miller,  713a. 
Schmied  v.  Frank,  1093,  1326. 
Schmittler  v.  Simon,  418. 
Schmitz  V.  Gold  Mining  Co.,  38. 
Schmitzler   v.    Fourth    Nat.    Bank   of 

Wichita,  1316. 
Schmucker  v.  Sibert,  1215. 
Schmueckle  v.  Waters,  195a,  156,  197, 

7956,  815. 
Schneider  v.  Norris,  74. 

V.  Schiffman,  712,  713a,  715. 
Schneitman  v.  Noble,  392. 
Schnewind  v.  Racket,  1385. 
Schoepfer  v.  Tommack,  741. 
Schoet  V.  Houghlin,  769a. 
Schofield  V.  Bayard,  526,  IO680. 
V.  Day,  917. 
V.  Palmer,  960. 
Schoharie  County  Nat.  Bank  v.  Bevard, 

107,  643. 
Scholefield  v.  Eichelbeerge,  1060. 
Scholey  v.  Ramsbottom,  1235,  1631. 

V.  Walsby,  1229. 
Scholfield  V.   Earl  of  Londesborough, 

1405,  1407a,  1408. 
SchoUengberg  v.  Seldenridge,  1301. 
Schollenberger  v.  Nehf,  715. 
School    Directors    v.    Fogleman,  377, 

427. 
School  District  v.  Reeve,  1197. 
V.  Sheidley,  63a,  165. 
V.  Sippy,  290. 
V.  Thompson,  319. 
Schooler  v.  Tilden,  145. 
School  Town  of  Monticello  v.  Kendall, 

403,  443a. 
Schooner    Freeman    v.    Buckingham, 

1733. 
Schorman  v.  Railroad  Co.,  1734a. 
Schram  v.  Werner,  81c,  710,  1338,  1341, 

1343. 
Schreyer  v.  Turner  Flouring  Co.,  394. 
Schroeder  v.  Central  Bank,  16366. 
V.  Kinney,  1312. 
V.  Nielson,  813,  8156. 
V.  Seittz,  1219. 
V.  Turner,  713a. 
Schryver  v.  Hawkes,  143. 
Schuchardt  v.  Hall,  1074. 
Schuler  v.  Bank,  336. 
Schulte  V.  Coulthurst,  812. 
Schultheis  v.  Sellers,  819. 
Schultz  V.  Astley,  142,  144. 
V.  Catlin,  857. 
V.  Kosbab,  68. 
V.  Noble,  175. 
Schumacher  v.  Dolan,  415. 
V.  Trent,  341. 


TABLE    OF   CASES 


clvii 


References  are  to  paragraphs  marked  § 


Schumacher  v.  Wolf,  1227. 

Schuster  v.  Marden,  725a. 

Schutt  V.  Evans,  205. 

Schuttler  v.  King,  1478. 

Schuyler   County   v.   Thomas,    1523a, 

1524. 
Schuylkill  County  v.  Copely,  847. 
Schwalm  v.  Mclntyre,  1386. 
Schwartzkopf  v.  Hill,  175. 
Schwartzman  v.  Post,  1243. 
Schwarz  v.  Oppold,  1385. 
Schwarzchild  v.  Savanah,  etc.,  Ry.  Co., 

1740a. 
Schweider  v.  Lang,  1289a. 
Schwind  v.  Hall,  812,  1200. 
Scionneaux  v.  Wagnerpack,  1191. 
Scipio  V.  Wright,  422,  1532,  1555a. 
Scofield  V.  Ford,  1409. 
Scollans  v.  Rollins,  1468a,  15016. 
Scolluns  V.  Flyn,  195a. 
Scotland  Co.  v.  Hill,  803,  1513. 

V.  Thomas,  1523a,  1524. 
Scotland  County  Nat.  Bank  v.  Hohn, 
273,  665. 

;;.  O'Connell,  1405. 
Scott  V.  Armstrong,  1425. 

V.  Baker,  403. 

V.  Bankers'  Union  of  the  World, 
795c,  1294. 

V.  Bevan,  917,  1454. 

V.  Calkin,  694. 

V.  Colmisnil,  350a. 

V.  Commonwealth,  1672. 

V.  First  Nat.  Bank,  724a,  997. 

V.  Gilkey,  1245,  1625. 

V.  Gillmore,  204. 

V.  Goode,  680. 

V.  Greer,  1107. 

V.  Hall,  1317. 

V.  Harris,  1317,  1319. 

V.  Hart,  859. 

V.  Lifford,  992,  995a,  1290. 

V.  Lloyd,  1217. 

V.  M'Lellan,  295. 

V.  Meeker,  1147,  1482,  1587. 

V.  Nat.  Bank,  286a. 

V.  Ocean  Bank,  333,  340,  340&. 

V.  Otis,  248. 

V.  Perlee,  90,  923. 

V.  Scott,  814. 

V.  Scruggs,  1312,  1317,  1327,  1334, 
1337. 

V.  Searls,  265. 

V.  State  Bank,  68a,  855. 

V.  Taul,  859,  1336,  1338. 

V.  Town  of  Menasha,  193. 

V.  Trents,  1428. 

V.  Walker,  1395. 
Scotten  V.  Randolph,  769a. 
Scovile  V.  Canfield,  882. 


Scoville  V.  Landon,  812. 
Scrapelini  v.  Atcheson,  254. 
Scribner  v.  Hanke,  183,  1191. 

V.  Rutherford,  1790,  1799. 
Scrivens  v.  Savings  Bank,  24a. 
Scroggin  v.  McClelland,  1634. 
Scruggs  V.  Gass,  737,  1677. 
Scudder  v.  Thomas,  205. 

V.  Union  Nat.  Bank,  504,  867. 
Scull  V.  Edwards,  130,  663. 

V.  Mason,  1096. 
Seaboard  Nat.  Bank  v.  Bank  of  Amer- 
ica, 141,  672,  1225,  1356. 

V.  Burleigh,  554,  561,  1799. 
Seabury  v.  Hugerford,  708,  713d,  1099. 
Seacord  v.  Miller,  1134. 
Sealey  v.  Missouri,  K.  &  T.  Ry.  Co., 

1747a. 
Searcy  v.  Vance,  56. 
Searight  v.  Calkight,  874. 
Searle  v.  Norton,  1587. 
Searles  v.  Seipp,  1384. 
Sears  v.  Brink,  1764. 

V.  Daly,  1219. 

V.  Lantz,  688c. 

V.  Moore,  726,  1218,  1220. 

i;.  Wingate,  1729a,  1733. 

V.  Wright,  44,  81. W 
Seaton  v.  Scovill,  995a,  1044. 
Seattle  v.  L.  H.  Griffith  Realty,  etc., 

Co.,  68a. 
Seattle  Shoe  Co.  v.  Packard,  294,  482, 

4976. 
Seaver  v.  Coburn,  403. 

V.  Lincoln,  572,  604,  609. 

V.  Phelps,  210,  685. 

V.  Weston,  1349,  1352a. 
Seay  v.  Bank  of  Tennessee,  145. 

V.  Fennell,  724a. 

V.  Palmer,  890. 
Sebag  V.  Abithol,  515. 
Sebald  v.  Citizens'  Deposit  Bank,  1309. 
Sebree  v.  Crutchfield,  209. 

V.  Door,  653. 
Sebree  Deposit  Bank  v.  Moreland,  990, 

1147a,  1148. 
Second  Nat.  Bank  v.  Anglin,  62. 

V.  Brady,  166. 

V.  Gaylord,  1787. 

V.  Gibbony,  294. 

V.  Howe,  191. 

V.  McGuire,  1133. 

V.  Miller,  248. 

V.  Prewett,  1235a. 

V.  Smith,  887,  908,  910,  969. 

V.  Smoot,  923. 

;;.  Snoqualime    Trust    Co.,    795c, 
832 

V.  Walbridge,  1733. 

V.  Werner,  824. 


clviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Second   Nat.   Bank  v.  Western    Nat. 
Bank,  1608. 

V.  Weston,    365,   367,   369a,   371, 
775,  7956. 
Second    Nat.    Bank    of    Baltimore    v. 

Bank  of  Alma,  325,  795a,  17346. 
Second    Nat.    Bank    of    Pittsburg    v. 

Hoffman,  819. 
Secor  V.  Clark,  857. 
Security  Bank  v.  Bell,  185. 

V.  Kingsland,  290,  393,  832a. 

V.  Lutgen,  1730,  1734a. 

V.  Nat.  Bank,  1603,  1661. 
Security  Co.  of  Hartford  v.  Eyer,  866. 
Security  Loan  &  Trust  Co.  v.  Fields, 

1109. 
Security  Warehousing  Co.  v.  American 
Exch.  Nat.  Bank,  1266a. 

V.  Hand,  1713a. 
Sedalia  Nat.  Bank  v.  Economy  Steam 

Heating  &  Elec.  Co.,  394,  394a. 
Sedgwick  v.  Lewis,  357. 

V.  Sedgwick,  1418. 
Seebright  v.  Fletcher,  849a. 
Seehorn  v.  Am.  Nat.  Bank,  1468a. 
Seeley  v.  Engell,  201. 

V.  Reed,  670. 

V.  Seeley-Howe-Le  Van,  229. 

V.  Wickstrom,  1191,  1192,  1201. 
Seeligson  v.  Lewis,  195a,  206. 
Segrist  v.  Crabtree,  1260. 
Seibel  v.  Vaughan,  1406. 
Seibeneck  v.  Anchor  Sav,  Bank,  1312, 

1318. 
Seieroe  v.  First  Nat.  Bank,  156. 
Selby  V.  Case,  193. 

V.  Eden,  642. 

V.  McCullough,  1260. 
Seldenridge  v.  Connable,  83. 
Seldner  v.  Mt.  Jackson,  1109a. 
Selfridge  v.  Northhamton  Bank,  1669. 
Selligson  v.  Lewis,  205. 
Sells  V.  Tootle,  741. 
Selser  v.  Brock,  1314. 
Selz  V.  Collins,  329,  330. 
Semple  v.  Detwiler,  1278a. 

V.  Turner,  713a. 
Seneca  County  Bank   v.   Neass,  644, 

657,  960,  962,  1025. 
Sentance  v.  Poole,  210. 
Senter  v.  Continental  Bank,  1637. 
Sergeson  v.  Sealy,  213. 
Serle  v.  Norton,  85,  1587. 

V.  Waterworth,  685. 
SerroU  v.  Derbyshire  R.  Co.,  1616. 
Serviss  v.  Washtenaw  Circuit  Judge, 

800a. 
Sessions  v.  Mosely,  24,  1181a. 
Settles  V.  Moore,  68. 
Setzer  v.  Deal,  775. 


Seurch  v.  Miller,  164. 

Seventh  Nat.   Bank  v.  Cook,   1636a, 

1663. 
Seventh  Ward  Bank  v.  Hanrick,  1041. 
Sewall  V.   Boston   Water  Power  Co., 

1708. 
Sewanee  Mining  Co.  v.  McCall,  290, 

292. 
Seward  v.  Derrickson,  1096. 
Seward   &   Co.   v.   Miller  &   Higdon, 

1734c. 
Sewell  V.  Evans,  1218. 
Sexton  V.  Barrie,  86. 
Seybel  v.  Nat.  Currency  Bank,  441, 

775,  776. 
Seybert   v.   City   of   Pittsburg,    1523, 

1532. 
Seybold  v.  Nat.  Bank,  24, 1181a. 
Seyfert  v.  Edison,  241,  786. 
Seymour  v.  Cemetery  Assn.,  377,  386a, 
1517a. 

V.  Continental  Life  Ins.  Co.,  1458a. 

V.  Farrell,  710,  713a. 

V.  Malcom,  etc.,  Lumber  Co.,  769a. 

V.  Mickey,  713c. 

V.  Newton,  17346. 

V.  Norton,  17346. 
Seymour  Opera  House  Co.  v.  Thurston, 

819. 
Shackleford  v.  Hooker,  102,  508. 
Shade  v.  Creviston,  1288. 
Shafer  v.  Farmers  &  Merchants  Nat. 

Bank,  713c?. 
Shaffer  v.  Clendennin,  1343. 

V.  Hohenschild,  710. 

V.  Maddox,  1588. 

V.  Rhynders,  1734c. 
Shain  v.  Goodwin,  815. 

V.  Sullivan,  666,  688. 
Shakespear  v.  Smith,  427. 
Shamburgh  v.  Cammagere,  635,  1217. 
Shand  v.  Du  Boisson,  16a,  20. 
Shank  v.  Butsch,  74. 
Shankland  v.  Corporation  of  Washing- 
ton, 277. 
Shanklin  v.  Cooper,  901,  936. 
Shannon  v.  Hawley,  187. 

V.  Langhome,  187. 
Sharp  V.  Allgood,  855. 

t;.  Bailey,  90,  1085. 

V.  Bowie,  183. 

V.  Emmett,  314. 

V.  Garnet,  1341. 

V.  Taylor,  200. 
Sharpe  v.  Bagwell,  1393. 

V.  Baker,  94,  1203. 

V.  Belhs,  305. 
Sharphawk  v.  Willis,  1186a. 
Sharpless  v.  Mayor,  1523. 
Sharrington  v.  Yates,  257. 


TABLE   OF   CASES 


clix 


References  are  to  paragraphs  marked  § 


Shattuck  V.  Eldridge,  795a. 
Shaver  v.  Ehle,  112,  1220. 

V.  Ocean  Mining  Co.,  400. 

V.  Western  Union  Telegraph  Co., 
16a,  508. 
Shaw  V.  Camp,  46. 

V.  Clark,  195a,  803. 

V.  Craft,  990. 

V.  Denniss,  1556,  1557. 

V.  Emery,  252. 

V.  Gardner,  1740. 

V.  Knox,  703. 

V.  McNeill,  1095a,  1147. 

t;.  M.  E.  Society,  79. 

V.  Neal,  1060,  1070. 

V.  Outwater,  673. 

V.  Railroad  Co.,  775,  1730,  1747a, 
1750a. 

V.  Reed,  644,  654,  1144. 

V.  Rigby,  1458a. 

V.  Smith,  100. 

V.  Spencer,  271,  795a,  1708. 

V.  Stein,  722. 

V.  Stone,  424. 
Shaw  &  Schooner  v.  Jacobs,  693. 
Shaw,  Kendall  &  Co.  v.  Brown,  139. 
Shawmut  Nat.  Bank  v.  Manson,  340c, 

1632. 
Shawnee  County  v.  Carter,  1558,  1563. 
Shaw,  Trustee,  v.  Saranac  Horse  Nail 

Co.,  294. 
Shaylor  v.  Mix,  1012. 
Sheahan  v.  Davis,  1343. 
Sheboygan  County  v.  Parker,  1523. 
Shed  V.  Brett,  572,  592,  979,  991,  1050, 

1051,  1118,  1209,  1212. 
Sheedy  v.  Streeter,  720a. 
Sheehy    v.    Mandeville,     1260,     1261, 

1296,  1297,  1299,  1300. 
Sheets  v.  Peabody,  268. 
Sheets,  Admr.,  v.  Russell,  1289. 
Sheffer  v.  Fleischer,  67. 
Sheffield  v.  Cleland,  612,  1227. 

V.  Inter.   Harvesting   Mach.   Co., 
205. 

V.  Johnson  County  Savings  Bank, 
688a,  787,  814,  815,  1219. 

V.  Larue,  307,  308. 
Shelburne  Falls  Nat.  Bank  v.  Townsley, 

1003,  1005,  1006,  1014,  1021, 1044, 

1045. 
Shelby  v.  Judd,  688c. 
Sheldon  v.  Benham,  584,  992. 

V.  Butler,  1763. 

V.  Chapman,  1103. 

V.  Heaton,  1211,  1215. 

V.  Horton,  1104. 

V.  Kendall,  1431. 

V.  Parker,  753&. 
Sheldon  Canal  Co.  v.  Miller,  1204. 


Shellenbeck  v.  Studebacker,  358a. 
Shellenberger  v.  Nourse,  814a,  819. 
Shelton  v.  Braithwaite,  974,  983,  1026. 

V.  Bruce,  41. 

V.  Carpenter,  680. 

V.  Darling,  413. 

V.  Gill,  62. 
Shenandoah  Nat.   Bank  v.  Gravatte, 
849. 

V.  Marsh,  62. 
Shenton  v.  James,  108. 
Shepard  v.  Abbott,  271,  513. 

V.  Hawley,  999a. 

V.  Whetstone,  1414,  1415,  1419. 
Shepard    &    Morse    Lumber    Co.    v. 

Eldridge,  1362. 
Shepaug  Voting  Trust  Cases,  1708. 
Shepherd  v.  Evans,  1187. 

V.  Graves,  83. 

V.  Harrison,  1734,  1734&. 

V.  Temple,  202. 
Shepley  v.  Waterhouse,  1215a. 
Sherer  v.  Easton  Bank,  959,  1165. 
Sheridan  v.  Mayor,  11926. 
Sheriff  v.  Wilkes,  489. 
Sherill  v.  Hopkins,  875. 
Sherlock  v.  Winneteka,  1497. 
Sherman  v.  Comstock,  1586. 

V.  Ecker,  929,  971. 

V.  Gilbert,  749. 

V.  Goodwin,  130. 

V.  Mclntyre,  71. 

V,  Port  Huron  Engine  &  Thresher 
Co.,  344,  345. 
Sherman  County  v.  Simons,  1537. 
Sherrard  v.  Lafayette  County,  1549. 
Sherrer  v.  Enterprise  Banking  Co.,  789. 
Sherrington  v.  Yates,  1184. 
Sherrod  v.  Dixon,  241. 

V.  Rhodes,  1163. 
Sherwood  v.  Archer,  207. 

V.  Barton,  371o. 

V.  Moore,  1458a. 

V.  Roys,  1181a. 

V.  Snow,  357. 

V.  Stone,  314,  357,  366. 
Shewell  v.  Knox,  1785. 
Shields  v.  Middleton,  568. 
Shinew  v.  First  Nat.  Bank,  1352a. 
Shipley  v.  Carroll,  837. 

V.  Reasoner,  789. 
Shipman  v.  Bank  of  the  State  of  N.  Y. 
139,  802,  1367,  1618. 

V.  Cook,  971. 
Shipp  V.  Stacker,  725a. 
Shipsey  v.  Bowery  Nat.  Bank,  1592, 

1599. 
Shiretzki  v.  Julius  Kessler  &  Co..  203. 
Shirk  V.  Mitchell,  810. 

V.  North,  242. 


clx 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Shirley  v.  Fellows,  1048,  1077. 
V.  Howard,  177. 
V.  Todd,  1436. 
Shirreff  v.  Wilks,  366. 
Shirts  V.  Overjohn,  850,  851. 
Shisler  v.  Van  Dyke,  1352a. 
Shiver  w.  Johnson,  112. 
Shoe  &  Leather  Nat.  Bank  v.  Doe,  407. 

V.  Wood,  873,  879. 
Shoemaker  v.  Benedict,  1215a. 
V.  Goshen  Township,  1545. 
V.  Mechanics'  Bank,  1008. 
Shoemakers  Bank  v.  Street,  56. 
Shook  V.  Shute,  1789. 
Short  V.  City  of   New  Orleans,   422, 
431. 
V.  New  Orleans,  428. 
V.  Trabue,  880,  899. 
Shortbridge's  Case,  1615. 
Shortred  v.  Cheek,  1766. 
Shotwell  V.  McKnown,  400. 
Shoulters  v.  Allen,  210. 
Showell  V.  Barr,  199a. 
Shreeves  v.  Allen,  775. 
Shrieve  v.  Duckman,  985,  1590. 
Shriner  v.  Keller,  1265. 
Shroeder  v.  Webster,  1412,  1421. 
Shropshire  Union  R.  &  C.  Co.  v.  The 

Queen,  1708/. 
Shuey  v.  Adair,  740a,  1189. 

V.  Holmes,  203. 
Shufeldt  V.  Gillilan,  742. 
Shugart  v.  Shugart,  179,  182,  1702. 
Shuler  v.  Gillette,  1380. 
V.  Hummel,  1317a. 
Shulman  v.  Damico,  68a. 
Shultz  V.  Payne,  83,  1376. 
Shuly  t;.  Holmes,  189. 
Shumway  v.  Reid,  1267. 
Shute  V.  Hinman,  1612a. 
V.  Jones,  812. 

V.  Pacific  Nat.  Bank,  1703. 
V.  Robins,  466,  471,  472,  474. 
Shutt  Imp.  Co.  V.  Erwin,  479. 
Shuttleworth  v.  Noyes,  242. 

V.  Stevens,  133. 
Shutts?;.  Fingar,  1306, 1307, 1311, 1312. 
Sibley  v.  Am.  Exch.  Nat.  Bank,  664a, 
1754. 
V.  Muskegon  Nat.  Bank,  713a. 
Sibree  v.  Tripp,  1289,  1703. 
Sicard  v.  Whale,  886. 
Sice  V.  Cunningham,  607,  609,  611,  612, 

1163. 
Siebenick  v.  Anchor  Sav.  Bank,  1317. 
Siegel  V.  Chicago  Tr.  &  Sav.  Bank,  51a, 
797. 
V.  Oehl,  775. 
Sieger  v.  Second  Nat.  Bank,  1147. 
Siegfried  v.  Ludwig,  373. 


Siegmeister  v.  Lispenard  Realty  Co., 

781b. 
Siemans  &  Halske  Electric  Co.  v.  Ten 

Brock,  205,  1266,  1266a. 
Siffkin  V.  Walker,  360. 
Sigerson  v.  Mathews,  1103,  1147,  1149, 

1162. 
Siglin  V.  Frost,  203. 
Sigourney  v.  Lloyd,  698,  698a. 

V.  Whetherell,  1328,  1788,  1789. 
Silby  V.  McCuUough,  1260. 
Sill  V.  Leslie,  716. 
V.  Pate,  795a. 
Sillman  v.  Fredericksburg,  etc.,  R.  Co., 

1498,  1550. 
Simanton  v.  Vliet,  403,  418. 
Simeon  Leland  in  Bankruptcy,  1487. 
Simmons  v.  Atkinson  &  Lampton  Co., 

1405. 
Simmons  Estate,  In  re,  188. 
V.  Council,  51a,  769a,  797. 
V.  Savings  Society,  26. 
V.  Taylor,  1585a. 
V.  Thompson,  81b. 
Simmons  Hardware  Co.  v.  Bank,  1637. 
Simmons  Nat.  Bank  v.  Dilley  Foundry 

Co.,  775,  795c. 
Simms  v.  Bank  of  Alma,  753a. 

V.  Clark,  1675. 
Simon  v.  Huot,  800a. 
V.  Ingham,  1253. 
V.  Jones  Estate,  46. 
V.  Krinks,  1227. 
V.  Mintz,  130. 
Simonds  v.  Merritt,  803. 
Simons  v.  Fisher,  392,  815. 
V.  Morris,  782,  786. 
V.  Steel,  1764. 
Simonson  v.  Aney,  1470. 
Simpson  College  v.  Tuttle,  180. 
Simpson  v.  Davis,  1418. 
V.  Field,  1298. 
V.  Fullen wider,  751. 
V.  Garland,  307,  400. 
V.  Griffin,  1459. 
V.  Hall,  724a,  725,  741. 
V.  Hefter,  814a,  917. 
V.  Ingham,  1250. 
V.  Meneden,  56. 

V.  Pacific,  etc.,  Ins.  Co.,  1590, 1593. 
V.  Stackhouse,  1417. 
V.  Tumey,  1044,  1045. 
V.  Vaughan,  1298. 
V.  Waldby,  341. 
V.  White,  963. 
Sims  V.  American  Nat.  Bank  of  Ft. 
Smith,  1636. 
V.  Bice,  850. 
V.  Bond,  1614. 
V.  Hammond,  834&. 


TABLE   OF   CASES 


clxi 


References  are  to  paragraphs  marked  § 


Sims  V.  Nat.  Commercial  Bank,  571. 

V.  Stillwell,  262. 
Sinclair  v.  Braggley,  65. 

V.  Johnson,  104. 

V.  Lynch,  983. 
Singer  Mfg.  Co.  v.  Sinners,  814a. 

V.  Summers,  184,  832,  1590. 
Singletary  v.  Goeman,  729. 
Singleton  v.  McQuerry,  1389. 

V.  Townsend,  1215a. 
Sinkler  v.  Siljan,  775. 
Sinsheimer  v.  Whitely,  1713a. 
Sioux  City  Railroad  Co.  v.  First  Nat. 

Bank,  1733a. 
Sisson  V.  Tomlinscn,  1083. 
Sistermans  v.  Fields,  198,  815. 
Sivils  V.  Taylor,  74. 
Sizer  v.  Heacock,  1319. 
Skaaraas  v.  Finnegan,  68a. 
Skelly  V.  Bristol  Sav.  Bank,  1233. 
Skelton  v.  Dustin,  602,  634,  719,  951. 
Skerrod  v.  Rhodes,  1163. 
Sketoe  V.  Ellis,  1426. 
Skidmore  v.  Clark,  775. 
Skilbeck  v.  Carbett,  1024,  1054. 
Skilding  v.  Warren,  789. 
Skillman  v.  Titus,  1633. 
Skinker  v.  Butler  County,  1497. 
Skinner  v.  Church,  699,  719. 

V.  Raynor,  771. 

V.  Somes,  743. 

V.  Tinker,  913. 
Skowhegan  Bank  v.  Barker,  1197. 
Ski'ine  v.  Lewis,  32. 
Skyes  v.  Giles,  1270. 

V.  Lewis,  1431. 
Slack  V.  Kirk,  704. 

V.  Marysville  R.  Co.,  1523, 1524. 
Slade  V.  Montgomery,  177. 

V.  Mutrie,  181,  1227. 
Slagle  V.  Bank  of  Valley,  704. 

V.  Pow,  1312. 

V.  Rust,  704. 
Slate  V.  Flye,  164. 
Slater  v.  Church,  1743. 
Slaton  V.  Fowler,  203. 
Slaughter  v.  Farland,  962. 
Slawson  v.  Loring,  241,  303,  410,  413, 

414,  686. 
Slayback  v.  Jones,  1431. 
Slaymaker  v.  Gundacker,  1266. 
Slipper  V.  Stidstone,  1428. 
Sloan  V.  Campbell,  1281b. 

V.  Gibbes,  703,  720a,  1093,  1765. 

V.  McCarty,  41. 

V.  Union  Banking  Co.,  814,  815. 
Slocomb  V.  Fayettville,  1522. 
Slocum  V.  Hooker,  238. 

V.  Lizardi,  999,  999a. 

V.  Pomeroy,  678,  899,  921. 


Slocumb  V.  Holmes,  1268. 
Sloman  v.  Bank  of  England,  1612. 

V.  Cox,  12666,  1411. 
Slotts  V.  Byers,  824. 
Small  V.  Clark,  1099. 

V.  Clewley,  81a,  164. 

V.  Franklin  Mining  Co.,  1623. 

V.  Ober,  1295. 

V.  Sloan,  1776. 

V.  Smith,  790. 
Small's  Admr.  v.  Lumpkin,  222. 
Smalley  v.  Bistol,  159. 

V.  Wright,  130,  741,  1000. 
Smallhouse   v.   American   Nat.    Bank, 

1326. 
Smallwood  v.  Vernon,  104. 
Smart,  Ex  -parte,  1343. 
Smead  v.  Indianapolis  R.  Co.,  383. 

V.  Trustees    of    Union    Township, 
1524    1550. 
Smedes  v.  Bank  of  Utica,  327,  331,  991. 
Smilie  v.  Stevens,  45,  1707. 
Smith  V.  Abbott,  508,  509. 

V.  Alesworth,  1209. 

V.  Allen,  39. 

V.  American  Coal  Co.,  1708/. 

V.  Anderson,  867. 

V.  Baker,  62. 

V.  Bales,  68a. 

V.  Bank,  1178. 

V.  Bank  of  Washington,  1212. 

V.  Bates  Mach.  Co.,  509. 

V.  Bayer,  721,  795a. 

V.  Becket,  1172. 

V.  Bettger,  1260. 

V.  Bibber,  831a. 

V.  Black,  1296. 

V.  Boehm,  55. 

V.  Bond,  240. 

V.  Boulton,  983. 

V.  Bradley,  670,  700. 

V.  Braine,     166,    808,    814,    815, 
1469. 

V.  Brooklyn  Sav.  Bank,  1711a. 

V.  Brooks,  199a. 

V.  Brown,  502. 

V.  Brunk,  748. 

V.  Buchanan,  875. 

V.  Caldwell,  12156. 

V.  Caro,  611,  669,  717. 

V.  Carter,  720a. 

V.  Case,  69. 

V.  Champion,  925. 

V.  Cheshire,  422,  427,  434. 

V.  Chester,  533,  1225,  1260,  1360, 
1364. 

V.  Childress,  721. 

V.  Chilton,  759a. 

V.  Christian,  68a,  69. 

V.  Clark,  696. 


clxii 


TABLE   OF   CASES 


References  are  to  paragraphs  marked  § 


th  V.  Clark  County,  1512a,  1524. 

Smith 

V.  Clopton,  53,  728. 

V. 

V.  Columbia  State  Bank,  197. 

V. 

V.  Columbus,  197. 

V. 

V.  Corege,  739a. 

V. 

V.  Cuff,  194. 

V. 

V.  Curiae,  926,  1147. 

V. 

V.  Dann,  1755,  1785&. 

V.  Dazey,  1384. 

V. 

V.  Dot^erweich,  68a,  81a. 

V. 

V.  Duimam,  1393. 

V. 

V.  Eals,  815. 

V. 

V.  Eighth  Ward  Bank,  3266. 

V. 

V.  Ellis,  43. 

V.  Eureka  Flour  Mills,  382,  383. 

V. 

V.  Felton,  361. 

V. 

V.  First    Nat.    Bank,    286a,    795, 

1312,  1338. 

V. 

V.  First  State  Bank  of  Tyler,  54, 

V. 

970. 

V. 

V.  Fisher,  1116. 

V. 

V.  Foley,  724a. 

V. 

V.  Foster,  63. 

V. 

V.  Gardner,  1227. 

V. 

V.  Gibbs,  654. 

V. 

V.  Gibson,  294. 

V. 

V.  Goodrich,  68,  855. 

V. 

V.  Hanie,  1182. 

V. 

V.  Hardman,  248. 

V. 

V.  Harper,  1267,  1311. 

V. 

V.  Hawkins,  1321. 

V. 

V.  Hightower,  185,  203. 

V. 

V.  Hill,  963. 

V. 

V.  Hiscock,  726a,  803. 

V. 

V.  Hyde,  1317. 

V. 

V.  Ide,  1764. 

V. 

V.  Ijams,  1215. 

V. 

V.  Immigration  Co.,  387. 

V. 

V.  Isaacs,  184. 

V. 

V.  Jansen,  777a. 

V. 

V.  Jay,  1311. 

V. 

V.  Johnson,  290,  671. 

V.  Jones,  1587,  1592. 

V. 

V.  Kendall,  54,  104,  620,  1181a. 

V. 

V.  Kinney,  164,  174. 

V. 

V.  Kittridge,  179. 

V. 

V.  Knox,  855a,  1307. 

V. 

V.  Landecki,  1230. 

V. 

V.  Law,  382,  383. 

V. 

V.  Lawson,  392. 

V. 

V.  Little,  928,  983,  1043. 

V. 

V.  Livingston,  775. 

V. 

V.  Lockridge,  485,  1092. 

V. 

V.  Lockwood,  1275. 

V. 

V.  Lord,  85. 

V. 

V.  Lounsdale,  1133,  1147. 

V.  Loyd,  1252. 

V. 

V.  Lusher,  371a. 

V. 

V.  McCall,  1316. 

V. 

V.  McClure,  63,  64,  65,  105,  1483. 

V. 

iv.  McDonald,  193. 
McLean,  644. 
McLennan,  180. 
McNair,  731, 1358, 1372a,  1499&. 
Mace,  1410a. 
Marland,  53. 
Marsack,    93,    228,  242,    535, 

536. 
Mason,  1316,  1340,  1342. 
Mayo,  232,  234. 
Mead,  867,  879. 
Melton,  488. 
Mercer,  1225, 1360, 1371, 1654a, 

1658. 
Merrill,  703. 
Miller,    452,    971,    1260,    1276, 

1330,  1590,  1623,  1625. 
Missouri  Pac.  Ry.  Co.,  1733. 
Moberly,  854. 
Mohr,  815,  819. 
Morrill,  717. 
Mullett,  1009. 
Munch,  795a. 

Muncie  Nat.  Bank,  62,  62a,  532. 
Myers,  53. 

Nelson,  1191,  1478,  1480,  1643. 
Nevlin,  728. 

New  Hartford  Waterworks,  205. 
Nightingale,  53. 
Nissen,  506,  1254. 
Ojerhome,  1114,  1134,  1754. 
Owens,  1260. 
Pearson,  1317. 
Peck,  1221. 
Pedley,  253. 
Philbrick,  640,  1180. 
Pickering,  260. 
Pickham,  669,  1092. 
Pitts,  1335. 
Poillon,  1041. 
Popular    Loan  &    Bldg.  Assn., 

815. 
Rawson,  663a. 
Roach,  449,  454,  1045. 
Rockwell,  1473,  1480. 
Rowland,  1081. 
Sac  County,  815. 
Savin,  833. 
Sawyer,  1254. 
Screven,  1251. 
Shaw,  1454. 

Sheldon,  370,  1300a,  1319. 
Silvers,  62. 
Sloan,  358a. 
Smith,  25,  86,  875,  927,  1398, 

1580. 
Southern  Express  Co.,  185. 
Southern  R.  Co.,  1733a. 
Spaulding,  249. 
SpinoUa,  882,  886. 


TABLE    OF   CASES 


clxiii 


References  are  to  paragraphs  marked  § 


Smith  V.  State  Bank,  189. 

V.  Steen,  1125,  1698a. 

V.  Strader,  366. 

V.  Stranger,  288. 

V.  Taylor,  92. 

V.  Terry,  1418. 

V.  Thompson,  832. 

V.  Thurston,  63. 

V.  Town  of  Greenwich,  1516,  1537. 

V.  Traders'  Nat.  Bank,  789. 

V.  Tramel,  1352a. 

V.  Union  Bank,  1585a. 

V.  United  States,  1312. 

V.  Van  Blarcom,  41, 

V.  Vertue,  509. 

V.  Walker,  87,  1478,  1479, 

V.  Warren,  1316. 

V.  Weld,  1387. 

V.  Weston,  365, 

V.  White,  1294. 

V.  Whiting,   266,  684,  685,  979a, 
980. 

V.  Willing,  145. 

V.  Winter,  1321. 

V.  Wood,  1247. 
Smith  Bros.  v.  Flanders,  769a. 
Smither,  Matter  of,  26. 
Smith  Premier  Typewriter  Co.  v.  May- 
hew,  196a. 
Smith  Sons  Gin  &  Machine  Co.  v.  Bad- 
ham,  62a. 
Smith  Tie  &  Timber  Co.  v.  Weather- 
ford,  1417. 
Smith  wick  v.  Anderson,  1217. 
Smock  V.  Pierson,  183. 

V.  Ripley,  62. 
Smoot  V.  Judd,  879. 
Smyley  v.  Head,  1314. 
Smyth  V.  Scott,  719. 
Snaith  v.  Mingay,  12,  65,  869. 
Snead  v.  Barclift,  1233. 

V.  Coleman,  262,  263. 
Snee  v.  Prescott,  698,  1730,  1744. 
Sneed  v.  Mitchel,  684. 

V.  Sabinal  Mining  &  Milling  Co., 
1378,  1387. 

V.  White,  1311. 

V.  Wiester,  1300. 
Snell  V.  Northside  Mill  Co.,  707. 
Snellgrave  v.  Bailey,  24. 
Sn-vily  v.  Ekel,  1782. 
Snevley  v.  Read,  182. 
Snider  v.  Mt.  Sterling  Nat.  Bank,  206. 
Snively  v.  Johnson,  1759. 
Snivley  v.  Matheson,  358a. 
Snodgrass  et  al.  v.  Sweeter,  1654a,  1655. 
Snow  V.  Goodrich,  411. 

V.  Peacock,  772,  1462,  1463. 

V.  Perkins,  909,  910,  979a,  980. 
Snyder  v.  Boviard,  434. 


Snyder  v.  Corn  Exch.  Nat.  Bank,  141, 
1405. 

V.  Gericke,  230. 

V.  Hargus,  193. 

V.  Moore,  573. 

V.  Otman,  728. 

V.  Reno,  731. 

V.  Riley,  725a,  784a. 

V.  Studbreaker,  93, 

e;.  Van  Doren,  142,  143,  147,  1388, 

t;,  Wiley,  204. 
Snyder  &  Dull  v.  Critchfield,  883. 
Soars  V.  Clyn,  697. 
Society  for  Savings  v.  New  London, 

389,  1500,  1509. 
Soffe  V.  Gallager,  1262,  1265. 
Sohn  V.  Morton,  1326. 
Solarte  v.  Palmer,  982,  985. 
Solenberger  v.  Gilbert,  156. 
Solicitors'  Co.  v.  Savage,  1397. 
SoUnger  v.  Earle,  194. 
SoUenberger  v.  Stephens,  164,  810. 
Smoloan  v.  Brodie,  812. 

V.  First   Nat.  Bank  of  Meridian, 
1343. 
Solomans  v.   Bank  of  England,   822, 

1680,  1683. 
Solomon  v.  Cohen,  1037. 

V.  Turner,  193. 
Solomon  Solar  Salt  Co.  v.  Barber,  149. 
Solomons  v.  Bank  of  England,  285. 

V.  Jones,  157. 
Solon  V.  WiUiamsburg  Sav.  Bank,  1495, 

1537. 
Solser  V.  Brock,  1309. 
Somers  v.  Losey,  800a. 
Somerville  v.  Brown,  800a. 
Sondheim  v.  Gilbert,   195a,  197,  356, 

807, 
Sonneman  v.  Loet,  248. 
Sonnethiel  v.  Skinner,  50. 
Soper  V.  Henry  County,  1519a. 

V.  Peck,  851. 
Soule  V.  Bonney,  196. 

V.  Chase,  1283. 

V.  Soule,  1267. 
South,  Ex  -parte,  16a,  23. 
South  &  Lane  v.  People's  Nat.  Bank, 

663,  729,  812,  1219. 
Southall  V.  Rigg,  81c,  177. 
Southard  v.  Arkansas  Valley,  etc.,  R. 
Co.,  177,  196. 

V.  Porter,  725a,  745. 
South  Boston  Iron  Co.  v.  Brown,  176. 
South  Carolina  Bank  v.  Case,  363,  364. 
Southcot  V.  Watson,  1664. 
South  Dakota  Cent.  R.  Co.  v.  Smith, 

81a,  164,  203. 
Southerland  v.  Goldsboro,  1535a. 

V.  Mead,  793a,  819. 


clxiv 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Southerland  v.  St.  Lawrence  County, 
262. 

V.  Whitaker,  1309. 
Southern   Bank  v.   Mechanics  Saving 

Bank,  1198. 
Southern  Hardware  &  Supply  Co.  v. 

Lester,  177. 
Southern  Life  Ins.,  etc.,  Co.  v.  Gray, 

1188,  1189a. 
Southern  R.  Co.  v.  Cofer,  81c. 

V.  Kinchen  &  Co.,  17336,  1743. 
Southern  Sand  &  Material  Co.  v.  Peo- 
ple's Savings  Bank  &  Trust  Co., 

184,  1407. 
Southern  Seating  &  Cabinet  Co.  v.  First 

Nat.  Bank,  1643. 
South  Mo.  Land  Co.  v.  Rhodes,  922. 
South  Ottawa  v.  Perkins,  1520,  1538, 

1539. 
South   St.   Paul   V.   Lanprecht,    1537, 

1539,  1542. 
Southwick  V.  Ely,  573. 

V.  First  Nat.  Bank,  366. 
Sowell  V.  Bank  of  Brewton,  112. 
Sowerby  v.  Butcher,  300. 
Spadine  v.  Reed,  568. 
Spalding  v.  Vandercook,  202. 
Spann  v.  Balzell,  1048. 
Sparhawk  v.  Willis,  1186a. 
Sparks  v.  Coats,  1181a. 

V.  Oklahoma  Const.  Co.,  196. 
Spartali  v.  IBenecke,  1279a. 
Spaulding  v.  Andrews,  501,  504,  567, 
568. 

V.  Evans,  103. 

V.  Kelly,  357. 

V.  Putman,  713a. 
Spear  v.  Ladd,  394. 

V.  Pratt,  497,  4976. 
Spears  v.  Bond,  55. 

V.  Lederberger,  1245. 

V.  Thompson,  1326. 
Specht  V.  Beindorf,  156. 

V.  Howard,  80. 
Speck  V.  Pullman  Car  Co.,  782. 
Spence  v.  Crockett,  959. 
Spencer  v.  Alki  Point  Transp.  Co.,  787, 
795c,  855a,  1338. 

V.  Ballou,  331,  791. 

V.  Bank  of  Salina,  1121. 

V.  Blaisdell,  1673a. 

V.  Carstardien,  665. 

V.  Dearth,  1227. 

V.  Halpern,  669a,  688c. 

V.  Harvey,  10926, 1104, 1131, 1133, 

1135. 
V.  Mobile  R.  Co.,  1503. 
V.  Robinson,  692. 
V.  Sloan,  710. 
V.  Stockwell,  241. 


Sperlin  v.  Peninsular  Loan  &  Discount 

Co.,  758,  7796. 
Sperry  v.  Horr,  62,  62a,  123. 

V.  Spaulding,  166,  815. 
Spetch  V.  Bunford,  46. 
Spicer  v.  State,  1654. 
Spielberger  v.  Thompson,  1200. 
Spier  V.  McNaught,  1789. 
Spies  V.  Gilmore,  1180. 

V.  Nat.  City  Bank,  899. 

V.  Newbery,  983. 

V.  Rosenstock,  81a,  195a. 
Spiller  V.  Creditors,  1252. 
Spilter  V.  James,  90,  144. 
Spinette    v.    Atlas    Steamship     Co., 

1741. 
Spinning  v.  Sullivan,  741. 
Splitberger  v.  Kohn,  903. 
Spooner  v.  Gardiner,  1077. 

V.  Hilfish,  246. 

V.  Holmes,  776,  1489,  1500. 
Sprague  v.  Fletcher,  1095a,  1096. 

V.  Sprague,  162,  164. 

V.  Tyson,  962,  1030. 
Spratt  V.  Hobhouse,  1687. 
Spreckles  v.  Bender,  812,  1198,  1229. 
Spreeves  v.  Allen,  775. 
Spreng  v.  Juni,  II8I0. 
Sprigg  V.  Bank  of  Mt.  Pleasant,  1332. 

V.  Cuny,  576,  1198. 
Spring  V.  George,  1311. 

V.  Lovett,  81. 
Spring  Brook  Chemical  Co.  v.  Dunn, 

815. 
Springfield  Bank  v.  Merrick,  1410a. 
Springfield  M.  &  F.  Ins.  Co.  v.  Peck, 

1637,  1703. 
Springs  V.  McCoy,  189,  1343. 
Springs  &  Co.  v.  Carpenter,  195a. 
Sprinkill  v.  Martin,  1250. 
Sprinkle  v.  Taylor,  789. 
Sproat  V.  Mathews,  504,  510,  549. 
Spurgeon  v.  Smiths,  1310. 

V.  Swain,  496. 
Spurgin  v.  McPheeters,  110,  174,  174a, 

190. 
Spurlock  V.  Union  Bank,  1147,  1149. 
Spyker  v.  Spence,  395. 
Staats  V.  Howlett,  361. 
Stack  V.  Beach,  719. 
Stacy  V.  Baker,  895. 

V.  Dane  County  Bank,  343. 

V.  Kemp,  69. 
Stadler  v.  First  Nat.  Bank,  106,  107. 
Staff  V.  First  Nat.  Bank,  1227. 
Stafford  v.  Bacon,  182. 
V.  Fargo,  725a. 
V.  Rice,  1217. 
V.  Yates,  987. 
Stahl  V.  Berger,  1401. 


TABLE   OF   CASES 


clxv 


References  are  to  paragraphs  marked  § 


Stainback  v.  Bank  of  Virginia,  280, 
282,  283,  457,  588,  855,  964, 
969,  1046. 

V.  Junk  Bros.,  394. 

V.  Read,  276,  280. 
Stalker  v.  McDonald,  831a,  831c. 
Staltemeier  v.  Barrett,  1227. 
Stam  V.  Kerr,  1260,  1262. 
Stamper  v.  Gay,  1181a. 
Stanard  v.  Sampson,  196a. 
Standage   v.   Creighton,    1109&,    1158, 

1167. 
Standard  Cement  Co.  v.  Windham  Nat. 

Bank,  392a,  394,  789,  812. 
Standard  Milling  Co.  v.  White  Line  Co., 

1738,  1740a,  1741. 
Standard  Oil  Co.  v.  Snowden,    1272, 

1274. 
Standard  Sewing  Mach.  Co.  v.  Smith, 

960,  972,  987,  1038,  1044. 
Standard  Wagon  Co.  v.  D.  P.  Drew  & 

Co.,  357,  366. 
Standfield  v.  State,  1338. 
Standifer  v.  Hamill,  1538. 
Stanford  v.  Horwitz,  186. 

V.  Pruet,  868. 
Stanford  Compress  Co.  v.  Farmers'  & 

Merchants'  Nat.  Bank,  1713a. 
Staninger  v.  Tabor,  1643. 
Stanley  v.  Davis,  144. 

V.  McEh-ath,  972,  1260. 

V.  Penny,  1181a. 
Stanton  v.  A.  &  C.  R.  Co.,  50a,  1491a. 

V.  Blossom,    987,    988,    990,    992, 
1075,  1212. 
Stan  wood  v.  Stanwood,  257,  1184. 
Staples  V.  Bedford,  etc.,  Bank,  74. 

V.  Franklin  Bank,  1209,  1671. 

!;.  Nott,  868,  879,  895,  919. 

V.  O'Kines,  1075,  1172. 
Stapleton  v.  Louisville  Banking  Co.,  62, 

62a. 
Stapylton  v.  Cie  des  Phosphates  de 
France,  1622. 

V.  Taegue,  174. 
Star  Compress  &   Warehouse  Co.   v. 

Meridian  Cotton  Co.,  1713a. 
Starin  v.  Town  of  Genoa,  1520,  1523, 

1532,  1533,  1552, 1555. 
Star  Ins.  Co.  v.  Bank,  1356. 
Stark  V.  Alford,  176,  1181a. 

V.  Cheeseman,  128. 

V.  Olsen,  62. 
Starke  v.  Alford,  1206. 

V.  Dicks,  193. 
Star  Mills  v.  Bailey,  393,  394a. 
Star  Pad  Co.  v.  Greenwood,  203. 
Starr  v.  Metcalf,  1383. 

V.  Miliken,  1310. 

V.  Richmond,  1252. 


Starrett  v.  Burkhalter,  1318. 
Start  V.  Tupper,  1587,  1596. 
Star  Wagon  Co.  v.  Swezey,  1109o,  1326, 

1788. 
State  t;.  Allen,  7135,  1345. 

V.  Bank  of  Missouri,  440. 

V.  Bierbauer,  1344. 

V.  Boies,  443,  1189a. 

V.  Cardozo,  442. 

V.  Carragin,  1345. 

V.  Cilley,  1386. 

V.  Cook,  199a. 

V.  Corning   State   Savings   Bank, 
81a,  670,  776. 

V.  Crawford,  1567. 

V.  Delafield,  441,  442,  444. 

V.  Dubuclet,  438. 

V.  Dunn,  1346. 

V.  Farrell,  1345. 

V.  Fitzpatrick,  823. 

V.  Givens,  1345. 

V.  Glover,  422. 

V.  Greene  County,  1523,  1524. 

V.  Hammelsy,  1566. 

V.  Hardware  Co.,  177,  393. 

V.  Hawes,  422. 

V.  Henzell,  1714. 

V.  Hinton,  693. 

V.  Hodges,  290,  292,  1350. 

V.  Huff,  427. 

V.  Humphreys,  1346. 

V.  Jahrans,  2716. 

V.  Little  Rock,  etc.,  R.  Co.,  1551. 

V.  Loomis,  1714. 

V.  McClellan,  741. 

V.  McCormick,  1569. 

V.  Madison,  1522,  1530. 

V.  Midland  State  Bank,  1612a. 

V.  Mitton,  1395. 

V.  Nelson  County,  1522. 

V.  Patterson,  1345. 

V.  Peck,  856. 

V.  Polk,  1387. 

V.  Potter,  856. 

V.  Saline  County,  1535. 

V.  Samuels,  1349. 

V.  Scougal,  1668. 

V.  Schwartz,  86a. 

V.  Stebbins,  573,  664a,  741. 

V.  Stratton,  150,  1395. 

V.  Sullivan  County,  1524. 

V.  Sutterfield,  1535a. 

V.  Taylor,  62,  1345. 

t;.  Town  of  Clark,  1524. 

V.  Trustees   of   Union   Township, 
1545. 

V.  Turner,  1350. 

t;.  Van  Home,  1545,  1548. 

V.  Wapello  County,  1523,  1560. 

V.  Warren,  1345. 


clxvi 


TABLE    OF   CASES 


References  are  to  paragraphs  marked 


State  u.  Webster,  1345. 

V.  Wenkelmeier,  1535a. 

t;.  Wichita  County,  800a. 

V.  Williams,  1344. 

V.  Wilson,  204. 
State  ex  rel.  v.  Adams  County,  1522, 
State  ex  rel.  Banking  Co.  v.  Edmunds, 

960. 
State  ex  rel.  Parks  v.  Hughes,   1090, 

1092. 
State  Bank  v.  Ayers,  1034. 

V.  Bank  of  Capitol,  331. 

V.  Burton-Gardner  Co.,  156,  1769. 

V.  Coquillard,  767. 

V.  Evans,  856, 

V.  Fearing,  672,  1356. 

V.  Forsyth,  174. 

V.  Hayes,  9. 

V.  Hennen,  1016. 

V.  Hurd,  639. 

V.  J.  Blakey  &  Co.,  789a. 

V.  Kahn,  1236. 

V.  Kain,  392, 

V.  McCabe,  1147. 

V.  McCoy,  214, 

V.  Napier,  656,  657. 

V.  Rhoads,  1217. 

V.  Reilly,  1612a, 

V.  Rowley,  1181a. 

V.  Slaughter,  999a. 

V.  Van  Horn,  1685. 

V.  Weiss,  500. 

V.  Wheeler,  392. 
State   Bank  &   Trust   Co.   v.   Evans, 

1470, 
State  Bank  of  Beaver  County  v.  Brad- 
street,  505. 
State  Bank  of  Chicago  v.  First  Nat, 
Bank  of  Omaha,  1361, 

V.  Holland,  197,  831a. 
State  Bank  of  Fillmore  v.  Hayes,  187. 
State  Bank  of  Fox  Lake  v.  Citizens' 

Nat.  Bank  of  King  City,  560. 
State  Bank  of  Gothenburg  v.  Carroll, 

1587,  1596. 
State  Bank  of  Greentown  v.  Lawrence, 

198,  775. 
State  Bank  of  Halstad  v.  Bilstad,  831a, 
State  Bank  of  Indiana  v.  Cook,  156, 
814,  815. 

V.  Gates,  193,  203, 

V.  Mentzer,  156,  193,  802, 
State  Bank  of  Iowa  Falls  v.  American 
Hardwood  Lumber  Co.,  1457, 

V.  Brown,  193, 
State  Bank  of  Lock  Haven  v.  Smith, 

187,  1311. 
State  Bank  of  Moore  v.  Forsyth,  185. 
State  Bank  of  St.  Johns  v.  McCabe, 

3266,  1050,  1152. 


State  Bank  of  St.  Louis  v.  Bartle,  1103, 

1311, 
State  Bank  of  Tabor  v.  Kelly,  322, 
State  Capitol  Bank  v.  Thompson,  69, 

70. 
State  Ins.  Bank  v.  Young,  1799. 
State  Loan  &  Investment  Co.  v.  Coch- 
ran, 1326, 
State  Nat.  Bank  v.  Bennett,  199a. 

V.  Bryant  &  Mathers,  1713. 

V.  Chicago,  etc.,  Ry.  Co.,  1740a. 

V.  Cudahy  Packing  Co.,  10. 

V.  Flathers,  769a. 

V.  Haylen,  694,  1781, 

«;.  J.  J,  Hyatt  &  Co.,  326. 

V.  Newton  Nat.  Bank,  392. 

V.  Reilly,  1612a. 

V.  Smith,  248. 

V.  State  Nat.  Bank,  341. 
Staten  Island  R.  Co.,  Matter  of,  1626. 
State  of  New  York  Nat.  Bank  v.  Ken- 
nedy, 262,  594,  606. 
State  Sav.   Assn.   v.   Boatman's   Sav. 
Bank,  3346,  1621,  1637. 

V.  Hunt,  824. 
State  Sav.  Bank  v.  Baker,  669,  1303, 
1312. 

V.  Shaffer,  1384,  1413. 
State  Solicitors'  Co.  v.  Savage,  1397. 
State  Trust  Co.  v.  Owen  Paper  Co.,  81c, 
Staunton  v.  Smith,  143. 
Staven  v.  Missimer,  1316. 
Stavenow  v.  Kenefick,  358a. 
Staylor  v.  Williams,  640,  1180. 
Stayner  v.  Joice,  1376. 
Steadman  v.  Duhamel,  14. 

V.  Gooch,  1019,  1272. 
Steamboat    Charlotte    v.    Hammond, 

1260,  1267,  1282, 
Steamship  Co,  v.  Heron,  1708d, 
Stearns  v.  Burnham,  883. 
Stebbing  v.  Spicer,  100. 
Stebbins  v.  Phoenix  Ins.  Co.,  1708e, 

V.  Union  Pac.  R.  Co.,  50,  104. 
Stedman  v.  Rochester  Loan  &  Banking 

Co.,  769a. 
Steel  V.  Davis  Co.,  430. 

V.  Steel,  1433. 
Steele  v.  Curie,  885. 

V.  Johnson,  1316,  1326. 

V.  McDowell,  263. 

V.  McKinlay,  143a,  485,  4976,  504, 
703a. 

V.  Soule,  1215a. 
Steen  v.  Stretch,  7.53, 
Steer  v.  Dow,  800a. 
Steger  v.  Jackson,  1266,  1325. 
Stein  V.  Empire  Trust  Co.,  1663. 

V.  Kaun,  835a. 

V.  Mobile,  1522,  1523. 


TABLE   OF   CASES 


clxvii 


References  are  to  paragraphs  marked  § 


Stein  V.  Yglesias,  724,  725,  726. 
Steinbeck  v.  Treasurer,  etc.,  427. 
Steine  v.  Franklin  County,  1564. 
Steiner  v.  Mutual  Alliance  Trust  Co., 

1233. 
Steiner  &  Lobman  v.  Jeffries,  571,  1250. 

V.  Steiner   Land   &   Lumber  Co., 
386. 
Steines    v.    Franklin    County,    1536a, 

1539,  1548,  1551,  1559. 
Steinhart  v.  Nat.  Bank,  1221,  1260. 
Steinman  v.  Magnus,  1331. 
Steinweg  v.  Erie  R.  Co.,  1732,  1740a. 
Steinwender  v.  The  Aspasia,  1741. 
Steman  v.  Harrison,  550,  551. 
Stephens  v.  Board  of  Education,  366. 

V.  Davis,  1409. 

V.  Elver,  1411. 

V.  Graham,  1376. 

V.  Gregg,  895. 

V.  Johnson,  59. 

V.  McLachin,  358a. 

V.  Monongahela  Nat.  Bank,  189, 
790,  1335a. 

V.  Spiers,  1966. 

V.  Thompson,  1295. 
Stephenson  v.  Clayton,  859. 

ii.  Dickson,  1041. 

V.  Primrose,  1018. 

v.  Richards,  1227. 
Sterling  v.  Fleming,  1221. 

V.  Marietta,  etc.,  Co.,  393,  1324, 
1326,  1328. 
Sterling  Wrench  Co.  v.  Amstutz,  1288, 

1290. 
Stern  v.  Germania  Nat.  Bank,  725a. 
Sternbach  v.  Friedman,  1343. 
Sternenberg  v.  Morgan,  365. 
Sterry  v.  Robinson,  930. 
Stettheim  v.  Myer,  831c. 
Steuben  County  Bank  v.  Alberger,  365. 
Steven  v.  Lord,  158. 
Stevens,  In  re,  532,  534,  1266. 

V.  Androscoggin  Water  Power  Co., 
513. 

V.  Beals,  254,  681. 

V.  Blunt,  43. 

V.  Boston,  etc.,  R.  Co.,  1732, 1737. 

V.  Campbell,  832. 

V.  Chadwick,  1281,  1281&. 

V.  Graham,  1384,  1386,  1401. 

V.  Hannan,  688c,  725a,  1238,  1241, 
1294. 

V.  Lynch,  1148,  1158,  1161,  1321. 

V.  Oakes,  1312. 

V.  Park,  1587. 

V.  Parsons,  713a. 

V.  Stevens,  24. 

V.  Strong,  139. 

V.  Taylor,  1227. 


Stevenson  v.  Bank,  3406. 

V.  O'Neil,  700,  797. 

V.  Short,  1221. 

V.  Unkefer,  766. 

V.  Woodhull,  1230. 
Stewart  v.  Ahrenfeldt,  1966. 

V.  Allison,  587. 

V.  Bramhall,  674. 

V.  Commonwealth  Nat.  Bank,  769a, 
867,  891. 

V.  Earl  of  Galloway,  188. 

V.  Eden,    588,    640,    1001,    1025, 
1029a,  1049,  1310.  1322. 

V.  Ellice,  920. 

V.  Foullarton,  46. 

V.  Givens,  824. 

V.  Gould,  384. 

V.  Hidden,  1285. 

V.  Hutchinson,  195a. 

V.  Insurance  Co.,  1714. 

V.  Jenkins,  249. 

V.  Kennett,  988,  990. 

V.  Lansing,  1512a. 

V.  Lathrop  Mfg.  Co.,  751. 

V.  Life  Ins.  Co.,  1259. 

V.  Lispenard,  211. 

V.  Lord  Kirkwall,  247. 

V.  Salamon,  87. 

V.  Smith,  728,  1587,  1589,  1652. 

V.  State,  1664. 

V.  Virginia,  448. 
Stewart  &  Co.  v.  Andes,  775,  815. 
Stickney  v.  Mohler,  187. 

V.  Moore,  1513. 
Stiles  V.  Eastman,  1335a. 

V.  Inman,  962. 

V.  Vanderwater,  80. 
Stillwell  V.  Aaron,  1338. 

V.  Patton,  1419. 
Stilwell  V.  Craig,  47. 
Stimson  v.  Whitney,  365,  368,  3696, 

775. 
Stinson  v.  Lee,  305. 

V.  Sachs,  1187. 
Stitzel  V.  Miller,  47,  1181a. 
Stitzer  v.  Whittaker,  184. 
Stivers  v.  Prentice,  590,  635. 
Stix  V.  Mathews,  879,  995a,  1045. 
Stocken  v.  Collin,  983,  1052. 
Stockman  v.  Parr,  978. 
Stocks  V.  Scott,  201. 
Stockton  Bros.  v.  Reed,  186. 
Stockton    Sav.    &    Loan    Society    v. 

Giddings,  203,  782. 
Stockwell  V.  Bramble,  490,  491. 
Stockyards  Nat.  Bank  v.  Smith,  1372. 
Stoddard  v.  Kimball,  757,  790,  831a, 
832a. 

V.  Lyon,  1219. 

V.  Penniman,  716. 


clxviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Stoddard  Bros.  Lumber  Co.,  In  re,  360, 

370. 
Stoessiger  v.  S.  E.  R.  Co.,  92. 
Stofflet  V.  Strome,  384. 
Stokes  V.  Anderson,  67. 

V.  Lewis,  182. 
Stoll  V.  Sheldon,  1181a. 
Stollenwerck  v.  Thacher,  1734&. 
Stoller  V.  Coates,  336. 
Stone  V.  Bishop,  24b. 

V.  Chamberlaine,  370. 

V.  Clough,  1227. 

V.  Dean,  800a. 

V.  Elliott,  800a. 

V.  Gray,  1480. 

V.  Hammell,  1339,  1342. 

V.  Marsh,  1612. 

V.  Metcalf,  112,  153. 

V.  Peake,  203. 

V.  Smith,  207. 

V.  Talbot,  1252. 
Stone's  River  Nat.   Bank  v.  Walter, 

1317. 
Stoneman  v.  Pyle,  62. 
Stoner  v.  Ellis,  1418. 

V.  Zachery,  849a. 
Stoney  v.  American  Life  Ins.  Co.,  389. 
Storall  V.  Border  Grange  Bank,  703. 
Storer  v.  Logan,  532,  550,  551,  554,  561. 
Storey  v.  Kerr,  1228. 
Storm  V.  Sterling,  101. 
Storr  V.  Wakefield,  62. 
Storts  V.  George,  1437. 
Story  V.  Atkins,  162. 

V.  Dane  Comity  Bank,  341, 

V.  Lamb,  43. 

V.  McKay,  898. 
Stothart  v.  Parker,  611,  1172. 
Stotsenburg  v.  Fordice,  1226. 
Stott  V.  Alexander,  1035. 

V.  Fairlamb,  184. 
Stotts  City  Bank  v.  T.  A.  Miller  Lum- 
ber Co.,  289,  386. 
Stouffer  V.  Curtis,  65,  386, 

V.  Fletcher,  815. 

V.  Stoy,  812. 
Stough  V.  Healy,  560, 

V.  Ogden,  1421a. 

V.  Ponca  Mills  Co.,  796. 
Stout  V.  Ashton,  1479. 

V.  Benoist,  1361,  1700, 

V.  Cloud,  1404, 
Stoutenburg  v.  Lybrand,  196, 
Stoutimore  v.  Clark,  93. 
Stovall  V.  Border  Grange  Bank,  1332. 
Stover  V.  Hamilton,  88. 
Stow  V.  Yarwood,  1423. 
Stowell  V.  Greenwich  Ins.  Co.,  80. 

V.  Raymond,  713a,  713c. 
Stoy  V.  Bledsoe,  156,  203,  725o. 


Stoyell  V.  Stoyell,  80. 
Strachan  v.  Muxton,  79. 
Straker  v.  Graham,  466,  474,  612. 
Strang  v.  Wilson,  1217. 
Strange  v.  Price,  982,  983. 

V.  Wigney,  772,  1463. 
Stratton  v.  Allen,  382. 

V.  McMakin,  205. 
Straughan  v.  Fairchild,  831a. 
Strauss  v.  Hensey,  731,  1226. 

V.  United  Telegraph  Co.,  1500. 
Strawberry  Point    Bank    v.  Lee,  62, 

865. 
Strawbridge  v.  Robinson,  12, 13. 
Streeter  v.  Poor,  284. 
Streissguth  v.  Kroll,  63,  68a. 
Strevell  v.  Jones,  188. 
Strieker  v.  Tinkham,  879. 
Strickland  v.  Henry,  752. 

V.  Holbrook,  86. 

V.  National     Salt     Co.,     43,     48, 
1230. 

V.  Parlin  &  Orendorf  Co.,  193. 

V.  Raihoad  Co.,  1523. 

V.  Vance,  248, 
Strickland  &  Co.  v.  Lesense  &  Ladd, 

748a. 
Stringer  v.  Adams,  63. 
Stringfield  v.  Vivian,  1276. 
Stroh  V.  Hickman,  296. 
Strohecker  v.  Cohen,  568. 
Strong  V.  Foster,  1334,  1337. 

V.  Hart,  1271. 

i;.  Jackson,  8346,  835. 

V.  Straus,  271. 
Stroud  V.  Marshall,  209. 
Stroughton  v.  Chu  Fong,  68a. 
Struthers  v.  Kendall,  832,  1399. 
Stuart  V.  Stonebraker,  1230. 

V.  West,  800a. 
Stubbs  V.  Colt,  868. 

V.  Goodall,  719. 
Stuber  v.  Schack,  1317a. 
Stuckkert  v.  Anderson,  654a. 
Studenbaker    v.    Maimfacturing    Co., 
799. 

V.  Langson,  812. 
Studenmire  v.  Ware,  185. 
Stults  V.  Silva,  45a. 
Stump  V.  Napier,  1217. 
Sturdevant  Bank  v.  Peterman,  1260. 

V.  Hull,  80,  403. 

V.  Memphis  Nat.  Bank,  922,  923. 
Sturdy  v.  Henderson,  626,  1671. 
Sturgeon  Sav.  Bank  v.  Riggs,  1250, 
Sturges  V.  Detroit,  1740a. 

V.  Keith,  286. 
Sturgis  V.  Baker,  1223. 

V.  Bank  of  Circleville,  392. 

V.  Crowninshield,  874. 


TABLE    OF   CASES 


cixix 


References  are  to  paragraphs  marked  § 


Sturgis  V.  Derrick,  1115. 

V.  Fourth  Nat,  Bank,  504. 
Sturtevant  v.  City  of  Alton,  1522. 

V.  Ford,  725a,  726,  786. 

V.  Hall,  402. 

V.  Jaques,  271. 

;;.  Liberty,  435. 

V.  Orser,  1730a. 
Sturz  V.  Fisher,  1272. 
Stutts    V.    Strayer,    156,    1309,    1312, 

1373,  1375. 
Styles  V.  Wardle,  83. 
Sublette  v.  Brewington,  163,  664a. 
Suckley  v.  Furse,  1328. 
Sudler  v.  Collins,  1378. 
Suero  V.  Rhodes,  1555. 
Sufeldt  V.  Gillian,  742. 
Suffell  V.  Bank  of  England,  1400. 
Suffolk  Bank  v.  Lincoln  Bank,   1685, 

1686,  1689. 
Suffolk  Sav.  Bank  v.  Boston,  803,  1503. 
Suiter  v.  National  Bank,  751,  815. 
Sullivan  v.  Bonsteel,  196. 

V.  Collins,  1966. 

V.  Deadman,  962,  968,  1084. 

V.  Morrow,  1311. 

V.  Rudisill,  1387,  1411. 

V.  Sullivan,  356,  357,  203,  1339. 
Sully  V.  Campbell,  1294,  1296. 

V.  Childress,  1317&. 
Sulzbacher  v.  Bank  of  Charleston,  1118. 
Summerhill  v.  Tappo,  1335. 
Summers  v.  Barrett,  1769. 

V.  Mills,  917. 
Sumner  v.  Bowen,  968. 

V.  Summers,  196a. 
Sumrell  v.  Atlantic  Coast  Line  R.  Co., 

1729. 
Sunderland  v.  Bell,  203. 
Supervisors  v.  Randolph,  1560. 

V.  Schenck,  316,  317,  319,  386, 389, 
391,  1500,  1523,  1537,  1543, 
1545,  1546. 
Supply  Ditch  Co.  v.  Elliott,  1708. 
Suse,  In  re,  1343. 

V.  Pompe,  669. 
Susong  V.  Williams,  127. 
Siisquehanna  Bank  v.  Evans,  717. 
Susquehanna  Valley  Bank  v.  Loomis, 

6696,  1113b. 
Sussex  Bank  v.  Baldwin,  572,  636,  637, 

639,  992,  1039,  1106. 
Sutch's  Estate,  In  re,    188. 
Sutcliffe  V.  Humphreys,  1235. 

V.  McDowell,  1079,  1081. 
Sutliff  V.  Atwood,  1260. 
Sutton  V.  Baldwin,  1623. 

V.  Beckwith,  166,  859. 

V.  Toomer,  619,  1385. 

V.  Warren,  254. 


Sutro  V.  Dunn,  1550, 

V.  Petitt,  1555. 

V.  Rhodes,  734a,  1550,  15556. 
Suydam  v.  Westfall,  95,  1236. 
Swall  V.  Clarke,  769a. 
Swampscott  Machine  Co.  v.  Rice,  1054. 
Swan  V.  Craig,  157. 

V.  Hodges,  1130. 

V.  Nesmith,  314. 

V.  North  British  Australasian  Co,, 
850. 

V.  Steel,  356, 
Swanke  v.  Herdemann,  68a, 
Swannell  v.  Watson,  850. 
Swansey  v.  Breck,  513, 
Swanzey  v.  Parker,  731. 
Swart  ley  v.  Oak  Leaf  Creamery  Co,, 

1203. 
Swarts  V.  Cohens,  418. 
Swartwout  v.  Payne,  205,  751. 
Swartz  V.  Redfield,  996. 
Swasey  v.  Vanderheyden,  225. 
Swayze  v.  Britton,  929,  960,  987,  991. 
Swearingen  v.  Tyler,  247,  1337. 
Sweat  v.  Hall,  1184. 
Swedish  American  Nat.  Bank  v.  Chi- 
cago, B.  &  Q.  Ry.  Co.,  1733. 
Sweeney  v.  Easter,  336,  698d,  17346. 

V.  Thickston,  61. 
Sweet  V.  Carver  County,  428,  432. 

V.  Chapman,  751,  752,  758a. 

V.  James,  1282, 

V.  McAllister,  703, 

V.  Powers,  1115, 

V.  Swift,  995. 

V.  Titus,  1623. 

V.  Woodin,  713a,  1115. 
Sweeting  v.  Halse,  549. 

V.  Fowler,  100. 
Sweetser  v.  Jordon,  995. 
Sweetzer  v.  French,  86,  86a,  366. 
Sweitzer  v.  Banking  Co.,  1417. 
Swem  V.  Newell,  1341. 
Swenson  v.  Stoltz,  744,  1763. 
Swet  V.  Hall,  241. 
Swetland  v.  Creigh,  56. 
Swift  V.  Smith,  775,  788. 

V.  Stevens,  1470,  1478. 

V.  Tyson,  10,  174a,  183a,  184,  775, 
829a,  831a,  832,  1503,  1800. 

V.  Whitney,  56. 
Swilley  v.  Lyon,  95. 
Swing  V.  Cider  and  Vinegar  Co.,  195, 
Swinney  v.  Edwards,  182, 
Swinyard  v.  Bowles,  1176,  1262,  1271. 
Swire  v.  Redman,  1312,  1337, 
Swope  V.  Boone  County  Deposit  Bank, 
1092,  1326, 

t;.  Leffingwell,  1221. 

V.  Missouri  Trust  Co.,  203. 


clxx 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Swope  V.  Ross,  480,  501. 
Sydnor  v.  Boyd,  203. 
Sykes  v.  Citizens'  Nat.  Bank  of   Des 
Moines,  879. 

V.  Giles,  1270. 

V.  Kruse,  971,  1181a. 

V.  Lewis,  1431. 
Sykles  v.  Bollman,  17346. 
Sylvester  v.  Crapo,  612,  783, 1220. 

V.  Crohan,  9,  879,  908. 

V.  Downer,  710,  713a. 

V.  Staples,  108. 
Sylvester  Bleckley  Co.  v.  Alewine,  62, 

709,  713,  713a. 
Syme  v.  Brown,  703,  7136. 
Symley  v.  Head,  1314. 
Symonds  v.  Parminter,  1205. 

V.  Riley,  769a,  803,  1651. 
Syracuse  Bank  v.  Davis,  1565. 
Syracuse,  etc.,  Co.  v.  Rollins,  1537. 
Syracuse,  etc.,  R.  Co.  v.  Collins,  1260, 

1587, 1588, 1590, 1591. 
Syre  v.  Reynolds,  1418. 


Taber  v.  Cannon,  294. 

V.  Perrott,  341. 
Tabor  v.  Merchants  Nat.  Bank,  814, 
832,  854,  855. 

V.  Miles,  713a. 
Tacoma  v.  Ger.  Am.  Bank,  1603. 
Tacoma  Mill  Co.  v.  Sherwood,  719. 
Taft  V.  Boyd,  1260,  12666. 

V.  Brewster,  307. 

V.  Church,  833. 

V.  Myerscongh,  193,  203. 

V.  Pittsford,  422. 

V.  Quinsigamond  Nat.  Bank,  340c. 

V.  Sergeant,  235. 
Taft's  Case,  1345. 
Taggart  v.  First  Nat.  Bank,  1617a. 
Tailer  v.  Murphy  Furnishing  Co.,  1103. 
Talbot  V.   Bank   of   Rochester,   1364, 
1657. 

V.  Dent,  1523. 

V.  First  Nat.  Bank,  754. 

V.  Gay,  1787,  1788. 

V.  Nat.  Bank,  1118,  1226. 
Talbott  V.  Hedge,  1219. 

V.  Heinz,  156. 
Tallahassee  Man.  Co.,  In  re,  812. 
Talleyrand  v.  Boulanger,  886,  907. 
Talmage  v.  Millikin,  365,  790. 
Tamlyn  v.  Peterson,  769a,  815. 
Tancil  v.  Seaton,  1672,  1674. 
Taney  County  Bank  v.  Bray,  1203. 
Tannant    v.    Rocky    Mountain    Nat. 

Bank,  298. 
Tanner  v.  Christian,  298. 


Tanner  v.  Guide,  1303,  1305. 
Tanners  &  Merchants'  Bank  v.  Ger- 

mania  Life  Ins.  Co.,  389. 
Tanners'  Nat.  Bank  v.  Lacs   149. 
Tansey  v.  Peterson,  560. 
Tapia  v.  Baggett,  1181a. 
Tapley  v.  Herman,  164. 

V.  Marstens,  1623. 
Tappan  v.  Ely,  152. 
Tarbell  v.  Sturtevant,  1192. 
Tarbox  v.  Childs,  1623. 

V.  Gorman,  1200. 
Tardy  v.  Boyd,  205,  1064,  1070,  1147, 

1163. 
Tarin  v.  Morris,  1235. 
Tarleton  v.  Allhusen,  1284. 

V.  Southern  Bank,  218. 
Tarver   v.   Evansville   Furniture   Co., 
1328. 

V.  Nance,  1074. 
Tash  V.  Adams,  391. 
Tassel  v.  Cooper,  1642. 

V.  Lewis,  616,  627,  743,  1327. 
Tassey  v.  Church,  513. 
Tate  V.  Hilbert,  26,  16186. 

V.  Sullivan,  963. 
Tatlock  V.  Harris,  23, 136, 137, 747. 
Tatum  V.  Kelly,  200. 

V.  Morgan,  1316,  1317a. 
Taunton   Bank    v.  Richardson,   1048, 

1106. 
Taup  V.  Drew,  1245. 
Tausig,  In  re,  1338. 
Tayloe  v.  Sandiford,  1251. 
Taylor  v.  Am.  Freehold  Co.,  248,  922. 

V.  American   Nat.   Bank  of  Pen- 
sacola,  47,  776. 

V.  Bank  of  Illinois,  954. 

V.  Beck,  807,  1217. 

V.  Binney,  1782. 

V.  Bowles,  769a. 

V.  Breden,  612. 

V.  Briggs,  740,  1271. 

V.  Bruce,  191,  752,  762a. 

V.  Burgess,  1334. 

V.  Craig,  854. 

V.  Cribb,  769a. 

V.  Croker,  92,  227,  228,  535,  536, 
682. 

V.  Curry,  797. 

V.  Dansby,  238. 

V.  Davis,  271. 

V.  Dobbins,  74. 

V.  Drake,  569. 

V.  French,   710,   719,   1093,   1106, 
1134,  1139,  1765. 

V.  Great  Ind.  P.  R.  Co.,  1708^. 

V.  Harminson,  63. 

V.  Herron,  355,  359. 

V.  Higgins,  1205. 


^ABLE   OF   CASES 


clxxi 


References  are  to  paragraphs  marked  § 


Taylor  v.  Hillyer,  366,  369. 

V.  Jacoby,  626,  1209. 

V.  Jones,  1152,  1158. 

V.  Mather,  725a. 

V.  McCune,  713d. 

V.  McFatter,  156. 

V.  Moseley,  1379. 

V.  NewmaD,  108,  508. 

V.  Page,  834a. 

V.  Plumer,  336. 

V.  Purcell,  214. 

V.  Reese,  1190. 

V.  Reger,  94,  361,  403,  405. 

V.  Ross,  1765. 

V.  Sanford,  1250. 

V.  Shelton,  307. 

V.  Sip,  1578,  1587. 

V.  Slater,  1260. 

V.  Smith,  81c,  1183a. 

V.  Snyder,  640,  1144,  1145,  1180. 

V.  Surget,  267. 

V.  Taylor,  1377,  1535a. 

V.  Taylor's  Estate,  161,  1227. 

V.  Thomas,  68. 

V.  Trussell,  815. 

V.  Vossburg  Mineral  Springs  Co., 
926. 

V.  Wetmore,  1785&. 

V.  Wilson,  1623. 

V.  Young,  1086,  1595. 
Teasley  v.  Brenan  Assn.,  271. 
Tebbets  v.  Dowd,   1148,   1152,   1156, 

1157. 
Tebbs  V.  Raihoad  Co.,  1739. 
Teberg  v.  Swenson,  1222. 
Tedens  v.  Schumers,  1227. 
Teed  v.  Elworth,  227. 

V.  Parsons,  358a. 
Teery  v.  Alis,  741. 

V.  Fargo,  294. 
Telford  v.  Patton,  24a,  1698a. 
Temple  v.  Baker,  713d. 

V.  Carroll,  1590. 

V.  Seaver,  683. 
Temple  Nat.  Bank  v.  Louisville  Cotton 

Oil  Co.,  1734c. 
Temple  St.  Cable  Ry.  Co.  v.  Hellman, 

381,  383. 
Templeton  v.  Brown,  241. 

V.  Poole,  724a. 
Tenney  v.  Porter,  205,  867. 

V.  Prince,  694,  1760. 
Ten  Eyck  v.  Vanderpoel,  270. 
Terbell  v.  Jones,  1055. 
Terrill  v.  TilUson,  183. 
Terry  v.  AUis,  741. 

V.  Fargo,  294. 

V.  Hazlewood,  1373a. 

V.  Parker,  1047. 

V.  Piatt,  69,  366,  374. 


Terry  v.  Ragsdale,  1646. 

V.  Taylor,  814a. 
Terwilliger  v.  George  O.   Richardson 

Mach.  Co.,  203. 
Tescher  w.  Merea,  99,  796,  812. 
Tevis  V.  Young,  92. 
Texarkana  &   Fort  Smith  R.   Co.   v. 

Bemis  Lumber  Co.,  386,  807. 
Texas  v.  White,  441. 

V.  Hardenberg,  441,  724a,  782. 
Texas  Banking  Co.  v.  Turnley,  724a, 

769a,  782    824,  1500. 
Texas  Land  Co.  v.  Carroll,  56,  303, 

1198. 
Texira  v.  Evans,  148. 
Thacher  v.  Stevens,  707a,  712. 
Thacker  v.  Thacker,  248. 
Thackray    v.    Blackett,     1464,     1079, 

1172. 
Thame  v.  Boast,  1235. 
Thamling  v.  Duffy,  815,  815b. 
Thatcher  v.  Bank  of  the  State  of  N.  Y., 
326a,  388. 

V.  Dinsmore,  186,  271,  1260. 

V.  Stevens,  707a,  712. 

V.  West  River  Nat.  Bank,  189,  790. 
Thayer  v.  Buffum,  1183. 

V.  Crossman,  1217. 

V.  Elliott,  867. 

V.  Goss,  369a. 

V.  King,  1317,  1478,  1482. 

V.  Manley,  776a,  1468a. 

V.  Middlesex  Mut.  Ins.  Co.  388. 

V.  Montgomery  County,  1492a. 
Thayers  v.  Manley,  1468a. 
The  Bark  Edwin,  1733. 
The  Confederate  Note  Case,  87. 
The  David  &  Caroline,  1741. 
The  Delaware,  1729a,  1733. 
The  Distilled  Spirits,  802. 
The  Governor  v.  Vagliano  Bros.,  136. 
The  Hampton,  218. 
The  Henry  B.  Hyde,  1741. 
The  Invincible,  1741. 
The  J.  W.  Brown,  1729. 
The  John  W.  Cannon,  724a. 
The  Joseph  Grant,  1733. 
The  Juniata  Baton,  1741. 
The  Kimball,  1260. 
The  Lady  Franklin,  1729,  1729a. 
The  Loan,  1729a,  1733. 
The  Lykus,  41. 
The  Mayflower,  1732. 
The  Onrust,  1742. 
The  Oriflamme,  1742. 
The  Phoenicia,  1741. 
The  Prize  Cases,  218. 
The  Protection,  1740. 
The  Rebecca,  1748. 
The  Sally  Magee,  1743. 


clxxii 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


The  Santee,  1739. 

The  Thames,  1740a,  1751. 

The  Vaughan,  1751. 

The  Venice,  218. 

The  WilUam  Bagaley,  218, 

Theard  v.  Gueringer,  758,  803. 

Theil  V.  Conrad,  643. 

Thetford  v.  McCUntock,  200. 

Thickemess  v.  Bromalowe,  361. 

Thiedemann  v.  Goldsmith,  174a. 

Thillman  v.  Guible,  609,  995b. 

Thimbleby  v.  Barron,  1291. 

Thin  V.  Richards  &  Co.,  1741. 

Third  Nat.  Bank  v.  Allen,  1372,  1661. 

V.  Angell,  573,  812. 

V.  Ash  worth,  1148. 

V.  Boyd,  286a. 

V.  Clark,  721. 

V.  Fults,  358a. 

V.  Hays,  1731. 

V.  Laboringman's   Mercantile  &c. 
Co.,  393,  394. 

V.  Lange,  271,  713a,  795a. 

V.  Merchants    Nat.     Bank,    677, 
1652. 

V.  Nat.  Bank,  698c. 

V.  Reichert,  81. 

V.  Shields,  833. 

V.  Snyder,  358a. 

V.  Tinsley,  195a,  819. 

V.  Vicksburg,  341. 
Third  Nat.  Bank  of  Columbus  v.  Poe, 

775. 
Third  Nat.  Bank  of  N.  Y.  v.  Merchants 

Nat.  Bank,  1655,  1661. 
Third  Nat.  Bank  of  Springfield,  Mass., 

V.  Nat.  Bank  of  Commerce,   729, 

813a,  910. 
Thisler  v.  Mackey,  81. 
Thomas  v.  Atlantic  Coast  Line  Ry.  Co., 
1733a. 

V.  Bishop,  413. 

V.  City  of  Richmond,  14916. 

V.  Davenport,  308a. 

V.  Dickenson,  1269. 

V.  Exchange,  1638. 

V.  Hardscog  &  Burton,  356. 

V.  H.  C.  Bagley  &  Co.,  156. 

V.  Hewes,  306. 

V.  Jennings,  713d. 

V.  Kinsey,  724a,  725a. 

V.  Leland,  1556. 

V.  Lewis,  24,  24o. 

V.  Lynn,  834. 

V.  Mayo,  1095a. 

V.  Miller,  188. 

V.  Newton,  816. 

V.  Port  Huron,  1523. 

V.  Ruddell,  852. 

V.  Scutt,  80. 


Thomas  v.  Shoemaker,  624,  1209. 
V.  Supervisors,  1623. 
V.  Thomas,  174,  573. 
V.  Todd,  737,  1672a,  1675,  1676a. 
V.  Watkins,  667. 
Thomas  &  McCafferty  v.  Siesel,  1181a. 
Thomasson  v.  Boyd,  234. 

V.  Commercial  Bank,  1611a. 
V.  Wilson,  1411. 
Thompson  v.  Armstrong,  815. 
V.  Briggs,  1300. 
V.  Brown,  1253. 
V.  Building  Assn.,  1181a. 
V.  Campbell,  1326. 
V.  Carter,  68a. 
V.  City  of  Peru,  1524. 
V.  Commercial  Bank,  657. 
V.  Gumming,  930. 
V.  Downing,  1745a,  1748. 
V.  Emery,  747. 
V.  Flower,  576,  1205. 
V.  Gray,  185,  1328. 
t;.  Hale,  783. 
V,  Hanson,  1966. 
V.  Harrison,  195a. 
V.  Hasselman,  403. 
V.  Hicks,  177. 
V.  Hoagland,  76. 
V.  Houston,  49. 
V.  Kelsey,  1417. 
V.  Ketchum,  80,  88,  604,  639,  879, 

880,  892. 
V.  Kock,  58. 
V.  Kyle,  894,  919,  924. 
V.  Lay,  233. 
V.  Lee  County,  10a,  389,  391,  729, 

1489,  1493,  1497,  1500,  15096, 

1513,  1514,  1520,  1523,  1525, 

1557,  1560,  1561. 
t;.  Love,  80,  775. 
V.  Lowe,  354. 
V  McKee  719. 
v.  Madduk,   184,  824,  831a,  832, 

834. 
V.  Nat.  Bank,  752. 
V.  Percival,  1289a,  1299,  1301. 
V.  Perkins,  314,  336. 
V.  Perrine,  724,   729,   1496,   1552, 

1557,  1562. 
V.  Pickel,  1458a. 
V.  Pitman,  1646,  1648. 
V.  Posten,  790. 
V.  Powles,  917,  923. 
V.  Rathbun,  145. 
V.  Riggs,  334. 

V.  St.  Nicholas'  Nat.  Bank,  775. 
V.  Samuels,  197. 
V.  Searcy  County,  420,  427. 
V.  Shepherd,  726a. 
V.  Sioux  Falls  Nat.  Bank,  1652. 


•ITABLE   Of   cases 


clxxiii 


References  are  to  paragraphs  marked  § 


Thompson  v.  Sloan,  58. 

V.  Thompson,  164. 

V.  Thorne,  81c,  418. 

V.  Toland,  1708g'. 

V.  Warren,  172. 

V.  West,  815. 

V.  Wharton,  188. 

V.  Wheatland  Mercantile  Co.,  50. 

V.  Williams,   972,   973,   975,   979, 
979a,  996. 

V.  Wilson,  883,  1267. 
Thompson  &  Thompson  v.  Brown,  7136. 
Thompson  &  WaLkup  Co.  v.  Appleby, 

1005. 
Thomson   v.    Bank   of   British   North 
America,  293,  1603. 

V.  Gortner,  1468a. 

V.  Lee  County,  1489,  1493,  15096, 
1525. 

V.  Perrine,  10a. 
Thomson-Housten  Elec.  Co.  v.  Capital 

Elec.  Co.,  833. 
Thorington  v.  Smith,  87,  169. 
Thorn  v.  Pinkham,  196a. 

V.  Rice,  1013. 
Thornburg  v.  Emmons,  465,  469,  617, 

954. 
Thornton  v.  Appleton,  1393. 

V.  Lemon,  183,  248. 

V.  Maynard,  1237. 

V.  Rankin,  271. 

V.  Wynn,  202,  1091,  1147,  1149. 
Thorold  Mfg.  Co.  v.  Imperial  Bank, 

387 
Thorp  v'.  Craig,  908. 

V.  Gulseth,  1343. 
Thorpe  v.  Minderman,  47,  688c,  700, 
802. 

V.  White,  714,  1409. 
Thorton  v.  Dean,  922. 

V.  Dick,  490. 

V.  Illingworth,  230. 

V.  Wynn,  1149,  1153. 
Thrall  v.  Horton,  797. 

V.  Newell,  733a,  734. 
Thrasher  v.  Dyer,  26. 

V.  Ely,  1785. 

V.  Everheart,  32,  885. 

V.  Moran,  1458a. 
Threadgill  v.  Commissioner,  573,  812, 

1191. 
Throp  V.  Craig,  879. 
Throop  V.  Grain  Cleaner  Co.,  16a. 
Thrupp  V.  Fielder,  231. 
Thuemmler  v.  Barth,  340e,  1612a. 
Thurgood  v.  Spring,  203. 
Thurman  v.  Van  Brunt,  1205,  1647. 
Thurston  v.  Island,  1763. 

V.  Munn,  303. 

V.  Wolfborough  Bank,  1685. 


Tice  V.  Moore,  203. 

Ticknor  v.  Roberts,  909,  948,  1149. 

Ticonic  Bank  v.  Smiley,  670. 

V.  Stackpole,  9,  928,  963. 
Ticonic   Nat.   Bank  v.  Bagley,    1191, 

1192a. 
Tidioute  Sav.  Bank  v.  Libbe'y,  1773. 
Tidmarsh  v.  Grover,  1378. 
Tiedeman  v.  Knox,  1747a. 
Tiernan  v.  Commercial  Bank,  341,  343. 

V.  Jackson,  19,  451. 
Tiernan's  Exrs.  v.  Woodruff,  1313. 
Tiffany  v.  Willis,  1789. 
Tilden  v.  Banard,  404,  819. 

V.  Goldy   Mach.   Co.,   392a,   598, 
970. 

V.  Stilson,  834,  835. 
Tiller  v.  Spradley,  298. 
TiUinghast  v.  Wheaton,  24,  24a. 
Tillon  V.  Clinton,  etc.,  Mut.  Ins.  Co., 

1420. 
Timbel  v.  Garfield  Nat.  Bank,  1659. 
Timberlake  v.  Thayer,  1095,  1312. 
Times     Square     Automobile     Co.     v. 

Rutherford  Nat.  Bank,  177,  1603. 
Timmins  v.  Gibbons,  740,  1263,  1679a. 
Timms  v.  Delisle,  1014,  1015. 
Tindal  v.   Brown,  612,  972,  985,  987, 

990,  1037,  1175,  1590. 
Tinker  v.  Cathin,  173a,  703,  707a,  7136. 

V.  Hurst,  194. 

V.  McCauley,  716,  1776,  1779. 

V.  Midland  Valley  Mercantile  Co., 
164. 
Tinsley  v.  Hoskins,  62. 
Tipon  County  v.  Lowenstein  Works, 

1523a. 
Tipton  V.  Christopher,  832. 
Tisdale  v.  Mallett,  81. 

V.  Maxwell,  71,  103. 
Tishomingo    Sav.    Inst.    v.    Johnson, 

1734c. 
Titcomb  v.  McAllister,  1260. 

V.  Powers,  721. 

V.  Thomas,  748. 
Title  Guarantee  &  Trust  Co.  v.  Haven, 

533,  1657. 
Tittle  V.  Thomas,  100. 
Titus  V.  Great  Western  Turnpike  Co., 
1611. 

V.  Mechanics'  Nat,  Bank,  341. 
Tobey   v.    Barber,    1264,    1267,    1272, 
1275,  1276,  1278. 

V.  Berly,  1048. 

V.  Chipman,  859. 

V.  Lenning,  979a. 
Tobin  V.  McKinney,  1215. 
Tobriner  v.  White,  81a. 
Toby  V.  Railroad  Co.,  1192. 
Tod  V.  Wick,  805,  819. 


clxxiv 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Todd  V.  Ames,  249. 

V.  Bailey,  248. 

V.  Bank  of   Kentucky,   880,   896, 
1381,  1382. 

V.  Edwards,  1015. 

V.  Lee,  248,  250. 

V.  Neal's  Admr.,  9,  908,  909,  911, 
934,  1050. 

V.  Shelburne,  758. 
Toledo  Iron  Works  v.  Heisser,  301,  305. 
Tolerton    &    Stetson    Co.    v.    Anglo- 
California  Bank,  174a,  1181a. 

V.  Roberts,  1343. 
Tolle  V.  Boecklcr,  1343. 
Tollman  v.  American  National  Bank, 

1663. 
Tolman  v.  Janson,  43,  812. 

V.  Hanrahan,  362,  488. 
Tombeckbee  Bank  v.  Dumell,  370. 

V.  Stratton,  1310. 
Tombler  v.  Reitz,  710. 
Tomblin  v.  Higgins,  1251. 
Tome  V.  Parkersburg  R.  Co.,  390. 
Tomlin  v.  Thornton,  1590. 
Tomlinson  v.  H.  P.  Drought  &  Co.,  62. 
Tompkins  v.  Ashby,  36a,  40. 

V.  Compton,  200. 

V.  Mitchell,  1281. 

V.  Woodward,  365,  366. 
Tompkins  County  Nat.  Bank  v.  Bun- 
nell &  Eno  Co.,  831c. 
Toms  V.  Powell,  1235. 
Toner  v.  Wagner,  1227. 
Took  V.  Tuck,  194. 
Tooke  V.  Bonds,  1251. 

V.  Newman,  832a. 
Toole  V.  Crafts,  612,  714,  1098,  1148, 

1149. 
Toomer  v.  Dickerson,  1311. 

V.  Rutland,  1395,  1405,  1411. 
Tooting  V.  Hubbard,  484. 
Tootle,  Ex  -parte,  41. 
Toovey  v.  Ayrhart,  1699. 
Topeka  Capital  Co.  v.  March,  394a. 
Toplitz  V.  Bauer,  833. 
Torbert  v.  Montague,  717,  1104. 
Torbett  v.  Worthy,  207. 
Torinus  v.  Buckham,  203. 
Torpey  v.  Tebo,  47,  185. 
Torrey  v.  Baxter,  1260. 

V.  Dustin  Monument  Assn.,  392a. 

V.  Foss,  1085,  1485. 

V.  Hadley,  1264. 
Touchard  v.  Touchard,  1527a. 
Tower  v.  Appleton,  1685,  1694. 

V.  Durell,  1140. 

V.  Richardson,  81. 
V.  Whip,  850. 
Towers  v.  Moore,  1298. 
Towles  V.  Tanner,  164,  1402. 


Towne  v.  Rice,  14,  51a,  403. 

V.  Wason,  1191. 
Towner  v.  McClelland,  782,  834. 
Townsend    v.    Bank    of    Racine,    737, 
1676a. 

V.  Colorado  Fuel  &  Iron  Co.,  1489. 

V.  Derby,  108. 

t;.  Drygoods  Co.,  638,  644,  979a, 
985. 

V.  Hager,  802. 

V.  Lorain  Bank,  929,  983,  984,  985. 

V.  Star  Wagon  Co.,  1378. 
Townsley  v.  Sumrall,  184,  449,  454,  465, 

569,  570,  909,  945,  959. 
Trabue  v.  Short,  899. 
Tracy  v.  Alvord,  25. 

V.  First   Nat.   Bank  of  Syracuse, 
832a. 
Trader  v.  Chichester,  62. 
Traders'  Bank  v.  Alsop,  197. 
Traders'  Nat.  Bank  v.  Jones,  990. 

V.  Parker,  1215. 
Tradesmen's  Nat.  Bank  v.  Curtis,  81t(, 

769a. 
Traer  v.  Mullaly,  1731. 
Trafford  v.  Hall,  725. 
Train  v.  Jones,  17856. 
Tramwell  v.  Hudmon,  1450. 
Transportation  Co.  v.  Downer,  1741. 
Tranter  v.  Hibberd,  156,  1373. 
Trapp  t'.  Spearman,  1378. 
Trask  v.  Martin,  617. 
Trauck  v.  Hill,  769a. 
Travellers'  Ins.  Co.  v.  Denver,  433. 

V.  Mayor  of  Johnson  City,  14916. 
Traver  v.   Evansville   Furniture   Co., 

1300a. 
Travers  r.  T.  M.  Sinclair  &  Co.,  1587. 
Travis  v.  Watson,  1312. 
Treacy  and  Wilson  v.  Chinn,  200. 
Treadway  v.  Sanger,  10a. 
Treadwell    v.    Commissioners,     1550, 

1551. 
Treanor  v.  Yingling,  1311. 
Treat  v.  Suydecker,  Tyffe  &  Co.,  195a. 
Trebilcock  v.  Wilson,  1245. 
Trecothick  v.  Edwin,  1383. 
Tredick  v.  Walters,  199a,  815. 

V.  Wendell,  654. 
Tredway  v.  Antisdel,  709. 
Trego  V.  Lowery,  174. 
Trent  Tile  Co.  v.  Fort  Dearborn  Nat. 

Bank,  490. 
Trentman  v.  Fletcher,  1250. 
Tretwell  v.  Carter,  1314. 
Treutell  v.  Barandon,  282,  283,  698, 

699. 
Trezevant  &  Cochran  v.  R.  H.  Powell 

&  Co.,  832. 
Trickey  v.  Larne,  203. 


TABLE    OF   CASES 


clxxv 


References  are  to  paragraphs  marked  § 


Trieber  v.  Commercial  Bank,  69,  70. 

Trier  v.  Bridgman,  162. 

Trigg  V.  Taylor,  1408. 

Trimbey  v.  Vignier,  867,  883,  906. 

Trimble  v.  Thorn,   1304,   1305,   1147, 

1152,  1339. 
Triplet  v.  Randolph,  1312. 
Triplett  v.  Fanver,  396. 

V.  Foster,  573,  812,  815. 

V.  Hunt,  987. 
Tripp  V.  Curtenius,  1702a,  1703,  1707. 

V.  Swanzey  Man.  Co.,  387. 
Tritt  V.  Colwcll,  254. 
Troendle  v.  Highleman,  917. 
Trombley  v.  Trombley,  1344. 
Trost  V.  Hinman,  812. 
Troy  V.  Cohoes  Shul  Co.,  795c. 
Troy  City  Bank  v.  Lauman,  515,  1380. 
Trubee  v.  Alden,  800o. 
True  V.  Bullard,  666,  669,  717. 

V.  Collins,  1029. 

V.  Fuller,  1776. 

V.  Thomas,  1586,  1596,  1629. 
Trueman  v.  Fenton,  182. 

V.  Loder,  740a. 
Trull  V.  Menetone,  125. 
Trullinger ;;.  Kofold,  1252. 
Truman  v.  Bishop,  81c. 
Trumpbour  v.  Trumpbour,  327. 
Trundy  v.  Farrar,  317. 
Truscott  V.  Davis,  862. 
Truss  V.  Miller,  1236a,  1343,  1340. 
Trust  Co.  V.  Nat.  Bank,  1782. 
Trust  Co.  of  America  v.  Conklin,  1659. 

V.  Hamilton  Bank,  533,  1225, 1369. 
Trustee  v.  Knox,  1689. 
Trustees  v.  Parks,  1188. 

V.  Rautenberg,  403. 
Trustees   of   American    Bank   v.    Mc- 

Comb,  781,  789. 
Trustees  of  I.  I.  Fund  v.  Lewis,  1510. 
Trustees    of    Schools    v.    McCaughy, 
1565. 

V.  McCormick,  316,  322. 
Trustees  of  Westminster  College  v.  Pier- 
sol,  156. 
Tryon  v.  Oxley,  262,  1612. 
Tucker  v.  Bradley,  67. 

V.  City  of  Virginia,  1527. 

V.  Coffin,  205. 

V.  Fairbanks,  409. 

V.  McCauley,  1779. 

V.  Nat.  Bank  of  Athens,  1230. 

V.  Randall,  1213. 

V.  Roach,  177,  1966. 

V.  Ronk,  196&. 
Tuckerman  v.  French,  17856. 

V.  Hartwell,  154. 

V.  Newhall,  1294. 
Tudor  V.  Goodloe,  1317. 


Tulley  V.  Citizens  State  Bank,  393. 
Tullisi;.  McClary,  1181a. 
Tunno  v.  Lague,  1006. 
Tuohy  V.  Woods,  1316,  1318. 
Turber  v.  Caverly,  1099. 
Turk  V.  Richmond,  196. 
Turnbull  v.  Block,  1327. 

V.  Bowyer,  1113. 

V.  Ferret,  268. 

V.  Hill,  1152. 

V.  Maddox,  1147. 

V.  Strohbecker,  1425. 

V.  Thomas,  74. 
Turner  v.  Bank  of  Fox  Lake,  1625. 

V.  Billagram,  1416. 

V.  Browder,  176,  534. 

V.  Brown,  181. 

V.  First  Nat.  Bank,  286a. 

V.  Hoole,  194. 

V.  Hoyle,  724a. 

V.  Iron  Mining  Co.,  609. 

V.  Keller,  672,  676. 

V.  Leech,  988,  1045,  1127,  1224. 

V.  Mead,  655. 

V.  P.  &  S.  R.  Co.,  50a. 

V.  Pearson,  205. 

V.  Rogers,  185,  936,  962. 

V.  Ross,  1215a. 

V.  Sampson,  9956,  1085. 

V.  Stones,  1679a. 

V.  Trustees  of  the  Liverpool  Docks, 
1730a,  1734a. 

V.  Turner,  1227. 

V.  Ware,  177. 
Turniss  v.  Gilchrist,  385. 
Turpin  v.  Thompson,  24. 
Turrentine  v.  Grigsby,  1228. 
Tuskaloosa  Oil  Co.  v.  Perry,  393,  1227. 
Tutt  V.  Hobbs,  1564. 

V.  Thornton,  1373a,  1398. 
Tuttle  V.  Bartholomew,  1782. 

V.  Becker,  1197. 

V.  First  Nat.  Bank,  271. 

V.  Fowler,  257. 

V.  George  H.  Tuttle  &  Co.,  203. 

V.  Mayo,  1687. 

V.  Standish,  1476,  1481. 

V.  Walton,  1708d. 

V.  Wilson,  725. 
TweKth  Ward  Bank  v.  Brooks,  1243. 
Twentieth    Century    Co.    v.    Quilling, 

199a. 
Twenty-sixth  Ward  Bank  v.  Stearns, 

854. 
Twopenny  v.  Young,  548,  1291,  1296, 

1328. 
Tye  V.  Gwynne,  203. 
Tygart  v.  Sutton,  202. 
Tyler  v.  Gould,  1636,  1644. 

V.  Jaeger,  185. 


clxxvi 


TABLE    OF   CASES 
References  are  to  paragraphs  marked 


Tyler  v.  Walker,  62,  62a. 

V.  Young,  611. 
Tvree  v.  Lyon,  365,  366. 
Tyrell  v.  Cairo  &  St.  L.  R.  Co.,  879, 889, 

8916. 
Tyson  v.  Bray,  174a. 

V.  Joyner,  1219. 

V.  Oliver,  1007,  1023,  1030. 

V.  School  Directors,  1556. 

V.  State  Bank,  324,  329,  341. 

V.  Western  Nat.  Bank,  340,  693. 

V.  Woodruff,  196b. 
Tyson  &  Ralls  v.  Weston  Nat.  Bank, 

336,  340. 


Ubsdell  V.  Cunnmgham,  43. 

Uhl  V.  Harvey,  3696. 

Ullery  v.  Brohm,  95. 

Uhich  V.  McCormick,  375. 

Ulster  Bank  v.  Synatt,  1734i. 

Ulster   County    Bank   v.   McFarland, 

561,  1756,  1799. 
Unaka  Nat.  Bank  v.  Butler,  776. 
Underbill  v.  Phillips,  108. 
Underwood  v.  Am.  Mtg.  Co.,  922. 

V.  Simmons,  81. 
Unger  v.  Boas,  674. 
Union  Bank  v.  Beirne,  275. 
V.  Coster,  1790,  1797a. 
V.  Crime,  1338. 
V.  Ellicott,  1689. 
V.  Ezell,  611. 
V.  Fowlkes,  953,  959. 
V.  Gilbert,  205,  751. 
V.  Grimshaw,  1162. 
V.  Humphreys,  982. 
V.  Hyde,  926,  968,  1095,  1095a. 
V.  Laird,  1708c. 
V.  Magruder,  1100. 
V.  Middlebrook,  963. 
V.  Ridgely,  388. 
V.  Simser,  1260. 
V.  Stone,  1056. 
V.  Trust  Co.,  742. 
V.  Warren,  1478,  1695. 
V.  Willis,  455,  594,  710,  713,  713a, 
999a,  1757. 
Union  Bank  of  Bridgwater  v.  Spies,  51, 
103.  ,    , 

Union   Bank  of  Brooklyn  v.  Deshel, 

1052. 
Union  Bethel  v.  Sheriff,  85. 
Union  Brewing  Co.  v.  Interstate  Bank 

&  Trust  Co.,  141,  741,  1266. 
Union  Central  Life  Ins.  Co.  v.  Champ- 
lin,  196. 
V.  Huyck,  177. 
V.  Pollard,  865,  887,  891. 


Union  Central  Life  Ins.  Co.  v.  Wynne, 

81a. 
Union  Collection  Co.  v.  Buckman,  183, 

195a,  742,  815. 
Union,  etc.,  R.  Co.  v.  Yaeger,  1733. 
Union  Ins.  Co.  v.  Grcenleaf,  41. 
Union  Iron  Works  Co.  v.  Union  Naval 

Stores  Co.,  394. 
Union  Nat.  Bank  v.  Barber,  815,  825, 
1200,  1470. 
V.  Brown,  197. 
V.  Chapman,  865,  867. 
V.  Citizens  Nat.  Bank,  334,  336, 

340e,  1621. 
v.  Cooley,  1311. 
V.  Cross,  1319. 
V.  First  Nat.  Bank,  739a. 
V.  Fraser,  197,  205. 
V.  Griswold,  1713a. 
V.  Hines,  742. 
V.  Marr's  Admr.,  1060. 
V.  McKey,  326a. 
V.  Menefee,  789a. 
V.  Neill,  10,  94,  357,  365,  368,  775. 
V.  Oceana  County  Bank,  1637. 
V.  Roberts,  832a,  1373a,  1395. 
V.  Rowan,  1731. 
V.  Slocomb,  748. 
V.  Underbill,  366. 
V.  Wheeler,  674. 
V.  Windsor,  7796. 
Union  Nat.  Bank  of  Columbus,  Ohio,  v. 

Mailloux,  775,  7796,  815. 
Union  Nat.  Bank  of  New  Orleans  v. 

Grant,  1310. 
Union  Nat.  Bank  of  Troy  v.  Wilhams 

Milling  Co.,  950,  952,  955. 
Union  &  Planters  Bank  of  Memphis  v. 

Jefferson,  186. 
Union  Pac.  R.  Co.  v.  Johnson,  1731. 
Union    Sav.    Bank    &    Trust    Co.    v. 

Indiana  Lounge  Co.,  1611a. 
Union  Square  Bank  v.  Hellerson,  790, 

791,  793a,  802. 
Union  Stock  Yards  Co.  v.  Westcott, 

17336. 
Union    Stock    Yards    Nat.    Bank    v. 
Bolan,  47. 
V.  Coffman,  248,  249. 
V.  Haskell,  1230,  1233. 
Union  Trust  Co.  v.  Chicago  R.  Co.,  50a. 
V.  McClellan,  791,  793a. 
V.  McGinty,  1302,  1312. 
V.  McKeon,  1230. 
V.  Monticello,  etc.,  R.  Co.,  1491a. 
V.  Rigdon,  187. 
V.  Wilson,  1713a. 
Union   Trust   Co.    of    New   Jersey   v. 

McCrum,  144,  1312. 
United  States  v.  Babbit,  1527. 


TABLE    OF   CASES 


clxxvii 


References  are  to  paragraphs  marked 


United  States  v.  B.  &  O.  R.  Co.,  1519o. 

V.  Bank  of  Metropolis,  174a,  436, 
437,  512,  517,  547. 

V.  Barker,  217,  438,  454,  478,  932, 
1039,  1041. 

V.  Boice,  443,  1189a. 

V.  Cameal,  657. 

V.  City  Bank,  392. 

V.  Clinton  Nat.  Bank,  1371. 

V.  County  of  Clark,  1491c. 

V.  Cushman,  1296. 

V.  Dodge  County,  1522. 

V.  Dunn,  719. 

V.  Grossmayer,  222,  1060. 

V.  Hodge,  1313,  1328. 

V.  Huckabee,  857. 

V.  January,  1250. 

V.  Kanhoe,  196a. 

V.  Kirkpatrick,  1250,  1252. 

V.  Lapine,  222. 

V.  Leffler,  1217. 

V.  Linn,  1391. 

V.  Morrison,  1525. 

V.  Nat.  Bank,  436. 

V.  Nat.  Park  Bank,  1364,  1369. 

V.  Oregon  R.  &  Nav.  Co.,  1713a. 

V.  Simpson,  1311,  1339. 

V.  Spalding,  1373a. 

V.  Vaughan,  1644. 

V.  White,  99,  104,  106,  130. 
United  States  Bank  v.  Bank  of  Georgia, 
1672,  1688. 

V.  Binny,  363. 

V.  Booney,  357. 

V.  Cameal,  601. 

V.  Russel,  1374. 

V.  Sill,  1696. 

V.  Southard,  1149,  1156. 
United  States  Bung  Mfg.  Co.  v.  Arm- 
strong, 1424. 
United  States  Exch.  Bank  v.  Zimmer- 
man, 7956. 
United  States  Express  Co .  ?;.  Haines,  125 . 
United  States  Fidelity  &  Guaranty  Co. 

V.  Adou  &  Lobit,  795a. 
United  States  Mortgage  Co.  v.  Gross, 

834. 
United  States  Nat.  Bank  v.  Burton, 
1005a,  1188. 

V.  Ewing,  339,  697,  791,  792. 

V.  First  Nat.  Bank,  389,  393. 

V.  Geer,  717,  719. 

V.  Nat.  Exch.  Bank,  1663. 

V.  Park   Nat.   Bank,   1359,    1400, 
1654a. 
United  States  Nat.  Bank  of  Portland  v. 

Waddingham,  1458a. 
United  States  Nat,  Bank  of  Vale  v. 

First  Trust  &  Sav.  Bank  of  Brogan, 

487,  1643,  1645. 


United  States  Tr.  Co.  v.  Mayor,  1223. 

V.  Village  of  Mineral  Ridge,  1538. 
United   States   Wind    Engine    Co.   v. 

Simonton,  719. 
United  States  Wringer  Co.  v.  Cooney, 

717,  1227. 
University    Press    v.    Williams,    1115, 

1116,  1117. 
Updegraft  v.  Edwards,  834. 
Upham  V.  Prince,  700,  1782,  1783. 
Urton  V.  Hunter,  875. 
Usefof  V.  Herzenstein,  612. 
Usher  v.  Dauncey  142,  372. 

V.  Gaither,  1472. 
Uther  V.  Rich,  770,  774. 
Utica  V.  Churchill,  1708a. 
Utica  Bank  v.  Ganson,  1190. 

V.  Smalley,  17086. 
Utica  City  Nat.  Bank  v.  Talhnan,  679. 
Uvalde  v.  Spier,  1550,  1560. 


Vacarro  v.  Toof,  350a. 
Vaduzer  v.  Howe,  540,  1405. 
VaU  V.  Van  Doren,  85,  925. 
Valentine  v.  HoUoman,  686. 

i;.  Foster,  182. 

V.  Packer,  283. 
Valette  v.  Mason,  832a. 
VaUquette  v.  Clark  Bros.  Coal  Min. 

Co.,  296. 
Valk  V.  Gaillard,  998. 

V.  Simmons,  1081. 
Vallett  V.  Parker,  197,  369,  807,  808, 

812. 
Valley  Sav.  Bank  v.  Mercer,  776. 
Valpy  V.  Oakeley,  1280. 
Van  Allen  v.  American  Nat.  Bank,  326c, 

336,  1636. 
Van  Aernam  v.  Granger,  812. 
Van  Amee  v.  Bank  of  Troy,  336,  337, 

339,  340. 
Van  Auken  v.  Hombeck,  1472,  1482. 
Van  Bibber  v.  Louisiana  Bank,  1637. 
Van  Brunt  v.  Eoff,  1403. 

V.  Singley,  849. 

V.  Vaughn,  1005a. 
Van  Buskh-k  v.  State  Bank  of  Rocky 

Ford,  479,  551,  1606. 
Vance  v.  Collins,  1005,  1387. 

V.  Lowther,  1658. 

V.  McLaughUn,  256. 

V.  Ward,  550,  551. 

V.  Wells,  240. 
Vancleave  v.  Beach,  1245,  1423. 
Vancleef  v.  Therasson,  874. 
Vandagrift  v.  Bates  County  Inv.  Co., 

782,  1236. 
Vandenburg  v.  Hall,  350. 


clxxviii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Vanderford  v.  Farmers'  Bank,  1312. 
Vander  Ploeg  v.  Van  Zuuk,  144. 
Vanderpool  v.  Brake,  859. 
Vandesande  v.  Chapman,  1209. 
Vandeveer  v.  Ogden,  83. 
Vanderveer  v.  Wright,  1784. 
Vandeventer  v.  Davis,  185,  248,  1338. 
Vandewall  v.  Tyrrell,  580,  941,  1254, 

1258. 
Van  Doren  v.  Tjada,  713c. 
Vandike  v.  Wilder  &  Co.,  1288. 
Vanduzer  v.  Howe,  147. 
Van  Dyke  v.  Wildor  &  Co.,  1288. 
Van  Eman  v.  Stanchfield,  664a,  741. 
Van  Epps  v.  Dillaye,  1299. 
Van  Eps  v.  Newald,  1411. 
Van  Etten  v.  Newton,  1738,  1740a. 
Van  Hoesen  v.  Van  Alstj-ne,  996. 
Van  Hostrup  v.  Madison  City,  1540. 
Van  Keuren  v.  Corkins,  834. 

V.  Parmlee,  370,  374. 
Vann  v.  Edwards,  242,  1227. 
Van  Ness  v.  Forrest,  1189. 
Van  Norden  Trust  Co.  v.  Rosenberg, 

179. 
Van  Patton  v.  Beals,  210. 

V.  Marks,  212. 
Van  Raugh  v.  Van  ArsdaJe,  875. 
Van  Reimsdyck  v.  Kane,  568,  882. 
Van  Rensselaer's  Exrs.  v.  Roberts,  1253. 
Van  Riper  v.  Baldwin,  1197. 
Van  Sands  v.  Middlesex  County  Bank, 

1708d. 
Van  Schaack  v.  Stafford,  751. 
Van  Schaic  v.  Edwards,  867,  923. 
Vanstandt  v.  Hobbs,  1222,  1223. 
Van  Steenburgh  v.  Hoffman,  240. 
Vanstrum  v.  Lilengren,  174a,  497,  515. 
Van  Vechten  v.  Pruyn,  1016, 1025, 1033. 

V.  Smith,  80. 
Van  Vliet  v.  Kanter,  1458a. 
Van  Vlissingen  v.  Roth,  576. 
Van  Voorhis  v.  Brown,  365,  795?>. 
Van  Wagenen  v.  Genesee  Falls  Sav. 

Assn.,  278. 
Van  Wart  v.  Wooley,  329,  241,  476, 

564,  995a,  1176,  1262,  1788. 
Van  Wickle  v.  Downing,  1149. 
Van  Windsch  v.  Klaus,  769a. 
Vanzant  v.  Arnold,  877. 
Van  Zant  v.  Hopkins,  41,  45,  151,  154. 
Vapereau  v.  Holcombe,  156,  179. 
Varin  v.  Hobson,  775. 
Varnarsdale  v.  Hax,  1198. 
Varner  w.  Nobleborough,  161,  430, 1260. 
Varney  v.  Monroe  Nat.  Bank,  1226. 
Varnum  v.  Milford,  802. 
Vashon  v.  Greenhow,  448. 
Vass  V.  Riddick,  177. 
Vastine  v.  Wilding,  1702. 


Vater  v.  Lewis,  93,  101,  415. 
Vather  v.  Zane,  166,  177,  815,  816, 
VatterUen  v.  Howell,  832. 
Vaughan  v.  Fowler,  1391..' 

V.  Potter,  602,  926,  959,  970,  995, 
1021,  1038. 
Vaughn  v.  Farmers',  etc.,  Nat.  Bank, 
27,  2406,  449,  1643. 

V.  Ferrall,  859. 

V.  Fuller,  1165. 

V.  Johnson,  775,  815,  819. 

V.  Wabash  Ry.  Co.,  1741. 
Veal  y.  Veal,  24. 
Veazie  v.  Carr,  1305,  1316. 
Veazie  Bank  v.  Paulk,  751. 

V.  Winn,  1209,  1210,  1590. 
Veeder  v.  Town  of  Luna,  1550,  1552, 

1553   1555. 
Veneable'v.  Lippold,  248,  769a. 
Venice  v.  Murdock,  1537. 
Vennum  v.  Carr,  195a. 
Verbeck  v.  Scott,  803. 
Verder  v.  Verder,  996. 
Vere  v.  Lewis,  136,  137. 
Vermilye  v.  Adams  Express  Co.,  441. 
Vermont  Township  Bank  v.  Railroad 

Co.,  1775. 
Vemey  v.  Steiner  Bros.,  1181a. 
Vernon  v.  Manhattan  Co.,  353,  369&. 
Vertue  v.  Jewel,  1749. 
Vestal  V.  Knight,  1312,  13176,  1338. 
Vette  V.  La  Barge,  787. 

V.  Sacher,  799. 
Vickers  v.  Battershall,  154. 
Vickery  v.  Burton,  812. 

V.  State  Sav.  Assn.,  336. 
Victor  V.  Bauer,  7796. 
Vidal  V.  Thompson,  908,  915. 
Viele  V.  Hoag,  1322. 
Viets  V.  Nat.  Bank,  1636. 

V.  Silver,  65. 
Vila  V.  Weston,  1199. 
Vilas  V.  Jones,  1317. 
Viles  V.  Moulton,  1470. 
Village  of  Ft.  Edward  v.  Fish,  377. 
Vincent  v.  Horlock,  688c,  1195. 
Vinson  v.  Palmer,  86a,  1181a. 
Vinton  v.  King,  787,  858. 

V.  Peck,  69,  758a. 
Violet  V.  Rose,  164,  815. 
Violett  V.  Patton,  189,  694,  843,  899, 

1765. 
Vipond  V.  Townsend,  62.^ 
Virginia  v.  Ches.  &  Ohio  Canal  Co., 

1500,  1513,  1514. 
Virginia  &  Tenn.  R.  Co.  v.  Clav,  1490, 
1494,  1495,  1500,  1511,  1512,  1514. 
Virginia-Carolina     Chemical     Co.     v. 
Fisher,  240. 

V.  Steen,  1230. 


TABLE    OF   CASES 


clxxix 


References  are  to  paragraphs  marked  § 


Virginia  Coupon  Cases,  448. 
Virginia  State  Bank  v.  Gibson,  451. 
Vischer  v.  Webster,  1406. 
Vitkovitch  v.  Kleinecke,  189,  1326. 
Vliet  V.  Camp,  922. 

V.  Simanton,  400. 
Voereis  v.  Nussbaum,  807. 
Vogel  V.  Starr,  1014,  1028. 
Vogle  V.  Ripper,  1373a,  1410a,  1412. 
Voice  V.  Rosenberry,  174. 
Voit  V.  Corr,  649. 
Voltz  V.  Harris,  1786,  1788. 

V.  Nat.  Bank,  1774. 
Vonhoffman  v.  United  States,  724a. 
Voorhees  v.  Atlee,  1096. 
Vore  V.  Hurst,  707,  709,  716. 
Voreis  v.  Nussbaum,  807. 
Voris  V.  Harshbarger,  210,  229. 
Vosberg  v.  Brown,  248. 
Vosburg  V.  Diefendorf,  775,  779,  804, 

815. 
Voss  V.  Chamberlain,  775,  819,  831a, 
1754. 

V.  German-American   Bank,  326&. 

V.  Lewis,  1340. 

V.  Robertson,  1750. 
Vrandenburg  v.  Johnson,  81d. 
Vreeland  v.  Blunt,  23. 

V.  Hyde,  607,  609. 
Vulliamy  v.  Noble,  369a. 

W 

Wabash  R.  Co.  v.  Brown,  1741. 
Wachusetts  Nat.  Bank  v.  Fairbrother, 

1027. 
Wackerbath,  Ex  parte,  521,  1255. 
Waddell  v.  Hanover   National  Bank, 

51. 
WaddiU  v.  Alabama  R.  Co.,  384. 
Waddle  v.  Owen,  80. 
Wade  V.  Chicago,  etc.,  R.  Co.,  7586, 
1517o. 

V.  Creighton,  709,  714. 

V.  EUiott,  664a,  803. 

V.  Foster,  724a. 

V.  New  Orleans  Canal,  etc.,  Co., 
1481,  1694. 

V.  Staunton,  1328. 

V.  Town  of  La  Moille,  1524. 

V.  Travis  County,  1522,  1525. 

V.  Wade,  701,  1482. 
Wadhams  v.  Portland  &  Y.  R.  Co., 

4976. 
Wadhams  &  Co.  v.  Inman,  Poulsen  & 

Co.,  534. 
Wadle  V.  Owen,  80. 
Wadley  v.  Lancaster,  420. 
Wadlington  v.  Covert,  50. 
Wadsworth  v.  Allen,  1788. 


Wadsworth  v.  Dunnam,  204. 

t;.  Sherman,  213. 

V.  Supervisors,  1524. 
Wager  v.  Brooks,  1375. 
Wagman  v.  Hoag,  1322. 
Wagner,  In  re  Estate  of,  1200. 

V.  Diedrich,  146,  7956. 

V.  Kenner,  624,  625. 

V.  Ladd,  1221. 

V.  Scherer,  196. 

V.  Simmons,  357,  831a. 

V.  Tupper,  926. 
Wagon  Co.  v.  Swezy,  1326. 
Wain  V.  Bailey,  1475. 

V.  Walters,  1764. 
Wainwright  v.  Webster,  737,  1676. 
Wait  V.  McKee,  726,  1342. 

V.  Pomeroy,  149,  150,  1397,  1407. 
Waite,  Matter  of,  1228. 
Waithman  v.  Elzee,  39. 
Wake  V.  Tinkler,  1424. 
Wakerbath,  Ex  parte,  530. 
Wakefield  v.  Greenhood,  566. 
Walbridge  v.  Arnold,  196a. 

V.  Harron,  182. 
Walde  Asphalt  Paving  Co.  v.  National 

Trading  Co.,  189. 
Walden  v.  Downing  Co.,  775,  815,  819, 
831a. 

V.  Sherburne,  370. 
Waldo  Bank  v.  Lambert,  368. 
Waldorf  v.  Simpson,  1373a. 
Waldrip  v.  Black,  1342. 
Waldron  v.  Young,  142. 
Wales  V.  Mower,  1230. 

V.  Webb,  207. 
Walker  v.  Atwood,  508. 

V.  Bank  of  Augusta,  1015. 

V.  Bank  of  New  York,  307,  341, 
414,  1381. 

V.  Bank  of  the  State,  511. 

V.  Christian,  443a,  445. 

V.  Clay,  80. 

V.  Dement,  834. 

V.  Dunham,  714,  1266,  1267. 

V.  Ebert,  849. 

V.  Eyth,  1428. 

V.  Fearhake,  1432. 

V.  First  Nat.  Bank,  1743. 

V.  Forbes,  1785,  17856. 

V.  Geisse,  85. 

V.  Hamilton,  1449. 

V.  Kee,  368,  748,  775. 

V.  Kimble,  1186a. 

i;.  Laverty,  1151. 

V.  McDonald,  696. 

V.  Monroe,  16a. 

V.  Patterson,  262. 

V.  Roberts,  47. 

V.  Rogers,  1147, 1149, 


clxxx 


TABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


Walker  v.  State  Bank,  979. 
V.  State  Trust  Co.,  294. 
V.  Stetson,  454,  1026,  1058. 
V.  Title  Ins.  Co.,  1318,  1327. 
V.  Tunstall,  962,  1027. 
V.  Turner,  929,  960,  961,  1055. 
V.  Wait,  354. 
V.  Walker,  1133,  1625. 
V.  Warfield,  112. 
V.  Winn,  174a. 
V.  Woolen,  44,  61,  62a. 
Wallr.  Bry,  1091,  1093,  1095a,  1102. 
V.  County   of   Monroe,   420,   427, 

428. 
V.  Emigrant  Industrial  Sav.  Bank, 
1655,  1657. 
Wallabout  Bank  v.  Peyton,  7796. 
Wallace  v.  Agrv,  454,  465,  466,  470, 
473,  94^3,  986. 
V.  Branch  Bank,  283,  753. 
V.  Crilleo,  603. 
V.  Goold,  713f. 
V.  Hardacre,  196a. 
V.  Harmstad,  1410a. 
V.  Jewell,  1387. 
V.  Kelsall,  1428. 
V.  Lincoln  Sav.  Bank,  1630a. 
V.  Loomis,  1499c. 

V.  Mayor  of  San  Jose,  1550,  1551. 
V.  McConnell,     334,     520,      643, 

645. 
V.  Richards,  1316,  1318. 
V.  Tellfair,  330. 
V.  Tice,  1410a,  1411. 
Wallace,  Admr.,  v.  Lipps,  Admr.,  759, 

760. 
Waller  v.  Tate,  748. 
Walley  v.  Desert  Nat.  Bank,  1312. 

V.  Montgomery,  1736,  1745. 
Wallis  V.  Litteell,  721. 
Walls  V.  Baird,  1295. 
Wall's  Case,  1346. 
Walmsley  v.  Acton,  951. 
V.  Child,  1466,  1470. 
V.  Cooper,  1291. 
V.  Rivers,  962. 
Wain  V.  Bank,  1708d. 
Walnut  V.  Wade,   1506,  1509&,   1513, 

1514,  1515,  1537. 
Walpole  V.  Ellison,  1413. 

V.  Pulteney,  544. 
Walrad  v.  Petrie,  103,  163. 
Walrath  v.  Thompson,  1756. 
Walsh  V.  Batchley,  463. 
V.  Cooper,  1260. 
V.  Dart,  472,  617,  908. 
V.  Hunt,  282,  284,  1373a,  1384. 
V.  Lennon,  1260. 
V.  Pearce,  1219. 
Walsh's  Appeal,  24. 


Walsh,  Boyle  &  Co.  v.  First  Nat.  Bank, 

1734c. 
Walston  V.  Davis,  1227. 
Walter  v.  Cubley,  1399. 
V.  Haynes,  1029. 
V.  Kirk,  1209. 
Walters  v.  Brown,  1008,  1009. 
V.  Monroe,  1140. 
V.  Rock,  775,  776,  789a,  819. 
V.  Short,  1418. 

«;.  Western  &  A.  R.  Co.,  1733b. 
Walton  V.  Bemmiss,  1260. 
V.  Hastings,  1376. 
V.  Mascall,  827. 
V.  Shelly,  1217. 
V.  Williams,  128. 
Walton  &  Whann  Co.  v.  Davis,  1251. 
Walton  Guano  Co.  v.  Copelan,  849a. 
Walton  Plough  Co.  v.  Campbell,  1395, 

1410a. 
Walwyn  v.  St.  Quintin,  424,  1076,  1077, 

1204,  1227,  1237. 
Walz  V.  Alback,  710,  713a. 
Wamesit  Bank  v.  Butterick,  995. 
Wamsley   v.   Lindenberger,   225,   230, 

238. 
Wangner  v.  Grimm,  1227. 
Waples-Painter  Co.  v.  Bank  of  Com- 
merce, 926,  970. 
Warburton  v.  Ralph,  1324. 
Ward  V.  Allen,  497,  505. 

V.  Bank  of  Kentucky,  291. 
V.  Barrows,  37. 
V.  Bourne,  1260. 
V.  Churn,  63,  856. 
V.  City  Trust  Co.,  776,  795c,  832. 
V.  Cornett,  62a,  1458a. 
V.  Doane,  196. 
V.  Evans,  1262,  1623,  1679a. 
V.  Hackett,  854,  1387,  1389. 
V.  Howard,  769a. 
V.  Howe,  874. 
V.  Johnson,  1296. 
V.  Lewis,  856. 
V.  Northern  Bank,  656. 
V.  Perrin,  1032,  1033. 
V.  Smith,  218,  222,  325,  326. 
V.  Sugg,  198. 
V.  Turner,  24,  26. 
V.  Vass,  1311. 
Warden  v.  Howell,  791,  792,  794,  831c. 

V.  Hughes,  107. 
Warden  v.  Ryan,  1375. 
Wardens    of    St.    James'    Church    v. 

Moore,  128. 
Warder  v.  Arell,  9,  874. 
V.  Pattee,  317. 
V.  Tucker,  1083,  1148. 
Warder,  Bushnell  &   Glessner  Co.  v. 
Libby,  1478, 1480. 


fABLE    OF   CASES 


clxxxi 


References  are  to  paragraphs  marked  § 


Warder,  Bushnell   &   Glessner  Co.  v. 

Myers,  202. 
Wardlow  v.  List,  1401. 
Wardrop  v.  Dunlop,  322,  575. 
Wardwell  v.  Haight,  369&. 
Ware  v.  Allen,  68a. 

V.  City  Bank,  62a. 

V.  Smith,  63. 

V.  Street,  737,  1677,  1685. 
Waring,  Ex  parte,  1343. 

V.  Betts,  602,  603,  654,  1114,  1118. 

V.  Gaskill,  833. 

V.  Smith,  1373a. 
Warman  v.  First  Nat.  Bank,  779&,  812. 
Warner  v.  Beardsley,  1305. 

V.  Citizens'  Nat.  Bank,  867. 

V.  Gruwell,  59. 

V.  Spencer,  1396. 
Wamick  v.  Crane,  584. 
Warning  v.  Betts,  1111. 
Warren  v.  Brown,  56. 

V.  Chapman,  204. 

V.  Coombs,  9,  1455. 

V.  Durfee,  25. 

V.  Oilman,  985,  995,  1005a,  1229. 

V.  Gruwell,  741. 

V.  Haight,  726&. 

V.  Harrold,  262,  271. 

V.  Layton,  1411,  1418. 

V.  Lynch,  32,  885. 

V.  Martin,  366. 

V.  Osborn,  156. 

V.  Scott,  104,  105. 

V.  Smith,  814a,  1225,  1469. 
Warren  Bank  v.  Suffolk  Bank,  341. 
Warren     County     v.     Marcy,     800a, 

1506a,  1537. 
Warren-Scharf  Asphalt  Paving  Co.  v. 

Commercial  Nat.  Bank,  1361. 
Warrensburg    Co-Op.    Assn.    v.    ZoU, 

1623. 
Warring  v.  Hill,  1260, 1340. 
Warrington  v.  Early,  149,  1385,  1397. 

V.  Furbor,  1172. 
Warshawsky  v.  Grand  Theatre  Co.,  183. 
Wartman  v.  Yost,  1422,  1426,  1429. 
Warwick  v.  Bruce,  227. 

t;.  Nairn,  202. 

V.  Noakes,  287,  314,  1474. 

V.  Rogers,  1636&. 
Washburn  v.  Picot,  202. 
Washington  County  Mut.  Ins.  Co.  v. 

Miller,  47. 
Washington  Nat.  Bank  v.  Pierce,  802. 
Washington  Sav,  Bank  v.  Ekey,  1406. 

V.  Ferguson,  717. 
Washington  Times  Co.  v.  Wilder,  388, 

394. 
Wasson  V.  Cabot  Bank,  824. 
V.  Hodshire,  1325, 


Wasson  v.  Lamb,  1621. 
Waterbury  v.  Andrews,  193,  240. 

V.  Sinclair,  713d. 
Waterloo  MiUing  Co.  v.  Kuenster,  342. 
Waterman  v.  Vose,  1385. 
Waters  v.  Bank  of  Georgia,  1693. 

V.  Brown,  1116. 
Watervliet  Bank  v.  White,  417,  1188. 
Watford  v.  Windham,  573,  1181a. 
Watkins  v.  American  Nat.  Bank,  203. 

V.  Angotti,  1181a. 

t;.  Crouch,  643,   644,    1128,    1130, 
1131,  1133,  1135,  1136,  1172. 

V.  Halstead,  240. 

V.  Harris,  1215. 

t;.  Hill,  835a,  1266&. 

17.  Hopkins,  Exr.,  1424. 

V.  Maule,  260,  267,  680,  685,  744, 
745. 

V.  Plummer,  293. 

i;.  SpouU,  1221. 

V.  Willis,  1209. 
Watley  v.  Deseret  Nat.  Bank,  1317. 
Watson  V.  Barr,  713a. 

V.  Boston    Woven    Cordage    Co., 
869. 

V.  Cabot  Bank,  824. 

V.  City  of  Huron,  427,  1520. 

V.  Davis,  90a. 

V.  Evans,  103,  684. 

i;.  Flanagan,  174a,  728,  803. 

V.  Heasel,  224. 

t;.  Hoag.  861. 

t;.  Hurt,'  709,  713a. 

t;.  Kahn,  1202. 

V.  Loring,  930. 

V.  McLaren,  1767. 

V.  Reynolds,  186. 

V.  Ruderman,  225. 

V.  Tarpley,  449. 

V.  Templeton,  1118. 

t;.  Tindall,  1343. 

V.  Wyman,  1235a. 
Watson's  Exrs.  v.  McLaren,  1797a. 
Watt  V.  Davison,  319. 

t;.  Cans  &  Co.,  1588,  1590,  1592. 

V.  Riddle,  1450. 
Watt-Harley-Holmes  Hardware  Co.  v. 

Day,  67. 
Wattrous  v.  Hallbrook,  96. 
Watts  V.  Gantt,  249. 
Watzlavzick  v.  Oppenheimer,  831a. 
Waugh  V.  Beck,  195a. 

V.  Bussell,  1404. 
Way  V.  Bachelder,  154. 

V.  Butterworth,  649,  713,  715 

V.  Dunham,  1316. 

V.  Lamb,  725. 

V.  Richardson,  813. 

V.  Smith,  45a, 


clxxxii 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Way  V.  Sperry,  182. 

V.  Towle,  1573. 
Waydell  v.  Adams,  1729a. 

V.  Luer,  1266,  1299. 
Wayland  v.  Moseley,  1729. 
Way  land  University  v.  Boorman,  81, 

812. 
Wayman  v.  Bend,  663a, 

V.  Jones,  1312. 

V.  Torreyson,  125. 
Waynesburg  College  Appeal,  24. 
Weader  v.  First  Nat.  Bank,  1425,  1436. 
Weakley  t;.  Bell,  1021,  1024, 1116,  1266. 
Wear  v.  Lee,  1590. 

Weatherbee  Bros.  v.  Lillybeck,  203. 
Weathered  v.  Smith,  809. 
Weatherwax  v.  Paine,  713a. 
Weaver  v.  Barden,  789a,  832. 

V.  Bromley,  1182,  1195. 

V.  Camall,  277,  298. 

V.  Nixon,  1259. 

V.  Pennsylvania,  1000. 

V.  Prebster,  1316, 1317, 1319, 1321. 
Webb  V.  Corbin,  852. 

V.  Fairmauer,  617,  1208. 

V.  Feathers  Estate,  248. 

V.  Mears,  454,  481. 

V.  Moseley,  193,  802. 

V.  Odell,  733. 

V.  Simmons,  164. 
Webb  City  Lumber  Co.  v.  Mining  Co., 

832a. 
Webber  v.  Webber,  1458. 

V.  Williams  College,  294. 
Weber  v.  Orten,  573,  741. 
Webster  v.  Calden,  728. 

V.  Carter,  741,  1181a. 

V.  Cobb,  713c,  1777. 

V.  De  Tastat,  330. 

V.  Lee,  728. 

V.  Mitchell,  1085,  1334. 

V.  Smith,  1219. 

V.  Switzer,  271. 

V.  Van  Steenburgh,  831c. 

V.  Vickers,  1217. 

V.  Wray,  303. 
Weed  V.  Bond,  807. 

V.  Carpenter,  688c. 
Weeks  v.  Esler,  32,  32a. 

V.  Parsons,  703a. 
Weems  v.   Shaughnessy,   183a,  726a, 

831c. 
Weganwega  v.  Alying,  1544. 
Weggersloffe  v.  Kerne,  516. 
Wegner  v.  Biering,  204,  205. 
Wehner  v.  Bauer,  164. 
Weiand  v.  State  Nat.  Bank,  1545, 1567. 
Weidemeyer  v.  Landon,  1342. 
Weidman  v.  Symes,  1405. 
Weil  V.  Carswell,  803. 


Weil  V.  Corn  Exchange  Bank,  1596. 

V.  Golden,  199. 

r.  Ponder,  1714. 

V.  Sturgis,  904. 
Weill  V.  Trosclair,  790. 
Weiner  v.  Peacock,  205. 
Weinhauer  v.  Morrison,  504. 
Weinstein  v.  Nat.  Bank,  1370. 
Weinstock  v.  Bellwood,  22,  23,  1637. 
Weir  V.  Walmsley,  1375. 
Weis  V.  Morris  Bros.,  68a. 
Weismer  v.  Village  of  Douglas,  1522, 

1547. 
Weiss  V.  Rieser,  790. 
Weisser  v.  Denison,  288a,  1370. 
Weith  V.  City  of  Wilmington,  1500. 
Weitz  V.  Wolf,  689a. 
Welbom  v.  Norwood,  196,  196a. 
Welby  V.  Drake,  1289a. 
Welch  V.  Alhngton,  1260. 

V.  B.  C.  Taylor  Mfg.  Co.,  1074. 

V.  Dameron,  63,  63a. 

V.  First  Div.  St.  P.  &  P.  R.  Co., 
15096,  1513. 

V.  Goodwin,  1369,  1372. 

V.  Kinney,  1181a,  1227. 

V.  Kukuk,  1317. 

V.  Lindo,  576,  700,  1198,  1227. 

V.  Mayer,  53.3. 
Welch  Co.  V.  Gillett,  713a. 
Weld  V.  Gorham,  658. 
Weldon    v.     ToUman,     1230,     1230a, 

1233. 
Welland    Canal    Co.    v.    Hathaway, 

391. 
Wellans  v.  Ayres,  1446. 
Weller  v.  Ralston,  1325,  1332a. 
Wellington  v.  Jackson,  1352a. 
Wellington  Nat.  Bank  v.  Robbins,  672, 

1356. 
Welhnan  v.  Miner,  1251. 
Wells  V.  Brigham,  104,  518,  1579. 

V.  Davis,  1785&. 

V.  Duffy,  777,  819. 

V.  Evans,  368. 

V.  Giles,  1209. 

V.  Hobson,  1219. 

V.  Hopkins,  203. 

V.  Jackson,  713d,  716. 

V.  Masterman,  362,  488. 

t;.  Moore,  255,  1184, 

V.  Morrison,  1289. 

V.  Potter,  203. 

V.  Schoonover,  1192,  1200. 

V.  Steam  Nav.  Co.,  1740a. 

V.  Supervisors,    422,    1529,    1530, 
1532,  1538. 

V.  Sutton,  795a. 

V.  Tucker,  246. 

V,  Wade,  1482. 


TABLE    OF   CASES 


clxxxiii 


References  are  to  paragraphs  marked  § 


Wells  V.  Western  Union  Tel.  Co.,  493, 
496. 

V.  Whitehead,  9,  114,  117,  943. 
Welsh  V.  Barrett,  967,  1057. 

V.  German-American  Bank,  1370. 

V.  Sage,  775. 
Welsh  Co.,  V.  Gillette,  868. 
Welton  V.  Adams,   1478,   1481,   1694, 

1703. 
Wemple  v.  Dangerfield,  1039,  1041. 
Wendt  V.  Ross,  1252. 
Wenman  v.  Mohawk  Ins.  Co.,  1215. 
Wentworth   v.   Woods    Machine   Co., 

1623. 
Wenzell  v.  Shultz,  193. 
Were  v.  Taylor,  137. 
Werner  v.  Hatton,  1428. 
Wescott  V.  Stevens,  703,  703a. 
Wessell  V.  Glenn,  144,  1401. 
Wesson  v.  Saline  County,  1537. 

V.  Town  of  Mt.  Vernon,  1537, 1542. 
West  V.  Banigan,  1266a. 

V.  Brison,  1316,  1319. 

V.  Brown,  637,  1041. 

V.  First  Nat.  Bank,  399,  399a. 

V.  Forman,  50. 

V.  Miller,  858. 

V.  Penny,  230,  231. 
Westacott  v.  Handley,  1266a. 
Westbay  ;;.  Stone,  571,  1317. 
Westberg  v.  Chicago  Lumber  &  Coal 

Co.,  106,  454,  500. 
West  Boston  Sav.  Inst.  v.  Thomson, 

1241. 
West  Branch  Bank  v.  Fuhner,  323,  327, 

1088. 
West  Coast  Co.  v.  Bradley,  185. 
West  London  Com.  Bank  v.  Kitson, 

307,  412. 
Westcott  V.  Patton,  571. 
Westerlo  v.  De  Witt,  24a. 
Western  Bank  v.  Mills,  177. 
Western  Boatman's  Benevolent  Assn.  v. 

Wolff,  710,  713. 
Western  Bros.  Mfg.  Co.  v.  Maverick, 

1623. 
Western  Carolina  Bank  v.  Moore,  80. 
Western  Grocer  Co.  v.  Lackman,  418. 
Western  Mfg.  Co.  v.  Rogers,  80. 
Western  Nat.  Bank  v.  State  Bank  of 

Rocky  Ford,  807. 
Western  WTieel  Scraper  Co.  v.  Locklin, 
94. 

V.  McMillen,  300,  418. 

V.  Sadilek,  328a,  1039. 
Westervelt,  Recr.,  v.  Baker,  240. 
Westfall  V.  Braley  1676a. 
Westgate  v.  Healv,  1181a. 
Westinghouse  v.  Ger.  Nat.  Bank,  280, 

79oa,  827,  1708y. 


Westman  v.  Ivrumweide,  68a. 
Westminster  Bank  v.  Wheaton,  1573, 

1574. 
Westmoreland  v.  Foster,  271,  795a. 
Weston  V.  Barker,  747. 

V.  Bear    River,    etc.,    Min.    Co., 
1708e. 

V.  Chamberlain,  703. 

V.  City  of  Charleston,  126. 

V.  Eight,  24,  1473. 
Westphal  v.  Ludlow,  1277a. 

V.  Nevills,  183. 
West     Plains     Bank     v.     Edwards, 

1181a. 
West  Plains,  etc.,  Co.  v.  Sage,  1537. 
Westport  Coal  Co.  v.  McPhail,  1741. 
West  St.  Louis,  etc..  Bank  v.  Shawnee, 

etc..  Bank,  392,  812. 
Wetherall  v.  Claggett,  967,  969. 

V.  Ela,  1198. 
Wetherell  v.  Joy,  1251. 
Wetherow  v.  Lord,  180. 
Wethey  v.  Andrews,  608. 
Wettlaufer  v.  Baxter,  106,  693. 
Wetumpka,  etc.,  R.  Co.  v.  Bingham, 

425. 
Wetzstein  v.  Joy,  1221. 
Weyerhauser  v.  Dun,  142,  694. 
Whalen  v.  Milholland,  24a,  24&. 
Whaley  v.  Houston,  964,  1596. 

V.  Neill,  796,  8156. 
Wharton  v.  Morris,  56. 

V.  Walker,  16366. 
Whateley  v.  Tricker,  543. 
Wheat  V.  Arnold,  1418. 

V.  Kendall,  1317,  1338. 
Wheatland  v.  Pry  or,  340c. 
Wheatly  v.  Kutz,  1630. 

V.  Strobe,  15,  16a,  19,  35,  1644. 
Wheaton  v.  Wilmarth,  983. 
Wheeler   v.   Field,    1058,    1116,    1117, 
1145. 

V.  Gould,  1461,  1618a. 

V.  Guild,  1227,  1228,  1233. 

V.  Johnson,  1191,  1200. 

V.  National  Bank,  674. 

t'.  Newbold,  833. 

I'.  Simmons,  182. 

V.  Slocum,  827. 

V.  State,  991. 

V.  Stone,  18. 

V.  Warner,  606,  1215. 

V.  Webster,  97,  486,  497,  497&. 

V.  Wheeler,  266,  685,  741. 
Wheeless  v.  Williams,  1209. 
Wheeling  Ice  &  Storage  Co.,  v.  Conner, 

795c. 
Wheelock  v.  Berkeley,  205,  1221. 

V.  Freeman,  79,  1347,  1397,  1409, 
1412. 


clxxxiv 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Whelan  v.  Swain,  186. 

Whelpdale's  Case,  858. 

Whetstone  v.  Colley,  1247. 

Whidden  t;.  Seelye,  891. 

Whiddon  v.  Sprague,  812. 

Whigham  v.  Hall  &  Co.,  81a. 

Whilden    v.    Merchants,    etc.,    Bank, 

496. 
Whilder  v.  M.  &  P.  Nat.  Bank,  496, 

551. 
Whipple  V.  Fowler,  834. 

V.  Stevens,  12156. 
Whistler  v.  Forster,  706,  745,  1578. 
Whiston  V.  Stodder,  868. 
Whitaker  v.  Bank  of  England,  603. 

V.  Brooks,  1326. 

V.  Brown,  359. 

V.  Edmunds,  165,  814. 

V.  Hartford,  etc.,  R.  Co.,  1514. 

V.  Morrison,  1165,  1168. 

V.  Pope,  1250. 

V.  Whitaker,  187a,  256. 
Whitbcck  V.  Vanness,  1254. 
Whitcomb  v.  Mills,  854. 

V.  Whiting,  374,  1215a. 

V.  Williams,  1260. 
White  V.  Bannister's  Exrs.,  1433. 

V.  Canfield,  886. 

V.  Casanove,  1281a. 

V.  Case,  1769a. 

V.  Central  Nat.  Bank,  1361. 

V.  Continental  Nat.  Bank,  533,  540, 
549a,  672,  1358,  1363,  1364, 
1372,  1603. 

V.  Curd,  1458a. 

V.  Cushing,  41,  50,  149,  150. 

V.  Dodge,  769a. 

t;.  Doughtery,  1281. 

V.  Eiseman,  1626. 

V.  Ford,  1431. 

V.  Goldsberg,  248. 

V.  Haas,  1379,  1418. 

V.  Harris,  1373a,  1398. 

V.  Hart,  173. 

V.  Heylman,  196,  743. 

V.  Hopkins,  1307,  1335a. 

V.  Howard,  1267. 

V.  Howland,  1780. 

V.  Kebling,  1233. 

V.  Kehloe,  1227. 

V.  Ledwick,  108. 

t;.  Madison,  307. 

V.  McNett,  248. 

V.  Nat.  Bank,  698,  698a,  698c. 

V.  Palmer,  1231. 

V.  Richmond,  56. 

V.  Rosencrantz,  497a. 

V.  Savage,  790. 

V.  Shepherd,  1385. 

f.  Smith,  41,  48^  81c. 


WTiite  V.  Springfield  Bank,  827,  831c, 
832a. 

V.  Stoddard,  578,  994,  1125,  1126, 
1177. 

V.  Story,  248. 

V.  Thompson,  262. 

V.  Trumbull,  1251. 

V.  Tudor,  370a,  373. 

V.  Vermont,  etc.,  R.  Co.,  148, 1487, 
1496,  1499,  1500. 

V.  Weaver,  713c,  728. 

V.  Weir,  1739. 

V.  WoodrufT,  182. 
Whiteford  v.  Burckmyer,  1003,  1191, 

1200. 
Whitehead  v.  Emmerich,  1398. 

V.  Heidenheimer,  865. 

V.  Purdy,  7956. 

V.  Walker,  724a,  725,  1436. 
Whitehouse  v.  Hanson,  712,  716. 
Whitelocke  v.  Musgrove,  1218. 
Whitely  v.  Allen,  1145. 
Whiteman  v.  Childress,  56. 

V.  Sheckle,  125. 
Whiteside  v.  United  States,  440. 
Whitesides  v.  Northern  Bank,  1378. 
White    Water    Valley    Canal    Co.    v. 

Vallette,  382. 
Whitfield  V.  Savage,  1077. 
Whiting  V.  Citv  Bank,  1038. 
Whitley  v.  Foy,  336. 
Whitlock  V.  Manciet,  1373a. 

V.  Underwood,  88,  604. 
Whitman  v.  Farmers  Bank,  983,  987, 
1045. 

V.  Leonard,  370,  371,  375. 
Whitmer  v.  Frye,  1385,  1410a,  1412. 
Whitmire  v.  Montgomery,  70. 
Whitmore  v.  ElUson,  1317. 

V.  Nickerson,  94. 
Whitnack  v.  Chicago,  B.  &  Q.  R.  Co., 

1728. 
Whitney  v.  Abbot,  1104. 

V.  Bunnell,  533. 

V.  Clary,  164. 

V.  Dutch,  231. 

V.  ElUott  Nat.  Bank,  20,  51. 

V.  Esson,  1625. 

V.  First  Nat.  Bank,  286a. 

V.  Going,  1329. 

V.  Groot,  1755. 

V.  McLean,  1734c. 

V.  Merchants  Union  Express  Co., 
348. 

V.  Nat.  Bank,  731. 

V.  Snyder,  848,  850. 

V.  Spearman,  721. 

V.  Wenman,  1713a. 
Whitney  Nai;.  Bank  v.  Cannon,  784, 
Whitning  v.  City  Bank,  1038. 


TABLE   OF   CASES 


clxxxv 


References  are  to  paragraphs  marked  § 


Whitnore  v.  Nickerson,  94. 

Whitridge  v.  Rider,  1116. 

Whitsett  V.  People's  Nat.  Bank,  1378. 

Whitt  V.  Blount,  203. 

Whittaker  v.  Brown,  357. 

V.  Kuhn,  725. 
Whitteker  v.  Charleston  Gas  Co.,  833, 

1192. 
Whitten  v.  Bank  of  Fincastle,  262,  289. 
Whittenhall  v.  Korber,  1198. 
Whitter  v.  Eager,  187. 
Whittier  v.  Graff  am,  1123. 

V.  Hayden,  1195. 
Whittle  V.  Skinner,  1289a. 
Whittle  &  Harrel  v.  National  Bank, 

142,  143a. 
Whitwell  V.  Crehore,  725a. 

V.  Johnson,  658. 

V.  Winslow,  53,  80. 

V.  Wright,  260. 
Whitworth  v.  Adams,   191,  750,  751, 

752,  753,  756,  757,  760,  762a,  763. 
Wickerman  v.  Evans,  193. 
Wickersham  v.  Jarvis,  1198,  1229. 
Wickershara  Banking  Co.  v.  Nicholas, 

316,  317,  680,  689. 
Wickham  v.  Evans,  1230. 

V.  Grant,  193. 

V.  Wickham,  314. 
Wickhizer  v.  Bolin,  65,  68a. 
Wricks  V.  Mitchell,  249. 
Widger  v.  Baxter,  182,  185. 
Widgery  v.  Munroe,  658,  1144,  1146. 
Widoe  V.  Webb,  204. 
Widsmith  v.  Tracy,  796. 
Wieman  v.  Anderson,  250. 
Wiener  v.  Peacock,  205. 
Wierbach  v.  First  Nat.  Bank,  210. 
Wiffen  V.  Roberts,  756. 
Wigging  V.  Bush,  775. 

V.  Damrell,  747. 
Wiggins  V.  Burkham,  1370. 

V.  Stevens,  802,  1612a. 
Wiggins  Ferry  Co.  v.  Chicago  &  Alton 

R.  Co.,  1740. 
Wiggle  V.  Thomasson,  1209,  1212. 
Wigglesworth  v.  Steers,  214. 
Wight  V.  Citizens'  Bank,  1219. 
Wilbur  V.  Jeep,  1435a. 

V.  Jernegan,  1260. 

V.  Lynde,  282. 

V.  Selden,  1057. 

V.  Williams,  1311. 
Wilbum  V.  Greer,  56. 
Wilcox  V.  Aultman,  1227. 

V.  Draper,  1785,  17856. 

t;.  Roath,  231. 

V.  Routh,  998. 

t;.  Tenant,  722. 

f.  Tetherington,  803,  850. 


Wilcox  Organ  Co.  v.  Lasley,  1245. 
Wilcoxen  v.  Reynolds,  87. 
Wilcoxon  V.  City  of  Bluffton,  1524. 
Wild  V.  Bank  of  Passmaquody,  388, 

392,  687. 
Wilde  V.  Armsley,  1418. 

V.  Sheridan,  896. 
Wilder  v.  Cowels,  740a. 

V.  De  Wolf,  130,  663o. 

V.  Seelye,  1480. 

V.  Weakley,  210. 
Wilderman  v.  Donnelly,  177. 
Wilders  v.  Stevens,  714a,  1202a. 
Wildes    V.    Savage,    551,    562,    1785, 

1786a,  1788. 
Wildman,  Ex  parte,  1203. 

V.  Ban  Gelder,  800a. 
Wilds  V.  Nahant  Bank,  1673a. 
Wildsmith  v.  Tracy,  796. 
Wilensky  v.  Morrison,  769o, 
Wiles  V.  Robinson,  1260. 
Wiley  V.  First  Nat.  Bank,  286a. 

V.  Knight,  802. 
Wilkes  V.  Jacks,  1083. 

V.  Pope,  156. 
Wilkes  County  v.  Coler,  1537. 
Wilkins  v.  Com.  Bank,  998. 

V.  Jadis,  602,  1160. 

V.  Usher,  7816,  782,  831a. 
Wilkinson  v.  Adams,  982. 

V.  Cook,  172. 

V.  Jeffers,  725. 

V.  Johnson,  528,  533,  549,  1257. 

V.  Lutwidge,  533. 

;;.  Searcy,  859. 
Wilks  V.  Robinson,  1685. 
Willard  v.  Crook,  386,  672,  790. 

V.  Nelson,  847,  848. 
Will  A.  Watkin  Music  Co.  v.  Basham, 

1295. 
Willenberger  v.  Spalding,  586. 
Willetv.  Young,  271. 
Willets  V.  Hatch,  1713. 

V.  Paine,  1587. 

V.  Phoenix  Bank,  1571,  1603. 
Willett  V.  Shephard,  1418. 
Willey  V.  Greenfield,  432. 
William  Mercantile  Co.  v.  Fussy,  1734, 
WiUiams  v.  Ayres,  129,  1438. 

V.  Bacon,  303. 

V.  Baker,  76,  724a. 

V.  Bank,  712. 

V.  Bank  of  U.  S.  1005,  1016,  1022, 
1117,  1119. 

V.  Brashera,  1076. 

V.  Brimhall,  1428. 

V.  Brobst,  1105,  1110. 

V.  Brown,  1587. 

V.  Cheney,  808. 

V.  Costello,  1623, 


clxxxvi 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Williams  v.  Drexel,  538,  1365. 
V.  Duanesburg,  1557. 
V.  Everett,  19. 
V.  First  Nat.  Bank    183. 
V.  First   Nat.   Bank   of  Syracuse, 

816. 
t;.  Floyd,  112. 
V.  Gait,  63a. 
V.  Gerbor,  1236a. 
V.  Germaine,  527,  529,  531. 
V.  Gilchrist,  1425. 
V.  Harris,  398,  403. 
V.  Haynes,  885. 
V.  Holt,  812. 
V.  Hoogewerff,  637. 
V.  James,  1205,  1241. 
V.  Jensen,  1389. 
V.  Jones,  884,  1203. 
V.  Keyes,  834,  1233. 
V.  Matthews,  369a,  572,  997,  1049. 
V.  Moore,  230. 
V.  Nat.   Bank  of  Baltimore,  748, 

824,  1230,  1266. 
V.  Neely,  203. 
V.  Nichols,  186. 
V.  Ogg,  710,  1339. 
V.  Paintsville  National  Bank,  90a, 

571,  714,  999a,  1326. 
V.  Pelly,  1233. 

V.  People's  Bank  of  Summitt,  1338. 
V.  Potter,  698. 

v.  Putnam,  909,  910,  928,  960. 

V.  Robbins,  303,  305. 

V.  Robinson,  1165. 

V.  Scott,  1319. 

V.  Sims,  55. 

V.  Smith,  824,  831c,  832a,  1676a, 
1679a,  1696. 

V.  Stormsj  751. 

V.  Tishomingo  Sav.  Inst.,  672, 677. 

i;.  Thomas,  357. 

V.  Union  Bank,  1149. 

V.  Urmston,  249. 

V.  Wade,  899,  900. 

V.  Walker,  196a. 

V.  Wallbridge,  366,  369. 

V.  Waring,  1379. 

V.  WilUams,  67a,  1760. 

V.  Winans,  490,  491. 
Williams,  Admr.,  v.  Planters  &  Mechan- 
ics Nat.  Bank,  640. 
Williams   Bros.   v.   Rosenbaum,   1092, 

1326. 
Williams    National    Bank    v.    Groton 

Mfg.  Co.,  262. 
Williamsburg  Sav.  Bank  v.  Town  of 

Solon,  1421,  15096,  1513. 
Williamsburgh     Trust    Co.     v.     Turn 

Suuden,  165"^ 


Williamson  v.  Albany  &  Salem  R.  Co., 
1509a. 
V.  City  of  Keokuk,  1538. 
V.  Doby,  724a. 
V.  Harrison,  225. 
V.  Johnson,  361,  688a,  1613. 
V.  Massey,  448. 
I'.  Smith,  86a,  1244. 
V.  Watts,  225. 
Williamsport  v.  Commonwealth,  420, 

1531. 
William   Thompson   Co.   v.   Williams, 

1290. 
Willings  V.  Consequa,  1296. 
Willis  V.  Barrett,  100. 
V.  Barron,  354. 
V.  Chowning,  1753. 
V.  Cresey,  1478. 
V.  French,  669a,  672. 
V.  Green,  455,  999a. 
V.  Heath,  800a. 
V.  Sanger  Bros.,  205. 
V.  Smyth,  24a. 
Willison  V.  Pattison,  217,  678a. 
Willman    Mercantile    Co.    v.    Fussy, 

17346. 
Willoughby  v.  Ball,  80,  81c,  189. 
V.  Moulton,  74. 
V.  Willoughby,  103. 
Wills  V.  Booth,  609,  611,  996. 
V.  Hurst,  1312. 
V.  Wilson,  1401. 
Willsey  v.  Hutchins,  248. 
Willson  V.  Clements,  550. 
Wilmington  Bank  v.  Houston,  689a. 
Wilmington,  etc.,  R.  Co.  v.  King,  87. 
Wilse  V.  Whitaker,  80. 
Wilson  V.  Bank,  341. 

V.  Barnard,  1219,  1387. 

V.  Barthrop,  306. 

V.  Beardsley,  1799. 

V.  Black,  719. 

V.  Carey,  123. 

V.  Carter,  7956. 

V.  City  of  Shreveport,  1530,  1538. 

V.  Clements,  551,  552,  558. 

V.  Codman,  700,  1431. 

V.  Crosnoe,  176. 

V.  Dawson,  3266. 

V.  Ellsworth,  174. 

V.  Forder,  370,  372a. 

V.  Gordon,  357. 

V.  Harris,  1419. 

V.  Hayes,  1352a,  1418. 

V.  Hendee,  704,  714. 

V.  Holmes,  698. 

V.  Jamieson,  1401. 

V.  Keedey,  1429. 

V.  Kelso,  819. 

V,  Kieffer,  1266. 


TABLE   OF   CASES 


clxxxvii 


References  are  to  paragraphs  marked  § 


Wilson  V.  Knox  County,  10a. 

V.  Lazier,  165,  198,  808,  814,  815, 
817,  880,  895. 

V.  McEachern,  1578. 

V.  McVey,  1310. 

V.  Mechanics'  Sav.  Bank,  726a. 

V.  Mitchell,  987. 

t;.  Mo.  Pac.  Ry.  Co.,  1741. 

V.  National    Fowler    Bank,    107, 
795a,  812. 

V.  Pauley,  769a,  789. 

V.  Peck,  986. 

V.  Powers,  68a,  1317a. 

V.  Ray,  194. 

V.  Richards,  356,  960. 

V.  Riddler,  775. 

V.  Sec.  Nat.  Bank,  802. 

V.  Senier,  1131,  1135. 

V.  Swabey,  987,  988,  990. 

V.  Smith,  344. 

V.  Stubbs,  100. 

V.  Tolson,  698d,  1181a. 

V.  Tricker,  185. 

V.  White,  1311,  1326,  1339. 

V.  WiUiman,  1209. 
Wilson  County  v.  Nat.  Bank,  99,  1496. 
Wilson  Sewing  Machine  Co.  v.  Moreno, 
62. 

V.  Spears,  1200. 
Wimberly  v.  Windham,  292. 
Winans  v.  Gibbs  &  Starett  Mfg.  Co., 

1759. 
Winchell  v.  Carey,  69. 
Winchester  v.  Hackley,  1431. 
Winders  v.  Sperry,  183,  185. 
Windham  v.  Doles,  207. 
Windham  Bank  v.  Norton,  598,  1048, 

1067,  1068,  1068a. 
Windham   Coimty   Bank  v.   Kendall, 

366. 
Windhorst  v.  Bergendahl,  7136,  1317. 
Windsor  Sav.  Bank  v.  McMahon,  10a, 

54a. 
Winer  v.  Bank  of  Blytheville,  93,  1227, 

1230. 
Wines  v.  State  Bank  of  Hamilton,  1219. 
Winfrey  v.  Ragan,  65,  164. 
Wing  V.  Cooper,  131. 

V.  Ford,  198,  775,  815. 

V.  Gluck,  443a. 

V.  Terry,  95. 
Wingate  v.  Blalock,  80,  1338. 
V.  Mechanics'  Bank,  341. 
Winkler  v.  Magdeburg,  833. 
Winn  V.  City  of  Macon,  1523. 

V.  Thomas,  194. 
Winnebago    County    State    Bank    v. 

Hustel,  1092,  1312. 
Winship  t- .  Bank  of  U.  S.,  368. 
V.  Merchants  Nat.  Bank,  812, 


Winslow  V.  Everett  Nat.  Bank,  1362. 

V.  Norton,  1730a. 
Winsted  Bank  v.  Webb,  1260,  1266a. 
Winston  v.  Farrow,  1339. 

V.  Yeargin,  1311. 
Winter  v.  Anson,  1281a. 

V.  Hutchins,  775. 
Winter  &  Loeb  v.  Pool,  815,  1395, 1417. 
Wintermute  v.  Post,  513,  545. 

V.  Torrent,  698d. 
Winters  v.  Armstrong^  336. 
Wintersmith  v.  Post,  508. 
Winthrop  v.  Pepoon,  930. 
Wintle  V.  Crowther,  351,  364. 
Winton  v.  Saidler,  1217. 
Wintons  v.  Westfeldt,  800a. 
Winward  v.  Lincoln,  868. 
Wipperman    v.    Hardy,     1251,     1252, 

1259,  1260,  1262,  1267. 
Wirt  V.  Stubblefield,  199. 
Wirth  V.  Roche,  204. 
Wisconsin  M.  &  F.  Fire  Ins.  Co.  v. 

Bank  of  British  N.  A.,  17346. 
Wisconsin  Trust  Co.  v.  Chapman,  262. 
Wisconsin  Yearly  Meeting  of  Freewill 

Baptists  V.  Babler,  795c. 
Wisdom  V.  Becker,  262. 
Wisdom  &  Levy  v.  Bille,  971. 
Wise  V.  Charlton,  51a. 

V.  Miller,  1785a. 

V.  Prouse,  1203. 

V.  Rogers,  448,  1726. 
Wisegarver  v.  Yinger,  193,  769o,  1312. 
Wiseman  v.  Chiapella,  1118. 

V.  Lyman,  1300. 
Wislezenus  v.  O'Fallon,  182. 
Wisner  v.  Bardwell,  204. 

V.  First   Nat.    Bank,   4976,   499a, 
500,  926,  1600. 

V.  Schopp,  1623. 
Withall  V.  Masterman,  1321. 
Witherow  v.  Slayback,  671,  710,  711, 

1085. 
Withers  v.  Hart,  1417. 
Witherspoon  v.  Musehnan,  62. 
Witkowski  v.  Maxwell  &  Peal,  241,  779, 

779a. 
Witmer  Bros.  v.  Weild,  68. 
Witt  V.  Williams,  775. 
Witte  V.  Derby  Fishing  Co.,  410. 

V.  Weinberg,  1259. 

V.  Williams,  753,  7816. 
Wittenberg  v.  Spalding,  581. 
Wittich  V.  First  Nat.  Bank,  1600. 
Witty  V.  Mut.  Life  Ins.  Co.,  86a. 
Wizig  V.  Beisert,  666,  719. 
Wm.  Deering  Co.  v.  Veal,  185. 
Wofford  V.  Board  of  Police,  1478. 
Wohl  V.  First  Nat.  Bank,  800a. 
Wolf  V.  Jewett,  311. 


clxXXviii  TABLE    OF   CASES 

References  are  to  paragraphs  marked  § 


Wolf  V.  Koppel,  314. 
V.  Madden,  1309. 
V.  Myers,  1729. 
V.  Shelton,  725. 
V.  Troxell  Estate,  196a. 
Wolfboro  Loan  &  Banking  Co.  v.  Rol- 
lins, 1181a,  1321,  1339. 
Wolf  Co.  V.  Bank  of  Commerce,  386, 

394a. 
Wolfe  V.  Jewett,  1144. 
Wolfersberger  v.  Bucher,  1432. 
Wolff  v.  Bluhn,  177. 
A\'olford  V.  Andrews,  929,  1095a. 

V.  Rusk,  725. 
Wolfurt    V.    Pittsburg,    etc.,    R.    Co., 

1729a. 
Wolke ;;.  Kuhne,  93. 
WoUenleber  v.  Ketterlinus,  1079,  1081. 
Wolstenholme  v.  Smith,  1312. 
Wolverman  v.  Bell,  1377. 
Wolz  V.  Parker,  159. 
Wood  V.  Babbitt,  769a. 

V.  Bodwell,  1260. 

V.  Boylston  Nat.  Bank,  334&,  336, 
339. 

V.  Brewer,  305. 

V.  Brown,  1158. 

V.  Brush,  742,  1428. 

V.  Bullens,  1247. 

V.  Callaghan,  995,  1054,  1251. 

V.  Corl,  622,  919,  1031. 

V.  Drury,  112. 

V.  Elwood,  688c. 

V.  Flanery,  68,  162. 

V.  Gibbs,  898. 

V.  Goodridge,  253. 

V.  Guarantee,    etc..    Deposit   Co., 
1222,  1505. 

V.  Holbeck,  366. 

V.  Jefferson   County   Bank,   1305, 
1326. 

V.  McKean,  782. 

V.  McMeans,  1084. 

V.  Merchants'  etc.,  Co.,  326a. 

V.  Mullen,  625. 

V.  Myton.  130. 

V.  Newkirk,  1317a. 

V.  Pugh,  523,  524,  1258. 

V.  Railway  Co.,  1739. 

V.  Skelley,  1413. 

V.  Starling,  803. 

V.  Steele,  1373,  1373a,  1376. 

V.  Surrell,  80. 

V.  Tomlin,  268. 

V.  Watson,  979a. 

V.  Wheeler,  867. 

V.  Wilder,  218. 

V.  Wood  999a. 
Woodall  V.  People's  Nat.  Bank,  27,  50, 

769a,  784. 


Woodall  &  Son  v.  People's  Nat.  Bank, 

819. 
Woodbridge  v.  Brigham,  656. 

V.  First  Nat.  Bank,  1612a. 

V.  Spooner,  80,  180. 
Woodburn  v.  Woodburn,  24,  1623. 
Woodbury  v.  Moulton,  299. 

V.  Roberts,  41. 
Woodcock     V.      Houldsworth,      1021, 

1052. 
Wood,    etc..    Machine    Co.    v.   Oliver, 

1300a. 
Woodford  v.  Dorwin,  63,  65,  66,  371a. 

V.  Whiteley,  1482. 
Woodhouse  v.  Simmons,  1215b. 
Woodhull  V.  Holmes,  815 
Woodin  t'.  Foster,  656. 

V.  Frayze,  1596. 
Woodman  v.  Boothy,  713a. 

V.  Chapman,  258. 

V.  Churchill,  726a,  803. 

V.  Eastman,  1131,  1134,  1135. 

V.  Thurston,  1090,  1092a,  1094. 
Wood  Mowing  &  Reaping  Machine  Co. 

V.  Land,  1759. 
Wood  River  Bank  v.  First  Nat.  Bank, 

327,  341,  617,  926,  1600. 
Woodruff  V.  American  Road  Mach.  Co., 
1245. 

V.  Heniman,  204. 

V.  Hill,  879,  889,  906. 

V.  Merchants     I3ank,     617,     622, 
1571o,  1572. 

V.  Miss.,  57,  60,  1245,  1246a,  1247, 
1570. 

V.  Monroe,  1351,  1352 

V.  Plant,  1598. 

V.  Scruggs,  1565. 

V.  Trapnall,  447,  1725. 
Wood's  Appeal,  1708^. 
Woods  V.  Armstrong,  197,  198. 

V.  Bailey,  1281,  1281&. 

V.  Finley,  80. 

V.  Lawrence  Coimty,  1493,  1494, 
1540. 

V.  North,  62. 

V.  Ridley,  128,  130. 

V.  Schroeder,  1652. 

V.  Sherman,  1251. 

V.  Thiedeman,  1734d. 

V.  Viozca,  725. 

V.  Wilder,  217,  218,  1060. 

V.  Woods,  713a,  1266. 
Woods  &  Son  V.  Carl,  199a. 
Woodson  V.  Beck,  81d. 

V.  Moody,  1788. 

V.  Wood,  369&,  371,  373. 
Woods  Sons  Co.  v.  Schaefer,  81c. 
Woodstock  Bank  v.  Downer,  159. 
Woodsum  V.  Cole,  782,  II8I0. 


TABLE   OF   CASES 


clxxxix 


References  are  to  paragraphs  marked  § 


WoodsviUe    Guaranty    Sav.    Bank    v. 

Rogers,  710,  713a. 
Woodthrope  v.  Lawes,  979,  983,  991, 

993. 
Woodward  v.  Foster,  713o,  719,  720a. 

V.  Lowry,  1092. 

V.  Row,  449. 

V.  Severance,  703. 

V.  Sup.  of  Calhoun  County,  1524, 
1535. 

V.  Walton,  1311. 
Woodworth  v.  Anderson,  1385,  1415. 

V.  Bank   of   America,    152,    1383, 
1397,  1401. 

V.  Barnett,  200. 

V.  Huntoon,  803. 

V.  Veitch,  161. 
Woodworth  &  Co.  v.  Carroll,  832. 
Wookey  v.  Pole,  145,  663,  1504. 
Woolen  V.  Uhich,  44,  852. 

V.  Whitacre,  852. 

V.  Wise,  852. 
Woolcy  V.  Clark,  261. 

V.  Clements,  627. 

V.  Lyon,  911. 
Woolf  V.  Clark,  795a. 

V.  Hamilton,  197. 
Woolfolk  V.  Duncan,  195a. 
Woolidge  V.  Wiggin,  703. 
Woolley  V.  Constant,  148. 

V.  Sergeant,  35. 
Woolsey  v.  Crawford,  1449. 
Woolwine  v.  Storrs,  157. 
Wooly  V.  Lyon,  1021. 
Woonsocket  Instn.  for  Saving  v.  Ballou, 

1215a. 
Wooster  v.  Jenkins,  187. 
Wootem  V.  Maullsby,  728. 

V.  Outlaw,  1220. 
Worcester  v.  Eaton,  858. 
Worcester  County  Bank  v.  Dorchester, 
etc.,  Bank,  775,  837,  1680. 

V.  Wells,  896. 
Worcester  County  Inst.,  etc.,  v.  Davis, 

1788. 
Worcester  Nat.  Bank  v.  Cheney,  829a, 

830,  832. 
Worden  v.  Dodge,  50. 

V.  Nourse,  992,  993. 

I'.  Salter,  710. 
Worden  Grocer  Co.  v.  Blanding,  52. 
Wordon  r.  Bemis,  1732. 
Work  V.  Tatman,  1572,  1574. 
Workingmen's  Banking  Co.  v.  Blell, 

1147a, 1149. 
Workman  v.  Wright,  1351,  1352a. 
Works  V.  Hershey,  44. 
Worley  v.  Waldran,  657. 
Wormer  &  Sons  v.  Waterloo  Agricul- 
tural Works,  183. 


Wormley  v.  Lowry,  832. 
Worrall  v.  Gheen,  1408. 
Worsham  v.  Goar,  1326. 

V.  State,  837. 
Worster  v.  Forbush,  358a. 
Wortendike  v.  Cowels,  740a. 

V.  Mechan,  197,  198,  819. 
Worth  V.  Case,  46,  180. 
Worthington  v.  Cowles,  731,  7316. 

V.  Railroad  Co.,  394. 

V.  Schuylkill  Electric  Co.,  386. 
Wray  v.  Miller,  47. 
Wren  v.  Pearce,  1764. 
Wright  V.  Andrews,  1128. 

V.  Bayless,  1966. 

V.  Boyd,  1188. 

V.  Brosseau,  368. 

V.  Byrne,  185,  271. 

V.  Douglas,  1669. 

V.  Dyer,  1786. 

V.  Forgy,  74. 

V.  Gansevort  Bank,  1236. 

V.  Hancock,  1472. 

V.  Hanna,  1266a. 

V.  Hart,  56. 

V.  Irwin,  48,  51a. 

V.  Kinney,  427. 

V.  Laing,  1252. 

V.  Liesenfield,  1093. 

V.  Maidstone,  1475,  1482. 

V.  Miss.    Valley   Trust   Co.,    782, 
831a. 

V.  Morse,  715. 

V.   Parvis   &   Williams  Co.,   247, 
253. 

V.  Reed,  1672a. 

V.  Remington,  80. 

V.  Robinson   &   Co.,    1249,    1310, 
1623. 

V.  Shawcross,  1043. 

V.  Smith,  67. 

V.  Steel,  231. 

V.  Traver,  60,  62. 

V.  Waller,  214. 

V.Wright,    25,    743,    1259,    1472, 
1481. 
Wright    Investment    Co.    v.    Friscoe 

Realty  Co.,  777. 
Wrightman  v.  PuUam,  371. 
Wrightson  v.  Pullan,  370. 
Wroten  v.  Armat,  769. 
Wroxon  v.  Macoboy,  725a,  726. 
W.  S.  Broom  &  Co.  v.  Harrah,  185. 
Wuest  V.  Moehrig,  203. 
Wulschner  v.  Sells,  667a. 
Wyant  v.  Pattorf,  62a. 
Wyat  V.  Campbell,  808. 
Wyatt  V.  Bulmer,  198. 

V.  Dufrene,  1317. 

V.  Evias,  1966. 


cxo 


TABLE    OF   CASES 


References  are  to  paragraphs  marked  § 


Wyatt  V.  Hodson,  12156. 

V.  Wallace,  199a. 

V.  Walton  Guano  Co.,  248. 
Wyckoff  V.  Anthony,  3346. 
Wyer  v.  Dorchester,  etc.,  Bank,  775, 

1680. 
Wyke  V.  Rogers,  1322. 
Wylie  V.  Bryce,  509. 

V.  Missouri   Pac,   R.   Co.,    1499a, 
1503. 
WyUie  v.  Pollen,  802. 
Wyman  v.  Adams,  612,  1113a. 

V.  Colorado  Nat.  Bank,  812,  823. 

V.  Ft.  Dearborn  Nat.  Bank,  326a, 
1643. 

V.  Robbina,  1437. 

V.  Whitehouse,  241. 

V.  Yeomans,  1377. 
Wyman,  Recr.,  v.  Williams,  1341. 
Wynn  v.  Alden,  979. 
Wynne  v.  Callander,  206. 

V.  Jackson,  914. 

V.  Raikes,  490,  491,  503,  552,  563. 

V.  Whesenant,  204. 


Yae  V.  Yandell,  1306a. 
Yakima  Nat.  Bank  v.  Knipe,  573. 
Yakima  Valley  Bank  v.  McAllister,  850. 
Yale  V.  Dederer,  248. 

V.  Wood,  11. 
Yancy  v.  Field,  24,  25. 
Yaney  v.  Mauck,  1281a. 
Yarnell  v.  Anderson,  1260. 
Yarwood  v.  Trusts  &  Guarantee  Co., 

188 
Yates  t^.Bell,  19,  16366. 

V.  Donaldson,  1295,  1335a. 

V.  Goodwin,  707a,  970. 

V.  Groves,  16a,  23. 

V.  Hall,  221. 

V.  Mead,  1343. 

V.  Shepardson,  1646. 
Yatesville  Banking  Co.  v.  Fourth  Nat, 

Bank,  1372. 
Yazos  &  M.  V.  R.  Co.  v.  G.  W.  Bent  & 

Co.,  1733a. 
Yeager  v.  Farwell,  1108,  1147,  1158. 
Yeagley  v.  Webb,  849a. 
Yeatman  v.  Cullen,  895,  899. 

V.  Mattison,  176,  185. 
Yeaton  v.  Bank  of  Alexandria,  189. 

V.  Berney,  643. 
Yegen  v.  Northern  Pac.  Ry.  Co.,  1728. 
Yellowstone  Nat.  Bank  v.  Gagnon,  832, 

832a. 
Yenney  v.  Central  City  Bank,  1233. 
Yeoman  v.  Lane,  790,  850. 
Yerker  v.  Salomon,  195a. 


Yndart  v.  Den,  1458a. 
Yocum  V.  Smith,  844,  1406. 
York  V.  Jones,  1390. 

V.  Pearson,  185,  186,  1328. 
York  County  v.  Central  R.  Co.,  1729a. 
Yorkshire    Banking    Co.   v.    Beatson, 

363. 
Youle  V.  Fosha,  775,  777,  789a. 
Young  V.  Adams,  737,  1675. 

V.  Baker,  1378. 

V.  Bennett,  954. 

r;.  Bryan,  926,  968. 

V.  Chew,  354. 

V.  Clarendon  Township,  1520. 

V.  Cole,  733,  734o,  1533. 

V.  Durgin,  1022,  1027. 

V.  Gaus,  808. 

V.  Glover,  688,  690. 

V.  Grote,  540,    842a,    1363,    1405, 
1659. 

V.  Harris,  879. 

V.  Hayes,  68a,  184. 

V.  Hudson,  392. 

V.  Leham,  540. 

V.  Lehman,  1363,  1369,  1405. 

V.  Lowry,  819,  887. 

V.  McFadden,  247. 

V.  Murray,  1188. 

V.  Sehon,  1. 

t;.  Shepard's  Estate,  186. 

V.  Ward,  1184. 

V.  Warner,  1203. 

V.  Wood,  1281a. 
Youngling  v.  Kohlkass,  1472. 
Youngs  i-.  Lee,  181,  184,  827,  831c,  832, 
832a,  979,  983. 

V.  Perry,  400. 
Youse  V.  McCreary,  749. 
Yowell  V.  Dodd,  406. 
Yowell  &  Williams  v.  Walker,  164. 


Zabriskei  v.  Spieknan,  752. 

Zahm  V.  First  Nat.  Bank,  1769. 

Zaloom  V.  Ganim,  1593. 

Zander  v.  New  York  Security  &  Trust 

Co.,  1706. 
Zapalac  v.  Zapp,  1338. 
Zeeler  v.  Jordan,  24,  26. 
Zeis  V.  Potter,  7266. 
Zelle  V.  Ger.  Sav.  Inst.,  1637. 
Zeller  v.  Jordan,  24,  26. 

V.  Leiter,  195a. 
Zellner  v.  Cleveland,  271. 
Zent  r.  Hart,  12156. 
Ziegfried  v.  Stein,  1290. 
Zielian   v.   Baltimore   Plate   Ice    Co., 

795a. 
Zilke  V.  Woodley,  23. 


^ABLE    OF   CASES 
References  are  to  paragraphs  marked  § 


exci 


Zimbleman  v.  Finnegan,  68a,  184,  185. 
Zimmer  v.  Chew,  11926,  1196,  1229. 
Zimmerman  v.  Adee,  80. 

V.  Anderson,  61. 

V.  Raster,  1316. 

V.  Rote,  1405,  1407,  1409. 
Zinc  V.  Dick,  814a,  815. 


Zollman  v.  Jackson  Trust  &  Savings 
Bank,  51a,  769a,  827. 

V.  San  Francisco,  318. 
Zollner  v.  Moffit,  959,  962,  969,  986, 

1052. 
Zuendt  v.  Doemer,  205. 
Zwinger  v.  Samuda.  1713. 


NEGOTIABLE  INSTRUMENTS 


NEGOTIABLE    INSTRUMENTS 


BOOK  I 

THE  MAKING    OF   THE   INSTRUMENT 
CHAPTEFl    I 

NATURE,  HISTORY,  AND  USES   OF  NEGOTIABLE  INSTRUMENTS 

SECTION   I 

NATURE,    ORIGIN,    AND    HISTOICV    OF    HILLS    AND    NOTES 

§  1.  An  instrument  is  called  ncKutiahle  when  the  loRai  title  to 
the  instrument  itself,  and  to  the  whole  amount  of  money  expressed 
upon  its  face,  may  be  transferred  from  one  to  another  by  indorse- 
ment and  delivery  by  the  holder,  or  by  delivery  only.  The  pecul- 
iarities which  attach  to  negotiable  paper  are  the  growth  of  time, 
and  were  acceded  for  the  benefit  of  trade. 

It  was  a  rule  of  the  common  law  of  England,  that  a  chose  in  ac- 
tion— by  which  is  meant  a  claim  which  the  holder  would  be  driven 
to  his  action  at  law  to  recover — could  not  be  assigned  to  a  stranger, 
our  forefathers  conceiving  that  if  claims  and  debts  could  be  assigned, 
''pretended  titles  might  be  granted  to  great  men,  whereby  right 
might  be  trodden  down  and  the  weak  oppressed,  which  the  common 
law  forbiddeth."  ^  The  first  relaxation  of  this  rule  was  made  in 
respect  to  bills  of  exchange,  and  was  gradually  extended  to  notes 
and  other  securities,  until  the  rule  itself  disappeared. 

But  while  all  choses  in  action  are  now  transferable,  the  negotiable 
instrument  is  the  only  species  which  carries  by  transfer  a  clear  title 
and  a  full  measure;  and  like  an  instrument  under  seal  imports  a  con- 

1.  Coke  Litt.  214a,  Chitty  on  BUls  {*7j,  9;  Edwards  on  Billa,  55. 
1 


2  NEGOTIABLE    INSTRUMENTS  §   1 

sideratioii.    It  has  therefore  three  peculiar  and  distinguishing  charac- 
teristics: 

First.  Respecting  thi-  title.  If  a  horse,  or  other  personal  chattel, 
or  a  nonnegotiable  instrument,  he  lost  or  stolen,  no  purchaser,  how- 
ever innocent  or  ignorant  of  the  loss  or  theft,  can  acquire  title  against 
the  true  owner,  who  may  at  any  place,  and  at  any  time,  identify  his 
property  and  reclaim  it.  But  if  a  neg(jtiable  instrument  be  lost  or 
stolen,  and  transferred  by  the  finder  thief  to  a  third  person  in  the 
usual  course  of  business,  before  maturity,  and  for  a  valuable  consider- 
ation, the  perso^i  so  accjuiring  it  may  hold  it  against  the  world. 

Second.  Respecting  the  amount.  If  a  bond  or  nonnegotiable 
note  be  assigned,  the  a.ssignee  steps  into  the  shoes  of  the  assignor, 
and  if  the  bond  or  note  Ikus  been  paitl,  or  is  subject  to  any  counter- 
claim or  set-off  against  the  original  maker,  they  attach  to  and  in- 
cumber it  into  whosesoever  hands  it  may  fall.  But  a  negotiable 
paper  carries  the  right  to  the  whole  amount  it  secures  on  its  face, 
and  is  subject  to  none  of  the  defenses  which  might  have  been  made 
between  the  original  or  intervening  parties,  against  anyone  who 
acquired  it  in  the  usual  course  of  business  before  maturity.  It  is 
a  circulating  credit  like  the  currency  of  the  country,  antl,  before 
maturity,  the  genuineness  ami  solvency  of  the  parties  are  alone  to 
be  considered  in  determining  its  value.  It  has  been  fitly  termed 
"a  courier  without  luggage."  - 

Third.  Respecting  the  consideration.  By  the  common  law,  an 
instrument  under  seal  im|K)rts  a  consideration,  by  virtue  of  the 
solemn  ceremony  of  its  execution;  and  no  other  nonnegotiable  instru- 
ment does.  A  bill  of  exchange,  however,  by  the  usages  of  merchants, 
also  prima  facie  imports  a  consideration ;  and  now  by  statute  promis- 
sory notes  of  a  certain  kind  are  placed  on  the  same  footing.  As  be- 
tween immediate  parties,  the  true  state  of  the  case  may  be  shown, 
and  the  presumption  of  consideration  rebutted.  But  when  a  bill  of 
exchange  or  negotiable  note  has  passed  to  a  bona  fide  holder  for  value, 
and  before  maturity,  no  want  or  failure  of  consideration  can  be 
shown.  Its  defects  perish  with  its  transfer;  while,  if  the  instrument 
be  not  a  bill  of  exchange  or  negotiable  note,  they  adhere  to  it  in 
whosesoever  hands  it  may  go. 


3 


2.  Overton  v.  Tyler,  3  Barr.  346,  Gibson,  C.  J.;  Brown  v.  First  Nat.  Bank, 
103  Ala.  123.  15  So.  435. 

3.  Young  V.  Sehon,  53  W.  Va.  127.  44  S.  E.  136,  62  L.  R.  A.  499,  97  .-Vm.  St. 
Rep.  070,  quoting  the  text. 


§§  la-3   NATURE,  ORIGIN,  AND  HISTORY  OF  BILLS  AND  NOTES       3 

§  la.  The  term  "negotiable,"  in  its  enlarged  signification,  is  used 
to  describe  any  wTitten  security  which  may  be  transferred  by  in- 
dorsement and  delivery,  or  by  deliver^'  merely,  so  as  to  vest  in  the 
indorsee  the  legal  title,  and  thus  enable  him  to  bring  a  suit  thereon 
in  his  owTi  name.  But  in  a  strictly  commercial  classification,  and  as 
the  term  is  twhnically  used,  it  applies  only  to  those  instruments 
which,  like  bills  of  exchange,  not  only  carrj-  the  legal  title  with  them 
by  indorsement,  or  deliven,',  but  carr>'  as  well,  when  transferred  before 
maturity,  the  right  of  the  transferee  to  demand  the  full  amounts 
which  their  faces  call  for.  '\\ssignable"  is  the  more  appropriate 
term  to  describe  bonds,  and  ordinary-  notes,  or  notes  of  hand  as  they 
are  most  commonly  called;  as  "negotiable"  is  the  more  fitting  term 
to  descril)e  the  peculiar  instnmients  of  conmierce.* 

§  2.  Bills  of  exchange  were  probably  the  first  instruments  for 
the  payment  of  money  that  were  accorded  a  negotiable  quality, 
though  promissor>'  notes,  being  simpler  in  form,  were  doubtless 
used  as  evidences  of  debt  before  bills  of  exchange  came  in  vogue 
among  merchants.  Certainly  these  two  securities  were  recognized  as 
negotiable  instruments  Ix'fore  any  other  paper  repres^^-ntatives  of 
money  or  property  passed  currently  from  hand  to  hand  in  like  manner 
as  money;  and  from  them,  as  fruitful  parents,  have  sprung  all  the 
varieties  of  negotiable  instruments  now  knov^Ti.  Of  bills  and  notes, 
therefore,  we  shall  first  speak,  and  after  they  have  been  sufficiently 
treated  of,  the  other  varieties  of  negotiable  instruments  will  receive 
due  attention. 

§  3.  As  to  the  origin  and  history  of  bills  and  notes. — The  numer- 
ous commentators  on  the  law  of  bills  of  exchange  and  promissor>- 
notes  have  generally  enriched  their  pages  \i-ith  the  results  of  their 
classic  and  antiquarian  researches  into  the  origin  and  history-  of  those 
instruments.  But  notwithstanding  the  number  and  the  diligence  of 
the  laborers  in  this  interesting  field  of  inquir\',  it  cannot  be  now 
stated,  with  any  degree  of  certainty,  by  whom  they  were  invented,  or 
when  they  were  first  used.  In  respect  to  bills  of  exchange,  it  is  said 
by  Pothier,  that  there  is  no  vestige  of  them  among  the  Romans,  or  of 
any  contract  of  exchange;  for  though  it  appears  that  Cicero  directed 
one  of  his  friends  at  Rome,  who  had  money  to  receive  at  Athens,  to 

4.  Odell  v.  Gray.  15  Mo.  342:  Interoaiional  Bank  v.  German  Bank,  71  Mo.  183; 
Cronin  v.  Patrick  Co..  4  Hughes.  529;  Provident  Tr.  Co.  v.  Mercer  Co.,  170  U.  S. 
e06,  IS  Sup.  Ct- Rep.  788,  text  died;  De  Haae  v.  Dibert.  17  C.  C  A.  79,  70  Fed.  227. 


4  NEGOTIABLE    INSTRUMENTS  §  3 

cause  it  to  be  paid  to  his  son  at  that  pUivv,  ami  that  friend  accordingly 
wrote  to  one  of  his  debtors  at  Athens,  and  ordered  him  to  pay  a  sum 
of  money  to  Cicero's  son,  yet,  it  is  observed,  that  this  mode  amounted 
to  nothing  more  than  a  mere  order  or  mandate,  and  wiuj  not  that 
species  of  negotiation  which  is  conducted  through  the  medium  of  a 
bill  of  exchange.^ 

Chancellor  Kent  seems  to  think  that  a  pa.ssage  in  one  of  the  plead- 
ings of  Isocrates  indicates  the  use  of  bills  of  exchange  amongst  tlui 
Greeks,"  but  Story  considers  that  the  transaction  referred  to  was 
little  more  than  the  very  case  alluded  to  by  Cicero,  and  put  in  the 
Roman  law.'  Sir  William  Blackstone,  remarking  upon  this  subject, 
says:  "This  method  is  said  to  have  been  brought  into  general  use  by 
the  Jews  and  Lombards  when  banished  for  their  usury  and  other 
vices,  in  order  the  more  easily  to  draw  their  effects  out  of  France  and 
England  into  those  countries  in  which  they  had  chosen  to  reside. 
But  the  invention  of  it  wa.s  a  little  earlier;  for  the  Jews  were  banished 
out  of  (Juienne  in  1287,  and  out  of  England  in  1200;  and  in  1230  the 
use  of  paper  credit  was  introduced  into  the  Mogul  Empire  in  China."  ** 
And  Chitty  says:  "()th(>r  a\ithors  have  attributed  the  invention  to 
the  Florentines,  when,  being  driven  out  of  their  country  by  the  faction 
of  the  Gebelings,  they  estal)lished  themselves  at  Lyons  and  other 
towns.  On  the  whole,  how(>ver,  ther(>  is  no  certainty  on  the  subject, 
though  it  seems  cl(>ar  foreign  bills  were  in  use  in  the  fourteenth  cen- 
tury, as  appears  from  a  Venetian  law  of  that  period ;  and  an  inference 
drawn  from  the  statute  5  Rich.  II,  stat.  1,  chap.  2,  warrants  the  con- 
clusion that  foreign  bills  were  introduced  into  this  country  previously 
to  the  year  138L"  ^  Macpherson,  in  his  "Annals  of  Commerce," 
speaks  of  letters  of  credit  being  employed  by  King  John  to  procure 
advancements  to  his  agents  in  Rome  as  early  as  1202.'°  And  there  is 
reason  to  believe  that  bills  of  exchange  were  known  in  England  as 
early  as  L307,  since  in  that  year  King  Edward  I  ordered  certain 
money  collected  in  England  for  the  Pope,  not  to  be  remitted  to  him 
in  coin  or  bullion,  but  by  way  of  exchange  {per  viam  Camhii)}^ 


5.  Pothier  de  Change,  n.  6;  Story  on  Bills,  §  6;  1  Bell  Com.  b.  3,  c.  2,  §  4 
,  386. 

6.  3  Kent  Com.,  Lect.  44. 

7.  Story  on  Bills,  §  6,  note  4. 

8.  2  Bl.  Com.  467. 

9.  Chitty  on  Bills  [*11],  16. 

10.  Page  181,  quoted  in  1  Parsons  on  Notes  and  Bills,  4. 

11.  Anderson's  History  of  Commerce,  vol.  I,  c.  361. 


§§  4,  o     NATURE,  ORIGIN,  AND  HISTORY  OF  BILLS  AND  NOTES        5 

§  4.  The  term  "bill  of  exchange,"  derived  from  the  French  phrase 
''billet  de  change,"  is  suggestive  of  the  use  which  it  subserves— that  of 
perfecting  a  previous  distinct  contract  of  exchange  or  bargain  betwcH'u 
A.  and  B.  at  one  place,  that  A.  would  cause  money  to  be  paid  to  B.  or 
his  assign  at  another  place,  by  C,  a  debtor  to  A.,  or  supplied  by  him 
with  value  to  the  amount. ^^  jhus,  if  A.  and  B.  are  in  England,  and 
C.  in  Jamaica  be  indebted  to  A.  one  thousand  pounds,  and  IV  be 
going  to  Jamaica,  B.  may  pay  A.  this  thousand  pounds  and  take  a  bill 
of  exchange  drawn  by  A.  in  England  upon  C.  in  Jamaica,  and  collect 
the  amount  from  C.  when  he  comes  thither;  and  thereby  A.  receives 
his  debt,  at  any  distance  of  place,  by  transferring  it  to  B.,  and  B.  re- 
ceives back  his  money  at  the  end  of  his  journey— and  the  i)art  ics  arc 
mutually  benefited  by  avoiding  the  dangers  of  loss  or  robbery  which 
would  attend  the  actual  transmission  of  funds  to  and  fro.'"* 

From  this  primitive  use,  bills  of  exchange  became,  in  the  expansion 
of  commerce,  the  evidences  of  valuable  i)roperty,  and  in  a  great 
measure  the  equivalent  of  money,  enlarging  the  (•ai)ital  stock  of 
wealth  in  circulation,  and  thereby  facilitating  and  increasing  the; 
operations  of  trade  between  communities  and  nations.'" 

§  5.  Promissory  notes  have  as  obscure  an  origin  as  bills  of  ex- 
change.—There  is  no  doubt  that  they   were  in   use  among  the 
Romans,  1^  but  they  seem  never  to  have  acquired  thos<;  negotiable 
qualities  which  now  impart  to  them  their  chief  value  a.s  instruments 
of  commerce.    They  were  in  use  upon  the  continent  of  Europe  before 
their  introduction  into  England,  where  they  first  came  in  vogue  about 
the  middle  of  the  seventeenth  century,'^  although  it  has  Jjeen  thought 
that  they  possess  a  more  recent  origin.^'     In  the  earlier  refxjrts  the 
terras  "bill"  and  "note"  appear  to  have  Vjeen  usf^J  indiscriminately, 
and  it  is  difl&cult  to  determine  in  many  cases  whether  the  particular 
suit  was  brought  upon  the  one  instrument  or  the  other."    It  ha.s  been 
a  much  debated  question  whether  or  not  the  common  law  of  England 
recognized  the  negotiability  of  promlsson*'  notes;  and  most  vigorously 
was  the  negative  advocated  by  Lord  Holt,  who  deelare^J  that  the 
effort  to  place  them  on  the  same  footing  as  bills  of  exchange  "prr>- 

12.  Chitty  on  Bilk,  1. 

IS.  2  Bl.  Com.  467. 

14.  Gibson  v.  Minet,  1  H.  Bl.  618. 

15.  Stor>'  on  Notes,  §  5. 

16.  Stor>'  on  Notes,  §  6. 

IT.   Buller  v.  Crips,  6  Mod.  29. 

la.  Grant  v.  Vaujchan.  3  Butt.  1525. 


6  NEGOTIABLE    INSTRUMENTS  $  5 

ctM'dcd  from  the  ohstinucy  and  oijiruonativciirss  of  the  merchants  wlio 
were  endeavoring  to  set  the  law  of  Lombard  street  al)()ve  the  law  of 
Westminster  Hall."  '"  This  wmtroversy  was  terminated  by  the  pass- 
age of  the  statute  3  and  4  Anne,  chap.  0  [170')]  (made  jierpetiial  hy 
the  statute  7  Anne,  chap.  25),  which  made  j)romissory  notes  "assign- 
able or  indorsahle  over  in  the  .same  manner  a.s  inland  hills  of  exchange 
are,  or  may  be  according  to  the  custom  of  merchants."  ^ 

This  statute  has  been  adopted  in  .some  of  tiie  States  of  the  I'nited 
States,  or  in  its  lieu  other  statutes  preserii)ing  the  criteria  and  condi- 
tions t)f  negotiability."-'  It  is  not  therefore  at  this  time  a  fjuestion  of 
nmch  practical  consequence  whether  at  common  law  promi.s.sory  notes 
wen^  negotiable*  or  not;  though  occjusionally  the  point  is  presented  in 
States  where  the  statute  law  on  the  subject  fixes  other  criteria  of 
negotiability  than  tho.se  established  by  the  statute  of  Anne.  By 
som(!  authorities  it  is  contended  that  the  statute  of  Anne  was  only 
declaratory  of  their  then  existing  status,-'-  while  by  others  the  result 
of  Lord  Holt's  reasoning  is  concurred  in.-^    Profes.sor  Parsons  con- 

19.  Clcrkc  V.  Murfm,  2  I>il.  Riiym.  757  (1703),  1  Salk.  129,  3C.:i;  Cliitty,  Jr., 
oil  Hills,  219. 

20.  Tin-  statute  of  .\nnc  (.'{  it  4  .Vnno,  rluip.  9)  proviilcs:  "That  :ili  notes  in 
writing;  tli:it  shall  he  niatle  and  siKni'<l  i)y  any  |)erson,  etr.,  wherein*  such  per- 
son, etc.,  shall  promise  to  pay  to  any  other  person,  his,  hor,  or  their  order,  or 
unto  bearer,  any  sum  of  money  mentioned  in  such  note,  shall  be  taken  and  (con- 
strued to  be,  by  virtue  thereof,  due  and  payable  to  any  such  person,  etc.,  to  whom 
the  same  is  made  ]>ayable;  and  also  every  such  note  paj'able  to  any  person,  etc., 
his,  her,  or  their  onhT,  shall  be  lus-si^nable  or  indorsable  over,  in  the  .same  manner 
as  inland  bills  of  exchange  are  or  may  be,  according  to  the  custom  of  merchants; 
and  that  the  p(>rsons,  etc.,  to  whom  such  .sum  of  money  is  or  .shall  be  by  such  note 
made  payable,  shall  and  may  maintain  an  action  for  the  same,  in  such  matmer  as 
he,  she,  or  they,  mi^ht  do  upon  anj'  inland  bill  of  exchange,  made  or  drawn  ac- 
cording to  the  custom  of  merchants,  against  the  person,  etc.,  who  signed  the  same; 
and  that  any  person,  etc.,  to  whom  such  note  that  is  made  payable  to  any  person, 
etc.,  his,  her,  or  their  order,  is  indorsed  or  a.ssignefl,  or  the  money  therein  men- 
tioned ordered  to  be  jiaid  by  indorsement  thereon,  shall  and  may  maintain  his, 
her,  or  their  action  for  such  sum  of  money,  either  against  the  p(>rson,  etc.,  who 
signed  the  note,  or  against  any  of  the  persons  that  indorsed  the  same,  in  like 
manner  as  in  cases  of  inland  bills  of  exchange." 

21.  Cowan  v.  Hallack,  9  Colo.  .579,  citing  the  text;  Pool  v.  Anderson,  IK)  Ind. 
92,  18  N.  E.  44r).    See  post,  804. 

22.  Irvin  v.  Maury,  1  Mo.  194;  Dunn  v.  Adams,  1  Ala.  .527.  See  Edwards 
on  Bills,  51,  52;  1  Parsons  on  Notes  and  Bills,  10-13.  There  is  a  very  learned 
and  able  dissertation  on  the  progress  of  the  Lex  Mercatoria  and  the  negotia- 
bility of  promi.ssory  notes  in  1  Cranch  S.  C.  II.,  appendix,  note  A,  368. 

23.  Caton  v.  Lcmox,  5  Rand.  31;  Davis  v.  Miller,  14  Gratt.  18;  Norton  v. 
Rose,  2  Wash.  (Va.)  233;  First  Nat.  Bank  v.  Hunt,  25  Mo.  App.  170. 


§  6  FOREIGN   AND    INLAND    BILLS  7 

eludes  that  "these  notes  were,  at  the  time  the  statute  was  made, 
negotiable  by  the  law  merchant  of  England,  which  was  and  is  as 
much  a  part  of  the  law  of  England  as — to  use  the  strong  language  of 
Christian — the  laws  relating  to  marriage  and  murder."^^ 


SECTION   II 

FOREIGN    AND    INLAND    BILLS 

§  6.  Bills  of  exchange  are  either  foreign  or  inland, — foreign 
when  drawn  in  one  State  or  country,  and  made  payabU'  in  another 
State  or  country;-'*  inland  when  drawn,  and  made  payable,  in  the 
same  State  or  country.-*'  Inland  bills  are  of  later  origin  than  foreign 
bills,  not  having  been  in  use  in  luigland  at  a  much  earlier  jjcriod  than 
the  reign  of  Charles  II.'-"  The  advantages  derived  from  employing 
foreign  bills  for  remittance  of  money  induced  merchants  universally 
to  adopt  them,  and  originally  deriving  their  sanction  from  the  custom 
of  merchants,  they  were  subsccjuently  recognized  and  approved  by 
the  judicial  tribunals,  and  the  engagements  of  the  various  parties  to 
them  enforced.^  Inland  bills,  like  them,  were  at  first  more  restricted 
in  their  operation  than  at  present,  for  it  was  deemed  essential  to  their 
validity  that  a  special  custom  f(jr  the  drawing  and  accepting  them 
shoukl  exist  between  the  towns  in  which  the  drawer  and  acceptor 
lived;  or  if  they  lived  in  the  same  town,  that  such  a  custom  should 
exist  therein.-"-'     .\t  first,  also,  effect  w;is  only  given  to  tin;  custom 

24.  1  Parsons  on  Notes  and  Bills,  13. 

25.  r-.ray  Tie  ALiimhor  Co.  v.  Farmers'  Rank,  100  Ky.  004,  60  S.  W.  .5.37. 

26.  .Morrisf)n  v.  Farmers'  ite.  Hank,  9  Okla.  097,  00  Pae.  273.  An  instrument 
made  in  one  State  direetinR  a  person  in  another  State  to  pay  a  certain  amount 
twelve  months  after  date,  and  charge  to  the  account  of  the  drawer,  is  to  be  re- 
garded not  as  a  promi.s.sory  note,  but  as  a  foreign  bill  of  exchange.  Johnson 
County  Sav.  Bank  v.  Kramer,  42  Ind.  App.  54.S,  K6  N.  E.  84  (1908).  Where  a  note 
is  made  in  this  State,  payable  at  a  specifiwl  bank,  but  not  naming  the  State  in 
which  the  bank  is  .situatcni,  it  wiU  be  presumwl,  the  contrary  not  appearing  on  the 
face  of  the  note,  that  the  bank  is  situated  in  this  State,  and  is  negotiable  as  an  in- 
land bill  of  exchange.    Collins  v.  Frost,  54  Ind.  245. 

27.  Chitty  on  Bills  [*n\,  16. 

28.  Chitty  on  Bills  [*11],  16;  Martin  v.  Boure,  Cro.  Jac.  6  (1602);  Oaste  v. 
Taylor,  Cro.  Jac.  306  (1613);  Hussey  v.  Jacob,  Ld.  Raym.  87  (1696);  Chitty,  Jr., 
157,  158,  189. 

29.  Buller  v.  Cripps,  6  Mod.  29  (1704);  Pinkney  v.  Hall,  Ld.  Raym.  175;  Chitty 
on  Bills  [*11,  121,  ItJ;  Chitty,  Jr.,  222. 


8  NEUOTlAliLE    INSTRUMENTS  §§  7-9 

when  the  parties  were  merchants,  though  afterward  extended,  as  in 
the  case  of  forciKu  l)ills,  to  all  persons  whether  traders  or  not.^ 

Ufulcr  Neguliahlf  Inslruminl  .stdtnte. — The  N«'j>;otial)le  Instrument 
statute  defines  inhind  and  foreign  bills  of  exchange.^' 

§  7.  The  chief  difference  between  foreign  and  inland  bills  is  this: 
that  the  former  must  be  protested  in  order  to  charge  the  drawer, 
while  the  latter  nee<l  not  be.^-  But  there  are  other  differences  im- 
portant to  be  observed.  Every  contract,  as  to  its  valiility,  nature, 
interpretation,  and  effect,  is  governed  by  the  laws  (jf  the  place  where 
it  is  made,  unless  it  is  to  be  performed  in  another  place,  in  which  case 
it  is  governed  by  its  laws;  and  as  the  drawer,  acceptor,  and  each 
indorser  is  a  several  and  distinct  contracting  party,  his  liabilities  are 
to  be  ascertained  by  the  law  of  the  place  where  his  engagement  is  to 
be  i)erformed.  This  subject,  and  also  the  interesting  questions  which 
.arise  when  a  bill  or  note  is  signeti  or  ilated  in  one  place  and  delivered 
in  another,  will  be  discussed  elsewhere.^' 

§  8.  What  bills  are  deemed  foreign  in  England. — In  England, 
whence  comes  the  distinction  between  foreign  and  inland  bills,  a 
bill  drawn  in  Ireland  and  payable  in  England  is  deemed  a  foreign 
bill.^^  And  where  a  bill  was  drawn  in  London  upon  a  merchant  in 
Brussels,  payable  to  the  drawer's  order  in  London,  it  was  held  an 
inland  bill,  Bolland,  B.,  saying:  "An  inland  bill  is  a  bill  drawn  in  and 
payable  in  Great  Britain,  wliich  this  bill  is."  ^^ 

§  9.  States  foreign  as  to  each  other. — There  is  no  doubt  that  the 
several  States  of  the  United  States  are  foreign  as  to  each  other;  for 
though  in  the  aggregate  they  form  a  confederated  government,  yet 
the  several  States  retain  (theoretically)  their  individual  sovereignties, 
and,  with  respect  to  their  municipal  regulations,  are  foreign  to  each 
other. ^^    Thus,  if  a  drawer  and  drawee  reside  in  Kentucky,  and  the 

30.  Bromwick  v.  Lloyd,  2  Lutw.  1585;  Chitty,  Jr.,  193;  Sarsfield  v.  With- 
erly,  Carth.  82;  Chitty  on  Bills  [*11,  12],  16. 

31.  Appendix,  sec.  129.  And  see  Bank  of  Laddonia  v.  Bright-Coy  Commission 
Co.  (Mo.  App.),  120  S.  W.  648. 

32.  See  vol.  II,  chapter  XXVIII,  on  Protest,  §  926  et  seq. 

33.  See  chapter  XXVII,  on  the  Conflict  of  Laws,  §  868  et  seq. 

34.  Mahoney  v.  Ashlin,  2  B.  &  Ad.  478. 

35.  Amner  v.  Clark,  2  Cromp.,  M.  &  R.  468. 

36.  Armstrong  v.  American  Ex.  Nat.  Bank,  133  U.  S.  433;  Life  Ins.  Co.  v. 
Pendleton,  112  U.  S.  696;  Joseph  v.  Salomon,  19  Fla.  632,  citing  the  text;  Warder 


§  10  FOREIGN    AND    INLAND   BILLS  0 

bill  be  payable  in  New  Orleans,  Louisiana,  it  is  a  foreign  bill ;  ^^ 
though  if  it  be  drawn  in  Kentucky  on  a  New  Orleans  merchant,  and 
be  payable  in  Kentucky,  it  would  be  inland.^ 

§  10.  Rules  of  decision  of  Federal  courts. — In  the  Federal 
courts  of  the  United  States,  the  decisions  are  sometimes  in  con- 
formity with  those  of  the  State  courts  of  last  resort  in  respect  to 
the  liabilities  of  parties  to  bills  and  notes,  but  not  uniformly.  The 
thirty-fourth  section  of  the  Judiciary  Act  of  1789  provides  that  "the 
laws  of  the  several  States,  except  where  the  Constitution,  treaties, 
or  statutes  of  the  United  States  shall  otherwise  require  or  provide, 
shall  be  regarded  as  rules  of  decision  in  trials  at  common  law,  in  the 
courts  of  the  United  States,  in  cases  where  they  apply."  But  this 
section  has  been  held  to  be  limited  in  its  application  to  the  laws  of  the 
several  States  of  a  strictly  local  character,  that  is  to  say,  to  the  posi- 
tive statutes  of  the  States,  and  their  interpretation  by  the  local  tribu- 
nals, and  the  rights  and  titles  to  things  having  a  permanent  locality, 
such  as  real  estate,  and  not  to  extend  to  questions  of  general  com- 
mercial law.  Therefore  where  any  controversy  arises  as  to  the  lia- 
bility of  a  party  to  a  bill  of  exchange,  promissory  note,  or  other 
negotiable  paper,  in  one  of  the  Federal  courts  of  the  United  States, 
which  is  not  determined  by  the  positive  words  of  a  State  statute,  or 
by  its  meaning  as  construed  by  the  State  courts,  the  Federal  courts 
will  apply  to  its  solution  their  conception  of  the  general  principles  of 
the  law  merchant,  regardless  of  any  local  decision.'^    The  rule  that  a 


V.  Arell,  2  Wash.  (Va.)  298;  Brown  v.  Ferguson,  4  Leigh,  37;  Buckner  v.  Fin- 
ley,  2  Pet.  586;  Lonsdale  v.  Brown,  4  Wash.  C.  C.  86,  153;  Chenowith  v.  Cham- 
berlin,  6  B.  Mon.  60;  Duncan  v.  Course,  3  Const.  R.  (So.  Car.)  100;  State  Bank 
V.  Hayes,  3  Ind.  400;  Warren  v.  Coombs,  20  Me.  139;  Ticonic  Bank  v.  Stackpole, 
41  Me.  302;  Phcrnix  Bank  v.  Hussey,  12  Pick.  483;  Carter  v.  Union  Bank,  7 
Huraphr.  548;  Carter  v.  Burley,  9  N.  H.  558;  Wells  v.  Whitehead,  15  Wend. 
527;  Todd  v.  Neal's  Admr.,  49  Ala.  266;  Donegan  v.  Wood,  49  Ala.  242.  Contra, 
Miller  v.  Hackley,  5  Johns.  375,  Vanness,  J. 

37.  Buckner  v.  Finley,  2  Pet.  586. 

38.  Amner  v.  Clark,  2  Cromp.,  M.  &  R.  468.  If  a  draft  is  drawn  on  a  resident 
of  a  State  and  payable  within  that  State  it  is  an  inland  bill  of  exchange  notwith- 
standing the  fact  that  the  drawer  hves  in  another  State  and  the  draft  was  ac- 
tually drawn  in  the  latter.    Sylvester  v.  Crohan,  63  Hun,  509,  IS  N.  Y.  Supp.  546. 

39.  Swift  V.  Tyson,  16  Pet.  1,  Story,  J.,  saying:  "We  have  not  now  the  sHghtest 
difficulty  in  holding  that  this  section,  upon  its  true  intendments  and  con.struc- 
tion,  is  strictly  limited  to  local  statutes  and  local  usages  of  the  character  before 
stated,  and  does  not  extend  to  contracts  and  other  instruments  of  a  commercial 
nature,  the  true  interpretation  and  effect  whereof  are  to  be  sought,  not  in  the 


10  NEGOTIABLE    INSTRUMENTS  §   10 

Federal  court  will  not  follow  the  law  of  the  State  in  which  the  court 
is  sitting,  unless  the  State  law  is  statutory,  has  boon  appliod  on  the 
questions  whether  a  certificate  of  deposit  is  a  nogotiahle  instrument,"' 
whether  a  note  containing  a  stipulation  for  an  attorney's  fee  is 
negotiable  *^  and  may  be  enforccnl,''-  as  to  what  is  sufficient  to  put  the 
purchaser  of  negotiable  paper  on  notice  of  fact.s  that  do{)rivo  him  of 
the  character  of  an  innocent  purchjiser,'*^  as  to  the  obligation  iiuurrod 
by  tho  indorsoment  of  a  noto,^'  and  as  to  the  manner  of  giving  and 
the  sufficiency  of  a  notice  of  dishonor.''' 

Effect  of  Negotiable  Instrument  statute. — In  those  States,  therefore, 
which  have  adopted  the  Negotiable  Instrument  statut(\  the  Federal 
courts  will  apply  the  statutory  provisions  and  the  construction  which 
may  have  been  given  thereto  by  the  highest  court  of  the  State,  but 
when  such  State  court  has  not  construed  the  statute,  the  Federal  court 
will  construe  it  for  its(>lf.'''' 

decisions  of  the  looiil  tribunals,  hut  in  the  Kcneral  principlos  and  dortrines  of  corn- 
morcial  jurispruilencc.  Undoubtedly,  the  decisions  of  the  local  tribunals  upon 
Buch  subjects  are  entitlc<l  to  and  will  receive  the  most  deliberate  attention  and 
respect  of  this  court;  but  they  cannot  furnish  positive  rules,  or  conclusive  author- 
ity, by  which  our  own  judgments  are  to  be  bound  up  and  povemed.  The  law 
respecting  negotiable  instruments  may  be  truly  declared,  in  the  language  of 
Cicero,  adopted  by  Lord  Mansfield  in  Luke  v.  Lyde,  2  Burr.  882,  887,  to  be,  in 
a  great  measure,  not  the  law  of  a  single  country  only,  but  of  the  commercial  world: 
'Non  eril  alia  lex  Roma;,  alia  Athcnis,  alia  nunc,  alia  posthac,  sed  el  apiul  omnes 
gentes,  el  omni  tern-pore,  una  eademque  lex  oblinebit.'"  Mercer  County  v.  Ilackett, 
1  Wall.  96;  Township  of  Pine  Grove  v.  Talcott,  19  Wall.  607;  Gelpcke  v.  Du- 
buque, 1  Wall.  175;  Gates  v.  National  Bank,  100  U.  S.  (10  Otto)  239;  Railroad  Co. 
V.  National  Bank,  102  U.  S.  (12  Otto)  14;  Farmers'  Nat.  Bank  v.  Sutton  Mfg. 
Co.,  3  C.  C.  A.  1,  52  Fed.  191.  Where,  in  an  action  on  promissory  notes  issued 
by  a  city,  the  defense  was  raised  that  the  notes  were  invalid  because  of  an  over- 
issue, the  question  is  not  one  purely  of  local  law,  but  when  the  facts  are  not  ex- 
hibited on  the  face  of  the  notes  and  were  not  known  to  the  holders  at  the  time 
the  title  to  them  was  acquired,  the  local  decisions  need  not  be  examined.  Citizens' 
Savings  Bank  v.  Newburyport,  169  Fed.  766.  See  on  this  subject  article  in 
American  Law  Review  for  April,  1875,  and  post,  §§  1525,  1526. 

40.  Forrest  v.  Safety  Banking  &  Trust  Co.,  174  Fed.  345;  Bank  of  Saginaw 
V.  Title  &  Trust  Co.  of  Western  Pennsylvania,  105  Fed.  491. 

41.  State  Nat.  Bank  v.  Cudahy  Packing  Co.,  126  Fed.  543;  affirmed  134 
Fed.  538. 

42.  The  Avolan,  169  Fed.  696. 

43.  Union  Nat.  Bank  v.  Neill,  149  Fed.  711,  10  L.  R.  A.  (N.  S.)  426. 

44.  Northern  Nat.  Bank  v.  Hooper,  98  Fed.  935. 

45.  Gurnsey  v.  Imperial  Bank  of  Canada,  188  Fed.  300. 

46.  Coosley  v.  Reynolds,  196  Fed.  Rep.  640;  Forrest  v.  Safety  Banking  &  Trust 
Co.,  174  Fed.  345;  In  re  Hopper-Morgan  Co.,  154  Fed.  249. 


§   10a  FOREIGN    AND    INLAND    BILLS  11 

§  10a.  Federal  jurisdiction  in  cases  of  bills  of  exchange  and 
promissory  notes. — By  the  Federal  Judiciary  Act  of  1789  it  was 
provided  that  no  district  or  circuit  court  shall  "have  cognizance  of  any 
suit  to  recover  the  contents  of  any  promissory  note,  or  other  chose  in 
action  in  favor  of  an  assignee,  unless  a  suit  might  have  been  prosecuted 
in  such  court  to  recover  the  said  contents,  if  no  assignment  had  been 
made,  except  in  cases  of  foreign  bills  of  exchange."  ^^  According  to 
the  established  construction  of  this  act  the  right  of  the  holder  of  a 
promissory  note,  payable  to  a  particular  person  or  })earer,  to  sue  in 
his  own  name,  does  not  depend  upon  the  citizenship  of  the  named 
payee,  or  of  the  first,  or  of  any  previous  holder;  because  in  all  such 
cases  the  title  passed  by  delivery  and  not  by  virtue  of  any  assign- 
ment.'*^ By  act  of  Congress  of  March  3,  1875,  it  is  provided:  "Nor 
shall  any  circuit  or  district  court  have  cognizance  of  any  suit  founded 
on  contract  in  favor  of  an  assignee,  unless  a  suit  might  have  been 
prosecuted  to  recover  thereon  if  no  assignment  had  been  made,  except 
in  cases  of  promissory  notes  negotiable  by  the  law  merchant  and  bills 
of  exchange."  *^ 

The  restriction  was  thus  removed  as  to  "promissory  notes  nego- 
tiable by  the  law  merchant,"  and  jurisdiction  in  such  suits  made  to 
depend  upon  the  citizenship  of  the  parties  as  in  other  cases.^° 

This  provision  of  the  statute  has  been  held  not  to  apply  in  cases 
removed  from  the  State  courts  untler  the  removal  acts,  but  to  the 
original  jurisdiction  of  the  Federal  courts.^^ 

In  some  cases  it  has  been  held  that  the  terms  "promissory  notes 
negotiabh;  by  the  law  merchant"  embrace  such  instruments  as 
would  be  negotiable  according  to  the  general  principles  of  the  law 
merchant,  which  was  a  part  of  the  common  law,^^  while  others  con- 
sider that  they  are  confined  to  those  instruments  which  are  nego- 


47.  See  §  11  of  Act  of  Sept.  24,  1789,  chap.  20.  Thompson  v.  Perrine,  106 
U.  S.  589;  Thomson  v.  Lee  County,  3  Wall.  327;  Bushnell  v.  Kennedy,  9  Wall. 
387;  City  of  Lexington  v.  Butler,  14  Wall.  282;  Cooper  v.  Town  of  Thompson, 
13  Blatchf.  434;  Coe  v.  Cayuga  Lake  R.  Co.,  19  Blatchf.  522. 

48.  Bullard  v.  Bell,  1  Mason,  243;  Bank  of  Ky.  v.  Wooster,  2  Pet.  318. 

49.  §  1,  chap.  137,  Supp.  to  Revised  Statutes  of  the  U.  S.,  p.  174. 

50.  New  Orleans  v.  Quinlan,  173  U.  S.  192,  19  Sup.  Ct.  Rep.  329;  Treadway 
V.  Sanger,  107  U.  S.  323,  2  Sup.  Ct.  Rep.  691. 

61.  Delaware  County  v.  Diebold  &  Co.,  133  U.  S.  473;  City  of  Lexington  v. 
Butler,  14  Wall.  283. 

52.  Windsor  Sav.  Bank  v.  McMahon,  38  Fed.  283;  Beverley  v.  Davidson  Co., 
2  Flipp.  507;  Gloucester  Ins.  Co.  v.  Younger,  2  Curtis,  338;  Adams  v.  Addington, 
16  Fed.  89. 


12  Negotiable  instruments  §  lOa 

liable  according  to  the  local  law,  that  is,  as  said  by  Gresham,  J.: 
"Notes  having  the  qualities  of  promissory  notes  negotiable  by  the 
law  merchant,  namely,  notes  which,  in  the  hantis  of  a  bona  fide  pur- 
chaser for  value  before  maturity,  were  subject  to  no  equities  in  favor 
of  the  maker."  '^^  This  latter  view  seems  to  us  the  correct  one.  An 
instrument  cannot  be  negotiable  when  nuule  in  a  State  whose  statutes 
declare  it  otherwise.  And  if  the  broad  interpretation  is  given  to  the 
words  "negotiable  by  the  law  merchant,"  the  result  in  some  cases 
would  be  that  suit  would  be  maintainable  in  a  Federal  court  because 
the  instrument  was  in  a  form  negotiable  "l)y  the  law  mc^rchant" 
when  negotiable  qualities  under  State  statutes  did  not  exist.  The 
intent  of  the  statute  was  doubtless  to  give  jurisdiction  in  cases  of 
negotiable  instruments;  and  this  would  be  ousted  in  some  cases  where 
the  instrument  by  State  statute  was  made  negotiable,  though  not  so 
by  the  law  merchant  inilependent  tiiereof.  The  statute  would  seem 
to  have  contemplated  substance  rather  than  form,  and  the  construc- 
tion given  it  in  the  cases  which  are  approvingly  cited,  enforces  this 
view. 

By  act  of  Congress  of  March  3,  1887,  it  is  declared:  "Nor  shall  any 
circuit  or  district  court  have  cognizance  of  any  suit,  except  upon 
foreign  bills  of  exchange,  to  recover  the  contents  of  any  promissory 
note,  or  other  chose  in  action,  in  favor  of  an  assignee,  or  of  any  sub- 
sequent holder,  if  such  instrument  be  payable  to  bearer  and  be  not 
made  by  any  corporation,  unless  such  suit  might  have  been  prose- 
cuted in  such  court  to  recover  the  said  contents  if  no  assignment  or 
transfer  had  been  made.^'*  This  statute  has  been  held  to  prohibit 
suits  in  the  Federal  courts  in  all  cases,  other  grounds  of  jurisdiction 
being  wanting,  except  suits  on  foreign  bills  of  exchange,  and  except 
suits  on  promissory  notes  made  payable  to  bearer  and  executed  by  a 
corporation.^^ 


53.  Gregg  v.  Weston,  7  Biss.  360;  Porter  v.  City  of  Janesville,  3  Fed.  317. 

64.  U.  S.  Stat,  at  Large,  188&-1887,  p.  552,  chap.  373;  New  Orleans  v.  Quin- 
lan,  173  U.  S.  192,  19  S.  Ct.  329.  And  see  Act  of  August  13,  1888,  chap.  866,  25 
Stat.  433.  The  act  of  March  3,  1911,  sec.  24  (1)  in  part  provides:  "No  district 
court  shall  have  cognizance  of  any  suit  (except  upon  foreign  bills  of  exchange)  to 
recover  upon  any  promissory  note  or  other  chose  in  action  in  favor  of  any  as- 
signee, or  of  any  subsequent  holder  if  such  instrument  be  payable  to  bearer 
and  be  not  made  by  any  corporation,  unless  such  suit  might  have  been  pros- 
ecuted in  such  court  to  recover  upon  said  note  or  other  chose  in  action  if  no 
assignment  had  been  made." 

55.  Wilson  v.  Knox  County,  43  Fed.  481,  a  county  warrant.  See  Newgass  v. 
New  Orleans,  33  Fed.  196;  Rollins  v.  Chaffee  County,  34  Fed.  91;  New  Orleans 


§§  11,  12  FOREIGN    AND    INLAND   BILLS  13 

§  11.  The  face  of  the  bill  does  not  always  disclose  its  character. — 

Whether  or  not  a  bill  is  foreign  or  inland,  and  by  what  laws  the 
liabilities  of  parties  to  bills  and  notes  are  to  be  governed,  may  often 
be  not  sufficiently  disclosed  by  the  date  of  place  on  the  instrument 
itself,  as  the  courts  of  the  several  States,  as  of  different  countries, 
upon  settled  principles,  do  not  take  judicial  notice  of  the  divisions  of 
foreign  States  into  counties,  towns,  and  cities.  Thus,  in  England, 
the  averment  that  a  bill  was  drawn  in  Dublin  was  not  considered 
equivalent  to  averring  that  it  was  an  Irish  bill.  Abbott,  C.  J.,  said: 
"The  framer  of  the  declaration  has  not  said  that  Dublin  is  in  Ireland, 
and  we  cannot  assume  it,  whatever  may  be  our  belief  on  the  subject; " 
and  Bailey,  J.,  said:  "There  may  be  a  Dublin  in  America  or  Scot- 
land." ^  So  the  Supreme  Court  of  Texas  have  held  that  they  could 
not  judicially  know  that  a  note  payable  in  New  Orleans  was  payable 
in  Louisiana,^^  or  a  bill  dated  there  was  drawTi  in  Louisiana;  ^^  or  that 
a  note  dated  "Philadelphia"  was  made  in  Pennsylvania.^^  So  in 
Missouri,  as  to  New  Orleans,  the  court  would  not  take  judicial  notice 
that  a  bill  dated  there  was  foreign.^ 

§  12.  It  may  be  difficult  sometimes  to  determine  whether  a  bill  is 
inland  or  foreign. — Thus,  suppose  a  Boston  merchant,  temporarily  in 
the  city  of  New  York,  were  to  draw  his  bill  on  a  New  York  merchant, 
payable  in  New  York,  but  were  to  date  it  in  Boston,  would  it  be  an 
inland  or  a  foreign  bill?  In  relation  to  innocent  third  parties,  who 
have  taken  the  bill  in  the  belief  that  it  was  what  its  face  imported,  it 
would  undoubtedly  be  held  foreign.^^  "As  between  the  original 
parties  and  others  having  notice  of  the  circumstances  under  which  the 
l)ill  was  dra^vn,  the  question  would  be  more  doubtful;  but  we  think 
it  would,  even  then,  be  held  to  be  a  foreign  bill,  especially  if  it  ap- 
peared that  it  was  drawn  in  that  form  for  no  wrongful  purpose,  but 


V.  Quinlan,  173  U.  S.  192,  19  Sup.  Ct.  Rep.  329.  Certificates  of  corporations 
payable  to  bearer  were  sued  on  and  action  sustained.  See  also  New  Orleans  v. 
Benjamin,  153  U.  S.  411,  14  Sup.  Ct.  Rep.  905.  As  to  jurisdiction  upon  an  in- 
dorsement as  a  distinct  contract,  see  post,  under  §  678. 

66.  Kearney  v.  King,  18  Eng.  C.  L.  28. 

57.  .Andrews  v.  Hoxie,  5  Tex.  171. 

68.  Yale  v.  Wood,  30  Tex.  17. 

69.  Cook  V.  Crawford,  4  Tex.  420. 

60.  Riggin  v.  Collier,  6  Mo.  568. 

61.  See  chapter  XXVII,  on  the  Conflict  of  Laws,  and  Snaith  v.  Mingay,  1 
Maule  &  S.  87;  Lennig  v.  Ralston,  23  Pa.  St.  137. 


14  NEGOTIABLE    INSTRUMENTS  §§   V.i,  14 

only  that  the  bill  might  conform  to  the  drawer's  usual  course  of 
business,  and  be  what  it  would  have  been  had  he  not  happened  to  be 
at  the  time  in  New  York.  The  converse  of  this  has  been  decided."  ^^ 
Such  is  the  language  of  Professor  Parsons  on  this  question,  which  we 
adopt  as  a  succinct  and  judicious  view  of  the  law.®^ 

§  13.  If  a  bill  be  upon  its  face  an  inland  bill,  the  fact  that  it  was 
actually  drawn  and  delivered  in  a  foreign  State  will  not  divest  it  of  its 
inland  character.  Thus,  where  a  bill  was  drawn  in  Wisconsin,  but 
dated  East  Fork,  in  Illinois,  it  was  held  in  the  latter  State  that  it  must 
be  treated  and  considered  as  an  inland  bill.  "Such  was  the  intention 
and  agreement  of  the  parties,  as  shown  on  the  face  of  the  instrument. 
That  it  was  competent  for  the  parties,  both  being  citizens  of  Illinois, 
to  provide  for  their  express  agreement  that  it  should  l)e  subject  to  and 
construed  by  the  laws  of  this  State,  is  too  well  established  by  authority 
to  admit  of  doubt."  " 

§  14.  The  presumption  is  that  a  bill  purporting  to  be  drawn  abroad 
was  really  so  drawn.  But  evidence  would  be  admissible  to  show  that 
a  bill  purporting  to  have  been  drawn  abroad  was,  in  fact,  drawn 
within  the  country  where  suit  is  brought,  and  is  therefore  void,  for 
want  of  a  stamp  required  by  the  internal  revenue  laws  of  such  coun- 
try.^^  But  it  has  been  recently  held,  in  Massachusetts,  that  the 
maker  or  indorser  of  a  note  cannot,  as  against  the  indorsee  in  that 
State  for  value,  before  maturity  and  wdthout  notice,  show  that  the 
note,  which  was  dated  in  Boston,  with  intent  that  it  should  be  a 
Massachusetts  contract,  was  actually  made  in  New  York,  and  on 
account  of  illegal  interest,  was  void  under  the  usury  laws  of  the  latter 
State.«« 


62.  Strawbridge  v.  Robinson,  5  Gilm.  470. 

63.  1  Parsons  on  Notes  and  Bills,  57. 

64.  Strawbridge  V.  Robinson,  5  Gilm.  472,  Caton,  J. 

65.  Abraham  v.  Dubois,  4  Campb.  269;  Eire  v.  Moreau,  2  Car.  &  P.  376  (12 
Eng.  C.  L.);  Jordaine  v.  Lashbrooke,  7  T.  R.  601;  Steadman  v.  Duhamel,  1  C.  B. 
888.    See  post,  §  869  et  seq. 

66.  Towne  v.  Rice,  122  Mass.  67. 


15,  16  THE   EFFECT   OF   A   BILL   OF   EXCHANGE  15 


SECTION   III 

THE    EFFECT   OF    A    BILL    OF    EXCHANGE;    WHETHER    OR    NOT   IT   IS   AN 

ASSIGNMENT 

§  15.  As  we  have  already  seen,  heretofore  it  was  the  policy  of  the 
common  law  to  interdict  the  assignment  of  possibilities,  rights,  titles, 
and  things  in  action,  on  the  ground,  as  stated  by  Lord  Coke,  that  "it 
would  be  the  occasion  of  multiplying  of  contentions  and  suits,  of 
groat  oppression  of  the  people,  and  chiefly  of  terre-tenants,  and  the 
subversion  of  the  due  and  equal  execution  of  justice."  ^^  Bills  of  ex- 
change and  promissory  notes  have  long  been  recognized  exceptions 
to  this  rule;  and  by  courts  of  equity,  it  has  long  been  discredited,  and 
assignments  of  a  mere  naked  possibility  or  chose  in  action  for  valuable 
consideration  have  been  held  valid  and  effectuated  by  them.*^^  And 
courts  of  law,  following  in  the  footsteps  of  equity,  now  recognize  and 
enforce  such  assignments  in  suits  brought  in  the  name  of  the  assignor 
for  the  benefit  of  the  assignee,  it  being  necessary  for  the  assignee  to 
assert  his  rights  at  law  in  that  form,  as  the  want  of  privity  of  contract 
between  himself  and  the  debtor  is  considered  to  stand  in  the  way  of  a 
suit  in  his  own  name,*^'-*  except  where  expressly  allowed  by  statute. 

§  16.  The  drawing  and  transferring  of  bills  of  exchange  depend 
upon  principles  of  the  law  merchant,  which  apply  peculiarly  to  nego- 
tiable instruments.  But  the  effect  of  the  drawing  of  a  bill  of  exchange, 
upon  the  rights  and  interests  of  the  parties  in  the  funds  which  is  in 
the  hands  of  the  drawee,  depends  very  frequently  upon  principles 
derived  from  the  doctrines  of  courts  of  equity  in  respect  to  equitable 
assignments.  And  we  shall  now  consider  the  effect  of  a  bill  or  order 
upon  the  fund  on  which  it  is  drawn.  This  inquiry  naturally  divides 
itself  into  several  branches:  First.  What  is  the  effect  of  a  bill  of  ex- 
change (a  negotiable  bill  in  its  commercial  sense)  drawn  for  the  whole 
amount  of  a  fund  in  the  drawee's  hand?  Second.  What  is  the  effect 
of  a  nonnegotiable  order  for  the  whole  of  a  fund?  Third.  What  is  the 
effect  of  a  bill  of  exchange  for  part  of  a  fund?  And  fourth.  What  is 
the  effect  of  a  nonnegotiable  order  for  part  of  a  fund? 

67.  Coke's  R.,  Part  X,  48a. 

68.  3  Lead.  Cas.  in  Equity  [*652],  307;  Chitty  on  Bills  [*7,  8],  9,  10. 

69.  Wheatley  v.  Strobe,  12  Cal.  98;  Mandeville  v.  Welch,  5  Wheat.  277;  Chitty 
on  Bills  [*9],  10. 


16  NEGOTIABLE    INSTRUMENTS  §   16a 

§  16a.  The  questions  stated  have  elicited  very  diverse  and  con- 
flicting opinions,  and  it  has  been  held  or  declared  in  judicial  decisions: 

(1)  That  an  unaccepted  l)ill  of  exchange  for  the  whole  amount  of 
the  debt  due  by  the  drawee  to  the  drawer,  or  for  the  whole  of  the  funds 
in  the  drawee's  hands,  operates  an  equitable  assignment  of  the  debt 
or  funds;  '^^  and  contrariwise  that  it  does  not  of  itself  operate  such  an 
assignment.^^ 

70.  In  C.ihson  v.  Cooke,  20  Pick.  15,  Dewey,  J.,  said:  "It  seems  to  be  equally 
well  settled  that  a  draft  by  the  creditor  on  his  debtor  in  the  form  of  a  bill  of  ex- 
change to  the  amount  of  the  debt,  or  the  whole  funds  in  his  hands,  is  a  Rood  and  valid 
assiKnment  of  the  debt  or  fund."  In  Robins  v.  Bacon,  3  Greenl.  349,  Mellen,  C.  J., 
said:  "A  case  which  Heem.s  directly  in  point  is  that  of  Mandeville  v.  Welch,  5 
Wheat.  277.  In  that  ciise  it  wiis  decided,  :us  stated  by  Story,  J.,  in  deliverinK  the 
oi)iriion  of  the  court,  that  'where  an  order  is  drawn  for  a  i)articular  fund,  it 
amounts  to  an  equitable  assignment  of  the  fund;  and,  after  notice  to  the  drawee, 
it  binds  the  fund  in  his  hands.'"  In  these  cases  the  bills  were  not  negotiable; 
but  no  distinction  in  respect  to  them  was  taken.  In  Corser  v.  Craig,  1  Wash.  C.  C. 
426,  suit  was  brought  by  the  payee  and  indorser,  for  the  benefit  of  his  indorsee, 
against  the  drawee.  Action  was  sustained.  This  is  going  farther  than  any  other 
adjudicated  cases  we  know  of.  Had  action  been  brought  in  the  name  of  the 
drawer  for  the  last  indorsee's  benefit,  it  would  have  been  unobjectionable,  as 
we  think,  and  the  following  language  of  Washington,  J.,  would  have  been  ap- 
phcable.  He  said:  "If  the  drawee  refuse  to  accept,  and  pay  the  bill,  the  right 
of  the  holder  to  the  debt  once  assigned  to  him  is  not  thereby  impaired;  although 
he  may  not  be  entitled  to  recover  the  same  in  his  own  name,  for  the  want  of  a 
promise  to  pay.  But  he  may  sue  the  drawer,  or  the  drawee  in  the  name  of  the 
drawer,  for  the  debt  originally  due,  in  consequence  of  the  implied  contract  of 
the  assignor  of  a  chose  in  action,  that  the  debtor  shall  pay,  and  on  failure,  that 
the  assignor  will.  The  bill  being  retained  after  protest,  by  the  assignee,  is  evi- 
dence that  the  amount  has  not  been  paid  by  the  drawer  or  any  of  the  indorsers. 
I  see  no  possible  mischief  which  can  result  from  this  doctrine.  For,  if  after  pay- 
ment refused,  and  protest  made,  the  drawee  should  pay  over  the  funds  in  his 
hands  to  the  drawer,  or  to  his  order,  without  notice  from  the  first  assignee,  that 
he  should  retain  the  bill  and  look  to  him  for  the  amount,  so  far  as  he  was  bound 
to  pay;  this  would  be  a  good  defense  against  a  suit  brought  in  the  name  of  the 
drawer."  In  Wheatley  v.  Strobe,  12  Cal.  97,  where  bill  was  for  whole  amount, 
it  was  held  that  after  presentment  of  the  bill,  funds  could  not  be  reached  by 
attachment  at  suit  of  drawer's  creditors.  Field,  J.,  said:  "The  want  of  a  written 
acceptance  does  not  affect  the  right  of  Howell  (the  holder)  to  the  money  due, 
but  only  the  mode  of  enforcing  it.  With  the  acceptance  he  could  have  sustained 
an  action  upon  the  order;  without  it  he  must  recover  upon  the  original  demand  by 
force  of  the  assignment.  Under  the  old  common-law  practice,  the  action  could 
only  be  maintained  in  the  name  of  the  assignor  for  the  benefit  of  the  assignee, 
but  under  our  system  it  may  be  brought  in  the  name  of  the  assignee  as  the  party 

71.  Bank  of  Commerce  v.  Bogy,  44  Mo.  15;  Shand  v.  De  Buisson,  18  Eq.  Cas. 
283;  First  Nat.  Bank  v.  Dubuque  S.  R.  Co.,  52  Iowa,  378;  Bush  v.  Foots,  58 
Miss.  5. 


§  16a  THE    EFFECT   OF   A    BILL   OF   EXCHANGE  17 

(2)  That  a  bill  of  exchange  for  part  of  a  debt  or  fund  is  not  an 
assignment  pro  tanto  unless  accepted/^  and  although  it  be  nonnego- 
tiable/^  But  the  theory  of  a  bill,  as  stated  by  some  of  the  best  writers, 
would  lead  to  a  different  conclusion,^^  and  a  check,  which  is  a  species 
of  bill,  has  been,  in  a  number  of  cases,  held  an  equitable  assignment 
pro  tanto J° 

(3)  That  an  order  for  an  entire  debt  due  by  the  drawee  to  the 
drawer,  or  an  entire  fund  in  his  hands,  specifying  the  debt  or  fund, 
operates  an  equitable  assignment,  and  binds  the  drawee  as  soon  as  he 
has  notice/**    This  doctrine  is  well  settled, 

(4)  That  an  unaccepted  order  for  part  of  a  fund  specified  in  it  is  not 
an  assignment  pro  tanto;  "  but  contrariwise  (and  the  better  opinion) 
that  it  is/s 

beneficially  interested.  Courts  of  law,  equally  with  courts  of  equity,  gave  effect 
to  assignments  like  the  one  under  consideration,  by  controlling  the  proceeds  of 
the  judgments  recovered  for  the  benefit  of  the  assignee."  Nimocks  v.  Woody, 
97  N.  C.  1;  Lee  v.  Robinson,  2  N.  Eng.  (R.  I.)  020;  Roberts  v.  Austin,  26  Iowa, 
315.  See  vol.  II,  chapter  XLVII,  on  Checks;  Chitty  on  Bills,  p.  1  (13th  Am.  ed.); 
Hirshfield  v.  Ludwig,  69  Hun,  5.04,  24  N.  Y.  Supp.  634. 

72.  Brill  V.  Tuttle,  81  N.  Y.  547;  Att'y-Gen'l  v.  Continental  Life  Ins.  Co.,  71 
N.  Y.  325;  Noe  v.  Christie,  51  N.  Y.  273;  Throop  Grain  Cleaner  Co.  v.  Smith, 
lia  N.  Y.  90;  People  v.  Remington,  45  Hun,  335;  Christmas  v.  Russel,  14  Wall. 
84;  Chase  v.  Alexander,  6  Mo.  App.  506.  A  negotiable  draft,  not  payable  out 
of  a  specific  fund,  does  not  amount  to  an  equitable  assignment.  Borough  of 
Rosolle  Park  v.  Montgomery  (N.  J.  Ch.),  60  Atl.  954;  McBride  v.  American  Ry. 
&  Lighting  Co.  (Tex.  Civ.  App.),  127  S.  W.  229. 

73.  In  Shaver  v.  West.  IJn.  Tel.  Co.,  57  N.  Y.  461,  the  nonnegotiable  bill  ran, 
"plea.se  pay  D.  L.  N.  $50  monthly  on  last  day  of  each  and  every  month,  com- 
mencing March  31st,  1868,  until  the  sum  of  $300  is  paid,  and  charge  my  salary 
account."  Held  not  an  assignment,  Lott,  Ch.  C,  saying:  "It  is  not  payable  out 
of  a  particular  fund." 

74.  Story  on  Bills,  §  13. 

75.  Sec  vol.  II,  §§  1643,  1646;  First  Nat.  Bank  v.  Coates,  8  Fed.  540,  Miller,  J. 

76.  Mandeville  v.  Welch,  5  Wheat.  277;  Robins  v.  Bacon,  3  Greenl.  346;  Cow- 
perthwaite  v.  Sheffield,  3  N.  Y.  243;  McMenomy  v.  Ferrers,  3  Johns.  72;  Bank 
of  Commerce  v.  Bogy,  44  Mo.  IS;  Walker  v.  Munro,  18  Mo.  564;  Anderson  v. 
De  Soer,  6  Gratt.  364;  Cutts  v.  Perkins,  12  Mass.  209;  Morton  v.  Naylor,  1  Hill. 
583;  Gibson  v.  Cooke,  20  Pick.  15;  Moore  v.  Davis,  57  Mich.  255,  distinguishing 
the  case  from  Grammel  v.  Carmer,  55  Mich.  201,  where  the  draft  was  a  "banker's 
draft"  and  drawn  for  only  a  part  of  the  fund.  Contra  in  Lewis  v.  Traders'  Bank, 
30  Minn.  135,  unless  the  fund  be  particularly  specified. 

77.  See  post,  §§  22,  23,  23a. 

78.  In  Row  V.  Dawson,  1  Ves.  331  (1749),  it  appeared  that  A.  borrowed  money 
of  B.,  and  gave  him  a  draft  upon  a  fund  due  him  out  of  the  Exchequer,  drawn 
on  Swinburne,  the  Deputy  of  Horace  Waljjole,  and  payable,  as  expressed,  "out 
of  the  money  due  to  me  from  Horace  Walpolc  out  of  the  Exchequer,  and  which 

2 


18  NEGOTIABLE    INSTRUMENTS  §   16a 

(5)  That  a  partial  unaccepted  order  will  operate  as  an  equitable 
assignment,  although  drawn  upon  a  fund  not  yet  in  existence,  or 
upon  a  debt  not  yet  mature,  and  although  the  sources  of  payment  be 
precarious  and  uncertain/' 

will  be  due  at  Michaelmas,  pay  to  T.  &  C,  value  received."  A.  afterward  be- 
came bankrupt,  and  it  was  held  that  the  draft  operatetl  in  an  equitable  assign- 
ment which  should  prevail  against  the  assignees  in  bankruptcy.  In  Lett  v.  Morris, 
4  Sim.  607,  A.,  having  engaged  to  pay  to  B.  £2,300  by  iii.st ailments,  B.  signed 
and  gave  to  C,  for  value,  an  order  authorizing  A.  to  i)uy  i)arts  of  each  install- 
ment to  C,  and  £400  was  to  be  reserved  in  A.'s  hands  out  of  the  balance,  ami 
C.'s  receipt  was  to  be  a  discharge  to  A.  A.  was  served  with  notice  of  the  order 
on  the  day  it  was  signed;  but  there  was  no  act  or  expression  of  consent.  Vice- 
Chancellor  Shad  well  said:  "I  entertain  no  doubt  that  the  order  amounts  to  an 
equitable  assignment."  In  Ex  parte  South,  3  Swanst.  391,  the  order  for  £417  6s., 
"as  part  of  the  amount  due  to  me  for  plumber's  work,"  etc.  Held,  subsequent 
bankruptcy  of  drawer  did  not  defeat  it,  it  having  been  shown  to  the  debtor.  In 
Yates  V.  Groves,  1  Vcs.  Jr.  281,  it  appeared  that  Dawson  being  indebted  to  Yates 
and  Brown,  upon  a  note,  gave  him  an  order  on  Groves  and  Dickinson  for  the 
amount  of  the  note,  which  they  surrendered,  payable  out  of  an  amount  for  lease- 
hold property.  Before  the  money  wjus  paid,  Dawson  was  thrown  into  bankruptcy, 
and  Yeatcs  and  Brown  claimed  the  fund  pro  tanto,  and  filed  their  bill  to  reach  it. 
Lord  Thurlow  said:  "This  is  nothing  but  a  direction  by  a  man  to  pay  part  of  his 
money  to  another  for  a  foregone  valuable  consideration.  If  he  could  transfer,  he 
has  done  it;  and  it  being  his  own  money,  he  could  transfer.  The  transfer  was 
actually  made.  They  were  in  the  right  not  to  accept,  as  it  was  not  a  bill  of  ex- 
change. It  i^  not  an  inchoate  business.  The  order  fixed  the  money  the  moment 
it  was  shown  to  Groves  &  Dickinson."  Christmas  v.  Russell,  14  Wall.  84.  In 
Brill  V.  Tuttle,  81  N.  Y.  457,  there  was  an  unaccepted  order  for  part  of  fund, 
running,  "Pay  B.  &  R.  S300,  and  charge  same  to  our  account  for  labor  and  ma- 
terials performed  and  furnished  in  repairs  and  alterations  of  a  certain  house." 
It  was  shown  that  the  amount  was  not  yet  due;  but  the  order  was  held  an  as- 
signment of  the  debt  pro  tanto,  and  that  subsequent  voluntary  payment  to  the 
drawer  by  the  drawee  was  no  defense  to  suit  by  the  payee.  Ehrichs  v.  De  Mill, 
75  N.  Y.  370.  Order  for  part  of  fund  assented  to  by  drawee,  running,  "Pay  E.  F. 
$400  on  account  of  work  done  as  per  contract."  Action  by  payee  against  drawee 
sustained.  In  Parker  v.  Syracuse,  31  N.  Y.  376,  the  order  ran,  "Pay  P.  &  W. 
$1,420  on  plank-road  and  sidewalk  accounts,  and  charge  to  my  account."  Held, 
an  assignment;  and  that  after  notice  to  the  drawee  he  would  violate  equitable 
rights  of  payee  by  paying  the  amount  to  any  other  but  the  payee.  In  Lowery 
v.  Steward,  25  N.  Y.  241,  the  order  ran  "Pay  to  the  order  of  A.  H.  L.  $500  on 
account  24  bales  cotton  shipped  to  you  as  per  bill  of  lading  by  steamer  Colorado, 
inclosed  to  you  in  letter."    Held  to  be  an  equitable  assignment. 

79.  Row  v.  Dawson,  1  Ves.  Sr.  331.  In  Brooks  v.  Hatch,  6  Leigh,  534,  the 
order  was  payable  "out  of  the  first  money  which  should  be  due  him  (the  drawer) 
for  salt  delivered,  or  to  be  delivered,  to  them  (the  drawees)."  Held,  equitable 
assignment  pro  tanto.  See  also  Peyton  v.  Hallett,  1  Cai.  363;  Cutts  v.  Perkins, 
12  Mass.  206;  Brill  v.  Tuttle,  81  N.  Y.  547, 


§  17  THE    EFFECT   OF   A    BILL   OF   EXCHANGE  19 

(6)  That  if  accepted,  the  bill  or  order,  whether  for  the  whole  or 
part  ot  a  timd,  operates  as  an  assignment  thereof .«° 

§17.  Let  us  now  consider  the  principles  to  be  relied  on  for  the 
solution  of  these  questions;  and  in  the  first  place:  as  to  the  effect  of  a  bill 
of  exchange  drawn  for  the  entire  amount  of  debt  due  by  the  drawer  or 
entire  fund  in  the  drawee's  hands. 

By  some  of  the  authorities,  as  we  have  seen,  such  a  bill  is  declared 
to  operate  as  an  equitable  assignment  of  the  fund.«i  By  others  the 
view  ,s  taken  that  the  drawing  of  the  bill  is  an  independent  transaction 
totally  disassociated  in  legal  effect  from  the  funds  in  the  drawee's 
hands,  and  does  not  operate  as  an  assignment  of  them,  but  simply  as 
an  engagement  of  the  drawer  that  the  drawee  shall  pay  to  the  payee 
a  certain  amount;  or  that  in  the  event  of  the  drawee's  default  the 
drawer  will  do  so,  the  due  steps  being  taken  to  hold  him  liable.  Great 
confusion  has  arisen  in  the  adjudicated  cases  from  a  failure  to  dis- 
criminate  between  the  parties  who  may  certainly  claim  that  as  to 
them  the  bill  operates  as  an  assignment,  and  those  who  cannot  make 
such  claim. 

In  an  early  English  case  it  was  said:  "The  theory  of  a  })ill  of  (ex- 
change IS  that  the  bill  is  an  assignment  to  the  payee  of  a  debt  due  from 
the  acceptor  to  the  drawer";  ^^  and  it  is  undoubtedly  true  that  the 
payee  has  a  right  to  suppose  that  the  drawee  has  funds  of  the  drawer 
upon  the  faith  of  which  understanding  he  receives  the  bill  directing 
them  to  be  paid  to  him.  As  between  the  drawer  and  payee,  then  we 
think  It  is  clear  that  the  bill  is  intended  to  operate,  and  does  operate 


80.  See  post,  §§  18,  22,  and  notes.  In  Risely  v.  Smith,  64  N.  Y.  576,  it  was 
held  that  an  acceptor  of  an  order  on  a  fund  not  then  existing  could  not  prevent 
the  fund  from  accrmng,  and  set  it  up  as  a  defense;  and  if  he  does,  that  he  may  be 
Bued  on  the  order.  To  same  effect  see  Gallagher  v.  Nichols,  60  N  Y  438  In 
Munger  y.  Shannon,  61  N.  Y.  251,  the  order  wa.s  for  a  certain  sum,  with  words 
and  deduct  the  same  from  my  share  of  the  profits,  etc.,"  and  it  was  held  that 
Its  acceptance  implied  the  condition  that  it  was  not  to  be  paid  unless  there  were 
prohts,  and  that  acceptor  might  show  there  were  none.  Nimocks  v.  Woody  97 
^.  C.  1;  County  of  Dcs  Moines  v.  Hinckley,  62  Iowa,  643. 

81.  See  ante  §  16a,  and  notes.  Where  a  creditor  has  draxvn  a  draft  on  his 
debtor  for  the  full  amount  of  the  debt  claimed  with  the  account  attached  in  favor 
of  a  certam  bank,  this  with  the  payment  of  the  draft  by  the  bank  constitutes 

he  assignment  of  the  claim,  and,  upon  protest  of  the  draft,  the  bank  has  the  right 
to  hold  the  drawer  of  the  draft  and  the  debtor  responsible.  Provident  Nat.  Bank 
V.  C.  D.  Harnett  Co.,  45  Tex.  Civ.  App.  273,  100  S.  W   1024 

82.  Gibson  V.  Minet,  1  H.  Bl.  569;  Story  on  Bills,  §  18;  Chitty  on  Bills  [*1]  2 


20  NEGOTIABLE    INSTRUMENTS  §  18 

as  an  assignment  of  the  fund  in  the  drawee's  hands  sufficient  to  meet 
it;^^  and  if  there  be  no  such  funds,  and  no  understanding  that  the 
bill  will  be  honored,  the  drawer  commits  a  fraud  upon  the  payee,  and 
will  be  absolutely  bound  upon  the  bill,  without  notice  of  dishonor. 
And  if,  after  drawing  the  bill,  the  drawer  should  withdraw  the  funds 
in  the  drawee's  hands,  it  would  be  likewise  a  fraud  upon  the  payee, 
and  the  drawer  would  be  absolutely  bound  without  notice.'*'* 

§  18.  Accepted  bill  operates  as  an  assignment. — As  between  the 
payee  and  the  drawee,  however,  there  is,  as  generally  hekl,  no  privity 
of  contract,  unless  the  drawee  accepts  to  pay  the  bill.  When  he  does 
this,  he  becomes  absolutely  bound  to  pay  the  debt  to  the  holder  of  the 
bill.  And  any  subsequent  bill  drawn  upon  him,  or  transfer  or  assign- 
ment of  the  fund  in  his  hands,  or  legal  process  served  upon  him  by  a 
creditor  of  the  drawer,  could  create  no  liability  upon  him  to  pay  or 
deliver  over  the  funds  of  the  drawer  to  anyone  but  the  holder  to 
whom  he  has  entered  into  an  obligation  to  pay  them.^^ 

It  has  indeed  been  said  that  "a  proper  bill  of  exchange  does  not  of 
itself  operate  as  an  assignment  to  the  payee  of  funds  of  the  drawer,  in 
the  hands  of  the  drawee,  and  even  after  an  unconditional  acceptance, 
it  cannot  in  strictness  be  held  to  have  that  effect,  since  the  drawee 
becomes  bound  by  reason  of  the  contract  of  acceptance,  irrespective 
of  the  funds  in  his  hands."  *®    But  it  has  been  well  replied  that,  "the 

83.  Story  on  Bills,  §  13;  Chitty  on  Bills  [*!],  2. 

84.  See  ante,  §  16a,  and  Gibson  v.  Cooke,  20  Pick.  15;  Robins  v.  Bacon,  3 
Greenl.  349;  Mandeville  v.  Welch,  5  Wheat.  277.  See  Chitty  on  Bills  [*1],  2; 
Story  on  Bills,  §  13. 

85.  Mandeville  v.  Welch,  5  WTieat.  277;  Barnsdall  v.  Walemeyer,  142  Fed. 
415;  Kyle  v.  Chattahoochee  Nat.  Bank,  96  La.  694,  24  S.  E.  149;  Harris  v.  Clark, 
3  N.  Y.  117,  Ruggles,  J.;  First  Nat.  Bank  v.  Dubuque  S.  R.  R.,  52  Iowa,  378; 
Lambert  v.  Jones,  2  Patton  &  Heath,  144;  2  Parsons  and  Notes  on  Bills,  330,  331; 
Story  on  Bills,  §  13.  In  Buckner  v.  Sayre,  17  B.  Mon.  754,  it  appeared  that  the 
Lexington  Insurance  Company  drew  a  bill  on  the  5th  of  August,  1851,  on  its 
agent,  J.  H.  Wheeler,  at  New  Orleans,  payable  at  six  months,  for  $7,182.  In 
November  following,  the  company  made  a  general  assignment  to  Buckner,  as 
trustee,  to  pay  its  debts.  And  afterward  Wheeler  who  had  accepted  the  bill, 
paid  over  $3,000,  which  he  had  collected  from  premiums,  to  Buckner,  the  trustee. 
Simpson,  J.,  said:  "Sayre,  as  the  holder  of  the  bill  of  exchange,  was  entitled  to  the 
fund  in  the  hands  of  the  acceptor,  which  the  latter,  by  his  acceptance,  had  appro- 
priated for  his  use  and  benefit."  Until  accepted  draft  does  not  operate  as  an 
assignment,  legal  or  equitable.    Erickson  v.  Inman,  34  Oreg.  44,  54  Pac.  949. 

86.  Cowperthwaite  v.  Sheffield,  3  N.  Y.  243,  Hurlbut,  J.  See  also  Wheeler 
V.  Stone,  4  Gill,  47.  In  Marine  and  Fire  Insurance  Bank  v.  Jauncey,  3  Sandf. 
258,  it  appeared  that  John  Wood  having  105  bales  of  cotton,  which  he  intended 


§  19  THE   EFFECT   OF   A    BILL   OF   EXCHANGE  21 

theory  is,  even  in  such  a  case,  that  funds  to  the  account  of  the  bill 
have  been  assigned,  and  that  the  acceptor  is  estopped  from  setting  up 
any  such  objection  as  that  there  were  no  funds  to  assign."  ^^ 

§  19.  Whether  unaccepted  bill  for  whole  of  fund  operates  as  an 
assignment.— When,  however,  the  drawee  has  not  accepted,  or 
assented  to  pay  the  amount  to  the  holder,  the  rights  of  the  parties  are 
more  difficult  to  determine.  The  holder  (unless  authorized  by  statute) 
cannot  sue  the  drawee  at  law  in  his  own  name,  for  there  is  no  contract 
on  the  part  of  the  drawee  to  pay  him.««  But  there  is  force  in  the  doc- 
trme  that  he  might  sue  the  drawee  in  the  name  of  the  creditor  for  the 

to  consiKn  to  Josoph  Wood,  drew  a  bilT^  him  in  favor  of  Walsh  at  sixty  days' 
sight  for  $3,000,  which  was  discounted  by  plaintiffs,  and  the  proceeds  applied 
by  John  \\ood  to  pay  for  the  cotton  above  mentioned,  which  he  had  bought 
The  bill  was  dated  July  29,  184G,  and  accepted  by  the  drawee  on  July  C  1846' 
The  cotton  was  shipped  to  the  drawee.  On  the  30th  of  June,  Joseph  Wood  be- 
came insolvent,  and  executed  an  assignment  of  all  his  estate,  including  a  debt  due 
him  by  John  Wood,  the  drawer,  of  $2,200.  The  cotton  was  also  placed  in  Jaun- 
cey  s  hands,  and  its  net  proceeds  were  $2,700,  which  the  plaintiffs  sought  to  reach 
by  their  bill  in  equity.  The  court  said  in  respect  to  the  bill  of  exchange,  that 
though  accepted,  it  was  not  an  equitable  assignment;  and  that  the  drawee  on 
receiving  the  funds  derived  from  the  cotton,  "had  a  right  to  apply  them  to'the 
payment  of  his  general  balance,  or  in  any  other  way  that  John  Wood  and  he 
might  agree  upon."  The  case  was,  as  we  think,  rightly  decided;  but  we  do  not 
see  that  the  broad  doctrine  declared  was  necessary  to  such  decision.  There  was 
a  superior  equity  in  the  drawee,  which  had  priority  over  the  equitable  assignment 
It  does  not  follow  that  there  was  not  an  equitable  assignment  (subject  to  su- 
penor  equitable  rights),  or  rather  an  equitable  right  to  foUow  the  proceeds  of 
the  cotton. 

f ;n''''o'"°^  ^-  ^^°^^^°'  103  Iowa,  186,  72  N.  W.  447;  1  Parsons  on  Notes 
and  Bills,  332. 

^88.  Tiernan  v.  Jackson,  5  Pet.  580;  Harris  v.  Clark,  3  N.  Y.  117,  Ruggles  J  • 
It  IS  cleariy  settled  that  no  action  at  law  will  lie  in  favor  of  the  holder  of  a' bill 
of  exchange  against  the  drawee,  unless  he  accepts  the  bill."  See  post  §  50  and 
note;  New  York  &  Va.  State  Bank  v.  Gilson,  5  Duer,  574,  Duer.  J  •  "There  is 
no  such  pnvity  between  him  (the  drawee)  and  the  holder  as  can  entitle  the  latter 
to  mamtain  an  action  against  him."  Yates  v.  Bell,  3  B.  &  Aid.  643;  Williams  v 
i.verett  14  East,  582.  Holder  has  no  action  against  drawee  to  whom  funds  are 
remitted  for  money  had  and  received.  See  ante,  §  15.  And  as  between  the  drawer 
and  the  drawee,  it  has  been  held  that  a  cotton  factor,  unless  he  has  expressly  or 
impliedly  engaged  to  pay  the  drafts  of  a  customer,  is  not  liable  in  damages  to 
the  latter  for  refusmg  tx,  pay  his  draft,  even  though  the  customer  had  in  the 
actor  s  hands,  funds  sufficient  to  meet  the  same  at  the  time  it  was  presented;  but 
the  contrary  is  true,  when,  by  express  agreement,  or  by  necessary  implication 
arising  from  the  course  of  dealings  between  the  parties,  there  is  an  understanding 

ZTf^T^V^^  f^^^^'e  part  to  pay  such  drafts.    See  Moss  v.  Stokeley,  95  Ga. 
0(0,  a  o.  111.  692. 


22  NEGOTIABLE    INSTRUMENTS  §  20 

amount  of  the  debt,  and  offer  the  bill  in  evidence  to  show  that  it  had 
been  assigned  to  him;  ^^  and  also  in  the  view  that  although  the  drawee 
would  be  protected  if  he  parted  with  the  funds  before  notice  of  the 
bill,  yet  if  it  were  payable  on  demand,  and  after  its  presentment  for 
payment,  he  should  pay  the  amount  to  another,  under  a  subsequent 
order,  he  would  be  still  bound  to  pay  it  over  to  the  holder  of  the  first 
bill.'-*"  And  after  presentment  to  the  drawee,  a  subsequent  assign- 
ment made  by  the  drawer  in  trust  for  creditors,  or  attachment  or 
garnishment  process  served  upon  the  drawee,  would  not  defeat  the 
equitable  claim  of  the  holder  to  have  the  funds  appropriated  to  pay 
the  bill." 

§  20.  The  doctrine  that  an  unaccepted  bill  for  the  entire  debt 
or  fund  operates  as  an  equitable  assignment  thereof  is  opposed  to  the 
current  of  authority  in  the  United  States,  and  in  England  as  well,  it 
being  considered,  as  already  stated,  that  the  bill  of  exchange  is  an 
independent  security  resting  on  the  commercial  responsibility  of  the 
parties  thereto.^^  But  it  is  conceded  that  the  bill,  whether  for  the 
whole  of  the  fund  or  debt,  or  only  a  part,  may  be  evidence  to  show  an 
assignment;  and  that,  with  other  circumstances  indicating  that  such 
was  the  intention,  will  vest  in  the  holder  an  exclusive  claim  to  the  debt 
or  fund,  and  bind  it  in  the  hands  of  the  drawee  after  notice.^^    Very 

89.  See  ante,  §  16a,  and  note;  Corser  v.  Craig,  1  Wash.  C.  C.  426. 

90.  Chitty  on  Billa  [*1],  2,  (13th  Am.  ed.). 

91.  See  ante,  §  16a,  note;  post,  §  1635  el  seq.;  Wheatley  v.  Strobe,  12  Cal.  97; 
Roberts  v.  Austin,  26  Iowa,  315;  Nimocks  v.  Woody,  97  N.  C.  1;  Flour  City 
Nat.  Bank  v.  Garfield,  30  Hun,  580. 

92.  See  Bank  of  Commerce  v.  Bogy,  44  Mo.  15.  In  this  case  the  bill  was  drawn 
for  the  whole  debt  due  the  drawer  by  the  drawee.  The  payee  sued  the  drawee 
and  it  was  held  that  the  bill  did  not  operate  per  se  as  an  assignment,  though 
connected  with  circumstances  it  might  be  evidence  of  an  assignment.  The  plead- 
ings did  not  aver  an  assignment,  and  were  defective  in  that  respect.  Harrison  v. 
Williamson,  2  Edw.  Ch.  438.  In  Shand  v.  De  Buisson,  L.  R.,  18  Eq.  Cas.  283 
(1874),  where  the  bill  was  for  the  exact  amount  of  the  funds  in  the  drawee's  hands, 
Sir  James  Bacon,  V.  C,  said:  "It  is  entirely  new  to  me  to  hear  that  a  bill  of  ex- 
change in  an  ordinary  mercantile  transaction  in  the  shape  in  which  this  appears, 
can  amount  to  an  equitable  assignment  of  the  debt.  The  note  might  have  been 
indorsed  to  any  individual,  or  to  any  number  of  people,  who  might  have  indorsed 
it  in  succession.  A  mercantile  instrument  it  is  in  its  original,  and  in  that  shape  it 
remains;  and  has  no  other  validity  or  effect,  and  to  call  it  an  assignment  of  a 
debt  would  be  to  call  it  not  by  its  right  name."  Grammel  v.  Carmer,  55  Mich. 
201;  Whitney  v.  Eliot  Nat.  Bank,  137  Mass.  351;  Meldrum  v.  Henderson,  7 
Colo.  App.  256,  43  Pac.  148. 

93.  First  Nat.  Bank  v.  Dubuque  S.  R.  R.,  52  Iowa,  378,  35  Am.  Rep,  281; 


§  20  THE    EFFECT   OF   A   BILL   OF   EXCHANGE  23 

slight  circumstances  in  addition  to  the  bill  ought  to  effectuate  an 
equitable  assignment;  and  while  the  current  of  authority  is  undoubt- 
edly otherwise,  the  better  opinion,  as  it  seems  to  us,  is  that  a  bill  for 
the  entire  amount  of  a  debt  or  fund  should  operate  as  an  equitable 
assignment  thereof.  The  doctrine  of  equitable  assignment  is  the 
creature  of  courts  of  equity,  and  the  phrase  "equitable  assignment" 
is  used  because,  by  the  technicalities  of  pleadings  at  law,  no  legal 
assignment  can  be  effectuated.®^  No  assent  of  the  debtor  is  necessary 
to  an  assignment  of  the  debt.  Notice  to  him  is  all  that  is  essential  to 
affect  him  with  liability  to  respect  the  assignment,  and  so  far  does 
equity  regard  the  justice  of  this  principle  that  it  is  applied  even  where 
an  integral  debt  is  broken  up  into  fragments.  Now,  then,  if  A.  have 
$1,000  in  the  hands  of  B.,  and  draw  a  bill  directing  B.  to  pay  $1,000  to 
C,  or  order,  on  demand,  there  can  be  no  fair  inference  from  the  trans- 
action but  this:  that  A.  intended  to  assign  the  debt  due  to  him  by 
B.  to  C,  and  for  the  bill  to  stand  in  B.'s  hands  as  evidence  of  the 
acquittance.  It  is  the  intention  to  assign  that  makes  the  assign- 
ment.®^ And  after  presentment  of  the  bill  to  B.,  which  is  notice,  what 
sound  principle  of  law  could  be  violated,  and  what  equitable  right 
impaired,  by  holding  that  an  assignment  is  effected  so  as  to  bind 
the  debt  in  equity,  and  bind  B.  to  respect  it — not  indeed  as  a  party 
to  the  bill,  but  as  the  holder  of  the  thing  assigned?  So  confident  is 
the  expectation  among  mercantile  men  that  a  bill  drawn  on  funds  will 
be  honored,  that  in  order  to  hold  the  drawer  liable  in  the  event  of  dis- 
honor, he  must  be  specially  notified  of  the  fact,  and  that  the  holder 
looks  to  him  for  payment.  The  payee  of  an  unaccepted  bill,  it  is 
true,  has  nothing  but  the  drawer's  direction  to  pay  him  the  money 
to  rely  on.  But  that,  in  its  very  nature,  imports  that  (1)  the  drawee 
holds  the  money;  (2)  that  the  drawer  assigns  it  to  the  payee;  (3)  and 
that  if  the  drawee  does  not  respect  the  assignment  and  pay  the  money 
to  the  payee,  the  drawer  will  himself  pay  its  equivalent  on  being 
notified  of  the  drawee's  refusal.  It  is  in  anticipation  of  the  drawee's 
assent  that  the  payee  is,  or  may  be,  induced  to  take  the  bill;  and 
while  he  cannot  exact  acceptance,  which  is  a  new  engagement,  from 
the  drawee,  that  is  no  reason  why  he  may  not  compel  acquiescence, 
which  in  nowise  affects  his  rights  or  privileges.    And  it  seems  just  and 

Bank  of  Commerce  v.  Bogy,  44  Mo.  17;  Bank  v.  Kowalsky,  105  Cal.  42,  38  Pac. 
517. 

94.  First  Nat.  Bank  v.  Coates,  8  Fed.  540,  Miller,  J. 

95.  Kahnweiler  v.  Anderson,  78  N.  C.  137,  the  court  saying:  "The  intention 
to  assign  operates  as  an  equitable  assignment." 


24  NEGOTIABLE    INSTRUMENTS  §  21 

right  that  courts  of  equity  and  courts  of  law,  in  so  far  as  their  rules  of 
procedure  will  permit,  should  carry  out  and  enforce  the  expectation 
and  intention  of  the;  chiefly  interested  parties.  It  is  not  sufficient  to 
answer  that  the  drawer's  contract  is  independent  and  apart  from  the 
fact  that  he  has,  or  has  not,  funds  in  the  drawee's  hands.  The  hill 
imports  that  he  has.  He  is  estopped  to  deny  it.  And  while  it  is  true 
he  may  be  held  personally  l)ound  whether  he  has  them  or  not — and 
that  indeed  he  is  more  rigidly  held  wh(>n  he  has  no  funds  and  no 
expectation  that  the  bill  will  be  honored  than  otherwise,  because  then 
he  has  not  acted  in  good  faith;  and  while  it  is  true  that  the  payment 
of  the  bill  is  not  conjined  to  the  funds  in  the  hands  of  the  drawee — we 
can  see  no  reason  why,  when  the  funds  are  actually  in  the  drawee's 
hands,  and  he  is  notified  of  the  bill  being  drawn  for  them,  he  should 
not  be  held  bound  to  hold  them,  and  apply  them  as  his  creditor  has 
directed.  If  a  subsequent  conveyance  of  the  debt  by  the  drawer  to 
another  by  deed,  or  subsequent  levy  on  the  debt  at  the  suit  of  the 
drawer's  creditor,  could  deprive  the  holder  of  the  bill  of  his  right  to 
pursue  them  by  proper  procedure,  recourse  against  the  drawer  might 
prove  of  no  avail;  and  the  most  righteous  claim  upon  the  fund  might 
fail  utterly  by  a  mere  technical  ruling,  which  excludes  the  peculiar 
instruments  of  commerce  from  a  basis  of  security  freely  accorded  to 
others. 

§  21.  In  the  second  place,  as  to  an  order  for  the  whole  of  a  fund. — 

It  may  be  regarded  as  a  settled  doctrine  that  an  order  founded  upon 
a  good  consideration,  given  for  a  specific  debt  or  fund  owing  by  or  in 
the  hands  of  a  third  person,  operates  as,  or  rather  is  evidence  of,  an 
equitable  assignment  of  the  demand  to  the  holder .^^  It  is  clearly  an 
assignment,  as  between  the  drawer  and  the  payee,  because  so  in- 
tended.^^    It  is  equally  so  as  between  them  and  the  drawee,  as  soon 

96.  Mandeville  v.  Welch,  5  Wheat.  277;  Robins  v.  Bacon,  3  Greenl.  346;  Cow- 
perthwaite  v.  Sheffield,  3  N.  Y.  243;  McMenomy  v.  Ferrers,  3  Johns.  72;  Bank 
of  Commerce  v.  Bogy,  44  Mo.  18;  Anderson  v.  De  Soer,  6  Gratt.  364;  Cutis  v. 
Perkins,  12  Mass.  209;  Morton  v.  Naylor,  1  Hill,  583;  Gibson  v.  Cooke,  20  Pick. 
15;  Parker  v.  City  of  Syracuse,  31  N.  Y.  379;  Harris  v.  Clark,  3  N.  Y.  117.  A 
release  of  a  specific  fund  in  bank  operates  as  an  equitable  assignment.  Dirimple 
V.  State  Bank  of  Philips,  91  Wis.  601,  65  N.  W.  501. 

97.  Morton  v.  Naylor,  1  Hill  (N.  Y.),  583.  A  landlord  gave  an  order  direct- 
ing his  tenant  to  pay  W.  the  rents  accruing  during  a  specified  period,  which,  on 
its  presentment,  he  said  he  would  do.  The  landlord  subsequently  directed  the 
tenant  not  to  pay,  but  the  latter  disregarded  the  notice  and  paid  the  order.  It 
was  held  that  the  tenant  did  right,  the  order  operating  as  an  equitable  assign- 
ment.   Cowen,  J.,  said:  "I  refer  to  cases  in  chancery  to  show  that  an  order  for 


§  21  THE  EFFECT  OF  A  BILL  OF  EXCHANGE  25 

as  it  is  presented  to  him  and  he  assents;  ^  and  whether  he  assents  or 
not,  the  holder  may  in  equity  recover  the  debt  or  fund  from  him.^^ 
And  if  the  debtor  be  served  with  garnishment  or  other  process  of  law 
after  the  order  has  been  given,  and  before  he  has  been  compelled  to 
pay  the  amount  to  another,  the  order  will  take  precedence.^  An  order 
for  a  specific  fund  usually  contains  words  indicating  an  intention  to 

pass  or  appropriate  the  whole  fund,  as,  "Pay  to  A.  B.,  § ,  the 

amount  of  your  collection  from  C.  D.,"  or  the  amount  received  from 
such  a  transaction;-  which  words,  unless  parenthetically  inserted  as  a 
value  is  per  se  an  equitable  assignment  to  the  payee  of  the  debt  due  from  the 
drawee  to  the  drawer.  Our  own  rules  at  law  as  to  enforcinK  such  an  assignment 
are  well  known.  We  give  it  the  .same  efTert  lus  would  a  eourt  of  chancery."  Gard- 
ner V.  Nat.  City  Hunk,  39  Ohio  St.  m\,  citing  the  text.  To  have  an  order  to  pay 
money  efTe.-tual  jus  an  equitable  :Ls.signmcnt,  it  mu.st  be  drawn  on  a  particular 
fund,  and  not  be  payable  generally.  Izzo  v.  Ludington,  79  N.  Y.  S.  744,  79  App 
Div.  272,  afhrmed  17.S  N.  Y.  021,  70  X.  E.  1100. 

98.  Legro  v.  Staples,  16  Me.  2.^j2;  Johnson  v.  Thayer,  17  Me.  403;  Dese.s.se  v 
Napier,  1  McCord,  100;  Peyton  v.  Hallet,  1  Cai.  303.  See  Story's  Eq.  Jur.,  §  1043. 
Where  the  assignee  of  a  fund  accepte<l  an  order  drawn  on  the  fund  by'  the  a.s- 
signor,  and  paid  the  order  partly  in  ciush  and  gave  to  the  drawee  of  the  order  a 
due-bill  representing  the  balance,  the  assignee  is  liable  to  the  drawee  on  the  due- 
bill  as  the  tran.s}iction  amounted  to  an  assignment  of  a  chose  in  action  by  the 
drawee  of  the  order  to  the  assignee.  Purneil  v.  Davenport,  30  Mont.  571,  93  Pac. 
939.  And  an  order  directing  the  drawee  to  pay  to  the  payee,  "from  equities  on 
ho.sier>'  consigned  to  you,"  a  certain  sum,  "and  charge  the  same  to  our  account," 
IS  a  direction  to  make  the  payment  from  a  fund  and  to  charge  it  to  the  drawer, 
and  not  to  charge  the  payment  to  a  particular  fund,  and  wa.s  an  assignment  of 
the  rights  of  the  consignor  against  the  consignee  growing  out  of  the  consignment 
mentioned  in  the  order,  and  by  acceptance  the  drawee  became  bountl  to  i)iiy  so 
much  of  the  amount  of  the  order  as,  but  for  the  order,  would  have  been  i)ayable 
to  the  drawer  when  the  "equities"  should  be  adjusted.  Morrison  v.  Lamson 
170  Mass.  .530,  .57  N.  E.  997. 

99.  Storj-'s  Eq.  Jur.,  §  1044;  Kahnweiler  v.  Anderson,  78  N.  C.  130;  McGahan 
&  Co.  V.  Lockett,  54  S.  C.  304,  32  S.  E.  429,  71  Am.  St.  Rep.  796. 

1.  Anderson  v.  De  Soer,  6  Gratt.  364.  In  this  ca.se  it  appearwJ  that  a  draft 
for  $10,000,  drawn  by  Grivegnee,  a  legatee,  dated  Malaga,  20th  July,  1819, 
upon  the  executors  of  his  uncle,  at  Richmond,  Va.,  who  had  left  him  a  legacy  of 
$10,000,  directing  that  when  forthcoming,  and  out  of  the  funds  destined  for  that 
object  by  his  decea.sed  uncle,  they  should  pay  that  amount  to  the  order  of  Messrs. 
Scholtz  &  Brothers,  for  value  received  of  them,  noting  the  same  as  amount  of 
legacy  left  him  by  his  uncle,  was  held  to  be  an  assignment  of  the  legacy,  and  as 
8uch  to  have  precedence  over  an  attachment  thereupon  served  four  days  after 
the  drawing  of  the  draft,  and  before  it  was  presented.  Held  otherwise  in  con- 
test between  gamisheeing  creditor  of  depositor  and  holder  of  check  presented 
for  pajTnent  after  the  senice  of  writ  of  garnishment  on  bank.  See  Commercial 
Bank  V.  Chilberg,  14  Wash.  247,  44  Puc.  2t>4,  53  .\m.  St.  Rep.  873. 

2.  Bank  of  Commerce  v.  Bog^',  44  Mo.  18. 


26  NEGOTIABLE    INSTRUMENTS  §§  22,  23 

mere  earmark,  characterize  the  instrument  as  an  unnegotiable  order, 
and  deprive  it  of  its  quahties  as  a  commercial  instrument. 

§  22.  In  the  third  place  and  fourth  place,  as  to  a  bill  of  exchange, 
or  an  order  for  part  of  a  fund. — Tlie  doctrine  is  laid  down  with 
emphasis  by  many  authorities  that  an  order,  or  a  bill  drawn  for  part 
of  a  fund,  does  not  operate  as  an  assignment  of  that  part,  or  give  a 
lien  as  against  the  drawee,  unless  he  consent  to  the  appropriation  by 
an  acceptance  of  the  draft. ^  And  Mr.  Justice  Story,  delivering  the 
opinion  of  the  United  States  Supreme  Court,  has  said:  "The  reason 
of  this  principle  is  plain.  A  creditor  shall  not  be  permitted  to  split 
up  a  single  cause  of  action  into  many  actions,  without  the  consent 
of  his  debtor,  since  it  may  subject  him  to  many  embarrassments  and 
responsibilities  not  contemplated  in  his  original  contract.  He  has  a 
right  to  stand  upon  the  singleness  of  his  original  contract,  and  to 
decline  any  legal  or  equitable  assignments  by  which  it  may  be  broken 
into  fragments.  When  he  undertakes  to  pay  an  integral  sum  to  his 
creditor,  it  is  no  part  of  his  contract  that  he  shall  be  obliged  to  pay  in 
fragments  to  any  other  persons.  So  that,  if  the  plaintiff  could  show 
a  partial  assignment  to  the  extent  of  the  bills,  it  would  not  avail  him 
in  support  of  the  present  suit."  ' 

§  23.  This  doctrine  is  clearly  correct  in  so  far  as  it  applies  to  legal 

3.  Bank  v.  Brewing  Co.,  50  Ohio  St.  151,  40  Am.  St.  Rop.  GGO;  Covert  v. 
Rhodes,  48  Ohio  St.  66,  27  N.  E.  94;  Harris  v.  Clark,  3  N.  Y.  115,  116.  Rugglcs, 
J.,  in  speaking  of  Justice  Story's  opinion  in  Mandeville  v.  Welch,  5  Wheat.  286,  to 
the  effect  that  a  bill  of  exchange  is  "in  theory  an  assignment  to  the  payee  of  a  debt 
due  from  the  drawer  to  the  drawee,"  says:  "This  is  undoubtedly  true  when  the 
bill  has  been  accepted,  whether  it  be  drawn  on  general  funds,  or  a  specific  fund, 
and  whether  the  bill  be  in  its  own  nature  negotiable  or  not;  for  in  such  case  the 
acceptor,  by  his  assent,  binds  and  appropriates  the  funds  for  the  use  of  the  payee. 
But  where  an  order  is  drawn  on  a  general,  or  on  a  particular,  fund  for  a  part 
only,  it  does  not  amount  to  an  assignment  of  that  part,  or  give  a  lien  on  the 
drawee  unless  he  consent  to  an  appropriation  by  an  acceptance  of  the  draft." 
See  Ex  parte  Jones,  77  Ala.  330;  Missouri  Pac.  R.  R.  Co.  v.  Councilmen,  38  Mo. 
141;  Rice  v.  Dudley,  34  Mo.  392;  Grammel  v.  Carmer,  55  Mich.  201;  Weinstock 
V.  Bellwood,  12  Bush,  139;  Mandeville  v.  Welch,  5  Wheat.  277;  Robins  v.  Bacon, 
3  Greenl.  346;  Gibson  v.  Finley,  4  Md.  Ch.  75;  Hopkins  v.  Beebee,  2  Casey,  85; 
Gibson  v.  Cooke,  20  Pick.  15;  Poydras  v.  Delamere,  13  La.  98  (O.  S.  1838),  action 
against  drawee;  Cowperthwaite  v.  Sheffield,  1  Sandf.  416,  Vanderpool,  J.:  "Where 
an  order  is  drawn  for  part  of  the  fund  only,  it  does  not  amount  to  an  assignment 
of  that  part,  or  give  a  lien  as  against  the  drawee,  unless  he  consent  to  an  appro- 
priation by  an  acceptance  of  the  draft."    See  cases  cited  contra,  §  16a,  notes. 

4.  Mandeville  v.  Welch,  5  Wheat.  277. 


§  23  THE    EFFECT  OF  A   BILL  OF  EXCHANGE  27 

assignments.  The  holder  of  the  bill  or  order  cannot  sue  the  drawee- 
at-law  in  his  own  name,  as  he  would  thus  divide  the  cause  of  action, 
and  leave  a  balance  due  the  creditor,^  He  cannot  sue  in  the  creditor's 
name,  except  by  his  consent,  as,  at  best,  he  is  only  entitled  to  a  part 
of  the  debt  due  him.  But  it  has  been  held  in  numerous  cases,  and  we 
think  should  now  be  regarded  as  law,  that  an  order  for  part  of  a  fund 
operates  as  an  equitable  assignment  pro  tanio.^  Clearly  this  is  the 
case  when  it  has  been  accepted  or  assented  to  by  the  drawee.^  And 
when  it  htus  not  been  accepted,  our  own  view  is  this:  that  a  nonnego- 
tiaijle  order  for  part  of  a  fund  does  operate  ;ls  an  equitable  a.ssignment 
fno  tanto  as  between  the  drawer  and  payee,  because  obviously  so  in- 
tcndetl.  But  as  between  drawer  and  payee  on  the  one  side,  and  the 
drawee  on  the  other,  it  creates  no  obligation  on  the  latter  to  paj'  it, 
as  he  has  a  right  to  insist  on  an  integral  discharge  of  his  debt.  And 
if  the  creditor  give  a  subsequent  order  for  the  whole  amount,  he  may 
pay  it  with  impunity,  as  he  thus  discharges  his  debt  in  its  entirety  at 
once,*  But  if  the  payee  or  indorsee  goes  into  equity,  or  the  parties  are 
l)rought  therein  i)y  any  proceeding,  so  that  all  of  them  are  before  the 
court,  the  holder  of  the  order  may  enforce  it  as  an  equitable  assign- 
ment as  against  all  subsequent  claimants,  whether  by  assignment 
from  the  drawer,  or  by  legal  process  served  upon  the  drawee.^ 

Mr.  Justice  Story  has  stated  the  principle,  as  we  conceive  it,  more 
correctly  in  his  treatise  on  Ekjuity  Jurisprudence  than  in  the  cases 
hitherto  cited;  and  he  there  declares  that,  while  a  draft  for  part  of  a 
fund  operates  no  assignment  at  law,  the  same  principle  applies  in 
equity  to  a  draft  for  part  of  a  fund  that  applies  to  a  draft  for  the 
whole,  and  that  "in  each  case  a  trust  would  be  created  in  favor  of  the 
equitable  assignee  of  the  fund,  and  would  constitute  an  equitable  lien 

6.  Woinstock  v.  Bellwootl,  12  Hush,  139. 

6.  See  cases  cited,  ante,  §  IGa;  Yciites  v.  Groves,  1  Ves.  Jr.  281;  Bradley  v. 
Root,  5  Paige  Ch.  tMl;  Lett  v.  Morris,  4  Sim.  607;  Row  v.  Dawson,  1  Ves.  331; 
Ex  parte  South,  3  Swanst.  391;  Po|)e  v.  Iluth,  14  Cal.  407;  Christmas  v.  Russell, 
14  Wall.  84;  Knapp  v.  Alvord,  10  Paige,  205;  McPhee  &  McGinnity  v.  Fowler, 
30  Colo.  202,  So  Pac.  421. 

7.  Desesse  v.  Napier,  1  McCord,  107;  Vreeland  v.  Blunt,  6  Barb.  182;  Peyton 
V.  Hallet,  1  Cai.  363;  Pope  v.  Huth,  14  Cal.  407;  Cutta  v.  Perkins,  12  Mass.  206; 
Israel  v.  Douglas,  1  H.  Bl.  239;  Clark  v.  Adair,  cited  by  Buller,  J.,  in  Masters  v. 
Miller,  4  T.  R.  343;  Tatlock  v.  Harris,  3  T.  R.  180  (aemble);  Ex  parte  Alderson, 
1  Madd.  53.    Sec  ante,  §  16a. 

8.  3  Lead.  Cas.  Eq.  (3d  Am.  ed.)  356;  Poydras  v.  Delamere,  13  La.  98  (O.  S. 
1838). 

9.  3  Lead.  Cas.  Eq.  3.">0;  Field  v.  Mayor  of  New  York,  6  N.  Y.  179;  Pease  v. 
Landauer,  63  Wis.  20,  citing  the  t€Xt. 


28  NEGOTIABLE    INSTRUMENTS  §  24 

upon  it."  We  can  perceive  no  sufficient  reason  for  excluding  a  bill  for 
part  of  a  fund,  whether  it  be  negotiable  or  not,  from  operating  as  an 
equitable  assignment  within  the  limitations  of  the  text.  It  would  only 
carry  out  to  its  legitimate  sequence  the  theory  of  the  bill.  The  doc- 
trine of  equitable  assignment  is  progressive,  and  we  regard  the  re- 
fusal of  courts  to  extend  it  to  bills  for  parts  of  funds  as  the  result  of 
that  ancient  prejudice  against  commercial  instruments,  which  Lord 
Mansfield  so  vigorously  combated,  but  the  traces  of  which  yet  remain 
in  precedents  which  would  be  "  more  honored  in  the  breach  than  in  the 
observance."  '°  It  is  necessary,  in  order  to  support  the  avSsignment, 
that  it  should  be  upon  a  valuable  consideration.'^ 

Under  Negotiable  Instrument  statute. — The  statute  declares  that  a 
bill  of  itself  does  not  operate  as  an  assignment  of  the  funds  in  the 
hands  of  the  drawee  available  for  the  payment  thereof,  and  the  drawee 
is  not  liable  on  the  bill  unless  and  until  he  accepts  the  same.^^ 


SECTION   IV 

DONATIO   MORTIS   CAUSA 

§  24.  A  gift  made  in  contemplation  of  death  is  termed  donatio 
mortis  causa,  an  expression  derived,  with  the  law  on  the  subject,  from 
the  civil  law."  And  the  requisites  to  the  validity  of  such  a  gift  are: 
(1)  That  it  be  made  with  a  view  to  the  donor's  death;  (2)  that  the 
donor  should  die  of  his  then  ailment  or  peril;  ^^  (3)  that  there  be  a 

10.  Story's  Eq.  Jur.,  §  1044.  See  also  Zilke  v.  Woodley,  36  Wash.  84,  78  Pac. 
299,  holding  that  where  a  draft  was  deposited  in  a  bank  for  collection  with  in- 
structions to  credit  a  certain  person  with  a  stated  amount  when  the  money  was 
collected,  this  constituted  an  equitable  assignment  of  that  amount  to  such  person. 
A  draft  on  a  special  fund  created  to  pay  the  claims  for  which  the  draft  was 
given  is  in  equity  an  assignment  pro  tanto  of  the  fund.  McBride  v.  American  Ry. 
&  Lighting  Co.  (Tex.  Civ.  App.),  127  S.  W.  229. 

11.  Alger  V.  Scott,  54  N.  Y.  14. 

12.  Appendix,  sec.  127.    See  also  Fulton  v.  Gesterding,  47  Fla.  150,  36  So.  56. 

13.  Guinan's  Appeal,  70  Conn.  347,  39  Atl.  482,  Baldwin,  J.,  saying:  "It  dif- 
fers from  a  gift  inter  vivos  in  that  the  donee  takes  a  present  title  Uable  to  be  di- 
vested on  the  recovery  of  the  donor.  If  the  donor  dies,  then  the  effect  of  the  gift 
is  the  same  as  in  case  of  a  gift  inter  vivos." 

14.  It  seems,  however,  that  such  gift  will  not  be  invalidated  because  the  death 
results  from  a  cause  not  immediately  the  one  anticipated.  Thus  where  a  gift 
was  made  in  anticipation  of  a  fatal  result  from  a  surgical  operation,  and  death 
occurred  three  days  after  the  operation,  but  not  as  a  result  thereof,  it  was  held 


§  24  DONATIO   MORTIS   CAUSA  29 

delivery,  real  or  symbolical,  of  the  thing  given,^^  and  (4)  that  the  gift 
be  accepted  by  the  donee.  ^^  The  gift  must  take  effect  in  the  lifetime 
of  the  donor,  for  otherwise  it  would  be  available  only,  if  at  all,  as  a 

that  the  gift  was  not  thereby  invalidated.  Ridden  v.  Thrall,  55  Hun,  185,  7  N.  Y. 
Supp.  822.  To  sustain  such  a  gift,  it  must  be  made  under  apprehension  of  death 
from  some  present  disease,  or  other  impending  -peril,  and  it  becomes  void  by  a 
recovery  from  the  disease  or  escape  from  the  peril.  It  is  not  necessary  that  it 
should  be  made  in  extremis,  and  when  there  is  not  time  or  opportunity  to  make 
a  will — in  order  to  render  the  gift  effectual  it  is  not  necessary  that  the  donor 
should  die  from  the  apprehendetl  disease — it  is  sufficient  if,  and  before  his  re- 
covery from  that  diseas*,",  he  died  from  some  other  disease  existing  at  the  time.  See 
Ridden  v.  Thrall,  125  N.  Y.  572,  26  N.  E.  627,  21  Am.  St.  Rej).  758.  See  also 
the  case  of  Board  of  Missions  v.  Mechanics'  Savings  Bank,  40  Ai)p.  Div.  120, 
54  N.  Y.  Supp.  28,  57  N.  Y.  Supp.  582. 

15.  Dickshicd  v.  Exchange  liank,  28  W.  Va.  340;  McCord  v.  McCord,  77  Mo. 
166.  Delivery  to  a  third  person  for  the  donee  is  sufficient.  Woodburn  v.  Wood- 
burn,  123  111.  619;  Dunbar  v.  Dunbar,  80  Me.  154;  Hatch  v.  Atkinson,  56  Me. 
324;  Daniel  v.  Smith,  75  Cal.  548;  VVaynesburg  College  Appeal,  HI  Pa.  St.  130; 
Gano  V.  Fisk,  43  Ohio  St.  402;  Burton  v.  Bridgejjort,  52  Conn.  398;  Curtis  v. 
Portland  Bank,  77  Me.  151;  Newton  v.  Snyder,  44  Ark.  42;  Stephenson  v.  King, 
81  Ky.  425;  Beaver  v.  Beaver,  117  X.  Y.  421.  In  the  c:ise  of  Ridden  v.  Thrall, 
sujrra,  held,  that  any  delivery  of  property  which  transfers  either  the  legal  or 
equitable  title  is  sufficient  to  effectuate  the  gift.  The  words  of  donor,  referring 
to  gift  of  deposit  in  bank,  "I  think  I  am  going  to  die,  take  these  books  (referring 
to  pass-books),  bury  me  out  of  them  and  what  is  left  out  of  it,  is  yours,"  do  not 
limit  or  place  a  condition  upon  th('  gift,  but  simjjly  impo.se  upon  the  donee  a 
trust  duty  to  pay  the  expen.ses  of  the  donor's  funeral,  ami  in  connection  with  other 
evidence,  i.s  sufficient  to  establish  a  valid  gift  caum  mortis  of  the  deposit.  Pod- 
more  V.  South  Brooklyn  Savings  In.stitution,  48  App.  Div.  218,  62  N.  Y.  Supp. 
901,  and  ciuses  there  cited.  And  such  a  gift  is  not  invalidated  by  the  fact  that 
it  is  accompanied  with  a  direction  to  the  donee,  to  divide  the  balance  of  the  money 
after  the  payment  of  the  donor's  doctor's  bill  and  funeral  expenses,  between 
himself  and  others  named  by  the  donor.  See  Loucks  v.  Johnson,  70  Hun,  565, 
24  N.  Y.  Supp.  267.  The  same  prinri[)le  of  law  as  to  delivery  is  equally  ajjplicable 
to  gifts  inter  vivos,  and  it  has  been  held  that  if  the  gift  be  from  father  to  son,  and 
the  son  has  no  general  or  testamentary  guardian,  the  possession  of  the  pji.ss-book 
by  the  father,  tis  the  guardian  by  nature  of  the  child,  does  not  destroy  the  gift, 
by  reason  of  nondelivery  of  the  pa.ss-book  to  the  child.  See  Beaver  v.  Beaver, 
62  Hun,  194,  16  N.  Y.  Supp.  476,  746;  Jones  v.  Weakley,  99  Ala.  441,  12  So.  420, 
42  Am.  St.  Rep.  84,  8  S.  E.  721;  Yancy  v.  Field,  85  Va.  759;  Thomas  v.  Lewis, 
89  Va.  1,  15  S.  E.  389,  37  Am.  St.  Rep.  848. 

16.  See  22  Moak's  Eng.  Rep.  687-688,  and  cases  cited.  Where  a  mother  on 
her  death-bed  delivered  a  note  for  her  daughter  to  another,  whom  the  daughter 
had  designated  as  her  agent  to  receive  it,  under  circumstances  indicating  the 
mtentive  to  make  a  gift  either  inter  vivos  or  viortis  causa,  the  delivery  was  suffi- 
cient to  pa.ss  title  to  the  note,  and  it  will  be  presumed  that  it  was  accepted.  Am- 
nion V.  Martin,  59  Ark.  191,  26  S.  W.  826. 


30  NEGOTIABLE   INSTRUMENTS  §  24 

testamentary  disposition.  It  must  take  effect  during  the  life  of  the 
donor  as  an  executed  and  complete  transfer  of  the  thing,  although  the 
right  of  the  donee  is  subject  to  be  divested  by  actual  revocation  of 
the  donor,  by  his  survival  of  apprehended  peril,  by  his  outliving  the 
donee,  or  by  the  insufficiency  of  his  estate  to  pay  his  debts. ^^  As  to 
the  character  of  the  article  which  may  be  the  subject  of  such  a  quasi- 
testamentary  disposition,  the  common  law  has  undergone  consider- 
able change.  Originally,  it  was  limited  to  chattels  which  might  be 
delivered  by  the  hand ;  and  the  rule  was  relaxed  slowly  and  somewhat 
reluctantly  by  the  courts,  under  the  apprehension  that  fraud  upon 
persons  in  dying  condition  might  be  encouraged  by  its  extension. 
Bank  notes  were  next  embraced,  with  lottery  tickets,  and  securities 
transferable  by  delivery,  such  as  notes  payable  to  bearer  ^*  or  to  order, 
and  indorsed  in  blank,  while  notes  not  so  payable  were  excluded. ^^ 
Subsequently  it  was  extended  to  bonds,^  and  the  later  cases  hold  that 
the  note  of  a  third  party  not  negotiable,  or  if  negotiable,  not  indorsed, 
but  delivered,  passes  by  such  a  donation,  with  a  right  to  use  the  name 
of  the  personal  representative  of  the  promisee,  to  collect  it  for  the 
donee's  own  use,  the  equitable  title  passing  to  him.^^    In  further  ex- 

17.  Basket  v.  Hassell,  107  U.  S.  609;  Gass  v.  Simpson,  4  Coldw.  288;  Parcher 
V.  Saco  Bkg.  &  Sav.  Inst.,  78  Me.  470;  Nutt  v.  Morse,  142  Mass.  3;  Walsh's 
Appeal,  122  Pa.  St.  177;  Kill  v.  Weaver,  94  N.  C.  274;  Connor  v.  Root,  11  Colo. 
183;  Daniel  v.  Smith,  75  Cal.  548;  Seybold  v.  Nat.  Bank,  5  N.  Dak.  460,  67  N.  W. 
682;  Plasterstein  v.  Hoes,  37  App.  Div.  421,  56  N.  Y.  Supp.  103;  Gammon  The- 
logical  Seminary  v.  Robbins,  128  Ind.  85,  27  N.  E.  341.  The  same  principle  ap- 
plies to  a  gift  inter  vivos.    Zeller  v.  Jordan,  105  Cal.  43,  38  Pac.  640. 

18.  Miller  v.  Miller,  3  P.  Wms.  356,  in  which  case  it  was  held  that  bank  notes 
passed,  but  a  note  payable  to  the  donor's  order  did  not.  Chitty  on  Bills  (13th 
Am.  ed.),  3. 

19.  See  Chase  v.  Redding,  13  Gray,  420. 

20.  Snellgrave  v.  Bailey,  3  Atk.  214;  Ward  v.  Turner,  2  Ves.  Sr.  431;  Duf- 
field  V.  Elwes,  1  Bligh,  409,  in  which  case  a  bond  with  mortgage  deeds  deliv- 
ered to  the  donee  was  held  to  create  a  trust  in  his  favor.  Leyson  v.  Davis  et  al., 
17  Mont.  220,  42  Pac.  775. 

21.  Chase  v.  Redding,  13  Gray,  418,  in  which  case  it  was  held  that  a  gift  mortis 
causa  of  promissory  notes,  secured  by  mortgages,  with  assignments  of  the  mort- 
gages, was  valid.  Grover  v.  Grover,  24  Pick.  264;  Sessions  v.  Moseley,  4  Cush. 
87;  Turpin  v.  Thompson,  2  Mete.  (Ky.)  420;  Jones  v.  Deyer,  16  Ala.  221;  Borne- 
man  v.  Sidlinger,  15  Me.  429;  Brown  v.  Brown,  18  Conn.  410;  McConnell  v. 
McConnell,  11  Vt.  290;  Parker  v.  Marston,  27  Me.  196;  Tillinghast  v.  Wheaton, 
8  R.  I.  536;  Veal  v.  Veal,  29  L.  J.  Ch.  321,  27  Beav.  303;  RankUn  v.  Weguelin, 
27  Beav.  309;  Stevens  v.  Stevens,  2  Hun,  472;  Druke  v.  Heiken,  61  Cal.  346,  44 
Am.  Rep.  553;  Byles  on  Bills  (Sharswood's  ed.),  295-296;  Thompson  on  Bills, 
20,  21;  Redfield  on  Wills,  312,  313.  Contra,  Bradley  v.  Hunt,  5  Gill  &  J.  54,  in 
which  case  it  is  limited  to  bank  notes  and  notes  payable  to  bearer. 


§  24a  DONATIO   MORTIS   CAUSA  31 

tension  of  the  principle,  it  has  been  held  that,  even  if  the  donor  indorse 
a  bill  or  note  of  a  third  person  as  donatio  mortis  causa,  the  donation 
will  be  valid,  although  the  estate  of  the  indorser  will  not  be  bound 
upon  his  indorsement,  as  it  is  without  consideration.  And  this  seems 
to  us  at  once  a  just  extension  and  limitation  of  the  principle.^^  This 
doctrine  obtains  in  Scotland,  where  it  has  been  decided  in  several 
cases;  -^  and  it  has  been  carried  even  further  in  England,  where  it  has 
been  held  that  bills  deUvered  on  death-bed,  but  without  consideration, 
were  valid  gifts,  and  authorized  the  donees,  in  the  first  place,  to  force 
the  donor's  executors  to  indorse  the  bills,  and,  in  the  next  place,  to 
recover  from  the  acceptors,  the  indorsation  being  regarded  as  a  mere 
technicality,^^  In  Louisiana,  where,  on  the  day  before  he  died, 
plaintiff's  testator  delivered  to  defendant  the  check  of  another,  pay- 
able to  and  indorsed  by  him  in  blank,  and  it  was  not  presented  until 
after  the  donor's  death,  it  was  held  a  valid  gift  causa  morlis.^^ 

§  24a.  Deposits  in  bank  may  be  the  subject  of  a  donatio  mortis 
causa,  and  the  doctrine  obtains  in  the  United  States  that  the  deliv- 
ery of  a  bank-book  containing  entries  of  deposits  in  bank  with  the 
intent  to  make  the  deposits  a  gift,  l)y  a  person  in  contemplation  of 
death,  to  the  donee,  constitutes  a  valid  gift  of  the  money  deposited. '^^ 

22.  Weston  V.  Hight,  17  Me.  287. 

23.  Thompson  on  Hills,  20.  In  one  case,  whore  a  person  had  indorsed  a  bill 
for  1,000  marks  to  his  grandson,  then  under  age,  and  put  it  thus  indorsed,  but 
without  particular  instructions,  into  the  hands  of  his  son  and  general  disponee 
(distributee),  the  court,  in  an  action  for  deliver>'  brought  by  the  grandson,  de- 
cerned (decreed)  in  his  favor.  In  a  later  case,  where  the  holder  of  two  promissory 
notes  indorsed  them  on  his  death-bed,  and  delivered  them  to  a  person,  telling 
him  to  deliver  one  to  a  servant,  as  a  reward  for  services,  and  the  other  to  certain 
parties,  as  a  mark  of  gratitude  for  past  favors,  the  court  sustained  the  right  of 
the  donees  to  sue  the  makers. 

24.  Veal  v.  Veal,  29  L.  J.  Ch.  321,  27  Beav.  303;  Rankin  v.  WegueUn,  27 
Beav.  309. 

25.  Burke  v.  Bishop,  27  La.  Ann.  465,  27  Am.  Rep.  567. 

26.  Citizens'  Sav.  Bank  v.  Mitchell,  18  I.  R.  739,  30  Atl.  626;  Hill  v.  Steven- 
son, 63  Me.  364;  Drew  v.  Hagerty,  81  Me.  243;  Camp's  Appeal,  36  Conn.  88,  4 
Am.  Rep.  39;  Minor  v.  Rogers,  40  Conn.  512;  Ray  v.  Simmons,  11  R.  I.  266; 
Martin  v.  Funk,  75  N.  Y.  134;  Millspaugh  v.  Putnam,  11  Abb.  Pr.  380;  Tilling- 
ha.st  V.  Wheaton,  8  R.  I.  536,  Durfee,  J.,  saying:  "It  is  true  we  find  no  ca.se  which 
is  the  exact  parallel  of  the  case  before  us,  but  the  principle  declared  in  the  cases 
to  which  we  have  referred  is  broad  enough  to  include  the  case  before  us;  and 
therefore  whatever,  as  a  matter  of  wise  pohcy,  we  may  think  of  the  expediency 
of  holding  a  savings  bank  to  be  the  subject  of  a  gift  mortis  causa,  we  do  not  see 
how,  as  a  matter  of  law,  we  can  hold  otherwi.se."    Contra,  McConnell  v.  Murray, 


32  NEGOTIABLE   INSTRUMENTS  §  24a 

Delivery  of  the  bank-book  of  the  depositor  is  all  the  delivery  of  which 
the  subject  is  capable.-^  A  certificate  of  deposit  may  also  be  the  sub- 
ject of  a  valid  gift  causa  mortis,  but  it  must  be  indorsed  and  delivered 
to  the  donee  so  as  to  vest  in  him  complete  title,  or  so  delivered  without 
indorsement  as  to  create  an  equitable  assignment  of  the  fund  it 
represents,  divesting  the  donor  of  all  control  and  dominion  over  it.-^ 
In  a  number  of  cases  it  has  been  held  that  where  a  person  deposits  a 
sum  in  bank  in  his  own  name  as  trustee  for  another,  and  recognizes  it 
as  his,  a  complete  and  irrevocable  gift  is  effected  to  the  cestui  que 
trust, ^^  and  if  the  trustee  withdraw  the  amount  his  personal  representa- 
tive will  be  liable  for  it.^*^  The  courts  adopting  these  views  rest  them 
upon  the  grounds :  that  by  entering  the  deposit  to  the  credit  of  the 
depositor  as  trustee  for  another,  a  plain  declaration  of  trust  is  made; 
accompanied  by  a  formal  transfer  of  the  money  which  is  the  subject- 
matter  to  himself  as  trustee,  that  thereby  the  title  passes;  and  that 
retention  of  the  pass-book  by  the  self-constituted  trustee  is  not  in- 
consistent with  the  intention  to  give  the  deposit  to  the  cestui  que  trust, 

Irish  R.  3  Eq.  460.  Deposits  in  bank  can  likewise  be  the  subject  of  a  gift  inter 
vivos.  See  Guinan's  Appeal  from  Probate,  70  Conn.  342;  Buckingham's  Appeal 
from  Probate,  60  Conn.  143;  Scrivens  v.  North  Easton  Savings  Bank,  166  Mass. 
255,  44  N.  E.  251;  Policy  v.  Hicks,  58  Ohio  St.  218,  50  N.  E.  809.  Delivery  of  a 
pass-book  in  a  saving  bank  to  the  donee  is  a  sufficient  delivery,  but  such  delivery 
of  a  pass-book  in  an  ordinary  bank  would  not,  as  the  depositor  docs  not  thereby 
lose  control  over  the  deposit,  Jones  v.  Weakley,  99  Ala.  441,  12  So.  420,  42  Am. 
St.  Rep.  84.  See  also  Thomas  v.  Lewis,  89  Va.  1,  15  S.  E.  389,  37  Am.  St.  Rep. 
848. 

27.  Martin  v.  Funk,  75  N.  Y.  134;  Whalen  v.  Milholland,  89  Md.  199,  43  Atl. 
45. 

28.  Basket  v.  Hassell,  107  U.  S.  613;  Amis  v.  Witt,  33  Beav.  619;  Moore  v. 
Moore,  L.  R.,  18  Eq.  474;  Hewitt  v.  Kaye,  L.  R.,  6  Eq.  198;  Westerlo  v.  Dewitt, 
36  N.  Y.  340;  Emery  v.  Clough,  63  N.  H.  552;  Leyson  v.  Davis  et  al,  17  Mont. 
220,  42  Pac.  775;  Telford  v.  Patton,  144  111.  611,  quoting  text,  33  N.  E.  1119. 

29.  Martin  v.  Funk,  75  N.  Y.  134;  Minor  v.  Rogers,  40  Conn.  512;  Willis  v. 
Smyth,  91  N.  Y.  297.  But  the  character  of  such  transaction  is  not  conclusively 
established  by  the  mere  fact  of  the  deposits  in  the  savings  bank  so  as  to  preclude 
evidence  of  contemporaneous  facts  and  circumstances,  constituting  the  res  gestce 
to  show  that  the  real  motive  of  the  depositor  was  not  to  create  a  trust  but  to 
accomplish  some  independent  and  different  purpose  inconsistent  with  an  inten- 
tion to  divest  himself  of  the  beneficial  ownership  of  the  fund.  Macey  v.  WilUams, 
83  Hun,  243,  31  N.  Y.  Supp.  620.  And  subsequent  acts  or  declarations  of  the 
depositor  not  connected  with  the  deposit  so  as  to  constitute  res  gestce  will  not 
avail  to  defeat  the  trust.  See  Hyde  v.  Kitchen,  69  Hun,  280,  23  N.  Y.  Supp. 
573;  Mize  v.  National  Bank,  60  Mo.  App.  358;  Sayre  v.  Weil,  94  Ala.  466,  10  So. 
546. 

30.  Milholland  v.  Whalen,  89  Md.  212;  Minor  v.  Rogers,  40  Conn.  512. 


§  24b  DONATIO   MORTIS   CAUSA  33 

because  the  legal  title  remains  in  the  trustee,  although  the  beneficial 
interest  has  been  transferred ;  that  the  pass-book  is  not  the  property, 
but  only  the  voucher  for  it;  ^^  and  that  the  trust  is  valid,  although 
unknown  to  the  beneficiary.^^  If  the  trust  so  declared  rests  upon  a 
legal  obligation,^^  and  probably  if  upon  a  moral  obligation,^'*  it  should 
be  supported,  and  it  is  not  needful  to  the  validity  of  the  trust  that 
notice  be  given  to  the  beneficiary.^'^  The  intention  of  the  trustee  to 
pass  the  title  must  be  clearly  manifested,  and  if  shown  not  to  have 
existed,  it  would  be  defeated.'^''  A  number  of  the  cases  turn  rather 
upon  the  principles  that  control  voluntary  settlements  than  upon  the 
peculiar  doctrines  of  donatio  mortis  causa.  But  where  the  declaration 
of  the  trust  is  plainly  made,  as  by  an  entry  in  a  pass-book  to  the 
credit  of  the  depositor  as  trustee  for  another,  and  it  is  shown  to  have 
been  the  depositor's  intention  that  at  his  death  the  depositor  should 
take  the  deposit,  then,  as  it  seems  to  us,  it  should  be  supported  as  a 
valid  donatio  mortis  causa. 

§  24b.  Delivery  to  the  donee,  or  some  other  person  for  him,  is 
rcfiuisite  to  a  valid  donatio  viorlis  causa,"^^  as  it  is  to  gifts  inter  vivos,^^ 
but  delivery  may  be  symbolically  or  constructively  madc.^''  And 
when  the  depositor  causes  the  sum  in  bank  to  be  credited  to  himself 
as  trustee  for  another,  it  is  deemed  a  sufficient  delivery,  as  we  have 
already  seen.""' 

31.  Milholland  v.  Whalcn,  89  Md.  212,  43  Am.  St.  Rep.  45;  Martin  v.  Funk, 
75  N.  Y.  1:M,  Church,  C.  J. 

32.  Hay  v.  Simmons,  11  R.  I.  200,  23  Am.  Rep.  266;  Martin  v.  Funk,  75  N.  Y. 
134. 

33.  Brabrook  v.  Boston,  etc.,  Sav.  Bank,  104  Mass.  228. 

34.  Brabrook  v.  Boston,  etc.,  Sav.  Bank,  104  Mass.  228. 

35.  Brabrook  v.  Boston,  etc.,  Sav.  Bank,  104  Ma.ss.  228. 

36.  Clark  v.  Clark,  108  Mass.  228;  Met.  Sav.  Bank  v.  Murphy,  82  Md.  314, 
33  Atl.  640,  51  Am.  St.  Rep.  473;  Sav.  Bank  v.  McCarthy,  89  Md.  194,  42  Atl.  929. 

37.  Hill  v.  Stevenson,  63  Me.  304;  Dole  v.  Lincoln,  31  Me.  422;  Wells  v.  Tucker, 
3  Binn.  360;  Dunbar  v.  Dunbar,  80  Me.  154;  Hatch  v.  Atkin.son,  50  Me.  324; 
Whalen  v.  MilhoUand,  89  Md.  199,  43  Atl.  45;  McMahon  v.  Newton  Sav.  Bank, 
67  Conn.  80,  34  Atl.  709;  Jennings  v.  Neville,  180  111.  270,  54  N.  E.  202. 

38.  Spooner  v.  Hilfish,  92  Va.  334,  23  S.  E.  751;  Ewing  v.  Ewing,  2  Leigh,  343; 
Miller  v.  Jeffress,  4  Gratt.  479;  Lee  v.  Boak,  11  Gratt.  185. 

39.  See  post,  §§  03,  07;  Bumey  v.  Ball,  24  Ga.  505;  Darland  v.  Taylor,  52 
Iowa,  503;  Stephenson  v.  King,  81  Ky.  425. 

40.  The  cases  on  this  subject  are  too  numerous,  and  their  refinements  too 
various  and  subtle,  to  admit  of  amplification  in  this  work.  Discussion  of  the 
subject  may  be  found  in  Cent.  L.  J.,  Jan.  0,  1882,  vol.  14,  pp.  10,  18,  31  Am. 

3 


34  NEGOTIABLE    INSTRUMENTS  §  25 

§  25.  Donee's  own  note. — The  donee's  own  note  may  l)e  made 
a  gift  mortis  causa,  and  its  destruction  by  the  donor,  with  intent 
that  it  be  extinguished  and  released  in  the  event  of  his  death,  would 
suffice  to  effect  it."*^  Strict  proof  of  the  gift  donatio  mortis  causa  is 
requisite.  A  mere  declaration  of  a  gift  alone  is  insufficient,^^  and  the 
evidence  should  be  closely  scrutinized.^^  But  the  gift  of  the  donor's 
own  note  as  donatio  mortis  causa  would  not  be  valid,  as  his  representa- 
tives might  prove  that  it  was  without  consideration;  ''■'  and  so  the 
draft  of  the  donor  on  a  third  person  who  holds  his  funds  it  has  been 
held  is  not  an  assignment  thereof  until  accepted,  and  is  not  a  valid 
mortuary  gift.''^  The  theory  of  the  law  is  to  throw  the  salutary  checks 
which  are  found  in  the  formal  execution  of  wills  around  those  who  are 
associated  with  the  donor  in  his  dying  condition;  and  to  hold  these 

Rep.  453,  26  Am.  Rep.  684,  and  in  followinp  cases:  Gerrish  v.  New  Bedford  In- 
stitution for  Saving.s,  128  Mass.  l.TO;  Brabrook  v.  Boston,  etc.,  Bank,  104  Mass. 
228;  Clark  v.  Clark,  108  Miuss.  522;  Powers  v.  Provident  Ins.  Co.,  124  Mtuss.  377; 
Stone  V.  Bishop,  4  Cliff.  (U.  8.  C.  C.)  593;  Bla,s(l(>ll  v.  Locke,  52  N.  II.  238;  Howard 
V.  Windham  liank,  40  Vt.  597;  Kerrigan  v.  Hantigan,  43  Conn.  17. 

41.  Darland  v.  Taylor,  52  Iowa,  503.  In  this  ea.se  a  lady  holding  her  grand- 
son's notes  destroyed  them,  stating  that  she  did  not  expect  to  live  long,  and 
in  case  of  her  death  did  not  desire  that  he  may  be  compelled  to  pay  them.  Held 
a  valid  donatio  mortis  causa.  To  same  effect,  see  Gardner  v.  Gardner,  22  Wend. 
525. 

42.  Yancy  v.  Field,  85  Va.  761,  8  S.  E.  721. 

43.  Smith  v.  Smith,  92  Va.  696,  24  S.  E.  280. 

44.  Basket  v.  Hassell,  107  U.  S.  612;  Harris  v.  Clark,  3  N.  Y.  93  (overruling 
Wright  v.  Wright,  1  Cow.  598);  Raymond  v.  Sellick,  10  Conn.  480;  Parish  v. 
Stone,  14  Pick.  198;  Warren  v.  Durfee,  126  Mass.  338;  Irish  v.  Nutting,  47  Barb. 
370;  Holley  v.  Adams,  16  Vt.  206.  In  Hamer  v.  Moore,  6  Ohio  St.  239,  the  note 
ran:  "For  value  received,  I  promise  to  pay  to  Mrs.  Hamer,  wife  of  John  Hamer, 
the  sum  of  $300,  as  a  small  recompense  for  the  kindness  shown  to  me  by  her. 
The  executors  of  my  last  will  and  testament  are  hereby  directed  to  pay  the  above 
to  Mrs.  H.  or  her  sons,  Moses  and  John,  after  my  decease."  Signed  and  attested. 
It  was  held  invalid  as  a  gift  causa  mortis.  In  Helfenstein's  Estate,  77  Pa.  St. 
328,  H.  made  his  note  for  the  sum  of  $4,000,  payable  one  year  after  date,  to 
Treasurer  of  Theological  Seminary,  and  delivered  it  to  the  chairman  of  the  semin- 
ary library  committee;  subjoined  to  it  was  a  statement  that  it  was  a  donation, 
the  interest  of  which  was  to  be  applied  to  the  purchase  of  books  for  the  seminary. 
Shortly  afterward  the  maker  died.  Held,  that  the  note,  being  without  considera- 
tion, and  not  having  been  accepted  by  the  trustees  before  the  maker's  death,  was 
revoked  thereby,  and  a  subsequent  acceptance  of  it  was  ineffective.  Tracy  v. 
Alvord,  118  Cal.  654,  50  Pac.  757,  citing  text. 

45.  Harris  v.  Clark,  3  N.  Y.  93;  Craig  v.  Craig,  3  Barb.  Ch.  76  (overruling 
Wright  v.  Wright,  1  Cow.  598);  Billing  v.  Devaux,  3  Man.  &  Gr.  565.  See  Bay- 
ley  on  Bills,  348,  intimating  the  contrary.  See  Lawson  v.  Lawson,  1  P.  Wms. 
441,  and  post,  §  26. 


§  26  DONATIO    MORTIS   CAUSA  35 

dispositions  valid  would,  in  effect,  dispense  with  the  guards  against 
fraud  and  imposition  which  are  found  in  the  rules  which  govern  the 
authentication^  and  probate  of  last  testaments.  "The  very  circum- 
stance," as  has  been  said,  "which  sometimes  renders  a  will  suspicious, 
is  the  living  principle  in  a  donatio  mortis  causa."  *^  But  it  would  seem 
that  the  payee  even  of  an  undelivered  bill  could  recover,  in  England, 
if  it  were  attested  in  terms  of  the  Wills  Act.^^ 

§  26.  Whether  donor's  check  is  valid  donatio  mortis  causa. — If 
a  check  of  the  donor  be  tlclivcrcd  to  tlio  duuec;  as  duiuUiu  mortis  causa, 
and  the  donee  transfers  it  for  a  present  valuable  consideration,  or  in 
discharge  of  a  debt,  or  if  it  be  paiil  by  the  i^ank  before  it  is  apprised 
of  the  drawer's  death,  it  seems  to  be  conceded  by  the  authorities  that 
no  court  should  or  woukl  take  if  from  the  donee,  and  that  the  gift 
woukl  be  sustained  as  a  valid  donatio  mortis  causa.  '**  But  where  none 
of  these  circumstances  exist  the  gift  is  regarded  as  incomplete  and 
invalid,  the  check  Ix'iiig  consitlered  a  manilate  revoked  by  death,  and 
the  bank  not  being  justified  in  paying  it,  if  it  is  apprised  of  the  drawer's 
death. '^  The  better  opinion,  as  we  think,  is  that  the  l)ank  would  be 
justified  in  paying,  unless  in  addition  to  knowing  that  the  drawer  was 
dead,  it  also  knew  that  the  check  was  a  mere  gift;  ^  and  even  if  it  knew 
the  latter  fact  we  do  not  think  that  should  change  its  right  to  pay. 
It  is  observed  by  Vice-Chancellor  Malins  that  the  law  on  the  question 
considered  here  "seems  to  be  in  a  very  curious  state,"  and  that  "the 
result  of  the  authorities  appears  to  be  that  a  gift  of  a  bill  of  exchange. 


46.  Holloy  V.  Adums,  16  Vt.  206. 

47.  Gou^h  V.  Finilon,  7  Exch.  48. 

48.  Tate  V.  Ililbert,  2  Ves.  Jr.  118,  4  Bro.  C.  C.  291;  Rolls  v.  Pcarce,  5  Ch. 
Div.  730  (1877),  22  Mouk's  Eng.  Rep.  432.    See  §  1618a,  posf. 

49.  Ih'id.;  Burke  v.  Bi.shop,  27  La.  Ann.  465;  Matter  of  Smither,  30  Hun, 
632.  In  Biusket  v.  Ha-sscll,  107  U.  S.  61.5,  Matthews,  J.,  says  of  a  check  that, 
"an  shown  by  all  the  authorities,  and  upon  the  nature  of  the  case  it  cannot  be 
vahd  as  a  doiuilio  morlis  cawia,  even  when  it  is  payable  in  ■prccsenti,  unless  paid 
or  accept etl  while  the  donor  is  ahve;  how  much  less  so  when,  as  in  the  present 
case,  it  is  made  payable  only  upon  his  death."  But  "all  the  authorities"  do  not 
sustain  this  view.  In  Simmons  v.  Savings  Society,  31  Ohio  St.  530,  the  bank  was 
notified  after  drawer's  death  not  to  pay,  and  did  not  pay  the  check.  Held,  that 
check  was  revoked  by  drawer's  death,  and  payee  could  not  recover  of  his  estate. 
In  Thrasher  v.  Dyer,  69  Conn.  411,  37  Atl.  979,  Hammersly,  J.,  says:  "Gift  is 
not  completed  by  mere  delivery  of  a  check,  which  remains  unacted  on  in  the  hands 
of  the  payee."  Sec  jMst,  §  16186;  McXamara  v.  McDonald,  69  Conn.  485,  38 
Atl.  54,  61  Am.  St.  Rep.  48;  Zeller  v.  Jordan,  105  Cal.  43,  38  Pac.  640. 

50.  See  -post,  §  1618a,  and  notes. 


36  NEGOTIABLE    INSTRUMENTS  §  26a 

which  is  by  its  very  nature  payable  at  a  future  day,  may  be  a  good 
donatio  mortis  causa,  but  the  gift  of  a  check  is  not  valid  unless  it  is 
presented  for  payment,  or  paid  before  the  death  of  the  donor,"  and 
in  respect  to  the  case  then  under  adjudication  he  expressed  his  opinion 
to  be,  that  "when  a  man  gives  his  wife  a  check  it  is  in  substance  as 
complete  a  gift  as  if  he  had  handed  her  the  cash."  ^^ 

Where  a  bill  was  drawn  by  the  donor,  in  his  last  illness,  on  a  gold- 
smith, to  enable  his  wife  to  purchase  mourning,  it  was  held  in  an  early 
case  that  it  was  valid  as  donatio  viortis  causa,  and  would  operate  like 
a  direction  of  the  testator  touching  his  funeral,  which  ought  to  be 
observed  though  not  in  his  will;  "  and,  as  said  by  the  vice-chancellor 
in  the  case  already  cited,  we  "  can  see  no  reason  why,  if  a  bill  drawn  on 
a  goldsmith  would  be  a  valid  donatio  mortis  causa,  a  check  should  not 
be  so  too.-'"'  It  is  clear  that  no  donatio  mortis  causa  can  prevail  against 
the  creditors  of  the  donor  when  his  assets  would  be  otherwise  in- 
sufficient to  satisfy  their  claims,^^  nor  unless  delivered;  ^^  but  when 
no  such  question  arises,  we  see  no  reason  why  a  check  should  not  be 
supported  as  a  valid  disposition — as  checks  are  generally  regarded  as 
the  equivalent  of  cash.  And  consistently  with  the  general  principles 
that  prevail  as  to  donationcs  mortis  causa,  the  rule  should  be  that  bills 
or  checks  should  be  supported  as  such  as  to  all  parties,  except  in 
so  far  as  to  authorize  suit  against  the  decedent's  estate.  Being 
executory  contracts  as  to  the  decedent  and  his  estate,  they  are  without 
consideration,  and  might  be  defended  on  that  ground;  but  as  to  the 
drawees  and  other  parties  they  should  be  upheld.^^ 

§  26a.  The  validity  of  a  gift  causa  mortis  is  to  be  determined  by 
the  law  of  the  place  where  it  was  made,  without  regard  to  the  domicile 
of  the  donor." 

51.  Rolls  V.  Pearce,  5  Ch.  Div.  N.  C.  J.  730,  22  Moak's  Eng.  Rep.  436.  At 
variance  with  the  propositions  stated  in  the  text  is  the  case  of  Matter  of  James, 
78  Hun,  12S,  28  N.  Y.  Supp.  992,  which  holds  that  checks  given  by  a  person,  when 
djnng,  to  his  wife,  named  in  his  will  as  executrix,  in  the  absence  of  any  evidence 
explaining  why  such  checks  were  given,  or  the  purpose  for  which  they  were  re- 
ceived and  used,  must,  upon  her  accounting  as  executrix,  be  treated  as  a  part  of 
the  testator's  estate,  and  be  accounted  for  by  her.    (Dykman,  J.,  dissenting.) 

62.  Lawson  v.  Lawson,  1  P.  Wms.  440  (1718). 

63.  Rolls  V.  Pearce,  5  Ch.  Div.  730,  22  Moak's  Eng.  Rep.  432. 

64.  Chase  v.  Redding,  7  Gray,  418. 

65.  Ward  v.  Turner,  2  Ves.  Sr.  431.  See  Southern  Law  Review  for  April,  1875, 
p.  145,  and  ante,  §  24. 

66.  See  ante,  §  24. 

67.  Emery  v.  Clough,  63  N.  H.  552. 


CHAPTER  II 

DEFINITION  AND  ESSENTIAL  REQUISITES  OF  BILLS  AND  NOTES 

§  27.  A  bill  of  exchange  is  an  opon  letter  addressed  l)y  one  per- 
son to  a  second,  directing  him,  in  effect,  to  pay  absolutely,  and  at  all 
events,  a  certain  sum  of  mone\'  therein  named,  to  a  third  person  or  to 
any  other  to  whom  that  third  person  maj'  order  it  to  be  paid;  or  it  may 
be  payable  to  bearer  or  to  the  drawer  himself.^ 

1.  The  deBnitions  of  bills  and  notes  are  given  as  follows  by  various  writers. 
Blarkstone  defines  a  bill  of  exchange  to  be  "an  open  letter  of  request  from  one 
man  to  another,  desiring  him  to  paj'  a  sum  of  money  therein  named  to  a  third 
person  on  his  account."  2  Bl.  Com.  4GG.  Bayley  says:  "A  bill  of  exchange  is  a 
written  order  or  request,  and  a  promissory  note  a  written  promi.se,  for  the  pay- 
ment of  money  absolutely  and  at  all  events."  Bayley  on  Bills,  1.  Chitty  fol- 
lows Blackstone,  and  Chancellor  Kent  follows  Bayley.  Chitty  on  Bills,  1,  3 
Kent's  Com.  74.  Byles  .says:  ".\  bill  of  exchange  is  an  unconditional  written 
order  from  A.  to  B.,  directing  B.  to  pay  C.  a  .sum  of  money  therein  named." 
Byles  (Sharswoof^l's  e<l.),  1.  And  that  ".\  promi.s.s«r>'  note,  or,  jus  it  is  frequently 
called,  a  note  of  hand,  is  an  absolute  promi.se  in  writing,  signed,  but  not  sealed, 
to  pay  a  specifietl  sum  at  a  time  therein  limited,  or  on  demand,  or  at  sight,  to  a 
person  therein  nameil  or  designated,  or  to  his  order,  or  to  the  bearer."  Byles 
(Sharswood's  ed.)  [*ol.  In  Story  on  Bills  the  definition  of  a  bill  given  by  Bayley 
is  commended  as  concise,  clear,  and  accurate.  The  learned  author  a<Ids  however: 
"But  here  again  its  peculiar  distinguishing  (juality  in  modern  times,  its  negotia- 
bility, is  omitted,  which,  although  not  by  our  law  cs-scntial  to  the  instrument, 
is  still  that  which,  practically  speaking,  among  merchants,  constitutes  its  true 
character."  Mr.  Kyd  has  accordingly  given  the  more  extended  definition,  stat- 
ing it  to  be  "an  open  letter  of  request,  a<idres.scd  by  one  person  to  a  second,  desir- 
ing him  to  pay  a  sum  of  money  to  a  third,  or  to  any  other,  to  whom  that  third 
person  .shall  order  it  to  be  paid;  or  it  may  be  payable  to  bearer."  See  Kyd  on 
Bills,  3,  and  Story  on  Bills,  §  3.  Tiedemann  .says:  "A  bill  of  exchange  is  an  un- 
conditional WTitten  order  by  one  person  on  another,  directing  him  to  pay  to  a 
third  person,  or  to  his  order,  or  to  the  bearer  the  sum  of  money  therein  namtnl." 
Tiedemann  on  Commercial  Paper,  §  2.  In  Randolph  on  Commercial  Paper, 
§  3,  it  is  said:  "A  bill  of  Exchange  is  an  unconditional  order  for  the  payment  of 
a  certain  sum  of  money  by  the  person  addressed  in  it  to  the  person  in  whose 
favor  it  is  drawn."  In  Story  on  Promis.sory  Notes  it  is  said:  "A  promissory  note 
may  be  defined  to  be  a  wTitten  engagement  by  one  person  to  pay  another  person, 
therein  named,  absolutely  and  unconditionally,  a  certain  sum  of  money  at  a 
time  s])ecified  therein."    Story  on  Notes,  §  1.    Without  adopting  the  precise  Ian- 

37 


3^  REQUISITES   OF   BILLS   AND   NOTES  §  28 

Abram,  who  draws  the  bill,  is  called  the  drawer;  Benjamin,  to 
whom  it  is  directed,  is  called  the  drawee,  and  upon  accepting  it,  be- 
comes the  acceptor.  Charles,  to  whom  the  bill  is  made  payable,  is 
called  the  payee. 

If  the  bill  be  payable  to  "Charles  only,"  it  is  not  negotiable;  but  if 
payable  to  "Charles  or  order,"  he  may,  by  indorsing  it,  direct  that  it 
be  paid  to  David,  and  in  that  case  Charles  becomes  the  indorser,  and 
David  the  indorsee. 

§  28.  Definition  of  promissory  note. — A  promissory  note  or  note 
of  hand,  as  it  is  often  called,  is  an  open  promise  in  writing  by  one 
person  to  pay  another  person  therein  named,  or  to  his  order,  or 
to  bearer,  a  specified  sum  of  money  absolutely  and  at  all  events.- 

gua^c  of  any  author,  wo  have  given  herein  definitions  which  seem  to  us  more 
accurate  than  some  others,  and  which,  at  le;ist,  cannot  he  misleading.  In  Allen 
V.  Leavens,  26  Oreg.  169,  37  Pac.  488,  46  Am.  St.  Rep.  613,  citing  text,  the  court 
held  that  a  promise  to  accept  the  order  of  another  with  such  other's  name  in- 
dorsed thereon  is  in  no  sense  a  bill  of  exchange.  This  case  is  reported  in  26  L.  R.  A. 
620,  with  a  useful  note  collecting  the  authorities  on  the  validity  of  parol  promises 
to  accept  orders  or  bills  of  exchange,  (a)  where  the  orders  or  bills  have  been  drawn, 
and  (b)  where  the  orders  or  bills  have  not  been  drawn.  See  Woodall  v.  People's 
Nat.  Bank,  153  Ala.  756,  45  So.  194;  Culbertson  v.  Nelson,  93  Iowa,  187,  61  N.  W. 
854,  57  Am.  St.  Rep.  266,  quoting  with  approval  the  text;  Bothwell  v.  Corum, 
135  Ky.  766,  123  S.  W.  291;  Mechanics'  &  Farmers'  Sav.  Bank  v.  Katterjohn,  137 
Ky.  427,  125  S.  W.  1071;  Vaughn  v.  Farmers',  etc.,  Nat.  Bank  (Tex.  Civ.  App.), 
126  S.  W.  690;  Chamberlain  v.  Young  (1893),  2  Q.  B.  206.  An  order  at  the  bot- 
tom of  a  bill  for  goods  in  the  following  words  "  Please  pay  [the  creditor]  the  above 
bill,  and  oblige,"  signed  by  the  debtor,  is  a  bill  of  exchange.  Knefel  v.  Planner, 
66  111.  App.  209,  affirmed  166  111.  147,  46  N.  E.  762. 

2.  Harris  v.  Pate  (Ind.  Ter.),  104  S.  W.  812;  Bick  v.  Clark,  134  Mo.  App.  544, 
114  S.  W.  1144,  citing  the  text;  Dobbins  v.  Oberman,  17  Neb.  165,  citing  the  text; 
New  York  Security  &  Trust  Co.  v.  Storm,  81  Hun,  33,  30  N.  Y.  Supp.  605;  First 
Nat.  Bank  of  Farmersville  v.  Greenville  Bank,  84  Tex.  40,  19  S.  W.  334,  quot- 
ing text.  In  Hegeman  v.  Moon,  131  N.  Y.  462,  it  was  held  that  a  written  state- 
ment signed  by  the  maker  to  the  effect  that  a  certain  amount  is  due  a  person 
named,  impUes  that  the  money  is  due  from  the  maker  and  is  an  indebtedness, 
from  him  to  the  person  named.  The  acknowledgment  of  the  indebtedness,  and 
that  it  is  due  implies  a  promise  to  pay  it  on  demand,  in  the  absence  of  other  direc- 
tion as  to  time  of  payment.  Such  an  instrument  is  a  promissory  note,  and  as 
such  imports  a  consideration  by  its  terms.  The  instrument  in  question  above  de- 
fined was  in  the  following  form: 
"$1976  90-100  Brooklyn,  Feb.  8th,  1871. 

"One  year  after  my  death  I  hereby  direct  my  executor  to  pay  to  Joseph  Hege- 
man, his  heirs,  executors  or  assignees,  the  sum  of  nineteen  hundred  and  seventy 
six  dollars,  and  ninety  cents,  being  the  balance  due  him  for  cash  advanced  at 


§§  29,  30    ESSENTIAL  REQUISITES  OF  BILLS  AND  NOTES  39 

Abrain,  who  makes  the  note,  is  called  the  maker;  Benjamin,  to 
whom  the  promise  is  made  to  pay,  the  payee;  and  if  the  note  is 
transferred  from  Benjamin  to  Charles  by  indorsement,  they  are 
termed  respectively  indorser  and  indorsee.  If  the  transfer  from 
Benjamin  to  Charles  be  by  delivery  merely,  they  are  termed  respec- 
tively assignor  and  assignee. 

The  maker  of  a  note  is  sometimes  termed  the  drawer,  and  in 
accommodation  indorsements  the  indorser  frequently  writes  over 
his  name:  "Credit  drawer."  When  the  term  "drawer"  is  so  used, 
the  maker  is  of  course  meant,  though  not  accurately  described. 

"Holder"  is  a  general  word  applied  to  any  one  in  actual  or  con- 
structive possession  of  the  bill  or  note,  and  entitled  at  law  to  recover 
or  receive  its  contents  from  the  parties  to  it. 

§  29.  Difference  between  bills  and  notes. — In  their  original 
structure,  a  bill  of  exchange  and  promissory  note  do  not  strongly 
resemble  each  other.  In  a  bill  there  are  three  original  parties:  drawer, 
drawee,  and  payee;  in  a  note  only  two:  maker  and  payee.  In  a  bill 
the  acceptor  is  the  primary  debtor.  In  a  note  the  maker  is  the  only 
debtor.  But  if  the  note  be  transferred  to  a  third  party  by  the  payee, 
it  becomes  strikingly  similar  to  a  bill.  The  indorser  becomes  then, 
as  it  were,  the  drawer,  the  maker  the  acceptor,  and  the  indorsee  the 
payee.'  The  reader,  bearing  this  similitude  in  mind,  will  ea.sily  be 
able  to  apply  to  notes  the  decisions  hereinafter  cited  concerning  bills, 
and  vice  versa. 

§  30.  In  order  to  fulfill  the  definition  given,  the  paper  must  carry 
its  full  history  upon  its  face,  and  embrace  the  following  requisites: 

various  times  by  liim  to  Adrian  Hcgeman  my  son,  and  others,  as  per  statement 
rendered  by  him  this  day,  without  interest. 

"Cornelia  W.  Hegeman." 

A  draft,  drawn  by  one  officer  as  an  authorized  agent  of  a  company  on  another 
officer  of  the  same  company  in  favor  of  a  third  person,  is  in  effect  the  promissory 
note  of  the  company  payable  on  demand.  National  Fire  Ins.  Co.  v.  Eastern 
B.  &  L.  Asso.,  65  Neb.  483,  91  N.  W.  482.  "The  essential  elements  of  a  promis- 
8or>'  note  are:  first,  that  it  must  be  in  writing;  second,  it  must  contain,  either 
express  or  implied,  a  promi.se  to  pay;  third,  the  promise  must  be  for  the  payment 
of  a  sum  certain  of  money  absolutely  and  at  all  events;  fourth,  the  promise  must 
be  unincumbered  with  collateral  agreements  to  do  something  else^,  and  fifth,  the 
in.strument  must  indicate  with  certainty  the  parties  to  the  contract.  And  under 
the  old  law  it  was  essential  that  it  be  not  sealed."  Kessler  v.  Clayes,  147  Mo. 
App.  88,  125  S.  W.  799. 

3.  Penniman  v.  Alexander,  111  N.  C  427,  16  S.  E.  408,  citing  text. 


40  REQUISITES   OF   BILLS   AND   NOTES  §§31,  32 

First.  It  must  be  open,  that  is,  unsealed.  Second.  The  engagement  to 
pay  must  be  certain.  Third.  The  fact  of  payment  must  be  certain. 
Fourth.  The  amount  to  be  paid  must  be  certain.  Fifth.  The  medium 
of  payment  must  be  money.  Sixth.  The  contract  must  be  only  for 
the  payment  of  money.  And  Seventh.  It  is  also  essential  to  the  opera- 
tion of  the  instrument  that  it  should  be  delivered.^ 

SECTION  I 

THE   PAPER  MUST   BE   OPEN,    THAT  IS,   UNSEALED 

§  31.  The  first  requisite  of  a  bill  is,  that  it  shall  be  an  "open  letter" 
of  direction— and  of  a  note,  that  it  shall  be  an  open  promise— for  the 
payment  of  money.  By  the  term  "open"  is  meant  "unsealed";  and 
though  the  instrument  possess  all  the  other  requisites  of  a  bill  or  note, 
its  character  as  a  commercial  instrument  is  destroyed,  and  it  becomes 
a  covenant,  governed  by  the  rules  affecting  common-law  securities,  if 
it  be  sealed.^  It  has  been  held,  however,  that  the  affixing  of  a  seal  to  a 
bill  is  a  mere  superfluity,  and  does  not  interfere  with  its  validity  or 
negotiability;  ^  but  the  doctrine  of  the  text  is  supported  by  the  highest 
authority. 

§  32.  Seals  to  notes.— In  respect  to  promissory  notes,  the  same 
rules  prevail.  If  a  seal  be  affixed  to  a  paper  in  the  ordinary  form 
of  a  note,  its  character  as  such  is  destroyed;  and  it  is  thereby  con- 
verted into  the  deed  or  bond  of  the  maker,  who  is  then  termed  the 
obligor,  and  the  instrument  is  not  subject  to  the  peculiar  doctrines 
that  are  applicable  to  mercantile  securities.^  An  instrument  binding 
the  signers  to  pay  a  certain  sum  of  money,  and  signed  by  some  wdth, 

4.  Certainty  as  to  the  payor  and  payee,  the  amount  to  be  paid,  and  the  terms 
of  payment,  is  an  essential  element  of  a  negotiable  promissory  note,  and  that  cer- 
tainty must  continue  until  the  obligation  is  discharged.  Randolph  v.  Hudson, 
12  Okl.  516,  74  Pac.  946. 

6.  Edwards  on  Bills,  208,  210;  Chitty  on  Bills  (13th  Am.  ed.)  [n6G],  190; 
Story  on  Bills,  §  62;  Story  on  Notes,  §  55;  Nicely  et  al.  v.  The  Winnebago  Nat. 
Bank  of  Rockford,  18  Ind.  App.  30,  47  N.  E.  476,  citing  text. 

6.  Irwin  v.  Brown,  2  Cranch  C.  C.  314. 

7.  Clegg  V.  Lemesurier,  15  Gratt.  108;  Mann  v.  Sutton,  4  Rand.  253;  Hop- 
kins V.  Railroad  Co.,  3  Watts  &  S.  410;  Clark  v.  Farmers'  Mfg.  Co.,  15  Wend. 
256;  Parks  v.  Duke,  2  McCord,  380;  Lewis  v.  Wilson,  5  Blackf.  369;  Helper  v. 
Alden,  3  Minn.  332;  Warren  v.  Lynch,  5  Johns.  239;  Brown  v.  Jordhal,  32  Minn. 
135;  Muse  v.  Dantzler,  85  Ala.  361;  McCrummen  v.  Campbell,  82  Ala.  567;  Raw- 
son  V.  Davidson,  49  Mich.  607;  Laidley  v.  Bright,  17  W.  Va.  779. 


§  32  THE    PAPER   MUST   BE    OPEN  41 

and  by  others  without,  seals,  is  the  bond  of  the  former,  and  the  promis- 
sory note  of  the  latter,  and  one  action  of  debt  may  be  brought  against 
all  the  parties.^  It  appears  indeed  that  anterior  to  the  statute  of  3  & 
4  Anne,  already  quoted,^  bonds  were  occasionally  transferred  by 
indorsement  in  like  manner  as  bills  and  notes,  but  the  practice  did  not 
ripen  into  a  settled  custom,  and  by  the  above-mentioned  statute  they 
were  not  included  with  notes  in  being  declared  negotiable. ^^  It  is  to 
be  observed,  however,  that  merely  by  attaching  a  seal  to  the  signature 
does  not  make  it  a  sealed  instrument,  unless  there  be  a  recognition  of 
the  seal  in  the  body  of  the  instrument  by  some  such  phrase  as  "  witness 
my  signature  and  seal,"  or  "signed  and  sealed,"  for  otherwise  the 
door  would  be  thrown  open  to  frauds  and  forgeries,  by  the  facility 
with  which  seals  could  be  superadded.'^  Such  is  the  view  taken  in 
Virginia;  but  it  is  conceded  that  the  rule  was  otherwise  at  common 
law,'^  and  there  are  decisions  adhering  to  the  common-law  rule.'' 

8.  Rankin  v.  Roler,  8  Gratt.  63.  Where  a  note  was  signed  by  one  person  at 
the  bottom  un(lpr  seal,  and  by  another  person  across  the  back  without  a  seal, 
both  before  delivery,  the  note  is  nonnegotiable  as  to  the  former  and  a  negotiable 
promissory  note  aa  to  the  latter.  McLaughlin  v.  Braddy,  03  S.  C.  433,  41  S.  E. 
523,  90  Am.  St.  Rep.  681. 

9.  See  ante,  §  5,  note. 

10.  HuUor  V.  Crips,  6  Mod.  29  (1704).  Holt,  C.  J.,  declared  that  he  ha^l  de- 
sired to  speak  with  two  of  the  most  famous  merchants  in  I^ondon,  and  that  they 
had  told  him  that  not  only  notes,  but  bonds  for  money,  were  transferred  fre- 
quently and  indorsed  as  bills  of  exchange. 

11.  Jacks(jn  v.  Augusta  Southern  R.  Co.,  125  Ga.  801,  54  S.  E.  697;  Skrine  v. 
Lewis,  68  Ga.  828;  Humphries  v.  Nix,  77  Ga.  98;  Weeks  el  al.  v.  Esler,  143  N.  Y. 
374,  .38  N.  E.  377;  Cromwell  v.  Tate's  Exrs.,  7  I^igh,  30.');  Pea.sley  v.  Boatwright, 
2  Leigh,  106;  Clegg  v.  Lemeaurier,  15  Gratt.  108;  Austin  v.  Whitlock,  1  Munf. 
487;  Argenbright  v.  Campbell,  3  H.  &  M.  174;  Jenkins  v.  Hart,  2  Hand.  446; 
Baird  v.  Blagrove,  1  Wash.  170.  In  .\nderson  v.  Bullock,  4  Munf.  442,  the  fol- 
lowing was  held  to  be  a  promissory  note,  and  the  scroll  annexed  aa  a  seal  to  be 
mere  surplusage: 

"$2,361.81  Richmond,  October  10,  1801. 

"On  or  before  the  first  day  of  February  next,  we  bind  ourselves,  our  heirs,  exec- 
utors, or  administrators,  to  pay  Thomas  and  .\mos  Ladd,  or  order,  two  thousand 
three  hundred  and  sixty-one  dollars  and  eighty-one  cents. 

"Austin  &  Anderson,  [L.  S.j" 

A  promissory  note,  concluding  in  the  following  language:  "witness  my  hand 
and  seal  the  date  and  year  above  written" — ^signed  in  the  name  of  the  maker  by 
his  mark,  followed  by  a  printed  "  [L.  S.j,"  is  an  instrument  under  seal.  Bankston 
v.  Kennesaw  Guano  Co.,  7  Ga.  App.  573,  67  S.  E.  679. 

12.  Cromwell  v.  Tate's  Exrs.,  7  Leigh,  305;  Clark  v.  Read,  12  D.  C.  App.  343. 

13.  Trasher  v.  Everhart,  3  Gill  &  J.  246. 


42  REQUISITES   OF   BILLS   AND   NOTES  §§  32u,  33 

§  32a.  Seals  on  corporate  bills  and  notes. — The  rule  that  if  a 
seal  be  affixed  to  an  instrument,  its  negotiable  character  is  destroyed, 
was  early  applied  to  ))oth  corporate  bills  ^^  and  notes.  ^'^  But  the  later, 
and  apparently  better  considered  cases,  say  that  the  presence  of  the 
seal  of  a  corporation  does  not  of  itself  render  its  instrument  non- 
negotiable,  as  a  corporate  seal  is  equally  ap[:)ropriat(^  as  a  means  of 
evidencing  its  assent  to  be  bound  by  a  simple  contract  or  by  a  spe- 
cialty.^^ 

§  33.  Statutes  as  to  sealed  instruments. — In  some  of  the  States 
of  the  United  States  sealed  instruments  for  the  payment  of  money 
are  placed  by  statute  upon  the  same  footing  as  bills  and  notes  in 
respect  to  their  negotiability,  and  the  addition  of  a  seal  to  a  bill  or 
note  payable  to  order  or  bearer  in  no  way  impairs  its  negotiability. 
In  others,  bonds  are  made  transferable,  and  may  be  sued  upon  in  the 
name  of  the  assignee,  but  the  latter  takes  them  subject  to  all  defenses 
that  were  available  to  the  original  obligee. ^^ 


14.  In  Conine  v.  Junction  &  B.  R.  Co.,  3  Houst.  (Del.)  2S9,  Gilpin,  C.  J.,  said: 
"Deeds  or  scaled  instruments  are  not  only  of  a  much  higher  antiquity  than  bills 
of  exchange,  but  they  are  of  a  totally  different  origin.  They  cannot  be  said  to 
be  made  secundum  w.sum  mercatorum,  since  they  find  their  recognition  and  validity 
in  the  more  ancient  rules  of  the  common  law.  On  the  other  hand,  bills  of  ex- 
change find  their  origin  and  sanction  in  the  usage  and  custom  of  merchants,  the 
lex  mercatoria,  a  particuilar  or  p(H;uliar  system,  which,  being  in  th(»  interest  of 
commerce,  became  at  length  gradually  engrafted  into,  and  established  as  a  part 
of  the  common  law  itself.  *  *  *  All  contracts  under  seal  are  specialties, 
sealing  and  delivery  being  the  particular  form  and  ceremony  which  alter  the  na- 
ture and  operation  of  the  agreement.  Forms,  consecrated  by  time  and  usage, 
become  substance.  The  seal  is  substance  and  changes  the  nature  and  operation 
of  the  contract.  It  seems  to  me,  therefore,  that  the  question  which  I  have  been 
considering  is  settled  upon  principle  against  plaintiffs.  But  however  this  may  be, 
it  has  been  held  as  settled  upon  authority  for  more  than  thirty  years  past." 

15.  Clark  v.  Farmers'  Mfg.  Co.,  15  Wend.  (N.  Y.)  256.  In  Weeks  v.  Esler, 
68  Hun  (N.  Y.),  518,  23  N.  Y.  Supp.  54,  it  was  held  that  the  seal  affixed  must 
have  been  the  seal  of  the  corporation  and  affixed  by  its  authority.  See  also  Chase 
Nat.  Bank  v.  Faurot,  72  Hun  (N.  Y.),  373,  25  N.  Y.  Supp.  447. 

16.  Rand  v.  Dovey,  83  Pa.  St.  280;  McLaughlin  v.  Boaddy,  63  S.  C.  433,  41 
S.  E.  523,  90  Am.  St.  Rep.  681;  Central  Nat.  Bank  v.  Chariottesville,  etc.,  R. 
Co.,  5  S.  C.  156.  See  also  Auerback  v.  Le  Sereur  Mill  Co.,  28  Minn.  291,  under  a 
statute  relating  to  corporate  bonds  and  notes,  and  Landauer  and  Sioux  Falls 
Improvement  Co.,  10  S.  Dak.  205,  72  N.  W.  467,  under  a  general  statute. 

17.  See  the  statutes  of  the  several  States,  and  Farrar  v.  Bank  of  New  York, 
90  Ga.  331,  17  S.  E.  87;  Christian  v.  Parrott,  114  N.  C.  215,  19  S.  E.  151;  Rail- 
way Co.  V.  Lynde,  55  Ohio  St.  23,  44  N.  E.  596;  Marble  Falls  Ferry  v.  Spitler,  7 
Tex.  Civ.  App.  82,  25  S.  W.  985.    A  note  signed  in  a  partnership  name  under 


§§  34,  35         CERTAINTY   AS   TO   ENGAGEMENT   TO    PAY  43 

Under  Negotiable  Instrument  statute. — Under  the  statute,  an  instru- 
ment in  the  form  of  a  promissory  note,  but  under  seal,  is  negotiable.  ^^ 

§  34.  Scrolls  used  as  seals. — A  scroll  affixed  as  a  seal  is  gener- 
ally of  the  same  force  as  a  seal,'^  and  parol  evidence,  where  such  is  the 
case,  is  admissible  to  show  that  a  scroll  affixed  was  intended  as  a  seal.^ 


SECTION  II 

CERTAINTY   AS   TO   ENGAGEMENT  TO   PAY 

§  35.  In  the  second  place  the  engagement  to  pay  must  be  certain. 
— Therefore  tlie  1)111  must  contain  a  certain  direction,  and  the  note 
a  certain  promise  to  pay.  A  bill  is  in  its  nature  the  demand  of  a  right, 
not  the  mere  asking  of  a  favor,  and  therefore  a  supplication  made,  or 
authority  given  to  paj'  an  amount,  is  not  a  bill.  The  language, 
"Mr.  Little,  please  to  let  the  bearer  have  £7,  and  place  it  to  my 
account,  and  you  will  much  oblige  your  humble  servant,"  was  held 
not  a  bill;  ~^  and  so  "please  to  send  £l()  by  bearer,  as  I  am  so  ill  I 
cannot  wait  upon  you;"  ^^  but  on  the  other  hand,  where  the  language 
was:  "Mr.  Nelson  will  much  oblige  Mr.  Webb  by  paying  I.  Ruff,  or 
order,  on  his  account,  twenty'  guineas,"  was  held  to  import  on  order, 
and  therefore  a  good  bill.-'^  The  usual  and  appropriate  expression 
used  in  bills  is,  "please  pay,"  and  it  has  been  well  said  by  Justice 
Story  that  the  language  should  not  be  too  nicely  scanned,  nor  be 
regarded  because  of  its  politeness  as  asking  a  favor  rather  than  de- 

8cal  is  tho  simple  contract  of  the  firm,  regariling  the  seal  aa  surplusage.  Cowan, 
MrClung  &  Co.  v.  Cunningham  <fe  Ward,  146  N.  C.  453,  59  S.  E.  992.  The  cus- 
tom of  putting  a  seal  upon  a  promissory  note  ha.s  come  about,  not  through  a  do- 
siro  on  the  part  of  those  making  and  taking  such  papers  to  foreclose  the  question 
of  consideration,  but  chiefly  to  make  the  period  of  the  statute  of  limitations  ap- 
plicable thereto  that  of  a  sealed  instrument  instead  of  that  governing  a  simple 
contract.    Lacey  v.  Hutchinson,  5  Ga.  .\pp.  865,  64  S.  E.  105. 

18.  Appendix,  sec.  6;  St.  Paul's  Episcopal  Church  v.  Fields,  81  Conn.  670,  72 
Atl.  145. 

19.  Giles  V.  Maulden,  7  Rich.  11;  Osbom  v.  Kistler,  35  Ohio  St.  99;  Peasley  v. 
Boatwright,  supra.    Contra,  Blackwell  v.  Hamilton,  47  Ala.  470. 

20.  Pollock  V.  Glassell,  2  Gratt.  439. 

21.  Little  V.  Slackford,  1  Moody  &  M.  371;  Nicely  el  al.  v.  The  Winnebago  Nat. 
Bank  of  Rockford,  IS  Ind.  App.  .30,  47  N.  E.  476,  citing  text. 

22.  The  King  v.  Ellor,  1  Leach  Cr.  Law,  323. 

23.  Ruff  V.  Webb,  1  Esp.  129. 


44  REQUISITES   OF   BILLS   AND    NOTES  §  36 

manding  a  right.^^  It  is  a  perfectly  valid  phrase,  being  a  mere  form 
of  civility.^^  "Please  let  the  bearer  have  $50;  I  will  arrange  it  with 
you  this  forenoon,"  and  signed,  "yours,  most  obedient,"  was  held 
sufficient  in  Kentucky.^®  An  instrument  directing  a  certain  person  to 
deliver  a  particular  sum  to  A.  B.,  or  to  be  accountable  or  responsible 
to  him  for  a  particular  sum,  would  be  a  good  bill,'^  and  so  would  a 
direction  to  credit  him  in  cash  for  a  particular  sum,^  or  any  expression 
from  which  such  direction  could  be  inferred. 

§  36.  Certainty  of  promise  in  a  note. — A  promissory  note  must 
contain  a  certain  promise  to  pay.  "1  promise  to  pay,  or  cause  to  be 
paid,"  would  suffice,  because  the  undertaking  that  the  payment  be 
made  is  definite  and  certain.^^  It  is  said  by  Story,  that  "  it  seems  that 
to  constitute  a  good  promissory  note,  there  must  be  an  express 
promise  upon  the  face  of  the  instrument  to  pay  the  money;  for  a  mere 
promise  implied  by  law,  founded  upon  an  acknowledged  indebtedness, 
will  not  be  sufficient."  ^°  But  we  think  the  better  language  is  used 
by  Byles,  who  says:  "No  precise  words  of  contract  are  necessary,  pro- 
vided they  amount,  in  legal  effect,  to  a  promise  to  pay."  ^^  In  other 
words,  if  over  and  above  the  mere  acknowledgment  of  debt,  there 
may  be  collected  from  the  words  used  a  promise  to  pay  it,  the  instru- 
ment may  be  regardc^d  as  a  promissory  note.^- 

24.  Story  on  Bills,  §  33;  Chitty,  150;  Thompson,  6. 

25.  Patterson  v.  Poindextor,  G  Watts  &  S.  235;  Whcatlcy  v.  Strobe,  12  Cal.  92; 
1  Ames  on  Bills  and  Notes,  3;  Jarvis  v.  Wilson,  46  Conn.  90. 

26.  Bresenthal  v.  Williams,  1  Duv.  329. 

27.  Morris  v.  Lee,  2  Ld.  Raym.  1396. 

28.  Ellison  v.  Collingride,  9  C.  B.  570;  Allen  v.  Sea  Fire,  etc.,  Ins.  Co.,  9  C.  B. 
574.    But  see  WooUey  v.  Sergeant,  3  Halst.  262,  contra. 

29.  Lovell  V.  Hill,  G  Car.  &  P.  23S;  Caviness  v.  Rushton,  101  Ind.  500.  Here 
the  language  was,  "I  promise  to  give  Emily  Caviness  two  thousand  dollars  at 
my  death,  which  she  claims  of  my  estate."  Held  insufficient  to  support  an  action. 
An  instrument  with  the  words  "Hibbard,  Spencer  &  Co.,  Cartage  Ticket,  50 
cents,"  in  print,  and  the  name  "Hibbard,  Spencer  &  Co."  signed  in  writing,  was 
held  not  to  be  negotiable  paper.  Hibbard  v.  Holloway,  13  111.  App.  101 ;  Kirsch 
V.  Braun,  153  Ind.  247,  53  N.  E.  1082.  "This  note  subject  to  conditions  of 
hotel  purchase  contract  of  even  date  herewith,"  is  not  a  negotiable  note. 
Rieck  V.  Daigle,  17  N.  D.  364,  117  N.  W.  346  (1908). 

30.  Story  on  Promissory  Notes,  §  14;  Rice  v.  Rice,  68  Ala.  217. 

31.  Byles  on  Bills,  8. 

32.  Cowan  v.  Hallack,  9  Colo.  578,  citing  the  text.  One  C.  W.  Bishop  exe- 
cuted an  instrument  in  writing,  as  follows: 

"$1,000.00  "Penn  Yan,  July  23,  1883. 

"At  my  death,  I  request  to  be  paid  to  Mary  A.  Chase  one  thousand  dollars, 


§  36a  CERTAINTY   AS   TO    ENGAGEMENT   TO    PAY  45 

§  36a.  Due-bills. — In  England  it  seems  to  be  well  settled  that 
an  ordinary  due-bill,  which  is  there  frequently  given  in  the  following 
form: 

"London,  1st  January,  1875. 
"Mr.  A.  B.: 

"I.  O.  U.  £100. 

"C.  D." 

does  not  amount  to  a  promissory  note,  but  is  mere  evidence  of  an 
account  stated,  requiring  no  stamp  under  the  English  Stamp  Acts. 
This  was  the  view  taken  by  Lord  Chief  Justice  Eyre  in  1795,  where  the 
paper  ran,  "I.  O.  U.  eight  guineas,"  ^^  and  though  in  1800  Lord  Eldon 
held  a  similar  paper  to  be  a  promissory  note,  and  ruled  it  out  when 
offered  in  evidence,  because  it  had  no  stamp,^^  subsequent  decisions 
have  recurred  to  the  doctrine  of  Chief  Justice  Eyre,  and  it  is  the  es- 
tablished law  of  England. ^^ 

In  the  United  States  the  decisions  are  conflicting.  In  some  of 
them  a  naked  due-bill  is  held  to  be  a  promissory  note;  ^  as  in  Illinois, 
for  instance,  where  the  paper  ran,  "Due  G.  S.  W.,  five  hundred  and 
twenty-five  dollars,"  ^^  and  in  Missouri,  where  the  words  were,  "Due 
B.,  one  hundred  and  fifty  dollars,"  ^  and  in  Arkansas,  "Balance  due 

for  value  received,  if  she  is  my  wife;  this  note  is  void  if  I  should  die  before  she 
is  my  wife;  this  is  to  be  paid  in  full  with  interest;  this  is  to  be  paid  before  any- 
thing else."  Held,  that  the  instrument  contains  no  promise  to  payee,  and  is 
therefore  not  a  promi.ssor>'  note.  Hatch  v.  Gillette,  8  App.  Div.  605,  40  N.  Y. 
Supp.  1016. 

33.  Fisher  v.  Leslie,  1  Esp.  425. 

34.  Guy  v.  Harris,  Chitty  on  Bills,  526. 

36.  Israel  v.  Lsrael,  1  Campb.  499,  Lord  EUenborough.  The  paper  ran:  "I 
owe  my  father  £470."  Childers  v.  Boulnois,  Dowl  &  Ry.  8;  Payne  v.  Jenkins, 
4  Car.  &  P.  325;  Fesenmayer  v.  Adcock,  16  M.  &  W.  449;  Tompkins  v.  Ashby, 
6  B.  &  C.  .541,  9  Dowl.  &  Ry.  543. 

36.  Fleming  v.  Burge,  6  Ala.  373;  Brewer  v.  Brewer,  6  Ga.  .588;  Marrigan  v. 
Page,  4  Humphr.  247;  Cummings  v.  Freeman,  2  Humphr.  145  (overruling  Read 
V.  Wheeler,  2  Yerg.  50);  Agens  v.  Agens,  50  N.  J.  Eq.  566,  25  Atl.  707;  Kessler  v. 
Clayes,  147  Mo.  App.  88,  125  S.  W.  799. 

37.  Jacquin  v.  Warren,  40  111.  4.59. 

38.  Brady  v.  Chandler,  31  Mo.  28.  A  due-bill  is  not  a  negotiable  note  when  it 
does  not  contain  the  words  "for  value  received,"  under  section  457,  Rev.  St.  1899, 
but  it  is  a  promissory'  note  though  it  does  not  contain  an  express  promise  to  pay 
as  the  word  "due"  imports  a  promise,  and  under  a  statute  providing  that  all 
instruments  of  writing  ma<le  and  signed  containing  a  promise  to  pay  any  sum  of 
money  shall  import  a  consideration,  such  an  instrument  imports  a  consideration. 
(Rev.  Stat.  1899,  section  894.)  Locker  v.  Kuecheumiester,  120  Mo.  App.  701, 
98  S.  W.  92. 


46  REQUISITES   OF    BILLS    AND    NOTES  §§  '.i7,  38 

P.  &  S.,  $178,  for  work  done."  ^'■'    In  others  such  a  paper  is  held  to  be 
a  mere  acknowledgment  of  indebtedness."*" 

§  37.  The  question  seems  to  us  simply  one  of  intention.  If  a 
debtor  give  a  mere  due-bill  to  his  creditor  containing  nothing  but  an 
acknowledgment  of  the  debt,  it  is  fair  to  presume  that  he  merely 
designed  to  furnish  him  with  evidence  of  its  existence.  The  law  im- 
plies a  promise  to  pay  from  the  existence  of  the  debt ;  but  that  promise 
not  being  written  on  the  note,  it  cannot  be  regarded  as  a  promissory 
note.  To  be  a  "promissory  note,"  the  promise  must  not  only  be 
implied  from  the  fact  of  indebtedness  evinced  by  tlie  note,  but  should, 
be  expressed  in  the  note  in  so  many  words,  or  by  necessary  implica- 
tion.'^ 

This  was  the  ruling  in  IMaine  where  the  paper  was  signed  by  the 
president  of  the  corporation  with  his  personal  signature  only,  and  ran, 
"Amount  due  C  E.  Ward  to  date  $28.20"— the  court  considering 
that  it  was  a  mere  voucher  of  the  amount  due,  that  it  was  without 
consideration  as  a  note,  and  should  not  l)e  so  regarded. '- 

§  38.  There  may  be  words  superadded  to  the  acknowledgment 
however,  from  which  an  intention  to  accompany  it  with  an  engage- 
ment to  pay  may  be  gathered.  Thus,  m  New  York,  the  words,  "  Duo 
S.,  or  bearer,  $340,  for  value  received,  with  interest,"  were  held  to 
constitute  a  note;  ^^  so  in  the  same  State,  the  words,  "Due  A.  B.,  or 
bearer,  two  hundred  and  26-100,  for  value  received "; '*"  in  Maine, 
the  words,  "Good  to  bearer,"  ^^  and  in  that  state,  "Due  A.  B.,  or 
order,  $20,  on  demand,"  ^^  and  in  Tennessee,  "Due  J.  C.  R.,  or  or- 
der," ^"^  were  held  sufficiently  obligatory  to  constitute  a  promissory 

39.  Anderson  v.  Pearce,  36  Ark.  293;  St.  Louis  R.  Co.  v.  Camden  Bank,  47 
Ark.  545. 

40.  Currier  v.  Lockwood,  40  Conn.  348;  Read  v.  Wheeler,  2  Yerg.  50;  Gay  v. 
Rooke  (Mass.),  23  N.  E.  835.    This  case  hokis  an  I.  O.  U.  to  be  not  a  note. 

41.  Long  V.  Straus  (Ind.),  4  West.  235;  Kessler  v.  Clayes,  147  Mo.  App.  88, 
125  S.  W.  799. 

42.  Ward  v.  Barrows,  86  Me.  148,  29  Atl.  922. 

43.  Sackett  v.  Spencer,  29  Barb.  180.  In  Colorado,  the  words,  "Due  A.  $250, 
vakiG  received,"  are  held  sufficient  by  force  of  statute.  Lee  v.  Balcom,  9  Colo. 
216;  Lowe  v.  Murphy,  9  Ga.  338;  Schmitz  v.  Hawkeye  Gold  Mining  Co.,  8  S.  Dak. 
544,  67  N.  W.  618. 

44.  Russell  v.  Whipple,  2  Cow.  536. 

45.  Hussey  v.  Winslow,  59  Me.  170. 

46.  Carver  v.  Hayes,  47  Me.  257. 

47.  Marrigan  v.  Page,  4  Humphr.  247. 


§  39  CERTAINTY   AS   TO    ENGAGEMENT  TO    PAY  47 

note.  So  in  New  Hampshire  the  language,  "Good  R.  C,  or  order, 
for  thirty  dollars,  borrowed  money,"  '*^  and  in  Arkansas,  "Due  I.  H., 
or  order,  value  received,"  has  been  given  the  like  effect.^^  In  these, 
as  in  other  cases,  the  insertion  of  negotiable  words  have  been  justly 
construed  as  manifesting  an  intention  to  make  the  instrument  promis- 
sory and  negotiable,  and  they  have  been  given  effect  accordingly.^ 

§  39.  The  words  "  on  demand  "  as  importing  promise. — The  in- 
sertion of  "on  demand"  has  been  thought,  in  itself,  sufficient  to  show- 
that  the  debtor  intended  to  do  more  than  merely  state  the  balance 
due  on  account.  It  recognizes  an  obligation,  and  necessarily  implies 
a  promise  to  pay  when  demanded.  This  view  was  taken  in  Connecti- 
cut, where  the  words  used  were,  "Due  John  Allen,  $94.91,  on  de- 
mand," Smith,  J.,  saying:  "Where  a  writing  contains  nothing  more 
than  a  bare  acknowledgment  of  a  debt,  it  does  not,  in  legal  construc- 
tion, import  an  express  promise  to  pay;  but  where  a  writing  imports 
not  only  the  acknowledgment  of  a  debt,  but  an  agreement  to  pay  it, 
this  amounts  to  an  express  contract."  ^^  And  the  like  view  has  ob- 
tained in  other  cases.  The  mere  addition  of  the  words  "value  re- 
ceived," would  not  alone,  it  seems,  import  a  promise  in  addition  to 
the  acknowledgment,"  though  it  has  been  held  otherwise."     But, 

48.  Franklin  v.  March,  6  N.  H.  364;  Huyck  v.  Meador,  24  Ark.  195;  Cummings 
V.  Freeman,  2  llumphr.  144. 

49.  Huyck  v.  Moiulor,  24  Ark.  192. 

60.  J()hnt«»n  Sch<Hjl  Township  v.  Citizens'  Bank,  81  Ind.  515. 

51.  Smith  V.  Allen,  .5  Day,  3.'i7.  .\n  instniraent  "For  value  reeeive<J  of  C.  P. 
Coleman  three  hundreil  dollar,  in  full,  with  use  or  hearer,  waiving  valuation  and 
appraisement  laws.  Paid  when  kalil  for,"  i.s  a  note  payable  generally,  at  no  par- 
ticular place,  on  demand,  and  i.s  a  pn)missor>'  note.  Kraft  v.  Thomaa,  123  Ind. 
513,  24  N.  E.  346,  18  Am.  St.  Rep.  345. 

62.  Read  v.  Wheeler,  2  Yerg.  50  (ovcrrule<l  by  Cummings  v.  I'>eeman,  2 
Humphr.  143);  Gray  v.  Bowden,  23  Pick.  282;  Currier  v.  Lockwood,  40  Conn. 
34S,  .\m.  Law  Reg.,  Jan.,  1K75.  Judge  Redfield,  in  a  note  to  this  ca.se,  dissents 
from  its  conclu.sions,  as  did  also  two  of  the  judges  (Foster  and  Phelps),  who  were 
members  (jf  the  court  which  decidtnl  it.  Judge  Redfield  says:  "A  promissory 
note  is  not  requireti  to  be  in  any  particular  form,  much  less  to  embrace  the  word 
'promise.'  .\11  that  is  required  is  that  the  written  terms  used,  in  their  proper 
legal  construction,  shall  import  an  admission  by  the  maker  that  he  holds  himself 
bound  to  pay  the  payee  a  definite  sum  of  money  at  a  definite  time;  or,  no  time 
being  namcfl,  then  presently  on  demand."  See  also  in  accord  with  decision  in 
Currier  v.  Lockwoo<l,  the  following  cases:  Davis  v.  Allen,  3  N.  Y.  168  (semble); 
HotchkLss  v.  Mo.sher,  48  N.  Y.  478  (semble). 

63.  Pmney  v.  Shiriey,  7  Mo.  42;  McGowen  v.  West,  7  Mo.  42.  See  Huyck  v. 
Meador,  24  .\rk.  192;  Lee  v.  Balcom,  9  Colo.  216. 


48  REQUISITES   OF   BILLS   AND   NOTES  §  40 


"Due  A.  B.,  $325,  payable  on  demand,"  ^''  or,  "  I  acknowledge  myself 
indebted  to  A.  in  £109,  to  be  paid  on  demand,  for  value  received,"  ^^ 
or  "I.  O.  U.  £85,  to  be  paid  May  5th,"  ^«  would  constitute  promissory 
notes,  significance  being  given  to  the  words  of  payment  as  indicating 
a  promise." 

§  40.  The  words,  "  I  undertake  to  pay  A.  B.  a  certain  sum  for  a  suit 
of  clothes  ordered  by  Daniel  Paige,"  have  been  held  to  be  a  guarantee 
and  not  a  note.^*^  Th(>re  are  other  memoranda  of  indebtedness  which 
have  been  held,  like  bare  due-bills,  not  to  amount  to  notes.  Thus,  a 
memorandum,  "Mr.  T.  has  left  in  my  hands  $200,"  is  not  a  note.^^ 
And  the  following  papers: 

"  I  have  received  the  sum  of ,  which  I  borrowed  from  you, 

and  I  have  to  be  accountable  for  the  said  sum  with  interest,"^" 

and  "I.  O.  U. ,  which  I  borrowed  of  Mrs.  Mclanotte,  and  to 

pay  her  five  per  cent,  till  paid,"  ^^  have  been  held  not  notes,  because 
not  importing  promises  to  pay. 

So,  in  a  written  bargain  for  buying  goods,  a  promise  to  pay  the 
seller  the  price  in  a  limited  time  is  not  a  note,  but  a  mere  memorandum 
of  the  terms  of  the  bargain.*^^  j^ut  more  expressions  of  gratitude, 
where  there  is  a  promise,  or  other  needless  addition,  will  not  deprive 
the  instrument  of  its  character  as  a  bill  or  note.^' 


54.  Kimball  v.  Huntington,  10  Wend.  675;  Mitchell  v.  Rome  R.  Co.,  17  Ga. 
574;  Pepoon  v.  Stagg,  1  Nott  &  McC.  102. 

55.  Casborne  v.  Button,  1  Selwyn's  N.  P.  401. 

56.  Waithman  v.  Elzee,  1  C.  «fe  K.  35. 

57.  Cowan  v.  Hallack,  9  Colo.  578,  citing  the  text. 

58.  Jarvis  v.  Wilkins,  7  M.  &  W.  410,  Lord  Abinger,  C.  B.,  saying:  "This  is 
a  memorandum  that  if  the  plaintiff  will  sell  Paige  clothes,  he,  the  defendant,  wiU 
pay  for  them." 

59.  Tompkins  v.  Ashby,  6  B.  &  C.  541,  1  Moody  &  M.  32. 

60.  Home  v.  Redfearne,  4  Bing.  N.  C.  433. 

61  Melanotte  v.  Teasdale,  13  M.  &  W.  216.  See  also  Taylor  v.  Steele,  16 
M.  &  W.  665;  Hyne  v.  Dawdney,  21  L.  J.  R.  278;  Gay  v.  Rooke  (Mass.),  23  N.  E. 
835. 

62.  Ellis  V.  Ellis,  Gow.  216. 

63.  Ellis  V.  Mason,  7  Dowl.  598. 


§  41  CERTAINTY   AS   TO    THE    FACT   OF   PAYMENT  49 

SECTION  III 

CERTAINTY   AS    TO    THE   FACT   OF   PAYMENT 

§  41.  In  the  third  place  the  fact  of  payment  must  be  certain. — 

The  instrument  must  be  payable  unconditionally,  and  at  all  events, 
in  order  to  be  negotiable.  If  the  order  or  promise  be  payable  pro- 
vided terms  mentioned  are  complied  with ;  as,  for  instance,  that  a  rail- 
road be  built  to  a  certain  point  by  a  certain  time,  it  is  not  a  bill  or 
note;  ^^  and  likewise  if  payable  provided  a  certain  act  be  not  done;  ^^ 
or  that  a  certain  receipt  be  produced ;  ^^  or  another  person  shall  not 
previously  pay;  ®^  or  provided  a  certain  ship  shall  arrive ;^^  or  provided 
the  maker  shall  be  able ;  '^^  or  provided  the  maker  shall  live  a  certain 
time;''"  or  "on  account  of  contract  when  completed  and  satisfac- 
tory;"^^ or  provided  one  person  shall  first  pay  another  a  certain 
sum,^^  or  upon  any  contingency  J'    Sometimes  a  condition  of  time  is 

64.  Blackman  v.  Lehman,  63  Ala.  547;  Eldrod  v.  Malloy,  2  Colo.  320;  Chitty 
on  Bills,  134;  Kingston  v.  Long,  reported  in  Bayley  on  Bills  (6th  ed.),  16;  Ames 
on  Bills  and  Notes,  vol.  1,  p.  31. 

65.  A[)pleby  v.  Bwldolph,  8  Mod.  363;  Chitty,  Jr.,  on  Bill.s,  5,  246,— some- 
times, citetl  as  Appleby  v.  Biddle;  Van  Zandt  v.  Hopkins,  1.51  111.  248,  citing 
text,  37  N.  E.  845.  An  instrument  promising  to  pay  a  certain  sum  in  money  at  a 
certain  time,  but  containing  an  express  condition  that  it  is  "  void  and  nonjjayable" 
upon  the  happening  of  a  certain  event,  and  stating  that  it  was  given  to  indemnify 
a  certain  p)erson  against  loss  in  a  particular  matter,  is  not  a  promissory  note  but 
a  contract  of  indemnity  only.    Jenckes  v.  Rice,  119  la.  451,  93  N.  W.  384. 

66.  MiLson  V.  Metcalf,  8  Baxt.  440. 

67.  Roberts  v.  Peake,  1  Burr.  323. 

68.  Coolidge  V.  Ruggles,  15  Miuss.  387;  Palmer  v.  Pratt,  2  Bing.  185. 

69.  Kx  parte  Tootle,  4  Ves.  372;  Salinas  v.  Wright,  11  Tex.  572. 

70.  Braham  v.  Bubb,  Chitty  on  Bills  (13th  ed.),  ♦135,  136. 

71.  Home  Bank  v.  Drumgooie  (N.  Y.),  15  N.  E.  747;  Lawrence  v.  Phipps, 
67  Hun.  61,  22  N.  Y.  Supp.  16. 

72.  Cha{)man  v.  \^' right,  79  Me.  595. 

73.  Sloan  v.  McCarty,  134  Ma.ss.  245;  Nicely  et  al.  v.  The  Winnebago  Nat. 
Bank  of  Rockford,  18  Ind.  App.  30,  47  N.  E.  476,  citing  text;  Succession  of  Ra- 
basse,  49  La.  Ann.  1405,  22  So.  767.  The  following  instruments,  because  contain- 
ing conditions  or  contingent  stipulations,  have  been  held  not  to  be  negotiable: 
a  draft,  issued  by  a  benefit  society,  payable  on  presentation  of  a  certain  certif- 
icate properly  released  (Knights  &  Ladies  of  Security  v.  Hibernian  Banking  Assn., 
137  111.  .\pp.  175);  a  note  payable  "upon  publication"  (Hovorka  v.  Hemmer, 
108  111.  App.  443);  an  instrument  agreeing  on  the  part  of  the  promisor  to  pay  or 
cause  to  be  paid  to  the  payee  a  certain  sum  in  ca.se  she  should  remain  with  him 
as  his  housekeeper,  companion,  and  nurse,  and  should  perform  these  duties  and 

4 


50  REQUISITES   OF   BILLS   AND    NOTES  §  41 

expressed  by  the  word  "when,"  as  "when  A.  shall  marry;"  ^^  "  when 
a  certain  suit  is  determined ;"  ^°  "when  a  certain  sale  is  made;""^ 
or  "certain  dividends  declared;"  "  or  "upon  completion  of  work  to  be 
done  on  a  dwelling-house;"  "^  or  "not  to  be  paid  unless  I  shall  have  the 
use  of  certain  premises;"  ^^  "when  a  certain  amount  is  collected ;"*° 
or  "when  the  estate  of  M.  is  settled  up;"  ^^  "after  arrival  and  dis- 
charge of  coal  by  brig  A,"  ^^ 

In  Massachusetts  a  ninety-day  note  for  $500  was  held  not  nego- 
tiable, because  it  contained  the  proviso:  "as  soon  as  $400  shall  be 
received  by  the  payees,  then  this  note  is  to  be  given  up  to  payor."  ^^ 

So,  if  it  be  expressed  to  be  "payable  subject  to  the  pohcy;"^"* 
or  subject  to  a  certain  contract;  ^^  or  if  an  order  be  given  on  a  savings 

care  for  him  until  death  (Russel  v.  Close's  Estate,  83  Neb.  232,  119  N.  W.  515); 
and  an  instrument  containing  a  promise  to  pay  a  certain  sum  "on  the  day  after 
my  nomination  for  county  clerk  in  the  year  1900."  Harris  v.  Firth  (N.  J.),  68 
Atl.  1064.  In  Aden  v.  Doub,  146  N.  C.  10,  59  S.  E.  162,  Walker,  J.,  said  that  it 
is  not  a  correct  proposition  in  law  that  a  negotiable  instrument  is  of  such  high 
dignity,  as  a  medium  of  exchange,  that  the  parties  cannot  annex  any  lawful 
condition  to  its  payment  at  the  time  it  is  given,  when  the  action  to  recover  it  is 
between  the  original  parties  to  it,  and  this  as  to  a  collateral  agreement  to  the  effect 
that  the  maker  should  have  one  month  after  the  date  of  the  note  to  determine 
whether  he  would  take  the  policy  of  insurance,  and,  if  he  decided  not  to  accept  it, 
then  the  note  is  to  be  void. 

74.  Pearson  v.  Garrett,  4  Mod.  242;  Beardsley  v.  Baldwin,  Stra.  1157;  Ahl- 
strong  v.  Fitzpatrick,  17  Mont.  295,  42  Pac.  757. 

75.  Shelton  v.  Bruce,  9  Yerg.  24. 

76.  De  Forest  v.  Frary,  6  Cow.  151;  Hill  v.  Halford,  2  B.  &  P.  413. 

77.  Brooks  v.  Hargreaves,  21  Mich.  255. 

78.  Chandler  v.  Carey,  64  Mich.  238.  An  instrument  promising  to  pay:  "On 
or  before  one  year  after  the  date  of  the  completion  of  the  piling  filling  and  of  the 
premises  described  in  a  certain  trust  deed  *  *  *  j  gaid  completion  of  piling 
and  fining  to  be  according  to  the  requirements  of  a  certain  agreement  *  *  *  • 
the  date  of  said  completion  of  piling  and  filling  to  be  determined  by  the  board 
of  commissioners,"  is  not  a  promissory  note,  and  cannot  be  reissued  by  the  maker. 
190  111.  Trust,  etc.,  Bank  v.  Chicago  Title,  etc.,  Co.,  92  111.  App.  366,  affirmed 
404,  60  N.  E.  586,  83  Am.  St.  Rep.  138. 

79.  Jennings  v.  First  Nat.  Bank,  22  Pac.  777,  citing  the  text. 

80.  Corbett  v.  State  of  Georgia,  24  Ga.  287;  Martin  v.  Shumatte,  62  Tex.  189. 

81.  Husband  v.  EpUng,  81  111.  172. 

82.  Grant  v.  Wood,  12  Gray,  220;  The  Lykus,  36  Fed.  922. 

83.  Hubbard  v.  Moseley,  11  Gray,  170.  See  also  Roads  v.  Webb,  91  Me.  411, 
40  Atl.  128,  64  Am.  St.  Rep.  246. 

84.  American  Exchange  Bank  v.  Blanchard,  7  Allen,  332.  But  a  mere  note 
of  the  number  of  the  policy  for  which  the  note  was  given  would  not  vitiate  its 
negotiability.    Union  Ins.  Co.  v.  Greenleaf,  64  Me.  123.    See  §  797. 

85.  Gushing  v.  Field,  70  Me.  50. 


§  41  CERTAINTY   AS   TO   THE    FACT   OF   PAYMENT  51 

bank  with  a  memorandum  thereon  "the  bank-book  of  the  depositor 
must  accompany  this  order,"  ^  it  is  not  negotiable.  And  so  if  ex- 
pressed "as  per  agreement,"  ^^  or  "given  as  collateral  security  with 
an  agreement,"  ^  or  "unless  a  certain  other  note  shall  not  be  paid;"  ^^ 
and  a  note  containing  a  provision  that  the  payee,  or  his  assigns,  may 
extend  the  time  of  payment  thereof,  is  not  negotiable.^"  But  the 
words,  "as  per  memorandum  of  agreement,"  were  not  considered  to 
render  the  promise  conditional  in  an  English  case.®^  In  all  these  cases 
the  contingency  implied  deprives  the  instrument  of  its  character  as 
a  bill  or  note,  as  the  events  named  may  never  happen.  If  payable 
in  installments,  no  time  for  the  payment  of  the  installments  being 
mentioned,  it  is  not  a  promissory  note.^^  In  Illinois,  where  the  prom- 
ise was  to  pay  a  railroad  company  or  order,  a  certain  sum,  in  such 
installments,  and  at  such  times  as  the  directors  of  the  payee  company 
might  assess  or  require,  it  was  held  negotiable,  and  in  effect  payable 
on  demand,  or  in  installments  on  demand.^' 

86.  White  v.  Gushing,  88  Me.  342,  34  Atl.  164,  51  Am.  St.  Rep.  402. 

87.  Bank  of  Sherman  v.  Apperson,  4  Fed.  25. 

88.  Costello  V.  Crowell,  127  Ma.ss.  293. 

89.  Grimison  v.  Rus.sell,  14  Nebr.  .521,  45  Am.  Rep.  126. 

90.  Woodbury  v.  Robcrt.s,  .59  Iowa,  348,  44  Am.  Rep.  685;  Rosenthal  v.  Rambo, 
165  Ind.  584,  76  N.  E.  404,  3  L.  R.  A.  (N.  S.)  678;  Evans  v.  Odem,  30  Ind.  App. 
207,  65  N.  E.  755;  Gity  Nat.  Bank  v.  Gunter  Bros.,  67  Kan.  227,  72  Pac.  842; 
Smith  V.  Van  Blarcom,  45  Mich.  371;  Goffin  v.  Spencer,  39  Fed.  262.  But  in 
Farmer,  Thomp.son  &  Hclsell  v.  Bank  of  Graettinger,  1.30  la.  469,  107  N.  W. 
170,  it  was  held  that  a  promissory  note  in  ordinary  form  except  this  provision: 
"sun'tios  hereby  consent  that  time  of  payment  may  be  extended  from  tim(!  to 
time  without  notice  thereof"  was  not  negotiable,  and,  commentinK  on  the  Wood- 
bury V.  Roberts  ciuse,  supra,  the  court  said:  "We  may  concede  that  in  the  ca.se 
of  an  instrument  i)roviding  in  terms  for  extension  of  time  of  payment  indefinitely 
there  is  such  uncertainty  as  to  make  the  same  nonnegotiable.  *  ♦  *  But, 
in  the  notes  before  us,  we  have  a  distinct  and  unqualified  agreement  on  the  part 
of  the  makers  to  pay  on  a  certain  date.  And  we  perceive  no  good  reason  for 
holding  that  the  negotiable  character  thereof  is  destroyed  because  of  a  clause 
embodi('d  therein  providing  that  a  surety,  if  such  there  shall  be,  will  not  claim  a 
relea.se  from  his  collateral  liability  on  the  instrument,  if,  forsooth,  an  extension 
of  time  shall  be  granted  the  makers  without  notice  to  him."  And  in  National 
Bank  of  Gommerce  v.  Kenney,  98  Texas,  293,  83  S.  W.  368,  it  was  said  that 
when  the  extension  meant  is  that  which  takes  place  when  the  debtor  and  creditor 
make  an  agreement  for  a  valuable  consideration  for  the  payment  of  the  debt  on 
some  day  subsequent  to  that  previously  stipulated,  the  note  is  negotiable.  See 
al.so  Gity  Nat.  Bank  v.  Goodhue-McGlelland  Gom.  Go.,  93  Mo.  App.  123. 

91.  Jury  v.  Baker,  El.,  Bl.  &  El.  459. 

92.  Moffat  V.  Edwards,  Gar.  &  M.  16.    See  post,  §  48. 

93.  White  v.  Smith,  77  111.  351. 


52  REQUISITES   OF   BILLS   AND    NOTES  §§  42,  43 

Under  Negotiable  Instrument  statute. — Under  the  statute^"*  it  has 
been  held  that  a  note  which  upon  its  face  states  that  it  is  given  as  a 
"part  of  the  purchase  price  of  real  property,  and  is  secured  by  mort- 
gage of  even  date  herewith,  and  is  subject  to  all  the  terms  and  condi- 
tions of  said  mortgage,"  the  mortgage  referred  to  giving  the  maker  of 
the  note  an  option  to  pay  it,  or  to  have  it  canceled  within  one  year,  is 
not  a  negotiable  instrument.'-'^ 

§  42.  In  England,  it  has  been  held  that  an  order  for  a  certain  sum 
"l)ayable  ninety  days  after  sight  or  when  realized,"  was  not  a  bill,  as 
the  latter  alternative  made  it  payable  upon  a  contingency ,^''  but  this 
is  not  the  view  which  prevails  in  such  cases  in  the  United  States." 

§  43.  Authorities  in  the  United  States. — In  the  United  States, 
if  the  time  must  certainly  come,  although  the  particular  day  is  not 
mentioned  in  the  note,  it  is  regarded  as  negotiable,  as  the  fact  of 
payment  is  then  certain.  Thus,  where  the  note  ran,  "I  promise  to 
pay  A.  B.,  or  bearer,  $75  one  year  from  date,  with  interest  annually, 
and  if  there  is  not  enough  realized  by  good  management  in  one  year, 
to  have  more  time  to  pay,  in  the  manufacture  of  the  plaster  bed  on 
Stearns'  land,"  it  was  held  negotiable,  Pierpont,  C.  J.,  saying  that  the 
only  uncertainty  was  as  to  the  length  of  time  to  be  given,  and  "this 
uncertainty  the  law  makes  certain  by  giving  him  a  reasonable  time 
thereafter  (the  time  prescribed)  to  make  the  payment."  ^^  So,  where 
the  note  ran,  "to  be  paid  as  soon  as  collected  from  my  accounts  at 
P.,"  it  was  held  that  the  phrase  was  not  intended  to  make  the  debt 
conditional,  but  only  to  prescribe  that  a  reasonable  time  be  allowed 
for  collection  of  the  accounts.^^    So,  where  the  note  was  to  pay  "by 

94.  Appendix,  sec.  1   (2). 

95.  Hull  V.  Angus  (Ore.),  118  P.  284. 

96.  Alexander  v.  Thomas,  16  Q.  B.  333. 

97.  See  Charlton  v.  Reed,  61  Iowa,  166,  Day,  J.,  saying  that  the  English  view 
"is  not  recognized  in  the  United  States  as  announcing  the  correct  rule"  and  ap- 
proving the  text. 

98.  Capron  v.  Capron,  44  Vt.  412  (1872);  Riker  v.  Sprague  Mfg.  Co.,  14  R.  I. 
402  (1884),  citing  the  text,  where  reservation  in  a  note  to  pay  it  before  maturity 
in  installments  of  not  less  than  5  per  cent.,  whenever  semi-annual  interest  falls 
due,  was  held  not  to  render  it  nonnegotiable.  See  also  Campbell  v.  Equitable 
Securities  Co.,  17  Colo.  App.  417,  68  Pac.  788.  In  Missouri-Lincoln  Trust  Co.  v. 
Long,  31  Okl.  1,  120  P.  291,  it  was  held  that  a  note  is  negotiable  though  it  con- 
tains a  clause  that  the  maker  consents  that  the  time  for  payment  may  be  extended 
without  notice  thereof. 

99.  Ubsdell  v.  Cunningham,  22  Mo.  124  (1855).    And  a  note  which  contains 


§  43  CERTAINTY   AS   TO   THE    FACT   OF   PAYMENT  53 

20th  of  May,  or  when  he  completes  the  building  according  to  con- 
tract," it  was  held  that  the  20th  of  May  fixed  the  ultimate  day  when 
it  should  fall  due.^  So,  where  the  promise  was  to  pay  "against  the 
19th  of  December,  or  when  the  house  John  Mayfield  has  undertaken 
to  build  for  me  is  completed,"  the  like  decision  was  made.^  So,  where 
a  promise  to  pay  on  or  before  March  12,  1882,  contained  the  further 
provision,  "this  note  becomes  due  and  payable  when  (if  before 
March  12,  1882)  A.  B.  &  Co.  shall  dispose  of  a  part  or  all  of  their 
interest  in  the  New  York  Hotel,  or  when  the  interest  of  B.  may  be 
sold  or  disposed  of."  ^  So  a  note  payable  on  or  before  a  certain  day;  * 
for,  as  said  in  such  a  case  by  Cooley,  J.:  "The  legal  rights  of  the 
holder  are  clear  and  certain;  the  note  is  due  at  a  time  fixed,  and  it  is 


provision  authorizing  an  attorney  to  appear  at  any  tirno  and  confess  judgment 
therein  does  not  render  a  note  uncertain  a.s  to  time  of  payment,  such  provision  is 
illegal  and  no  part  of  the  note.  See  Tolman  v.  Jan.son,  KXj  Iowa  455  76  N  W 
732. 

1.  Stevens  v.  Blount,  7  Mass.  240  (1810);  Gamer  v.  Hall  &  Farley,  114  Ala 
166,  21  So.  835. 

2.  Goodloe  v.  Taylor,  3  Hawks,  458. 

3.  Kiskadden  v.  Allen,  7  Colo.  206;  Dobbins  v.  Oberman,  17  Nebr.  165. 

4.  Miller  v.  Western  College  of  Toledo,  177  III.  2S0,  52  N.  E.  432,  42  L.  R.  A. 
797,  69  Am.  St.  Rep.  242;  Mattison  v.  Marks,  31  Mich.  421;  Jordan  v.  Tate,  19 
Ohio  (N.  S.),  586;  First  Nat.  Hank  v.  Skeen,  29  Mo.  App.  119.  citing  te.xt;  Curtis 
v.  Horn,  58  N.  H.  504;  Cunningham  v.  McDonald,  98  Tex.  316,  S3  S.  VV.  372, 
citing  text;  Hughes  County  v.  Livingston,  43  C.  C.  A.  541,  104  Fed.  306; 
Lovenberg  v.  Henr>-  (Tex.),  140  S.  W.  1079,  reversing  Henry  v.  Lovenberg, 
128  S.  W.  675.  Under  a  statute  providing  that:  "No  written  promise  to  pay 
money  shall  be  held  not  to  be  a  promissory  note,  or  not  to  be  negotiable  for  the 
reason  that  the  time  of  payment  is  uncertain,  provided  that  the  money  is  payable 
at  all  events  and  at  some  time  that  mu.st  certainly  come,"  it  wa.s  held  to  be  un- 
necessary to  decide  whether  a  note  containing  the  language:  "The  privilege  being 
allowed  the  makers  hereof  to  pay  the  whole  or  any  portion  of  said  principal  sum 
at  any  time  within  said  five  years  if  they  so  desire"  wa.s  negotiable  by  the  law 
merchant,  as  it  was  within  the  terms  of  the  statute.  Lowell  Trust  Co.  v.  Pratt, 
183  Mass.  379,  67  N.  E.  363.  In  Strickland  v.  National  Salt  Co.,  77  N.  J.  Eq! 
328,  76  Atl.  1048,  it  was  held  that  a  corporate  certificate  containing  an  agreement 
to  pay  to  a  party  named,  or  to  his  ortler,  a  sum  of  money  in  several  equal  .semi- 
annual installments,  but  further  stipulating  that  the  maker  may  cause  its  liability 
to  be  discharged  by  paying  the  amount  of  all  future  installments  to  a  trustee  in 
trust  to  pay  the  same  to  the  registered  holder  of  the  certificate,  was  not  negotiable, 
as  the  paper  did  not  on  its  face  bear  a  promise  to  pay  the  amount  named  to  the 
holder  or  owner  abstjlutely  and  at  all  events.  The  same  certificate  was  held  ne- 
gotiable in  National  Salt  Co.  v.  Ingraham,  143  Fed.  805,  but  the  above  point  was 
not  noticed;  it  was  there  held  that  the  right  to  pay  before  maturity  did  not  affect 
negotiability. 


54  REQUISITES   OF   BILLS   AND    NOTES  §  44 

not  due  before.  True,  the  maker  may  pay  sooner  if  he  shall  choose, 
but  this  option  if  exercised  would  be  a  payment  in  advance  of  the 
legal  liability  to  pay,  and  nothing  more.  Notes  like  this  are  common 
in  commercial  transactions,  and  we  are  not  aware  that  their  nego- 
tiability is  ever  questioned  in  business  dealings.  It  ought  not  to  be 
questioned  for  the  sake  of  any  distinction  that  does  not  rest  upon 
sound  reason."  •'' 

§  44.  Other  cases  have  arisen  illustrative  of  these  views. — A 
note  payaljle  on  demand  after  date,  "when  convenient,"  has  been 
held  payable  absolutely  in  a  reasonable  time ;  ^  and  so  a  note  payable 
"as  soon  as  I  can."  ^  So  a  note  payable  in  six  months,  "or  as  soon  as 
I  can  with  due  diligence  make  the  money  out  of  said  patent  right;"  * 
a  note  payable  in  nine  months,  "or  as  A.'s  horse  earns  the  money  in 
the  cavalry  service;"  ^  a  note  payable  twelve  months  after  date,  "or 
sooner  if  made  out  of  a  certain  sale,"  ^°  have  been  each  held  valid, 
negotiable  notes,  payable  absolutely  at  the  termination  of  the  time 
expressed,  and  earlier,  provided  the  alternative  event  transpired.  A 
note  payable  "from  the  avails  of  logs  l)ought  of  M.  M.,  when  there  is 
a  sale  made;"  '^  or  "when  I  sell  my  place  where  I  now  live,"  have 
been  held  payable  absolutely  after  a  reasonable  time.^^ 

6.  Mattison  v.  Marks,  31  Mich.  421  (1875);  Hclmer  v.  Krolick,  36  Mich.  373 
(1877).  See  post,  §  46.  To  same  effect,  Smith  v.  Ellis,  29  Me.  422,  note  payable 
as  soon  and  as  fast  as  the  money  could  be  collected;  and,  if  not  collected,  in  four 
years.  But  a  note  promising  to  pay  a  stated  sum  with  interest  "on  or  before  two 
years  from  date,"  and  providing  that  if  it  be  paid  within  one  j'car  no  interest 
should  be  paid,  has  been  held  nonnegotiable,  because  lacking  certainty  in  time 
and  amount.  Story  v.  Lamb,  52  Mich.  525;  Charlton  v.  Reed,  61  Iowa,  166,  47 
Am.  Rep.  809,  citing  the  text;  Fogg  v.  School  District,  75  Mo.  App.  159;  Pagal 
V.  Nickel,  107  Wis.  471,  83  N.  W.  767. 

6.  Works  V.  Hershey,  35  Iowa,  340;  Lewis  v.  Tipton,  10  Ohio  (N.  S.),  88.  See 
post,  §  88. 

7.  Benton  v.  Benton,  78  Kan.  366,  97  Pac.  378,  130  Am.  St.  Rep.  376;  Kincaid 
V.  Higgins,  1  Bibb,  396. 

8.  Palmer  v.  Hummer,  10  Kan.  464.   Contra,  Hubbard  v.  Mosely,  11  Gray,  170. 

9.  Gardner  v.  Barger,  4  Heisk.  669. 

10.  Ernst  v.  Steckman,  74  Pa.  St.  13.  To  same  effect,  see  Cidne  v.  Chidester, 
85  111.  523;  Walker  v.  Woollen,  54  Ind.  164;  Woollen  v.  Ulrich,  64  Ind.  120;  Noll  v. 
Smith,  64  Ind.  511;  Charlton  v.  Reed,  61  Iowa,  166.  A  promise  to  pay  a  certain 
sum  "on  or  before  the  completion  of  a  certain  contract,"  is  not  a  contingent  but 
an  absolute  promise,  and  the  completion  of  the  contract  is  referred  to  merely  as 
fixing  the  time.  Crocker-Woolworth  Nat.  Bank  v.  Carle,  133  Cal.  409,  65  Pac. 
951,  citing  text. 

11.  Sears  v.  Wright,  24  Me.  278.  See  Fiske  v.  Pratt,  154  Mass.  367, 28  N.  E.  282. 

12.  Crooker  v.  Hohnes,  65  Me.  195. 


i§  45,  45a     CERTAINTY   AS   TO   THE    FACT   OF    PAYMENT  55 

§  45.  So,  where  the  note  was  to  pay  "as  soon  as  reaUzed,"  to  which 
was  added,  "to  be  paid  in  the  course  of  the  season  now  coming," 
Shaw,  C.  J.,  said  the  undertaking  to  pay  was  absolute,  and  that 
"whatever  time  may  be  understood  by  the  'coming  season,'  whether 
harvest-time  or  the  coming  year,  it  must  come  by  mere  hxpse  of  time, 
and  that  must  be  the  ultimate  limit  of  the  time  of  payment."  ^^ 
So,  where  the  certificate  is  payable  "on  the  return  of  this  certificate," 
it  is  negotiable,  because  that  merely  requires,  as  in  the  case  of  any 
note,  the  return  of  the  evidence  of  the  debt:  ^^  but  if  there  be  added, 
"and  the  return  of  my  guaranty  of  a  certain  note,"  it  would  engraft 
a  collateral  condition  which  would  defeat  the  negotiability  of  the 
instrument.  ^^ 

The  American  decisions  quoted  seem  to  us  salutary  and  correct. 
It  has  been  held  by  the  United  States  Supreme  Court  that  a  note 
payable  "as  soon  as  the  crop  can  be  sold,  or  the  money  raised  from 
any  other  source,"  is  not  a  promissory  note.^^ 

§  45a.  In  Massachusetts,  it  is  considered  essential  to  the  nego- 
tiability of  the  note  that  it  be  payable  at  a  definite  time,  or  at  a  time 
that  can  be  made  definite  at  the  election  of  the  holder.  And  accord- 
ingly that  an  instrument  given  with  a  mortgage,  promising  to  pay  a 
certain  sum  in  a  year  or  a  half  from  date,  "or  sooner,  at  the  option  of 
the  mortgagor,  with  interest  at  a  certain  rate  during  the  term  of  the 
mortgage,"  was  not  a  negotiable  note.'^  And  this  view  has  been 
approved  in  Missouri,  where  corporate  bonds  provided  that  "the 
company  reserve  the  right  to  pay  the  same  at  any  time  by  adding  to 
the  principal  a  sum  equal  to  twenty  per  cent,  thereof."  '^  This  latter 
decision  seems  clearly  right,  as  the  amount  payable  was  not  certain. 
But  if  a  certain,  or  reasonably  definite,  time  be  fixed  when  the  liability 

13.  Cota  V.  Buck,  7  Mctc.  (Mass.)  588. 

14.  See  §§  47,  1703,  1707. 

15.  Smilie  v.  Stevens,  39  Vt.  31G;  Blowl  v.  Northrup,  1  Kan.  29;  Van  Zandt 
V.  Hopkins,  lol  III.  24S,  citing  text,  37  N.  E.  845. 

16.  Nunez  v.  Dautel,  19  Wall.  .560. 

17.  Stults  V.  Silva,  119  Mas-s.  137;  Way  v.  Smith,  111  Mass.  523;  Mahoney  v. 
Fitzpatrick,  133  Ma-ss.  151.  On  the  other  hand  it  has  been  held  that  "A  promis- 
sory note  payable  when  payor  or  payee  mutually  agree  is  to  be  construed  as 
meaning  that  it  is  payable  on  demand  when  and  after  the  payor  ought  reasonably 
to  have  agreed."  Page  v.  Cook,  164  Mass.  166,  41  N.  E.  115,  49  Am.  St.  Rep. 
410.     See  also  Powers  v.  Manning,  154  Ma.ss.  370,  21  N.  E.  290. 

18.  Chouteau  v.  Allen,  70  Mo.  3.39;  Brown  v.  Vossen,  112  Mo.  App.  676,  87 
S.  W.  577  and  Bank  v.  Booze,  75  Mo.  App.  189,  citing  text. 


56  REQUISITES   OF   BILLS   AND    NOTES  §  46 

to  pay  occurs,  thus  marking  the  hmit  of  the  currency  of  the  note  and 
the  period  of  its  maturity,  the  fact  that  it  may  be  taken  up  in  advance 
ought  not  to  imi)air  its  character  as  a  negotial)Ie  note,  and  we  liave 
already  given  what  seems  to  us  the  better  opinion,  as  expressed  by 
Judge  Cooley,  in  reference  to  instruments  so  payable.  '^ 

§46.  If  i)ayable  when,  or  so  many  days  after,  "A.  shall  come  of 
age,"  ^  the  instrument  would  not  be  a  bill  or  note,  as  A.  might  die  a 
minor,  and  the  fact  that  he  actually  attains  majority  does  not  alter 
it;  but  if  the  time  when  A.  will  come  of  age  is  specified,  it  will  be  good, 
as  it  will  be  taken  to  be  payable  absolutely  when  the  time  arrives.^' 
If  jiayable  at,  or  within  a  certain  time  after,  a  man's  death,  it  is  suffi- 
cient, because  the  event  must  occur.'--     And  the  words  after  the 

19.  FoRg  V.  School  District,  75  Mo.  App.  l.'iO;  ante,  §  43;  Coulter  v.  Clark,  2 
Ind.  App.  512,  28  N.  E.  723. 

20.  Rice  V.  Rice,  43  App.  Div.  458,  60  N.  Y.  Supp.  97,  citing  text;  Kelley  v. 
Homniingwiiy,  13  111.  004. 

21.  Goss  V.  Nelson,  1  Burr.  226. 

22.  Cooke  V.  Colehan,  2  Stra.  1217;  Colehan  v.  Cooke,  Welles,  393;  RofTey  v. 
Groonwell,  10  Ad.  it  El.  222;  Crider  v.  Shelby,  95  Fed.  212;  Conn.  v.  Thornton, 
46  Ala.  587;  Simon  v.  Jones'  Estate  (Ark.),  138  S.  W.  98();  Beatty  v.  Western 
College,  179  111.  281,  52  N.  E.  432,  69  Am.  St.  Rep.  242;  Price  v.  Jones,  105  Ind. 
544,  citing  the  te.xt;  Mortee  v.  Edwards,  20  La.  Ann.  236;  Harper  v.  Davis,  115 
Md.  349,  80  Atl.  1012;  Hegeman  v.  Moon,  131  N.  Y.  462,  30  N.  E.  487;  Cam- 
Wright  V.  Gray,  127  N.  Y.  93,  27  N.  E.  835,  24  Am.  St.  Rep.  424;  Chitty,  Jr.,  on 
Bills,  301;  1  Ames  on  Bills  and  Notes,  83.  The  fact  that  a  note  was  made  pay- 
able after  the  death  would  not  of  itself  defeat  recovery.  Harper  v.  Davis,  115 
Md.  349,  80  Atl.  1012.  An  instrument  directing  the  maker's  executor  to  pay  to 
the  order  of  a  certain  person  a  certain  sum,  and  adding  the  words:  "It  being 
for  work  in  house  and  for  manual  labor  on  my  farm,"  shows  mdehilum  in  prcvsenti, 
the  time  of  payment  of  which  wjis  to  be  deferred  until  after  the  death  of  the  maker. 
Junkins  v.  SuUivan,  110  Md.  539,  73  Atl.  264.  A  note  payable  in  "twelve  months 
after  I  shall  become  the  legal  owner  of  one  hundred  and  fifteen  acres  of  land  con- 
veyed to  me  by  my  father,  H.  V.  Davis,  reserving  to  him,  H.  V.  Davis,  a  life  es- 
tate in  said  land,"  is  not  open  to  the  objection  that  it  is  payable  upon  a  contin- 
gency. McClenathan  v.  Davis,  243  111.  87,  90  N.  E.  265,  27  L.  R.  A.  (N.  S.) 
1017.  In  Banker  v.  Coons,  40  App.  Div.  572,  58  N.  Y.  Supp.  47,  the  note  read: 
"After  the  death  of  Ehzabeth  Avery  Horton,  for  value  received,  I  promise  there 
shall  be  paid  by  my  administrators  or  executors  to  Luella  Banker,  if  living,  if  not, 
to  her  heirs,  if  any,  if  none,  to  my  nearest  kin,  three  thousand  dollars  with  in- 
terest." The  court  commenting  upon  the  note,  said:  "It  is  not  necessary  to 
characterize  it  as  a  nonnegotiable  note;  it  is  simply  necessary  to  observe  that  it 
is  a  valid  contract  to  pay  upon  consideration  a  fixed  sum  to  the  plaintiff,  if  she 
should  be  alive  to  receive  it  at  the  due  day  thereof."  A  curious  case  arose  in  Scot- 
land, in  which  it  appears  that  a  party  accepted  a  bill  payable  at  a  certain  time 
after  his  decease.    He  survived  the  acceptance  thirty  years.    The  court  regarded 


§  4G       CERTAINTY  AS  TO  THE  FACT  OF  PAYMENT        57 

promise  "to  be  allowed  at  ray  decease"  would  mean  to  he  paid  out  of 
the  maker's  estate,  and  the  paper  would  be  a  good  negotiable  note.-^ 
And  a  promise  to  pay  "on  demand,  after  my  decease,  $850,"  signed 
by  the  promisor,  is  a  good  note,  negotiable  as  any  other,  and  binding 
on  the  promisor's  estate  at  his  death.-"*  So  a  note  payable  "one  day 
after  date  or  at  my  death,"  -'"  and  if  the  day  of  payment  must  come 
at  the  same  time,  it  has  been  said  that  the  distance  is  immaterial.-® 
The  English  courts  have  gone  so  far  as  to  hold  that  if  payable  at  a 
certain  time  after  a  government  ship  is  paid  off,  it  would  be  good,  be- 
cause government  is  sure  to  pay;  -^  but  tliis  decision  has  been  justly 
criticised  and  distrasted.^ 

An  agreement  to  pay  ninety  days  after  the  happening  of  two 
events,  one  of  which  may  never  happen,  is  not  negotiable.^  A  note 
payable  "on  or  l)y"  a  certain  day  is  payable  on  that  day;^  and  a 
note  payable  "by"  a  certain  day  may  be  declared  on  as  payaijle  on 

the  matter  a.s  8o  anomalouH  as  not  to  be  subject  of  a  bill  of  exchanRe,  and  sus- 
taincHJ  objections  to  the  bill.  Stewart  v.  KuUarton,  M(jrri.s<jn'H  Dictionary  <jf 
Decisions,   1408. 

23.  Martin  v.  Stone,  67  N.  H.  367,  29  Atl.  845. 

24.  liristol  V.  Wanier,  1!)  Conn.  7. 

25.  C;()nn  v.  Thornton,  4r)  Ala.  TiHH;  Hegeman  v.  Moon,  60  Hun,  412,  .{0  X.  E. 
487;  Shaw  v.  Camp,  160  111.  425,  43  N.  E.  «K)8. 

26.  Worth  V.  Cjise,  42  N.  Y.  362;  Garrigus,  Adinr.,  v.  The  Home  Frontier  and 
Foreign  Missionary  Society,  3  Ind.  App.  91,  2S  N.  E.  1009,  50  Am.  St.  Rep.  262, 
citing  text. 

27.  Andrews  v.  Franklin,  1  Stra.  24;  Evans  v.  Underwoo<l,  1  Wils.  262. 

28.  1  I'arsons  on  Notes  and  liills,  40;  Edwards  on  Hills,  142.  SccminKlj'  in 
8Ui)|)ort  of  the  proposition  statini  is  the  ejusc  of  Powers  v.  Manning,  I.'j4  Mass. 
370,  28  N.  E.  290.  Held,  an  action  may  be  brought  upon  a  promi.s.sory  note  which 
by  its  terms  is  payable  "  when  the  United  States  pays  judgments  "  under  sections  5 
and  8  of  United  States  Statutes  of  June  5,  1882,  upon  the  "Alabama  claims  in 
the  so-called  class  2  ca.ses,"  if  the  United  States  has  in  the  main  paid  all  judg- 
ments of  the  first  class  in  full  and  over  35  per  cent,  of  the  greater  part  of  those 
of  the  second  class  and  has  substantially  exhausted  the  fund.  In  Jo.seph  v. 
Carton,  13  N.  M.  202,  Si  Pac.  439,  1  L.  R.  A.  (N.  S.)  1120,  citing  the  text,  it  was 
held  that  a  note  containing  a  prf)mi.se  to  pay  upon  the  confirmation  by  Congress  of 
a  certain  land  grant  is  not  a  negotiable  instrument,  since  it  was  not  certainly  and 
at  all  events  payable;  it  not  being  morally  certain  that  the  grant  would  ever  be 
confirmed  by  Congress,  the  court  sajnng  further  that  the  fact  that  the  grant  may, 
as  a  matter  of  fact,  have  been  confirmed  many  years  after  the  making  of  the 
instrument,  does  not  alter  the  rule,  since  the  certainty  of  maturity  must  be  of 
the  date  of  the  instrument,  and  cannot  derive  support  from  any  subsequent  event. 

29.  Sackett  v.  Palmer,  25  Barb.  178;  Specht  v.  Beindorf,  56  Nebr.  553,  76 
N.  W.   10.59. 

30.  Maasie  v.  Belford,  68  III.  290;  anU,  §  43. 


58  REQUISITES   OF   BILLS   AND    NOTES  §  47 


that  day."  ^^    A  bill  payable  in  New  York,  October  31st,  or  in  Paris, 
December  31st,  is  unobjectionable.' 


32 


§  47.  A  promise  to  pay  a  certain  sum  for  stock,  "in  whole  or  from 
time  to  time  in  part,  as  the  same  shall  be  required  within  thirty  days 
after  demanded,  or  upon  notification  of  thirty  days  in  any  news- 
paper," would  answer  the  conditions  necessary  to  a  negotiable 
promissory  note.^' 

And  so  would  a  promise  to  pay  a  certain  sum  "in  such  manner 
and  proportions,  and  at  such  time  and  place  as  A.  shall  require," 
being  paya])le  on  demand;  ^"^  but  a  like  promise  to  pay  at  such  times 
and  in  such  articles  as  C.  may  need  for  support,  would  not,  the 
medium  of  payment  not  being  money.^^  A  promise  to  pay  a  certain 
sum  after  six  months'  notice  is  a  good  note.^  A  written  instrument 
acknowledging  receipt  of  a  certain  sum,  and  promising  to  pay  it  to  a 
certain  party,  "on  return  of  this  receipt,"  has  been  held  a  perfect 
negotiable  note  in  New  York,  and  its  return  was  regarded  as  not  of 
the  essence  of  the  contract.^^ 

If  the  note  be  in  part  for  a  sum  certain,  and  part  upon  a  contin- 
gency, it  will  not  be  negotiable."''* 

Under  Negotiable  Instrument  statute. — Under  the  statutory  defini- 
tion that,  to  be  negotiable,  an  instrument  must  be  payable  on  demand, 
or  at  a  fixed  or  determinable"  future  time,^^  it  has  been  held  that  an 

31.  Preston  v.  Dunn,  25  Ala.  507. 

32.  Henschel  v.  Mahlen,  3  Den.  428. 

33.  Protection  Ins.  Co.  v.  Hill,  31  Conn.  534.  See  Stillwoll  v.  Craig,  58  Mo. 
24,  where  note  payable  in  installments  not  to  exceed  10  per  cent,  on  each  share, 
at  thirty  days'  notice  of  call  from  board  of  directors,  was  held  negotiable. 

34.  Goshen  v.  Turpin,  9  Johns.  217  {semble)',  Washington  County  Mutual 
Ins.  Co.  V.  Miller,  26  Vt.  77. 

35.  Corbett  v.  Steinmetz,  15  Wis.  170. 

36.  Walker  v.  Roberts,  Car.  &  M.  590;  Gaytes  v.  Hibbard,  5  Biss.  99  (semble); 
Dutchess  County  v.  Davis,  14  Johns.  238  (semble). 

37.  Frank  v.  Wessels,  64  N.  Y.  158,  Church,  C.  J.,  saying  of  the  paper:  "It 
contains  an  express  promise  to  pay  Feist  or  order  a  specified  sum  of  money  upon 
demand,  with  interest.  These  are  the  statutory  elements  of  such  a  (negotiable 
promissory)  note."  1  Rev.  Stat.  721,  §  7.  "The  words,  'on  the  return  of  this 
receipt,'  do  not  make  it  payable  upon  a  contingency,  or  constitute  a  condition 
precedent  to  any  payment.  *  *  *  This  restriction  would  be  implied,  if  not 
expressed;  it  is  implied  in  every  promissory  note;  and  there  is  also  an  imphed  ex- 
ception on  account  of  mistake  or  accident.  *  *  *  This  clause  is  not  of  the 
essence  of  the  contract."    See  ante,  §  45. 

38.  Palmer  v.  Word,  6  Gray.  34a 

39.  Appendix,  sec.  1  (3) ;  see  also  sees.  4,  5.   A  draft,  containing  the  words  "upon 


§  47       CERTAINTY  AS  TO  THE  FACT  OF  PAYMENT        59 

order  that  a  certain  sum  is  to  be  due  Oct.  1st  means  that  the  sum 
stated  is  to  be  paiil  Oct.  1st  and,  so  construed,  is  an  unconditional 
order  to  pay  a  sum  certain  in  money,  at  a  fixed  future  time,  to  the 
payee  or  order,  and  is  a  bill  of  exchange,  within  the  meaning  of  the 
statute.'*®  When  the  time  of  payment  depends  upon  the  will  of  the 
holder  and  is  uncertain,  the  instrument  is  not  negotiable,  as  when 
it  contains  a  provision  retaining  title  to  the  property  for  the  purchase 
of  which  the  note  was  given,  and  further  provides  that  the  payee  has 
full  power  to  declare  the  note  due  and  take  possession  of  the  property 
when  he  deems  the  debt  insecure  even  before  the  maturity  of  the 
note.^^  Where,  however,  the  contingency  as  to  time  of  payment  de- 
pends upon  some  act  done  or  omitted  to  be  done  by  the  maker,  or 
upon  the  occurrence  of  some  event  indicated  in  the  note,  and  not 
upon  the  act  of  the  payee  or  holder,  this  does  not  render  the  instru- 
ment nonnegotiable.'*^    When  an  option  to  extend  the  time  of  pay- 

acccptancc,"  is  payable  only  on  a  continKcncy  or  condition,  and  thorefore  is  not 
negotiable.  Berenson  v.  London  &  Lancaahire  Fire  Ins.  Co.,  201  Mass.  172, 
87  N.  E.  687.  And  so  as  to  a  note  "Payed  when  we  get  it  from  the  brewery  after 
date."    Wray  v.  Miller,  120  N.  Y.  S.  787. 

40.  Torpey  v.  Tebo,  1S4  Mass.  307,  08  N.  E.  223. 

41.  Ki[)ton  V.  Studcbukcr  Bros.  Co.,  14  Idaho,  r).'')2,  94  Pac.  1030,  125  Am.  St. 
Rop.  18.5  (stH*  al.so  appendix,  m^c.  1  |51).  Stn-  further,  j)()sl,  under  §  (U.  A  note 
whieh  eontain.s  a  recital  that  collateral  .security  wa.s  attached  of  a  certain  value, 
and  a  stipulation  that  "if,  in  the  judgment  of  the  holder  of  this  note,  said  col- 
lateral depreciates  in  value,  the  undersigned  agrees  to  deliver,  when  demanded, 
additional  security  to  the  satisfaction  of  said  holder;  otherwise  this  note  shall 
mature  at  once,"  is  nonnegotiable  lx?causc  it  contains  a  promi.se  to  do  an  act  in 
addition  to  the  payment  of  the  money,  and  becau.s*!  the  date  when  it  is  to  come 
due  is  uncertain.  HoUiday  State  Bank  v.  Hoffman,  116  P.  239,  85  Kan.  71,  35 
L.  R.  A.  (N.  S.)  390. 

42.  Joergenson  v.  Joergenson,  28  Wash.  477,  68  Pac.  913,  92  Am.  St.  Rep.  888, 
as  to  a  note  containing  a  provision  that  "if  we  sell  or  remove  the  timber  that  we 
have  bought  on  Johan  Joergenson 's  homestead  claim,  before  the  expiration  of  said 
four  years,  then  this  note  shall  be  paid  at  the  time  of  such  sale  or  removal  of 
said  timber."  In  Iowa  Nat.  Bank  v.  Carter,  144  Iowa,  715,  123  N.  W.  237,  it 
was  held  that  notes  are  nonnegotiable  where  they  and  a  chattel  mortgage  were 
executtni  at  the  same  time,  and  were  i)art  of  the  same  transaction,  and  the  mort- 
gage provides  that  if  the  mortgagor  disp<jse  of  or  attempt  to  dispose  of  or  remove 
the  whole  or  any  part  of  the  goo<ls,  then  the  whole  amount  not  paid  shall  be  im- 
mediately due  and  pa3able,  and  the  notes  provide  that  in  case  of  default,  the 
payee  shall  have  the  option  to  declare  any  and  all  other  notes  at  once  due  and 
payable.  Subsequently,  in  State  Bank  of  Halstead  v.  Bilfltad  (Iowa),  136  N.  W. 
204,  the  court  said  that  the  above  case  should  be  quaUfied,  as  the  statute,  section 
4  (2)  expressly  makes  notes  payable  on  or  before  a  certain  time  negotiable.  .\nd 
in  Mackintotth  v.  Gibba,  79  N.  J.  L.  40,  74  Atl.  708,  it  was  held  that  by  sec- 


60  REQUISITES   OF   BILLS   AND    NOTES  §  47 

ment  can  be  exercised  by  the  payee  or  holder  only  upon  failure  to  pay 
at  maturity  the  instrument  is  negotiable/'  but  if  a  clause  in  a  note  is 
to  be  construed  as  giving  the  maker  and  indorser  the  right  before 
maturity  to  extend  the  time  of  payment,  the  note  is  not  negotiable.''"* 

tion  2,  a  note  is  negotiable  notwithstanding  tiie  fact  that  it  contained  provisions 
for  payment  with  interest  payable  semiannually,  and  a  provision  that,  upon  de- 
fault, the  whole  sum  should  become  immediately  due  and  i)ayable  at  the  option 
of  the  holder.  In  Thorpe  v.  Minderman,  123  Wis.  149,  101  N.  W.  417,  03  L.  R.  A. 
146,  107  Am.  St.  Rep.  1003,  it  was  held  that  an  agreement  in  a  note  that  the 
whole  principal  of  the  note  shall  be  due  at  the  mortgagee's  option  in  case  of  a 
failure  to  pay  interest  or  perform  any  of  the  conditions  of  the  mortgage,  does  not 
nmder  the  note  nonnegotiable.  The  point  was  decided  on  the  clause  of  the 
Wisconsin  statute,  sec.  4,  .subd.  4:  "At  a  fixed  period  after  the  date  or  sight,  though 
payable  before  then  on  a  contingency;"  this  clause  does  not  appear  in  the  other 
statutes.  Citing  Thorpe  v.  Minderman,  supra,  it  was  held  in  Taylor  v.  American 
Nat.  Bank  of  Pensacola  (Fla.),  57  So.  678,  that  a  promissory  note  in  negotiable 
form,  with  interest  payable  quarter-annually,  is  negotiable,  though  accompanied 
by  an  ordinary  real  estate  mortgage,  which  provides  that,  upon  default  in  the 
payment  of  any  installment  of  interest,  which  interest  is  payable  quarter-annually, 
the  whole  amount  of  such  note  shall  tluTcby  become  due  and  payable. 

43.  Stitzel  V.  Miller,  95  N.  E.  ,53,  250  111.  72,  34  L.  R.  A.  (N.  S.)  1004,  as  to  a 
provision  in  a  note,  "in  case  said  not(!  is  not  paid  at  maturity,  that  it  is  at  the 
option  of  the  holder  hereof  to  extend,  as  he  deems  proper,  the  payment  of  the 
above  note."  See  also  State  Bank  of  Halstad  v.  Bilstad  (Iowa),  136  N.  W.  204, 
as  to  a  note  due  at  a  certain  time,  but  containing  a  stipulation  that  on  a  certain 
contingency  the  note  shall  be  extended  one  year,  wherein  the  court  said:  "These 
provisions  clearly  provide  for  flexibility  in  fixing  the  time  of  payment,  provided 
only  that  there  shall  certainly  come  a  time  when  the  note  is,  by  its  terms,  due. 
In  other  words,  they  recognize  the  right  of  the  parties  to  an  instrument  to  contract 
for  their  mutual  benefit,  and  say,  in  etTect,  that,  if  the  contract  made  is  certainly 
to  be  performed  at  some  definite  time  in  the  future,  its  negotiability  is  not  de- 
stroyed. A  determinable  future  time,  as  used  in  the  second  clau.se  of  the  section, 
can  mean  nothing  else  than  a  time  that  can  be  certainly  determined  after  the  exe- 
cution of  the  note.  The  contingency  which  will  render  a  note  nonnegotiable 
under  the  last  clause  of  the  section  clearly  means  an  event  which  may  or  may  not 
happen." 

44.  Rosville  State  Bank  v.  Heslet,  84  Kan.  315,  113  Pac.  1052,  as  to  a  pro- 
vision: "The  makers  and  indorsers  of  this  note  hereby  severally  waive  present- 
ment for  payment,  notice  of  payment,  protest  and  notice  of  protest,  and  all 
exemptions  that  may  be  allowed  by  law,  and  valuation  and  appraisement  laws 
waived,  and  each  signer  and  indorser  makes  the  other  an  agent  to  extend  the  time 
of  this  note."  See  also  Union  Stockyards  Nat.  Bank  v.  Bolan,  14  Idaho,  87,  93 
Pac.  508.  But  in  First  Nat.  Bank  v.  Buttery  (N.  D.),  116  N.  W.  341,  16  L.  R.  A. 
(N.  S.)  878,  it  was  held  that  the  negotiable  quality  of  a  promissory  note  is  not 
destroyed  by  a  provision  therein,  that  the  makers  and  indorsers  thereof  severally 
waive  presentment  of  payment  and  notice  of  protest,  and  consent  that  the  time 
of  payment  may  be  extended  without  notice,  when  by  its  terms  it  is  made  payable 
on  or  before  a  day  named,  the  court  saying:  "This  phrase  does  not  express  an 


§  48       CERTAINTY  AS  TO  THE  FACT  OF  PAYMENT        61 

§  48.  Notes  payable  in  installments. — If  a  promissory  note  be 
made  payable  by  installments,  with  a  condition  that  if  default  be 
made  in  the  payment  of  the  first  installment  by  the  maker,  the  whole 
shall  be  immediately  payable,  it  is  negotiable  within  the  statute  of 
Anne.  It  is  not  payable  upon  a  contingency,  or  at  a  time  uncertain, 
but  is  likened  to  a  bill  payable  at  a  certain  time  after  sight;  and  the 
period  or  periods  when  it  shall  be  due  is  dependent  on  the  act  of  the 
maker  himself. ''"  In  Michigan,  where  the  promise  was  to  pay  "  $1,500, 
to  be  paid  20  per  cent  a  month  from  the  1st  of  July,  1871,"  toward 
building  a  certain  road,  the  note  was  held  negotiable.'^  And  in 
Illinois,  where  a  note  is  not  payable  to  a  corporation  or  order,  "in 
such  installments,  and  at  such  times  as  the  directors  of  said  company 
may  from  time  to  time  require,"  the  like  decision  was  rendered, 
Sheldon,  J.,  saying:  "It  wa,s  in  effect  payable  on  demand,  or  in  install- 
ments on  demand."  ^^  An  option  expressed  in  a  note  that  the  holder 
may  treat  it  as  due  immediately  upon  default  in  payment  of  an  in- 
stallment of  interest  must  be  exercised  in  a  reasonable  time,  and  delay 
of  seven  months,  as  has  been  held,  would  be  unreasonable  and  would 
discharge  an  indorser.^^  Such  a  provision  has  also  been  held  not  to 
impair  the  negotiability  of  the  instrument. ^^ 

agreement  to  extend  time,  but  leaves  the  matter  of  extension  optional  with  the 
holder,  and  not  obligator>'  upon  him,  and  the  note  on  its  face  fixes  the  time  when 
it  becomes  due.  In  this  respect  it  must  be  distinguished  from  a  j)rovision  to  the 
effect  that  the  time  of  payment  shall  be  extended  indefinitely,  in  which  ciiso  the 
uncertainty  of  the  time  renders  the  instrument  nonnegotiable." 

45.  Carlon  v.  Kenealy,  12  M.  &  W.  139;  Martin  v.  Jesse  French  Piano,  etc., 
Co.,  151  Ala.  2S9,  44  So.  112;  Strickland  v.  National  Salt  Co.,  77  N.  J.  Eq.  328, 
76  Atl.  1048;  Mackintosh  v.  Gibbs,  81  X.  J.  L.  577,  80  Atl.  554,  affirming  judgment 
79  N.  J.  L.  40,  74  Atl.  708;  Clark  v.  Skeen,  61  Kan.  526,  citing  text.  See  Miller 
V.  Biddle,  13  L.  T.  R.  334  (1865),  Pollock,  C.  B.,  questioning  Carlon  v.  Kenealy. 

46.  Wright  v.  Irwin,  33  Mich.  32. 

47.  White  V.  Smith,  77  111.  351  (1875). 

48.  Crossmore  v.  Page,  73  Cal.  213.  In  Wisconsin,  however,  it  is  held  that  a 
note  payable  in  installments  is  rendered  nonnegotiable  by  a  subjoined  agreement 
that  in  case  of  default  in  any  payment,  or  an  attempt  to  di-spose  of,  or  remove 
the  chattel  for  the  price  of  which  the  note  is  given,  the  holder  may  declare  the 
whole  amount  due.    Kimball  County  v.  Mellon,  80  Wis.  133,  48  N.  W.  1100. 

49.  Roberts  v.  Snow,  43  N.  W.  241.  Where  a  printed  clause  in  a  note,  read: 
"Principal  and  interest  payable  in  gold  coin  of  the  United  States,"  and  con- 
tinued in  writing  "in  sums  of  twenty-five  dollars  or  more  monthly,  together  with 
interest  monthly,"  the  provision  for  the  paj'ment  of  twenty-five  dollars  or  more 
was  merely  an  option  given  to  the  makers  whereby  they  were  permitted,  in  ad- 
vance of  the  maturity  of  the  note,  to  make  partial  payments  on  account  of  the 
principal,  and  did  not  limit  their  obligation  to  pay  the  interest  monthly,  nor  did 


62  REQUISITES   OF   BILLS   AND   NOTES  §§  49,  50 

§  49.  Cases  arising  out  of  Confederate  War. — During  the  war 
between  the  United  States  and  the  Confederate  States,  obligations 
w(>re  frequently  given,  payable  when,  or  a  certain  time  after,  peace 
should  be  declared.  Where  a  note  was  expressed  to  be  payable  "six 
months  after  peace  is  declared  between  the  United  States  and  the 
Confederate  States  of  America,"  it  was  held  actionable  six  months 
after  peace  ensued.^  And  the  like  ruling  prevailed  <u>  to  a  note 
payable  "thirty  days  after  peace  between  the  C.  S.  and  the  U.  S.,"  ^^ 
and  as  to  a  note  payable  "one  day  after  the  treaty  of  peace."  ^-  But 
in  West  Virginia,  where  a  bond  was  payable  "six  months  after  the 
ratification  of  peace  between  the  U.  S.  and  C.  S.,"  it  seems  to  have 
been  regarded  as  a  wager  upon  the  success  of  the  Confederacy;  but 
the  case  went  off  on  a  formal  point. ^■''  In  North  Carolina  this  view  has 
been  adopted  and  applictl,^'*  and  certainly  is  not  without  force.  Only 
the  United  States  Senate  can  ratify  a  peace,  and  a  peace  ratified 
between  two  countries  implies  the  independence  of  each.  And 
further,  it  may  be  said  that  until  the  condition  precedent  is  fulfilled, 
no  liability  accrues.  But  upon  the  princii)le  'Wes  magis  valeal,  qunm 
pcrcat,"  we  think  the  better  view  is  that  "six  months  after  peace" 
would  fulfill  the  meaning  of  the  terms  as  they  were  used  in  the  coun- 
try, though  they  are  the  very  words  of  Confederate  treasury  notes; 
and  it  has  been  so  decided  in  a  number  of  cases,  the  courts  construing 
the  language  according  to  its  poi)ular  import,  and  the  probable  inti'U- 
tion  of  the  parties,  rather  than  in  its  strict  technical  sense.^^ 

§  50.  Instruments  payable  out  of  a  particular  fund  not  negotiable. 
— In  accordance  with  these  principles  the  character  of  the  instrument 
as  a  bill  or  note  is  destroyed  if  it  be  made  payable  expressly  or  by 

it  destroy  or  modify  the  holder's  right  to  declare  the  entire  sum  due  when  there 
should  be  a  default  in  the  payment  of  interest.  Kinsel  v.  Ballou,  151  Cal.  754, 
91  Pac.  620. 

50.  Brewster  v.  Williams,  2  S.  C.  455  (1871). 

51.  Mortee  v.  Edwards,  20  La.  Ann.  236  (1868). 

52.  Gaines  v.  Dorsett,  18  La.  Ann.  563  (1866). 

53.  Harris  v.  Lewis,  5  W.  Va.  (Hagans)  576  (1872). 

54.  McNinch  v.  Ramsey,  66  N.  C.  229  (1872). 

55.  Knight  v.  McReynolds,  37  Tex.  204;  Atcheson  v.  Scott,  51  Tex.  213  (over- 
ruling Thompson  v.  Houston,  31  Tex.  610).  A  case  arose  in  the  Supreme  Court 
of  Appeals  of  Virginia,  involving  this  question  (Phelps  v.  Moomaw),  but  it  was 
compromised  and  never  came  to  trial.  The  inferior  court  ruled  as  in  Texas. 
Brewster  v.  WiUiams,  2  S.  C.  455;  Mortee  v.  Edwards,  20  La.  Ann.  236;  Gaines 
V.  Dorsett,  18  La.  Ann.  563;  Nelson  v.  Manning,  53  Ala.  549. 


§  50       CERTAINTY  AS  TO  THE  FACT  OF  PAYMENT        63 

implication  out  of  a  particular  fund;  for  its  payment  becomes  then 
conditioned  on  the  sufficiency  of  that  fund,  which  may  prove  inade- 
quate.^ Thus  the  insertion,  in  an  order  of  A.  upon  B.  to  pay  a  certain 
sum,  of  the  words  "on  account  of  brick  work  done  on  a  certain  build- 
ing," "  or  "out  of  any  money  in  his  hands  belonging  to  me,"  ^  or  to 
"charge  the  same  to  the  account  of  R.  M.  I.  100  bales  of  cotton,"  ^^ 
have  been  held  to  imply  contingencies,  and  nonnegotiable.  So,  also, 
where  the  paper  was  expressed  as  payable  "for  value  received  in 
stock,  ale,  brewing  vessels,  etc.,  this  being  intended  to  stand  against 
the  undersigned  tus  a  set-off  for  the  sum  left  me  in  my  father's  will 
above  my  sister's  share."  ^  and  where  the  words  were  added,  "out 
of  rents,"  ^'  "out  of  avails,  when  received,  on  sale  of  logs,"  ^'^  "out  of 
my  growing  suljstance,"  "  "out  of  the  net  proceeds  of  certain  ore,"  ^* 
or  "out  of  a  certain  claim,"  *^  "out  of  a  certain  payment  when 
made,"  <^  or  "the  demand  I  have  against  the  estate  of  A.,"  ^  or  "out 

66.  Woodall  v.  P«H)p!f8'  Nat.  Bank,  153  Ala.  7.56,  45  So.  194;  Miller  v.  Poage, 
50  Iowa,  9(i;  White  v.  CiLshinR,  H-S  Me.  342,  34  Atl.  H>4,  51  Am.  St.  Rep.  402; 
VViulIinKton  v.  Covert,  51  Misw.  Cuil;  S<jnnetliicl  v.  Skinner,  07  Tex.  455.  Ah  recog- 
nizinK  a  tU-stinction  where  the  in.stnirnent  is  nirnply  (•h:ir>;('al)le  to  a  particular 
aeeount,  see,  i)o.it,  §51,  and  Kirst  Nat.  Bank  of  lIutchinHon  v.  Lightner, 
74  Kan.  736,  88  Pac.  59,  8  L.  H.  A.  (N.  S.)  231,  118  Am.  St.  Rep.  353,  citing 
U'.xt. 

67.  Pitman  v.  Crawfonl,  3  Gratt.  127;  Rlwanls  on  Billrt,  143. 

68.  Averett's  .\(inir.  v.  Ii<x)ker,  15  (Jratt.  105,  Lee,  J.:  "Here,  the  sum  to 
be  paid  is  not  payable  al)solutely  and  at  all  events.  It  is  payable  out  of  a  par- 
ticular fund,  to  wit,  the  moneys,  if  any,  in  the  hands  of  the  drawe<',  belonging 
to  the  drawer.  The  draft,  theri'fore,  cannot  Ix-  tn-ati^l  jw  a  bill  (jf  exchange,  nor 
can  a  recover>'  be  had  u|K)n  it  jus  such."  Jcnney  v.  Hearle,  2  I>1.  Riiym.  13(il. 
But  see  Corlx'tt  v.  Chirk,  45  Wis.  4().{,  where  the  words  "and  take  the  same  out 
of  our  .shan-  of  the  grain,"  were  iulde<l  to  the  request  by  the  drawee  to  pay;  and 
the  instrument  was  held  a  valid  bill. 

69.  Ilannay  v.  Guaranty  Trust  Co.  of  New  York,  187  Fed.  686. 

60.  Clarke  v.  Perceval,  2  B.  &  Ad.  000. 

61.  1  Parsons  on  Notes  and  Bills,  43.  And  see  Thompson  v.  Wheatland  Mer- 
cantile Co.,  10  Wyo.  HO,  m  Pac.  .595,  h«)lding  that  an  in.strumcnt  which  is  only  a 
promise  to  pay  "out  of  the  wjuity  in  the  al>ove  describe*]  lan<l,  or  out  of  the  crop 
raised  on  the  siiid  land,"  which  is  contingent  u[xjn  the  sufficiency  of  the  fund, 
is  not  a  negotiable  bill  or  note,  and  citing  text. 

62.  Kelly  v.  Bron.son,  26  Minn.  359. 

63.  Joaselyn  v.  Lacier,  10  Mod.  294. 

64.  Wonlen  v.  Dodge,  4  Den.  1.59. 

66.  RichanLson  v.  Carpenter,  40  N.  Y.  661;  Corbett  v.  State,  24  Ga.  287; 
Iloagland  v.  Erck,  11  Nebr.  .>S0. 

66.  Haydock  v.  Lynch,  2  IaI.  Raym.  1563 

67.  West  V.  Forman,  21  Ala.  400. 


64  REQUISITES    OK    BILLS    AND    NOTES  §  5(hl 

of  my  part  of  the  estate  of  A.,"  ''"^  or  "  ijeing  the  amount  that  came  to 
you  from  B.  to  me,"  ^^  or  "out  of  the  proceeds  of  A.'s  bond,"  ™  or 
"and  deduct  the  same  from  my  share  of  the  profits  of  the  partner- 
ship," ^^  or  "and  charge  the  same  to  our  account  for  labor  and  mate- 
rials, performed  and  furnished,"  ^^  or  "on  account  of  work  done  as 
per  contract,"  ^^  or  "out  of  amount  due  me  on  contract."  "'  But  a 
written  promise  to  pay,  one  day  after  the  promisor's  death,  $2,(X){) 
for  services  rendered,  "to  be  paid  out  of  my  estate,"  would  be  a 
good  note,  because  payable  generally  and  not  out  of  a  particular 

§  50a.  Certificates  of  receivers  of  courts  are  not  regarded  as 

negotiable,  although  framed  with  the  negotiable  words  usual  in 
promissory  not(>s,  for  the  reason,  lus  a,ssigned  in  Illinois,  that  "whether 
in  any  event  they  are  payable  in  full  depends  on  the  question  whether 
th(>  fund  under  the  control  of  the  court  is  sufficient  for  that  purpose."  "' 
Such  certificates  have  not  the  quality  of  negotiable  instruments  not- 


68.  Mills  V.  Kuykendale,  2  Blackf.  47. 

69.  Harriman  v.  Sanborn,  43  N.  II.  128. 

70.  Kenny  v.  Hinds,  44  How.  Pr.  7. 

71.  Mungor  v.  Shannon,  Gl  N.  Y.  2r)8,  Dwipht,  C:  "The  present  order,  it 
should  be  observed,  is  payable  out  of  an  uncertain  fund,  from  profits,  and,  of 
course,  none  may  be  realized.  This  fact  deprives  it  of  an  element  essential  in  a 
bill  of  exchange,  which  is  that  it  be  payable  alisolutely,  and  not  upon  a  con- 
tingency. *  *  *  1  think  that  the  true  construction  of  the  present  order  is, 
that  it  wtxs  an  equitable  assignment  of  a  certain  amount  of  the  profits  of  the  busi- 
ness of  L.  A.  Gulick.  Cowpcrthwaite  v.  Sheffield,  3  N.  Y.  243,  is  not  opposed 
to  this  view,  since,  in  that  Ciuse,  there  was  nothing  on  the  face  of  the  bills  to  in- 
dicate that  they  were  drawn  on  a  specific  fund,  but  they  were  in  the  ordinary 
forms  of  bills  of  exchange.  The  same  remark  is  to  be  applied  to  Harris  v.  Clark, 
3  N.  Y.  93." 

72.  Brill  V.  Tuttle,  81  N.  Y.  457.  (But  query,  see  §  51.)  The  language  was 
regarded  as  ambiguous,  and  attendant  circumstances  were  considered. 

73.  Ehrichs  v.  De  Mill,  75  N.  Y.  370,  Hand,  J.:  "It  would  seem  clear  that  an 
order  for  payment,  as  per  contract,  confined  the  direction  for  payment  to  the  fund 
becoming  due  by  contract."  Gerow  v.  Riffe,.29  W.  Va.  462;  American  Boiler  Co. 
V.  Fontham,  34  App.  Div.  294,  55  N.  Y.  Supp.  923. 

74.  Hoagland  v.  Erck,  11  Nebr.  580;  Stebbins  v.  Union  Pac.  R.  Co.,  2  Wyo. 
Ter.  78. 

75.  Price  v.  Jones,  105  Ind.  543. 

76.  Turner  v.  P.  &  S.  R.  Co.,  95  111.  134;  Union  Trust  Co.  v.  Chicago,  etc., 
R.  Co.,  7  Fed.  513;  Staunton  v.  Ala.  &  C.  R.  Co.,  31  Fed.  587;  McCurdy  v.  Bowes, 
88  Ind.  583.  The  principle  stated  in  the  text  has  been  appHed  in  Indiana  to 
gravel-road  bonds.    See  Kirsch  v.  Braum,  153  Ind.  247,  53  N.  E.  1082. 


§  51       CERTAINTY  AS  TO  THE  FACT  OF  PAYMENT        65 

withstanding  the  terms  of  the  order  of  the  court  authorizing  the  re- 
ceiver to  issue  a  negotiable  receiver's  certificate.^^ 

§  51.  Indications  as  to  mode  of  reimbursement. — The  statement 
as  to  a  particular  fund  in  a  bill  however  will  not  vitiate  it  if  inserted 
merely  as  an  indication  to  the  drawee  how  to  reimburse  himself,  or 
to  show  to  what  account  it  should  be  charged."'^  Thus,  where  the  bill 
said,  "and  charge  the  sum  against  whatever  amount  may  be  due  for 
my  share  of  fish,"  it  wa^j  held  a  mere  indication  of  the  means  of  reim- 
bursement, and  the  pa>Tnent  not  limited  to  the  proceeds  of  the  fish,"^ 
and  so  as  to  a  sight  draft  to  the  order  of  a  certain  person,  for  a  stated 
amount,  "and  charge  to  account  of  one  bale  of  cotton,  bill  of  lading 
attached."  ^  So,  where  A.  B.  directed  the  defendant  in  writing  to 
pay  the  plaintiff  or  order  £9  10s.,  "as  my  quarterly  half-pay,  to  be 
due  from  24th  of  June  to  27th  of  September  next,  by  advance,"  the 
court  held  it  a  gootl  bill,  saying,  "The  mention  of  the  half-pay  is  only 
by  way  of  direction  how  he  shall  reimburse  himself,  but  the  money 
is  still  to  be  advanced  on  the  credit  of  the  person."  *^  So  it  was  held 
where  the  expression  used  was  "pay  A.  L.,  or  order, — it  will  Ije  in  full 
of  a  certain  judgment."®-  Where  the  words  u.sed  were,  "which  I 
agree  to  pay  out  of  my  next  quarter's  mail  pay,"  the  Supreme  Court 
of  Maine  said:  "The  promise  is  both  absolute,  and  to  pay  in  money," 
and  it  was  deemed  evident  that  the  payment  was  not  to  be  confined 
to  the  particular  fund,  but  was  to  be  made  whether  it  sufficed  or  not. 
Hence  the  note  w;us  held  negotiable.**' 

Under  Negotiable  hifitrument  statute. — Under  the  statutory  defini- 
tion of  a  negotiable  instrument  and  of  an  unconditional  promise  to 
pay,*^  an  order  or  promise  to  pay  out  of  a  particular  fund  is  not  un- 

77.  Bernard  v.  Union  Trust  Co.,  l.TO  Fvd.  G20,  16  L.  R.  A.  (N.  S.)  1118. 

78.  Corbett  v.  Clark,  4.5  Wis.  307;  Etlwards  on  Bill.s,  144.  See  §§41,  797; 
Whitney  v.  Eliot  Nat.  Bank,  1.37  Ma.ss.  .3.')!.  The  wonts  in  an  order  "on  account 
of  contract"  do  not  moan  "out  of  the  procee<l.s  of  contract,"  but  amount  to  no 
more  than  an  indication  of  the  fund  fmrn  which  the  drawee  i.s  to  reimburse  him- 
self. First  Nat.  Bank  of  Hutchinson  v.  Light ner,  74  Kan.  730,  88  Pac.  59,  8 
L.  R.  A.  (N.  S.)  231,  lis  Am.  St.  Rep.  3r)3,  citing  text. 

79.  Reilman  v.  Adams,  51  Me.  433. 

80.  Bank  of  Guntersville  v.  Jones  Cotton  Co.,  1.56  Ala.  525,  46  So.  971. 

81.  Macleod  v.  Snee,  2  Stra.  762,  2  Ld.  Raym.  1481;  Nichols  v.  Ruggles,  76 
Me.  27. 

82.  Ellett  V.  Britton,  G  Tex.  229. 

83.  Nichol.s  V.  Ruggles,  76  Me.  27. 

84.  .\p[)endix,  sees.  1,  3. 

5 


GO  REQUISITES   OF  BILLS    AND    NOTES  §  51a 

conditional  and  not  negotiable.^^  The  instrument  is  negotiable,  how- 
ever, under  the  statute  as  under  the  law  merchant,  when  it  does  not 
limit  payment  out  of  a  particular  fund  but  is  made  to  the  general 
credit  of  the  maker  or  drawer  and  indicates  the  fund  or  source  from 
which  it  may  be  paid.^^ 

§  51a.  Recitals  of  collateral  matters  or  words  of  consideration.— 
The  fact  that  a  writing  in  the  form  of  a  promissory  note  forms  part  of 
an  instrument  containing  other  conditions  and  stipulations  does  not 
destroy  its  character  as  a  negotiable  promissory  note  when  the  whole 
instrument  indicates  that  the  note  was  to  be  considered  between  the 
parties  as  an  absolute  payment  to  the  payee  of  the  amount  stated."*^ 
The  negotiability  of  the  instrument  is  not  impaired  by  recitals  or 
statements  upon  its  face,  which  merely  state  the  consideration  upon 
which  it  was  made,  and  impose  no  other  liability  upon  any  party 
thereto  than  that  for  the  payment  of  the  sum  of  money  therein  ex- 
pressed,^ as  that  it  was  "given  in  consideration  of  a  certain  patent 

85.  National  Sav.  Bank  v.  Cable,  73  Conn.  568,  48  Atl.  428,  as  to  an  order 
to  pay  a  certain  sum  "or  what  may  be  due  on  my  deposit  book;"  Fulton  v. 
Varney,  102  N.  Y.  S.  608,  117  App.  Div.  572,  a.s  to  an  instrument  f)roviding: 
"this  amount  to  be  paid  out  of  our  profits"  on  a  certain  job.  A  written  promise 
to  pay  the  amount  named  from  the  final  payment  due  to  the  drawer  under  a 
building  contract  in  process  of  performance,  should  not  be  treated  aa  an  inland 
bill  of  exchange  (see  appendix,  sees.  126,  129).  Buttrick  Lumber  Co.  v.  Collins, 
202  M;uss.  41:5,  89  N.  E.  138. 

86.  Hibbs  v.  Brown,  190  N.  Y.  107,  82  N.  E.  1108;  Waddell  v.  Hanover  Na- 
tional Bank,  97  N.  Y.  S.  305,  48  Misc.  578,  aa  to  a  draft  for  a  certain  sum  "4 
hundred  cases  A.  R.  L.  No.  3.362— via  A.  R.  L.  B.  L.  direct."  This  section  is 
merely  declaratory  to  the  common  law,  and  the  insertion  in  a  bill  of  exchange 
of  the  words  "on  account  of"  has  not  the  same  effect  as  the  words  "out  of  the 
proceeds  of,"  and  does  not  render  the  bill  nonnegotiable.  First  Nat.  Bank  v. 
Lightner,  74  Kan.  736,  88  Pac.  59,  8  L.  R.  A.  (N.  S.)  231,  118  Am.  St.  353.  A 
provision  in  a  note  that  "In  case  of  the  death  of  the  insured  before  the  note  falls 
due,  the  above  amount  with  interest  shall  be  deducted  from  the  amount  of  the 
policy,"  is  clearly  covered  by  section  3,  and  also  is  within  the  spirit  of  section  5, 
and  the  note  is  negotiable.  Union  Bank  of  Bridgwater  v.  Spies,  151  Iowa,  178, 
130  N.  W.  928.  A  demand  note  otherwise  negotiable  is  not  rendered  nonnegoti- 
able by  a  provision:  "This  note  is  given  to  take  up  the  freight  and  rehauling  of 
N.  P.  Car  43607  and  proceeds  from  resale  of  said  car  shall  apply  on  this  note," 
as  it  was  made  on  the  general  credit  of  the  maker,  and  pointed  to  proceeds  of  a 
sale  which  might  be  applied  to  its  payment.  First  Nat.  Bank  of  Snohomish  v. 
Sullivan,  66  Wash.  375,  119  P.  820. 

87.  New  Bank  of  Eau  Claire  v.  Kleiner,  112  Wis.  287,  87  N.  W.  1090.  See 
'post,  §  156. 

88.  Siegel  v.  Chicago  Tr.  &  Sav.  Bank,  23  N.  E.  417;  Chase  v.  Behrman,  10 


§  51a  CERTAINTY   AS   TO   THE   FACT   OF   PAYMENT  67 

right;"  ^^  or  "as  part  pay  for  a  piano-forte,"  or  for  any  other  consider- 
ation,^ or  "and  the  same  will  be  credited  in  your  joint  note  to  me."  ^^ 
The  statement  that  collateral  security  has  been  given  or  deposited 
for  the  performance  of  the  promise  contained  in  the  bill  or  note  is  a 
recital  only,  which  does  not  affect  its  negotiability;  ^^  and  though  the 
recital  contain  the  terms  of  the  deposit,  that  does  not  alter  the  case, 
for  it  renders  neither  the  amount,  the  time  of  payment,  the  payee, 
nor  the  engagement  to  pay,  uncertain,^^ 

Daly,  345;  Clanin  v.  Esterly  Machine  Co.,  118  Ind.  373;  post,  §§  108,  150;  Bresee 
V.  Crumpton,  121  N.  C.  122,  28  S.  E.  351,  citing  text;  Nat.  German  Am.  Bank  v. 
Lang,  2  N.  Dak.  66,  49  N.  W.  414;  Boatty  v.  Wo.stem  College,  177  111.  281,  52 
N.  E.  432,  09  Am.  St.  Ilcpr.  242;  Simmons  v.  Council,  5  Ga.  App.  380,  03  S.  E. 
238. 

89.  Hrrcth  v.  Meyer,  33  Ind.  511.  See  post,  §797.  So  a  recital  in  the  note 
showing  that  the  con.siderution  \v;us  a  sale  to  the  maker  of  a  soda  fountain,  and 
retaining  title  in  the  payee  until  the  note  is  paid,  does  not  impair  its  negotiability. 
Choate  V.  Stevens,  110  Mich.  28,  74  N.  W.  289. 

90.  Preston  v.  Whitney,  23  Mich.  200;  Wright  v.  Irwin,  33  Mich.  32;  Mott  v. 
Havana  Nat.  Hank,  22  Hun,  3.')4;  Newton  Wagon  Co.  v.  Dyers,  10  Nebr.  284; 
Collins  V.  Bnulbury,  »)4  Me.  37;  Kidgely  Nat.  Hank  v.  Patton,  109  111.  484;  First 
Nat.  Hank  v.  Badham,  80  S.  C.  170,  68  S.  E.  530,  138  Am.  St.  Rep.  1043.  See 
§§41,  797. 

91.  Adams  v.  Boyd,  33  Ark.  .33. 

92.  Wi.se  V.  Charlton,  4  Ad.  &  El.  780;  Fancourt  v.  Thome,  9  Q.  B.  312;  Ha-s- 
soullier  V.  Harkenck,  7  T.  R.  733;  P'armer  v.  First  Nat.  Bank,  89  Ark.  132,  115 
S.  W.  1141,  131  Am.  St.  Rep.  79;  Roberts  v.  Jacks,  31  Ark.  .597;  First  Nat.  Bank 
V.  Mineral  Farm  Con.sol.  Min.  Co.,  17  Colo.  App.  452,  68  Pac.  981;  Zollman  v. 
Jack.s<jn  Trust  A  Savings  Bank,  23  111.  290,  87  N.  E.  297;  Duncan  v.  Louisville, 
13  Bu.sh.  385;  Howry  v.  Epjiinger,  34  Mich.  2<);  Littlefield  v.  Hodge,  6  Mich. 
320;  Kelley  v.  Whitney,  45  Wis.  110.  See  jjost,  §  156.  A  recital  in  an  in.strument, 
in  other  respects  like  a  promissory  note,  that  it  is  secured  by  a  lien  or  by  a  deposit 
of  collaterals,  does  not  destroy  its  negotiability,  unless  such  recital  qualifies  the 
promise  or  makes  it  uncertain  or  conditional.  Beckstrom  v.  Krone,  125  111.  App. 
376.  An  instniment  that  "Si.x  months  and  twenty-four  days  after  date,  I  promi.se 
to  pay  to  the  order  of  J.  G.  Rathburn  one  thousand  dollars,  with  interest  from  ma- 
turity. And  to  better  secure  the  payment  of  the  same,  the  attached  certificate 
No.  184,  for  twenty  shares  of  the  stock  of  the  Car.  Sulph.  Acid  Mfg.  Co.,  is  here- 
with depo.sited  as  collateral  without  recourse,"  is  both  a  promissory  note  and  a 
pledge  of  collateral  security,  and  the  words  "without  recourse"  refer  to  the  pledge. 
Rathburn  v.  Jones,  47  S.  C.  206,  25  S.  E.  214.  In  ComLsh  v.  Woolverton,  32  Mont. 
456,  81  Pac.  4,  108  Am.  St.  Rep.  598,  under  a  statute  provading  that  several 
contracts  relating  to  the  same  matters,  between  the  same  parties,  and  made  as 
parts  of  substantially  one  transaction,  are  to  be  taken  together  (Civil  Code, 
§  2207),  it  was  held  that  though  a  note  should  be  negotiable  so  far  as  concerns  the 
conditions  expressed  upon  its  face,  its  negotiable  character  must  be  determined 
by  the  provisions  of  the  mortgage. 

93.  Towne  v.  Rice,  122  Mass.  67;  .Vrnold  v.  Rock  River,  etc.,  R.  Co.,  5  Duer, 


68  REQUISITES   OF   BILLS   AND   NOTES  §  52 

Under  Negotiable  Instrument  statute.— Vnder  the  statutory  defini- 
tion of  a  promissory  note,^^  it  has  been  held  that  an  instrument  recit- 
ing: "Having  been  cause  of  a  money  loss  to  my  friend  Gerardine  H. 
Hickok,  I  have  given  her  three  thousand  dollars.  I  hold  this  amount 
in  trust  for  her,  and  one  year  after  date  or  thereafter  on  demand  I 
promise  to  pay  to  the  order  of  Gerardine  H.  Hickok,  her  heirs  or 
assigns,  three  thousand  dollars  with  interest."  contained  every 
essential  element  to  constitute  a  promissory  note.^'^  And  a  note  given 
for  the  premium  on  an  insurance  policy  is  not  rendered  nonnegotiable 
from  the  fact  that  it  contains  language  from  which  it  appears  that  the 
promise  was  an  indebtedness  for  a  balance  remaining  unpaid  of  the 
first  annual  premium  upon  a  policy  which  had  been  actually  deliv- 
ered.^^ 

§  52.  The  rule  seems  to  be  that  if  the  memorandum  or  collateral 
agreement  impairs  the  essential  characteristics  of  certainty  necessary 
to  negotiable  paper,  it  destroys  its  negotiability,  but  otherwise  not.^^ 
A  promise  to  pay  S.  or  order  SI, 000,  or  upon  surrender  of  "this  note," 
to  issue  stock  for  the  same,  does  not  violate  this  rule,  and  is  a  good 
note,  the  option  to  receive  the  stock  being  entirely  with  the  payee.^^ 
And  the  like  view  applies  to  a  note  payable  in  money,  or  in  goods  on 
demand,  the  election  to  take  the  goods  or  no  resting  with  the  payee.^^ 
So  it  was  held  in  Wisconsin  that  a  note,  otherwise  negotiable,  was  not 
therein  affected  by  the  fact  that  it  contained  a  memorandum  that,  if 
the  maker  failed  to  pay  it  at  maturity,  the  whole  amount  of  the  pre- 
mium on  a  policy  of  insurance,  for  which  it  was  given,  should  be 

207;  Heard  v.  Dubuque  County  Bank,  8  Nebr.  16.  In  Mott  v.  Havana  Nat. 
Bank,  22  Hun,  354,  the  note  was  expressed  on  its  face  to  be  "in  part  payment  for 
a  portable  engine,  which  engine  shall  be  and  remain  the  property  of  the  owner 
of  this  note  until  the  amount  hereby  secured  is  paid."  Held  negotiable.  In  Perry 
V.  Bigelow,  128  Mass.  129,  the  note  contained  a  memorandum  authorizing  the 
collateral  to  be  sold.    Held  negotiable.    See  §§  108,  110,  797. 

94.  Appendix,  sec.  184. 

95.  Hickok  v.  Bunting,  73  N.  Y.  S.  967,  67  App.  Div.  560.  On  a  later  ap- 
peal in  the  same  case,  Hickok  v.  Bunting,  86  N.  Y.  S.  1059,  92  App.  Div.  167, 
it  was  further  held  that,  in  the  absence  of  contrary  evidence,  the  note  showed 
prima  facie  a  consideration,  the  court  saying  that  the  note  did  not  show  that  the 
stated  loss  did  not  constitute  a  legal  obligation. 

96.  Equitable  Trust  Co.  of  New  York  v.  Taylor,  131  N.  Y.  S.  475,  146  App. 
Div.  424;  Equitable  Trust  Co.  v.  Newman,  131  N.  Y.  S.  1113,  146  App.  Div.  953. 

97.  Gilpin  v.  People's  Bank,  45  Ind.  App.  52,  90  N.  E.  91,  citing  text. 

98.  Hodges  v.  Shuler,  22  N.  Y.  114. 

99.  Hosstater  v.  Wilson,  36  Barb.  307. 


§  53  CERTAINTY   AS   TO   THE   AMOUNT   TO    BE    PAID  69 

considered  earned,  and  the  policy  void.^  And  so,  where,  m  a  note,  the 
obligation  to  pay  is  not  limited  or  contingent,  but  is  absolute  and 
unequivocal,  the  character  of  the  note  as  a  negotiable  instrument  is 
not  afifected  by  a  recital  therein  that  it  was  given  for  an  amount  due 
by  the  makers  for  goods  furnished  by  the  payee  upon  a  reservation 
of  title  as  upon  a  conditional  sale.^ 

The  negotiability  of  a  promissory  note  payable  to  order  is  not  re- 
strained by  the  circumstance  of  its  being  for  the  purchase  of  real 
property  in  Louisiana,  and  the  notary  before  whom  the  contract  of 
sale  was  executed  writing  upon  it  the  words,  ''ne  varietur,"  according 
to  the  laws  and  usages  of  that  State,  and  others  governed  by  the  civil 
law.^ 

SECTION  IV 

CERTAINTY    AS   TO   THE   AMOUNT   TO    BE   PAID 

§  53.  In  the  fourth  place,  the  amount  to  be  paid  must  be  cer- 
tain.''— Thcroforr,   tlio  iustruinciit    is   not    I'fjrotiiiMe  if  it  engages 

1.  Kirk  V.  Dodge  County  Mutual  In.s.  Co.,  39  Wis.  138.  But.  in  that  State, 
where  the  note  contained  a  provision  for  the  sale,  before  its  maturity,  of  collat- 
eral securities  delivered  therewith,  and  the  application  of  the  proceeds  to  the 
payment  of  the  note,  the  balance,  if  any,  to  become  immediately  due,  it  was 
held  that  the  note  wtus  thereby  rendered  nonncgotiable.  Continental  Nat.  Bank 
V.  McGooch,  73  Wis.  335. 

2.  First  Nat.  Bank  v.  Alexander,  161  Ala.  .580,  50  So.  45;  J.  B.  Pyron  &  Son 
V.  Ruohs,  120  Ga.  1060,  48  S.  E.  434;  Howard  v.  Simpkin.s,  70  Ga.  323;  Choate  v. 
Stevens,  116  Mich.  28,  74  N.  W.  289;  Burnley  v.  Tufts,  66  Miss.  48;  Heard  v. 
Dubuque  County  Bank,  8  Nebr.  10.  A  conditif)n  in  a  note  which  presents  a  case 
in  which  the  title  to  RfKxls  never  passetl  to  the  maker,  as  distinguished  from  a 
c:Lse  of  a  complete^l  .sale  with  a  reservation  of  title  by  way  of  .security  only,  de- 
stroys the  negotiability  of  the  note.  Worden  Grocer  Co.  v.  Blanding,  161  Mich. 
254,  126  N.  W.  212.  Compare  Schmidt  v.  Pegg  (Mich.),  137  N.  W.  524,  where 
the  sale  reserved  title  by  way  of  security  only,  and  was  not  a  conditional  sale, 
and  the  notes  were  given  after  delivery  of  the  machine,  and  the  notes  were  not 
rendered  nonncgotiable. 

3.  Fleckner  v.  Bank  of  U.  S.,  8  Wheat.  338. 

4.  Parsons  v.  Jackson,  99  U.  S.  (9  Otto)  440;  Gilpin  v.  People's  Bank,  45  Ind. 
App.  52,  90  N.  E.  91;  Nicely  et  al.  v.  Winnebago  Nat.  Bank  of  Rockford,  111., 
18  Ind.  App.  .30,  47  N.  E.  476,  citing  text;  Smith  v.  Marland,  59  Iowa,  345;  Gaar 
v.  Louisville  B.  Co.,  11  Bush,  180;  Storj-  v.  Lamb,  52  Mich.  525;  Roblee  v.  Union 
Stock  Yards  Nat.  Bank,  69  Neb.  180,  95  N.  W.  61;  Farquhar  v.  Fidelity  Ins. 
Co.,  13  Phila.  473;  Donald.son  v.  Grant,  15  Utah,  231,  49  Pac.  779.  In.struments 
which  include  an  order  for  certain  goods  at  certain  prices  and  also  a  i)art  which 


70  REQUISITES    OF   BILLS   AND    NOTES  §  53 

to  pay  a  certain  sum  "and  all  other  sums  which  may  be  due,"  as 
the  aggregate  amount  is  not  capable  of  definite  ascertainment.^  So, 
if  it  be  for  a  certain  sum  "and  whatever  sum  you  may  collect  of  me 
for  C. ; "  ^  or  "  and  taxes; "  ^  or  if  it  be  for  "  the  proceeds  of  a  shipment 
of  goods,  value  about  £2,000,  consigned  by  me  to  you;"*  or  "the 
demands  of  the  sick  club  in  part  of  interest;"  ^  or  "a  certain  sum,  the 
same  to  go  as  a  set-off;"  '°  or  if  it  be  expressed,  "deducting  all  ad- 
vances and  expenses;"  ^^  or  if  it  be  for  "$800  and  such  additional 
premium  as  may  ])e  due  on  policy  No.  218,171;"  ^-  or  if  it  be  for  a 
principal  sum  certain  but  unctTtain  as  to  the  amount  of  interest 
payable;  '^  or  if  it  provide  that  there  shall  be  no  interest  if  paid  within 


is  in  the  form  of  u  promissory  note  for  the  amount  of  purchiiso  prifc  of  the  Koo<lfl, 
is  not  a  negotiubk'  promis8<jry  note.  Neyons  v.  IIoss;ick,  142  111.  App.  '.i'27.  In 
Roblec  V.  Union  Stock  Yards  Nat.  Bank,  69  Nob.  ISO,  95  N.  VV.  61,  the  court 
said  that  whore  a  note  and  mortgage  are  executed  together,  the  provisions  may 
be  such  an  to  make  the  note  nonnegotiable  a.s  to  all  persons  chargeable  with  notice 
thereof,  and  that  the  incorporation  of  a  collateral  agreement  in  a  promissory  note 
which  requires  or  may  cause  payment  to  be  mtule  of  uncertain  sums  at  uncertain 
times  before  maturity,  and  thus  renders  it  impo.ssible  to  siiy  how  much,  if  any- 
thing, will  be  due  at  maturity,  renders  the  note  nonnegotiable.  In  Kendall  v. 
Selby,  66  Nebr.  60,  92  N.  W.  178,  103  Am.  St.  Rep.  697,  it  w:ls  held  that  a  mort- 
gage, referred  to  in  a  note,  providing  that  the  mortgager  should  pay  all  taxes  on 
the  premises  before  they  become  delinquent,  and  that  on  his  failure  so  to  do  the 
holder  might  pay  the  same,  and  recover  ten  jxt  cent,  interest  thereon,  and  that 
the  mortgage  should  stand  a.s  security  then^f<jre,  does  not  render  the  note  non- 
negotiable.  Hut  in  AUi'n  v.  Dunn,  71  Nebr.  831,  99  N.  W.  680,  it  wa.s  held  that 
a  mortgage  containing  a  provision  that  in  ca.se  any  taxes  or  a.sses.sment s  shall  be 
levied  against  the  legal  holder  of  the  indebtedness  on  account  of  the  loan  within 
the  state  in  which  the  mortgaged  property  is  situated,  the  party  of  the  first  part 
shall  pay  them,  renders  a  note  secured  by  the  mortgage  nonnegotiable. 

6.  Smith  v.  Nightingale,  2  Stark.  375;  Dodge  v.  Emerson,  34  Me.  96;  Roads 
v.  Webb,  91  Me.  412. 

6.  Legro  v.  Staples,  16  Me.  252;  Lime  Rock  F.  &  M.  Ins.  Co.  v.  Hewitt,  60 
Me.  407. 

7.  Smith  V.  Myers,  207  111.  126,  69  N.  E.  858,  affirming  107  lU.  App.  410. 

8.  Jones  v.  Simpson,  2  B.  &  C.  318. 

9.  Bolton  V.  Dugdale,  4  B.  &  Ad.  619. 

10.  Clark  v.  Percival,  2  B.  &  Ad.  660. 

11.  Cashman  v.  Haynes,  20  Pick.  132. 

12.  Marret  v.  Equitable  Ins.  Co.,  54  Me.  537. 

13.  Whitewell  v.  Winslow,  134  Mass.  346  ("with  interest  the  same  as  Savings 
banks  pay");  Cornish  v.  Woolverton,  32  Mont.  456,  81  Pac.  4,  108  Am.  St.  Rep. 
598;  Randolph  v.  Hudson,  12  Okl.  516,  74  Pac.  946  ("with  interest  at  the  rate  of 
12  per  cent,  from  date  if  not  paid  at  maturity");  Davis  v.  Boady,  17  S.  D.  511, 
N.  W.  719  ("with  interest  from  date  until  fully  paid  at  the  rate  of  10  per  cent. 


§  53  CERTAINTY   AS   TO   THE   AMOUNT   TO    BE    PAID  71 

a  certain  time.^^  But,  id  cerium  est  quod  cerium  reddi  'potest,  and  if  the 
amount  can  be  ascertained  from  the  face  of  the  paper,  the  form  of 
expression  is  immaterial. ^^  Therefore  a  promise  to  pay  bearer  a 
certain  sum  per  acre  for  so  many  acres  as  a  certain  tract  contained, 

per  annum,  payable  annually  on  principal  and  all  over  due  unpaid  interest.  If 
the  said  interest  is  not  paid  when  due,  it  becomes  a  part  of  the  i)rincipal  and  draw 
interest  at  the  rate  of  12  fK*r  cent,  per  annum  until  paid").  A  provision  in  a  note 
and  mortgage  that  in  case  of  default  in  .some  [)articular  the  debt  shall  draw  a 
higher  rate  of  interest  than  would  otherwise  be  the  case  is  in  the  nature  of  a  pen- 
alty, is  nonenforceable,  and  its  incorjxjration  in  the  note  does  not  affect  its  ne- 
gotiability. Kendall  v.  Selby,  66  Nebr.  60,  92  x\.  W.  178,  103  Am.  St.  Rep.  097. 
In  Hrown  v.  Vo.ss<-n,  112  Mo.  App.  670,  87  S.  W.  o77,  it  wa.s  held  that  a  note, 
providing  "and  if  interest  be  not  paid  .s<'miannually  to  become  aa  principal  and 
b<;ar  tin-  .sjime  rate  of  interest,"  was  negotiable. 

14.  Lamb  v.  Story,  4')  .Mich.  4SS.  Or  "with  10%  damages  for  expen.se  of  col- 
lection or  may  take  fxxssi-ssion  of,  ami  .s<'ll  [jrojHTty  to  pay  the  unpaid  balance, 
interest,  damages,  and  costs  of  .sale,  and  that  if  there  Ls  a  deficiency  on  such  sale 
the  receiver  will  pay  it  on  demand."  Kimball  v.  Mellon,  80  Wis.  133,  48  N.  W. 
1100;  Donald.son  v.  Grant,  1.5  Utah,  231,  49  Pac.  779.  Held  in  this  cji.se  that  the 
stipulation  in  a  note  which  include<l  the  covenants  of  a  mortgage  by  which  the 
maker  agrees  to  pay  the  taxes  on  the  property,  a.s.s<'.ssments,  insurance,  and  wiuste, 
renders  the  note  nonnegotiable.  Contra,  Hoiw  v.  Barker,  112  .\Io.  338,  20  S.  W. 
5<)7,  34  .\in.  St.  Hep.  387;  Clrutacui)  v.  Woulloi.se,  2  McLean,  581;  Price  v.  Teal, 
4  Mcl^ean,  201;  John.stjn  v.  P'rlsbie,  1.0  Mich.  2H6. 

16.  Parsons  v.  JacLson,  99  U.  S.  (9  Otto)  440;  I.amb  v.  Story,  45  Mich.  488. 
See  vol.  II,  §  HlMWi.  An  instniment  certifying  that  th(?  payee  is  the  holder  of  a 
certain  number  of  shares  of  nonassei«uible  stock  in  a  certain  |)iece  of  property, 
and  pmmLsing  to  retle<*m  the  stock  with  inten-st  within  a  stati-*!  time,  is  an  «'ngage- 
ment  to  pay  a  certain  sum  of  money,  absolutely  and  unconditionally,  within  a 
specified  time,  and  contains  all  the  recjuisitj-s  (jf  a  [iromi.-vsrjry  note.  Green wrKni 
Lodge  No.  135,  A.  F.  &  A.  .M.  v.  Priebatsch,  8:j  .Miss.  120,  35  So.  427.  See  aLso 
Luther  v.  Crawfoni,  1 16  111.  App.  351,  affirmed  213  III.  596,  73  N.  E.  430,  holding 
that  a  note:  "Deposited  with  me  by  David  Luther  eight  hundred  dollars  in  caah 
and  three  hundred  dollars  in  Yorktown  bonds,  to  be  deUvered  on  call,"  was  ne- 
gotiable. Where  one  part  of  a  note  states  that  it  was  given  for  $1,.0(K),  but  other 
parts  of  the  note  and  the  coufKjns  attached,  as  also  the  mortgage  securing  the 
note,  combine  to  .show  that  it  was  given  for  $1,000,  in  an  action  seeking  to  re- 
cover $1,000,  objection  that  the  note  was  for  an  indefinite  amount  wa.s  held  not 
good.  Griggs  V.  Corson,  71  Kan.  884,  81  Pac.  471.  In  Loving  v.  .\nderson,  95 
Minn.  101,  103  X.  W.  722,  citing  the  text,  it  was  held  that  a  note  promising  to 
pay  a  certain  amount  on  Oct.  1st.,  1903,  and  containing  a  provision:  "A  discount 
of  6  per  cent  to  be  allowed  if  paid  on  or  before  Oct.  1,  1903,"  is  negotiable,  the 
court  saving  that  an  instrument  whereby  the  maker  promises  to  pay  to  the  payee 
or  order  or  bearer  a  definite  sum  plus  or  minus  a  definite  amount  or  discount  is  a 
promissory  note,  and  hence  it  is  negotiable;  but,  if  the  promi.se  be  to  pay  a  stated 
sum  of  money  plus  or  minus  an  indefinite  amount  or  discount,  it  is  not  a  nego- 
tiable instrument. 


72  REQUISITES    OF   BILLS   AND  NOTES  §  54 

was  held  to  be  a  note  as  soon  as  the  number  of  acres  was  indorsed 
upon  it.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statute  ^^  it  has 
been  held  that  a  stipulation  in  a  mortgage  requiring  the  mortgagor 
to  pay,  in  addition  to  the  principal  debt  and  interest,  such  sums  as 
the  mortgagee  may  be  required  to  incur  for  insurance,  taxes,  assess- 
ments and  charges  on  the  land,  etc.,  is  not  imported  into  the  note 
secured  so  as  to  render  it  nonnegotiable.'^ 

§  54.  Bills  and  notes  payable  with  exchange. — If  there  be  added 
to  the  amount  "with  current  exchange  on  another  place,"  the  com- 
mercial character  of  the  paper  is  not  impaired,  as  that  is  capable  of 
definite  ascertainment.^^  Exchange  is  an  incident  to  bills  for  the 
transmission  of  money  from  place  to  place.  Its  nature  and  effect  are 
well  understood  in  the  commercial  world,  and  merchants  having 
occasion  to  use  their  funds  at  their  place  of  business  sometimes  make 
the  currency  at  that  point  the  standard  of  payments  made  to  them 
by  their  customers  at  a  different  point.  Exchange  preserves  the 
equivalence  of  amounts  in  value,  and  does  not  introduce  such  an 
element  of  uncertainty  as  destroys  the  negotiability  of  the  bill  or 
note  which  embodies  it  in  its  terms.^"  But  there  are  cases  which  hold 
that  an  agreement  to  pay  exchange  destroys  the  neg()tial)le  character 
of  the  paper,  and  renders  it  a  special  promise  requiring  proof  of  con- 
sideration.-^   Wh(Te  there  is  such  an  addition  to  a  bill  or  note,  payable 

16.  Smith  V.  Clopton,  4  Tex.  109. 

17.  Appendix,  sees.  1  (2),  2. 

18.  Barker  v.  Sartori,  GG  Wa.sh.  2G0,  119  P.  GU. 

19.  Price  v.  Teal,  4  McLean,  201 ;  Mich.  137;  Grutacup  v.  Woulloise,  2  McLean, 
581;  Bradley  v.  Lill,  4  Biss.  473;  First  Nat.  Bank  v.  Dubuque  S.  R.  Co.,  .52  Iowa, 
378  isemble);  First  Nat.  Bank  v.  Nordstorm,  70  Kan.  4S5,  78  Pac.  804;  Bullick 
V.  Taylor,  39  Mich.  137;  Johnson  v.  Frisbio,  15  Mich.  28G;  Smith  v.  Kendall,  9 
Mich.  241;  Haslack  v.  Wolf,  GG  Nebr.  GOO,  92  N.  W.  574,  GO  L.  R.  A.  434,  103 
Am.  St.  Rep.  73G,  quoting  text;  Morgan  v.  Edwards,  53  Wis.  599;  Leggett  v.  Jones, 
10  Wis.  34.  See  Pollard  v.  Herries,  3  B.  &  P.  335,  where  a  paper  "payable  in 
Paris,  or,  at  the  choice  of  the  bearer,  at  the  Union  Bank  in  Dover,  or  at  H.'s  usual 
residence  in  London,  according  to  the  course  of  exchange  upon  Paris,"  was  de- 
clared on  and  treated  as  a  promissory  note.  Contra,  Culbertson  v.  Nelson,  93 
Iowa,  187,  Gl  N.  W.  854,  57  Am.  St.  Rep.  26G. 

20.  Smith  v.  Kendall,  9  Mich.  242. 

21.  Smith  V.  First  State  Bank  of  Tyler,  95  Minn.  496,  104  N.  W.  3G9;  Low  v. 
Bliss,  24  111.  1G8;  Read  v.  McNulty,  12  Rich.  (Law)  445;  Savings  Bank  v.  Strother, 
28  S.  C.  518.  In  Russell  v.  Russell,  1  McArthur,  263  (1874),  it  was  held  that  a 
note  made  and  payable  in  Michigan,  "with  current  exchange  on  New  York," 


§  54a  CERTAINTY   AS   TO   THE    AMOUNT   TO    BE    PAID  73 

where  it  is  drawn,  it  is  clear  that  it  might  be  rejected  as  surplusage, 
there  being  in  such  case  no  exchange.^" 

§  54a.  It  has  been  urged  that  an  instrument  payable  "with  ex- 
change" on  another  place  cannot  be  regarded  as  a  bill  or  note: 

(1)  Because  the  fluctuations  in  the  rate  of  exchange  make  it  im- 
possible to  ascertain  the  amount  payable  when  the  bill  is  issued;  and 

(2)  because,  if  this  were  not  so,  evidence  dehors  the  instrument  would 
be  necessary  to  ascertain  the  amount  due  at  maturity."^  The  words 
of  the  rulings  as  to  the  requisites  of  negotiable  instruments  would  lead 
to  these  conclusions,  and  the  doctrine  of  the  text  has  been  declared 
"a  slight  modification  of  the  general  rule."  ^'^  But  reply  may  be 
made  that  instruments  payable  with  exchange  have  been  generally 
treated  as  commercial  instruments  by  the  business  world  and  the 
courts;  -^  that  a  fair  construction  of  the  statute  of  Anne,  upon  which 
many  of  the  modern  statutes  are  modeled,  and  which  has  been  deemed 
i)y  some  of  the  courts  only  declaratory  of  the  common  law,  does  not 
necessarily  impeach  as  a  note  an  instrument  so  payable;  and  that  the 
spirit  of  the  rule  requiring  precision  in  the  amount  of  negotiable 
instruments  applies  rather  to  principal  amount  than  to  the  ancillary 
and  incidental  additions  of  interest  or  exchange.^ 

was  not  negotiable,  the  court  rcganling  the  sum  as  uncertain,  so  that  an  indorsee 
couM  not  sue  in  his  own  name.    Philatielphia  Rank  v.  Newkirk,  2  Mile.s,  442. 

22.  C.arrettson  v.  Hank,  47  Fe<i.  sn?,  citinK  text;  Cluu.ser  v.  Stone,  2!)  111.  116; 
Hill  V.  Tcxld,  2'.)  111.  lO.i;  The  C'hri.stian  County  Hank  v.  Good,  44  Mo.  App.  129, 
citing  text;  Chandler  v.  Calvert,  S7  Mo.  App.  368;  Huck  v.  Harri.s,  125  Mo.  App. 
365,  102  S.  W.  640.    See  Hyles  on  BilLs  (Sharswood's  cil.),  73. 

23.  Henjamin's  Chalmers  on  Hills  and  Notes,  IS;  Fitzharris  v.  Leggatt,  10  Mo. 
App.  52S;  Wind.sor  Sav.  Bank  v.  McMahon,  .38  Fed.  283;  Hughitt  v.  Johnson,  28 
Fed.  SC..-,;  FlacK  v.  School  District,  4  N.  Dak.  30,  5.8  N.  W.  499;  Nicely  el  al.  v. 
Winnebago  Nat.  Hank  of  Rockford.  111.,  IS  Ind.  App.  30,  47  N.  E.  476;  Omer  v. 
Sattley  Mfg.  Co.,  IS  Ind.  App.  122.  47  N.  E.  644;  Huck  v.  Harris,  125  Mo.  App. 
305,  102  S.  W.  640;  Palmer  v.  Fahnestock,  9  Up.  Can.  C.  P.  172;  Saxton  v.  Steven- 
son, 23  Up.  Can.  C.  P.  .503;  Cazet  v.  Kirk,  4  .\Ilen  (N.  B.),  543;  Nash  v.  Gibbon, 
4  Allen  (N.  B.),  479. 

24.  Leggett  v.  Jones,  10  Wis.  30;  Clark  v.  Skeen,  61  Kan.  526;  Hope  v.  Barker, 
43  Mo.  App.  632,  34  Am.  St.  Rep.  aS7,  citing  text;  The  Christian  County  Bank 
v.  Good,  44  Mo.  App.  129,  citing  text. 

25.  Ivcggett  v.  Jones,  10  Wis.  30. 

26.  In  Morgan  v.  ExKvards,  53  Wis.  599,  the  court  said,  per  Lyon,  J.,  though 
the  precise  question  \v:us  not  before  it:  "A  note  is  payable  in  lawful  money  of 
the  United  States,  which  is  at  par  in  every  portion  of  the  country.  If  a  note  is 
made  payable  in  Milwaukee  with  exchange  on  New  York,  it  requires  precisely 
the  same  sum  of  money  to  pay  it  as  would  be  required  had  it  been  made  payable 


74  REQUISITES   OF   BILLS   AND   NOTES  §  55 

SECTION  V 

CERTAINTY  AS  TO  THE  MEDIUM  OF  PAYMENT,  WHICH  MUST  BE  MONEY 

§  55.  In  the  fifth  place  the  medium  of  payment  must  be  money. — 
It  is  indispensably  rt'(iuisitc,  in  order  to  constitutt'  a  bill  of  exchange 
or  negotiable  promissory  note,  that  the  direction  or  promise  be  to  pay 
in  money.^^  And  if  the  instrument  be  expressed  to  be  payable  "in 
cash  or  specific  articles,"  in  the  alternative,^  or  in  merchandise,  as 
for  instance,  "in  good  merchantable  whisky  at  trade  price,"  '^  or  "in 
ginned  cotton  at  eight  cents  per  pound,"  ^  or  "in  work,"  ^^  or  in  any 
other  article  than  money  ^^  as  for  instance  "an  ounce  of  gold,"  ^^  it 
becomes  a  special  contract,  and  by  the  law  merchant  loses  its  character 

in  New  York.  The  exchange  is  the  cost  of  drawing  a  bill  and  transmitting  the 
money  to  New  York  to  meet  it.  In  Leggett  v.  Jones,  the  note  was  payable  at  the 
Dodge  County  Bank  with  exchange  on  New  York.  Had  the  note  boon  made  pay- 
able in  New  York,  no  one  would  claim  that  there  was  any  uncortaintj-  in  the 
amount,  although  the  maker  would  nocossarily  have  been  subjected  to  the  ex- 
pense, uncertain  in  amount,  of  providing  funds  there  to  meet  it.  It  is  precisely 
that  expense  which  constitutes  and  governs  the  cost  of  exchange.  Hence,  the 
same  sum  of  money  which  would  have  been  required  to  pay  the  note  in  New  York, 
would  have  paid  it  at  the  Dodge  County  Bank,  including  the  exchange,  according 
to  its  terms.  In  speaking  of  the  cost  of  exchange,  we  refer  only  to  transactions 
in  money.  Nominally,  the  cost  of  exchange  may  include  the  discount  on  the 
ordinary  currency  of  the  place  where  the  bill  is  drawn,  at  the  place  of  payment, 
and  such  discount  may  greatly  fluctuate.  But  a  note  payable  with  exchange  is 
not  affected  by  those  facts,  for  it  cannot  be  payable  in  anything  but  money  (un- 
less by  virtue  of  some  special  statutory  provision)  and  still  be  a  note.  There  can 
be  no  discount  on  money  to  affect  the  cost  of  inland  exchange.  Hence,  it  may 
well  be  said,  that  the  uncertainty  in  the  amount  due  on  a  note  which  stipulates 
for  the  payment  of  exchange  between  two  points,  is  rather  apparent  than  real 
and   substantial." 

27.  Roads  v.  Webb,  91  Me.  410,  40  Am.  Rep.  128;  Chandler  v.  Calvert,  87 
Mo.  App.  368;  Chitty  on  Bills  [*132],  153. 

28.  Matthews  v.  Houghton,  2  Faufax,  377. 

29.  Rhodes  v.  Lindley,  Ohio  Cond.  465,  Chitty  on  Bills  [*132]. 

30.  LawTence  v.  Dougherty,  5  Yerg.  435. 

31.  Quimby  v.  Merritt,  11  Humphr.  439. 

32.  Auerbach  v.  Pritchett,  58  Ala.  451;  Dixon  v.  Bovill,  3  Macq.  H.  L.  1.  In 
Missouri  contracts  to  pay  in  property,  to  order  or  to  bearer,  are  made  negotiable 
by  statute.  Spears  v.  Bond,  79  Mo.  470;  Hyland  v.  Blodgett,  9  Oreg.  166;  Mc- 
Clellan  v.  Coffin,  93  Ind.  456.  In  this  case  a  note  payable  in  services  was  held 
nonnegotiable. 

33.  Roberts  v.  Smith,  58  Vt.  494. 


§  56  CERTAINTY   AS   TO   THE   MEDIUM   OF   PAYMENT  75 

as  commercial  paper,  Nor  can  it  be  for  payment  in  "good  East 
India  bonds,"  ^^  or  in  "foreign  bills,"  ^^  or  "by  bill  or  note,"  ^^  or  in 
county  scrip.^^  A  bond  payable  "in  notes  of  the  United  States  Bank, 
or  either  of  the  Virginia  banks,"  has  been  held  not  payable  in  money;  ^ 
but  where  the  bond  was  for  a  certain  sum,  and  it  was  added,  "which 
sum  may  be  discharged  in  notes  or  bonds  due  on  good  solvent  men 
in  R.,"  it  was  held  payable  in  money. ^^  But  the  courts  would  not  go 
so  far,  we  think,  as  to  hold  an  instrument  couched  in  such  terms 
negotiable, '"  for  in  order  to  possess  that  quality  it  should  afford  on  its 
face  every  element  necessary  to  fix  its  value,  and  such  a  paper  would 
be  a  special  contract  rather  than  a  negotiable  bill  or  note. 

§  56.  Instruments  payable  in  bank  bills  or  in  currency. — Strictly 
pursuing  this  principle,  it  ha.s  been  held  in  England  that  a  note 
payable  "in  ca.sh,  or  Bank  of  England  notes,"  or  payable  "in  Bank 
of  England  notes,"  wa.s  not  negotiable  under  the  statute  of  Anne, 
though  the  bills  of  that  bank  were  at  any  time  redeemable  in  money."*^ 
In  Pennsylvania,  this  ruling  was  followed  upon  an  instrument  payable 
in  "current  bank  bills  or  notes,"  the  court  remarking  that  "it  was 
payable  in  more  than  forty  kinds  of  paper  of  different  value."  ^^  The 
Supreme  Court  of  th(^  United  States  ha-s  applied  it  where  the  note  was 
payabk;  in  the  "office  notes  of  a  bank."  "  When  the  medium  of 
payment  is  expressed  to  be  "good  current  money,"  or  "(current 
money,"  it  is  not  objectionable,  as  legal  tender  money  is  intended;  " 
but  if  it  be  "in  (-urrency"  simply,  the  paper  is  not  negotiable,  as  the 


34.  Smith  v.  Boehm,  Chitty,  Jr.,  234. 

36.  Jones  v.  Fulcs,  4  Miuss.  245;  Yoihik  v.  Adams,  6  Mass.  182. 

36.  Chitty  on  Bills  [•132],  143,  Chitty,  Jr.,  538. 

37.  Jones  v.  State,  40  .\rk.  347. 

38.  Beirne  v.  Dunlap,  8  Leigh,  514. 

39.  Butcher  v.  Carlisle,  12  Gratt.  520. 

40.  Williams  v.  Sims,  22  Ala.  512. 

41.  See  Rex  v.  Wilcox,  Bayley  on  Bills  (6th  ed.),  11  (in  cash  or  Bank  of  Eng- 
land notes);  Ex  parte  Imeson,  2  Rose,  225  (Bank  of  England  notes). 

42.  McCormick  v.  Trotter,  10  Serg.  &  R.  94. 

43.  Irvine  v.  Lowr\-,  14  Pet.  293. 

44.  Wharton  v.  Morris,  1  Dall.  124.  See  the  following  cases  where  the  in- 
struments were  held  negotiable:  Graham  v.  Adams,  5  Ark.  261  (good  current 
money  of  the  State);  Wilbum  v.  Greer,  6  Ark.  255  (Arkansas  money);  Black  v. 
Ward,  27  Mich.  173;  Searey  v.  Vance,  Mart.  &  Y.  225  (Tennessee  money) ;  Chrys- 
ler V.  Rendis,  43  N.  Y.  209  (in  gold  coin).  But  contra,  McCherd  v.  Ford,  3  T.  B. 
Mon.  166. 


70  REQUISITES   OF   BILLS   AND    NOTES  §  5G 

term  includes  all  varieties  of  the  circulating  medium.^^  But  the 
decisions,  as  will  be  seen  from  the  subjoined  notes,  are  contradictory/^ 

45.  Lampton  v.  Haggard,  3  Mon.  149;  Farwell  v.  Kennett,  7  Mo.  595;  Mobile 
Bank  v.  Brown,  42  Ala.  108;  Rindskoff  v.  Barrett,  11  Iowa,  172;  "in  current 
bills,"  Collins  v.  Lincoln,  11  Vt.  26S;  Ford  v.  Mitchell,  15  Wis.  304.  And  like 
decisions  were  rendered  where  the  bill  or  note  was  payable  "in  common  currency 
of  Arkansas,"  Dilhird  v.  Evans,  4  Ark.  1S5;  "in  current  bank  paper,"  Campbell  v. 
Weister,  1  Litt.  30:  "in  notes  receivable  in  bank,"  Breckenridgc  v.  Ralls,  4  Mon. 
533;  "in  current  bank  notes,"  Gamble  v.  Hatton,  Peck,  130;  Kirkpatrick  v.  Mc- 
Cullough,  3  Humphr.  171;  Whiteman  v.  Childress,  G  Humphr.  303;  Simpson  v. 
Moulders,  3  Caldw.  429;  McDonnell  v.  Keller,  4  Caldw.  258;  "in  Tennessee 
currency,"  2  Yerg.  448;  "in  Canada  bills,"  Gray  v.  Worden,  29  Up.  Can.  Q.  B. 
535;  "in  bank  bills,"  Simpson  v.  Meneden,  3  Caldw.  429;  "in  New  York  funds  or 
their  equivalent,"  Hasbrook  v.  Palmer,  2  McLean,  10;  "in  current  bank  bills," 
Fry  V.  Rousseau,  3  McLean,  lOG;  "in  foreign  bills,"  Jones  v.  Fales,  4  Maas.  245; 
"in  paper  medium,"  Lange  v.  Kohne,  1  McCord,  115;  "in  current  bank  notes," 
Little  V.  Phccnix  Bank,  2  Hill,  425;  Gray  v.  Donahoe,  4  Watts,  400.  See  Pardee 
V.  Fish,  60  N.  Y.  265;  "in  Pennsylvania  or  New  York  paper  currency,"  Lieber  v. 
Goodrich,  5  Cow.  186;  "in  current  notes  of  the  State  of  North  Carolina,"  Warren  v. 
Brown,  64  N.  C.  381;  "in  current  funds  of  Pittsburg,"  Wright  v.  Hart,  44  Pa.  St. 
454;  "in  current  funds,"  Cornwell  v.  Pumphrey,  9  Ind.  135;  Haddock  v.  Woods, 

46  Iowa,  433;  Johnson  v.  Henderson,  76  N.  C.  227;  Lafayette  Bank  v.  Ringel, 
51  Ind.  393;  Piatt  v.  Sauk  County  Bank,  17  Wis.  222;  Lindsey  v.  McClelland,  18 
Wis.  481. 

46.  In  the  following  cases  instruments  expressed  to  be  payable  as  indicated 
were  held  negotiable:  "in  current  funds,"  Shoemakers'  Bank  v.  Street,  16  Ohio 
(N.  S.),  5;  Bull  V.  Kasson,  123  U.  S.  112;  Laird  v.  State,  61  Md.  309,  citing  the 
text.  Contra  in  Texas  Land  Co.  v.  Carroll,  63  Tex.  52;  "in  current  Ohio  bank 
notes,"  Swetland  v.  Creigh,  15  Ohio,  118;  "in  current  funds  of  the  State  of  Ohio," 
White  V.  Richmond,  16  Ohio,  5;  "current  bank  notes  of  Cincinnati,"  Morris  v. 
Edwards,  1  Ohio,  80;  "currency  of  this  place,"  Dugan  v.  Campbell,  1  Ohio,  47; 
"in  funds  current  in  the  city  of  New  York,"  Lacy  v.  Holbrook,  4  Ala.  88;  "current 
money  of  Alabama,"  Carter  v.  Penn,  4  Ala.  140:  "in  good  current  money  of  this 
State  {or  in  Arkansas  money),"  Graham  v.  Adams,  5  Ark.  261;  Wilburn  v.  Greer, 
1  Eng.  255;  but  otherwise  if  "in  Arkansas  money  of  the  Fayetteville  branch,"  Haw- 
kins V.  Watkins,  5  Ark.  481;  in  New  York  "in  New  York  State  bills  or  specie," 
Keith  V.  Jones,  9  Johns.  120;  "in  bank  notes  current  in  the  city  of  New  York,"  Judah 
V.  Harris,  19  Johns.  144;  "in  North  Carolina  bank  notes,"  Deberry  v.  Darnell, 
5  Yerg.  451;  "in  lawful  current  money  of  Pennsylvania,"  Wharton  v.  Morris, 
1  Dall.  124;  "in  foreign  money,"  Sanger  v.  Stimpson,  8  Mass.  260;  "in  currency," 
Butler  V.  Paine,  8  Minn.  324;  Hunt  v.  Divine,  37  111.  137;  Swift  v.  Whitney,  20 
111.  144;  Laughlin  v.  Marshall,  19  111.  390;  Peru  v.  Farnsworth,  18  111.  563;  Drake 
v.  Markle,  21  Ind.  433;  Fry  v.  Dudley,  20  L.  Ann.  368;  Klauber  v.  Biggerstaff, 

47  Wis.  551;  Phelps  v.  Town,  14  Mich.  374  (semble);  Howe  v.  Hartness,  11  Ohio 
St.  449;  "in  currency  of  the  State  of  Mississippi,"  Mitchell  v.  Hewitt,  5  Smedes  & 
M.  361;  "in  currency  of  Missouri,"  Cockrell  v.  Kirkpatrick,  9  Mo.  688;  "in  New 
York  State  currency,"  Ehle  v.  Chittenango  Bank,  24  N.  Y.  549;  "in  current  bank 
notes,"  Pardee  v.  Fish,  60  N.  Y.  265;  Fleming  v.  Nail,  1  Tex.  246.     A  note  for 


§  57  CERTAINTY   AS   TO   THE   MEDIUM   OF    PAYMENT  77 

In  some  cases  it  is  held  that  the  meaning  of  such  phrases  as  "  current 
funds,"  may  be  explained  by  parol  evidence  as  to  the  understanding 
of  the  parties  and  that  they  may  be  shown  to  have  meant  money. ^"^ 
In  business  paper  it  is  best  to  adhere  to  strict  rules;  and  as  certainty 
is  of  the  first  moment  in  commercial  dealings,  and  paper  payable  in 
fluctuating  values  is  uncertain  and  delusive,  we  think  sound  judgment 
approves  the  doctrine  of  the  text.  Money  alone  is  legal  tender,  and 
only  the  note  which  represents  money  should  be  held  negotiable.  It 
should  be  expressed  simply  as  payable  in  dollars,  which  have  a  definite 
signification  fixed  by  law.^^ 

§  57.  It  has  been  suggested  that  since  Congress  has  declared,  and 
the  Supreme  Court  held,  that  the  treasury  notes  of  the  United  States 
shall  be  "legal  tender"  in  discharge  of  debts,  the  term  "in  currency" 
should  be  const ru(>d  to  mean  legal  tender  currency,  and  instruments 
so  payable  should  be  deemed  negotiable.  But  "the  very  reverse  of 
this  proposition  is  true,"  as  said  in  Iowa,  in  respect  to  a  certificate  of 
deposit  payable  in  currency.  And,  continued  Beck,  J.:  "It  is  evident 
that  it  was  not  intended  that  payment  should  be  made  in  coin,  or 
'legal  tender'  government  notes.  The  holder  of  the  paper  could  have 
demanded  payment  thereon  in  'legal  tender'  money,  without  any 
words  in  the  instrument  indicating  the  currency  in  which  payment 
should  be  made.  *  *  *  Some  other  medium  of  circulation  is 
described  by  the  word  currency."  ^^  In  Arkansas  it  has  been  held 
that  a  note  payable  "in  greenback  currency"  was  negotiable,  be- 
cause legal  tender  currency,  and  not  national  or  other  bank  notes,  was 
intended;  -^  and  in  New  York  it  has  been  said  by  Church,  Ch.  J.: 
"The  objection  that  the  instrument  is  not  a  promissory  note  because 
payable  in  paper  currency,  is  answered  by  the  suggestion  that  this 
must  be  taken  to  refer  to  the  legal  tender  paper  currency  which  under 

Sl.OOO,  payable  "in  levee  bonds  of  the  State  of  Arkansas  at  par"  is  not  an  under- 
taking for  the  payment  of  money  but  for  the  payment  in  such  bonds  absolute  so 
that  the  payee  on  the  maker's  default  is  entitletl  to  damages  only  to  the  extent 
of  the  value  of  such  bonds  and  not  to  the  sum  of  money  named  with  interest. 
Johnson  v.  Dooley,  G.5  Ark.  71,  44  S.  W.  1032;  Kampmann  v.  McCormick,  24 
Tex.  Civ.  App.  4«)2. 

47.  Haddock  v.  Woods,  46  Iowa,  435;  Huse  v.  Hamblin,  29  Iowa,  501;  Pilmer 
V.  Branch  Bank,  16  Iowa,  321. 

48.  Omohundro  v.  Crump,  18  Gratt.  703. 

49.  Hu.se  V.  Hamblin,  29  Iowa,  244.     See  also  Dille  v.  White,  132  la.  327,  109 
N.  W.  909.  10  L.  R.  A.  (N.  S.)  510.     But  see  Fry  v.  Dudley,  20  La.  Ann.  368. 

50.  Burton  v.  Brooks,  25  Ark.  215. 


78  REQUISITES   OF   BILLS   AND    NOTES  §  58 

the  United  States  laws  and  decisions  is  money."  "  The  United 
States  Supreme  Court  has  held  that  a  check  payable  "in  current 
funds"  is  negotiable.^2  National  bank  notes  would  be  embraced  by 
these  words,  and  the  decision  is  not  in  consonance  with  the  precedents 
that  require  negotiable  paper  to  be  payable  in  money.  In  England, 
Bank  of  England  notes  were  made  legal  tender,  but  nevertheless  a 
promise  to  pay  in  that  medium  was  not  considered  a  promissory 
note.^^    And  similar  views  were  taken  in  Canada.^^ 

§  58.  It  is  not  necessary  however  that  the  money  should  be  that 
current  in  the  place  of  payment,  or  where  the  bill  is  drawn;  it  may  be 
in  the  money  of  any  country  whatever."  But  it  has  been  hold  that  it 
is  necessary  that  the  instrument  should  express  the  specific  denomina- 
tion of  money  when  it  is  payable  in  the  money  of  a  foreign  country, 
in  order  that  the  courts  may  be  able  to  ascertain  its  equivalent  value ; 
otherwise  it  is  not  negotiable.  Thus  in  New  York,  where  a  note  was 
given  for  a  certain  sum  "payable  in  Canada  money,"  it  was  held  not 
negotiable;  and  the  court  said: 

"This  view  of  the  case  is  not  incompatible  with  a  bill  or  note 
payable  in  money  of  a  foreign  denomination,  or  any  other  denomina- 
tion, being  negotiable,  for  it  can  be  paid  in  our  own  coin  of  equivalent 
value,  to  which  it  is  always  reduced  by  a  recovery.  A  note  payable  in 
pounds,  shillings,  and  pence,  made  in  any  country,  is  but  another 
mode  of  expressing  the  amount  in  dollars  and  cents,  and  is  so  under- 
stood judicially.    The  course,  therefore,  in  an  action  on  such  an  in- 

61.  Frank  v.  Wessels,  64  N.  Y.  158  (1876). 

52.  Bull  V.  Kasson,  123  U.  S.  112,  Field,  J.,  saying:  "Within  a  few  years  com- 
mencing with  the  first  issue  in  this  country  of  notes  declared  to  have  the  quality 
of  legal  tender,  it  has  been  a  common  practice  of  drawers  of  bills  of  exchange  or 
checks,  or  makers  of  promissory  notes,  to  indicate  whether  the  same  are  to  be 
paid  in  gold  or  silver,  or  in  such  notes;  and  the  term  'current  funds'  has  been  used 
to  designate  any  of  these,  all  being  current  and  declared  by  positive  enactment 
to  be  legal  tender."  Woodruff  v.  Mississippi,  162  U.  S.  302,  16  Sup.  Ct.  Rep.  820. 
See  section  1651.  See  also  Krieg  v.  Palmer  Nat.  Bank  (Ind.  App.),  95  N.  E. 
613. 

63.  Rex  V.  Wilcox,  Bayley  on  Bills  (6th  ed.),  11,  1  Ames  on  Bills  and  Notes,  39. 

64.  Gray  v.  Worden,  29  Up.  Can.  Q.  B.  535.  The  paper  was  payable  in  Canada 
bills,  which,  by  Stat.  29  &  30  Vict.,  chap.  10,  were  made  legal  tender,  Wilson,  J., 
saying:  "They  have  no  intrinsic  value  as  coin.  They  represent  only,  and  are  the 
signs  of  value." 

55.  Chitty  on  Bills  [*133],  154,  Story  on  Bills,  §  43;  Black  v.  Ward,  27  Mich. 
193;  Thompson  v.  Sloan,  23  Wend.  71;  King  v.  Hamilton,  12  Fed.  478,  citing  the 
text. 


§  59  CONTRACT  ONLY   FOR   THE   PAYMENT  OF  MONEY  79 

strument,  is  to  aver  and  prove  the  value  of  the  sum  expressed,  in  our 
own  tenderable  coin."  ^^ 

Intention,  to  be  gathered  from  the  face  of  the  paper,  according  to 
fixed  rules,  is  the  test  of  negotiability,  and  we  do  not  see  how  the  idea 
of  its  possessing  a  negotiable  quality  is  excluded  by  the  mere  fact 
that  the  denomination  of  foreign  money  is  not  set  out.  A  case,  re- 
markable for  its  learning  and  ability,  decided  by  the  Supreme  Court 
of  Michigan,  adopts  this  view;  and  there  it  has  been  held  that  a  note 
payable  "in  Canada  currency"  is  negotiable,  the  terms  being  equiv- 
alent to  Canada  money.^^ 

Under  Negotiable  Instrument  statute. — The  statute  declares  the  rule 
that  an  instrument  which  contains  an  order  or  promise  to  do  any  act 
in  addition  to  tiic  payment  of  money  is  not  negotiable,'^  and  such  is  a 
note  promising  to  pay  a  certain  sum  and  deliver  one-half  the  wheat 
grown  on  certain  land  each  year  as  a  payment.^^ 

SECTION   VI 

THE  CONTRACT  MUST  BE  ONLY  FOR  THE  PAYMENT  OF  MONEY 

§  59.  In  the  sixth  place  it  is  essential  to  the  negotiability  of  the 
bill  or  note  that  it  purport  to  be  only  for  the  payment  of  money .^'' 

66.  Thompson  v.  Sloan,  23  Wend.  71. 

67.  Black  v.  Ward,  27  Mich.  193  (1873),  Campbell,  J.,  saying:  "A  note  payable 
in  Canada  currency  means  no  more  and  no  less  than  that  it  is  payable  in  Canada 
money  at  the  Canada  standard,  and  that  it  i.s  governed  as  to  the  amount  it  calls 
for  by  the  .same  rules  a.s  if  it  had  been  m;ule  in  Canada,  and  payable  in  so  many 
dollars,  without  containing  any  further  direction."  "It  is  evident  the  language 
waa  used  to  exclude  the  idea  that  it  should  be  paid  in  dollars  according  to  our 
paper  standard,  and  to  put  it  on  the  footing  of  a  gold  contract."  "It  is  urged  that 
this  is  superfluous,  and  that  as  ever>'  one  is  presumecl  to  know  the  law,  it  would 
not  have  been  [)ut  in  except  for  some  purpose  which  would  change  its  legal  import. 
The  objection  appears  to  us  to  be  far-fetched  and  unreasonable.  This  ca.se  cited 
above  sufficiently  answers  it.  A  verj*  large  proportion  of  the  bonds  and  deeds 
drawn  up  in  this  country  describe  the  money  secured  or  paid  as  'lawful  money 
of  the  United  States,'  when  there  can  be  no  other  lawful  money  in  the  republic, 
and  when  it  is  clearly  superfluous." 

68.  Appendix,  sec.  5. 

69.  Thompson  v.  Kock,  62  Wash.  438,  113  Pac.  1110. 

60.  Fletcher  v.  Thompson,  55  N.  H.  308;  Humphrey  v.  Beckwith,  48  Mich. 
151;  Edwards  v.  Ramsey,  30  Minn.  91;  Mast  v.  Matthews,  30  Minn.  442;  Stevens 
V.  Johnson,  27  Minn.  172;  Killam  v.  Schoeps,  20  Kan.  312,  citing  the  text;  Con- 
tinental Nat.  Bank  v.  Wells,  41  N.  W.  409;  Ingham  v.  Dudley,  60  Iowa,  16; 
Chapman  v.  Steiner,  5  Kan.  App.  326,  48  Pac.  607,  quoting  text;  Chandler  v. 


80  REQUISITES   OF   BILLS   AND   NOTES  §  60 

Such  at  least  may  be  stated  to  be  the  general  rule,  for  if  any  other 
agreement  of  a  different  character  be  engrafted  upon  it  it  becomes  a 
special  contract  clogged  and  involved  with  other  matters,  and  has 
been  deemed  to  lose  thereby  its  character  as  a  commercial  instru- 
ment. But  at  the  present  time  we  think  that  this  general  rule  is 
subject  to  the  qualification  that  if  the  superadded  agreement  do  not 
impair  the  certainty  of  the  promise  to  pay  the  certain  amount  named, 
but  only  facilitates  the  means  of  its  collection,  it  does  not  in  any 
degree  destroy  the  negotiability  of  the  instrument,  but  is  embodied 
in  the  contract  of  all  the  parties  and  passes  as  an  incident  of  the  paper 
itself  to  every  holder.''^ 

§  60.  In  accordance  with  the  general  rule  above  stated,  it  has 
been  held  that  if  a  note  for  a  certain  amount  be.  given  for  the  hire  of 
a  negro,  to  which  is  added,  "said  negro  to  be  furnished  with  the  usual 
quantity  of  clothing,"  was  not  a  negotiable  promissory  note,  but  a 
special  contract  for  the  hiring  and  clothing  of  the  negro.^'-  And  this 
seems  to  us  clearly  the  correct  doctrine,  though  the  view  has  been 
taken  that  such  a  paper  is  negotiable,  the  obligation  to  pay  the  money 
only  passing  to  an  indorsee.^^  So  it  has  been  held  that  if  the  instru- 
ment be  to  pay  money,  and  also  "  to  deliver  up  horses  and  a  wharf; "  ^^ 
or  to  pay  money  "and  take  up  a  certain  outstanding  note,"  ^^  it  is  not 
a  negotiable  note.    So  if  it  be  to  pay  money  "  and  all  fines  according  to 

Calvert,  87  Mo.  App.  368.  In  First  Nat.  Bank  of  San  Francisco  v.  Golden  (Cal. 
App.),  126  P.  498,  an  order  on  its  face  payable  upon  demand,  but  which  was  in 
fact  not  to  be  paid  until  30  days  notice  was  given  to  the  drawee,  and  its  payment 
was  also  conditional  upon  its  being  accompanied  by  the  drawer's  pass-book,  was 
held  to  be  nonnepotiable. 

61.  National  Bank  v.  Gray,  18  S.  C.  286,  citing  text.  But  see  Warren  v.  Gru- 
well,  5  Kan.  App.  523,  48  Pac.  205.  Checks  is.sued  to  employees  and  redeemable 
only  in  merchandise,  are  not  negotiable.  Attoyac  River  Lumber  Co.  v.  Payne 
(Tex.  Civ.  App.),  122  S.  W.  278.  Memoranda  "non-negotiable  or  transferable" 
appearing  on  the  face  of  a  note,  and  "this  note  is  not  transferable  nor  to  be  used 
as  collateral  without  the  written  consent  of  principal  and  indorsers,"  appearing 
on  the  back  thereof,  destroy  its  negotiability.  And  a  further  memorandum 
"And  if  so  used  shall  be  absolutely  void,"  is  noneffective.  Such  a  note  is  assign- 
able as  any  nonnegotiable  paper.  Herrick  v.  Edwards,  106  Mo.  App.  633,  81 
S.  W.  466. 

62.  Barnes  v.  Gorman,  9  Rich.  297. 

63.  Baxter  v.  Stewart,  4  Sneed,  213;  Gaines  v.  Shelton,  47  Ala.  413;  Woodruff 
v.  Mississippi,  162  U.  S.  291. 

64.  Martin  v.  Chauntry,  2  Stra.  1271. 

65.  Cook  V.  Satterlee,  6  Cow.  108.  Or  "to  pay  the  taxes  on  the  property,  as- 
sessments, insurance,  and  waste."    Donaldson  v.  Grant,  15  Utah,  231,  49  Pac.  779. 


§  00  CONTRACT  ONLY  FOR  THE   PAYMENT  OF  MONEY  81 

rule,"  it  is  not  a  negotiable  note,  and  the  additional  words  cannot  be 
construed  as  insensible  surplusage.  "It  is  quite  possible,"  said 
Parke,  B.,  "that  they  have  a  meaning,  and  may  import  that  certain 
pecuniary  fines  or  forfeitures  are  to  be  paid  by  the  defendants;  and, 
if  so,  this  is  certainly  no  promissory  note  within  the  statute,  but  is  a 
specific  agreement  to  do  certain  things."  ^ 

So  likewise  where  the  following  words  were  added  the  instruments 
were  held  special  agreements  and  not  negotiable:  "If  any  dispute 
should  arise  about  the  sale  of  goods  for  which  the  note  is  given,  it  is  to 
be  void,"  or  it  is  'only  a  security  for  all  ijalances  up  to  its  amount.'  ^ 
So  if  it  provide  that  the  payee  is  to  receive  less  than  the  principal  sum 
if  it  be  paid  before  maturity .^^  So,  where  the  promise  was  to  pay  H. 
a  certain  amount,  atlding,  'and  said  H.  is  to  build  a  barn  and  fence, 
and  said  P.  (the  promisor)  is  to  have  all  the  land  back  of  the  house.' "  ''^ 
So,  where  the  note  contained  a  condition  that  if  not  paid  when  due, 
the  penalty  for  which  it  was  given  should  belong  to  the  payee.^^ 
Where  the  promise  is  coupled  with  a  condition  that  the  sale  or  removal 
of  the  property  for  which  it  was  given  shall  cause  the  debt  to  mature 
at  once,  the  objection  prevails.^-  Where  a  note  contained  a  provision 
making  it  in  effect  a  chattel  mortgage  without  power  of  sale  before 
maturity,  it  wixs  held  negotiable,  since  the  debt  evidenced  thereby 
was  not  subject  to  be  diminished  before  maturity." 

In  Rhode  Island  where  there  was  a  memorandum  on  the  note 
"issued  as  collateral  to  A.  &  W.  Sprague  Mfg.  Co.'s  draft  accepted 


66.  Ayrey  v.  Fearnsides,  4  M.  &  W.  1G8. 

67.  Hartley  v.  Wilkin.son,  4  Caniph.  127. 

68.  Leeds  v.  Lancashire,  2  Campb.  205. 

69.  Fralick  v.  Norton,  2  Mich.  130. 

70.  Fletcher  v.  Thompson,  5.5  N.  H.  208. 

71.  Wright  V.  Travers,  73  Mich.  494. 

72.  Yimt  Nat.  Bank  v.  Carson,  60  Mich.  433.  In  Schmidt  v.  PeKg  (Mich.), 
137  N.  W.  524,  a  provision  in  notes  given  for  a  machine,  that  "if  default  is  made 
in  the  payment  of  any  note,  or  the  machine  is  levied  upon  or  the  undersigned 
attempts  to  sell  or  remove  the  same,  said  company  may  declare  all  notes  due," 
was  held  not  to  render  the  notes  nonnegotiable  on  account  of  uncertainty  as  to 
time  of  payment — the  notes  having  been  given  after  the  delivery  of  the  property, 
and  not  on  a  conditional  sale.  A  certi6cate  of  indebtedness  which  contains,  in 
addition  to  a  promise  to  pay  money,  an  agreement  to  keep  free  from  incumbrance 
property  on  which  the  value  of  collateral,  pledged  for  the  security  of  the  certifi- 
cate, depends,  is  not  a  negotiable  instrument.  Strickland  v.  National  Salt  Co. 
(N.  J.  L.),  81  A.  828,  affirming  decree  76  A.  1048,  77  N.  J.  Eq.  328. 

73.  Bank  of  Carroll  v.  Taylor,  67  Iowa,  573.  See  under  §  52,  as  to  conditional 
sale  clauses. 

6 


82  REQUISITES   OF   BILLS   AND   NOTES  §  61 

by  Hoyt,  Sprague  &  Co.,  No.  6806,"  the  court  considered  it  not 
negotiable  because  not  payable  at  all  events,  it  being  evident  that  the 
payment  of  the  drafts  would  at  once  discharge  both  the  makers  and 
indorsers  of  the  note  and  render  said  note  null  and  voidJ^ 

§  61.  Additions  (1)  of  power  to  confess  judgments;  (2)  of  waivers 
of  exemptions ;  and  (3)  of  stipulations  to  pay  collection  or  attorney's 
fees. — Sometimes  it  is  stated  in  the  note  that  (1)  the  promisor 
appoints  the  payee,  or  order,  or  holder  to  confess  judgment  for  him 
when  the  note  is  payable;  or  (2)  waives  benefit  of  appraisement  laws, 
or  homestead  exemptions,  where  such  laws  or  exemptions  exist,  or 
(3)  stipulates  for  payment  of  collection  and  attorney's  fees.  The 
authorities  differ  as  to  the  negotia])ility  of  such  instruments;  but  the 
later  cases  maintain  that  they  are  negotiable,  and  the  principle  is 
becoming  established  that,  if  the  note  is  in  itself  certain  and  perfect 
without  conditions,  and  there  is  merely  superadded  the  provision  or 
declaration  that  the  payee  or  holder  may  confess  judgment  for  the 
maker;  or  that  certain  rights  are  waived  in  respect  to  its  collection, 
then  the  negotiability  of  the  paper  is  not  destroyed.^^  In  Pennsyl- 
vania, when  a  note  contains  a  power  to  confess  judgment,  it  has  been 
the  practice  to  allow  judgment  to  be  taken  before  maturity  in  order 
to  obtain  a  lien  upon  real  estate,  but  to  delay  issuing  execution  thereon 
until  after  maturity,  and  a  stipulation  in  a  note  of  the  above  kind 
under  that  practice,  is  held  to  render  such  a  note  nonnegotiable.'^^ 

74.  American  Nat.  Bank  v.  Sprague,  14  R.  I.  411;  Gibson  v.  Hawkins,  69  Ga. 
354;  Haskell  v.  Lambert,  16  Gray,  592.     See  post,  §  150. 

76.  See  Ohio  case,  cited  end  of  note  5.  2  Parsons  on  Notes  and  Bills,  147; 
Walker  v.  Woollen,  54  Ind.  164;  Lyon  v.  Martin,  31  Kan.  412,  citing  the  text; 
Hughlitt  V.  Johnson,  28  Fed.  865.  In  Clements  v.  Hull,  35  Ohio  St.  141,  it  was 
held  that  power  to  any  attorney  of  record  to  appear  and  confess  judgment  in  favor 
of  any  holder  did  not  affect  negotiability  of  the  note,  and  might  be  executed  in 
favor  of  any  holder,  even  if  he  had  only  the  equitable  title.  And  where  a  promis- 
sory note  contains  a  clause  waiving  "all  differences  on  the  ground  of  any  exten- 
sion of  the  time  of  its  payment,  that  may  be  given  by  its  holders  to  them  (the 
makers)  or  either  of  them,"  such  stipulation  destroys  the  negotiability  of  the 
note.  See  Merchants  &  Mechanics'  Sav.  Bank  v.  Fraze,  9  Ind.  App.  161,  36 
N.  E.  378,  53  Am.  St.  Rep.  341;  Gilmore  v.  Hirst,  56  Kan.  626,  44  Pac.  603,  cit- 
ing text;  Mumford  v.  Tolman,  157  III.  258,  41  N.  E.  617;  First  Nat.  Bank  v. 
Alexander,  161  Ala.  580,  50  So.  45;  Osborn  v.  Hawley,  19  Ohio,  130.  The  nego- 
tiability of  a  note  is  not  affected  by  a  mortgage  provision  that  the  note  may  be 
declared  due  before  the  day  fixed  for  payment,  upon  the  happening  of  some  con- 
tingency.   Hunter  v.  Clarke,  184  111.  158,  56  N.  E.  297,  75  Am.  St.  Rep.  160. 

76.  Sweeney  v.  Thickstun,  77  Pa.  St.  131;  Overton  v.  Tyler,  3  Barr,  346.    In 


i  6^  CONTRACT  ONLY  FOR  THE   PAYMENT  OF  MONEY  83 

Under  Negotiable  Instrument  statute. ~\]nder  the  statute/'  it  has 
been  held  that  when  the  time  of  payment  depends  upon  the  will  of 
the  holder  and  is  uncertain,  the  instrument  is  not  negotiable,  as  when 
a  note  contains  a  power  of  attorney  by  which  judgment  may  be  en- 
tered upon  it  at  any  time  after  its  date  whether  due  or  not. 

§  62.  Addition  in  bills  and  notes  of  stipulations  to  pay  collection 
or  attorney's  fees. — Quite  frequently  in  recent  years  bills  and 
notes  are  met  with,  framed  in  other  respects  in  the  usual  negotiable 
forms,  but  containing  the  additional  stipulation  on  the  part  of  the 
drawer  or  maker  to  pay  collection  or  attorney's  fees,  and  they  have 
elicited  from  the  courts  various  and  conflicting  decisions.  The  cases 
may  be  divided  into  four  classes. 

First.  Those  which  sustain  both  the  validity  of  the  stipulation 
and  the  negotiability  of  the  instrument.^* 

Zimmcrmiin  v.  Anderson,  07  Pa.  St.  421,  it  \va.s  held  that  a  note  in  the  following 
terms  was  negotiable:  "Six  months  after  date  I  promise  to  pay  to  E.  W.  Lowe,  or 
order,  one  hundred  and  twenty-five  dollars,  for  value  received,  with  interest, 
waiving  the  right  of  appeal,  and  of  all  valuation,  appraisement,  stay,  and  e.xemp- 
tion  laws." 

77.  Appendix,  sec.  1  (3);  Wisconsin  Yearly  Meeting  v.  Babler,  115  Wis.  189, 
91  X.  W.  ()7S. 

78.  Lockwood  v.  Lindsey,  6  App.  Caa.  (D.  C.)  390  (as  to  law  of  Texjis);  In  re 
Kt-eton,  Stell  et  Co.,  120  Fed.  420  (under  the  law  of  Texas);  Schlesinger  v.  Arline, 
31  Fed.  04S;  Wil.>«)n  Sewing  Machine  Co.  v.  Moreno,  29  Am.  Rep.  4f)0;  First  Nat. 
Bank  v.  Slaughter,  9S  Ala.  002,  14  So.  .545,  39  Am.  St.  Rep.  88;  Farmers'  Nat. 
Hank  v.  Riusmessen,  1  Dak.  00;  Smith  v.  Baker,  137  Ga.  298,  72  S.  E.  1093,  upon 
giving  statutory-  notice;  Dorsey  v.  WolfT,  142  III.  589,  32  N.  E.  495,  34  Am.  St. 
Hep.  99,  quoting  text;  Shenandoah  Nat.  Bank  v.  Marsh,  89  Iowa,  273,  50  N.  W. 
458,  48  Am.  St.  Rep.  381;  Sperry  v.  Horr,  32  Iowa,  184  (1871);  Seaton  v.  Scovill, 
18  Kan.  435;  Deitrich  v.  Baylie,  23  La.  Ann.  707  (1871);  Clifton  v.  Bank  of 
Aberdeen,  75  Miss.  929,  23  So.  394,  text  cited;  Brahan  v.  First  Nat.  Bank  of 
Clarksville,  72  Miss.  200,  10  So.  203;  Bank  of  Commerce  v.  Fuqua,  11  Mont.  285, 
28  Pac.  291,  28  Am.  St.  Rep.  461,  text  cited;  Stark  v.  Olsen,  44  Nebr.  040,  03  N.  W. 
473;  Roberts  v.  Snow,  27  Nebr.  425,  43  N.  VV.  241;  Kemp  v.  Claus,  8  Nebr.  24; 
Heard  v.  Dubuque  Bank,  8  Nebr.  10  (1878);  Oppenheimer  v.  Bank,  97  Tenn.  19, 
30  S.  W.  705,  .50  Am.  St.  Rep.  778,  quoting  and  approving  text;  Tyler  v.  Walker, 
101  Tenn.  300,  47  S.  W.  424;  Hamilton  Gin  Co.  v.  Sinker,  74  Tex.  52,  citing  the 
text;  Tomlinson  v.  H.  P.  Drought  &  Co.  (Tex.  Civ.  App.),  127  S.  W.  262;  Elmore 
V.  Rugely  (Tex.  Civ.  App.),  107  S.  W.  151;  Ramsey  v.  Thomas,  14  Tex.  Civ. 
App.  431,  38  S.  W.  2.59;  Hopkins  v.  Halliburton  &  Parr,  6  Tex.  Civ.  App.  451, 
25  S.  W.  1005;  Salisbury  v.  Stewart,  15  Utah,  308,  49  Pac.  777,  62  Am.  St.  Rep. 
934;  Second  Nat.  Bank  v.  Auglin,  6  Wash.  403,  33  Pac.  1056.  See  Cornish  v. 
Woolverton,  32  Mont.  450,  81  Pac.  4,  108  Am.  St.  Rep.  .598.  In  the  following 
cases,  such  instruments  were  held  valid  but  the  question  of  negotiability  waa 


84  REQUISITES   OF   BILLS   AND    NOTES  §  62 

These  cases  consider  that  the  stipulation  is  valid  because  it  is  an 
indemnification  assured  by  the  maker  against  the  consequences  of 
his  own  act,  for,  unless  in  default,  he  will  not  have  to  pay  the  addi- 

not  raised:  Rinker  v.  Laucr,  13  Idaho,  163,  88  Pac.  1057;  Harris  Mfg.  Co.  v. 
Anfinson,  31  Minn.  182;  Johnston  Harvester  Co.  v.  Clark,  30  Minn.  308,  citing 
the  text;  Bank  of  Duncan  v.  Brittain,  92  Miss.  545,  46  So.  163;  Duggan  v. 
Champlin,  75  Miss.  441,  23  So.  179;  Meacham  v.  Pinson,  60  Miss.  217;  Eyrich  v. 
Capital  State  Bank  (Miss.),  6  So.  615;  Howey  v.  Ge.>«ler,  16  N.  Mex.  319,  117 
Pac.  734;  Peyser  v.  Cole,  11  Oreg.  39;  Bank  of  California  v.  Union  Packing  Co., 
60  Wash.  456,  111  Pac.  573.  In  Garretson  v.  Purdy,  3  Dak.  Ter.  178,  it  was  held 
that  negotiability  was  destroyed  when  the  note  contained  a  stipulation,  not  for  a 
definite  sum  as  attorney's  fee,  but  for  payment  of  reasonable  fees.  In  HoLstt)n 
Nat.  Bank  v.  Wood,  125  Tenn.  6,  140  S.  W.  31,  it  was  held  that  while  a  stipulation 
in  a  note  for  attorney's  fees  is  valid  and  will  be  enforced,  the  provision  as  to  any 
particular  amount  is  not  binding,  and  will  not  be  enforced  unless  it  appears  rea- 
sonable to  the  court.  After  quoting  and  approving  text,  the  Supreme  Court  of 
Oregon  said:  "A  careful  examination  has  satisfied  us  that  the  weight  of  authority, 
and  especially  the  more  recent  decisions  is  strongly  in  favor  of  the  doctrine  that 
the  negotiability  of  a  promissory  note  is  in  no  way  affected  by  a  stipulation  for  a 
reasonable  attorney's  fee"  (citing  numerous  cases).  Benn  v.  Kutzschan,  24 
Oreg.  28,  32  Pac.  763.  On  the  other  hand,  the  Oregon  Supreme  Court,  in  an  earlier 
case,  held  that  a  provision  in  a  note  to  pay  a  stipulated  allowance  of  10  per  cent, 
attorney's  fees,  was  void,  as  oppressive  and  unconscionable,  the  court  stating 
that  a  provision  for  "a  reasonable  attorney's  fee"  was  unobjectionable.  Levens 
V.  Briggs,  21  Oreg.  333,  28  Pac.  15.  In  Indiana  a  note  containing  a  stipulation 
for  attorney's  fee  on  nonpaj-ment  at  maturity  is  vaUd  and  negotiable.  Proctor 
V.  Baldwin,  82  Ind.  370;  Johnson  v.  Crossland,  34  Ind.  334;  Smith  v.  Silvers,  32 
Ind.  321 ;  Smith  v.  Muncie  Nat.  Bank,  29  Ind.  159.  In  First  Nat.  Bank  v.  Canat- 
sey,  34  Ind.  149,  drawers,  indorsers,  and  acceptor  were  held  liable  where  the  bill 
agreed  to  pay  reasonable  attorney's  fees.  See  also  Hubbard  v.  Harrison,  38  Ind. 
323.  In  that  state  a  statute  provided  (1  Rev.  Stat.  1876,  p.  149),  "  that  any 
and  all  agreements  to  pay  attorney's  fees,  depending  upon  any  condition  therein 
set  forth,  and  made  part  of  any  bill  of  exchange,  acceptance,  draft,  promissory 
note,  or  other  written  e\'idence  of  indebtedness,  are  hereby  declared  illegal  and 
void,  pro\'ided  that  nothing  in  this  section  shall  be  construed  as  appljnng  to  con- 
tracts made  previous  to  the  taking  effect  of  this  act. "  After  this  act  it  was  held 
that  the  stipulation  in  a  note  to  pay  attorney's  fees  "if  suit  be  brought"  was 
conditional  and  void.  Churchman  v.  Martin,  54  Ind.  380,  the  court  also  holding 
that  an  unconditional  stipulation  to  pay  five  per  cent,  attorney's  fees  w;us  vaUd. 
That  under  the  statute  an  unconditional  stipulation  would  be  valid,  sec  Brown 
V.  Barber,  59  Ind.  533;  Smock  v.  Ripley,  62  Ind.  81;  Gar\'er  v.  Pontius,  66  Ind. 
191;  Maxwell  v.  Morehart,  66  Ind.  301;  Farmers'  Nat.  Bank  v.  Sutton  Mfg.  Co., 
52  Fed.  191.  A  statute  providing  that  a  negotiable  instrument  may  contain  a 
provision  for  reasonable  attorney's  fee,  in  effect  takes  away  from  the  maker  of  a 
note  a  defense  he  might  have  asserted  against  it  as  a  nonnegotiable  instrument, 
which  defense  is  simply  one  on  the  remedy,  and  though  applied  to  a  note  executed 
before  the  enactment  of  the  statute  is  not  unconstitutional.  Bullard  v.  Smith, 
28  Mont.  387,  72  Pac.  761. 


S  62  CONTRACT  ONLY  FOR  THE   PAYMENT  OF  MONEY  85 

tional  amount;  ^^  that  it  is  consonant  with  public  policy-  because  it 
adds  to  the  value  of  the  paper;  has  a  tendency  to  lower  the  rate  of 
discount,  not  only  because  it  promises  less  expensive  collection,  but 
bears  evidence  of  a  greater  degree  of  confidence  on  the  part  of  the 
maker  in  his  ability  to  pay  without  suit ;  ^  and  that  it  does  not  impair 
the  negotiability  of  the  instrument,  for  the  reasons:  that  the  sum  to 
be  paid  at  maturity  is  certain;  that  commercial  paper  is  expected  to 
be  paid  promptly;  that  if  so  paid,  no  element  of  uncertainty  enters 
into  the  contract;  that  it  ceases  to  be  negotiable,  in  the  full  sense  of 
the  term,  if  not  paid  at  maturity,  and  that  the  additional  agreement 
relates  rather  to  the  remetly  upon  the  note,  if  a  legal  remedy  be  pur- 
sued, than  to  the  sum  which  the  maker  is  bound  to  pay;  and  that  it  is 
not  different  in  its  character  from  a  cognovit,  which,  when  attached 
to  promissory  notes,  docs  not  destroy  their  negotiability.^^ 

Second.  The  second  class  of  cases  enforce  the  stipulation,  but 
deny  the  negotiability  of  the  instrument.*-    They  rest  on  the  consid- 

79.  Moore  v.  Staaer,  6  Ind.  App.  364,  32  X.  E.  563,  33  N.  E.  .563,  33  X.  E.  665. 

80.  StaF)leton  v.  Louisville  Banking  Co.,  95  Ga.  802,  23  S.  E.  81,  citing  text; 
Heard  v.  Dubuque  Bank,  8  Xebr.  10  (1878). 

81.  Xicely  et  al.  v.  Winnebago  Xat.  Bank  of  Rockford,  111.,  18  Ind.  App.  30, 
47  X.  E.  476,  quoting  text;  Stoneman  v.  Pylc,  35  Ind.  103  (1871);  Proctor  v.  Bald- 
win, 82  Ind.  370;  Sperrj-  v.  Horr,  32  Iowa,  184  (1871);  Cherr>'  v.  Sprague,  187 
Mass.  113,  72  X.  E.  4.56,  67  L.  R.  A.  33,  105  Am.  St.  Rep.  .^Sl;  Mackintosh  v. 
Gibbs,  81  X.  J.  L.  .577,  .SO  Atl.  .554,  affirming  79  X.  J.  L.  40,  74  Atl.  708.  In 
Cudahy  Packing  Co.  v.  State  Xat.  Bank,  134  Fed.  .5.3-8,  the  court  s.aid  that  the 
general  rule  of  certainty  rwjuires  commercial  and  not  mathematical  certainty. 
Following  the  reasoning  underlying  the  classes  of  cases  referred  to  in  the  te.xt 
and  upholding  the  validity  and  negotiability  of  contracts  containing  such  provi- 
sions, the  Supreme  Court  of  Washington  has  dwided  that  attorney's  fees  are  not 
collectible  except  in  case  of  default  in  payment  of  the  principal  debt,  and  that  a 
suit  to  collect  an  installment  of  interest  due  does  not  warrant  an  allowance  of  a 
fee  to  the  attorney  for  plaintiff.  Merrill  v.  Muzzy.  11  Wash.  16,  .39  Pac.  279. 
WTiere  a  note  stipulated  that  upon  default  the  holder  might  sell  collateral,  and 
after  the  princess  had  been  appUed  to  the  payment  of  the  note,  and  after  charging 
all  costs  and  attorney's  fees,  any  excess  was  to  be  paid  to  the  maker  of  the  note, 
a  sale  of  the  collateral  by  the  holder  was  contemplated,  and  the  holder  was  not 
entitled  to  attorney's  fees  when  the  collateral  was  sold  by  receivers  and  the  holder 
merely  proved  his  claim  and  received  paj-ment.  Merchants'  Xat.  Bank  of  Balti- 
more V.  Roxbur>-  Distilling  Co.,  196  F.  76. 

82.  Chestertown  Bank  of  Maryland  v.  Walker,  163  Fed.  510  (in  Marjland); 
Hardin  v.  Olson,  14  Fed.  705  (in  Minnesota);  Findlay  v.  Pott,  131  Cal.  385,  63 
Pac.  694;  Kendall  v.  Parker,  103  Cal.  319,  37  Pac.  401,  42  .\m.  St.  Rep.  117; 
Harber  v.  Brown,  101  Cal.  445,  35  Pac.  1035;  First  Xat.  Bank  v.  Falkenhan,  94 
Cal.  141,  29  Pac.  866;  First  Xat.  Bank  v.  Babcock,  94  Cal.  96,  29  Pac.  415,  28 
Am.  St.  Rep.  94;  .\dams  v.  Seaman,  82  Cal.  037;  Chase  v.  ^^^litmo^e,  68  Cal.  545; 


86  Requisites  of  bills  and  notes  §  62 

erations  as  stated  in  Pennsylvania,  by  Sharswood,  J.  (in  Woods  v. 
North),  where  to  the  note  was  added,  "and  five  per  cent,  collection 
fees  if  not  paid  when  due,"  that  "it  is  a  necessary  quality  of  nego- 
tiable paper,  that  it  should  be  simple,  certain,  unconditional  and  not 
subject  to  any  contingency.  *  *  *  Interest  and  costs  of  protest 
after  nonpayment  at  maturity  are  necessary  legal  incidents  of  the 
contract,  and  the  insertion  of  them  in  the  body  of  the  note  would  not 
alter  its  negotiability.  Neither  does  a  clause  waiving  exemption,  for 
that  in  no  way  touches  the  imphcity  and  certainty  of  the  paper.  But 
a  collateral  agreement  as  here,  depending  too,  as  it  does,  upon  its 
reasonableness,  to  be  determined  by  the  verdict  of  a  jury,  is  entirely 
different." 


Bowie  V.  Hall,  69  Md.  433;  Mar>'land  Fertilizing  Co.  v.  Newman,  60  Md.  584, 
45  Am.  Rep.  750;  Jones  v.  Radatz,  27  Minn.  240;  German-American  Bank  v. 
Martin,  129  Mo.  App.  484,  107  S.  W.  1108;  Johnston  v.  Spcer,  92  Pa.  St.  227; 
Woods  V.  North,  84  Pa.  St.  407  (1877);  Sweeney  v.  Thickstun,  77  Pa.  St.  131; 
Sylvester  Beckley  Co.  v.  Alewine,  48  S.  C.  308,  26  S.  E.  607;  Savings  Bank  v. 
Strother,  28  S.  C.  504;  Kimball  v.  Mellon,  80  Wis.  133,  48  N.  W.  1100;  Continental 
Nat.  Bank  v.  McGeoch,  73  Wis.  332,  41  N.  W.  409;  Vipond  v.  Townsend,  88  Wis. 
285,  60  N.  W.  430;  Peterson  v.  State  Bank,  78  Wis.  113,  47  N.  W.  368;  First  Nat. 
Bank  v.  Larsen,  60  Wis.  206.  In  the  following  cases  such  instruments  were  held 
to  be  nonncgotiable,  but  the  question  whether  the  stipulation  was  enforceable 
was  not  raised:  Garretson  v.  Purdy,  3  Dak.  Ter.  178;  Roads  v.  Webb,  91  Me. 
406,  40  Am.  Rep.  128;  McCoy  v.  Green,  83  Mo.  626;  Storr  v.  Wakefield,  71  Mo. 
622;  First  Nat.  Bank  v.  Marlow,  71  Mo.  618;  First  Nat.  Bank  v.  Gay,  71  Mo.  627; 
Samstag  v.  Conley,  64  Mo.  476;  First  Nat.  Bank  v.  Gay,  63  Mo.  33;  Ruck  v. 
Harris,  125  Mo.  App.  365,  102  S.  W.  640;  Pace  v.  Gilbert  School,  118  Mo.  App. 
369,  93  S.  W.  1124;  Creasy  v.  Gray,  88  Mo.  App.  454;  Clark  v.  Barnes,  58  Mo. 
App.  667;  First  Nat.  Bank  v.  Bynum,  84  N.  C.  25;  Clevenger  v.  Lewis,  20  Okla. 
837,  95  Pac.  230,  16  L.  R.  A,  (N.  S.)  410;  American  Machinery  &  Export  Co.  v. 
Druge  Bros.,  82  Vt.  476,  74  Atl.  84.  In  Michigan,  a  note  containing  such  a  provi- 
sion is  not  negotiable.  Strawberry  Point  Bank  v.  Lee,  117  Mich.  122,  77  N.  W. 
444;  Conrad  Seipp  Brewing  Co.  v.  McKittrick,  86  Mich.  191;  Altman  v.  Fowler, 
70  Mich.  58;  Altman  v.  Rittershoeffer,  68  Mich.  287;  Cayuga  Nat.  Bank  v.  Purdy, 
56  Mich.  6.  But  in  Wright  v.  Traver,  73  Mich.  493,  it  was  held  that  a  provision 
in  a  note  carrjang  interest  at  6  per  cent,  to  pay  "ten  per  cent,  attorney  fees,"  is 
in  effect  the  same  as  16  per  cent,  interest,  and  void.  A  stipulation  "to  pay  fifteen 
dollars  attorney's  fees,  over  and  above  all  taxable  costs,  should  any  proceeding 
be  instituted  to  collect,"  being  out  of  proportion  to  the  amount  of  the  note,  is 
void.  Bullock  v.  Taylor,  39  Mich.  137.  See  also  Myer  v.  Hart,  40  Mich.  517. 
In  Morgan  v.  Edwards,  53  Wis.  599,  the  note  was  payable  with  "all  expenses, 
including  attorney's  fees,  incurred  in  collecting."  Held  not  negotiable,  the  court 
pointing  out  that  the  additional  amounts  were  not  payable  only  upon  the  contin- 
gency of  default  in  payment  at  maturity.  A  note  negotiable  on  its  face  does  not 
become  nonnegotiable  on  account  of  a  stipulation  in  a  mortgage  securing  the 


§  62a       CONTRACT  ONLY  FOR  THE   JPAYMENT  OF  MONEY  87 

Third.  The  third  class  of  cases  mamtam  the  negotiabiUty  of  the 
instrument,  but  regard  the  stipulation  as  penal  and  void.  They 
proceed  on  the  ground  that  the  paper  is  negotiable,  because  as  long  as 
current  the  amount  contemplated  to  be  paid  is  certain,  and  that  after 
that  its  negotiable  office  is  performed;  but  that  the  insertion  of  such 
provisions  tends  to  encourage  litigation,  to  oppress  debtors,  and  is 
against  the  policy  of  the  law  and  void.^^ 

Fourth.  The  fourth  class  of  cases  hold  that  the  stipulation  to 
pay  the  additional  amount  renders  the  transaction  usurious,  and  sub- 
jects the  instrument  to  the  operation  of  the  statutes  against  usury  .^^ 

§  62a.  Considerations  in  favor  of  negotiability. — Such  instru- 
ments .should,  \VL'  think,  be  upheld  as  negotiable.  They  are  not  like 
contracts  to  pay  money  and  do  some  other  thing.  They  are  simply 
for  the  payment  of  a  certain  sum  of  money  at  a  certain  time,  and  the 
additional  stipulations  as  to  attorney's  fees  can  never  go  into  effect 
if  the  terms  of  the  bill  or  note  are  complied  with.  They  are  therefore 
incidental  and  ancillary  to  the  main  engagement,  intended  to  assure 
its  performance,  or  to  compensate  for  trouble  and  expense  entailed 
by  its  breach.  At  maturity,  negotiable  paper  ceases  to  be  negotiable 
in  the  full  commercial  sense  of  the  term,  as  heretofore  explained,^^ 
though  it  still  passes  from  hand  to  hand  by  the  negotiable  forms  of 
transfer;  and  it  seems  paradoxical  to  hold  that  instruments  evidently 
framed  as  bills  and  notes  are  not  negotiable  during  their  currency, 
because  when  they  cease  to  be  current  they  contain  a  stipulation  to 
defray  the  expenses  of  collection.^ 

same  providing  for  an  attorney's  fee  in  the  event  of  foreclosure.    Farmer's  Nat. 
Bank  v.  McCall,  25  Oki.  GOO,  106  Pac.  866. 

83.  Boozer  v.  Anderson,  42  Ark.  167;  Trader  v.  Chichester,  41  Ark.  242;  Over- 
ton V.  Mathews,  35  Ark.  147;  Witherspx)on  v.  Musselman,  14  Bush,  214;  Garr  v. 
Louisville  Banking  Co.,  11  Bush,  182;  E.xchange  Bank  v.  Appalachian  Land  & 
Lumber  Co.,  128  N.  C.  193,  38  S.  E.  813;  Tinsley  v.  Hoskins,  111  N.  C.  340,  16 
S.  E.  174,  .32  Am.  .St.  Rep.  801,  citing  text;  Baird  v.  Vines,  18  S.  D.  .52,  99  N.  W. 
89;  Chandler  v.  Kennedy,  8  S.  D.  .56,  65  N.  W.  4.39.  In  Virginia  it  has  been  held 
that  such  a  stipulation  is  a  penalty  and  not  enforceable.  Fields  v.  I'^ields,  105 
Va.  714,  .54  S.  E.  888.  The  negotiability  seems  to  have  been  a.s.sumed  in  Rixoy  v. 
Pearre,  89  Va.  117,  15  S.  E.  498,  and  in  Ronald  v.  Bank  of  Princeton,  90  Va.  813, 
20  S.  E.  780,  the  question  of  negotiability  raised  was  not  distinctly  decided. 

84.  Merchants'  Nat.  Bank  v.  Sevier,  14  Fed.  662;  Shelton  v.  Gill,  11  Ohio,  417; 
State  v.  Taylor,  10  Ohio,  378. 

86.  Dorsey  v.  Wolff,  142  111.  .589,  32  N.  E.  495,  34  Am.  St.  Rep.  99,  citing  text. 
See  anlr,  §§  1,  la. 

86.  Benjamin's  Chahners'  Digest,   17;  Stapleton  v.  Louisville  Banking  Co., 


gg  REQUISITES   OF   BILLS   AND    NOTES  §  62a 

Such  stipulations  do  not,  we  tliink,  render  such  instruments 
usurious.  The  additional  amounts  are  in  consideration  of  addi- 
tional trouble  and  expense  inflicted  on  the  holder,  and  not  excessive 
interest  for  the  loan  or  forbearance  of  money5 

If  the  additional  stipulations  be  regarded  as  in  the  nature  of 
penalties,  and  therefore  void,  they  would  simply  be  surplusage,  and 
would  not  impair  the  negotiability  of  the  paper.  And  this  is  the  view 
which  commends  itself,  as  it  seems  to  us,  to  judicial  favor .^^  Unless 
there  be  some  statute  under  which  such  stipulations  are  permissive, 
it  certainly  tends  to  the  oppression  of  debtors  to  sanction  their  in- 
corporation in  commercial  instruments;  and  they  are  therefore  against 
the  policy  of  the  law  and  void.  But  when  the  added  stipulation  is 
deemed  valid,  and  the  bill  or  note  negotiable,  such  stipulation  be- 
comes a  part  of  the  acceptor's  or  indorser's  contract,^^  and  need  not 
be  sued  for  by  the  attorney  but  are  recoverable  by  the  holder  of  the 
instrument.''"    When  the  amount  of  fees  is  fixed  by  a  certain  percent- 

95  Ga.  802,  23  S.  E.  81,  quoting  text;  Hunter  v.  Clarke,  184  111.  158,  56  N.  E. 
297,  75  Am.  St.  Rep.  160;  Clifton  v.  Bank  of  Aberdeen,  75  Miss.  929,  23  So.  394, 
text  cited;  First  Nat.  Bank  v.  Badham,  86  S.  C.  170,  68  S.  E.  536,  138  Am.  St. 
Rep.  1043;  (divided  court  to  the  contrary  in  Smith  Sons  Gin  &  Machine  Co.  v. 
Badham,  81  S.  C.  63,  61  S.  E.  1031  and  Green  v.  Spires,  71  S.  C.  107,  50  S.  E. 
554);  Tyler  v.  Walker,  101  Tenn.  306,  47  S.  W.  424;  Salisbury  v.  Stewart,  15  Utah, 
308,  49  Pac.  777,  62  Am.  St.  Rep.  934,  citing  and  approving  text.  In  Sperry  v. 
Horr,  23  Iowa,  184,  negotiability  of  the  note  was  maintained,  not  on  the  idea  that 
the  amount  was  definite,  but  that  the  liability  was  not  incurred  until  maturity 
and  was  part  of  the  remedy. 

87.  Barton  v.  Farmers'  Nat.  Bank,  122  111.  352;  Moore  v.  Staser,  6  Ind.  App. 
364,  23  N.  E.  563,  33  N.  E.  665. 

88.  Hamilton  Gin  Co.  v.  Sinker,  74  Tex.  52,  citing  the  text.  See  Ward  v. 
Cornctt,  91  Va.  676,  22  S.  E.  494,  case  of  alleged  usury.  In  Rixey  v.  Pearre, 
89  Va.  117,  15  S.  E.  498  (1892),  the  court,  by  Lewis,  P.,  said:  "In  each  of  the 
negotiable  notes  held  by  the  bank,  there  is  a  stipulation  'to  pay  on  default  of 
payment  at  maturity  10  per  cent,  on  the  face  of  this  note  for  attorney's  fee  for 
collection.'  This  was  held  by  the  Circuit  Court  (of  Fauquier  county)  a  penalty, 
and,  as  such  not  enforceable,  and  in  this  view  we  concur."  To  the  same  effect, 
see  Ronald  v.  Bank  of  Princeton,  90  Va.  813,  20  S.  E.  780  (1894). 

89.  Bank  v.  Ellis,  2  Fed.  44  (accommodation  indorser);  Hubbard  v.  Harrison, 
38  Ind.  323;  First  Nat.  Bank  v.  Canatsey,  34  Ind.  149;  Smith  v.  Muncie  Nat. 
Bank,  29  Ind.  158. 

90.  Adams  v.  Addington,  16  Fed.  92,  citing  the  text;  Bank  v.  Ellis,  2  Fed.  44; 
Rylee  v.  Bank  of  Statham,  7  Ga.  App.  489,  67  S.  E.  383;  Dorsey  v.  Wolf,  142  111. 
589,  32  N.  E.  495,  34  Am.  St.  Rep.  99,  quoting  text;  Walker  v.  Woollen,  54  Ind. 
164;  Jones  v.  Smith,  4  Tex.  Civ.  App.  353,  26  S.  W.  240.  See  Ware  v.  City  Bank 
59  Ga.  848,  that  a  stipulation  in  a  draft  for  attorney's  fees  is  a  contract  between 
the  drawer  and  the  acceptor,  and  not  recoverable  by  a  holder. 


§  62a         CONTRACT  ONLY  FOR  THE   PAYMENT  OF  MONEY  89 

age,  or  certain  sum,  as  in  many  cases,^^  the  objection  to  negotiability 
of  the  paper  becomes  extremely  technical  and  sophistical,  if  the 
validity  of  the  additional  stipulation  is  supported,  and  it  is  only 
when  their  amount  is  left  undetermined  that  such  objection  seems  to 
be  forcible.  The  holder,  it  has  been  held,  must  prove  the  amount 
of  the  attorney's  fees  in  order  to  recover  them.^^ 

Under  Negotiable  Instrument  statute. — The  conflict  of  authority 
on  the  question  whether  a  provision  for  the  payment  of  an  attorney's 
fee  impairs  the  negotiability  of  an  instrument  containing  such  a 
clause,  has  been  settled  in  those  states  which  have  adopted  the 
Negotiable  Instrument  law,  by  the  section  that  "The  sum  payable 
is  a  sum  certain  within  the  meaning  of  this  act,  although  it  is  to  be 
paid  with  costs  of  collection  or  an  attorney's  fee,  in  case  payment 
shall  not  be  made  at  maturity."  ^^    And  it  has  been  held,  under  the 

91.  Sperry  v.  Horr,  32  Iowa,  184,  10  per  ront. ;  Dietrich  v.  Hnylie,  23  La.  Ann. 
707,  10  per  cent.;  Overton  v.  Mathews,  35  Ark.  147,  10  per  cent.;  Farmers'  Nat. 
Bank  v.  Ilasmussen,  1  Dak.  60,  §  10,  and  cases  cited  ante,  §  62. 

92.  Orr  v.  Sparkman,  120  Ala.  9,  23  So.  829;  Lindley  v.  Sullivan,  133  Ind.  588, 
32  N.  E.  738,  33  N.  E.  .561.  Wyant  v.  Pattorf,  37  Ind.  512.  Sec  Hopkins  v.  Halli- 
burton &  Parr,  6  Tex.  Civ.  App.  451,  25  S.  W.  1005.  But  not  where  judgment  is 
procured  by  default.  Alexander  v.  McDow,  108  Cal.  25,  41  Pac.  24.  In  Illinois 
recovery  cannot  be  had  in  same  action.  Dearlove  v.  Edwards,  Itili  HI.  619,  46 
N.  E.  1081.  Where  a  promissory  note,  in  addition  to  j)rincij)al  and  interest, 
provided  for  the  payment  of  "reasonable  attorney's  fees  in  collecting  by  suit  or 
otherwise,"  the  presiding  judge  was  not  authorized  to  direct  a  verdict  for  a  certain 
amount  as  attorney's  fees  because  of  the  testimony  of  a  number  of  the  bar  that 
such  amount  would  be  reasonable,  although  there  was  no  conflicting  evidence  on 
the  subject.  Finleys<jn  v.  International  Harvester  Co.  of  America  (Ga.),  75  S.  E. 
103.  Where  a  note  contains  an  agreement  to  pay  "all  legal  expenses  and  attor- 
ney's fees  which  may  be  incurre<l  in  the  collection  of  this  note,"  it  is  not  incumbent 
upon  the  plaint itT  to  allege  and  .show  by  express  proof  that  an  attorney  had  been 
employed  and  an  agreement  had  been  made  to  i)ay  him,  before  the  court  was 
authorized  to  make  an  allowance  for  attorney's  fees  as  having  been  "incurred" 
by  the  plaintiff.  Conner  v.  Blodget  (Cal.  App.),  124  P.  733.  A  stipulation  in  a 
note  or  10  per  cent,  attorney's  fees,  if  the  note  is  placed  in  the  hands  of  an 
attorney  for  collection,  is  a  stipulation  for  liquidated  damages,  and  the  fees  are 
recoverable  in  an  action  on  the  note  without  any  proof  that  they  were  incurred. 

First  Nat.  Bank  of  Vicksburg  v.  Mayer,  57  So.  308,  129  La.  981. 

93.  Appendix,  sec.  2  (5).  See  Farmers'  Nat.  Bank  v.  McCall  (Okl.),  106  Pac. 
866;  McCormick  v.  Swem,  36  Utah,  6,  102  Pac.  626;  First  Nat.  Bank  v.  Miller, 
139  Wis.  126,  120  N.  W.  820.  A  note  with  a  clause  "and  10  per  cent,  attorney's 
fees  if  collected  by  attorney,  or  if  suit  is  brought  upon  this  note,"  provides  for 
payment  of  attorney's  fees  only  on  collection  by  an  attorney  after  dishonor. 
First  Nat.  Bank  v.  Miller,  139  Wis.  126,  120  N.  W.  820,  131  Am.  St.  Rep.  1040. 
Where  a  note  was  made  payable  "with  reasonable  attorney's  fees,"  a  reasonable 
attorney's  fee  may  be  •demanded  when  the  note  has  been  placed  in  the  hands  of 


90  REQUISITES   O'P  BILLS   AND    NOTES  §  63 

statute,  that  where  the  amount  is  left  blank  in  an  attorney's  fee 
clause,  it  is  tantamount  to  a  promise  to  pay  a  reasonable  sum  as  an 
attorney's  fee.^^  On  the  question  as  to  the  effect  of  the  statute  in 
those  states  which  hold  such  a  stipulation  in  an  instrument  to  be 
contrary  to  public  policy  and  void,  it  has  been  held  that  the  statute 
does  not  give  validity  to  such  stipulations,  but  provides  only  that  they 
shall  not  destroy  the  negotiable  character  of  instruments  in  which 
they  are  incorporated.^" 

SECTION  VII 

DELIVERY 

§  63.  In  the  seventh  place  the  instrument  must  be  delivered. — 
Delivery  is  the  final  step  necessary  to  perfect  the  existence  of  any 
written  contract,  and  therefore  as  long  as  a  bill  or  note  remains  in 
the  hands  of  the  drawer  or  maker  it  is  a  nullity ;  ^^  and  a  note,  to  be 

an  attorney  for  collection  though  suit  has  not  been  brought  thereon.  Morrison  v. 
Ornbaun,  30  Mont.  Ill,  75  Pac.  953. 

94.  McCormick  v.  Swem,  36  Utah,  6,  102  Pac.  626. 

95.  Miller  v.  Kyle  (Ohio),  97  N.  E.  372.  See  Mackintosh  v.  Gibbs,  79  N.  J.  L. 
40,  74  Atl.  708,  holding  that  such  a  stipulation  does  not  render  a  note  nonnego- 
tiablc.  In  North  Carolina,  an  additional  section  was  added  to  the  statute,  as 
follows:  "Nothing  in  this  chapter  shall  authorize  the  enforcement  of  an  authoriza- 
tion to  confess  judgment  of  a  waiver  of  homestead  and  personal  property  exemp- 
tions or  a  provision  to  pay  counsel  fees  for  collection  incorporated  in  any  of  the 
instruments  mentioned  in  this  chapter;  but  the  mention  of  such  provisions  in  such 
instruments  shall  not  affect  the  other  terms  of  such  instruments  of  the  nego- 
tiability thereof."    Revisal  of  North  Carolina  of  1905,  sec.  2346. 

96.  Bailey  v.  Taber,  5  Mass.  286;  Marvin  v.  McCullum,  20  Johns.  288;  Free- 
man V.  Ellison,  37  Mich.  459;  Lansing  v.  Caine,  2  Johns.  300;  Woodford  v. 
Dorwin,  3  Vt.  82;  Ward  v.  Churn,  18  Gratt.  801;  Hopper  v.  Eiland,  21  Ala.  714; 
Richards  v.  Darst,  51  111.  141;  Roberts  v.  Bethell,  12  C.  B.  778;  Cox  v.  Troy, 
5  B.  &  Aid.  474;  Howe  v.  Quid,  28  Gratt.  7;  Bartlett  v.  Same,  28  Gratt.  7; 
Devries  v.  Shumate,  53  Md.  216;  Smith  v.  Foster,  41  N.  H.  215;  Dexter  Sav. 
Bank  v.  Copeland,  77  Me.  269;  McFarland  v.  Sikes,  54  Conn.  250;  Palmer  v. 
Poor,  121  Ind.  138,  citing  the  text;  Purviance  v.  Jones,  120  Ind.  164,  citing  the 
text;  Stringer  v.  Adams,  98  Ind.  539;  Morris  v.  Morton,  14  Nebr.  360,  citing 
the  text;  Mattix  v.  Leach,  16  Ind.  App.  113;  Nicely  et  al.  v.  Winnebago  Nat. 
Bank  of  Rockford,  111.,  18  Ind.  App.  30,  47  N.  E.  476,  citing  text;  Johnson  v. 
Eaton,  51  Kan.  708,  33  Pac.  597;  Polhemus  v.  Prudential  Realty  Corp.,  74  N.  J. 
Eq.  570,  67  Atl.  303,  citing  text;  In  re  Reeve's  Estate,  111  Iowa,  260,  82  N.  W. 
912,  quoting  text.  An  indorsement  on  a  note  that  it  was  given  in  connection  with 
a  contract  for  a  deed  to  certain  land  does  not  make  the  note  a  part  of  another 


§  63  DELIVERY  91 

a  binding  obligation,  must  be  accepted  by  the  payee.^'  The  con- 
trolling element  in  determining  the  delivery  of  a  note  is  the  intention 
of  the  parties,^^  and  a  negotiable  instrument  stolen  from  the  maker 
before  it  has  become  effective  as  an  obligation  by  actual  or  construc- 
tive delivery  cannot  be  enforced  by  any  subsequent  innocent  holder .^^ 
And  even  though  it  be  placed  by  the  drawer  or  maker  in  the  hands 
of  his  agent  for  delivery,  it  is  still  undelivered  as  long  as  it  remains  in 
his  hands,  and  may  be  recalled;  and,  while  there,  the  payee  has  no 
right  to  it,  unless  it  be  wrongfully  withheld  by  the  agent.^  If  the 
agent  to  whom  a  note  is  delivered,  to  be  issued  on  condition,  refuses 
to  return  it  to  the  party  who  has  executed  it  upon  the  failure  of  that 
condition,  such  party  may  restrain  him  from  its  negotiation,  and 
compel  the  cancellation  of  his  signature  thereon.-  If  he  wrongfully 
delivers  the  note  the  maker  is  not  bound,  unless  it  comes  to  the  hands 
of  a  bona  fide  holder  under  the  rules  entitling  him  to  protection.^ 
It  is  not  necessary  to  aver  the  delivery  of  a  bill  or  note,  for  the  aver- 
ment that  a  bill  was  drawn  or  a  note  made  includes  the  idea  of  a 


written  instrument,  delivery  of  which  must  be  proved  to  sustain  an  action  on  the 
note.    Lachenmaier  v.  Han.son,  190  F.  773. 

97.  O'Moara  v.  McDermott,  43  Mont.  189,  115  P.  912. 

98.  Barber  v.  McHenry  County  Hetlge  Fence  Co.,  129  111.  App.  45;  Enneking 
V.  Woebkenberg,  SS  Minn.  259,  92  X.  W.  932;  Streissguth  v.  Kroll,  86  Minn.  325, 
90  N.  W.  577.  Delivery  is,  normally,  to  be  in  accordance  with  the  purpose  and 
intent  of  the  parties  to  a  note;  but  this  is  subject  to  exceptions  of  which  one 
obtains  when  the  departure  from  the  intent  of  the  parties  is  one  of  mode  only. 
Polhemus  v.  Prudential  Reahy  Corp.,  74  N.  J.  570,  67  Atl.  303. 

99.  Salley  v.  Terrill,  95  Me.  553,  50  Atl.  896,  55  L.  R.  A.  730,  85  Am.  St.  Rep. 
433. 

1.  Thompson  on  Bills,  90-91;  The  King  v.  Lambton,  5  Price,  42S;  Byles  [*146], 
265;  Exlwards  on  Bills,  186;  1  Parsons  on  Notes  and  Bills,  4J^50;  De\Ties  v. 
Shumate,  53  Md.  216.  The  delivery  of  a  check  by  the  maker  to  his  own  agent  for 
delivery  to  the  payee  does  not  constitute  delivery  to  the  payee,  though  the  agent 
procures  his  indorsement  upon  the  check  by  fraudulently  representing  it  to  be  a 
voucher.  BaTrj-  v.  Mutual  Life  Ins.  Co.  of  New  York,  211  Mass.  306,  97  N.  E. 
779. 

2.  Devries  v.  Shumate,  53  Md.  212;  Eppert  v.  Hall,  133  Ind.  418,  31  N.  E.  74, 
32  N.  E.  713,  citing  the  te.vt;  Gross  v.  Arnold,  177  111.  575,  52  N.  E.  867. 

3.  Ware  v.  Smith,  62  Iowa,  159;  Mercer  County  v.  Life  &  Trust  Co.,  19  C.  C.  A. 
44,  72  Fed.  623,  citing  text.  Where  money,  deposited  with  a  banker  to  be  loaned 
by  him  for  the  owner  on  real  estate  security,  was  loaned  on  other  kind  of  security, 
the  transaction  was  unauthorized  and  such  banker  was  not  authorized  to  receive 
a  delivery  of  the  notes  as  agent  of  the  lender,  and  the  person  who  deposited  the 
money  was  not  entitled  to  posseasion  of  the  notes  as  against  the  receiver  in  bank- 
ruptcy of  the  banker.    Morris  v.  Butler,  138  Mo.  App.  378,  122  S.  W.  377. 


92  REQUISITES   OF   BILLS   AND   NOTES  §  63a 


delivery,  without  which  the  drawing  or  making  is  not  complete.'' 
So  essential  is  delivery,  that  it  has  been  held  that  where  a  promissory 
note,  the  writing  of  which  was  unknown  to  the  grantee,  lay  in  the 
grantor's  possession,  and  was  found  among  his  papers  after  death,  the 
payee  could  not  claim  or  sue  upon  it;  ^  and  though  such  a  note  should 
be  found,  accompanied  with  written  directions  to  deliver  it  to  the 
payee,  the  payee  will  still  have  no  right  of  action,  unless  the  directions 
be  valid  as  a  testament.'^ 

§  63a.  Constructive  delivery. — It  is  to  be  observed  however 
that  delivery  may  be  constructive  as  well  as  actual,  by  manual  pass- 
ing of  the  instrument.  A  direction  to  a  third  person  who  is  in  actual 
custody  thereof,  to  hold  it  su))ject  to  the  payee's  or  transferee's  order; 
or  an  order  to  the  depositary  to  deliver  it,  or  a  delivery  to  a  third 
person  for  the  payee  without  condition,^  is  sufficient  in  legal  con- 
templation.^   Where  the  plaintilY's  bankers  indorsed  a  note  to  him 


4.  Churchill  v.  Gardner,  7  T.  R.  596;  Smith  v.  McClure,  5  East,  477;  Binney 
V.  Plumlcy,  .5  Vt.  500;  Peets  v.  Bratt,  6  Barb.  662;  Chester,  etc.,  R.  Co.  v.  Lickiss, 
72  111.  521;  Black  v.  Duncan,  60  Ind.  522;  Lord  v.  Russell,  64  Conn.  86,  29  Am. 
Rep.  242;  Smith  v.  Thurston,  8  Ind.  App.  105,  35  N.  E.  520;  Bank  v.  Simmons, 
43  W.  Va.  79,  27  S.  E.  299;  Welch  v.  Damoron,  47  Mo.  App.  221,  citing  text. 

5.  Disher  v.  Disher,  1  P.  Wms.  204,  Chitty,  Jr.,  230.  Where  a  testatrix,  three 
days  before  her  death,  signed  her  name  to  notes  payable  on  demand  after  her 
demise,  in  stated  amounts,  placed  the  notes  with  bankbooks  and  other  documents 
of  her  own  in  the  pocket  of  a  skirt  belonging  to  herself,  had  the  pocket  sewn  up, 
and  intrusted  the  skirt  and  its  contents  as  her  own  to  one  of  the  persons  named  as 
payee  in  one  of  the  notes  for  safe-keeping  only  at  night,  and  with  the  understand- 
ing, that  the  whole  package  was,  upon  her  death,  to  be  given  up  to  the  person 
named  in  her  will  as  executor,  there  was  no  delivery  of  the  notes  during  the  life- 
time of  the  promisor.     Mason  v.  Gardiner,  186  Mass.  515,  71  N.  E.  952. 

6.  Gough  V.  Findon,  7  Exch.  48;  Gammon  Theological  Seminary  v.  Robbins, 
128  Ind.  85,  27  N.  E.  341;  Taylor  v.  Harmison,  179  111.  137,  53  N.  E.  584. 

7.  Gordon  v.  Adams,  127  111.  225;  School  District  v.  Sheidley,  138  Mo.  672,  40 
S.  W.  656,  60  Am.  St.  Rep.  576,  citing  text.  Where  the  maker  of  a  note  had  been 
the  agent  of  the  payee  for  many  years  and  had  been  her  agent  in  handling  her 
investments,  and,  after  making  the  note,  retained  it  among  other  papers  belonging 
to  her,  and  made  statements  periodically  of  amounts  due  her  and  indorsed  pay- 
ments on  the  note,  this  is  sufficient  to  show  a  delivery  of  the  note  to  the  payee. 
Indiana  Trust  Co.  v.  Byram,  36  Ind.  App.  6,  72  N.  E.  670,  petition  to  rehear 
denied,  73  N.  E.  1094. 

8.  Howe  V.  Ould,  28  Gratt.  7;  Bartlett  v.  Same,  28  Gratt.  7;  Fisher  v.  Bradford, 
7  Greenl.  28;  Richardson  v.  Lincoln,  5  Mete.  (Mass.)  201;  Mitchell  v.  Byrne, 
6  Rich.  171.  In  Howe,  Knox  &  Co.  v.  Ould  &  Carrington,  28  Gratt.,  it  appeared 
that  Samuel  Strong,  the  owner  of  a  note  executed  to  him  by  Samuel  Myers,  in- 
dorsed it,  and  deposited  it  with  the  First  National  Bank  of  Richmond,  Va.,  as 


§  64  DELIVERY  93 

and  put  it  in  an  envelope  with  his  papers,  at  the  same  time,  making 
appropriate  entries  of  the  transaction  on  their  books,  it  was  held  a 
sufficient  deHvery  to  him;  and  that  a  subsequent  assignment  of  the 
bankers  could  not  defeat  it.^ 

§  64.  If  the  party  who  has  signed  or  indorsed  the  instrument  die 
l)('fore  delivery,  it  is  a  nullity,  and  cannot  be  delivered  by  his  personal 
representative;  ^°  but  if  advances  had  been  made  on  the  faith  of  a  de- 
livery, then  the  promisee  or  indorsee  would  be  entitled  to  a  delivery.'^ 

It  is  said  by  Mr.  Chitty,  in  respect  to  a  bill,  that  delivery  (by  the 
acceptor)  is  not  essential  to  vest  the  legal  interest  in  the  payee.  ^^ 
But  the  doctrine  sustained  by  the  authorities  goes  only  to  the  extent 
that  if  the  drawee  actually  accepts  the  bill,  and  improperly  detains 


collateral  for  a  loan  obtained  from  the  bank  by  Hetz,  Youngaling  &  Byer.  Strong 
Bold  the  note  to  Ould,  and  gave  him  an  order  on  the  bank  for  it,  who  at  once 
presented  the  order  at  the  bank,  but  was  informed  that  the  president  was  out  of 
town.  A  few  days  afterward  the  president  informed  him  that  the  debt  for  which 
the  note  was  pledged  was  nearly  paid,  and  that  he  would  deliver  him  the  note 
but  for  the  fact  that  an  attachment  had  been  i.ssued  against  it — of  the  attachment, 
which  antedated  the  sale  of  the  note,  Ould  &  Carrington  had  no  notice.  It  was 
hold  that  they  were  entitled  to  it — were  not  affected  by  the  attachment  of  which 
they  had  no  notice  at  time  of  purchase,  and  that  the  constructive  delivery  of  the 
note  was  sufficient,  (lanunon  Theological  Seminary  v.  Robbins,  128  Ind.  85, 
•27  N.  E.  341;  Welch  v.  Dameron,  47  Mo.  App.  221,  citing  text. 

9.  Williams  v.  Gait,  65  111.  172.  When  a  banker  executed  a  note  payable  by 
hinwelf  in  the  presence  and  with  the  consent  of  the  payee,  and  kept  it  thereafter 
for  her  lus  her  banker,  for  safe-keeping,  and  for  the  collection  of  collaterals  and 
the  crediting  of  the  proceeds  thereof  u[X)n  the  note,  this  constituted  a  constructive 
delivery.    In  rr  Reeve's  Estate,  111  la.  2G0,  82  N.  W.  912. 

10.  Clark  V.  Boyd,  2  Ohio,  50;  Clark  v.  Sigourney,  17  Conn.  511;  Bromage  v. 
Lloyd,  1  E.xch.  32;  Byles  1*56],  242;  Drum  v.  Benton,  13  App.  D.  C  245.  When 
the  maker  places  the  note  in  the  hands  of  a  third  person  merely  for  delivery  to 
the  payee,  such  third  person  is  the  agent  of  the  maker,  and  not  of  the  payee.  And 
if  the  maker  dies  before  delivery  by  the  agent,  the  agent's  authority  is  thereby 
revoked,  and  a  subsequent  delivery  by  him  is  ineffectual  to  create  a  liability. 
Jones  v.  Jone.s,  101  Me.  447,  64  Atl.  815,  115  Am.  St.  Rep.  328.  But  in  Rowan  v. 
Chenoweth,  49  W.  Va.  2S7,  38  S.  E.  544,  87  Am.  St.  Rep.  790,  recognizing  the  rule 
that  delivery  of  a  promissory  note  is  indispensable  to  its  efficacy,  and,  if  not  de- 
livered in  the  lifetime  of  its  maker,  it  cannot  be  delivered  after  his  death,  the 
court  said  that  delivery  may  be  actual  or  constructive,  and  that  if  it  is  clear  that 
the  maker  of  the  note  intended  it  to  be  a  finished  note,  and  binding  on  him,  with- 
out further  act  on  his  part,  it  will  so  operate,  though  not  actually  delivered  in  his 
hfetime. 

11.  Perr>'  v.  Crammond,  1  Wash.  C.  C.  100,  1  Parsons  on  Notes  and  Bills,  49. 

12.  Chitty  on  Bills  1*172],  198 


94  REQUISITES   OF   BILLS   AND   NOTES  §  65 

it  in  his  hands,  an  averment  that  the  bill  was  accepted  is  sufficient, 
without  averment  of  a  delivery  by  the  acceptor.  ^^ 

§  65.  Whenever  a  bill  or  note  is  found  in  the  hands  of  the  payee, 
it  will  be  presumed  that  it  was  delivered  to  him,^*  and  that  the 
delivery  took  place  on  the  day  of  its  date,  if  it  be  dated, ^^  and,  at  any 
rate,  before  the  day  of  its  maturity.^*'  But  the  presumption  both  as  to 
the  fact  and  the  time  of  delivery  may  be  rebutted. ^^ 

As  a  bill  or  note  takes  effect  only  by  delivery,  so  it  takes  effect  only 
on  delivery;  and  if  this  be  subsequent  to  its  date,  it  will  be  binding 
only  from  that  day.^^  But  still,  when  delivered,  if  it  bear  an  anterior 
date,  and  be  payable  at  some  future  day  from  date,  the  time  will  be 
computed  according  to  its  terms,  and  therefore  by  relation  from  its 
date;  for  it  is  competent  for  the  parties  to  frame  their  contracts  to 
suit  themselves.'^  And  it  will  be  proper  to  describe  it  as  drawn  on  the 
day  it  bears  date.-" 

13.  Smith  V.  McClure,  5  Eaat,  476;  Story  on  Bills,  §  203,  note  2;  Thompson  on 
Bills,  90. 

14.  Lachcnmaier  v.  Hanson,  196  Fed.  773;  Pastene  v.  Pardini,  135  Cal.  431, 
67  Pac.  861;  Griswold  v.  Davis,  31  Vt.  390;  Woodford  v.  Dorwin,  3  Vt.  82;  Garri- 
gus,  Admr.  v.  The  Home  Frontier  &  Foreign  Missionary  Society,  3  Ind.  App.  91, 
28  N.  E.  .1009,  50  Am.  St.  Rep.  262;  Knapstein  v.  Tinnette,  156  111.  322,  40  N.  E. 
947.  Winfrey  v.  Ragan,  136  Mo.  App.  250,  117  S.  W.  83;  Candy  v.  Bissell,  72 
Nebr.  356,  100  N.  W.  803.  See  §  812.  The  possession  of  a  note  by  one  claiming 
to  be  the  real  and  intended  payee,  but  alleged  to  have  been  made  payable  to 
another  by  mistake,  affords  no  basis  for  the  inference  that  the  note  was  fully 
executed  by  delivery.  Digan  v.  Mandel,  167  Ind.  586,  79  N.  E.  899,  the  court 
saying:  "Delivery  involves  both  an  act  and  an  intention,  and  where  the  contest 
is  waged  with  respect  to  the  act  and  puqwse  necessary  to  create  the  article,  and 
give  it  existence  and  legal  force,  there  can  be  no  presumption  of  law  or  foundation 
for  an  inference  of  fact  in  favor  of  one  not  in  terms  a  party  to  the  disputed  instru- 
ment. It  was  incumbent  on  appellee  to  prove  delivery,  or  to  prove  such  facts  as 
warranted  the  inference  of  dehvery  by  the  trial  court." 

15.  Cranston  v.  Coss,  107  Mass.  439;  Sinclair  v.  Baggaley,  4  M.  «fe  W.  312; 
Anderson  v.  Weston,  6  Bing.  N.  C.  296;  Emery  v.  Vinall,  26  Me.  295. 

16.  ChurchiU  v.  Gardiner,  7  T.  R.  596;  Smith  v.  McClure,  5  East,  477;  Exchange 
Bank  v.  Veirs,  3  Cal.  App.  71,  84  Pac.  455,  citing  text;  Binney  v.  Plumley,  5  Vt. 
500.    See  chapter  XXI,  on  transfer  by  Indorsement,  §  6. 

17.  Lachenmaier  v.  Hanson,  196  Fed.  773;  Candy  v.  Bissell's  Estate,  81  Nebr. 
102,  117  N.  W.  349,  115  N.  W.  571;  Woodford  v.  Dorwin,  3  Vt.  82;  Scaife  v.  Byrd, 
39  Ark.  568;  Wickhizer  et  al.  v.  Bohn,  22  Ind.  App.  1,  53  N.  E.  238. 

18.  Lovejoy  v.  Whipple,  18  Vt.  379. 

19.  Powell  V.  Waters,  8  Cow.  669;  Bumpass  v.  Timms,  3  Sneed,  459;  Snaith 
V.  Mingay,  1  Maule  &  S.  87;  Barker  v.  Sterne,  9  Exch.  684. 

20.  Snaith  v.  Mingay,  1  Maule  &  S.  89. 


§§  66,  67  bELIVERY  95 

Under  Negotiable  Instrument  statute. — Following  the  rule  of  the 
general  law,  the  statute  declares  a  contract  on  a  negotiable  instrument 
incomplete  until  delivery.^i  An  instrument  in  the  form  of  a  bill  of 
exchange  payable  to  the  order  of  the  drawer  does  not  come  into 
existence  as  a  bill  of  exchange  until  it  is  delivered  as  well  as  indorsed 
by  the  payee,--  but  the  production  of  an  instrument  raises  the  pre- 
sumption of  a  valid  and  intentional  delivery  by  the  maker. -^ 

§  66.  If  the  bill  or  note  bear  no  date,  the  time  must  be  computed 
from  its  delivery;  and  if  the  day  of  actual  delivery  cannot  be  proved, 
it  will  be  computed  from  the  earliest  day  on  which  it  appears  to  have 
been  in  the  hands  of  the  payee  or  any  holder.-^  It  is  not  necessary  to 
aver  a  date  to  the  bill  or  note,  but  it  is  sufficient  to  aver  that  it  was 
drawn  or  made  a  certain  day.^^ 

§  67.  Delivery  to  a  father  of  an  order  for  an  amount  due  his  minor 
son  is  sufficient  delivery  in  law;  -*  and  so  delivery  to  a  trustee  is 
sufficient  as  delivery  to  the  cestui  que  trust;  -^  and  delivery  may  be 
made  to  one  person  for  another.^  Delivery  by  one  of  two  joint  makers 
will  be  conclusively  presumed  to  be  the  act  of  both.-* 

It  is  essential  to  delivery  that  the  minds  of  both  parties  should 
assent,  in  order  to  bind  them;  and  if,  through  inattention,  infirmity, 
or  otherwise,  one  does  not  assent,  the  act  of  the  other  is  nugatory.^" 

21.  Appendix,  sec.  IG.  Massachusetts  Nat.  Bank  v.  Snow,  187  Maas.  159,  72 
N.  E.  959;  Viets  v.  Silver,  15  N.  D.  51,  106  S.  W.  35. 

22.  Stouffer  v.  Curtis,  198  Ma.ss.  560,  85  N.  E.  180. 

23.  Madden  v.  Gaston,  121  N.  Y.  S.  951,  137  App.  Div.  294  (a.s  to  checks). 

24.  Clark  v.  Sigourney,  17  Conn.  511;  Richardson  v.  Lincoln,  5  Mete.  (Mass.) 
201 ;  Woodford  v.  Don\in,  3  Vt.  82. 

25.  De  Lu  Coutier  v.  Bellamy,  2  Show.  422  (1683);  Hague  v.  French,  3  Bros. 
&  P.  173;  Giles  v.  Bourne,  6  Maule  &  S.  73. 

26.  Mason  v.  Hyde,  41  Vt.  432.  See  also  Enneking  v.  Woebkenberg,  88  Minn. 
259,  92  N.  W.  932,  holding  that  it  was  a  sufficient  deHvery  when  the  maker  left  the 
note  with  the  father  of  the  payee,  when  he  understood  that  he  had  parted  with  all 
interest  therein. 

27.  Tucker  v.  Bradley,  33  Vt.  325. 

28.  Elliott  V.  Deason,  64  Ga.  63.  Delivery  to  the  husband  for  the  wife  has  been 
hold  insufficient.  ^^' right  v.  Smith,  81  Va.  777.  A  delivery  made  to  the  agent 
of  the  person  is  equivalent  in  law  to  the  principal.  See  Callahan  v.  Crow,  91 
Hun,  346,  36  N.  Y.  Supp.  225.  Compare  Giselman  v.  Starr,  106  Cal.  651,  40 
Pac.  8. 

29.  Beman  v.  Wessels,  53  Mich.  549;  Carter  v.  Moulton,  51  Kan.  9,  32  Pac. 
633,  37  Am.  St.  Rep.  2.59. 

30.  In  re  Reeve's  Estate,  111  La.  260,  82  N.  W.  912,  quoting  text.     Where 


96  REQUISITES    OF    BILLS    AND    NOTES 


67 


Therefore,  leaving  a  check  on  the  desk  of  a  clerk,^'  or  the  counter  of 
a  bank,^2  without  the  knowledge  of  such  clerk  or  the  bank  otiicer,  is 
not  delivery.  Where  papers  were  taken  up  in  the  presence  of  the 
party  sought  to  be  charged,  and  placed  in  the  safe  of  a  thirtl  pers(m, 
it  was  held  no  delivery  on  his  part,  as  between  the  immediate  parties, 
when  he  had  done  or  said  nothing  to  indicate  an  intention  to  deliver.'^ 
Where  notes  were  executed  an<l  left  with  the  payee's  agent,  who 
objected  only  to  their  form,  but  retained  them,  agreeing  to  accept 
them,  if  the  form  could  not  be  changed,  and  it  was  not,  it  was  held  to 
be  sufficient  delivery.'"''  Placing  lulls  or  notes,  signed  or  indorsed,  in 
the  custody  of  the  postman,  addressed  to  the  payee  or  indorsee— that 
being  the  course  of  business  between  the  parti(>s— has  been  held,  in 
England,  a  sufficient  delivery;  ^•'  and  so  depositing  them  in  the  post- 
office,  with  the  assent  of  the  payee  or  indorsee,  is  considered  sufficient 
in  the  United  States.^"    And  if  a  bill  or  note  so  deposited  be  lost  on 

notes,  which  had  been  executed  before  an  order  was  signed  for  goods,  were  laid 
on  the  counter  while  the  maker  went  lo  wait  on  a  customer,  and  the  agent  of  the 
seUer  took  uj)  the  notes  and  pupcru  and  left  the  store,  there  wius  no  proper  delivery 
of  tlie  notes.    Sheffer  v.  Fleischer,  158  Mich.  '270,  122  N.  W.  543. 

31.  Kinney  v.  Ford,  52  Barb.  194. 

32.  Chicopce  Bank  v.  Philadeli)hia  Bank,  8  Wall.  641. 

33.  Stokes  v.  Anderson,  118  Ind.  533. 

34.  Bodley  v.  Higgin.s,  73  111.  375. 

35.  Rex  V.  Lambton,  5  Price,  428. 

36.  Kirkman  v.  Bank  of  America,  2  Coldw.  397;  Canterbun,-  v.  Bank  of 
Sparta,  91  Wis.  53,  G4  N.  W.  311,  51  Am.  St.  Rep.  870.  If  a  cheek  has  been  sent 
by  mail,  but  has  never  been  received  by  the  payee,  it  remained  the  property  of 
the  sender.  Garthwaite  v.  Bank  of  Tulare,  134  Cal.  237,  G()  Pac.  32G.  Where 
a  debtor  sends  by  mail  a  check  to  pay  a  debt,  the  title  to  the  check  remains  in 
the  sender  until  it  is  received  by  the  creditor,  unless  the  creditor  instructs  the 
debtor  to  send  a  check  by  mail  in  settlement  of  the  debt.  In  the  latter  case,  the 
title  to  the  check  vests  in  the  creditor  or  payee  when  the  check  is  placed  in  the 
mail  according  to  his  instructions.  Watt-Harley-Holmes  Hardware  Co.  v.  Day, 
1  Ga.  App.  G46,  57  S.  E.  1033.  Where  a  person  agrees  to  accept  a  note  signed  by 
two  persons  in  his  own  state  and  by  one  person  in  another  state,  and  the  note  is 
signed  by  the  two  who  send  it  to  the  third  person  for  signature,  the  note  was 
delivered  in  another  state  when  such  third  person  signed  the  note  and  deposited 
it  in  the  post-oflSce  addressed  direct  to  the  payee.  Loud  v.  Collins,  12  Cal.  App. 
786,  108  Pac.  880,  citing  text.  Where  a  note,  blank  as  to  date  of  payment,  waa 
sent  by  mail,  and  returned  by  payee  who  stated  that  it  could  not  be  accepted 
in  that  form,  and  the  maker  sent  it  again  with  a  letter  stating  that  he  could  not 
tell  when  he  would  be  able  to  pay  it  and  asking  the  payee  to  hold  it,  and  he  would 
pay  it  as  soon  as  he  was  able,  the  note  was  not  finally  delivered  until  it  was  sent 
the  second  time  with  the  letter,  and  the  note  and  letter  formed  a  single  transaction. 
Glass  v.  Adone,  39  Tex.  Civ.  App.  21,  86  S.  W.  798. 


§§  67a,  68  DELIVERY  97 

the  way,  and  the  creditor  obtain  a  duplicate,  and  cause  it  to  be  de- 
manded and  protested,  he  may  recover."  The  vendor  of  negotiable 
paper  has  the  right  of  stoppage  in  transitu  to  the  same  extent  as  the 
vendor  of  other  species  of  personal  property;  and  the  right  to  the 
remedy  applies  not  only  as  against  the  vendee,  but  as  well  against  a 
creditor  of  the  vendee  who  ha.s  made  a  loan  upon  the  promise  of  the 
vendee  to  transfer  the  paper  to  him  on  its  arrival.^ 

§  67a.  One  who  becomes  a  party  to  a  note  after  delivery,  and  the 
consideration  has  passed  between  the  original  parties,  incurs  no  lia- 
bility to  the  payee  unless  there  be  a  new  consideration  and  a  re- 
delivery of  the  note;  and  merely  signing  the  note  in  the  presence  of 
the  payee  does  not  amount  to  a  redelivery.^^ 

§  68.  Escrows.— A  l)ill  or  note,  as  well  as  a  deed,  may  be  de- 
livered as  an  escrow— that  is,  delivered  to  a  third  party  (but  not  to 
the  payee), ■^  to  hold  until  a  certain  event  happens,  or  certain  condi- 
tions are  complied  with — and  then  the  liability  of  the  party  com- 
mences as  soon  as  the  event  happens  or  tlu?  conditions  are  fulfilled, 
without  actual  delivery  by  the  depositary  to  the  promisee,"*^  but 

37.  Kirkman  v.  Bank  of  .\inerica,  2  Coldw.  397. 

38.  Mull.T  V.  Pondir,  55  N.  V.  ."125. 

39.  WillianiH  v.  Williams,  07  Mo.  Otil.  To  same  effect,  see  Bri(y?9  v.  Downing, 
48  Iowa,  550;  Hrant  v.  Bamett  tt  al.,  10  Ind.  App.  653,  38  N.  E.  441;  Messenner 
V.  Vaughan,  45  Mo.  App.  15.  But  when  it  was  the  original  understanding  that 
the  further  security  would  be  given,  if  such  additional  security  is  given,  pursuant 
to  the  original  agreement,  then  it  relates  back  to  the  inception  of  the  first  contract; 
and  in  such  cases  no  new  consideration  is  required.  Montgomery  County  v. 
Auchley,  92  Mo.  120,  4  S.  \V.  425. 

40.  Clanin  v.  Esterly  Harv.  Mach.  Co.,  118  Ind.  374;  Murray  et  al.  v.  W.  W. 
Kimball  Co.,  10  Ind.  Ai)p.  184,  37  X.  K.  734;  Garner  v.  File  et  al.,  93  Ala.  405, 
9  So.  307,  citing  text.  A  delivery  of  a  note  to  the  payee's  attorney  is  a  complete 
deUvery.  Schultz  v.  Kosbab,  125  Wis.  157,  103  N.  W.  237.  The  burden  is  upon 
the  plaintiff  to  show  that  a  note  was  left  with  a  third  person  to  be  delivered  to  the 
payee  upon  the  happening  of  a  contingency.  Jones  v.  Jones,  101  Me.  447,  64 
Atl.  815.  In  Nichols  it  Shepard  Co.  v.  First  Xat.  Bunk,  6  N.  Dak.  404,  71  N.  W. 
135,  it  was  held  that  where  promissorj'  notes  were  placed  by  the  parties  thereto 
in  the  hands  of  a  third  party,  with  instructions  not  to  deliver  the  same  until  the 
maker  so  directed,  the  transaction  did  not  constitute  an  escrow.  The  notes  still 
remained  in  the  control  of  the  maker.  There  was  no  deUvery  in  law,  and  no  title 
to  the  notes  vested  in  the  payee. 

41.  Bradbur>'  v.  Davenport,  120  Cal.  152,  52  Pac.  301;  Witmer  Bros.  v.  Weid, 
108  Cal.  569,  41  Pac.  491;  Couch  v.  Meeker,  2  Conn.  302;  Smith  v.  Goodrich, 
167  111.  46,  47  N.  E.  310;  Taylor  v.  Thomas,  13  Kan.  217;  Mi.ssouri  Pac.  R.  Co. 
V.  Atkinson,  17  Mo.  App.  492,  citing  the  te.xt;  Parker  v.  Young,  73  N.  J.  L.  774, 

7 


98  REQUISITES    OF   BILLS   AND   NOTES  §  68 

delivery  by  such  third  party  contrary  to  agreement  would  not  con- 
stitute a  delivery.''^  And  it  matters  not  that  the  actual  delivery  is 
not  designed  to  take  place  until  after  the  death  of  the  promisor;  the 
instrument,  whether  negotiable  or  otherwise,  is  nevertheless  valid. ""^ 
But  there  is  this  distinction  between  negotiable  and  sealed  instru- 
ments: If  the  custodian  of  the  former  betrays  his  trust,  and  passes 
off  the  negotiable  instrument  to  a  bona  fide  holder  before  maturity, 
and  without  notice,  all  parties  are  bound;  but  if  the  instrument  be 
sealed,  the  rule  is  otherwise.'*'' 

65  Atl.  194  (as  to  waiver  of  the  condition  of  a  check  being  held  in  escrow) ;  Ketter- 
son  V.  Inscho,  55  Tex.  Civ.  App.  150,  118  S.  W.  626,  citing  text;  Alexander  v. 
Wilkes,  11  Lea  (Tenn.),  221;  Glenn  v.  Hill,  11  Wash.  541,  40  Pac.  141,  citing  and 
approving  text;  Lehigh  Coal  &  Iron  Co.  v.  West  Superior  Iron  &  Steel  Co.,  91  Wis. 
221,  64  N.  W.  346;  1  Parsons  on  Notes  and  Bills,  .")1;  and  see  chapter  on  Bona 
Fide  Holder,  §§  855,  856.  Where  a  note  made  for  th(!  purcha.se  price  of  stock  and 
the  certificates  of  .stock  were  placed  in  escrow  under  an  agreement  that  the  stock 
should  be  delivered  to  the  maker  of  the  note  if  he  paid  the  note  witliin  a  year, 
but  no  provision  was  made  for  the  disposition  of  the  stock  or  the  note  in  default 
of  payment,  the  payee  of  the  note  cannot  sue  thereon  when  the  stock  and  note 
are  still  in  the  hands  the  escrow  of  holder;  the  payee's  remedy  would  be  for  a 
breach  of  contract.  Gray  v.  Baron  (Ariz.  ),  108  Pac.  229.  When  the  maker  of 
a  check  has  deposited  it  in  escrow,  the  depositary  is  bound  to  account  to  the  payee 
for  his  property,  and  is  entitled  to  prove  any  facts  which  would  defeat  the  maker's 
claim  thereto.  Brockway  v.  Reynolds,  77  Nebr.  225,  109  N.  W.  154.  When  a 
note,  whose  validity  depends  upon  the  delivery,  is  left  with  a  third  person  to  be 
delivered  to  the  payee,  on  the  happening  of  a  contingency,  the  first  delivery  is 
complete,  and  irrevocable  by  death  or  otherwise.  Jones  v.  Jones,  101  Me.  447, 
64  Atl.  815,  115  Am.  St.  Rep.  328.  If  a  promissory  note  when  executed  is  by 
agreement  of  the  parties  delivered  to  a  third  person,  to  be  by  him  delivered  to 
the  payee  upon  the  performance  of  a  condition  precedent,  and  the  condition  is 
performed  after  the  death  of  the  maker  of  the  note,  the  delivery  becomes  complete 
by  the  performance  of  the  condition.  Gandy  v.  Bissell,  72  Nebr.  356,  100  N.  W. 
803,  reversing  on  rehearing  5  Nebr.  (Unof .)  184,  97  N.  W.  632. 

42.  Settles  v.  Moore,  149  Mo.  App.  724,  129  S.  W.  455,  and  when  the  cashier  of 
a  bank  held  the  note  as  cashier  under  the  escrow  agreement,  the  bank  is  liable. 
Brown  v.  Citizens'  State  Bank,  17  Idaho,  716,  107  Pac.  405.     Compare  §  855. 

43.  Giddings  v.  Giddings,  51  Vt.  227;  Belden  v.  Carter,  4  Day,  66;  Glenn  v. 
Hill,  11  Wash.  541,  40  Pac.  141,  citing  and  approving  text;  Wood  v.  Flanery,  89 
Mo.  App.  632,  citing  text.  If  the  maker  of  a  note  delivered  it  to  a  third  person,  to 
be  held  by  him  and  delivered  to  the  payee  on  condition  that  the  maker  died  with- 
out recaUing  it,  the  happening  of  the  condition  left  the  holder  with  authority 
to  deliver  it  to  the  payee  and  thereby  to  give  him  a  good  title.  But  if  such  person 
was  simply  to  take  the  note  into  his  custody,  and  to  hold  it  as  the  servant  of  the 
maker,  under  his  orders,  it  could  not  be  effectually  delivered  to  the  payee  after 
the  death  of  the  maker.  Daggett  v.  Simonds,  173  Mass.  340,  53  N.  E.  907,  46  L. 
R.  A.  332. 

44.  Hutchinson  v.  Brown,  19  D.  C.  136;  Provident  Trust  Co.  v.  Mercer  County, 


§  68a  DELIVERY  99 

§  68a.  Can  delivery  to  payee  be  upon  condition  precedent? — It 
has  been  suid  that  a  bill  or  note  cannot  be  shown  to  have  been  de- 
livered to  the  promisee  as  an  escrow,  for  the  evidence  would  be  re- 
pugnant to  the  act.^^  These  questions  are  elsewhere  more  fully  con- 
sidered.^^ It  has  been  said  however  by  the  Court  of  Appeals  of  New 
York,  that  "instruments  not  under  seal  may  be  delivered  to  the  one 
to  whom  on  their  face  they  are  made  payable,  or  who  by  their  terms 
is  entitled  to  some  interest  or  benefit  under  them,  upon  conditions, 
the  observance  of  which  is  essential  to  their  validity.  And  the  annex- 
ing of  such  conditions  to  the  deHvery  is  not  an  oral  contradiction  of 
the  written  obligation,  though  negotiable  as  between  the  parties  to 
it,  or  others  having  notice.  It  needs  a  delivery  to  make  the  obligation 
operative  at  all,  and  the  effect  of  the  delivery  and  the  extent  of  the 
operation  of  the  instrument  may  be  limited  by  the  conditions  \Nith 
which  the  delivery  is  made."  *''     This  view  is  now  taken  by  the 


170  U.  S.  607,  18  Sup.  Ct.  Rep.  788;  Fearing  v.  Clark,  16  Gray,  74;  Long  Island 
L.  &  T.  Co.  V.  Columbus  R.  Co.,  05  Fed.  4.58;  Barson  v.  Huntington,  21  Mich. 
415;  Galvin  v.  Lyfers,  22  Ind.  App.  43,  .52  N.  E.  96;  North  Atchi.son  Bank  v.  Gay, 
114  Mo.  203,  21  S.  W.  479;  Joyce  v.  Cockrill,  35  C.  C.  A.  38,  92  Fed.  838.  Com- 
pare §  855. 

45.  1  Parsons  on  Notes  and  Bills,  51;  Scott  v.  State  Bank,  9  Ark.  36;  Ma8.s- 
man  v.  HoLschor,  49  Mo.  87;  Badcock  v.  Steadman,  1  Root  (Conn.),  87;  Jones 
V.  Shaw,  67  Mo.  667.    S<'('  post,  §§  79,  81. 

46.  See  chapter  XX\I,  on  Rights  of  Bona  Fide  Holder  or  Purchaser,  §855. 
Hcnshaw  v.  Dutton,  59  .Mo.  139. 

47.  Benton  v.  Martin,  52  N.  Y.  574,  Folger,  J.;  Belleville  Bank  v.  Borncman, 
124  111.  205.  In  .Merchant.s'  Exch.  Bank  v.  Luckow,  37  Minn.  542,  Gilfillan,  J., 
said:  "It  was  held  in  Wcstman  v.  Krumwcide,  30  Minn.  314,  and  Skaaraas  v. 
P'innegan,  31  Minn.  4S,  that  in  the  ca^c  of  an  in.strument  not  under  seal  it  is 
C()m{)etent  to  .show  hy  i)ar(jl  that  notwith.standing  it.s  delivery,  it  was  intended  by 
the  parties  that  it  .should  become  operative  a.s  a  contract  only  upon  the  happening 
of  a  future  contingent  event,  such  as  that  it  should  be  first  executed  by  .some  other 
person.  It  is  claimed  that  the  rule  ought  not  to  apply  to  negotiable  paper,  but  we 
can  see  no  reason  why,  as  between  the  original  partii>s,  it  should  not  apply  to  such 
in.struments,  as  well  as  any  other,  nor  why  a  tran.sferee  with  notice,  or  without 
valuable  consideration,  or  after  maturity,  should  not  take  such  negotiable  paper 
subject  to  that  defense  as  well  as  to  any  other."  The  cases  cited  above  appear 
to  have  been  instances  of  deliver)'  to  the  payee  himself,  or  to  his  agent.  Where 
the  deliver)'  is  made  by  a  surety  to  his  principal  upon  conditions  to  be  observed 
before  the  final  promulgation  of  the  pap>er,  the  Uabilities  of  the  parties,  as  between 
themselves,  present  a  different  question,  some  authorities  contending  that  the 
payee  taking  such  paper  without  notice  of  the  condition  is  not  affected  thereby, 
and  others  maintaining  that  where  the  paper  is  nonnegotiable,  or  still  in  the  hands 
of  an  original  party,  the  surety  may  avail  himself  of  the  violation  or  nonobserv- 


1(J()  REQUISITES   OF   BILLS    AND    NOTES  §  (i.Sa 

Supreme  Court  of  the  United  States."*    And  it  is  now  generally  luld 
that  a  note  may  be  delivered  to  the  payee  to  take  effect  only  upon  a 

ance  of  the  condition.  That  the  payee  should  take  the  paper  free  from  any  secret 
or  private  understanding  exi.sting  between  i)artic.s  occupyinK  the  relations  of 
principal  and  surety,  seems  to  us  the  better  doctrine.  It  is  well  presenteil  by 
Mclver,  J.,  in  an  ojjinion  delivered  in  the  ca.se  of  Fowler  v.  Allen  (S.  C),  10  S.  K. 
947,  where,  after  stating  the  facts,  he  said:  "As  to  the  second  (juestion,  while  it  is 
not  to  be  denied  that  there  is  some  conflict  in  the  cases  elsewhere,  we  think  the 
decided  weight  of  authority  as  well  Jus  of  argument,  is  in  favor  of  the  proi>osition 
that  where  on(»  signs  a  negotiable  note,  perfect  on  its  face,  lus  surety  for  another 
upon  the  condition  known  only  to  the  principal  that  it  is  not  to  be  delivere<l  to 
the  payee  until  sonietliing  else  is  done,  the  surety  will  be  liable,  even  if  .such  am- 
dition  be  not  complied  with,  unless  notice  of  such  condition  is  brought  home  to  the 
payee.  This  proposition  does  not  rest  alone  upon  the  peculiar  character  of  n«'- 
gotiable  paper,  but  u|)on  the  well-.scttled  principle  that  where  one  of  two  innocent 
persons  must  suffer,  tlie  lo.ss  .shoukl  fall  upon  him  who  put  it  in  the  iK)wer  of  a 
third  person  to  cau.se  sucli  loss,  as  well  lus  upon  the  principle  that  where  an  agent 
is  clothed  with  ajjparent  authority  to  do  an  act,  he  may  bind  his  principal  within 
the  limits  of  that  authority,  whatever  m.ay  have  been  his  private  instructions. 
Here  the  principal  debtor,  after  .signing  the  notes,  takes  them  to  the  defendant 
for  the  purpo.se  of  procuring  her  signature  as  his  surety,  in  accordance  with  the 
agreement  made  by  him  with  the  plainlifi's;  and,  when  he  delivers  them  projjcrly 
signed,  surely  the  payees  cannot  be  afTected  by  any  private  instructions  which 
the  surety  may  have  given  to  his  principal,  unless  the  same  were  communicated 
to  the  payees.  The  .surety  by  signing  the  notes  complete  in  form,  and  placing 
them  in  the  hands  of  her  principal  to  be  delivennl  to  the  payees,  even  though  ujion 
a  condition,  has  plac-ed  it  in  the  jwwer  c^f  her  principal  to  dec(>ive  the  payees; 
and  if  loss  ensues  it  must  fall  upon  the  one  who  contributed  to  that  loss,  rathi^r 
than  upon  the  innocent  payees,  who  were  left  in  ignorance  of  the  conditions  upon 
which  the  notes  were  signed.  The  principal  debtor  was  the  agent  of  the  surety, 
and  not  of  the  creditor;  and  if  he  has  done  an  act,  for  the  doing  of  which  he  was 
clothed  with  apparent  authority,  even  though  it  may  have  been  done  in  violation 
of  his  private  instructions,  the  person  who  invested  him  with  such  apparent 
authority,  must  take  the  consequences."  See  also  Jordan  v.  Jordan,  10  Lea,  124; 
Callahan  v.  Crow,  91  Hun,  346,  36  N.  Y.  Supp.  225.  See  also  authorities  cited 
in  note  92  to  §  81a;  Wickhizer  et  al.  v.  Bolin,  22  Ind.  App.  1,  53  N.  E.  238.  And 
the  motive  of  the  maker  of  a  note  in  delivering  the  same  is  immaterial  in  an  ac- 
tion against  the  sureties  thereon.  Weis  v.  Morris  Bros.,  102  Iowa,  327,  71 
N.  W.  208.  See  also  Juilliard  v.  Chaffee,  92  N.  Y.  529;  Reynolds  v.  Robinson, 
110  N.  Y.  654,  18  N.  E.  127;  McFraland  v.  Sikes,  54  Conn.  250,  7  Atl.  408,  1 
Am.  St.  Rep.  111. 

48.  In  Burke  v.  Dulaney,  153  U.  S.  228  (1893),  14  Sup.  Ct.  Rep.  816,  the  court 
held  that  in  an  action  by  the  payee  against  the  maker  of  a  note  evidence  is  ad- 
missible to  show  a  parol  agreement  between  them,  and  at  the  time  of  making  the 
note  that  it  should  not  become  operative  as  a  note  until  the  maker  could  examine 
the  property  (which  consisted  of  a  group  of  mines)  for  which  the  note  was  to  be 
given,  and  determine  whether  he  would  take  them.  Harlan,  J.,  cited  Ware  v. 
Allen,  128  U.  S.  595,  9  Sup.  Ct.  Rep.  174;  Pym  v.  Campbell,  6  El.  &  Bl.  370; 


§  68a  DELIVERY  101 

condition  precedent. ^^  And  so,  where  a  person  signed  a  note  under  an 
express  agreement  that  it  was  not  to  become  obligatory  until  certain 
other  persons  had  signed  it,  and  the  payee  received  it  with  this  undcr- 


Davis  V.  Jones,  17  C.  B.  (N.  S.)  625;  Wilson  v.  Powers,  131  Mass.  539;  Pawling 
V.  I'nitod  States,  4  Cranch,  219,  and  approvinR  Benton  v.  Martin,  52  N.  Y.  574. 
This  decision  goes  to  the  consideration  of  the  instrument,  for  unless  the  property 
was  purchased  it  was  without  valuable  con.sideration,  the  option  to  purchase  it 
not  having  been  the  value  given  for  the  note.  It  is  therefore  in  accordance  with 
the  views  set  forth  in  §  Kla. 

49.  Purcell  v.  Armour  Packing  Co.,  4  Ga.  .\pp.  2.53,  61  S.  E.  13.S;  Hunter  v. 
First  Xat.  Bank,  172  Ind.  62,  .S7  X.  K.  I'.U;  SlreLssguth  v.  Kroll,  SO  Minn.  325, 
9<)  .\.  \V.  577;  Xiblock  v.  Si)rague,  93  X.  E.  1105,  200  N.  Y.  390,  reversing  judg- 
ni.nt  lis  X.  Y.  1127,  134  App.  Div.  910;  Smith  v.  Dotterweich,  93  X.  E.  985, 
2fXJ  X.  Y.  299,  33  L.  H.  A.  (X.  S.)  892,  reversing  judgment  116  N.  Y.  896,  132 
App.  Div.  489;  Stoughton  v.  Chu  Kong,  130  X.  Y.  S.  228;  Xewgrass  v.  Shulhof, 
128  X.  Y.  S.  m4;  Shulman  v.  Damico,  123  X.  Y.  S.  61,  KiS  App.  Div.  191.  A 
promi.ss<jr>'  note  may,  in  this  state,  b«'  ddiventl  to  the  payw  in  escrow,  to  become 
efTcctive  if  certiiin  conditions  are  fuliilh-*!;  otherwise  to  remain  ineffective,  and 
the  fact  that  the  escnjw  holder  wjis  the  agent  of  the  maker  in  other  mutters  does 
not  preclude  hw  being  the  dejKJsitarj'  of  the  note  in  escrow,  provided  he  received 
it  not  in  his  cajjacity  as  agent,  but  in  his  individujd  capjicity.  St.  Paul's  Episcopal 
Church  V.  Fields,  81  Conn.  670,  72  Atl.  145.  In  the  case  of  delivery  to  an  agent 
of  the  payee,  the  court  said  that  the  better  authority  is  to  the  efifcct  that  when 
the  rights  of  no  thinl  parties  inter\ene,  and  there  Ls  nothing  inconsistent  with 
the  agent's  duty  to  his  principal  in  holding  the  pajjcr  subject  to  the  conditions 
agree<l  u|M)n  when  it  wxs  execute<l,  the  writing  may  be  delivered  to  the  agent  of 
the  ailvers<>  |)arty  to  be  held  by  him  until  he  receives  instructions  to  deliver  it 
to  his  principal.  This  was  a  case  of  a  purchjise  of  machinery  and  delivery  of  a 
note  to  the  agent  to  be  held  by  him  until  the  machinery  could  be  teste*!,  and  the 
court  held  that  the  holder  was  acting  as  the  agent  of  the  purchaser  in  holding  the 
note.  Case  Threshing  Mach.  Co.  v.  Barnes,  133  Ky.  321,  117  S.  W.  418.  Where 
a  note  was  given  on  an  account,  and  the  maker  siiid  that  there  must  be  an  ad- 
justment of  the  account  as  to  over-charges  before  the  note  was  paid,  but  the  pers<jn 
taking  the  note  .statcnl  that  he  ha4l  no  authority  liS  to  that,  there  was  no  condition 
attache<l  to  the  deliver*-  of  the  note.  Conditions  !us  to  deliver*'  may  be  shown,  but 
not  conditions  which  change  or  modify  the  character  of  the  obligation.  Pratt  &. 
Whitney  Co.  v.  American  Pneumatic  Tool  Co.,  63  X.  Y.  S.  1062,  50  App.  Div. 
369,  aiFirmed  106  X.  Y.  588,  59  X.  E.  1129.  The  maker  of  a  promissory  note, 
deliven-d  on  condition  precedent  to  the  payee,  may  recover  the  note  in  trover 
from  the  payee,  where  there  has  been  a  bn«ach  of  condition  by  the  latter;  the  fact 
that  the  pay«>e,  in  violation  of  the  condition  has  indorsotl  the  note  to  an  innocent 
holder  for  value  do<>s  not  defeat  the  maker's  cause  of  action  as  the  unauthorized 
transfer,  being  a  conversion,  cannot  be  a  defense  to  a  suit  in  trover.  Thompson 
V.  Carter,  6  Ga.  App.  604,  65  S.  E.  599.  Performance  of  a  condition  precedent 
may  be  waived  or  the  party  for  whose  benefit  it  operates  may  be  estopped  from 
complaining  of  its  nonperformance.  Heitman  v.  Commercial  Bank,  6  Ga.  App. 
584,  65  S.  E.  590. 


102  REQUISITES   OF   BILLS   AND    NOTES  §  08a 

standing  and  without  procuring  such  other  persons  to  sign  it,  the 
person  signing  it  is  not  hable.^  But,  of  course,  such  an  agreement 
between  the  parties  to  a  note  relating  to  its  conditional  delivery  could 
not  be  available  as  against  an  indorsee  in  good  faith. ^^ 

Under  Negotiable  Instrument  statute. — The  conflict  of  authority  on 
the  question  whether  a  bill  or  note  can  be  shown  to  have  been  de- 
livered upon  a  condition  precedent,  is  settled  in  those  states  which 
have  adopted  the  statute,^^  whereunder  the  rule  is  recognized  that  a 
person  may  manually  deliver  an  instrument,  though  it  be  in  the  form 
of  commercial  paper,  to  another,  on  its  face  containing  a  binding 
obligation  in  -prcesenti  of  such  person  to  such  other,  with  a  contem- 
poraneous verbal  agreement  that  it  shall  not  take  effect  until  the 
happening  of  some  specified  event,  and  that  the  paper  as  between  the 

50.  Hakes  v.  Russ,  175  Fed.  751;  Young  v.  Hayes  (Mass.),  99  N.  E.  327;  In- 
ternational Bank  v.  Enderle,  133  Mo.  App.  222,  113  S.  W.  262;  Seattle  v.  L.  H. 
Griffith  Realty,  etc.,  Co.,  28  Wash.  605,  68  Pac.  1036.  See  al.so  as  to  parol  evi- 
dence, -post,  §  81a.  A  surety  who  signs  an  unconditional  promise  is  not  dis- 
charged from  liabiUty  thereon  by  reason  of  any  expectation,  reliance  or  con- 
dition, unless  notice  thereof  be  given  to  the  promisee;  or  in  other  words,  that 
the  contract  stands  as  expressed  in  the  writing  in  the  absence  of  conditions  which 
are  known  to  the  recipient  of  the  promise.  In  this  case,  the  fact  that  the  surety 
signed  on  condition  that  another  surety  would  be  obtained  was  not  known  to 
the  payee.  Joyce  v.  Auten,  179  U.  S.  591,  21  S.  Ct.  227,  45  L.  Ed.  332.  The 
fact  that  a  surety  signed  the  note  upon  an  agreement  that  it  should  be  signed  by 
another  person  also  as  surety,  is  available  as  a  defense.  Hunter  v.  First  Nat. 
Bank,  172  Ind.  62,  87  N.  E.  734;  Smith  v.  Bales  (Ky.),  99  S.  W.  672;  That  it 
should  not  be  delivered  until  another  had  signed  it.  See  also  Bank  of  Benson  v. 
Jones,  147  N.  C.  419,  61  N.  E.  193,  16  L.  R.  A.  (N.  S.)  343.  In  Smith  v.  Bales 
(Ky.),  99  S.  W.  672,  it  was  so  held  under  an  agreement  that  the  note  should  not  be 
delivered  until  another  had  signed  it.  But  in  Dils  v.  Bank  of  Pikeville,  109  Ky. 
757,  60  S.  W.  715,  it  was  held  that  a  contemporaneous  condition  in  parol,  on  de- 
livery by  a  surety,  that  an  additional  name  would  be  secured  as  co-indorser, 
could  not  operate  to  vary  the  terms  of  the  contract,  though  it  might  be  available 
upon  proper  allegations  of  facts  showing  damage  as  a  basis  for  a  counter- 
claim. 

51.  Gilette  v.  Hodge,  170  Fed.  313;  Norris  v.  Merchants'  Nat.  Bank,  2  Ala. 
App.  434,  57  So.  71.  Where  there  was  a  collateral  agreement  between  the  maker 
of  a  promissory  note  and  a  third  person,  on  failure  of  which  the  payee  promised 
that  the  note  should  be  returned,  the  maker  of  the  note  has  no  defense  to  the  note 
in  the  hands  of  a  purchaser  notwithstanding  his  full  knowledge  of  the  equities 
between  the  parties  to  the  note,  when  the  default  of  the  maker,  without  any  fault 
on  the  part  of  the  third  person,  occasioned  the  failure  of  performance  of  the  agree- 
ment between  the  maker  of  the  note  and  such  third  person.  Case  v.  Beyer,  142 
Wis.  496,  125  N.  W.  947. 

62.  Appendix,  sec.  16. 


§  69  DELIVERY  103 

parties  will  have  no  validity  as  a  binding  contract  till  the  condition 
shall  have  been  satisfied.^' 

§  69.  Bills  and  notes  made  on  Sunday. — By  the  common  law, 
there  is  no  interdiction  of  secular  business  being  conducted  on  Sun- 
day, and,  unless  restrained  by  statute,  a  party  may  draw,  make,  in- 
dorse, or  accept  bills  and  notes  on  Sunday,  and  their  acts  will  be  as 
valid  as  if  done  on  any  other  day.^^    By  statute  however  in  many  of 

53.  Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  192.  In  that  case  it  was  held 
that  where  some  of  the  makers  of  a  note  were  induced  to  sign  the  note  upon  the 
understanding  that,  although  it  remained  in  the  hands  of  the  payee  to  obtain 
other  signatures,  it  was  not  to  be  dehvered  so  as  to  take  effect  until  signed  by 
other  respon.sible  signers,  and  it  has  not  in  fact  been  so  signed  in  good  faith,  then 
it  hjus  no  effect  or  existence  as  a  promissor>-  note  a.s  against  any  of  the  makers. 
See  als<3  Hunk  of  Cartersville  v.  Gunter  (Ala.  .A.pp.),  oS  So.  757;  Citizens'  State 
Bank  of  Lunkin  v.  Garceau  (M.  D.),  134  N.  W.  882;  English  v.  Schlesinger,  105 
N.  Y.  S.  989,  55  Misc.  584;  Morris-Miller  Co.  v.  Von  Prossentin,  63  Wash.  74, 
114  Pac.  912  (as  to  a  check);  Swanke  v.  Herdemann,  138  Wis.  654,  120  N.  W.  414. 
In  Zimbleman  v.  Finnegan,  141  la.  358,  1 18  N.  W.  312,  the  court  said  that  if  there 
was  an  understanding  b<'twe<'n  the  parties  to  a  note  that  it  was  not  to  become 
binding  on  the  maker  until  others  had  signe*!  it,  .such  understanding  would  have 
to  be  based  on  a  mutual  agreement  between  them,  and  an  understanding  bj'  either, 
not  ba.sed  on  an  agreement,  would  not  bind  the  other.  \N'here  defendant  and 
B.  made  a  note  for  the  price  of  corporate  stock,  with  an  understanding  that  neither 
the  sale  nor  the  note  should  be  effective  unless  M.  should  sign  the  note  and 
take  part  of  the  stock,  the  payee  could  not  recover  from  defendant  unless 
M.  was  willing  to  sign  the  note  and  was  prevented  from  doing  so  by  de- 
fendant's wrongful  act.  Key  v.  Usher  (Ky.),  99  S.  W.  324.  Under  this  rule,  it 
has  been  held,  in  an  action  on  a  note  given  for  the  price  of  corporate  stock,  that 
evidence  was  competent  to  show  that  it  was  delivered  to  the  payee  upon  the  con- 
dition that  if  the  maker  paid  interest  on  the  sum  for  18  months,  the  payee  was 
to  renew  the  notes,  and  if  the  maker  did  not  want  the  stock  he  might  elect  to 
terminate  the  purchase  and  have  the  notes  canceled,  and  that  the  evidence  showed 
that  it  was  not  intended  that  the  note  should  be  a  present  binding  agreement. 
Paulson  V.  Boyd,  137  Wis.  241,  118  \.  W.  841,  to  which  there  were  three  dissents, 
mainly  on  the  ground  that  the  evidence  showed  that  the  note  was  to  take  effect 
on  delivery,  and  that  the  agreement  was  with  reference  to  a  contingency  which 
might  enable  the  payor  to  discharge  his  obligation  other%vise  than  according  to 
its  tenor.  In  the  above  case  it  was  held  further  that  where  a  bank  held  a  note 
with  notice  of  an  arrangement  between  the  parties  to  the  note  that  it  should  not 
become  a  completed  contract  in  prccsenti  but  was  to  take  effect  only  upon  con- 
dition, a  new  bank  which  took  a  transfer  of  the  assets  of  such  holding  bank  under 
a  condition  that  the  new  bank  "assume  the  liabilities  of  the  private  bank  *  *  * 
in  consideration  of  the  transfer"  of  its  assets  to  the  new  bank,  the  new  bank  held 
such  note  subject  to  the  defense  that  its  delivery  was  conditional. 

64.  Hooks  V.  State,  58  Fla.  57,  50  So.  586;  Bigbie  v.  Levy,  1  Cromp.  &  J.  180, 


104  REQUISITES   OF   BILLS   AND    NOTES  §  09 

the  States  of  the  United  States,  no  contract  can  be  entered  into  on 
Sunday,  or  secular  business  legally  conducted;  bills  and  notes  executed 
and  delivered  on  Sunday  are  held  in  many  cases  to  fall  within  the 
interdiction  of  such  general  laws,  and  the  rule  applicable  to  such 
instruments  is,  that  the  plaintiff  cannot  recover  when,  in  order  to  sus- 
tain his  supposed  claim,  he  must  set  up  an  illegal  agreement,  to  which 
he  himself  is  a  party. ^^  In  some  cases  the  question  is  made  to  depend 
upon  the  terms  and  provisions  of  the  statutes,  and  consequently  it 
has  been  held  that  statutes  prohibiting  labor  or  the  performance  of 
any  work  do  not  extend  to  the  making  of  contracts."^  But  it  is 
delivery  that  completes  a  contract,  and  if  the  bill  or  note  be  delivered 
on  another  day,  it  will  be  valid,  though  dated  and  signed  on  Sunday;  " 
and  parol  evidence  is  competent  to  show  that  it  was  so  delivered  on  a 
different  day,  notwithstanding  its  date  as  of  Sunday;  ^  and  e  cnn- 

1  Tyrw.  130;  O'Rourke  v.  O'Rourke,  43  Mich.  58;  Chitty,  Jr.,  ITjIO;  Chitty  on 
Bills  [*148],  171;  Thompson  on  Bills,  171. 

55.  Haucrwius  el  al.  v.  Goodloo,  Recr.,  101  Ala.  162,  13  So.  567;  Ball  v.  Powers, 
62  Ga.  757;  Pope  v.  Linn,  50  Me.  S3;  Bank  of  Cumberland  v.  Mayberry,  48  Me. 
198;  Finney  v.  Callendar,  S  Minn.  41;  Bramhall  v.  Van  Campen,  8  Minn.  13; 
Hartshorn  v.  Hartshorn,  67  N.  H.  103;  State  Capitol  Bank  v.  Thompson,  42 
N.  H.  370;  Smith  v.  Case,  2  Oreg.  190;  Furz  v.  Nieholls,  2  M.  G.  i^i:  S.  ,500.  A 
note  executed  on  Sunday  by  one  as  a  part  of  a  transaction  connected  with  his 
usual  or  ordinary  callinp  is  void.   Smith  v.  Christian,  6  Ga.  App.  259,  64  S.  E.  1002. 

56.  Glover  v.  Cheatham,  19  Mo.  App.  658.  "The"  purpose  of  our  statute, 
when  all  of  its  provisions  are  considered,  seems  to  be  to  prohibit  the  performance 
on  Sunday  only  of  those  works  or  pursuits  that  from  their  nature  have  to  be 
performed  in  public,  and  that  may,  therefore,  be  offensive  to  the  sensibilities  of 
the  Christian  community  in  which  they  are  carried  on,  if  followe<l  on  the  Lord's 
Day.  Hooks  v.  State,  58  Fla.  57,  50  So.  586.  The  casual  execution  and  delivery 
of  a  promissory  note  does  not  come  within  the  prohibition,  and  is  not  illegal  and 
void,  under  statutes  the  manifest  purpose  of  which  was  to  prohibit  the  carrying 
on  of  any  business  or  traffic  to  the  extent  of  seriously  interrupting  the  religious 
observances  of  Sunday.    Holden  v.  O'Brien,  86  Minn.  297,  90  N.  W.  531. 

57.  Terry  v.  Piatt,  1  Pennewill  (Del.),  185,  40  Atl.  243;  Conrad  v.  Kinzie,  105 
Ind.  281;  Hofer  v.  Cowan  McClung  &  Co.  (Ky.),  68  S.  W.  438;  Barger  v.  Farn- 
ham,  130  Mich.  487,  90  N.  W.  281;  Bank  of  Cumberland  v.  Mayberry,  48  Me.  198; 
Prescott  Nat.  Bank  v.  Butler,  157  Mass.  548,  32  N.  E.  909. 

58.  Flanagan  v.  Meyer,  41  Ala.  133;  Aldridge  v.  Branch  Bank,  17  Ala.  45; 
Trieber  v.  Commercial  Bank,  31  Ark.  128;  Vinton  v.  Peck,  15  Mich.  287;  Drake 
V.  Rogers,  32  Me.  524;  Fritsch  v.  Heesless,  40  Me.  556;  Lovejoy  v.  Whipple,  18 
Vt.  379;  State  Capitol  Bank  v.  Thompson,  42  N.  H.  376;  Dohoney  v.  Dohoney, 
7  Bush,  217;  King  v.  Fleming,  72  111.  21;  Love  v.  Wells,  25  Ind.  503  (a  deed); 
Burns  v.  Moore,  76  Ala.  339;  Goss  v.  Whitney,  24  Vt.  187;  Hill  v.  Dunham,  7 
Gray,  543;  Stacy  v.  Kemp,  97  Mass.  166;  Hauerwas  et  al.  v.  Goodloe,  Recr.,  101 
Ala.  162,  13  So.  567. 


§  70  DELIVERY  105 

verso,  that  it  was  delivered  on  Sunday  though  dated  as  of  a  secular 
day.^  And  when  so  delivered  on  a  different  day,  it  is  no  objection  to 
it  that  interest  commences  to  run  on  Sunday.^"  Though  the  note 
made  and  delivered  on  Sunday  be  void,  the  payee  may  recover  upon 
the  original  consideration,"  and  it  has  been  held  that  though  a 
transaction  had  all  taken  place  on  Sunday,  the  maker  cannot  avoid 
payment  of  a  note  given  on  that  day  without  restoring  to  the  holder 
the  money  he  received  upon  it.^^  xhe  weight  of  authority  seems  to 
be,  that,  although  a  contract  be  entirely  closed  up  on  Sunday,  yet, 
if  ratified  by  the  parties  upon  a  subsequent  day,  it  is  valid.^^ 

§  70.  Rights  of  indorsee  on  contracts  made  on  Sunday. — The 
indorsement  of  a  bill  (jr  note  on  Sunday  stands  on  the  same  footing  as 
drawing  a  bill  or  making  a  note,  and  the  indorsee  cannot  sue  upon 
such  an  indorsement,  either  in  his  own  name  or  in  another's,  for  his 
benefit."  But  the  defense  that  a  note  was  made  and  delivered  on 
Sunday  cannot  avail  in  a  suit  by  an  indorsee  against  the  indorser,  if 
the  contract  of  indorsement  wa.s  not  entered  into  on  Sunday .^^  And 
if  the  bill  or  note  bear  a  certain  date,  or  it  appears  that  it  was  executed 
upon  a  certain  day  of  the  month,  the  court  will  take  judicial  notice  of 
the  fact,  if  such  day  were  Sunday.  The  almanac  has  long  been  re- 
garded and  held  as  a  part  of  the  law  of  the  land.^«  And  an  indorsee 
would,  doubtless,  be  chargeable  with  notice  from  the  face  of  the 
paper,  if  the  day  of  the  date  it  bears  was  Sunday. 

69.  Allen  v.  Deming,  14  N.  H.  133;  Bank  of  Cumberland  v.  Mayberry,  48  Me. 

19S. 

60.  Marshall  v.  Russell,  44  N.  H.  -WO. 

61.  Sayre  v.  Wheeler,  31  Iowa,  112;  Hartahom  v.  Hartshorn,  07  N.  H.  163, 

29  Atl.  406. 

62.  Hale  v.  Harris  (Ky.),  91  S.  W.  (i(>0,  .5  L.  R.  A.  (N.  S.),  295. 

63  KinK  v  FlominK.  72  111.  21;  Commonwealth  v.  KendiK,  2  Pa.  St.  448; 
ClouKh  V.  DavLs.  9  N.  H.  .500;  Lovejoy  v.  Whipple,  18  Vt.  379;  Hilton  v.  Hough- 
ton, 3.5  Me.  143;  Winchell  v.  Carey,  115  Mass.  560;  Cook  v.  Forker,  193  Pa.  St. 
461,  44  Atl.  5»)0,  74  Am.  St.  Rep.  699,  citing  text. 

64  Honson  v.  Drake,  55  Me.  5.55.  But  see  State  Capitol  Bank  v.  Thompson, 
42  N.  H.  370;  First  Natl.  Bank  v.  Kingsley,  84  Me.  Ill,  24  Atl.  794;  Cook  v. 
Forker,  193  Pa.  St.  461,  citing  text;  Whitmire  v.  Montgomery,  165  Pa.  St.  253, 

30  Atl.  1016.  r.  ««»     t- 

66.  Prescott  Nat.  Bank  v.  Butler,  157  Mass.  548,  32  N.  E.  909,  the  court  say- 
ing: "The  defendant  by  his  indorsement  is  estopped  to  deny  that  the  note  is  a 
valid  contract,  and  as  against  him  it  must  be  a.s.sumed  that  it  was  made  and  de- 
livered at  a  time  when  such  business  could  be  lawfully  done." 

66.  Chrisman  v.  Tuttle,  59  Ind.  155;  Finney  v.  Callendar,  8  Minn.  41. 


106  REQUISITES   OF   BILLS   AND    NOTES  §  71 

Clearly,  however,  an  indorsee  who  takes  a  bill  or  note  dated  as 
of  a  secular  day,  and  without  notice  from  its  face  or  otherwise,  that 
it  was  executed  on  Sunday,  could  recover  upon  it."  But  it  has  been 
held  that  a  note  signed  by  a  surety  on  Sunday,  but  delivered  on  a 
week  day  to  the  payee,  who  did  not  know  the  fact,  was  void.®*  This 
doctrine  is  inconsistent  with  the  wei{j;ht  of  authority,  anil  with  sound 
reason,  as  it  is  the  delivery  that  gives  significance  to  the  act;  and  the 
paper,  in  the  absence  of  notice,  should  always  be  taken  to  be  what  its 
face  purports.  If  the  instrument  were  without  date,  there  would  be 
nothing  about  it  to  intimate  notice,  or  charge  the  indorsee  with  its 
illegality  because  made  on  Svniday.'^'-'  It  is  urged  by  the  learned 
editor  of  Ames  on  Bills,  that  while  the  transfer  on  Sunday  is  unlawful, 
it  yet  passes  title,  and  that  the  transferee  may  sue  prior  parties.^" 
An  analogous  question  is  elsewhere  discussed.^^ 

§  71.  The  execution  of  a  note  does  not  import  a  debt  existing  pre- 
vious to  the  period  of  its  execution;  but  its  effect  is  to  give  the  debt 
and  the  note  a  contemporaneous  originJ^    Proof  of  the  giving  of  a 

67.  Myers  v.  Kessler,  142  Fed.  730;  Mosclcy  v.  Sclma  Nat.  Bank  (Ala.  Apf).), 

57  So.  91;  Trieber  v.  Commercial  Bank,  31  Ark.  128;  Hei.se  v.  Bumpass,  40  Ark. 
547;  Cranson  v.  Goss,  107  Mass.  439;  Greathead  v.  Walton,  40  Conn.  81;  Pope 
V.  Linn,  50  Me.  84;  State  Capitol  Bank  v.  Thompson,  42  N.  H.  370;  Clinton  Nat. 
Bank  v.  Graves,  48  Iowa,  228;  Ball  v.  Powers,  62  Ga.  757;  Knox  v.  Clifford,  38 
Wis.  651;  Nelson  v.  Cowing,  20  Wend.  336;  Bigelow  on  Bills,  539;  Benjamin's 
Chalmers'  Digest,  24,  25.  And  though  transferred  after  maturity,  the  maker  has 
no  equity  against  the  transferee.  He  cannot  set  up  its  illegality  to  protect  himself 
against  the  claim  of  a  bona  fide  holder  without  notice.    Leightman  v.  Kadetska, 

58  Iowa,  676,  43  Am.  Rep.  129;  Harrison  v.  Powers,  76  Ga.  240;  Gordon  v.  Levine, 
197  INIass.  263,  83  N.  E.  861,  15  L.  R.  A.  (N.  S.)  243,  125  Am.  St.  Rep.  361. 

68.  Parker  v.  Pitts,  73  Ind.  598;  Gilbert  v.  Vanchon,  69  Ind.  372.  It  is  also 
held  in  Indiana  that  if  a  note  be  delivered  to  a  comaker  for  the  payee  on  Sunday 
it  is  void.    Davis  v.  Barger,  57  Ind.  55. 

69.  State  Capitol  Bank  v.  Thompson,  42  N.  H.  370.  In  Benjamin's  Chalmers' 
Digest,  p.  24,  it  is  stated,  and  Bigbie  v.  Levy,  1  Cromp.  &  J.  180  (1830),  "that 
a  bill  bearing  date  on  a  Sunday  is  not  presumed  to  have  been  issued  on  that  day." 
The  citation  does  not  support  the  text.  It  was  the  case  of  suit  against  the  ac- 
ceptor of  a  bill  drawn  payable  to  the  drawer's  order,  the  court  saying  that  "the 
presumption  arising  from  the  known  practice  of  merchants  would  be  that  the 
bill  was  not  accepted  on  the  day  on  which  it  was  drawn."  Chitty  states  that 
there  is  no  objection  to  a  bill  being  dated  on  Sunday.  Chitty  on  Bills  [*94],  114; 
[*148],  170  (13th  Am.  ed.).  . 

70.  Ames  on  Bills  and  Notes,  vol.  I,  p.  352. 

71.  §§  762,  764,  et  seq. 

72.  Johnson  v.  Lane's  Trustees,  11  Gratt.  553. 


§71 


DELIVERY  107 


promissory  note  by  one  person  to  another,  nothing  else  appearing,  is 
prima  fade  evidence  of  an  accounting  and  settlement  of  all  demands 
between  the  parties,  and  that  the  maker  at  the  date  of  the  note  was 
indeljted  to  the  payee  upon  such  settlement  to  the  amount  of  such 
note.'^  But  this  is  a  mere  presumption,  which  may  be  repelled  by 
proofs  of  the  consideration  of  such  note,  and  of  the  occasion  for  and 
circumstances  attentling  tlie  giving  of  the  same.^^  And  the  presump- 
tion does  not  apply  to  include  notes  previously  given.'^ 

73.  Lake  v.  Tyson,  6  N.  Y.  461 ;  Davis  v.  Gallagher,  55  Hun,  595;  Do  Freest  v. 
BloominKilalo,  5  Den.  304;  Dutcher  v.  Porter,  G3  Barb.  20;  Sherman  v.  Mclntyre, 
7  Hun,  .W2;  TLsdale  v.  Maxwell,  5S  Ala.  40;  Graves  v.  Shulman,  59  .Via.  400;  Chal- 
loner  v.  Hoyinnton,  91  WLs.  27,  G4  N.  W.  422,  citing  and  approving  text;  Mar- 
mion,  v.  McCliUan,  11  .\pp.  D.  C.  4G7. 

74.  Sherman  v.  Mclntyre,  7  Hun,  592. 
76.  TLsdale  v.  Maxwell,  5S  Ala.  40. 


CHAPTER  III 

FORMAL  REQUISITES  OF  BILLS  AND  NOTES 
SECTION   I 

FORMALITY    IN    RESPECT   TO    STYLE    AND    MATERIAL 

§  72.  Having  sufficiently  treated  of  the  elements  essential  to  the 
contract  in  order  to  impart  to  it  the  character  of  negotiability,  we 
now  come  to  speak  of  tlie  formal  preparation  and  delivery  of  the 
instrument. 

§  73.  As  to  the  peculiar  forms  of  bills  and  notes. — It  does  not 
appear  necessary  that  they  should  be  framed  in  any  particular  form, 
provided  they  possess  the  essential  qualities  which  have  been  men- 
tioned. We  give  the  forms  which  are  usually  in  vogue  among  mer- 
chants, and  it  would  be  unwise  to  depart  from  them.^    But  the  law 

1.  Chitty  on  Bills  [♦1281,  148. 

1.  Usual  Form  of  Bills. 

New  York,  Jan.  1,  1913. 
$500. 

On  demand  (or  at  sight — or  ten  days  after  sight — or  thirty  days  after  date) 
please  pay  to  John  Doe,  or  order  (or  bearer),  five  hundred  dollars,  value  re- 
ceived, and  charge  the  same  to  my  account. 

Richard  Roe. 
To  David  Sterling,  Esq., 

Philadelphia. 
2.  Form  of  Foreign  Bill  Drawn  in  Set  of  Three. 

New  York,  Jan.  1,  1913. 
$500. 

Sixty  days  after  date,  please  pay  to  John  Doe,  or  order,  five  hundred  dollars, — 
this  our  first  of  exchange,  second  and  third  not  paid. 

Richard  Roe. 
To  David  Sterling,  Esq., 

Edinburgh,  Scotland. 

3.  Usual  Form  of  Negotiable  Promissory  Note. 

New  York,  Jan.  1,  1913. 
$500. 

Two  months  after  date  (or  at  other  specified  time),  I  promise  to  pay  to  John 
Doe,  or  order  (or  bearer),  five  hundred  dollars,  value  received. 

Richard  Roe. 

108 


§  74        FORMALITY    IN    RESPECT   TO    STYLE   AND    MATERIAL        109 

respects  substance  more  than  form;  and  where  the  intention  appears 
to  have  assumed  the  ()blip;ations  which  devolve  upon  drawers  and 
makers  of  negotiable  instruments,  it  will  be  enforced,  although  not 
evidenced  in  the  usual  commercial  form.  Thus,  an  order  written 
under  a  note,  "Please  pay  the  above  note,  and  hold  it  against  mo  in 
our  settlement,"  signed  by  the  drawer  and  accepted  by  the  drawee, 
has  been  held  a  good  bill;  ^  and  so  also  has  been  held  a  like  order 
written  under  an  account.^  And  where  an  indorsement  was  written 
on  a  bond,  ordering  the  contents  to  be  paid  to  order  for  value  received 
it  was  held  a  good  bill.''  And  an  instrument  of  the  following  tenor: 
"Nobleboro,  October  4th,  18()i).  Nathaniel  O.  Winslow,  Cr.  By 
labor  16^4  days,  a  $4  per  day,  S(i7.  CJood  to  bearer.  (Signed,)  Wm. 
Vannah,"  has  been  decided  to  be  a  negotiable  promissory  note,  pay- 
able to  Winslow  on  demand.''  The  words  "this  is  to  certify  I  am  to 
pay"  are  a  sufficient  promise."  But  the  words  under  an  itemized 
account:  "A.  B.,  plea.se  pay  the  above  bill,"  if  naming  no  payee, 
would  not  be  a  bill; '  and  the  like  view  was  taken  where  under  such 
an  account  was  written:  "Mr.  Solomon,  plea,se  to  pay  the  above 
account  to  Messrs.  Oliver  «t  Son,  7  Lawrence  Lane,  and  oblige,  yours 
respectfully,  R.  Norris."  * 

§  74.  Signature. — It  does  not  matter  upon  what  portion  of  the 
instrument  the  maker  or  drawer  affixes  his  name,  so  that  he  signed 

4.  Form  of  Joint  Note. 

New  York,  Jan.   1,   1913. 

?.-)()n. 

Oil  ilcmund  wo  promiise  to  paj'  John  Dok,  or  order,  five  hundred  dollars,  value 
received. 

RiCHAKD    RoK. 

RirnAKD  STp:uLiNa. 
5.  Form  of  Joint  and  Several  Note. 

New  York,  Jan.  1,  1913. 
$.'500. 

One  month  after  date,  I  promise  to  pay  for  we  jointly  and  severally  promise  to 
pay)  JoH.N  Doe,  or  order,  five  hundred  dollars,  value  received. 

Richard  Roe. 
RicHAUD  Sterling. 

2.  I^eonard  v.  Ma.son,  1  Wend.  252. 

3.  Hoyt  V.  Lyneh,  2  Sandf .  32S. 

4.  Bay  v.  Krazer,  1  Bay,  6G.    But  see  Norris  v.  Solomon,  2  Moody  &  R.  117. 
6.  Hussey  v.  Winslow,  .59  Me.  170. 

6.  Meyer  v.  Weil,  .37  La.  Ann.  IGO. 

7.  Platzer  v.  Norris,  38  Tex.  .387. 

8.  Norris  v.  Solomon,  2  Moody  &  R.  266. 


110  FORMAL   REQUISITES   OF   BILLS    AND    NOTES  §  74 

as  drawer  or  maker.''  In  a  late  case,  where  the  maker  of  a  note, 
which  was  in  printed  form,  by  mistake  signed  his  name  above  the 
printed  line  which  stated  the  bank  at  which  it  was  payable,  it  was 
held  that  the  printed  line  below  the  siRnature  was  nevertheless  part 
of  the  note,  especially  where  it  had  interest  coujwns  attached,  and 
was  indorsed  in  that  form;  these  circumstances  precluding  all  doubt 
of  the  fact  that  the  designation  of  the  place  of  payment  was  on  the 
note  at  the  time  it  was  executitl.'"  "I,  A.  B.,  promise  to  pay,"  is  as 
good  a  note,  if  written  by  A.  B.  or  his  authorized  agent,  as  "  I  prom- 
ise to  pay,"  subscribed  "A.  B."  '^  And  so  "I,  A.  B.,  request  you 
to  pay,"  would  be  a  good  l)ill,  though  not  undersigned.'-  Nor  is  it 
at  all  material  whether  the  writing  is  in  pencil  or  ink,"  though,  as  a 
matter  of  permanence  and  security,  ink  is,  of  course,  preferable. 
And  the  name  may  be  printed  as  well  as  written,  though,  in  such 
cases,  it  cannot  prove  itself  and  must  be  shown  to  have  been  adopteil 
and  used  by  the  party  as  his  signature."  If  another  sign  the  name 
of  the  party  in  his  presence  and  at  his  request,  it  is  the  same  as  if 

9.  Hunt  V.  Adams,  5  Miuw.  359;  CUuson  v.  Btiiloy,  14  Johns.  4.S4;  Schmidt  v. 
SchnKiclfer,  4.5  Mo.  .502.  Where  a  note  wius  n'\f.m\i  at  the  foot  by  one  iK'r«on  and 
endorsed  on  the  back  by  another,  they  are  joint  makern.  .MeGraw  v.  Union 
Trust  Co.,  \M  Mich.  .521,  IH)  N.  W.  7.5S.  While  it  is  tru<',  that  Kenerally  the 
makers'  names  are  sipned  to  a  note  at  its  foot,  and  the  indon«>rs,  if  any,  on  its 
back,  and  without  more  the  names  of  those  ap|)earing  on  the  back  would  be  pre- 
sumed to  have  been  placed  there  as  indorsers,  and  not  as  makers,  yet,  we  know 
of  no  rule  of  law,  which  requires  that  the  makers  may  not  place  their  names  on 
any  part  of  the  note  where  they  may  prefer  to  write  them,  and  thus  bind  them- 
selves aa  makers.  It  is  immaterial,  in  other  worils,  upon  what  part  of  a  note  the 
name  of  a  maker  may  be  written.  Endora  Min.  A:  Co.  v.  Harday,  122  Ala.  .506, 
2(3  So.  113.  Where  a  note  is  signed  but  not  indorsed  by  the  payee,  and  other  par- 
ties sign  on  back  thereof  payee  may  treat  such  parties,  in  the  absence  of  any  agree- 
ment to  the  contrary',  either  as  indorsers  or  joint  makers.  Miller  v.  Clendenin, 
42  W.  Va.  416,  26  S.  E.  512.  A  note  with  a  warrant  of  attorney  to  confess  judg- 
ment is  sufficiently  executed  though  the  signature  of  the  maker  is  not  attached  to 
the  note  proper,  but  only  to  the  warrant  of  attorney  at  the  foot  of  the  same  sheet 
of  paper  upon  which  both  the  note  and  warrant  of  attorney  were  written.  Heslip 
V.  Anderson,  134  111.  App.  8. 

10.  Turnbull  v.  Thomas,  1  Hughes,  172. 

11.  Taylor  v.  Dobbins,  1  Stra.  399. 

12.  Saunderson  v.  Jackson,  2  Bos.  &  P.  238;  Chitty,  Jr.,  on  Bills,  10. 

13.  Brown  v.  Butchers'  Bank,  6  Hill,  443;  Reed  v.  Roark,  14  Tex.  329;  Closson 
V.  Stearns,  4  Vt.  11;  Geary  v.  Physic,  5  B.  &  C.  234;  Chitty  on  Bills  (*126],  147. 
A  deed  in  pencil  has  been  deemed  sufficient.  McDowell  v.  Chambers,  1  Strobh. 
Eq.  347. 

14.  Schneider  v.  Norris,  2  Maule  &  S.  286;  Brown  v.  Butchers'  Bank,  6  Hill, 
443;  Pennington  v.  Baehr,  48  Cal.  565;  Story  on  Bills,  §  58. 


§  74        FORMALITY   IN   RESPECT   TO    STYLE    AND   MATERIAL        111 

he  did  it  himself;  ''  and  if  another  sign  the  party's  name  by  verbal 
or  other  authority,  it  is  sufficient.i«  The  full  name  may  be  written; 
and  at  least  the  surname  should  appear,  and  generally  does.  But 
this  is  not  indispensable-the  initials  are  sufficient,^^  and  any  mark 
which  the  party  uses  to  indicate  his  intention  to  bind  himself  will 
be  as  effectual  as  his  signature,^  whether  there  be  a  certificate  of 
witnesses  on  the  instrument  or  noV'  But  of  course  a  mark  does 
not  prove  itself  like  a  signature,  although  it  is  an  adminicle  of  proof.- 

16.  Sugcr  V.  Tupper,  42  Mich.  (305;  Cruinrim.  v.  The  Estate  of  Crumrino,  14 
Ind  App  641  43  N-  K.  322.  It  id  comjH'tt'nt  and  K'KuI  for  the  surety  to  act  M 
an  auent  for  the  principal  in  HiRninR  his  name  to  a  bond  in  his  presence  and  at  his 
request,  an.i  the  fact  that  the  principal  made  his  mark  after  his  surety  had  signed 
the  principal's  name,  without  witness  thereto,  did  not  take  from  the  vahdity  of 
effi.-acy  of  the  exe<-ution  of  the  contract  as  having  his  signature  thereto  at  his 
instance-.    Wright  v.  Forgy.  12()  Ala.  :i89,  2S  .So.  I'.tS. 

16  The  note  in  controversy  wim  signnl  hy  a  n.ark,  and  there  wius  no  evidence 
that  the  dectHlent  touchi-d  the  iK-n  in  the  hand  of  the  person  who  signed  h.s  name 
for  him  It  is  not  necessarj-,  in  the  execution  of  a  note,  that  the  person  executing 
it  if  unable  to  write  hi.s  own  name,  shall  touch  the  in-n  while  su<'h  person  is  signing 
fo'r  hi.n.  it  is  only  m.-essuo'  that  such  person  l>e  authorized  by  lum  to  H'gn  h.s 
name  for  him.  S^v  Kennedy  v.  C.raham.  Admr..  9  Ind.  .\pp.  ti24,  35  N.  L.  92o,  .i7 
N.K.2.5.    S<-e§§2<H).274.  ,i^        i-,. 

17.  Merchants'  Hank  v.  Spicer.  0  Wend.  443;  Palmer  v.  Stephens,  1  Di-n.  \.l, 
1  Parsons  on  Notes  and  BilLn.  30.  , ,  c  ri    loo 

18.  Jackson  v.  Tribble,  15(i  Ala.  480,  47  So.  310;  Lyons  v.  H..lm<>s.  11  S.  C.  4.J. 
r.ul.r  the  common  law  rule  that  the  execution  of  an  instrument  by  mark  is 
sutlM-ient  and  this  without  attestation,  a  promissor>-  note  is  validly  executed  by 
an  intend.Hi  pav.r,  who  cannot  write  his  name,  by  the  aflixing  a  cross  mark  bi- 
tw,.-n  an  initial  ..f  hLs  name  an.l  his  surname,  the  initials  and  name  being  written 
by  the  pavtH..  and  the  name  of  tlu-  sub.sc-ribing  witness,  who  ••ouM  not  write  h.s 
name,  being  also  written  by  the  paycn-.     McGowan  v.  Collins,  154  Ala.  299,  4b 

''^ig.'willoughby  v.  MouUon,  47  N.  H.  205  (unwitne8.sed) ;  Shank  v.  Butsch  28 
Ind    19  (unwitnc-ssed);  Flint  v.  Flint,  6  Allen,  34;  Hilborn  v.  .Vlfonl,  22  Cal  4S.; 
G.-i.rge  V.  Surrev,  1  Moodv  &  M.  510,  where  the  indorsement  wtis  '  Ann  Moore 
X  her  mark."    \^To^^■n  v.  Butchers'  Bank,  ti  Hill,  443,  where  the  figures     1,  2,  8 
were  held  suflicii-nt. 

20.  Hilborn  v.  Alford,  22  Cal.  482;  Flowers  v.  Billing,  4o  .Ma.  488.  See  cases 
supra,  and  Story  on  Bills,  §  53.  note  6.  The  promisee  cannot  become  the  agent 
of  the  promisor,  for  the  purpose  of  signing  his  name  to  the  contract,  and  a  no  e 
is  not  legally  proved  by  the  evidence  of  the  payee  who  testifies  that  he  wrote 
the  note,  signed  the  name  of  the  defendant,  and  made  his  mark  the  defendant 
touching  the  ix.n.  Penton  v.  Williams,  163  Ala.  603.  51  So.  35.  W  hen  a  statute 
prescribes  the  manner  in  which  a  note  must  be  signed  by  mark,  aa,  that  the  signa- 
ture near  the  mark  must  be  written  by  a  person  who  writes  his  own  name  as  a 
witness,  a  note  must  be  signed  in  that  manner  to  be  valid.  Sivils  v.  Taylor,  1- 
Okla.  47,  69  Pac.  867. 


112  FORMAL  REQUISITES   OF   BILLS   AND    NOTES       §§  75,  76 

Any  peculiarity  in  it  may  be  shown  as  evidence  of  its  genuineness:  ^^ 
but,  unless  there  be  an  attesting  witness,  or  one  who  saw  it  written, 
or  is  familiar  with  its  characteristics,  the  plaintiff  cannot  recover.^^ 
Proof  by  subscribing  witnesses  is  elsewhere  consicleri-d.-^ 

§  75.  The  name  is  not  necessary  if  it  be  sufficiently  indicated  who 
the  party  is.  A  note  signed  "Steamboat  Ben  Lee  and  owners,"  2* 
has  been  held  sufficient;  and  likewise  a  bill  drawn  on  "Steamer  C,\  W. 
D.  and  owners,"  and  accepted  "Steamer  C.  W.  D.,  by  A.  B.,  agent."  " 

§  76.  Manifest  informalities. — A  manifest  informality  of  expres- 
sion or  grammatical  error,  whether  in  respect  to  date,  amount,  time, 
place,  or  other  matter,  will  in  nowise  affect  th<'  validity  of  a  bill  or 
note.  Thus,  it  has  been  held  that  a  note  in  form  negt)tiable,  but 
running,  "sixty  days  after  date,  I  promised  to  pay,"  instead  of  "I 
promise,"  was  as  good  as  if  the  promise  in  the  past  tense  had  been 
expressed  in  the  present.-^  So  the  singular  "pound"  clearly  means 
"pounds;"  27  the  words  "Fife  hundred"  means  "five  hundred,"^ 
and  "four  hund,"  "four  hundred."  ^  A  note  payable  "twenty-four 
after  date,"'"  and  one  payable  "six  after  date,"  ^^  have  been  held  not 
void  for  uncertainty,  but  parol  evidence  has  been  admitted  to  ascer- 
tain the  intention  of  the  parties;  and  a  note  payable  "four  months 
after,"  has  been  held  payable  "four  months  after  date,"  ^^  and  a 
note  payable  "ninety  after  date"  at  ninety  days."  So  where  the 
note  was  payable  "seventy-five  after  date"  parol  evidence  was  ad- 
mitted to  show  that  days  were  intended.'^    "With  ten  per  cent,  after 

21.  George  v.  Surrey,  1  Moody  &  M.  516;  Thompson  on  Bills,  35;  2  Parsons 
on  Notes  and  Bills,  480. 

22.  See  Thompson  on  Bills,  30,  31,  33.  Contra,  Staples  v.  Beiiford  Loan  & 
Dep.  Bank,  98  Ky.  451,  33  S.  W.  403;  Chadwell's  Admr.  v.  Chadwell,  98  Ky.  643, 
33  S.  W.  1118. 

23.  Post,  §  112. 

24.  Sanders  v.  Anderson,  21  Mo.  402. 

25.  Alabama  v.  Brainard,  35  Ala.  478. 

26.  Perkins'  Case,  7  Gratt.  651;  Commonwealth  v.  Pannenter,  5  Pick.  279. 

27.  Rex  V.  Post,  Russ.  &  Ry.,  101. 

28.  Ohm  V.  Young,  63  Ind.  412. 

29.  Glenn  v.  Porter,  72  Ind.  526. 

30.  Conner  v.  Routh,  7  How.  (Miss.)  176. 

31.  Nichols  V.  Frothingham,  45  Me.  220. 

32.  Pearson  v.  Stoddard,  9  Gray,  199. 

33.  Deshon  v.  Leffler,  7  Mo.  App.  595. 

34.  Boykin  v.  Bank  of  Mobile,  72  Ala.  262. 


§§  77,  78      FORMALITY  IN  RESPECT  TO  STYLE  AND  MATERIAL       113 

due,"^^  or  "at  ten  per  cent,  value  received,"  ^^  or  "with  ten  per 
cent.,"^^  clearly  means  with  ten  per  cent,  "interest,"  although  the 
word  "interest"  be  omitted. 

Where  a  note  is  dated  in  December,  and  made  payable  on  "the 
25th  of  December  next,"  it  is  admissible  to  show  that  December 
instant  was  intended.^  And  where  a  bill  was  drawn  "payable  on 
the  6-9  Jan.,"  the  evidence  of  bankers  and  brokers  was  held  admissi- 
ble to  show  that  the  figures  were  designed  to  deginate  the  days  of 
grace.^^  The  words  "are  to  be  paid,"  if  obviously  necessary  to  make 
sense,  may  be  understood  as  implied,  and  considered  as  inserted.'^ 
A  note  drawn  "payable  at  Citz.  Bank,"  evidently  means  at  Citizen's 
Bank." 

§  77.  Material. — As  to  the  material  upon  which  negotiable  in- 
struments should  be  written,  it  does  not  appear  to  be  necessary  that 
the  substance  should  be  paper.  It  is  conceived  that  they  might  be 
written  on  parchment,  cloth,  leather,  or  any  other  convenient  sub- 
stitute for  paper."  Whether  a  valid  bill  or  note  may  be  written 
upon  metal,  stone,  or  wood,  does  not  seem  to  have  been  decided; 
but  if  it  were  distinctly  proven  that  the  instrument  was  intended 
as  a  bill  or  note,  the  substance  could  be  no  objection  to  its  validity. 
But  it  is  of  course  entirely  out  of  the  usual  course  of  business;  and 
it  must  rarely,  if  ever,  occur  that  such  a  question  is  presented.  Cer- 
tainly, the  courts  would  look  with  suspicion  upon  so  peculiar  an 
instrument;  and  its  unusual  form  wouUl,  in  itself,  be  a  warning  to 
all  purchiisers  that  they  took  it  at  their  peril.*'  A  metallic  token,  like 
an  I.  O.  U.,  would  seem  at  common  law  to  be  only  evidence  of  a  debt."* 

§  78.  Printed    notes.— Individuals,    bankers,    and    others    have 
frequently,  in  the  United  States,  issued  their  promi-ssory  notes  in 

36.  HiKloy  v.  Newoll,  28  Iowa,  516. 

36.  \Villiam.s  v.  Bakor,  07  111.  23.8;  Thompson  v.  Hoaftland,  05  ill.  310;  Cramer 
V.  .I<Mi.T.  05   HI.  314. 

37.  <  )hm  V.  Younp,  03  Ind.  412. 

38.  McCrar>'  v  Ca-skcy,  27  Ga.  54. 

39.  Kolscy  v.  Hiblw.  13  Ohio  (N.  S.),  340. 

40.  Peyton  v.  Harman,  22  Gratt.  G43. 

41.  Ivocke  V.  Merchants'  Nat.  Bank,  66  Ind.  355. 

42.  Byles  on  Bills  (Sharswood's  cd.),  105.    A  deed  must  be  written  upon  parch- 
ment or  paiaer.    Coke  Litt.  229. 

43.  1  Parsons  on  Notes  and  Bills,  23. 

44.  Byles  on  Bills  (Sharswood's  ed.),  281. 

8 


114  FORMAL   REQUISITES    OF    HILLS    AND    NOTES       §§  79,  SO 

printed  forms  closely  resemhliiif^  in  size,  color,  and  texture  of  paper, 
and  in  mode  of  execution,  bank  notes.  They  are  intended  to  cir- 
culate as  money,  and  very  often  constitute  a  currency  in  themselves, 
when  no  National  or  State  law  prohibits  them.  They  are  valid  obli- 
gations when  not  so  prohibited,  and  are  enforced  by  the  courts  as 
the  promissory  notes  of  the  parties  executing  them.^* 

§  79.  Whole  instrument  must  be  in  writing.— The  whole  of  the 
bill  or  note  must  be  expressed  in  writing.  But  the  whole  of  it  nrvd 
not  be  in  the  body  of  the  instrument;  '^  and  a  contemporaneous 
memorandum  or  indorsement  on  any  part  of  it  may  qualify  its  terms 
by  making  it  payai)le  upon  a  conting<'ncy,"  or  at  a  particular  place.''* 
or  providing  that  it  may  be  renewed.'^  And  there  may  be  a  written 
stipulation  on  a  detached  paper  affecting  the  instrument,  which 
would  hi)  atlmissible  as  between  the  original  parties  and  their  repre- 
sentatives; ^  but  such  stii)ulation  would  not  affect  a  bona  fide  holder 
for  value,  who  acciuired  it  without  notice.^^  But  any  party  having 
notice  would  stand  on  no  better  footing  than  the  original  parties." 
Whether  the  instrument  be  a  bill  of  exchange  or  a  promissory  note 
or  otherwise,  antl  whether  or  not  it  ])e  negotiable,  must  be  determined 
by  its  face,  without  reference  to  any  other  source. ^^ 

§  80.  Parol  evidence. — It  is  a  general  principle  of  law  that 
parol  evidence  is  inadmissible  to  vary  or  contradict  a  written  con- 
tract. Therefore,  if  a  bill  or  note  be  absolute  upon  its  face,  no  evi- 
dence of  a  verbal  agreement  made  at  the  same  time,  qualifying  its 
terms,  can  be  admitted.^"*     The  rule  applies  to  the  offer  of  parol 

46.  James  v.  Rogers,  23  Ind.  453. 

46.  Goldman  v.  Blum,  58  Tex.  636,  citing  the  text. 

47.  Beele  v.  Bidgood,  1  Man.  &  Ry.  143,  7  B.  &  C.  453;  Hartley  v.  Wilkinson, 
4  Maule  &  S.  25;  Hey  wood  v.  Perrin,  10  Pick.  228;  Shaw  v.  M.  E.  Society,  8 
Mete.  (Mass.)  22G;  Chitty  on  Bills  [*126],  146;  Wheelock  v.  Freeman,  13  Pick. 
168;  Byles  (Sharswood's  ed.)  [*94],  193;  Leeds  v.  Lancashire,  2  Campb.  205; 
Hughes  V.  Fisher,  10  Colo.  385,  citing  the  text. 

48.  Ibid. 

49.  Hartley  v.  Wilkinson,  4  Maule  &  S.  25. 

50.  Bowerbank  v.  Monteiro,  4  Taunt.  844. 

51.  Hoare  v.  Graham,  3  Campb.  57;  Gilmore  v.  Hirst,  56  Kan.  626,  44  Pac. 
603,  quoting  text. 

62.  Gibbon  v.  Scott,  2  Stark.  286. 

53.  Strachan  v.  Muxton,  24  Wis.  21. 

54.  Burns  v.  Scott,  117  U.  S.  582;  Clark  v.  Gramling,  54  Ark.  525,  16  S.  W. 
475;  Cooper  v.  German  Nat.  Bank  of  Denver  et  al.,  9  Colo.  App.  169,  47  Pac.  1041; 


§  so        FORMALITY    IN    RESPECT   TO    STYLE    AND    MATERIAL        115 

evidence  to  vary  the  date  of  the  maturity  of  a  promissory  note;  ^^ 
thus,  whore  a  note  is  payable  on  demand,  it  cannot  be  shown  by 
verbal  testimony  that  it  was  agreed  that  it  should  not  be  paid  till 
after  the  decease  of  the  testator;^  nor  until  after  sale  of  the  maker's 

Carroll  v.  Hutchinson,  2  Ga.  App.  GO,  58  S.  E.  309;  Davis  v.  Stout,  126  Ind.  12, 
25  N.  E.  802;  Zimmerman  v.  Adee,  120  Ind.  15,  25  N.  E.  828;  Potter  v.  Earnest, 
45  Ind.  410;  Preacott  v.  Hixon,  22  Ind.  App.  139,  53  N.  E.  391,  72  Am.  St.  Rep. 
291;  Altman  v.  Anton,  91  Iowa,  012,  00  N.  W.  191;  Beattyville  Bank  v.  Roberts, 
117  Ky.  0X9,  78  S.  W.  901 ;  Whitwell  v.  Winslow,  133  Mass.  343;  Kelsey  v.  Cham- 
berlain, 47  Mich.  241;  Harri.«jn  v.  Morri-son,  39  Minn.  319;  Kessler  v.  Clayes, 
147  Mo.  App.  H.S,  125  S.  \V.  799,  citing  text;  Chicago  Cottage  Organ  Co.  v.  Smart- 
zcU,  01  Mo.  App.  490;  Miller  v.  Gunderson,  48  Nebr.  715,  07  N.  W.  709;  Van 
Etten  V.  Howell,  40  Nebr.  8.50;  Stiles  v.  Vandewater  (N.  J.),  3  Cent.  485,  citing 
the  text;  Heecher  v.  Dunlap,  52  Ohio  St.  04,  38  N.  E.  795;  McGrath  v.  Barnes, 
13  S.  C.  328;  Har\v(Kxi  v.  Brown,  5  West.  00.  In  Thomas  v.  Seutt,  127  N.  Y. 
133,  the  court  said  that  there  are  two  claasea  of  exceptions  to  the  general  rule 
that  parol  evidence  cannot  be  receive<l  as  to  the  contract  of  the  parties  to  a  nego- 
tiable in.strunient.  The  first  cliuss  includ«>H  these  caiw-s  in  which  parol  evidence  is 
received  to  show  that  a  written  instrument  which  jHinKirts  to  be  a  contract  is 
in  fact  no  contract  at  all.  The  s<-cond  chuss  embru<-es  tho.st^  viim-h  which  recognize 
the  instrument  as  existing  and  valiil,  but  regard  it  tus  incomjjlete,  either  obviously 
or  at  least  possibly,  and  admit  parol  evidence,  not  to  contrmlict  or  vary,  but  to 
com{»lete,  the  entire  agn^'ment,  of  which  the  writing  was  only  a  part.  And  that 
two  things  are  ess<'ntial  to  bring  a  case  within  second  class:  1.  The  writing  must 
not  a|)|M-ar  ujMjn  ins|H-ction  to  be  a  complete  contract,  embracing  all  the  par- 
ticulars ne<-«'ssjiry  to  make  a  jK-rfect  agreement,  and  designed  to  express  the  whole 
arrangement  between  the  parties,  for  in  such  a  <as<'  it  is  conclusively  presumeti 
to  embrace  the  entire  contract.  2.  The  parol  evi<lence  mu.st  be  consistent  with, 
and  not  contradictory  of,  the  written  instrument.  Set;  also  Stowell  v.  Green- 
wich Ins.  Co.,  163  N.  Y.  .305.  Thus  Ix-ing  the  rule  as  between  the  original  parties 
to  the  instrument,  it  follows  that  the  defense  could  not  be  set  up  as  against  a 
subs«>(|uent  holder  of  the  note,  who  t(X)k  after  maturity  of  the  note.  Anderson  v. 
Mitchell,  51  Wash.  2t>5,  9S  Pac.  751.  That  the  note  simply  showed  the  interest 
of  the  paycH'  in  certain  land  and  is  not  evidence  of  any  indebte«lnes8  on  the  part  of 
the  maker,  cannot  be  provinl  by  t(^timony  of  a  contemiwraneous  agreement. 
Chapman  v.  Chapman,  132  Iowa,  5,  WJ  N.  W.  300,  citing  text.  In  a  suit  upon 
a  note,  a  plea  is  demurrable  which  alleges  that  the  note  was  given  in  jiursuance  of 
an  oral  agreement  that  the  payee  employeti  the  maker  to  work  for  him  the  sub- 
sequent year,  and  a«lvancetl  to  him  the  money  for  which  the  note  was  given,  with 
the  understanding  that  he  was  to  pay  it  in  certain  installments  out  of  his  wages, 
and  that  the  payee  refused  to  carry  out  his  contract  of  employment.  Johnson  v. 
NLsbit,  137  Ga.  1.50,  72  S.  E.  915. 

66.  Crooker  v.  Hamilton,  3  Ga.  App.  190,  59  S.  E.  722;  MaUory  v.  Fitzgerald, 
69  Nebr.  312,  95  N.  W.  001. 

66.  Woodbridge  v.  Spooner,  3  B.  &  Aid.  2.33;  Graves  v.  Clark,  6  Blackf.  183. 
Nor  that  makers  of  a  promissory  note  signet!  as  sureties,  especially  when  there 
is  an  affirmative  statement  in  the  note  that  the  parties  signed  as  principals.  Win- 
gate  v.  Blalock,  15  Wash.  45,  45  Pac.  663. 


110  FORMAL   REQUISITES    OF    BILLS    AND    NOTES  §80 

estates;  "  nor  until  a  certain  account  should  be  adjusted  and  cretiited 
on  its  face;^  nor  until  certain  premises  were  delivered  up;  •'•*  nor 
until  a  dividend  of  a  bankrupt's  assets  should  have  been  made;  "*'  nor 
until  the  junount  was  coUectetl  from  certain  sources;^'  nor  until  a 
certain  draft  wjis  received; '^  nor  can  it  be  shown  verbally  that  de- 
mand of  a  post-dated  check  was  not  to  be  made  at  maturity  ;^^  nor 
tliat  a  note  in  which  no  time  for  payment  is  expressed,  and  is  there- 
fore constructively  payable  on  demand,  wius  to  Ih'  paid  at  a  specified 
time; "'  nor  can  it  be  shown  that  there  was  any  agreement  to  prolonu; 
or  vary  the  time  of  payment  specified  in  the  instrument ."^^  by  takiuf? 
part  payment  and  waiting  for  the  residue,  by  receiving  payment 
on  installments,  or  otherwise  than  the  instrument  itself  declares,*'"' 
nor   vary   the   place  of  pa>Tnent;'^   nor  that   the  liability  of   the 

67.  Gctto  V.  Binkert,  55  Kan.  Ml,  40  Par.  925;  Freo  v.  Hawkins,  8  Taunt.  92, 
1  J.  B.  Mo()n\  5;{5. 

68.  Miihiin  V.  Sherman,  7  Blackf.  37S;  San  Joh6  Sav.  Bank  v.  Stonr,  59  Cal. 
ISH,  citing  thv  text. 

69.  Moseley  v.  Hanfonl,  10  B.  A  C  729. 

60.  Kiiw.soM  V.  Walker,  1  Stjirk.  MM. 

61.  Campbell  V.  I'p.shaw,  7  llumphr.  1K5;  McCIananhan  v.  TTines,  2  Strohh. 
122;  Litehfielil  v.  Faleoner,  2  .\la.  280;  Dc  Ixing  v.  \ah',  7A  Iowa,  r,:i;  Van  Ve<ht.n 
V.  Smith,  .W  Iowa,  73. 

62.  Kineaici  v.  Higgins,  1  Bibb,  .39G. 

63.  Hill  V.  Gaw,  4  Barr,  493. 

64.  Thompson  v.  Ketehum,  S  Johns.  1S9. 

65.  Jones  v.  Taylor,  5  Ga.  App.  Itil,  tVJ  S.  E.  992;  Crooker  v.  Hamilton,  3  Ga. 
App.  190,  59  S.  E.  722;  Homewood  I'eopl.-'s  Bank  v.  Heekert,  207  Pa.  St.  231,  .5t) 
All.  431.  An  oral  agreement  having  relation  only  to  the  time  and  manner  of 
repayment,  if  it  can  be  considered  at  all,  can  be  given  effect,  not  to  destroy  the 
enforceability  of  the  notes  rei)re.s<'nt ing  the  advancement,  but,  at  best,  a.s  a  biusi.s 
on  which  to  rest  a  claim  for  damages.  Ilouts  v.  Siou.x  City  Brass  Works,  134  la. 
484,  HON.  W.  166. 

66.  Eaton  v.  Emerson,  14  Me.  335;  Barton  v.  Wilkins,  1  Mo.  74;  Dawson  v. 
Bank  of  Illinois,  4  Scam.  50;  Walker  v.  Clay,  21  Ala.  797;  Doss  v.  Peterson,  S2 
Ala.  256;  Gardner  v.  Matthews,  11  Mo.  App.  209;  Port  ecus  v.  Muir,  8  Ont.  127; 
Wilse  v.  Whitaker,  22  Hun,  242;  Blakemore  v.  Wood,  3  Sneed,  470;  Rice  v. 
Ragland,  10  Humphr.  545;  Sturdivant  v.  Hull,  59  Me.  172;  Roache  v.  Roanoke 
Classical  Seminary,  56  Ind.  202. 

67.  In  Atwood  v.  Little  Bonanza  Quicksilver  Co.,  13  Cal.  App.  594,  110  Pac 
344,  under  a  statute  (Civil  Code,  §3100)  providing  that  "a  negotiable  instru- 
ment which  does  not  specify  a  place  of  pajTnent,  is  payable  at  the  residence  or 
place  of  business  of  the  maker,  or  wherever  he  may  be  found,"  it  was  held  that  a 
note  executed  by  a  foreign  corporation,  failing  to  show  any  place  of  payment,  is 
payable  in  the  place  of  the  domicile  of  the  maker,  and  evidence  of  a  contem- 
poraneous oral  agreement  that  notes  were  to  be  payable  wnthin  the  State  cannot 
be  received. 


§  80        FORMALITY    IN    RESPECT   TO    STYLE    AND    MATERIAL        117 

drawer, ««  maker,^'*  or  other  party ,7°  was  not  to  be  enforced;  nor  that  it 
was  not  to  be  negotiated,  but  renewed;''  nor  that  a  party  joint-maker 
in  form,  supposed  his  Habihty  to  be  that  of  an  indorser;  ^^  nor  that 
it  was  not  to  be  paid  in  cjuse  a  certain  verdict  was  obtained,"  or  in  any 
other  event;  '^  nor  that  it  was  to  be  paid  to  some  person  other  than 
the  payee;  ^^  nor  that  it  was  merely  given  as  an  indemnity  against 


68.  Wood  V.  Sum-Il,  SO  111.  107;  CumminKs  v.  Kent,  44  Ohio  St.  02,  cif  iri^  Ih*. 
text. 

69.  Piiync  v.  .Mutuul  Life  In.s.  Co.,  141  FVd.  ;{:}9;  Armstrong  v.  Soott,  30  Fed. 
<i;};  Hibhop  V.  Dillunl,  4«)  Ark.  2S,",;  Mjuson  v.  Mu«)n,  72  Iowa,  4.')7;  Ccrth  v. 
KiikKt,  71  lowu,  OIG;  Hank  v.  MiuuiiriK,  (M)  Kun.  721),  57  Pac.  949;  Lipsctt  v. 
HjiKsjird,  l.-).S  Mich.  rAY.),  122  N.  W.  U)91;  Hiuw  v.  Sanhom,  119  Mo.  Apj).  W.i,  9.5 
S.  W.  9.5.');  Wright  v.  HcmiriKtoM,  41  N.  .1.  1..  (i:{  Vrootii)  4S;  W«vtcm  Carolina 
Bank  v.  .M(H)n-,  l.{.S  N.  C.  .529,  .5!  S.  K.  79;  WillouKliln-  v.  Hall,  IS  Okl.  .5:i.5,  <M) 
Par.  1017;  Dol.son  v.  DtCJanahl,  70'rix.  (;2I ;  Davy  v.  Krlh  y,  tWi  Wi.s.  4.5.5.  In  an 
a<-tion  on  a  note,  im  iwcominixlation  maker  rniinot  hIkjw  \>y  parol  ovidcnco  that 
tin-  payc*'  aKni-*!  (hat  hi-  hIiouM  not  Ix-  htld  liable  but  that  th<>  payee  woulfl  look 
to  the  on<'  for  who.s«'  acoommodation  the  note  wa«  made.  Karle  v.  KnoH,  l.iO 
Fed.  4t)7.  Where  a  note  ujxjn  itn  faee  in  joint  and  wveral,  evidenee  oJTered  to 
Hhow  that  an  idleR*-*!  rontem|M)nuH'otH  oral  aKre<-ment  that  each  of  the  sinners 
nhould  l>e  liable  only  for  his  pro  rata  part  of  the  noten  should  be  excluded. 
W<KxiH  V.  Kinley,  1.5;{  \.  C.  4.57,  09  S.  K.  .502.  Hut  in  O'Hrien  v.  Patl.r.son 
Hrewinn  A  .Mahinn  Co.,  09  N.  J.  i:<|.  117,  (51  Atl.  4;{7,  it  wjw  held  that  the  maker 
of  a  ncKotiable  pn»mi.s«)r>-  note  may  show  by  parol  that  it  never  had  any  binding 
eff«Tt  U|)on  him  in  (Hiuity ;  that  by  the  triwle  that  wim  ma<le  he  wouhl  not  Im-  called 
uiK)n  to  jiay  the  note;  in  intjuirinK  into  the  objeet.n  and  ijurpo.^e.s  of  u  writing  e«jiiity 
i.s  more  lilM-ral  than  law,  and  will  not  jx-rmit  a  written  contract  to  be  u.s<"d  for 
|)ur[><>.x«'n  for  which  it  wjls  not  intende«i. 

70.  §  719;  Ketidell  V.  Iljirriman,  7.5  .Me.  497;  Davi.s  v.  Englan.!.  Ill  Mms.  .5S7; 
IlefTner  v.  Hn)wne||,  7.5  low.i,  .Ml.  In  the  ab.s4-nce  of  framl  or  mi.Mtake,  a  mirety  on 
a  note  cannot  \h'  allowinl  to  show  a  eonlem|)orane«iii.s  understanding  that  he 
Hluiul.l  not  lx«  lield  liable  on  the  note.  Farmers'  Bank  v.  WicklifTe,  IM  Ky.  787, 
1 10  S.  W.  249.    See  al.^o  Fambro  v.  Keith  (Tex.  Civ.  App.),  122  S.  W.  40. 

71.  IleLst  v.  Hart,  73  Pa.  St.  2.Sti;  McCrath  v.  BamcH,  13  S.  C.  328;  Thompson 
v.  I/)ve,  01  Ark.  SI,  32  S.  W.  8.5;  Waddle  v.  Owen,  43  \ebr.  4S9,  01  N.  W.  731. 
When'  a  mortgage  was  given  to  secure  a  note,  and  it  wius  i)rovided  in  the  instru- 
ment that  the  payee  of  the  note  had  agr^-d  to  n-new  it  from  time  to  time,  it  was 
ndmuHsible  to  show  that  a  note  Ixaring  :i  later  date  was  a  renewal  of  that  first 
given.    C.armany  v.  Uwton,  124  Ca.  S70,  o3  S.  E.  GG9,  110  Am.  St.  Rej).  207. 

72.  Cooke  V.  Brown,  02  Mich.  474. 

73.  Foster  v.  Jolly,  2  Cromp.,  M.  &  R.  703. 

74.  Jones  V.  Shaw,  07  Mo.  007;  post,  §  81;  Gardner  v.  Matthews,  81  Mo.  027; 
Farmer  v.  Perr>-,  70  Iowa.  3,58;  Western  Mfg.  Co.  v.  Rogers,  .54  Nebr.  4.5G,  74 
N.  W.  849;  Murchi<'  v.  Peck  Hnxs.,  100  111.  17.5,  43  N.  E.  .3.50. 

76.  DrajK-r  v.  Rice,  .5()  Iowa,  1 14.  A  statement  of  the  maker  of  a  note  that  he 
did  not  know  it  was  payable  to  the  payee  is  not  admissible  unless  inseparably  con- 


118  FORMAL   REQUISITES    OF   BILLS   AND    NOTES  §  80 

certain  claims;  ^^  nor  merely  as  a  receipt;"  nor  merely  as  a  matter 
of  form;  ^^  nor  (in  case  of  a  bill)  that  it  won  in  full  discharge  of  the 
debt  and  of  liability  on  the  bill.'^  But  if  a  party  signed  a  note  on 
the  false  assurance  that  it  was  a  receipt,  instead  of  a  note,  he  acting 
on  that  assurance  and  not  reading  the  paper,  it  seems  that  such  evi- 
dence between  the  parties  would  be  admissible  to  show  fraud.^ 
On  this  subject  the  United  States  Supreme  Court  has  said:  "Negotia- 
ble notes  are  written  instruments,  and  as  such  they  cannot  be  con- 
tradicted, nor  can  their  terms  be  varied  by  parol  evidence;  and  that 
proposition  is  universally  true  where  the  promissory  note  is  in  the 
hands  of  an  innocent  holder.  Where  a  bill  of  exchange  was  drawn 
in  the  usual  form,  and  was  protested  for  nonpayment,  the  court 
held  twenty  years  ago  that  parol  evidence  of  an  understanding  be- 
tween the  drawer  and  the  party  in  whose  favor  the  bill  was  drawn 
was  inadmissible  to  vary  the  terms  of  the  instrument."  ^^ 

Under  Negotiable  Instrument  statute.— In  the  absence  of  a  showing 
of  want  of  failure  of  consideration,  or  of  fraud  or  mistake,  it  is  in- 
competent for  one  who  signs  a  promissory  note  as  principal  to  set  up 
an  independent  collateral  agreement  limiting  or  exempting  him 
from  liaV)ility.*'  And  the  rule  that  parol  evidence  cannot  be  received 
to  show  that  the  obligation  of  a  party  to  a  negotiable  instrument 
was  not  to  be  enforced,  is  recognized  by  the  statute  in  the  provision 
declaring  that  an  accommodation  party  is  liable  on  the  instrum(mt 
to  a  holder  for  value,  notwithstanding  such  holder  at  the  time  of 
taking  the  instrument  knew  him  to  be  only  an  accommodation  party  ,*^ 
and  parol  evidence  that  there  was  an  agreement  at  the  time  a  note 

nected  with  evidence  tending  to  show  want  of  consideration.    Harrison  v.  State 
Bank  of  Monticello,  47  Ind.  App.  568,  94  N.  E.  1020. 

76.  Ridout  V.  Bristow,  1  Cromp.  &  J.  231. 

77.  BiUings  v.  BilUngs,  10  Cush.  178;  Dickson  v.  Harris,  60  Iowa,  727.  But 
in  Bond  v.  Vandergrift,  128  N.  Y.  S.  1078,  it  was  held  that  it  may  be  shown  by 
parol  that  a  note  was  executed  as  a  receipt  to  show  the  amount  of  money  ad- 
vanced by  the  payee  in  the  promotion  of  a  corporation  in  which  he  was  in- 
terested. 

78.  Wright  v.  Remington,  12  Vroom  (N.  J.),  48. 

79.  Martin  v.  Lewis,  30  Gratt.  672. 

80.  Stoyell  v.  Stoyell,  82  Me.  334,  19  Atl.  860. 

81.  Brown  v.  Spofford,  95  U.  S.  (5  Otto)  480  (1877).  See  Brown  v.  Wiley,  20 
How.  442;  Specht  v.  Howard,  16  Wall.  564;  Forsyth  v.  Kunball,  91  U.  S.  (1  Otto) 
291;  Martin  v.  Lewis,  30  Gratt.  672;  Foster  v.  Clifford,  44  Wis.  569;  Cashman  v. 
Harrison,  90  Cal.  297,  27  Pac.  283,  citing  text. 

82.  Pitt  v.  Little,  58  Wash.  255, 108  Pac.  941. 

83.  Appendix,  sec.  29. 


§  81        FORMALITY    IN    RESPECT   TO    STYLE    AND    MATERIAL        119 

was  executed  that  an  accommodation  maker  would  not  be  called 
upon  to  pay  the  note  cannot  be  received.^^ 

§  81,  The  principle  applies  to  every  element  of  the  instrument. 
It  cannot  be  showTi  by  parol  that  the  sum  agreed  to  be  paid  was 
different;  ^^  nor  that  an  additional  sum  was  to  be  paid  in  a  certain 
contingency ;  ^  nor  that  a  certain  account  was  to  be  deducted  from 
the  note,^^  or  the  value  of  certain  articles  credited  upon  it;^  nor  that 
a  note  payable  in  "lawful  money"  was  to  be  paid  in  silver f^  nor 
when  expressed  to  be  payable  in  dollars,  that  it  was  payable  in  bank 
notes,  corporation  or  individual  notes,  or  in  any  paper  currency,^ 
or  in  goods  or  other  articles.^^  In  Missouri,  it  has  been  held  that  if 
payable  in  the  "currency  of  the  State,"  it  cannot  be  shown  that  any- 
thing was  intended  but  gold  and  silver,  or  notes  of  the  Bank  of 
Missouri.^-    Nor  can  any  condition  be  engrafted  in  the  instrument 

84.  Gerli  v.  National  Mill  Supply  Co.,  78  N.  J.  L.  1,  73  All.  252. 

86.  Beard  v.  White,  1  Ala.  436,  5  Port.  (Ala.)  94;  Carter  v.  Hamilton,  11  Barb. 
147;  Downs  v.  Web.stcr,  Brayt.  79;  Loudermilk  v.  Loudermilk,  93  Ga.  443,  21 
S.  E.  77;  Bowen  v.  E.  A.  Wa.\elbaum  &  Bro.,  2  Ga.  App.  521,  58  S.  E.  784.  In 
an  action  at  law  on  a  note,  the  defendant  cannot  show  that  through  an  oversight 
and  accident  the  note  by  its  terms  wa.s  miule  to  read  with  interest  at  8  per  cent, 
instead  of  6  per  cent.  Cochran  v.  Zacher>-,  137  Iowa,  585,  115  N.  W.  486,  16 
L.  R.  A.  (N.  S.)  235,  126  Am.  St.  Rep.  307.  Contemporaneous  verbal  agreement 
that  the  maker  declined  to  sign  the  note  until  the  payee  agreed  to  "knock  off" 
the  interest  for  the  first  year,  cannot  be  allowed.  Tisdale  v.  Mallett,  73  Ark.  431, 
84  S.  W.  481. 

86.  Gazoway  v.  Moore,  Harp.  401. 

87.  Knight  v.  W.  T.  Walker  Bri<k  Co.,  23  .\pp.  D.  C.  519;  Eaves  v.  Henderson, 
17  Wend.  190.  In  Allen  v.  Herrick  Hanlware  Co.  (Tex.  Civ.  App.),  118  S.  W. 
1157,  the  court  said:  "If  it  could  be  held  that  by  the  strict  letter  of  the  law  plain- 
tifif  in  error  should  not  be  allowed  to  offer  proof  entitling  him  to  credits  on  the 
note,  because  the  note  waa  evidence  of  a  full  settlement,  a  court  of  equity  would 
come  to  the  relief  of  the  maker  of  the  note,  and  permit  him  to  show  that  the  note 
Wiis  not  intended  as  a  full  settlement  between  the  parties,  but  that  it  had  been 
agreed  that  there  should  be  a  further  settlement,  in  which  the  maker  of  the  note 
should  have  the  benefit  of  credits  claimed  by  him." 

88.  Featherston  v.  Wilson,  4  Ark.  154;  St.  LouLs,  etc.,  Ins.  Co.  v.  Homer,  9 
Mete.  (Mass.)  39.  Or  a  lesser  rate  of  interest  than  that  stated  in  the  note.  See 
Davis  V.  Stout,  126  Ind.  12,  25  N.  E.  862,  22  Am.  St.  Rep.  565. 

89.  Alsop  V.  Goodwin,  1  Root,  196. 

90.  Noe  V.  Hodges,  3  Humphr.  162;  Cole  v.  Handley,  8  Smedes  &  M.  473; 
Pack  V.  Thomas,  13  Smedes  &  M.  11;  Baugh  v.  Ramsey,  4  T.  B.  Mon.  155; 
M'Minn  v.  Owen,  2  Dall.  173;  Hair  v.  Le  Bronse,  10  Ala.  548;  Langenberger  v. 
Kraeger,  48  Cal.  147;  Clark  v.  Hart,  49  Ala.  86. 

91.  Bradley  v.  Anderson,  5  Vt.  152;  Coe  v.  Wallace,  5  Blackf.  199. 

92.  Cockrill  v.  Kirkpatrick,  9  Mo.  688. 


120  FORMAL    REQUISITES    OF    HILLS    AND    NOTES  §  81a 

by  verbal  testimony — as  tliut  ii  should  be  void  unless  others  inter- 
ested agreed  to  the  settlement  in  which  it  was  given;"'  or  Wius  to  be 
void  if  certain  bills  should  be  paid  at  maturity;"'  or  wjis  to  be  void 
or  surrendered  up  in  the  event  the  ciuse  in  which  it  was  given  for  a  fee 
were  comproiniscil,''*^  or  in  any  other  contingency."*  Nor  can  it  lu; 
shown  that  it  was  only  to  be  [)aitl  out  of  a  particular  fund  or  estate.^^ 

81a.  As  to  consideration  generally. —In  an  action  1)V  the  original 
payee  of  a  negotiable  instrument,  or  by  one  having  notice,  the  (pies- 
tion  of  consideration  may  bo  intjuired  into."*    And  so  parol  evi- 

93.  Ely  V.  Kill)()rn,  f.  Dm.  r,lA;  BcccIut  v.  Dunlap,  .72  Ohio  St.  (M,  3.S  N.  E. 
795;  Barnard  State  Hank  v.  Ecsler,  HI)  Mo.  .Vpp.  217;  C'hicjmo  CottaRo  Orjjan 
Co.  V.  Svvartzell,  01  Mo.  App.  49().  Without  proof  of  fraud  or  mi.stakc,  a  n«)t«' 
cx('(ruted  ius  an  al)Sohite  pronii.se  to  |)ay  eaiuiot  he  attaeki-d  hy  .showing  a  parol 
aKreement  to  tlw  elTect,  that  the  promi.s*-  \v!ls  conditional  and  that  the  maker 
wa.s  not  to  [)ay  the  note  unles.s  on  certain  conditions.  Begley  v.  Coinb.s  (Ky.), 
87  S.  W.  lOSl. 

94.  Penny  v.  Graves,  12  III.  1S7. 

95.  Dale  v.  Pope,  4  Litt.  1(50. 

96.  Holt  V.  Moore,  f)  Ala.  .')21;  Anderson  v.  Majirufler,  10  Cal.  410;  Rivers  v. 
Brown  (Fla.),  5()  So.  5r);};  Barber  v.  McHenry  County  Hedne  Fence  Co.,  12!)  111. 
App.  4.');  Potter  v.  Earnest,  4.'»  Ind.  4 IS;  Burge  v.  Di.shinan,  '>  Ind.  272;  Calhoun 
v.  Davi.s,  2  Ind.  .W2;  Miller  v.  White,  7  Blackf.  4«>1 ;  Thi.slcr  v.  Mackey,  ().-.  K.ui. 
4()4,  70  Pac.  ;«4;  Dale  v.  Pope,  4  Litt.  Ititi;  Sears  v.  Wright,  24  Me.  27.S;  Coddard 
V.  Cutts,  11  Me.  440;  .\dams  v.  Wil.son,  12  Meto.  (Miuss.)  ViS;  SjjrinR  v.  Lovett, 
11  Pick.  417;  Underwood  v.  Simond.s,  12  Mete.  (Ma.ss.)  27.5;  Rose  v.  Learne<l, 
14  Mass.  154;  Tower  v.  Richard.son,  (i  Allen,  351;  Central  Sav.  Bank  v.  O'Connor, 
132  Mich.  578,  94  N.  W.  11,  102  Am.  St.  Rep.  433;  Haverin  v.  Donnell,  7  Smedes 
&  M.  244;  Jones  v.  Shaw,  67  Mo.  (itw;  Third  Nat.  Bank  v.  Reichert,  101  Mo. 
Ajjp.  242,  73  S.  W.  893;  Aultman,  Miller  &  Co.  v.  Hawk,  4  Nebr.  (Unof.)  5.S2,  95 
N.  W.  095;  Brown  v.  Hull,  1  Den.  4(K);  Cline  v.  Farmers'  Oil  Mill,  83  S.  C.  204, 
05  S.  E.  272;  Nixon  v.  First  State  Bank  (Te.x.  Civ.  Ai)p.),  127  S.  W.  8S2,  129  S.  W. 
145;  Wayhind  Univensity  v.  Boonnan,  56  Wis.  6()0;  Brown  v.  Langley,  5  Scott 
N.  R.  249;  see  ante,  §  SO. 

97.  Brown  v.  SpofTord,  95  U.  S.  (5  Otto)  482  (1877);  Gorrell  v.  Homo  Life  Ins. 
Co.,  11  C.  C.  A.  240,  63  Fed.  370;  Mumford  v.  Tolman,  157  III.  258,  41  N.  E.  617; 
Hensley  v.  Mitchell,  147  III.  App.  161;  Adams  v.  Wilson,  12  Mete.  (Mass.)  1.3S; 
Currier  v.  Hale,  8  Allen,  47;  Ryan  v.  Sullivan,  128  N.  Y.  S.  632,  143  App.  Div. 
471;  Fuller  v.  Law,  207  Pa.  St.  101,  56  AtL  333;  Rawson  v.  Walker,  1  Stark.  361; 
Campbell  v.  Hodgson,  Gow.  74. 

98.  1  Greenleaf  on  E\ndence,  §  285;  2  Wharton  on  Evidence,  §  1042;  Folmar 
v.  Siler,  132  Ala.  297,  31  So.  719;  Ramsey  v.  Young,  69  Ala.  158;  Cashman  v. 
Harrison,  90  Cal.  297,  27  Pac.  283,  citing  text;  Holmes  v.  Horn,  120  III.  App.  3.59; 
First  Nat.  Bank  v.  Nugent,  99  Ind.  160;  Deming  Inv.  Co.  v.  Wallace,  73  Kan. 
291,  85  Pac.  139;  Spies  v.  Rosenstock,  87  Md.  14,  39  Am.  Rep.  268;  Maltz  v. 
Fletcher,  52  Mich.  484;  Kessler  v.  Clayes,  147  Mo.  App.  88,  125  S.  W.  799;  Car- 


§  81a     FORMALITi'    IN    RESPECT   TO    STYLE    AND   MATERIAL        121 

dence  may  be  received,  as  against  such  original  party  or  one  having 
notice,  to  show  a  want  '-^  of  consideration,  or  failure  of  considera- 

rington  V.  Waff,  112  X.  C.  115,  16  S.  E.  1008;  Gifford  v.  Fox,  2  Nebr.  (Unof.)  30, 
95  N.  W.  106(i;  Lone  Star  Leather  Co.  v.  National  Bank,  12  Tex.  Civ.  App.  128, 
34  S.  W.  297.  See  also  post,  §  174.  Evidence  may  be  given  of  the  actual  considera- 
tion for  which  a  check  was  delivered  though  there  nuxy  be  a  written  inonioniiKluni 
containing  the  ternw  under  which  the  check  wjw  given.  Foxworthy  v.  Adams, 
i:{»J  Ky.  403,  124  S.  \V.  :i,Sl,  27  L.  R.  A.  (X.  S.)  308.  It  is  competent  to  prove  by 
panji  evidence  that  a  note  was  given  for  the  purcha.se  money  of  land.  Davis  v. 
Evan.s,  142  X.  C.  ACA,  .55  S.  E.  344;  MdVters  v.  English,  141  X.  C.  491,  54  S.  E. 
417.  When  note  six^ifies  "legal  services"  as  the  consideration,  it  is  competent 
for  defendant  to  prcjve  by  parol  that  the  agreement  w:w  that  the  payee  was  to 
attend  to  all  her  legal  business  in  connection  with  her  administration  of  an  estate, 
and  that  a  large  amount  of  work  remaine<l  to  Im*  done,  which  he  refused  to  do. 
Jones  V.  Hhea,  122  \.  C.  721.  30  S.  E.  .34r,.  When  the  statement  of  the  con- 
sidi'ration  is  not  a  statement  of  the  terms  of  the  contmct  but  is  the  narration  of  a 
mere  fact,  pan)l  evidence  may  be  intHnluced  to  vary,  contradict,  or  e\|)lain  such 
Htatemr-nt.  Kam|>mHiiM  v.  McCorrnick  (Tex.  Civ.  App.),  99  S.  W.  1147.  The 
recitation  of  con.sid(Tati(jn  is  always  o|)cn  to  explanation  or  contradiction.  Mc- 
Court  V.  Pei)panl,  120  Wis.  320,  105  X.  W.  809.  Whenever  the  statement  of  the 
consideraticm  leaves  the  field  of  mere  re<'ital  and  enters  into  that  of  contract,  as 
shown  by  the  intention  of  the  partit-s  to  Ix?  gathernl  from  the  instrument,  it  is 
no  longer  ojx'n  to  contnuliction  by  i)an)I  evidence — as  to  a  note  state<l  to  be  in 
considi-raticjn  of  cre«lit  gnmliil  by  one  of  the  parties  to  a  tliinl  person  on  the 
purchxs*-  {»rice  of  nuuhinery  l)<)uglit  by  said  thinl  |KTHon.  McXinch  v.  Xorth- 
west  Thresher  Co.,  23  Okl.  .isi],  10(j  I>ac.  524.  Where,  at  the  time  a  note  was 
executed,  the  fiaye*'  sign«l  a  certificate  showing  the  state  of  the  account  between 
hiuKself  and  the  maker  at  the  time,  and  not  pun>orting  to  contain  the  terms  of 
the  agn>«Mnent  In-twcvn  the  partit-s  as  to  the  conditions  un<l<T  which  the  note 
w:i.s  given,  the  i)ayee  may  testify  !is  to  the  un<ierstan(ling  and  agreement  under 
which  the  note  was  execut^l.     Ilaini-s  v.  Ciulweil,  40  Or.  229,  i'At  I'ac.  910. 

99.  Ablxjtt  V.  Hendricks,  1  M.  A  (1.  795  (39  Eng.  C.  L.);  Burke  v.  Duhmey, 
1.'.3  r.  S.  22.S,  14  Sup.  Ct.  Hef).  SIO;  Indeiwrnlent  Brewing  A.ssn.  v.  Klett,  114 
111.  App.  1 ;  Purcell  v.  .Vrmour  Packing  Co.,  4  Ga.  App.  2.')3,  til  S.  E.  13S;  Small  v. 
Clewley,  02  Me.  155;  Aldrich  v.  Whitaker,  70  N.  H.  027,  47  Atl.  591;  Smith  v. 
Dotterweich,  93  N.  E.  98,5,  200  X.  Y.  299,  33  L.  R.  A.  (X.  S.)  892;  reversing 
judgment  116  X.  Y.  S.  896,  132  App.  Div.  489;  South  Dakota  Cent.  R.  Co.  v. 
Smith,  22  S.  D.  210,  110  X.  W.  1120.  At  least  in  equity,  it  may  be  shown  that 
the  maker  of  a  note  was  in  fact  the  surety  for  an  anomalous  indorser — was  an  ac- 
commtxlation  maker.  Jennings  v.  Moore,  189  Mass.  197,  75  X.  E.  214.  Under 
the  principle  that  want  of  consideration  may  be  shown  by  parol,  it  was  held  in 
Bnxjk  v.  Latimer,  44  Kan.  431,  24  Pac.  940,  21  Am.  St.  Rep.  292,  that  parol  evi- 
dence was  admissible  to  show  that  a  promissory  note  for  the  payment  of  §10,000, 
executed  by  a  daughter  to  her  father  and  made  payable  on  demand,  was  in  fact 
executed  by  the  daughter  and  receive<l  by  the  parent  aa  a  mere  receipt  or  mem- 
orandum of  advancement  mjuie  by  the  parent  to  the  child  and  that  a  partial 
understanding  was  ha<l  at  the  time  of  its  execution  and  delivery  that  payment 
thereof  would  never  be  demanded  or  enforced.    The  maker  of  a  note  may  properly 


122  FORMAL   REQUISITES    OF    HILLS    AND    NOTES  §  Sla 

tion/  or  that  the  consideration  was  ill»nal;  -  and  the  rulr  forl)iddinK 
the  admission  of  an  oral  agreement  varying  tht-  trrms  of  a  written 
contract  is  not  viohited  by  permitting  the  defendant,  in  an  action  upon 


show  that  ho  and  tho  payoo  jointly  purrhaswl  certain  property  and  that  the  note 
was  ^ivcn  merely  fi)r  the  pun>OfM.'  of  nhowiiiK  the  pay(H''s  interest  in  the  proix-rty, 
as  .showing  that  the  maker  reeeivwl  no  consideratiijn  for  the  exeeution  of  the  note. 
Davis  V.  Sterns,  So  Xehr.  121,  122  N.  W.  (572.  Parol  evideiiee  is  admissible  to 
show  that  a  certificate  of  dejjosit  ^iveri  by  a  bank  wils  in  fact  a  loan.  iState  v. 
Coming  State  Savin^H  Hank,  Lit)  Iowa,  79,  1  LI  N.  W.  500. 

1.  Dial  V.  McKay,  150  Ala.  118,  43  S<i.  21H;  Miner  v.  Hamilton,  152  Cal.  ('.31, 
9;J  Pac.  857;  Pope  v.  Peterson,  7  Ga.  App.  395,  (541 S.  K.  9H-I;  Pideock  v.  J.  Crouch  A 
Son,  7  Ga.  App.  299,  Oti  S.  E.  971;  Purcell  v.  Armour  Packing  Co.,  4  Ga.  App. 
2.')3,  01  S.  E.  1.38;  Aultnian  Threshing  «!t  Engine  Co.  v.  Knoll,  71  Kan.  109,  79 
Pac.  1074;  Brown  v.  Smedley,  L3t>  Mi.sc.  tio,  98  N.  W.  85«);  Holmes  v.  Karris,  97 
Mo.  App.  .305,  71  S.  VV.  llt>;{!reat  Northern  Moulding  Co.  v.  iionewur,  113  \.  Y. 
S.  ()0,  128  App.  Div.  S31 ;  Fane  v.  Fitler,  223  Pa.  St.  .5«)8,  72  Atl.  891.  132  Am.  St. 
Hep.  742;  Gandy  v.  W.-ckerly,  220  Pa.  St.  285,  t)9  Atl.  8.58,  18  L.  K.  A.  (N.  S.) 
4.34,  123  Am.  St.  Hep.  ()91;  Preaa  v.  Vollintine,  .53  Wash.  137,  101  Pac.  700. 
Evidence  to  show  failure  of  consideration  in  a  promissory  note  must  clearly  show 
that  the  thing  on  which  the  failuri'  n-sts  enten><l  into  the  consideration  of  the  note. 
Guthrie  v.  Huntington  Chair  Co.,  1)9  W.  Va.  152,  71  S.  E.  14.  Where  notes  wer(> 
given  for  bonds  i-ssued  by  a  company,  which  had  no  value  a|)art  from  the  ability 
of  the  promi.><or  to  i)erft>nn  theuj  and  repres«'ntetl  an  im|)os.sible  undertaking  by  an 
insolvent  concern,  .such  facts  may  be  shown  on  an  i.ssue  of  no  consideration  for 
tho  notes.  German-American  Security  Co.  v.  McCulloch  (Ky.),  89  S.  W.  5. 
Upon  the  trial  of  an  action  on  a  negotiable  note,  given  for  the  premium  on  an 
insurance  policy,  evidence  of  a  parol  contem[)oraneous  agreement  between  the 
maker  of  the  note  and  an  agent  of  the  payee  that  the  |M)licy  was  to  be  delivere<l 
within  a  given  time  was,  in  the  absence  of  fraud,  accident,  or  mistake,  inadmi.s.sible, 
in  connection  with  pn)of  that  the  policy  had  not  been  .so  delivered,  to  .show  failure 
of  consideration  of  the  note.  Union  Central  Life  Ins.  Co.  v.  Wynne,  123  Ga. 
470,  51  S.  E.  389.  In  an  action  on  a  note  given  for  the  price  of  animals  sold,  which 
note  contained  a  warranty  of  title  but  did  not  exclude  a  warranty  aa  to  soundness, 
evidence  was  held  admissible  as  to  a  parol  warranty  of  the  seller  of  soundness  of 
the  animals;  the  note  not  expressing  the  whole  contract,  and  tho  warranty  as  to 
soundness  not  varying  its  terms.  Whigham  v.  W.  Hall  &  Co.,  70  S.  E.  23,  8  Ga. 
App.  509.  But  in  Flemming  v.  Satterfield,  4  Ga.  App.  351,  01  S.  E.  518,  it  was 
held  that  where  a  promissory  note  is  given  for  the  purchase  of  a  mule  which  is 
unambiguous  and  conditional  and  contains  no  warranty  of  the  soundness  of  the 
mule,  no  express  warranty  can  be  added  to  the  note  by  evidence  of  an  express 
warranty  alleged  to  have  been  made  by  parol  contemporaneously  with  the  execu- 
tion of  the  note. 

2.  Corbett  v.  Clute,  137  N.  C  540,  50  S.  E.  210.  Where  it  is  alleged  that  the 
consideration  for  a  note  given  for  rent  under  a  lease  was  illegal,  the  fact  that  a 
written  lease  was  entered  into  would  not  prevent  the  introduction  of  oral  evidence 
to  show  the  conversation  and  the  circumstances  for  the  purpose  of  determining 
the  real  consideration.    O'Connor  v.  Kleiman,  143  Iowa,  435,  121  N.  W.  1088. 


§  sib     FOR\L\LITY    IN    RESPECT   TO    STYLE    AND    MATERIAL        123 

a  promissory  note,  to  prove  as  a  set-off  an  amount  due  from  the 
plaintiff  uix)n  an  oral  contract  made  at  the  time  the  note  was  given, 
and  which  formed  a  part  of  its  consideration.' 

And  parol  evidence  is  admissible  to  show  that  the  maker  of  a 
promissory  note  executed  it  for  the  accommodation  and  at  the  re- 
quest of  the  payee  and  was  not  to  be  held  personally  responsible 
on  the  note  by  the  payee;  this  shows  want  of  consideration  between 
the  parties.* 

§  81b.  Delivery  to  payee  to  take  effect  only  upon  condition  pre- 
cedent, or  to  be  void  upon  condition  subsequent. — A  eoiulitional 
delivery  to  the  payee  may  be  shown  by  parol;  a  promissory  note, 
like  any  other  written  instrument  has  no  legal  inception  or  valid 
existence  until  it  has  been  delivered  in  accordance  with  the  purpose 
and  intention  of  the  parties.^    And  so,  it  has  been  held  in  a  numl)er 


8.  Owensboro  Wagon  Co.  v.  D.  A.  Wilson  &  Co.,  79  Kan.  033,  101  Pac.  4; 
Brown  V.  Smedley,  130  Mich.  6,5,  98  X.  W.  H.'iO. 

4.  Peterwjn  v.  Tillinghiwt,  192  Fcxl.  2.S7;  Tohrinor  v.  Whit*-,  19  App.  D.  C.  103; 
National  Citizfn.s  Hank  v.  liowcn,  109  Minn.  473, 124  \.  W.  241 ;  Connui  v.  Clarke, 
im  Minn.  4;«).  119  N.  W.  214,  119  .N.  W.  482.  p:vi(l.-ncc  i.s  adniisnil)!.'  t.-ndin^ 
to  hHow  knowhMlKc  on  the  part  of  the  payee  of  a  draft  o{  the  character  of  the  pajjcr 
he  received  and  the  extent  to  which  the  drawer  would  Ix-  bound  by  it,  namely 
that  the  draft  wan  drawn  for  the  accommodation  of  the  payee.  Preaa  v.  Vollintine, 
53  Waah.  137,  101  Pac.  700.  While  panjl  evidence  will  Ix;  receive*]  to  explain  that 
a  proraii«or>'  note  wa.s  exji-utj"*!  by  the  maker  for  the  accomnuxlation  of  another, 
or  to  U-  helil  jw  colIat«'ral  H«'<-urity,  it  cannot  l><-  re<-eive«l  to  <lefeat  recovery  thereon, 
where  the  paye<-,  on  the  .strennth  of  the  exf<-utii>n  and  delivery  of  .such  note,  and 
at  the  n'qui-st  of  the  maker,  extendi-d  credit  t<i  a  third  |)arty.  Willoughhy  v.  Ball, 
IS  Okl.  r>.3.5,  90  Pac.  1017. 

6.  Ik-ach  V.  Nevin.s,  102  Ke<i.  1'29;  Hunter  v.  First  .\at.  Bank,  172  Ind.  62, 
S7  .\.  E.  734;  Oakland  Cemetery  .\j«n.  v.  Lakin.s,  120  Iowa.  121,  101  N.  W.  778; 
Hill  V.  Hall,  191  Ma.««.  2.'i.3,  77  \.  E.  8.31;  Great  .N'orthem  Moulding  Co.  v.  Bone- 
wur,  113  N.  Y.  S.  00,  128  App.  Div.  .8,31 ;  Pratt  &  Whitney  Co.  v.  American  Pneu- 
matic Tool  Co.,  0.3  X.  Y.  S.  1062,  'jO  App.  Div.  309,  affimifxi  IW  X.  Y.  .588,  .59 
X.  E.  1129;  Hughes  v.  Crooker,  148  X.  C.  318,  02  S.  E.  429,  128  Am.  St.  Hep.  <J00. 
Where  a  note  was  executed  at  the  time  of  an  application  for  a  life  in.surance  policy, 
evidence  may  be  received  of  an  understanding  that  it  was  delivered  to  show  the 
applicant's  gootl  faith,  and  that  it  would  not  be  binding  u[)on  him  except  that  if 
the  policy,  when  it  arrived,  wjls  satwfactor>',  and  they  accepted  it,  the  note  would 
be  binding,  otherwi.se  it  would  be  void.  Graham  v.  Hemmel,  70  Ark.  140,  88 
S.  W.  899.  If  a  surety  executes  a  note  on  the  payee's  agreement  to  procure  the 
signature  of  another  name  thereto,  and  which  the  payee  failed  to  do,  thi.s  fact 
cannot  be  reliwl  on  as  a  defen.s«'  when  sued  by  a  purcha.ser  for  value,  who  had  no 
notice  of  such  agreement;  but  if  the  payee  or  obligee  had  notice  of  such  condition 
or  agreement,  the  fact  of  the  agreement,  and  knowledge  thereof  on  the  part  of  the 


124  FORMAL   REQUISITES    OF    RILLS    AND    NOTES  §  Ml) 

of  ciises  that  a  note  may  \)v  delivered  to  the  payee  to  take  effect  only 
upon  a  condition  precedent;  and  that  default  in  the  fulfillment  of 
such  conditions  may  be  shown  by  parol  evidence,  and  will  defeat 
recovery  as  between  immediate  parties  i*^  and  also  that  it  may  be 


obliKoe  or  payee,  would  constitute  n  vulid  dofrnse,  and  it  is  entirely  rompetent 
to  show  the  existence  of  such  knowleilne  by  parol  tet*timony.  Caudle  v.  Ford 
(Ky.),  72  S.  VV.  270.  In  Pidcock  v.  J.  Crouch  &  Son,  7  Ga.  App.  229,  (Mi  S.  E.  <»7 1 . 
it  was  held  that  while  it  is  permissible  to  show  that  a  i)romissf)ry  note,  sinnetl  by 
one  or  more  persons  and  apparently  complete,  is  not  in  fact  com|)lete,  by  reiLSDn 
of  the  fact  that  it  Iwus  never  be«'n  delivere<l  from  one  party  to  the  other  jus  a  finally 
complete<l  contract,  but  that  it  w:ls  simply  left  in  the  possession  of  the  payee,  until 
some  additional  person  should  siyii  it  before  it  should  become  a  completJil  con- 
tract, yet  it  is  not  permissible  to  show  by  parol  that  a  note  w:us  delivere<l  to  the 
payee  as  a  completed  contract,  but  U|M)n  a  pn)mise  ujion  his  part  that  he  would 
Bubsecjuently  secure  the  signature  of  another  jhtsou  thereto,  where  the  writiuR 
is  silent  hh  to  any  such  jjromise  (m  the  payee's  j)art.  See  Etz  v.  Place,  SI  Hun,  2();<, 
30  N.  Y.  S.  70').  See  Jamestown  Business  ColU'^e  A.ss'n  v.  Allen,  172  N.  Y.  291, 
04  N.  E.  9r)2,  92  Am.  St.  Rep.  710,  holdiiin  (one  justice  di.ssentinK)  that  a  promis- 
sory note  in  the  usual  form  and  actually  delivere<l  to  the  payee,  although  accom- 
panied by  a  contract  in  writing  showing  that  the  note  wils  niven  for  a  sch«)larship 
in  a  business  college,  cannot  be  contnulicteil  by  parol  evidence  that  the  note  wjls 
not  to  be  paid  if  the  maker  should  decide  not  to  tiike  instructions  at  the  school 
and  could  not  sell  her  scholarship,  as  the  delivery  of  the  note  was  not  conditional, 
not  to  become  effective  until  the  hapiM'ninn  of  s(jme  condition  jjreceflent,  but  wius 
an  absolute  delivery  which  cannot  be  tiefeated  by  tin-  hapj)oninK  t)f  any  subse- 
quent contingency. 

6.  Graham  v.  Rcmmel,  70  Ark.  1 10,  S8  S.  W.  S99;  Heitman  v.  Commercial 
Bank,  G  Ga.  App.  oS4,  05  S.  E.  fjiK);  Benton  v.  Martin,  52  X.  Y.  574;  Williams  v. 
First  Nat.  Bank  of  Syracuse,  45  App.  Div.  239,  GO  N.  Y.  Supp.  1105,  0  Am.  St. 
Rep.  70;  Persons  v.  Hawkins,  41  App.  Div.  171,  .58  N.  Y.  Supp.  831;  Tra<l«t- 
men's  Nat.  Bank  v.  Curtis,  3S  App.  Div.  240,  57  N.  Y.  Supp.  121;  Benjamin  v. 
Ver  Nooy,  36  App.  Div.  5S1,  55  N.  Y.  Supp.  790,  93  Am.  Dec.  540;  Simmons  v. 
Thompson,  29  App.  Div.  559,  51  N.  Y.  Supp.  lOlS,  80  Am.  Dec.  332,  citing 
Higgins  V.  Kidgeway,  153  N.  Y'.  130,  47  N.  E.  32;  Andrews  &  Co.  v.  Hess,  20 
App.  Div.  194,  46  N.  Y'.  Supp.  790;  Juilliard  v.  Chaffee,  92  N.  Y.  529;  (^uinlan 
V.  Fairchild,  76  Hun,  312,  27  N.  Y.  Supp.  689;  Elwell  v.  Turncy,  39  Wash.  615, 
81  Pac.  1047.  See  ante,  §  68.  There  is  a  plain  difference  between  allowing  proof 
by  parol  or  other  extrinsic  evidence  of  the  nonperformance  of  a  condition  precedent 
as  to  which  the  writing  is  silent,  and  allowing  such  proof  of  the  nonperformance  of 
a  condition  stated  in  writing  to  have  been  performed,  or  to  have  been  agreed  upon 
as  unnecessary  to  the  final  utterance  of  the  writing  as  a  presently  operative  con- 
tract. Heitman  v.  Commercial  Bank,  6  Ga.  App.  584,  65  S.  E.  590.  In  an  action 
to  recover  on  a  promissory  note,  parol  evidence  was  admissible  to  show  that  the 
parties  had  made  an  oral  agreement  for  the  purchase  of  a  commodity  in  pursuance 
of  which  the  note  was  given,  that  under  such  agreement  the  payee  of  the  note  was 
to  make  its  maker  a  certain  loan,  and  that  the  loan  had  not  been  in  fact  made. 
Kessler  &  Co.  v.  Parelius,  107  Minn.  224,  119  N.  W.  1069. 


§  sic      FORMALITY    IN    RESPECT   TO   STYLE    AND    MATERIAL        125 

shown  by  parol  that  at  the  time  a  note  was  made  it  was  agreed  that 
it  should  be  held  for  nothing  on  the  happening  of  a  certain  event 
or  on  the  nonfulfillment  of  a  certain  condition.'  But  unless  such 
event  operated  a  failure  of  consideration,  we  cannot  perceive  upon 
what  principle  such  a  view  could  be  taken.* 

§  81c.  Parol  evidence  is  admissible  to  show  that  parties  to  bills 
ant!  notes,  apparently  otherwise,  are  really  in  privity  with  each 
other;  ^  and  as  l)etween  parties  to  show  their  real  relations  to  each 
other;  "*  and  if  there  be  a  latent  ambiguity  to  explain  it.'^  And  if 
the  instrument  b<*  so  obscurely  written,  or  so  mutilated  or  erased 
as  to  render  its  meaning  uncertain,  it  is  admissible  to  ascertain  its 
terms.'-  There  are  also  some  cases  in  which  patent  ambiguities 
in.iy  be  resolved  by  parol  testimony,  which  are  elsewhere  considered.'^ 

7.  Dial  V.  MfKay.  IT/)  Ala.  1  IS,  A^i  So.  21.S;  The  I)«nv«r  Hn-winK  Co.  v.  hurcis, 
't  Colo.  Apj).  :i\\,  IS  Viw.  S:H;  .\iMork  v.  Spr:i«u»-.  200  .\.  Y.  .'JIH),  1K{  .N.  K.  llOf), 
nvcn^iriK  I  IS  .\.  Y.  S.  1127,  1:M  Apj).  Div.  «H0;  Ostramhr  v.  Snyder,  73  Hun, 
:{7S,  2»i  .\.  Y.  Supp.  2»)3;  Hiiwinn'T  v.  Cluitcrnan,  6  lleink.  277;  Clark  v.  Duchc»- 
ricau,  20  Utah,  97,  72  Pac.  3:J1 ;  liowoU  v.  Ware,  175  Fed.  742.  It  may  be  shown  by 
parol  that  the  note  wa.s  not  execufe<l  until  after  the  ji^wment.s  between  the  parties 
were  (ujule,  arul  it  never  W!ts  inteiuhtl  to  be  in«)re  than  .S4'curity  for  anotlu-r  anre<v 
riieiit,  and  that  surh  aure^-inent  h:Ls  Iwen  jxTforined.  Oakland  Cemetery  Assn. 
V.  l^ikins,  12«i  Iowa.  121,  101  N.  \V.  778. 

8.  S-^'  anlf,  §  (>S. 

9.  §§  17."^,  170. 

10.  Ilouck  V.  Graham,  lOCy  Ind.  lO.**;  pout,  §  710.  But  in  the  hands  of  one  wlio 
takes  the  pafHT  for  value  Ix-fore  maturity  without  actual  notice  of  any  defect 
then-iti  the  law  presumes,  and  the  holder  ha«  a  ri^ht  to  iLSsume,  that  the  relalion.s 
to  the  pa|x'r  of  every  party  whose  name  a|)|><>arN  on  it  are  |)reci.s«'ly  what  they 
apiK-ar  to  l)e.  Cheever  v.  V.  S.  &  L.  K.  K.  Co.,  I.'jO  .\.  Y.  TjO,  41  N.  K.  701,  Tj-j 
Am.  St.  Hep.  tVJC;  Davis  v.  Hly,  32  App.  Div.  124,  .'j2  .\.  Y.  Sui)p.  201);  Schram  v. 
Werner,  S.",  Hun,  21(3,  32  X.  Y.  Sujjp.  IW.');  Marsh  v.  Chown,  104  Iowa,  .'i.'jti,  73 
\.  W.  10-MJ;  Ilanlester  v.  Tate,  85  Mo.  .\pp.  024.  Evidence  may  be  received  of 
(•(•ntemp«jrar>'  oral  a(creement*»  that  the  maker  of  a  note  executed  it  as  an  accom- 
tiKxlation,  or  to  l)o  held  a«  collateral  security,  but  not  to  defeat  recovery  thereon. 
Wiliounhby  v.  Hall,  ISOkl.  .W."),  90  Pac.  1017. 

11.  Wlwirton  on  Evidence,  §  9.')0. 

12.  Paine  v.  Kinnold,  43  Mich.  .341;  County  of  Dea  Moines  v.  Hinckley,  62 
Iowa,  »V42.  .\nd  ujxjn  the  sjime  principle  it  is  settlwi  that  the  meaning  of  ab- 
breviations may  be  explain(xl  by  parol.  S<'o  Lane  v.  Union  Nat.  Bank,  3  Ind. 
App.  21H),  29  N.  E.  013;  Merrill  v.  Syp<Tt,  0.')  .\rk.  .51,  44  S.  W.  462. 

13.  §§  418,  419.  Thomjwon  v.  Thome,  83  Mo.  App.  241;  Keokuk  Falls  Imp. 
Co.  v.  Kinji.sland  &  Douglas  Mfg.  Co.,  .')  Okl.  32,  47  Pac.  484;  Carr  v.  Jones,  29 
Wiish.  7M,  (i9  Pac.  64(».  Where  the  su.scepliijility  of  language  in  a  note  to  a  double 
construction  makes  it  ambiguous  or  obscure,  a  resort  to  parol  testimony  is  neces- 


120  FORMAL  REQUISITES   OF    BILLS   AND    NOTES  §  81c 

Where  a  note  was  executed  by  several  persons  jointly  and  severally 
promising  to  pay  a  certain  amount,  parol  evidence  is  inadmissible 
on  a  claim  that  they  were  severally  and  not  jointly  liable;*^  but 
between  privy  parties  a  mistake  in  the  execution  of  a  written  in- 
strument— as  for  instance  where  the  makers  of  a  note  intentled  it 
should  be  several  as  well  as  joint,  but  it  was  drawn  only  as  a  joint 
note — may  be  rectified  in  a  court  of  ('(luity,  and  the  true  intention 
shown. '^  And  as  between  them,  if  the  party  executed  the  instru- 
ment supposing  himself  liable  for  the  amount,  when  in  fact  he  was 
not,  it  is  admissible  to  show  it,  tlie  evidence  going  to  prove  want  of 
consideration."^  And  if  by  mistake  the  instrument  were  given  for 
too  large  an  amount  the  better  opinion  is  that  it  may  be  shown, 
for  as  to  the  mistaken  excess  there  is  partial  want  of  consideration.'^ 
And,  in  general,  parol  eviilence  is  admissible  l)etween  the  original 
parties  to  show  fraud,  accident,  or  mistake  in  the  creation  of  the 


sary,  to  show  in  what  8en.se  the  lanRuajce  usmhI  wjw  intondtxl  by  the  parties  to  the 
instrument.  Ikrtig-Smythe  Co.  v.  Bonsack  Lunibi-r  Co.,  112  Mo.  App.  259,  8G 
S.  W.  870.  See  al.so  Ltfller  Co.  v.  Dickorson,  1  Ga.  App.  03,  57  S.  E.  911  (as  to 
ambiRuity  in  date  of  maturity);  Southern  R.  Co.  v.  Cofer,  119  .Via.  505,  43  Sfj. 
102  (a.s  to  place  of  delivery  in  bills  of  lading). 

14.  City  DeiK)sit  Hank  v.  C.reen.  130  Iowa,  3S4,  100  N.  \V.  942;  Parker  v. 
Mayer,  So  S.  C.  419,  07  S.  E.  5.59,  137  Am.  St.  Hep.  912. 

15.  Hawstone  v.  Parr,  3  Russ.  424,  529;  Chitty  on  Bills,  191  [•100],  213,  [♦184]; 
Benjamin's  Chalmers'  Digest,  252;  Hopkins  v.  Insurance  Co.,  57  Iowa,  204.  In 
Massaehusetts,  held:  that  contemi)oraneous  written  agreement  of  a  collateral  and 
personal  character  not  admissible  in  evidence  for  the  pur{X)se  of  defeating  recovery 
on  note.  Woods  Sons  Co.  v.  Schaefer,  173  Ma.ss.  443,  .')3  N.  E.  881,  73  Am.  St. 
Rep.  305.  But  by  the  .same  court  it  has  been  held  that  a  paper  writing  directed  to 
payee  and  holder  of  a  note  and  signed  by  person  who  has  indorsed  in  blank  before 
delivery  and  stating  that  he  is  an  indorser  and  waives  demand,  protest  and  notice 
is  admissible  in  evidence  for  purpose  of  showing  that  he  understood  that  he  was  an 
indorser.  State  Trust  Co.  v.  Owen  Paper  Co.,  102  Mass.  150;  First  Nat.  Bank  v. 
Watkins,  154  Mass.  385,  28  N.  E.  275.  Same  principle  applicable  to  ownership  of 
instrument.  Taylor  v.  Smith,  116  N.  C.  531,  21  S.  E.  202.  Evidence  of  an  oral 
agreement  not  generally  admissible.  Carrington  v.  Waff,  112  N.  C.  114,  16  S.  E. 
1008;  Hemrich  v.  Wist,  19  Wash.  516,  53  Pac.  710;  Bryan  v.  Duflf,  12  Wix-sh.  233, 
40  Pac.  936,  50  Am.  St.  Rep.  899;  Remington  v.  Dental  Mfg.  Co.,  101  Wis.  307, 
77  N.  W.  178.  In  such  case  the  mistake  must  be  mutual.  See  Deering  &  Co.  v. 
Russell,  5  N.  Dak.  319,  65  N.  W.  691;  Johnson  v.  Willard,  83  Wis.  420,  53  N.  W. 
776;  Lee  v.  Percival,  85  Iowa,  639,  52  X.  W.  543. 

16.  Southall  v.  Rigg,  11  C.  B.  481;  Reardon  v.  Moriarty,  30  La.  Ann.  120;  1 
Parsons  on  Notes  and  Bills,  201. 

17.  Claxon  v.  Demaree,  14  Bush,  173.  See  §§  179,  201.  But  see  Downs  v. 
Webster,  Brayt.  79;  2  Parsons  on  Notes  and  Bills,  505. 


§  Sid     FORMALITY    IN    RESPECT   TO    STYLE    AND    MATERIAL        127 

instrument.'*    Also  to  set  up  a  verbal  agreement,  by  performance  of 
which  the  written  contract  has  been  discharged.  ^^ 

§  81d.  As  to  collateral  matters. — A  further  exception  to  the 
general  rule  is  recognized  in  many  cases,  by  which,  as  between 
the  parties  or  as  to  one  taking  with  notice,  parol  evidence  may  be 
received  of  collateral  matters  affecting  or  being  part  of  the  contract 
and  which  do  not  interfere  with  the  terms  of  the  written  contract.-^ 
So,  it  may  be  shown  how  the  note  should  be  paid,^'  as  that  it  should 

18.  Roo  V.  KLser,  62  Ark.  92,  34  S.  W.  .534;  Epps  v.  WarinR,  93  Ga.  705,  20  S.  E. 
6^1');  Mizcll  Live  Stork  Co.  v.  Bunks  (C.ii.  Ajh).),  73  S.  E.  410;  White  v.  Smith, 
7'.»  Klin.  90,  9S  I'uc.  HM'r,  I)«>nnin>;  Inv.  Co.  v.  W;ilhu-t',  73  Kiin.  291,  S-'j  Puc.  139; 
Phd-nix  Ina.  Co.  v.  Owens,  SI  .Mo.  Ai)p.  201;  Philliiw  v.  Meily,  100  Pu.  St.  530; 
Karner  v.  Rosa,  43  Tex.  Civ.  App.  .>12,  95  S.  W.  40. 

19.  In  First  Nut.  Hunk  v.  Watkins,  l.'>4  Milss.  .3S5,  23  N.  E.  275,  it  was  held 
thut  an  oral  aurwinent  o|)oratod  at  once,  and  in  effeet  discharRod  the  defendant 
from  liuhiUty  on  the  note,  while  in  Hayes  v.  .Mien,  ItK)  Mjuss.  2.S(),  35  N.  E.  H52,  it 
WiW  decideil  that  "It  is  no  defen.s<'  to  an  action  on  a  promissory  note  for  a  valid 
consideration,  that  subsetjueiit  to  the  making  and  delivery  of  the  not<',  an  indepen- 
dent oral  aKre«'ment  w:ls  made  betwe«'n  the  parties  that  the  defendant  would  .sell, 
and  the  plaintiff  wouhl  huy,  on  Januar)-  1st  next  ensuinK,  certain  shares  of  the 
capital  stock  of  a  coriH)ration  at  a  certain  price  per  share  and  that  the  note  should 
be  taken  as  payment  pro  tanlo  for  the  shares."  See  Rogers  v.  Bedell,  97  Tenn. 
240,  30  S.  W.  KXMj.  In  this  connection,  court  held:  Evidence  that  a  check  which 
h:ul  been  di.shonore<i  w:ls  sul)s«'«iuently  delivered  by  the  payee  to  another  person, 
under  an  jmre«'ment  that  the  former  should  not  be  iMJund  u|K)n  it,  because  of  his 
indorsement  made  Iwfore  it  wius  di.shonored,  Ls  ailmLs-sible  to  wt  juside  the  elTeet 
of  th«'  previous  indors4-ment.  Ei)ps  v.  Waring,  93  (la.  7r)5,  20  S.  E.  045;  Truman 
V.  Bishop,  Ki  Iowa,  091,  .")()  N.  W.  27S;  H<»ward  v.  Stratton.  M  Cal.  4S7.  Parol 
testimony  is  admissible,  in  an  action  u[X)n  a  promissor>'  note,  to  show  that  it  wfis 
given  to  secure  the  p<'rformance  of  an  agreemc'nt  whereby,  in  consideration  of  the 
transfer  of  certain  lands  by  the  payee  to  the  maker,  the  latter  should  support  the 
payt-*'  during  the  remainder  of  his  life,  and  that  the  maker  had  ixrforme*]  the 
conditions  of  the  agre<'ment.    CiitTord  v.  Fosc,  2  Nebr.  (I'nof.)  30,  95  \.  W.  1000. 

20.  Crooker  v.  Hamilton,  3  (la.  App.  190,  59  S.  E.  722;  Wood.s«jn  v.  Beck.  151 
N.  C.  144,  05  S.  E.  751 ;  s«><'  /xw/,  §§  1.5<j,  133H.  Parol  evidence  of  a  collateral  agree- 
ment not  purixjrting  to  Ik-  in  writing  is  not  excluded  by  th<'  fact  that  in  a  written 
instrument  such  collateral  agreement  is  recognized.  Anderson  v.  Thero,  139 
Iowa,  032,  1  IS  N.  W.  47.  Where  a  warehouse  receipt  was  pledged  to  secure  a  note, 
the  phxlgee  may  be  allowed  to  testify  that  there  was  an  agreement  that  if  the  note 
was  not  paid  at  maturity,  the  8uri)lus  arising  from  the  sale  of  the  property  pledged 
should  be  cn>«lited  on  another  indebtedness.  Lewis  v.  First  Nat.  Bank,  46  Or. 
1S2,  7S  Pac.  990.  When  the  promiss«jry  note  is  complete  in  itself,  parol  evidence 
cannot  be  received  to  add  further  terms  to  its  consideration.  Hightower  v.  Henry, 
85  Miss.  470,  37  So.  745. 

21.  Louisville  Tobacco  Warehouse  O.  v.  Stewart  (Ky.),  70  S.  W.  285;  Evans 


12.S  FOKMAL   KKQUISITKS    OF    HILLS    AND    NOTES        §§  .M.',  .s;j 

be  paid  out  of  the  proceeds  of  tin-  sale  of  Cfrt;iin  property,""  from 
money  earned  on  a  contract  for  work  upon  which  purchased  machin- 
ery would  be  used,'''  or  out  of  the  first  money  earned  by  the  maker 
as  agent  for  the  payee,  and  that  money  so  earned  had  been  applied 
on  unsecured  advances  of  tlu^  maker.-^  It  may  be  shown  that  at 
the  time  the  note  was  given,  the  maker  directed  that  any  deposit 
he  might  thereafter  make  should  be  credited  on  the  note,  although 
l)efore  its  maturity,'^  antl  that,  when;  the  parties  to  the  note  were 
partners,  it  was  agreed,  that  if  the  losses  of  the  business  amoimtetl 
to  a  certain  sum,  the  liability  of  the  maker  of  the  note  should  be 
released,  and  that  such  loss  had  (x'curred.-*^ 


SECTION    II 

THE    FORMAL    ELEMENTS    AND    PHRASES    OV    HILLS    AND    NOTES 

§82.  W(>  have  now  to  consider:  1st,  the  date;  2d,  the  amount; 
'.U\,  tiic  time  of  payment;  Ith,  the  place  of  payment;  Sth,  name 
of  the  tlraw(T  or  makcT;  (ith,  name  of  the  drawee  (if  it  be  a  bill); 
7th,  name  of  tlu'  payee;  Sth,  the  terms  of  negotiability;  Oth,  the 
words  of  consideration;  lOth,  the  words  of  advice;  11th,  the  state- 
ment of  account;  and  12th,  the  attestation. 

§  83.  The  date.-" —  In  the  first  place,  as  to  the  date,  this  is  usually 
WTitten  in  the  right-hand  corner  of  the  instrument;  but  no  date  is 
essential  to  the  validity  of  a  bill  or  note;^  and  it  is  of  no  consequence 
on  what  portion  of  the  paper  it  is  wTitten.^    If  there  be  no  date, 

V.  Freeman,  142  N.  C.  61,  54  S.  E.  847.  Where  notes  are  by  their  terms  payable 
in  money,  evidence  cannot  be  received  tending  to  show  an  agreement  between  the 
original  parties  to  the  notes  that  payment  should  be  made  in  labor.  Vrandenburp 
V.  Johnson,  3  Nebr.  (IJnof.)  327,  91  N.  W.  496. 

22.  SafTer  v.  Lambert,  HI  111.  App.  410,  the  court  saying  that  such  an  agree- 
ment is  equivalent  to  a  direction  by  the  debtor  as  to  application. 

23.  Ramsay  &  Bro.  v.  Capshaw,  71  Ark.  408,  75  S.  W.  479. 

24.  New  York  Life  Ins.  Co.  v.  Smucker,  106  Mo.  App.  304,  80  S.  W.  278. 
26.  Roe  V.  Bank  of  Versailles,  167  Mo.  406,  67  S.  W.  303. 

26.  Fane  v.  Fitler,  223  Pa.  St.  568,  72  Atl.  891,  132  Am.  St.  Rep.  742. 

27.  As  to  presumption  of  date  of  indorsement,  see  post,  §  728. 

.    28.  Michigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  11;  Mechanics,  etc.,  Bank  v. 
Schuyler,  7  Cow.  337;  Byles  [*74],  166;  Edwards,  150;  Bayley,  21;  Story  on  Bills, 
§  37;  Drake  v.  Rogers,  32  Me.  524;  Vandeveer  v.  Ogden,  1  Pen.  (N.  J.)  67. 
29.  Shepherd  v.  Graves,  14  How.  505. 


§  84  ELEMENTS   AND    PHRASES   OF   BILLS   AND    NOTES  129 

it  will  be  considered  as  dated  at  the  time  it  was  made,^°  and  parol 
evidence  is  admissible  to  show  from  what  time  an  undated  instru- 
ment was  intended  to  operate,^^  or  to  show  that  there  was  a  mistake 
in  the  date.^^  If  dated,  it  will  be  presumed  to  have  been  executed 
on  the  day  it  bears  date.'^  If  untlated,  but  containing  a  reference 
to  date,  it  will  date  from  delivery .'•'  When  a  note  without  date  is 
made  fur  another's  accommodation,  the  maker  authorizes  him  to 
fill  up  the  date  as  he  sees  fit.^^  An  indorsee  has  been  allowed  to  prove 
against  the  maker  a  mistake  in  the  date  of  a  note,  though  by  such 
proof  the  maker  was  cut  off  from  a  defense  valid  as  to  the  payee.^^ 
But  a  maker  would  not  be  admitted  to  prove  a  different  date  as 
against  an  indorsee  for  value,  who  relied  on  its  apparent  date.'^  A 
mistaken  date  may  be  rectified  in  eciuity.  **  Frima  facie,  an  undated 
indorsement  upon  a  note  will  b<!  held  to  have  been  made  as  of  the  date 
of  the  note.'^-' 

§84.  When  the  paper  is  payable  at  a  specified  time  after  date, 
it  is  ahnost  indispensable  that  the  date  should  appear  on  its  face; 
for  otherwis*',  if  it  be  a  bill,  the  drawee  cannot  tell  when  it  falls  due, 
nor  can  an  indorsee  tell  whether  it  be  a  bill  or  note.  Nor  can  the 
holder  know  when  to  present  it  for  payment,  nor  when  it  will  be 
considered  ovenliie.  When  tlie  bill  or  note  is  payable  at  sight,  or  on 
<lemand,  or  on  a  certain  day,  the  d:ite  is  not  so  material;  but  to  avoid 
difficulty,  it  should  never  be  omitted.^    And  it  has  been  questioned 


30.  Ciilcs  V.  I^mrnr,  0  Muulc  A  S.  7.'?;  D«'  hi  Coiirtitr  v.  liollamy,  2  Show.  422; 
S«'ldfnrulKt'  v.  Ojnnubh',  32  Intl.  M'i;  Cowinn  v.  Altrniin,  71  N.  Y.  441;  FirHt 
Nat.  Bank  v.  Hunt,  2fj  Mo.  App.  174,  citing  the  text;  Button  v.  Bt-lding,  22  App. 
Div.  618,  48  N.  Y.  Supp.  981. 

31.  Davi.s  V.  Jonps,  25  L.  J.  C.  P.  91.  17  C.  B.  62,5  (84  Eng.  C.  L.);  Richardson 
V.  Kllft,  10  Trx.  IIH);  l>ean  v.  Ix>zardi,  27  Mich.  424;  Cowing  v.  Altman,  71  N.  Y. 
411;  Thomp.son  on  liills,  37. 

32.  Drake  v.  Rogers,  32  Me.  524;  Biggs  v.  Piper,  86  Tenn.  589;  Paige  v.  Carter, 
61  Cal.  4S9. 

33.  Kinsley  v.  Sami)«on,  10()  111.  571;  ante,  §65;  Gage  v.  Anesilly,  57  Mo. 
App.  111. 

34.  Armitt  v.  Breame,  2  Ld.  Raym.  1076;  Styles  v.  Wardlc,  4  B.  &  C.  908. 

36.  Androscoggin  Bank  v.  Kimball,  10  Cush.  :i73;  Shultz  v.  Payne,  7  La.  Ann. 
222. 

36.  Drake  v.  Rogers,  32  Me.  524;  Germania  Bank  v.  Distler,  4  Hun,  633. 

37.  Huston  v.  Young,  33  Me.  85. 

38.  Paysant  v.  Ware,  1  Ala.  160. 

39.  Do<ld  V.  Doty,  98  111.  393. 

40.  Story  on  NoU-s,  §  48. 

9 


130  FORMAL  REQUISITES   OF    BILLS    AND    NOTES  §  SS 

whether  or  not  th<>  druvvec  mi^ht  not  rcasoniihly  refuse  to  accept 
or  pay  an  undated  bill,  on  account  of  enil)arrassnients,  in  respect 
to  remedy  and  evidence,  to  which  he  might  be  subjected.  ^' 

§  85.  Ante-dating  and  post-dating. — Bills,  checks,  and  notes 
are  sometimes  post-dated  or  ante-dated  for  purposes  of  conveni- 
ence; '^  and  the  fact  that  they  are  negotiated  prior  to  the  tlay  of 
date  is  not  a  suspicious  curcumstance  against  which  parties  must 
guard. "*'  The  indorsee  of  a  bill  which  was  post-dated,  and  indorsed 
by  the  payee,  who  died  the  day  before  the  day  of  date,  was  hel<l  in 
an  English  case  to  have  derived  title  through  the  indorser,  and  en- 
titled to  recover  against  the  drawer,'*^  and  this  case  has  been  foUowetl 
in  the  United  States."*^  So  if  a  note  bear  date  as  of  a  time  before 
the  maker  became  of  age,  or  as  of  a  time  when  the  maker  wa.s  dis- 
qualifietl  by  being  a  feme  covert,  it  may  be  shown,  in  answer  to  the 
plea  of  infancy  or  coverture,  that  the  period  of  its  actual  date  or 
delivery  was  when  no  such  incapacity  or  disqualification  existetl.'* 
And  if  the  Ijill  (^r  note  be  ante-dated  or  post-dated  as  of  a  time  when 
it  would  be  valid,  it  may  be  shown  that  it  was  datcnl  or  delivered 
at  a  time  when  the  party  had  no  capacity  to  enter  into  the  contract, 
or  that  it  came  within  the  interdiction  of  a  statute.''  And  whenever 
there  is  a  false  date  to  evade  the  law,  the  instrument  is  void  as  to 
all  parties  having  notice.'*  If  the  date  does  not  correspond  with 
the  declaration,  tlu>  discrepancy  must  be  explained.'^     But  where  it 


41.  Story  on  Bills,  §  37. 

42.  Gray  v.  Wood,  2  Ilarr.  &  J.  328;  Richter  v.  Selin,  8  Serg.  &  R.  425;  Mc- 
Sparran  v.  Nccly,  91  Pa.  St.  315;  I'nion  Bethel  v.  Sheriff,  33  La.  Ann.  14(51; 
Frazier  v.  Troy  Print  Co.,  24  Hun,  281.  But  one  of  a  firm  of  attorneys  cannot 
post-date  a  check.  Foster  v.  Mackreth,  L.  R.,  2  Exch.  103.  See  Bank  of  Houston 
V.  Day,  145  Mo.  App.  410,  122  S.  W.  756,  as  to  a  statute  which  seemed  to 
contemplate  instruments  which  are  ante-dated  or  post-dated  by  the  parties  in 
accordance  with  a  mutual  agreement  to  that  effect,  as  is  frequently  done,  and  de- 
clares that  they  are  not  invalid  because  of  such  fact,  provided  no  illegal  or  fraudu- 
lent purpose  is  intended. 

43.  Brewster  v.  McCardel,  8  Wend.  478;  Edwards  on  Bills,  151;  Walker  v. 
Geisse,  4  Whart.  252;  McFall  v.  Murray,  4  Kan.  App.  554,  45  Pac.  1100. 

44.  Pasmore  v.  North,  13  East,  517. 

45.  Brewster  v.  McCardel,  8  Wend.  478. 

46.  Pasmore  v.  North,  13  East.  517;  Story  on  Notes,  §  48. 

47.  Bayley  v.  Taber,  5  Mass.  286. 

48.  Serle  v.  Norton,  9  M.  &  W.  309;  Byles  on  Bills  [*75],  168;  Edwards,  151. 
See  Vail  v.  Van  Doren,  45  Nebr.  450,  63  N.  W.  787. 

49.  Fitch  V.  Jones,  5  El.  &  Bl.  238;  Fanshawe  v.  Peet,  2  H.  &  N.  1. 


§  86  ELEMENTS   AND    PHRASES   OF   BILLS   AND    NOTES  131 

is  alleged  that  a  note  was  made  on  a  certain  day  (and  not  that  it 
bore  date  on  that  day)  it  is  not  a  fatal  variance  that  it  bears  date 
on  another.^  When  a  person  agrees  to  become  a  party  to  a  note, 
and  the  payee  takes  it  on  that  assurance,  the  signature,  though 
actually  signed  long  after  the  emission  of  the  note,  will  relate  back 
to  its  date,  and  bind  accordingly.^^  And  in  general,  time  is  computed 
in  respect  to  an  ante-dated  or  post-dated  note  with  reference  to  the 
actual  date  it  bears.^^ 

;j  86.  Secondly,  as  to  the  amount  or  sum  payable.— This  is 
usually  spccilicd  in  figures  in  the  upper,  or  lower,  U-lt-hand  corner  of 
the  instrument,  as  well  a.s  in  writing  in  the  body  of  it.  But  these 
marginal  figures  are  really  not  a  part  of  the  instrument,  but  merely  a 
memorandum  of  the  amoimt."  They  do  not  seem,  in  general,  to  have 
been  considered  among  merchants  as  of  the  same  effect  and  value  as 
the  mention  of  the  sum  contained  in  the  body  of  the  l)ill.  The  first 
model  of  a  bill  (jf  exchange  preserved  to  us,  and  which  dates  from  the 
year  a.  d.  biSl,  does  not  possess  them,  though  it  does  jwssess  the 
votum  or  invocation  with  which  merchants'  bills  used  generally  to 
commence,  and  which  usually  preceded  the  figures.  The  marginal 
figures  were  probably  added  at  a  very  «'arly  date  in  order  that  the 
amount  of  the  bill  might  strike  the  eye  immediately,  and  was  in  fact 
a  note,  index,  or  summary  of  the  contents  of  the  bill  which  followed." 
Where  a  difference  appears  between  the  words  and  iigures,  evidence 
cannot  be  received  to  explain  it;  but  the  words  in  the  body  of  the 
paper  mu.st  control;  "  and  if  there  is  a  difference  l>etween  printed  and 

50.  Coxon  V.  Lyon,  2  Ciimph.  :«)7;  Smith  v.  lionl,  2  I)<jwl.  &  L.  7.09. 

61.  HarrinKtnn  v.  Hmwn,  77  N.  Y.  72.  Stn?  also  MoicH  v.  Bird,  11  MaaH.  436; 
McNaiiKht  V.  McClauKhry,  42  N.  Y.  22;  Pauly  v.  Murray,  110  Cal.  13,  42  Pac. 
313. 

62.  Lure  v.  ShafT,  70  Ind.  l.'')2. 

63.  C'.aminl  v.  I/wis,  10  Q.  B.  Div.  30,  37  Eng.  375;  IMm  v.  Hammol,  134 
Ahi.  t>.j2,  32  So.  KKH),  92  Am.  St.  Rep.  .52,  quoting  text ;  Sexton  v.  Barrio,  102  111. 
App.  586;  Hollrn  v.  Davi.s,  .59  Iowa,  444,  43  Am.  Rep.  690;  Commonwealth  v. 
Emigrants'  Ins.  Co.,  98  Mass.  12;  Smith  v.  Smith,  1  R.  L  398;  Chestnut  v.  Chest- 
nut. 104  Va.  539,  52  S.  E.  348,  2  L.  R.  A.  (N.  S.)  879.    See  pout,  §  1499a,  and  notes. 

54.  C.arrard  v.  I^wLs,  supra;  Marius,  P.  34;  Beawes,  §  193;  Stor>'  on  Bills,  §  42. 

55.  Prim  v.  Hammel,  134  Ala.  652,  32  So.  1000,  92  Am.  St.  Rep.  52; 
Payne  v.  Clark,  19  Mo.  152;  Riloy  v.  Dickons,  19  111.  30;  Moars  v.  Graham, 
8  Blackf.  144;  Saundorson  v.  Pi|)er.  5  Bing.  X.  C.  425;  Fisk  v.  McNeal,  23  Ncbr. 
728,  citing  the  text.  In  Smith  v.  Smith,  1  R.  I.  39S,  it  appeared  a  bill  bore  the 
marginal  figures  "$175.94,"  and  on  its  face  called  for  the  payment  of  "three 
hundred  and  Heventy-five  96-100,"  expressed  as  indicated.     The  clerk  of  the 


132  FORMAL    REQUISITES    OF    BILLS    AND    NOTES  §  86a 

written  words,  th.-  written  must  control.^  If  the  words  are  so  ol>- 
scureiy  written  or  printed  :is  to  be  indistinct,  the  figures  in  the  margin 
bay  be  referred  to  to  explain  them/^  If  by  inadvertence  the  amount 
is  expressed  in  figures  only,  it  will  suffice.^ 

§  86a.  Marginal  figures  of  amount,  with  blank  amount  in  body 
of  instrument.  The  fact  that  an  iiuiount  is  stut.d  in  the  margin  of  a 
note,  both  in  words  an<l  figures,  d(M-s  not  dispense  with  the  necessity 
of  expressing  clearly  in  the  instrument  the  amount  for  which  it  is 
made,^^  an.l  though  the  figures  are  in  the  margin  of  the  pap<T,  so 
long  U  the  amount  is  left  blank  in  the  body  of  the  instrument,  there 
can  be  no  recovery  thereon.^ 

bank  whore  it  waa  loft  for  discount,  obscrvinR  the  difforonro  Ix-lwoon  the  nuirKinul 
r.Kiinw  :m(l  th.-  words  in  the  hcKlv,  chunRfMl  the  nuirninal  fiRiiro  I  to  ft  3,  thereby 
eoi.f..rn.it.K  th.-ni.  Th.-  n.urt  said:  "We  do  not  think  the  nuirKinnl  notution  ron- 
Btitutes  any  part  of  the  bill.  It  b^  simply  a  menjoraii.luin  or  abri.lnuient  of  the 
contents  of  the  bill  for  the  e.)nvenienee  of  referenee.  The  rontraet  is  perfeet  with- 
out it.  If  this  is  so,  ftny  alteration  in  the  t.Kures  cannot  avoid  the  eontraet.  b«- 
cause  it  is  no  alteration,  either  material  or  immaterial,  in  th.-  contract."  Chitty 
on  Bills  1*1 -)()!,  17:^ 

56.  1  Tarsons  on  Notes  and  Hills.  2S. 

57.  Hiley  V.  Dickens,  19  111.  20;  Corgan  v.  Frew,  39  III.  31;  Chitty  on  Hills 

1*1  t'.)l,  172. 

68.  Sweetzer  v.  Kren.h,  13  Mote.  (Mass.)  2132;  Petty  v.  Heispol,  31  I  <-x.  K.D; 
Corgan  v.  Frew,  39  III.  31,  whore  there  was  in  the  margin  "$:A1^)"  and  m  th.> 
body  "five  hundred,"  and  it  was  held  to  mean  "dollars."  In  Louisiana  it  is  pro- 
vided by  the  Revi.sed  Statutes  of  1S70,  as  f.)llows:  "Sec.  319.  No  bill  of  oxchanRo, 
promis.sorv  note,  or  other  oblipition  for  the  payment  of  money,  miuie  withm  the 
State,  shall  be  received  as  eviden«-e  of  a  debt,  when  the  whole  sum  shall  be  ex- 
pressed in  fiKures,  unless  the  same  shall  be  a<-comi)anied  by  proof  that  it  wtus  Riven 
for  the  sum  therein  expre.s.sed.  The  cents  or  fractional  parts  of  a  dollar  may  be 
in  figures."  In  a  case  in  which  the  amount  in  fiKures  preceded  the  date  of  ma- 
turity and  promise  to  pay,  it  wm  held  to  be  suthcient.    Strickland  v.  Ilolbrook, 

75  Cal.  26S. 

59  Chestnut  V.  Chestnut,  104  Va.  5.39,  52  S.  E.  348;  2  L.  R.  A.  (X.  S.)  879, 
citing  text.  Compare  Witty  v.  Mut.  Life  Ins.  Co.,  123  Ind.  411,  24  N.^  E.  141, 
in  which  it  was  held  that  if  the  maker  of  a  note  promises  to  pay  "dollars,"  but  the 
number  of  dollars  in  the  body  is  left  blank,  and  figures  in  the  margin  state  the 
number  of  dollars,  the  marginal  figures  should  be  taken  as  the  obligation. 

60.  Norwich  v.  Hyde,  13  Conn.  279;  Hollen  v.  Davis,  .59  Iowa,  444.  Where  it 
was  obviously  the  purpose  of  the  parties  that  the  body  of  the  note  should  contain 
the  complete  promise  of  payment,  the  marginal  figures  will  be  regarded  as  merely 
a  memorandum  for  convenience  of  reference,  and  no  part  of  the  note  itself;  and 
while  the  amount  to  be  paid  remains  unstated,  the  writing  does  not  constitute  a 
note,  and  cannot  be  recovered  upon  as  such.  Vinson  v.  Palmer,  45  Fla.  630,  34 
So.  276,  citing  text. 


§  87  ELEMENTS   AND    PHRASES   OF   BILLS   AND    NOTES  133 

If  it  had  really  been  the  intention  of  the  parties  to  the  paper  that 
the  sum  for  which  it  was  executed  should  have  been  stated  therein, 
there  is  implied  authority  to  the  holder  to  fill  the  blank  accordingly 
to  an  amount  not  exceeding  the  limitation  of  the  figures  on  the  mar- 
gin.^' Where  the  word  "dollars"  is  left  out,  or  the  dollar-mark  is 
omitted,  they  will  nevertheless  be  supplied  in  this  country ,*2  where, 
under  the  like  circumstances,  "pounds"  would  be  supplied  in  B^ng- 
laiid.*'''  Where  "  thee  hundred  dollars"  was  expressed  in  a  note,  it  was 
left  to  a  jury  to  say  whether  or  not  "three,  etc.,"  was  intended,*^^  and 
a  note  for  "the  sum  of  fifty-two,  25-l(M),"  was  held  to  tlenote,  beyond 
(juestion,  that  the  fraction  meant  wius  "dollars."  ^•'  So  where  the 
note  was  for  "one  hundred  and  ninety-one,  fifty  cents,"  the  word 
dollars  was  supplied." 

§  87.  The  term  "  dollars."— When  the  term  "dollars"  is  u.sed  in 
my  security  for  money  given  in  any  of  the  I'nited  States,  it  is  under- 
toiwl  to  mean  dollars  "of  the  lawful  money  of  the  I'liited  States;" 
iiid  extraneous  evidence  will  not  be  permitted  as  a  general  rule  to 
-:ive  it  a  different  signification."^  But  un<ler  jx-culiar  circumstances, 
^uch  as  arose  during  the  existence  of  the  ('onfed«Tate  States,  when 
tin'  term  "dollars"  was  applied  to  ( 'onfederate  currency  in  all  circles, 
parol  or  other  evidence  will  l»e  jjermittiKl  to  explain  the  true  meaning 
and  intent  with  which  it  was  <'mployeti."*    Thus,  in  a  ciuse  before  tlu; 

61.  Hank  of  Commonwpjilth  v.  Curry,  2  niirin,  112;  Hunk  of  LiincHtonr  v. 
I'ctiick,  .')  Mon.  ■J.'i;  Norwich  Hnuk  v.  Hy<l«',  lA  Conn.  270.     S<'<>  /x>.s/,  §  14:{. 

62.  Coruiin  v.  Fn-w.  :«»  111.  .11;  Kl.in.ln*-  v.  Kay,  124  111.  App.  l.iti;  Williiini.son 
V.  Smith,  1  Coldw.  1;  .\I<-C4)y  v.  Cilrnorf.  7  Ohio  St.  2»1.S;  .Miirrill  v.  Hiiridy,  17 
Mo.  Mn't;  Ccmlbroth  v.  I'urinlon.  L'y  M«-.  4«i«J;  Swiitzrr  v.  Fn'nch,  i:5  .Mete.  (Miu<.s.) 
2tV2;  .Northrop  v.  Sjinlwrn,  22  Vt.  43.'!;  Ikxith  v.  Wiillnr*-,  2  lloot,  247;  Hiirrnan  v. 
Howe,  27  Gratt.  (»77;  Statr  v.  Sohwtuiz,  (>4  \Vi.H.  4:V2. 

63.  Hex  V.  Klliott,  1  I>earh  C.  L.  ITft,  2  luwt  P.  C.  <Jol;  Phipps  v.  Tanner, 
:{  C.  iV  H.  4S.S.     S«-<',  (iTile,  §70. 

64.  Hurnhani  v.  All.n,  1  Gray,  496. 
66.   .Murrill  v.  Hiimiy,  17  Mo.  4(Mt. 

66.  H.':u-(Woy  v.  Hill,  Gl  111.  liTA. 

67.  Bank  v.  Supor\LsorH,  7  Wall.  26;  ThorinRton  v.  Smith,  8  Wall.  12;  Omo- 
hunilro  v.  Crump,  18  Gratt.  7(V);  I^ohman  v.  Crouch.  19  Gratt.  .'i21;  Smith  v. 
Walker,  1  Call,  24;  Commonwoalth  v.  H«'autnarrhai.s,  3  Call,  107;  Wilcoxen  v. 
Itcynoldn,  46  Ala.  .')'29;  HiRhtower  v.  .Maull,  'A)  Ala.  495;  Stewart  v.  Salamon,  94 
r.  S.  r4  Otto),  4:W. 

68.  l»hrnan  v.  Crourh,  19  Gratt.  331 ;  ThorinKton  v.  Smith,  8  Wall.  12;  Donley 
V.  lin.iall,  32  Tex.  43;  Stewart  v.  Salamon,  94  l'.  S.  (4  Otto)  434;  Confederate 
Note  Case,  19  Wall.  548;  WilminRton,  etc.,  R.  Co.  v.  King,  91  U.  S.  (1  Otto)  3. 


134  FORMAL   REQUISITES   OF   BILLS    AND    NOTES  §  88 

United  States  Supremo  Court,  involvinR  the  legal  effect  of  a  note  for 
$10,000,  dated  Montgomery,  Ala.  (whieli  was  in  the  Confi-derate 
States  during  the  war),  November  28,  1864,  Chief  Justice  Chase,  de- 
livering the  opinion  of  the  court,  said:  "It  is  quite  clear  that  a  con- 
tract to  pay  dollars,  made  between  citizens  of  any  State  of  the  Union, 
while  maintaining  its  constitutional  relations  with  the  national  govern- 
ment, is  a  contract  to  pay  lawful  nioney  (jf  the  United  States,  and 
cannot  be  modified  or  explained  by  parol  eviilence.  But  is  it  ecpially 
clear,  if  in  any  other  country  coins  or  notes  denominated  dollars 
should  be  authorized,  of  different  value  from  the  coins  or  notes  which 
are  current  here  under  that  name,  that,  in  a  suit  upon  a  contract  to 
pay  dollars  made  in  that  country,  evidence  would  be  admitted  to 
prove  what  kind  of  dollars  were  intended,  and  if  it  should  turn  out 
that  foreign  dollars  were  meant,  to  prove  their  etjuivalent  value  in 
lawful  money  of  the  United  States.  Such  evidence  does  not  modify 
or  alter  the  contract.  It  simply  explains  an  ambiguity  which,  under 
the  general  rules  of  evidence  may  be  removed  by  parol  evidence."  "^ 
But  the  same  tribunal  has  held  that  in  the  ab.sence  of  parol  testimony 
it  would  be  presumed  that  a  note  payable  in  one  of  the  Confederate 
States  during  the  war,  in  "dollars,"  was  presumptively  payable  in 
lawful  money  of  the  United  States.^"  In  such  cases  the  Supn-nie 
Court  of  the  United  States  holds  that  the  sum  payable  in  actual 
money  must  be  asc(>rtained  by  the  value  in  coin,  or  legal  currency  of 
the  United  States,  at  the  time  when,  and  place  wIutc,  the  note  was 
made,  of  the  Confederate  note  equal  in  nominal  amount  to  the  number 
of  dollars  specified.^^ 

§  88.  Thirdly,  as  to  the  time  of  payment. — Bills  and  notes  are 
usually  drawn  payable  at  a  specified  time  after  date,  or  after  sight, 
or  at  sight."-    Sometimes  they  are  made  payable  on  demanil,  or  no 

69.  ThorinRton  v.  Smith,  8  Wall.  12.  Sec  Cook  v.  Lillo,  103  U.  S.  (13  Otto) 
793.  In  Now  York  hoUl,  that  it  was  competent  for  an  expert  in  handwriting  to 
explain  a  provision,  that  might  be  construed  to  mean  January  or  July.  See 
Drcsler  v.  Hard,  127  N.  Y.  235,  27  N.  E.  823.  Following  the  principle  that  latent 
ambiguity  can  be  explained  by  parol  testimony,  it  has  been  held  that  the  word 
''duplicate,"  as  used  in  a  note,  can  be  explained  as  performing  a  similar  office  to 
that  with  which  it  is  generally  coupled  in  foreign  bills  of  exchange.  See  McCann 
V.  Preston,  79  Md.  223,  28  Atl.  1102. 

70.  The  Confederate  Note  Case,  19  Wall.  548. 

71.  Stewart  v.  Salamon,  94  U.  S.  (4  Otto)  434  (1876). 

72.  Story  on  Rills,  §  50.  In  Martin  v.  Lewis,  30  Gratt.  672,  the  bill  was  dated 
August  20,  1866,  and  was  drawn  payable  "on  the  Ist  January,  1867."    A  note 


§  88  ELEMENTS   AND    PHRASES   OF   BILLS   AND    NOTES  135 

time  is  specified,  in  which  case  on  demand  is  understood.^^  If  the 
time  of  payment  be  left  blank,  as  for  instance  if  the  instrument  be 

payable  " months  after  date,"  the  like  rule  would  apply.' ^    A 

note  promising  to  pay  when  the  maker  can  make  it  convenient  has 
been  held  payable  within  a  reasonable  time;  '^  and  it  seems  that  notes 
payable  within  a  reasonable  time  are  generally  regarded  as  negotiable 
in  the  United  States,  the  law  fixing  a  definite  limit  to  the  period  to  l)e 
allowed.'* 


dated  on  March  25,  1904,  and  payable  on  "the  Ist  day  of  November,"  without 
B[H'<-ifyinK  a  year,  i.s,  in  the  alisenee  of  anything  in  the  instrument  requiring  a 
contran.-  con.struftion,  to  Ik-  oonHtrued  iw  maturinR  on  the  Ist  day  of  November 
of  the  year  tmme<l.    l^-Hler  C'«».  v.  Di.kerson,  1  da.  App.  03,  57  S.  E.  911  (1907). 

73.  Firnt  .Nut.  li.mk  v.  Hunt,  2.',  Mo.  App.   171,  citinK  the  text;  CoUins  v. 
Trotter,  Si  Mo.  27.^,  citinK  the  te.xt;  Libby  v.  Mikelborn,  2.S  Minn.  3S;  Converse  v. 
Johnson,  14t)  Mass.  ll*;  Hall  v.  Toby,  1 10  Pa.  St.  HIS;  Ku.s\vell  Mf^.  Co.  v.  Hudson, 
72  CJa.  25;  ThomiW)n  v.  Ketehunj,  S  John.s.  is'.);  Herriek  v.  Hennett,  S  Johns.  374; 
Caylord  v.  Van  I.oan,  15  Wend.  30S;  Cornell  v.  Moulton,  3  Den.  12;  Keyes  v. 
Fenstermaker,  24  Cal.  32<>;  Freeman  v.  Ross,  15  Ga.  252;  Kendall  v.  Calvin,  15 
Me.  151;  Porter  v.  Porter,  51  Me.  37r);  Jon.-s  v.  Hrown,  U  Ohio  St.  tiOl;  Hacon  v. 
Pa^e,  1  Conn.  4(M;  I)o<id  v.  Denny.  t>  Onu.  157;  Cn-^n  v.  Drebillis,  1  Iowa,  552; 
Stover  V.  Hamilton,  21  dnitt.  273;  Bowman  v.  .MrCh.-sney,  22  (Initt.  iWJ;  Whit- 
Iwk  V.  rnder\v(HKi,  2  H.  A  C.  157;  Aldous  v.  Cornw.ll,  L.  K.,  3  (^  H.  .573;  Abbott 
V.  DouRlas,  1  C.  B.  491;  Story  on  Hill.s,  §  'A);  Chitty  [M511,  174;  and  int.re.st  runs 
from  date:  Collier  v.  C.niy,  1  Tenn.  110.    See  antt;  §§  40,  44.     In  (M-ornia  held 
te«.nstruinK  s»-etion  37(X)  of  the  Civil  Code)  that  a  promi.>wor>'  note  payable 
generally  "after  date"  un«l  not  otherwise  expressinR  any  time  for  payment,  is 
ptiyabl.'  on  d-inand.     H<jtel  Iaviuvt  Co.  v.  Johnson,  103  da.  (MM,  30  S.  10.  558; 
Younn  V.  Ellis,  91  Va.  301,  21  S.  Iv  4.S0;  Cowan  v.  llndford  Iron  Co.,  H:J  Va.  550, 
3  S.  K.  120;  MeVeinh  v.  Howard,  S7  Va.  ri03,  13  S.  K.  31 ;  <  )mohun<lro  v.  Omohun- 
dro,  21  Gratt.  tKH.     Where  a  jury  fouml  that  an  anninicnt  was  uv.ulc  for  an  ex- 
H-nsion  of  time  of  payment  of  the  note,  that  no  d.linit.-  time  wjum  !i(ire«><l  uf)<)n,  but 
that  a  n-jisonable  time  for  such  deUiy  was  until  the  phiintitT  was  .li.ssatisfied  with 
the  security,  until  payment  was  demanded  or  ofTert^l,  the  lin<linKH  do  not  make  the 
instnmient  a  demand  note  in  the  onlinarv'  lepal  meaning  of  the  term  "payable  on 
demand."    The  jury  in  efTe<-t  found  that  a  rinlit  of  action  di.l  not  ar.-rue  u|)on  the 
note  until  the  pay*-*-  w:ls  di-ssjitisfiol  with  the  .s<-<>urity  an<l  made  an  actual  demand 
of  payment.    Lynd..n  Sav.  Hank  v.  International  Co.,  7S  Vt.  169,  02  Atl.  50,  112 
Am.  St.  Rep.  900.     Where  the  laws  of  the  State  mak.-  the  appan-nt  maturity  of  a 
demand  note  bt^aring  inten-st  one  year  after  its  date,  such  an  ia'itrument  is  negotia- 
ble.    Merchants'  Nat.  Hank  of  Santa  Monica  v.  Bentel,  15  Cal.  App.  170,  113 

Pac.  70S. 

74.  Mcl>'an  v.  Nichlen,  3  Vict.  107.  But  evidence  will  be  received  to  identify 
Buch  a  note  with  one  described  in  a  mortgane  as  payable  at  a  time  therein  siKJcified. 
Stowe  V.  Merrill,  77  .Me.  5.^0. 

76.  U-wis  V.  Tipton,  10  Ohio  (N.  S.),  88.    See  ante,  §  44. 

76.  Bowman  v.  McCheaney,  22  Gratt.  609.    See  arUe,  §  44. 


136  FORMAL  KEQUISITES    OF    BILLS    AND    NOTES  §  89 

When  the  word  "month"  is  used  in  specifying  the  time  of  payment, 
a  calendar  month  is  understood;  and  the  word  "year"  signihes  a 
calendar  year." 

In  England,  foreign  bills  are  frequently  drawn  payable  at  usance 
or  usances;  and  by  usance  is  meant  the  common  period  fixed  by  cus- 
tomary dealing  between  the  country  of  the  drawer  and  the  country 
of  the  place  of  payment  for  the  payment  of  bills."'* 

§  89.  A  note  payable  "when  demanded,"  "^  or  "on  call,"  '^  or  when 
"called  for,"**'  or  "on  demand  after  date,"  ^^  is  not  distinguishable 
from  one  payable  on  demand;  and  payable  "on  demand  at  sight," 
is  equivalent  to  payable  "at  .sight."  **^  If  payable  with  interest 
"twelve  months  after  notice,"  the  amount  is  due  whenever  demanded 
after  notice  has  been  given  and  twelve  months  have  expired;^'  and 
the  words  "one  hundred  and  eighty  days  pay  to  the  order  t)f"  in  a 
bill  of  exchange  import  that  the  bill  was  due  180  days  after  date,  and 
not  that  tlie  money  should  be  ])aid  within  ISO  days;**'*  and  where  the 
expression  used  is  "on  demand  with  interest  after  four  months," 
it  is  due  wiien  four  months  have  exjiircd.^"  Hut.  in  such  a  c-asc,  it  has 
been  held  that  d(>mand  might  be  made  itnnicdi.itcly.  but  that  interest 


77.  See  chapter  XX,  on  Pr(\sontnu'nt  for  Payment;  and  post,  §  624. 

78.  Story  on  Bills,  §  .TO. 

79.  Bowman  v.  McChesney,  22  Gratt.  609;  KinRsbury  v.  Butler,  4  Vt.  4.58. 

80.  Luther  v.  Crawford,  11(>  111.  App.  351,  affirmed  213  111.  .590,  73  N.  E.  4.30; 
Bacon  v.  Bacon,  94  Va.  ()87,  27  S.  E.  .570. 

81.  Mobile  Sav.  Bank  v.  McDonnell,  S3  .\la.  598;  Crossmore  v.  Pape,  73  Cal. 
213;  Dixon  v.  Nuttall,  1  Cromp.,  M.  &  R.  307;  Boyman  v.  McChesney,  22  Gratt. 
609.     See  §§  599,  1215. 

82.  Hull  V.  Myers,  90  Ga.  074,  10  S.  E.  053;  citing  text;  Fenno  v.  Gay,  146 
Mass.  118;  Hitchings  v.  Edmands,  132  Mass.  338;  O'Neill  v.  Magnor,  81  Cal.  631 ; 
Crim  V.  Starkweather,  88  N.  Y.  339.  See  §  1215.  In  Crim  v.  Starkweather,  88 
N.  Y.  340,  the  words  "on  demand"  were  thought  to  render  the  note  immediately 
due,  while  "on  demand  after  date"  require  that  some  time  should  elapse  before 
demand  could  be  made.  In  New  Jersey  the  Supreme  Court  commenting  on  this 
case  said:  "The  New  York  case  comports  more  exactly  with  the  terms  used, 
but  plainly  a  demand  forthwith  after  the  day  of  the  date  would  be  in  accordance 
with  the  contract,"  i.  e.,  to  charge  an  indorser.  Foley  v.  Emerald  Brewing  Co., 
61  N.  J.  L.  430,  39  Atl.  650. 

83.  Bowman  v.  McChesney,  22  Gratt.  609. 

84.  Clayton  v.  Goslmg,  5  B.  &  C.  360. 

85.  Moreland's  Adm'r  v.  Citizens'  Sav.  Bank,  114  Ky.  .577,  71  S.  W.  520,  61 
L.  R.  A.  900,  102  Am.  St.  Rep.  293. 

86.  Hobarts  v.  Dodge,  1  Fairf.  156. 


§  90  ELEMENTS   AND    PHRASES   OF   BILLS   AND   NOTES  137 

would  not  begin  until  after  the  time  speeified.^^  And  where,  upon  com- 
promising a  suit,  a  certain  sum  was  paid  in  cash,  and  a  note  was  given 
for  the  balance  of  the  amount  compromised  on  payable  "at  once," 
the  words  "at  once"  were  construed  to  mean  within  reasonable  time.*^ 
Under  Negotiable  Instrument  statute. — Under  the  statutory  defini- 
tion of  an  instrument  payable  on  demand,  and  the  provisions  declaring 
that  any  terms  are  sufficient  which  clearly  indicate  an  intention  to 
conform  to  the  requirements  of  the  statute,**^  it  has  been  held  that  an 
instrument  not  expressing  any  time  of  payment  is  payable  on  demand 
though  it  contain  the  words  "and  in  the  event  of  my  death  I  hereby 
authorize  and  direct  the  payment  of  the  same  out  of  the  funds  of  my 
estate,"  as  such  words  are  surplusage.'-^ 

§  90.  Fourthly. — The  place  of  payment  need  not  be  specified  in 
the  l)ill  or  note,  but  very  often  is.  If  tlii'  ilrawer  ilesignate  in  the  bill  a 
place  of  payment,  he  will  be  dischargeti,  unless  it  be  there  presented 
at  maturity,  as  will  also  an  indorser;  '•"  but  as  to  the  maker  of  a  note 
or  acceptt)r  of  a  bill  payable  at  a  particular  i)lace,  unless  the  restric- 
tive words  "only  and  not  elsewhcn"  br  added,  no  presentment  there 
at  maturity  or  afterward  is  necessary  to  charge  him.^-  Where  no  place 
of  payment  is  expressed  in  a  note,  the  place  of  i)ayment  is  untlerstood 
to  be  where  the  maker  resides;'-"  and  if  ncnie  be  expressed  in  a  bill, 
where  the  drawee  resides  is  understood.^^ 

87.  I/oriiin  V.  f'.urncy,  5  Pick.  1.');  Maasie  v.  Hoyd  (Ala.),  0  Sfj.  145. 

88.  Hiv»rs  v.  C':iriii)l)(ll,  .')!  Tex.  Civ.  App.  103,  111  .S.  VV.  190. 

89.  ApiMiidix,  .si'cs.  7,  10. 

90.  (;ill).rt  V.  A<lani.s,  131  N.  Y.  S.  7S7. 

91.  See  chu|)ter  XX,  on  Presentment  for  Payment. 

92.  See  chapter  XX,  on  Presentment  for  Payment.  A  statement  of  the  place 
of  payment  in  a  promLsaory  note  does  not  affect  the  liabihty  of  the  maker;  there- 
fore, in  a  suit  on  a  note  in  which  no  phice  of  payment  was  stipulated,  evidence 
that  the  payee  resided  in  Chici^o,  and  tliat  the  contract  was  to  pay  the  note  in 
that  city,  wjus  pro|)erty  excluded  as  immaterial.  Ray  v.  Anderson,  119  Ga.  926, 
47  8.  E.  20'). 

93.  Story  on  Notes,  §  49;  Oxnard  v.  Varnum,  111  Pa.  St.  193;  Overland  Min- 
ing Co.  V.  McMaster,  19  Utah,  177,  .50  Pac.  977;  Christ opherson  v.  Common 
Council,  117  Mich.  125,  75  X.  W.  445,  citing  text;  Bardsley  v.  Wa.shington  Mill 
Co.,  54  Wash.  5.03,  103  Pac.  822,  132  Am.  St.  Rep.  1133,  or  at  the  usual  place 
of  business.  Though  at  the  time  a  note  was  given  the  payee  resided  and  has 
contiiuied  to  reside  in  another  state,  the  place  of  payment  is  in  the  state  where 
the  maker  residtni,  when  the  debt  was  contractetl  and  the  note  was  executed  and 
dcliveretl  there.     Gage  v.  McSweeney,  74  Vt.  370,  52  Atl.  9(39. 

94.  Chitty  on  Hiils  (13th  Am.  «i.),  1*1511,  174;  Story  on  Bills,  §48;  Scott  v. 
Perlee,  39  Ohio  St.  07,  citing  the  text. 


138  FORMAL   REQUISITES   OF    BILLS    AND    NOTES  §  'JOa 

Circumstimces  however  may  control  this  inference.  Thus,  if  ii  hill 
were  dniwn  upon  a  merchant  abroad,  addressed  to  him  "at  Paris  or 
at  London,"  the  place  of  payment  would  be  deemed  the  place  where 
he  accepted  it,  whether  Paris  or  London.^^  If  the  drawer  direct  on  the 
face  of  the  bill  that  it  be  paid  at  his  own  house,  it  creates  a  presump- 
tion that  it  is  an  accommodation  bill;  and  that  he  was  to  pay  it;  and 
unless  he  rebut  it  by  showing  that  he  really  had  effects  in  the  drawee's 
hands,  notice  of  dishonor  will  be  dispensed  with.^^  Where  a  bank  is 
named,  it  will  be  presumed,  in  the  absence  of  evidence  appearing  on 
the  face  of  the  note  to  the  contrary,  that  it  was  at  the  maker's  home 
town,^^  And  the  execution  of  a  note,  on  its  face  payable  at  a  bank,  the 
place  for  the  nain<'  of  which  is  left  blank,  at  a  town  named,  authorizes 
the  payee,  b('ft)rr  tiic  maturity  of  tin'  note,  to  insert  the  name  of  a 
particular  bank,  at  sucii  town,  in  the  blank  space,  so  that,  whatever 
limitation  of  authority  may  have  been  imposed  i)y  the  maker  on  the 
payee,  and  although,  by  the  law  of  the  State,  no  note  is  negotiable  un- 
less payabl(>  at  a  specified  bank,  the  note  will  be  negotiable,  and 
governed  by  the  law  merchant  in  the  hands  of  a  bona  jldv  indorsee.'-"* 

§  90a.  Place  of  payment  as  criterion  of  negotiability. — In  some 
of  the  Stales  of  the  I  nili'd  Stales  the  place  of  payment  is  made 
criterion  of  negotiability.^     Where  it  is  necessary  to  negotiability 

96.  Freese  v.  Brownell,  35  N.  J.  L.  285;  Cox  v.  National  Bank,  100  U.  S. 
(10  Otto)  713;  Story  on  Hills,  §  4«».  In  Indiana,  under  1  Rrv.  Stat.  1870,  p.  636, 
§  6,  notes  to  be  governed  Ijy  th(>  law  merchant  niUHt  show  on  their  face  that  they 
are  payable  at  or  in  a  bank.  Cros^san  v.  May,  »>S  Ind.  2t2.  If  payable  "at  In- 
diana Banking  Company,"  it  has  been  held  that  such  expression  is  not  equivalent 
to  being  payable  at  or  in  a  bank.  Rominger  v.  Keyes,  73  Ind.  376.  So  held  also 
where  the  note  was  made  "payable  at  the  bank  in  Attica,"  though  there  was  but 
one  bank  there.  Hardy  v.  O'Brien,  91  Ind.  94;  Butterfield  v.  Davenport,  84  Ind. 
591. 

96.  Sharp  v.  Bailey,  9  B.  &  C.  44. 

97.  Bailey  v.  Birkhofer,  123  Iowa,  59,  98  N.  W.  594.  Where  the  maker  promised 
to  pay  the  sum  nanuxl  at  "the  First  National  Bank,"  and  no  other  designation 
of  the  place  of  payment  appeared  upon  the  instrument,  except  a  printed  memoran- 
dum on  the  margin  reading,  "Corner  Main  Street  and  First  Ave."  these  words 
were  no  part  of  the  note.    Bailey  v.  Birkhofer,  123  la.  59,  98  N.  W.  594. 

98.  Gillaspie  v.  Kelly,  41  Ind.  158;  Spitler  v.  James,  32  Ind.  203.  See  post, 
§144. 

99.  For  cases  applying  such  statutes,  see  Oates  v.  National  Bank,  100  U.  S. 
239  (Alabama  statute);  Gwathmay  v.  Clisby,  31  Fed.  220;  Walston  v.  Davis, 
146  Ala.  510,  40  So.  1017;  Ray  v.  Baker,  165  Ind.  74,  74  N.  E.  619;  Adams  & 
Westlake  Co.  v.  Robinson  (Ky.),  76  S.  W.  510;  Barger  v.  Farnham,  130  Misc. 
487,  90  N.  W.  281.    It  has  been  held  in  Georgia  that  a  note  payable  at  "H.  &  J.," 


§  90a        ELEMENTS   AND    PHRASES    OF   BILLS   AND    NOTES  139 

that  the  note  be  payable  at  a  bank  in  the  State,  and  a  note  is  made  in 
the  State,  payable  at  a  bank,  it  will  be  presumed  that  the  bank  is  in 
the  State.  1 

Under  Negotiable  Instrument  statute. — It  has  been  held  that  the 
Negotiable  Instrument  statute  repealed  a  statute  providing  that  a 
promissory  note  payable  at  a  bank  is  put  upon  the  footing  of  a  bill  of 
exchange  when  discounted  by  the  bank.^ 

does  not  upon  its  face  show  that  it  was  made  for  the  purpose  of  negotiation  at  a 
chartered  bunk;  and  that  the  fact  that  suit  thereon  Ls  brought  against  the  indorscrs 
by  n.  &  J.,  and  who  are  describeil  in  the  {jleatlings  ua  lately  bankers  doing  business 
under  the  name,  styh-,  and  fimi  of  II.  &  J.,  is  not  sufficient  to  prove  that  H.  &  J. 
is  a  chartennl  bank.  Salmons  v.  Iloyt,  o3  Oa.  493.  In  Freeman's  Bank  v.  Ruck- 
man,  Hi  (Jratt.  12<),  the  note  8ue<l  on  was  executed  in  Boston,  Mass.,  and  was 
payable  "at  either  of  the  banking  hous<'S  in  Wheeling,  V'a."  Judge  Moncure 
said:  "The  note  was  not  payable  at  a  particular  bank,  or  at  a  particular  office 
thereof,  etc.  (following  the  statute),  but  'at  either  of  the  banking  houses  in  Wheel- 
ing Va.,'  and  therefore  is  not  a  negotiable  note."  It  is  not  necessary  in  Virginia 
that  the  note,  in  onler  to  be  negotiable,  be  expressly  payable  in  that  State:  "It 
is  certainly  true  that  such  note,  etc.,  miLst  on  its  face  be  payable  in  this  State, 
bwaii.s<-  the  .si-ctinn  so  re<]uires.  Hut  it  does  not  require  that  the  State  shall  be 
exjiressly  namnl  in  the  note."  McVeigh  v.  Bank  of  the  Old  Dominion,  20  CJratt. 
&«),  Moncure,  V.  Si-e  Broun  v.  Hull,  '.Hi  Gratt.  31,  in  which  case  the  bank  ceased 
to  exist  after  the  note  was  made;  an<l  the  court,  considering  the  eflfect  of  this  fact 
on  an  indorsement  after  maturity,  heUI  that  the  indorsement  amounte<J  to  a 
mere  assignment,  and  was  not  negotiable.  If  the  note  ha<l  be<'n  transf(rre<l  be- 
fon>  maturity,  the  princijjlt-of  the  decision  would  have  led  to  a  like  ruling,  the  court 
bi'ing  of  opinion  that  as  the  indonw-mcnt  could  not  Iw  payable  at  tli«;  bank,  il 
coulil  not  be  such  in  the  sense  of  the  law  merchant.  The  c;ls«'  is  a  very  peculiar 
one,  and  the  dccL-^ioii  questionable.  The  negotiable  character  of  the  j)aper  having 
been  fixed  in  its  inception,  query,  if  that  character  could  be  changed  by  subse- 
quent events?  To  place  a  note  upon  the  fofjting  of  a  bill  of  exchange  under  the 
Kentucky  statute,  it  must  be  not  only  payable  and  negotiable  at  an  incorporated 
bank,  but  indorsetl  to,  and  dLscountc<l  by,  the  bank  at  which  it  is  |)ayable  or  by 
mmv  other  incor|)orati>d  bank.  Magoffin  v.  Boyle  Xat.  Bank  (Ky.),  09  S.  W. 
702;  Nickell  v.  Citizens'  Bank  (Ky.),  00  S.  W.  92.'j;  Jones  v.  Worj<J,  10  Ky.  (3 
A.  K.  Marsh.)  lt)2.  Under  a  statute  providing  that  a  note  payable  in  a  bank 
shall  be  neg(»tiable,  a  note  payable  "at"  a  certain  bank  is  within  the  statute. 
Halstead  v.  WchkIs  (Ind.  App.),  95  N.  E.  429.  Where  false  and  fraudulent  rep- 
ri'sentations  with  respect  to  the  consideration  of  a  note  are  set  up  in  an  action 
on  the  note,  where  the  note  was  not  made  payable  at  a  bank  in  the  State  and  had 
been  assigned  to  a  nonresident,  the  same  reme<Jy  may  be  hatl  against  the  assignee 
that  might  be  had  against  the  payee.  Reed  v.  The  Tioga  Mfg.  Co.,  66 
Ind.  21. 

1.  McGuirk  v.  Cummings,  54  Ind.  246.    See  McVeigh  v.  Bank  of  Old  Dominion, 
26  Gratt.  S30,  and  sxqira. 

2.  Williams  v.  Paintsville  Nat.  Bank,   137  S.  W.    535,  143  Ky.  781,  as  to 
Kentucky  Statutes,  §  483. 


1  10  FOKMAL    REQUISITES    OF    BILLS    AND    NOTES     §§  90b-92 

§  90b.  Power  of  government  to  change  place  of  payment.  —When 

the  place  ol"  payineiil  is  >i)eeititil  in  a  l»ill  or  note,  or  iiegotialjle  Injnd 
it  is  a  part  of  the  contract,  and  after  its  execution  a  State  is  without 
power  to  chanjj;e  tlie  place  of  payment,  under  the  provision  of  the 
United  States  Constitution  prohibiting  tlu-  States  from  passing  any 
law  "impairing  the  obligation  of  contracts."  ^ 

§  91.  Fifthly,  as  to  the  name  of  the  drawer  or  maker. — It  is  of 
the  first  importance,  indeed  indispi^nsahle,  that  th<>  hill  or  note  should 
point  out  vvitli  certainty  the  party  who  enters  into  the  contract  im- 
ported by  its  terms,'  and  if  the  promise  be  in  the  alternative,  it  is  not  a 
good  negotiable  instrument.  Thus,  where  the  note  ran,  "I,  A.  B., 
promise  to  pay,"  and  was  signetl  "  A.  H.  or  else  ( '.  I).,"  the  court  said: 
"This  is  not  a  i)r()missory  note  against  this  defendant,  within  the 
statute  of  Anne.  It  operates  differently  as  to  the  two  parties.  It  is 
tiie  absolute  undertaking  on  the  part  of  Corner  (A.)  to  pay,  and  it  is 
conditional  only  on  the  part  of  the  defendant  (B.),  who  undertakes 
to  pay  only  in  the  event  of  Corner's  not  i)aying."  ''  But  it  has  been 
said  that  such  an  instrument  would  be  a  good  note  as  against  A.° 

§  92.  The  name  of  the  drawer  is  absolutely  needful  upon  the 
face  of  the  bill;  for  without  it  the  drawee  cannot  tell  whether  he 
should  accept  it  or  not,  or  any  holder  know  to  whom  notice  should 
be  given.  Indeed,  it  is  i)arado\ical  tosp<>ak  of  a  bill  without  a  drawer; 
for  the  xvvy  teiin  iaqjorts  a  negotiable  order  drawn  by  some  one.^ 
And  even  when  such  an  instrument  bears  the  name  of  one  upon  it  who 
signs  as  acceptor,  it  is  still  nothing  more  than  an  inchoate  i)aper,  which 

3.  Dillingham  v.  Hook,  32  Kan.  185,  4  Pac.  166. 

4.  Homan  v.  Francisco,  12  Mo.  App.  560.  In  this  case  the  note  began,  "One 
(lay  after  date,  wr,  jointly  and  severally  ...  as  principal,  and  John  Francesco, 
J.  B.  Walsh  (and  otherti)  a.s  security  .  .  .  promise  to  pay,  etc."  It  was  signed  by 
the  parties  described  as  sureties,  but  the  name  of  the  maker  was  omitted.  It  \va.s 
held  that  the  name  of  the  maker  could  not  be  supplied  by  parol  evidence,  and  that 
there  being  no  primary  obligation,  the  parties  signing  as  sureties  were  not  bound. 
In  Aultman  &  Taylor  Co.  v.  Gunderson,  6  S.  Dak.  226,  60  N.  W.  859,  55  Am.  St. 
Rep.  837,  it  is  held  that  where  a  note  is  signed  by  one  party  in  the  lower  right- 
hand  corner  and  by  another  in  the  lower  left-hand  corner,  evidence  is  admissible 
to  show  that  the  former  was  the  maker,  and  the  latter  a  witness. 

5.  Ferris  v.  Bond,  4  B.  ct  Aid.  679;  Story  on  Notes,  §  34;  1  Parsons  on  Notes 
ami  Bills,  36-37;  Chitty  [*1401,  162. 

6.  Byles  (Sharswood's  ed.)  [*92],  190.  See  Edwards  on  Bills,  134.  This  seems 
to  be  there  implied  by  the  author's  language. 

7.  Story  on  Bills,  §  53;  Benjamin's  Chalmers'  Digest,  4. 


§  92  ELEMENTS    AND    PHRASES    OF    BILLS    AND    NOTES  141 

cannot  bo  sued  upon  unless  a  drawer's  name  is  authoritativel}'  in- 
serted in  it."  And  it  has  been  well  said  that  it  is  "an  abuse  of  terms 
to  say  that  one  was  the  acceptor  of  a  bill  which  had  never  been  drawn ; 
or,  in  other  words,  that  he  had  accepted  an  'order,'  or  'request,'  that 
had  never  been  made  upon  him."  *  But  authority  to  insert  the  name  of 
a  drawer  to  such  an  inchoate  paper  would  be  prima  facie  presumed ;  '° 

8.  Tevifl  V.  YounR,  1  Mete.  (Ky.)  199;  May  v.  Miller,  27  Ala.  515;  Byles 
on  HilLs  (Shurwwood'8  t«d.)  ['HS],  17S.  In  MeC'iill  v.  Tiiylor,  10  C.  B.  (N.  S.) 
30,  34  L.  J.  305,  C  I'.  Lrie,  C.  J.,  said:  "The  in.strunient  haa  no  date  and  no 
drawer's  name,  but  the  defendant  wrote  hi.s  aeeeptanee  aeross  it,  and  the  question 
i.H,  hari  the  holder  of  .such  an  instrument  the  rinht  to  dei-hire  on  it,  either  jis  a  bill 
of  exehanne  or  pr<jmis.s<»ry  note?  It  certainly  is  ncjt  a  bill  of  exchange,  nor  is  it 
a  promi.H.s<»ry  nute.  It  w,  in  fart,  only  an  inchoate  instrumc-nt,  thounh  ca|)able 
of  bfinj;  c<)iii|)lrte<i."  Aeeordinf?,  t**"*'  StiM-ssin'T  v.  S.  K.  R.  V<j.,  3  Kl.  A  Bl. 
511),  •J3  L.  J.  (2.  M.  293;  KeRina  v.  llariHr,  7  (I  !V  1).  TS;  Cent.  L.  J.,  1S81, 
I).  171. 

9.  Tevifl  V.  YounK,  1  Mctr.  (Ky.)  199.  In  this  rafle  the  instrument  sued  on 
w:is  in  the  form  of  a  bill,  but  no  name  was  siRne*!  as  drawer.  It  wius  dat^nl  Shelbv- 
ville,  and  adiirestwd  "To  W.  (I.  Rogers,  Slidbyville;"  aeei'pt«'<l  by  Rogers,  and 
iniii>rs«tl  "John  TevLs."  Suit  wils  brought  by  Vouiig  against  Tevis  lus  indorH-r,  and 
Rogers  as  acceptor;  but  it  wius  held  that  the  instrument  Wiis  incomplete,  and  the 
action  «"ould  not  Iw  maintaine*!.  It  wits  sjiid  by  th«'  c«)urt,  [mt  I  )uval,  J.  (Simpson, 
J.,  di.Hs«'f>ting):  "The  fjilhicy  of  nil  the  ri-a.soning  of  eoun.s«-|  u|x»n  this  |M)int,  con- 
sists in  th«'ir  failure  to  re<'ogniw  the  distinction  l)etwiH'n  a  bill  of  exchange  and  the 
men*  form  of  such  an  in.strument.  'I'he  words  written  U|K»n  the  fare  of  the  |)aper 
in  i|uestion  jire  utterly  ino|x'rative,  and  without  force  or  legal  efTeet  for  any  pur- 
|K»S4'  lis  a  commercial  instrument,  without  the  name  of  n  drawer,  either  subs«'ribed 
to  the  pajM-r,  or  iiusj-rti-^l  in  the  ImmIv  of  it.  Whether  the  name  of  the  drawer, 
or  of  any  subs^Hjuent  party  to  the  bill,  be  forge*!  or  fictitious  makes  no  difTerence 
as  it  n-siH-cts  the  liability  of  the  indonv-r.  The  indors«-ment  im|>lies  an  undertaking 
that  the  antec»'<lent  parties  are  comi»etent  to  draw  and  accept  the  bill,  and  that 
their  signatun-s  an*  geiuiine.  But  the  indorwment  tlo*-?*  not  imply  an  undertaking 
that  the  pa|M>r  inilors«t|  contains  the  nam<-s  of  all  the  ant^-cedent  parties  neces.sary 
to  con.stitute  a  valid  bill  of  exchange,  when  the  fac«'  of  the  pa|X'r  ifs«'lf  shows  that 
it  is  blank  as  to  all  or  any  of  such  names.  The  indors4-ment  of  the  pajwr  would, 
doubth-ss,  confer  upon  th*-  party  intnj.st«>d  with  it,  authority  to  fill  up  the  blanks 
with  the  nanjes  of  any  parties,  at  the  di.scretion  of  the  latter;  and  .so,  the  inrlorse- 
mcnt  of  a  piece  of  blank  pajK-r  would  give  the  holder  authority  to  make  a  bill  of 
exchange,  uixjn  which  the  indorser  would  be  liable,  in  the  hands  of  an  innocent 
holder  for  value,  for  whatever  amount  or  in  the  names  of  whatever  parties  the 
bill  might  \h'  sub.'W'tiuently  drawn  and  accept(«d.  But  certainly  it  cannot  be  suf)- 
|H)S<'<1  that  in  either  of  the  cjls^-s  stat«>d,  the  indors«'r  could  l)<>  hel<|  liable,  as  such, 
until  the  paper  should  have  l>een  drawn  and  exe<-ut«Hl  and  comi)lete<l  as  a  bill  of 
exchange.  It  is  not  the  nu-re  authority  to  make  a  bill,  which  of  itself  creates  the 
liability,  but  it  Ls  the  execution  of  that  authority." 

10.  ilarvey  v.  Cane,  3-1  L.  T.  R.  04  (1H70).  See  jxyst,  §§  142,  147,  843,  844; 
Scard  v.  Jackaon,  34  L.  T.  R.  65,  note  a;  Moies  v.  Knapp,  30  Ga.  942;  Ben- 


142  FORMAL   REQUISITES   OF    BILLS   AND    NOTES  §  *J3 

and  if  inserted  without  authority,  the  acceptor  would  be  bound  to 
a  bonajide  holder  without  notice.^' 

§  93.  Maker  estopped  to  deny  capacity  of  payee. — By  executing 
a  promissory  note,  the  maker  engager  to  pay  the  amount  therein 
named  to  the  bearer,  if  it  be  payable  to  bearer;  to  the  payee  or  order, 
if  it  be  payable  to  a  particular  jMTson  or  ord<'r.  By  the  very  act  of 
engaging  to  pay  to  a  particular  payee  he  acknowledges  his  capacity 
to  receive  the  money;  and  also  his  capacity  to  order  it  to  be  paid  to 
another.^^  And  therefore  if  the  maker  is  sued  by  an  indorsee  of  the 
payee,  lie  cannot  defend  himself  on  the  ground  that  the  payee  had  no 
capacity  to  take  or  to  indorse  it  by  reason  of  being  an  infant,'^  a 
married  woman/^  a  bankrupt,'"  a  fictitious  person,'®  a  corporation 
without  legal  existence  or  capacity  to  indorse;  "  or  that  such  payee 
wiis  insane  at  the  time  the  note  was  executed;  '*  though,  if  the  payee 
became  insane  after  the  execution  of  the  note,  his  indors(>ment  would 
then  be  a  mere  nullity,  and  if  the  acceptor  knew  of  such  insanity  he 
would  not  be  justified  in  making  payment  to  any  one  whose  title  was 
affected  by  it.'^    There  are  authorities  which  hold  that  the  insanity 

jamin's  Chulmors'  Digest,  35,  46;  In  re  Duffy,  5  L.  II.,  Ireland,  927;  Hopps  v. 
Savage,  09  Md.  51(). 

11.  See  these  questions  discussed,  post,  §§  131,  132,  142,  147,  843,  844.  The 
Scotch  law  accords.  Smith  v.  Taylor,  Ct.  of  Seas.,  Feb.  27,  1824 ;  Ames  on  Bills  and 
Notes,  vol.  I,  p.  884.    And  so  also  the  Irish  law.     In  re  Duffy,  5  L.  II.,  Ireland,  92. 

12.  Wolke  V.  Kuhno,  109  Ind.  313;  I^-wi.sohn  v.  Kent  &  Stanley  Co.,  87  Ilun, 
257,  33  N.  Y.  Supp.  820,  citing  and  approving  the  text ;  Mayer  v.  Old,  57  Mo.  App. 
039,  text  cited. 

13.  Frazier  v.  Massey,  14  Ind.  382;  Taylor  v.  Croker,  4  Esp.  187;  Jones  v. 
Darch,  4  Price,  300;  Grey  v.  Cooper,  3  Doug.  05.    See,  post,  §  227. 

14.  Smith  v.  Marsack,  0  C.  B.  480,  Wilde,  C.  J.;  Binney  v.  Globe  Nat.  Bank, 
150  Mass.  574,  6  L.  II.  A.  381;  Castor  v.  Peterson,  2  Wash.  204,  26  Pac.  223,  26 
Am.  St.  Rep.  854,  citing  te.xt.     See  post,  §  242. 

15.  Drayton  v.  Dale,  2  B.  &  C.  293. 

16.  Lane  v.  Krekle,  22  Iowa,  404.     See  §§  136,  139. 

17.  Winer  v.  Bank  of  Blytheville,  89  Ark.  435,  117  S.  W.  232,  131  Am.  St.  Rep. 
102;  Brickley  v.  Edwards,  131  Ind.  3,  30  N.  E.  708;  Ray  v.  Indianapolis  Ins.  Co., 
39  Ind.  290;  Vater  v.  Lewis,  36  Ind.  291;  Snyder  v.  Studebaker,  19  Ind.  402; 
John  V.  Farmers'  Bank,  2  Blackf.  307;  Greiner  v.  Ulery,  20  Iowa,  200;  Massey 
v.  Building  Assn.,  22  Kan.  034;  Stoutimore  v.  Clark,  70  Mo.  477;  National  Ins. 
Co.  v.  BowTnan,  00  Mo.  252;  Farmers'  &  M.  Bank  v.  Needles,  52  Mo.  17;  Blevins 
V.  Fairley,  71  Mo.  App.  259;  Ehrmen  v.  Union  Cent.  Life  Ins.  Co.,  35  Ohio.  St. 
324. 

18.  See  Smith  v.  Marsack,  supra. 

19.  See  Bigelow  on  Estoppel,  450,  541;  Alcock  v.  Alcock,  3  M.  &  G.  208  (42 
Eng.  C.  L.).    The  fact  of  lunacy  came  to  defendant's  knowledge  pending  the  trial. 


§  94  ELEMENTS   AND    PHRASES   OF    BILLS   AND    NOTES  l43 

of  the  payee  at  the  time  the  paper  was  executed  may  be  shown;  ^ 
but  they  have  been  sharply  criticised,-'  and  do  not  accord  with  the 
general  principle  of  estoppel  applied  to  negotiable  paper.  He  is  also 
estopped  from  showing  that  the  payee  was  not  the  real  party  in  in- 
terest at  the  time  the  note  was  executed.-^ 

§  94.  Joint  and  several  notes. — A  note  by  two  or  more  makers 
may  be  eitiier  joint,  or  j(jint  and  several.  A  note  signed  by  more 
than  one  person,  and  beginning  "we  promise,"  is  joint  only.-^  A 
joint  and  several  note  usually  expresses  that  the  makers  jointly  and 
severally  promise.-^    But  a  note  signed  by  more  than  one  person,  and 

20.  PcHPlof-  V.  Rohl)in.s,  3  Mete.  (Mmw.)  164. 

21.  HIkcIow  on  Kstopprl,  4r»(),  4.')1. 

22.  John.son  v.  Conklin,  119  Ind.  109;  Hluckor  v.  Dunbar,  108  Ind.  217. 

23.  Thompson  on  Hilla,  1.50;  Union  Nat.  Hank  v.  N'cill,  149  Fed.  711,  10  L.  H.  A. 
(N.  S.)  420;  Hartlctt  Estate  Co.  v.  Fraser,  11  Cal.  App.  37.3,  105  Pac.  130;  Barrett 
V.  Funay,  3.S  Ind.  H(\;  Sharpo  v.  Baker  (Ind.  A\^\y.),  99  N.  E.  44;  Taylor  v.  Hckct, 
IS  Ind.  App.  40(»,  4S  N.  E.  202,  03  Am.  St.  Rep.  3.')2;  Dusenhury  v.  Albright, 
31  Nebr.  34.'),  47  N.  \V.  10-17.  But  in  Michigan  a  note  pommencing  "we  promise 
to  i)ay"  with  the  further  provi-sion  "t<j  be  paid  by  u.h  in  pro|M)rtion  to  road  tax 
in  ubove-mentione<l  di.striet.s  on  hind.s"  wiw  held  to  ereate  a  .sejiarate  and  not  a 
joint  liability.  Wentern  Wheel  ScrajxT  Co.  v.  Locklin,  100  Mich.  .339,  M  N.  W. 
1117.  If,  in  an  action  on  a  joint  note,  it  appears  that  one  of  the  persons  whose 
names  appears  thereon  did  not  Ki^n  it,  there  can  be  a  recovery  a^^ainst  the  other, 
dray  v.  Gray  (Del.  SujK-r.),  .SO  .\ti.  2.33.  Though  a  note  in  in  form  a  joint  ami 
.>*cveral  liability,  it  may  be  shown  that  the  parties  intended  to  be  bound  only  for 
their  sj-veral  liability,  and  this  i.s  .shown  by  a  contract  foniiinK  part  of  the  same 
tran.sjiction  that  lach  .shouM  Ix- liable  each  for  only  his  |)roper  .share.  City  Deposit 
Bank  Co.  of  Columbus,  Ohio,  v.  Creen,  1.30  la.  :i.S4,  103  X.  W.  90.  But  see  Rum- 
.sey  V.  Fox,  LW  Mich.  348,  122  N.  W.  526,  holding  that  where  several  persons 
signed  a  subscription  paper  aRrecinR  to  pve  their  joint  and  several  obligations 
fur  the  projx'rty  purchased,  and  sub.secjuently  delivered  joint  and  several  notes  in 
I)ayment  for  the  prop<'rty,  their  obligation  is  joint  and  .several  notwith.standing 
the  subscrii)tion  reciteil  that  each  sub.scriber  took  the  amount  of  stock  .set  o|)i)o.site 
his  name,  and  a  certifi«'ate  way  signe*!  by  the  vendor  and  delivere<J  to  each  reciting 
his  share  in  the  {)n)iM'rty.  \N'heri'  a  j(jint  note  hafl  been  given  by  two  persons  for 
the  purch.'Lse  of  property  which  turns  out  to  be  u.sele8s,  a  promi.se  by  one  of  the 
makers  after  knowing  its  condition  to  pay  the  note  is  not  binding  upon  the  other. 
Ilayman  v.  Lambden,  97  Md.  33,  54  Atl.  962.  Under  a  statute  providing  that  a 
promis8or>'  note  signwi  by  two,  through  j(jint  in  form,  is  joint  and  several,  when 
.such  a  note  has  been  declared  on  jointly  and  also  on  common  counts,  recovery 
may  be  had  against  one  only  when  service  has  been  quashed  as  to  the  other. 
Harrison  v.  Thackaberry.  94  N.  E.  172,  248  111.  512. 

24.  It  b  the  same  as  though  the  parties  to  it  ha<J  executed  a  joint  obligation  and 
each  of  the  parties  had  executed  a  separate  obligation.  Sharpe  v.  Baker  (Ind. 
App.),  99  N.  E.  44.    Under  a  statute  providing  that  "where  all  the  parties  that 


144  FORMAL   REQUISITES   OF    BILLS   AND    NOTES  §  1)4 

boginniiiK  "I  promise,"  is  several  as  well  as  joint;  ^^  and  so  also  is  one 
signed  by  two  makers,  and  running  "we  or  either  of  us  promise  t(» 
pay."  -®  And  where  two  have  signed  a  joint  note,  "payable  to  the 
order  of  myself,"  it  means  payable  to  the  order  of  either,  and  the  in- 
dorsement of  either  carries  a  good  title.-"^  If  a  note  running  "we 
promise"  is  signed  by  but  one  person,  he  is  bound  just  lus  if  the  lan- 
guage were  "  I  promise."  "^  Where  two  sign  the  note  as  makers,  they 
will  be  regarded  prima  facie  as  joint  makers,  and  not  as  partners.-"^ 


unite  in  a  promise  receive  some  benefit  from  the  consideration,  whether  pjust  or 
present,  their  jjromise  is  pn'sumetl  to  be  joint  and  s<n'enil,"  where  it  appears  that 
the  |)arties  received  some  benefit  from  the  consideration,  and  nothing  further  is 
shown  from  which  their  intention  can  be  luscertaincnl,  the  hiw  stei)s  in  and  makes 
the  i)roinise  joint  and  several,  but  where  it  clearly  apjM'ars  that  such  wjus  not  the 
intention  of  the  |)arties,  and  it  clearly  iipjM'ars,  on  the  contrary,  that  the  intention 
was  that  the  promise  should  be  joint,  the  presumption  is  overcome,  and  the 
promise  must  be  cnforciMl  aecordinK  to  its  express  terms.  Fanners'  Kxch.  Hank 
V.  Morse,  129  Cal.  239,  til  Pac.  UXSK. 

26.  Salomon  v.  Hopkins,  til  Conn.  49, 23  Atl.  710;  Monson  v.  Drakely,  40  Conn. 
5r)2;  Rooth  v.  HufT,  lltJ  ('.a.  M,  42  S.  K.  .ISl,  9-1  Am.  St.  Hep.  9S;  Miller  v.  Lewi.s- 
ton  Nat.  Hank,  IS  Idaho,  124,  lOS  Pac.  9()1;  Maiden  v.  VVeb.ster,  ;H)  Ind.  :n7; 
Corneille  v.  PfeilTer,  2t)  Ind.  App.  t)2,  r>\)  N.  K.  1S.S;  Ilcnunenw.iy  v.  Stone,  7  Ma.Hs. 
.W;  Dow  Law  Hank  v.  Codfny.  12t)  Mich.  .')21.  S",  N.  W.  107'.,  SC.  Am.  St.  Rep. 
.•S.W;  Ely  V.  Clute,  19  Hun,  3");  Partridge  v.  Colby,  19  Harb.  2IS;  L.ane  v.  Salter, 
4  Rob.  (N.  Y.)  2:39;  Harn>tt  v.  Skinner,  2  Hailey,  SS;  Arbuckle  v.  Templeton,  t»r» 
Vt.  207,  2r)  All.  109r);  Dill  v.  White,  r)2  Wis.  109;  H<»lman  v.  (lilliam,  (i  Rand.  39; 
Marsh  v.  Ward,  Peake,  130;  Lmid  v.  Haker,  G  Fost.  70;  Galway  v.  Mathew, 
1  Campb.  4(i2. 

26.  Po^ue  v.  CMark,  25  III.  335;  Harvey  v.  Irvine,  11  Iowa,  S2;  First  Nat.  Hank 
V.  Fowler,  30  Ohio  St.  r)24.  And  when  the  note  w;us  given  for  the  purchase  of 
property  by  the  signers,  a  recital  of  the  proportions  paid  and  to  be  paid  of  the 
purchase  price  of  the  property  by  the  purchasers  thereof  should  be  construcnl  aa 
intended  as  between  themselves  to  evidence  their  respective  interests  in  it.  Dolin- 
Bki  V.  First  Nat.  Hank  of  Pittsburg,  (Tex.  Civ.  App.),  122  S.  W.  270  (1909). 

27.  First  Nat.  Bank  v.  F'owler,  30  Ohio  St.  524.  In  Jenkins  v.  Bass  (Ky.),  11 
S.  W.  293,  parol  evidence  was  admitted  to  show  which  of  the  two  was  intended 
as  payee. 

28.  Whitmore  v.  Nickerson,  125  Mass.  496;  Rice  v.  Gove,  22  Pick.  158;  Holmes 
V.  Sinclair,  19  111.  71. 

29.  Ellinger's  Appeal,  114  Pa.  St.  505,  §  361,  post.  A  joint  and  several  note 
not  negotiable  binds  makers  proportionately.  Groves  v.  Sentell,  153  U.  S.  465, 
14  Sup.  Ct.  Rep.  898.  Where  one,  for  a  valuable  consideration,  signs  his  name 
to  a  joint  and  several  promissory  note  after  it  has  been  signed  and  delivered,  he 
becomes,  as  between  himself  and  the  payee,  a  maker,  and  may  be  sued  as  such. 
He  entered  into  a  new  contract  with  the  holder  of  the  note  on  a  new  and  additional 
consideration.  First  Nat.  Hank  v.  Cecil,  23  Oreg.  .58,  31  Pac.  01,  32  Pac.  393; 
Palmer  v.  Field,  70  Hun,  229,  27  N.  Y.  Supp.  730. 


§  "J5  ELEMENTS   AND    PHRASES    OF    BILLS   AND    NOTES  145 

If  a  note  bo  signed  l)y  a  person  in  the  name  of  a  firm,  whether  that 
name  represents  in  form  more  than  one  person,  as  "A.  &  Co.,"  or  only 
one  person,  as  "  A.,"  it  is  in  both  cases  the  note  of  the  firm,  and  all  the 
partners  will  be  bound,  whether  the  language  be  "I"  or  "We"  prom- 
ise.^ If  the  note  runs  "  We  promise,"  and  is  signed  "  A.  B.,  principal; 
C.  D.,  surety,"  it  is  still  the  joint  note  of  both;  and  if  it  were  written 
"I  promise,"  and  signed  in  the  same  manner,  it  would  be  the  joint 
and  several  note  of  both."''  A  joint  and  several  note,  though  on  one 
piece  of  paper,  comprises  in  reality  and  in  legal  effect,  several  notes.'^ 
Thus,  if  A.  B.  &  C.  make  a  joint  and  several  note,  there  is  a  several 
note  of  each,  and  the  joint  note  of  all — in  all,  four  notcs.^^  The  joint 
note  may  be  valid,  though  the  several  notes  are  void.^^ 

Under  Negotiable  Instniment  statute. — The  statute  declares  that 
"where  an  instrument  containing  the  words,  'I  promise  to  pay,'  is 
signed  by  two  or  more  persoiLs,  they  are  deemed  to  be  jointly  and 
.severally  liable  thcn^jn."  " 

§  95.  Two  or  more  drawers. — The  drawer  of  a  bill  is  gener- 
ally a  single  person,  or  a  copartnership  firm,  or  a  corporation.  Hut 
two  or  more  p«TS(ms  may  unit*-  in  drawing  a  bill,^  and  unless  they  are 
partners,  each  is  cntitN-d  t<j  reijuire  demand  and  notice.*^"  And  they 
may  make  the  bill  payable  to  their  joint  order,  or  to  the  order  of 
either  of  thrm,  or  to  a  third  person  or  order.  Sometimes  another 
person  unit«'S  with  the  drawer  lus  a  surety,  and  such  person  is  called  a 
"surety  drawer."  Where  several  persons  unite  in  drawing  a  l)ill  of 
exchange  upon  a  person  in  whose  hands  they  have  no  funds,  and  the 

30.  S:il(.m<)n  v.  Hopkin.-*,  (H  Omn.  47,  2.'}  All.  71(5;  IIih-s  v.  AhlM)tt,  Cowp.  832. 

31.  Hunt  V.  A(ljiin.H,  T)  Miuw.  3.'>.S;  I'lilmcr  v.  Grant,  4  Conn.  :iS9;  Luthiun  v. 
Flour  Mills,  68  Tex.  130,  citing  the  t««xt;  Salomon  v.  Hopkina,  (51  Conn.  47,  23 
Atl.  7U\. 

32.  Klctrhcr  v.  Dytc,  2  T.  K.  fi;  Hylf-s,  7S.  The  fact  that  tho  word  sunfy  is 
written  aft  or  the  nuiiu'  of  one  of  two  nixners  of  a  i)n)mLs.>v»ry  note  «1o<'h  not  render 
thorn  any  the  less  joint  and  wvenil  ohlip»rs,  so  far  as  their  liahility  to  the  plaintiff 
\»  conecrne<l.  Calloway  v.  Hartholoniew,  44  Or.  7.5,  74  Pac.  467;  See  also  Booth 
V.  Huff,  1 10  Ca.  S,  42  S.  E.  3S1,  9-1  Am.  St.  Hep.  98. 

33.  KinK  v.  Houre,  13  M.  &  W.  56.5. 

34.  McClae  v.  Sutherland,  3  El.  &  Bl.  1  (77  Eng.  C.  L.);  Byles  (Sharswood's 
ed.)  CS],  79. 

36.  Appendix,  sec.  17  (7).  See  also  Ullen,-  v.  Brohm,  20  Colo.  App.  389,  79 
Pac.  ISO,  hoKliuR  that  one  could  not  be  eharged  as  guarantor  for  the  other. 

36.  Suydam  v.  Westfall,  4  Hill,  211,  2  Den.  205;  McMean  v.  Little,  3  Baxt. 
3.32. 

37.  MrM.an  v.  Little,  3  Baxt.  332. 

10 


146  FORMAL    REQUISITES   OF    BILLS   AND    NOTES     §§  95u,  OG 

bill  is  accepted  and  paid,  all  of  them  are  hound  to  the  acceptor,  antl 
neither  one  of  them  can  show  that  he  signed  as  surety  for  the  others, 
and  that  the  drawee  knew  the  fact  when  he  accepted  the  hill,^  The 
doctrine  has  been  carried  farther,  and  it  ha.s  been  held  that  if  A.  &  B. 
draw  on  C.  without  having  funds  in  his  hantls,  and  B.  signs  himself 
surety,  both  must  be  consideri'd  as  drawers  to  all  the  parties  to  the 
bill,  as  well  to  the  acceptor  as  the  payee,  for  the  acceptor  may  have 
been  induced  to  accept  the  bill  quite  as  much  as  the  payee  or  other 
holder  to  take  it,  because  B.,  as  surety  of  A.,  was  liable  to  him  for 
payment  in  the  character  of  joint  drawers.^" 

In  New  York  a  different  view  is  taken,  on  the  ground  that  the  liabil- 
ity of  a  joint  drawer  extends  to  the  payee  or  subsecjuent  holder  aloiu', 
and  even  if  he  draws  the  i)ill,  with  the  understanding  that  he  is  to  be 
liable  to  the  aceeptor,  such  a  contract  would  be  a  parol  j)roniise  to 
pay  the  debt  of  another,  and  void  under  the  statute  of  frauds. '°  But 
this  view  does  not  seem  to  us  tenable."*^ 

§  95a.  In  an  English  case,  M.  anil  P,  drew  a  bill  payable  to  their 
own  order  on  R.  B.,  who  accepted  it,  and  J.  B.  indorsed  it  with  the 
view  of  becoming  surety  for  R.  B.  to  the  drawer.  Action  was  brought 
against  J.  B.  as  an  indorser,  and  also  as  a  drawer.  He  was  held  bcnmd 
in  the  latter  character.  Shee,  J.,  said :  "  It  is  alleged  that  the  defendant 
'indorsed,'  which  as  a  stranger  he  could  not  do.  But  the  defc^ndant 
here  may  be  treated  as  drawer:  that  is,  as  guaranteeing  the  payment 
of  the  bill  by  the  acceptor."  "'^ 

§  96.  Sixthly:  as  to  the  drawee. — A  bill  of  exchange  being  an 
open  letter  of  request  from  the  drawer  to  a  third  person,  supposed 
to  be  under  obligation  to  accept  the  bill,  should  be  regularly  addressed 
to  such  person  by  his  christian  name  and  surname,  and  also  by  a 
designation  of  his  place  of  residence;  and  if  it  is  addressed  to  a  firm, 
the  name  of  the  firm  should  be  expressed  in  the  address. ^^ 

38.  Suydam  v.  Westfiill,  4  Hill,  211,  2  Den.  205;  Oyler  v.  McMurray,  7  Ind. 
App.  645,  34  N.  E.  1004. 

39.  Swillcy  v.  Lyon,  18  Ala.  558;  Story  on  Bills,  §  420;  Church  v.  Swope,  38 
Ohio  St.  495,  citing  the  text. 

40.  Griffith  v.  Reed,  21  Wend.  502;  Wing  v.  Terry,  5  Hill,  160. 

41.  Story  on  Bills,  §  420;  Edwards  on  Bills,  §  376. 

42.  Mathews  v.  Bloxsome,  Q.  B.,  33  L.  J.  R.  209.  See  Penny  v.  Innes,  1  Cromp. 
M.  &  R.  439. 

43.  Byles  (Sharswood'a  ed.)  [*84],  179;  Chitty  on  Bills  (13th  Am.  ed.)  [*164l, 
188;  Story  on  Bills,  §  58. 


§  97  ELEMENTS   AND    PHRASES   OF    BILLS   AND    NOTES  147 

Such  at  least  is  requisite  to  perfect  the  bill  in  a  proper  and  business- 
like manner;  and  without  such  accuracy  in  the  address,  it  does  not 
appear  who  should  bo  called  upon  to  accept  or  pay  it,  or  who  would 
be  justified  in  so  doing.  In  an  early  English  case  it  was  held  that  it 
was  not  necessary  that  the  bill  should  have  a  drawee;  '*^  but  that  case 
has  been  tlistinctly  repudiated,  and  both  in  England  and  in  the  United 
States  it  is  settled  doctrine  that  a  drawee  must  Ik;  pointed  out.''^ 
Where  a  bill  without  a  drawee  was  sued  upon,  it  was  well  said:  "For 
want  of  a  drawin-  it  is  inccjmplete  as  a  bill  of  exchange;  and  for  want 
of  a  promise  it  appears  to  us  incomplete  as  a  note."  ^^  But  the  bona 
fide  holder  of  a  check  without  a  drawee,  which  has  been  issued  as  a 
memorandum  of  indebtedness,  may  recover  on  account  for  money  had 
and  received." 

§  97.  Where  a  bill  was  dra\\'n  payable  to  the  drawer's  order,  anil 
there  was  adiletl  "  Payable  at  No.  1  Wilmot  Street,  opposite  the  Lamb, 
Bethnal  Green,  I^ondon,"  and  was  accepted  by  one  Milner,  it  was 
held  sufficient,  upon  the  ground  that  it  must  be  considered  as  directed 

44.  K.-Kina  v.  H:iwk»-s,  2  M«j<j.  C.  C.  «J<). 

45.  la  IVto  V.  HrynoKls,  9  Kxch.  410,  .MdcrHon,  H.,  mid:  "With  respect  to  the 
question  whether  thLs  instrument  in  or  is  not  a  bill  of  exchanRe,  the  ca«e  of  Ilegina 
V.  Hawkes  ia  un(loul)t<«<lly  in  point.  I  must  own,  however,  that  I  now  think  I 
wa.s  wnjnK  on  that  occasion.  The  caao  soenw  to  have  been  (l<K'idetl  on  the  ground 
that  Milner  v.  CJray,  8  Taunt.  739,  Koverni"*!  it;  ami  the  fact  wius  not  adverted 
to,  that  (iray  v.  MiUier  may  be  thiw  explaincti;  that  a  bill  of  exchange  made  pay- 
able at  a  particular  place  or  hcju.s4',  in  meant  tcj  be  iuldre>we<l  to  the  perwjn  who 
resid»^  at  that  place  or  house.  Therefore,  in  that  cast',  the  bill  wjis,  on  the  face 
of  it,  directed  to  some  one;  and  the  court  held,  that,  inasmuch  as  the  defendant 
promise*!  to  pay  it,  that  was  conclusive  evidence  that  he  was  the  party  to  whom 
it  was  mldressetl.  But  in  the  case  of  Regina  v.  Hawkes,  the  instrument  was  ad- 
dnt««il  to  no  one."  Si'e  also  Reyn«ilils  v.  Peto,  11  Exch.  41S;  Watrous  v.  Hall- 
brook,  39  Tex.  572.  In  Hall  v.  Allen,  1.5  Mass.  4.3.5,  Parker,  C.  J.,  says:  "The 
mere  possession  of  a  pa|H>r  drawn  in  the  ffjrm  of  an  order,  there  being  no  drawee 
in  exi.stence,  we  think,  cannot  entitle  the  posrtessf)r  to  an  action  in  any  form,  for 
the  pai)er  may  have  been  carelessly  dealt  with  as  being  imperfect,  and  may  have 
come  to  the  possessor  by  finding.  It  is  enough  for  the  purpo.se  of  justice  that  the 
holder  of  such  a  paper  may  entitle  himself  to  recover,  merely  by  showing  that  he 
paid  for  it,  or  that  he  came  otherwise  fairly  by  it;  for  it  can  rarely  happen  that 
he  will  lie  unable  to  produce  the  person  for  whom  he  received  it.  If  the  circum- 
stances are  such  as  induce  him  to  decline  pro«lucing  evidence  of  the  manner  in 
which  the  paper  came  to  him,  no  probable  harm  will  be  the  result  of  his  loss  of 
the  money."  Story  on  Bills,  §  58;  1  Parsons  on  Notes  and  Bills,  61 ;  2  Robinson's 
Practice  (newed.),  144. 

46.  Forward  v.  Thompson,  12  Up.  Can.  Q.  B.  103,  Draper,  J.    See  §  97. 

47.  Ellis  V.  Wheeler,  3  Pick.  19.    See  Ball  v.  Allen,  supra. 


148  FORMAL   REQUISITES   OF    BILLS    AND    NOTES  §  98 

to  the  person  residing  at  that  house,  and  acceptance  by  the  defendant 
was  acknowledgment  that  he  was  intended  as  the  drawee.''*  Such  a 
bill — or  any  accepted  bill  without  a  drawee — is  considered  by  many 
authorities  as  defective  in  its  inception,  but  perfected  by  acceptance, 
the  acceptor  being  estopped  to  deny  that  he  was  the  drawee."'^  And 
this  seems  the  correct  doctrine.  But  it  was  regarded  in  the  case  a])ove 
cited  as  informal,  but  valid. ■'°  That  decision  however  has  been  ques- 
tioned.^^ If  invalid  as  an  acceptance  the  paper  might  be  treated  as  a 
note.^2 

§  98.  Alternative  address  of  bill. — If  the  bill  be  addressed  to 
A.,  or  in  his  absence  to  li.,  it  is  sullicient  and  valid,  and  will  bind 
whichever  accepts  as  acceptor.^^  And  it  has  been  thought  that  a 
direction  to  A.  or  B.,  in  the  alternative,  would  be  sufficient  if  both 
were  at  the  same  place  at  the  same  time.^^  If  the  bill  is  drawn  upon 
A.,  B.,  and  C,  it  may  be  accepted  by  A.  and  B.  only,  and  they  will  be 
bound  as  acceptors,  and  it  will  lie  no  variance  to  alleg(>  in  the  declara- 
tion that  it  was  dra\Mi  upon  A.  and  B.,  without  referring  to  C.''^  But 
if  a  bill  is  intended  to  be  accepted  by  two  persons,  it  should  be  ad- 
dressed to  both;  otherwise,  though  accepted  by  both,  it  will  bind  only 
the  drawee  as  acceptor,  as  there  cannot  be  a  series  of  acceptors. •"*  The 
drawer  and  drawee  may  be  the  same  person,  but  such  an  instrument 
would  be  actionable  without  acceptance.^^  In  case  of  uncertainty  as 
to  the  real  drawee  attempted  to  be  expressed  or  designated,  or  any 

48.  In  Gray  v.  Milner,  S  Taunt.  739,  3  Moore,  90,  Dallas,  C.  J.,  said  the  in- 
strument was  clearly  a  bill  of  exchange;  and  that,  "it  being  directe<l  to  a  par- 
ticular place,  cniikl  only  mean  to  the  person  who  resided  there;  and  that  the  de- 
fendant, by  accepting  it,  acknowledged  that  he  was  the  person  to  whom  it  was 
directed."    Cork  v.  Bacon,  45  Wis.  192. 

49.  Wheeler  v.  WYbster,  1  E.  D.  Smith,  3;  -post,  §  480;  Thompson  on  Bills,  40; 
Grierson  v.  Sutherland,  Scotch  case  therein  cited;  Chitty  on  Bills  [*104],  188; 
1  Parsons  on  Notes  and  Bills,  288-289;  Benjamin's  Chalmers'  Digest,  50. 

50.  Gray  v.  Milner,  supra;  Edwards  on  Bills,  174. 

51.  Davis  V.  Clarke,  G  Q.  B.  16.  See  also  Peto  v.  Reynolds,  sujrra;  Story  on 
Bills  (Bennett's  ed.),  58;  1  Parsons  on  Notes  and  Bills,  62. 

52.  See  §§  131,  132,  133,  485. 

53.  Anonymous,  12  Mod.  447;  Chitty,  Jr.,  216;  Ames  on  Notes  and  Bills, 
111. 

54.  Marius  on  Bills,  16;  Story  on  Bills  (Bennett's  ed.),  §  58. 

55.  Mountstephen  v.  Brooke,  1  B.  &  Aid.  224;  Story  on  Bills,  §  58. 

56.  Davis  v.  Clarke,  6  Ad.  &  El.  (N.  S.)  16;  Jackson  v.  Hudson,  2  Campb.  447. 
See  chapter  XVIII,  on  Acceptance. 

67.  See  chapter  V,  on  Irregular,  etc..  Instruments;  and,  post,  §  482. 


§  99  ELEMENTS   AND    PHRASES   OF   BILLS   AND    NOTES 


149 


ambiguity  in  the  address  of  the  bill,  then,  as  in  all  cases  of  written 
contracts,  extrinsic  evidence  is  admissiVjle  to  ascertain.^ 

By  the  French  and  English  usage,  the  address  is  uniformly  at  the 
left-hand  lower  corner,  upon  the  face  of  the  bill;  but  the  Italians  and 
Dutch,  as  it  seems,  write  it  on  the  back  of  the  bill.^^  But  it  is  not 
supposed  that  the  place  of  the  address  is  essential,  if  it  distinctly 
appear  what  was  intended. 

§  99.  Seventhly :  as  to  the  payee.— The  bill  or  note  must  point 
out  with  certainty  the  party  who  is  to  receive  the  money— that  is,  it 
must  designate  a  payee.*^"  But  the  payee  need  not  be  named  in  person, 
it  being  sufficient  if  some  one  be  indicated .«^  Thus,  if  the  instrument 
be  payable  to  A.  or  bearer,  or  to  bearer,  or  to  the  holder,  or  to  order, 
it  is  intended  to  mean  whoever  comes  in  lawful  possi-ssion,  and  the 
holder  may  sue  upon  it.^^  In  order  to  make  a  promissory  note  or 
other  obligation  for  the  absolute  payment  of  a  sum  certain,  on  a  cer- 
tain day  negotiable,  it  is  not  essential  that  it  should  in  terms  be  pay- 
able to  bearer  or  order.  Any  other  equivalent  expressions  demon- 
strating the  intentiim  to  make  it  negotiable  will  be  of  e(iual  force  and 
validity."  Hence,  if  the  instrument  be  payable  to  a  certain  person  or 
"  assigns,"  ''^  or  to  a  certain  corporation,  or  the  holder,  "  if  transferred 
by  the  signature  of  its  president,"  it  would  be  negotiable.^^  If  the 
note  be  written  "due  the  bearer  SICK),  which  I  promise  to  pay  A.  or 

68.  Cork  V.  Biicon,  45  Wis.  192;  McCullough  v.  Wuinwright,  14  Pa.  St.  171; 
JucLson  V.  Sell,  11  Johns.  201. 

59.  Story  on  Hill.s  (  Hennctt'si  (h\.),  §  .'iS,  note  1. 

60.  llich  V.  St:irl)U(k,  .')1  Ind.  S7.  A  proniiiwoo'  note  payable  to  a  person 
niuncd  therein  "it  al.  or  order"  i.s  not  ncKotiiihle  either  at  the  common  law  or 
under  the  Code  of  Iowa.  Sin-  Gordon  v.  Anderson,  S3  Iowa,  224,  49  N.  W.  80,  32 
Am.  St.  Rep.  3()2.  Where  a  note  i.s  made  payable  to  a  certain  person  or  luTsoas 
named  as  payee  therein,  and  there  is  nothinp;  in  the  wordinR  of  the  note  to  indicate, 
and  no  showing  in  the  evidence,  that  any  other  person  ha.s  any  interest  therein, 
the  presumption  will  be  that  the  note  is  for  the  personal  benefit  of  the  payee 
name<l  therein.    McGuthn  v.  Coyle  &  Guss,  16  Okl.  G4S,  85  Pac.  954. 

61.  Evidence  may  be  received  to  h1k)W  that  a  certain  person  wa.s  the  person 
intendeil  to  be  described  by  the  name  which  appears  a.s  that  of  the  payee.  Tapley 
v.  Herman,  95  Mo.  App.  537. 

62.  Mechanics'  Hank  v.  Straiton,  3  Abb.  N.  Y.  App.  209;  Hathwick  v.  Owen, 
44  Miss.  803;  Melton  v.  Gibson,  97  Ind.  158,  citing  the  text;  Tescher  v.  Merea, 
118  Ohio  St.  586. 

63.  County  of  Wilson  v.  National  Bank,  103  U.  S.  776. 

64.  Porter  v.  City  of  Janesville,  3  Fed.  619.  But  sec  §  1490  and  Cronin  v. 
Patrick  County,  4  HuKhes,  .529. 

66.  County  of  Wilson  v.  National  Bank,  103  U.  S.  776. 


150  FORMAL    REQUISITES   OF    BILLS    AND    NOTES  §  lOO 

order,"  it  is  piiyable  not  to  bearer,  but  to  A.  or  order.^^  And  whenever 
a  bill  or  note  is  payable  to  a  certain  person  or  order,  it  is  the  same  as  if 
expressed  to  be  payable  to  the  order  of  that  person,^^  payable  to 
whomsoever  the  payee  named  may  by  indorsement  order  it  to  be 
paitl."* 

So  the  instrument,  though  not  naming  a  payee  on  its  face,  yet  if  it 
furnishes  a  sufTicient  description  by  which  he  may  be  ascertained,  it 
is  sufficient;  the  maxim  applying  id  ccrtum  e.st  quod  certum  rvddi 
potest.^^  Thus  it  suffices  if  it  be  payable  to  "the  administrators  of  the 
estate  of  A.;"  "°  or  to  the  "trustees  acting  under  the  will  of  A,;"  ^' 
or  to  the  "heirs  of  A.,"  though  A.  were  then  alive;  ^-  or  to  "A.  or  his 
heirs;"  '^  or  to  the  order  of  the  person  who  should  thereafter  indorse 
it;  ^'*  for  in  all  such  cases  the  payee  is  ascertainable J^ 

Under  Ncijoiiahle  Inslrurmnt  stdtutc. — Under  the  statute  it  has 
been  luld  that  an  order  addressed  to  no  one  in  particular,  but  gen- 
erally to  any  one  for  wiiom  plaintilT  might  be  employed  or  who  owed 
him  money,  is  too  indefinite  and  uncertain  to  be  binding  on  any  one,"*^ 
and  that  an  indorser  of  a  note  which  does  not  name  any  person  to 
whom  payments  shall  be  made,  nor  make  the  payment  due  to  bearer, 
incurs  no  obligation,^^ 

§  100.  Illustrations. — Where  the  writing  ran,  "I  owe  the  estate 
of  A.  B.  S113U,"  it  was  held  that  no  payee  was  sufficiently  designated, 

66.  Cock  V.  Fellows,  1  Johns.  143.    See  post,  §  102. 

67.  Fisher  v.  Pomfret,  12  Mod.  125;  Ruling  v.  Hugg,  1  W.  &  S.  418. 

68.  See  chapter  XXI,  on  Transfer  by  Indorsement. 

69.  Blackman  v.  Lehman,  03  Ala.  553;  Clarke  v.  Marlow,  Admr.,  20  Mont.  249, 
50  Pac.  713.  As  to  the  identity  of  the  payee,  a  note  is  sufficient  if  it  discloses  from 
whom  the  consitleration  was  received.  Kessler  v.  Clages,  147  Mo.  App.  88,  125 
S.  W.  799  (1910). 

70.  Adams  v.  King,  IG  111.  1G9;  Moody  v.  Threlkeld,  13  Ga.  55. 

71.  Megginson  v.  Harper,  2  Cromp.  &  M.  322. 

72.  Bacon  v.  Fitch,  1  Root,  181. 

73.  Knight  v.  Jones,  21  Mich.  161. 

74.  United  States  v.  WTiite,  2  Hill,  59. 

76.  See  Chadwick  v.  Allen,  2  Stra.  706  (1726).  Note  ran:  "  I  do  acknowledge 
that  Sir  Andrew  Chadwick  has  delivered  me  all  the  bonds  and  notes  for  which 
£400  were  paid  him  on  account  by  Col.  Synge,  and  that  Sir  Andrew  delivered  me 
Major  Graham's  receipt  and  bill  on  me  for  £10,  which  £10,  and  £15  5s.,  balance 
due  Sir  Andrew,  I  am  still  indebted  and  do  promise  to  pay."  Held  a  good  note. 
See  post,  §  102. 

76.  Appendix,  §  126.    Dugane  v.  Hvezda  Porokn  No.  4,  (la.)  119  N.  W.  141. 

77.  Appendix,  sees.  1,  8;  Hilborn  v.  Pennsylvania  Cement  Co.,  129  N.  Y.  S. 
957,  145  App.  Div.  442. 


§  101  ELEMENTS   AND    PHRASES   OF   BILLS   AND    NOTES  151 

and  it  was  inferred  under  the  circumstances  to  be  a  mere  memorandum 
of  a  balance  due.'^^  But  it  has  been  held  that  a  note  regular  in  form, 
payable  "  to  the  estate  of  T.  A.  Thornton,"  might  be  sued  on  by  Thorn- 
ton's personal  representative.^^  The  contrary  view  however  has  been 
taken.^  If  a  note  is  payable  to  A.,  and  there  are  two  persons  of  the 
same  name,  father  and  son,  it  seems  that  it  would  be  priina  facie 
payable  to  the  father;*^  but  the  son  being  in  possession,  and  l)ringing 
the  action,  would  be  entitled  to  recover.'*-  Wherever  tluTc  is  any 
misdescription  or  misspelling  of  the  payee's  name,  it  may  be  shown 
who  was  really  intended.*''  And  extrinsic  evidence  is  in  general  ad- 
missible as  to  the  subject-matter  and  the  parties,  to  make  both  certain 
and  show  what  and  who  was  intended.*^ 

§  101.  Illustrations  continued.  -If  the  note  were  made  payable 
"to  the  secretary  for  the  time  being  of  a  certain  society,"  it  would 
not  be  sufficient,  as  it  would  be  a  floating  promise,  the  performance 
of  which  would  be  made  to  the  person  being  secretary  at  its  matur- 
ity; **  but  if  it  be  payable  "to  the  now  secretary"  of  a  certain  society, 
it  would  be  different,  as  such  person  could  be  immediately  and  defi- 
nitely ascertained."**    And  if  payable  to  the  "trustees  of  W.  Chapel, 

78.  Bowl.-s  V.  Liirnbrrt,  FA  III.  239. 

79.  Iltiiciricks'  K.xrs.  v.  Thorntijn,  V)  Ahi.  300;  Shaw  v.  Smith,  150  Mass.  166, 
6  L.  K.  A.  348.  In  New  York  hfld,  that  note  payable  "to  the  order  of  the  estate 
of  D.  G.  Littlefield,"  is  a  promis«or>'  note  with  a  fictitious  pay(H>,  and  where  it  has 
been  nenotiate«i  by  the  maker,  is  de<'me<l  as  against  him  to  hr  payable  to  the 
b<-:in«r.    Si-e  Lewi.sohn  v.  Kent  &  Stanley  Co.,  S?  Hun,  257,  3:5  N.  Y.  Supp.  826. 

80.  Tittle  V.  Thoniius,  :J0  Mi.s.s.  132;  Lyon  v.  .Marshall,  11  Harb.  248,  Edward.s, 
J.:  "The  instrument  sued  U|Mjn  (by  Lyon's  represt-ntativcs)  wtus  mside  [jayuble  to 
the  'estate  of  Mosi-s  Lyon,  d«'eea.s«'d,'  and  not  to  any  person  <jr  jM-rsons  by  name. 
Such  an  instrument  Ls  elearly  not  a  promissory  note  under  the  statute.  Hut  what- 
ever it  may  be  considered,  it  certainly  is  not  a  promise  to  pay  the  testator,  for  he 
is  describcni  as  deceased.  It  could  only  be  recovered  ufjon  as  a  promise  to  pay 
some  other  i)erson  or  jiersons.  If  it  be  regarded  a.s  a  promise  to  pay  the  plaintiffs, 
a»  it  wtus  treated  in  this  ca.sr,  there  was  no  necessity  for  their  suinR  in  a  repre- 
sentative capacity;  and  having  done  s^)  unnecessarily,  they  are  hable  to  pay  coats, 
without  a  special  motion  or  order  for  that  purpose." 

81.  Sweeting  v.  Prowler,  1  Stark.  10«);  WiLson  v.  Stubbs,  Ilobart,  330. 

82.  Stebbing  v.  Spiccr,  19  L.  J.  C.  P.  24,  8  C.  B.  827  (65  Eng.  C.  L.). 

83.  Jacobs  v.  Benson,  29  Me.  132;  WilUs  v.  Barrett,  2  Stark.  29;  Hall  v.  Tafts, 
18  Pick.  455. 

84.  Cork  V.  Bacon,  45  Wis.  192;  Jackson  v.  Sell,  11  Johns.  201. 
86.  Storm  v.  Sterling,  3  El.  &  Bl.  382. 

86.  Ibiil.;  Robertson  v.  Steward,  1  M.  «k  G.  511;  Davis  v.  Garr,  6  N.  Y.  124; 
Rex  v.  Box,  6  Taunt.  325. 


152  FOUMAL    REQUISITES    OF    HILLS    AND    NOTES  §    1U2 

or  tluir  treasurL-r  for  tlie  time  being,"  it  would  suflice,  as  the  trustees 
are  the  real  payees,  the  treasurer  being  merely  designated  as  their 
agent  to  receive  payment."^  So  it  would  sufliee  if  payable  to  "the 
treasurer  or  his  successors  in  office"  of  a  corporation  named;  for  the 
corporation  would  then  be  the  real  payee,  and  the  treasurer  its  agent 
to  receive  payment.'*  And  such  would  also  be  the  effect  of  a  note 
payable  "to  the  treasurer  of  a  corporation,"  the  corporation,  but  not 
the  treasurer,  being  named.*®  A  note  payable  to  "The  People  of 
Illinois"  means  to  the  State  of  Illinois,  and  the  designation  is  sulii- 
cicnt."-*  A  note  payable  to  "\V.  Lane,  cashier  First  Nat.  Bank  of 
Lebanon,"  is  payable  to  the  bank.^' 

§  102.  Without  definite  payee  the  instrument  is  defective.  If 
no  one  be  nanifd  or  (Itlinitcly  referred  to  as  payee  and  no  blank  Ix' 
left,  the  instrument  is  fatally  incomplete;  and  therefore  "SolK)  on  de- 
mand. valu(>  received,"  ^'  is  mere  wa.ste  paper,  and  so  also  pap(TS  run- 
ning "(!ood  for  one  hundred  and  twenty-six  dollars  on  demand,"'-''' 
"pay  on  within  $750,"  ^'  ami  "pay  to  the  order  of  on  sight."  ^'•'  But 
"rcceivc-d  of  A.  one  hundred  dollars,  which  I  promise  to  pay  on  de- 
mand," ^*^  is  regarded  as  sullicient,  it  l)eing  inferred  that  A.  is  the 
payee.  It  has  been  held  that  where  the  promise  is  to  pay  "you,"  as, 
for  instance,  where  the  |nii)er  runs,  "I.  O.  U.  the  sum  of  SIGO,  which 
1  shall  pay  on  demand  to  you,"  parol  evidence  would  be  admissible 
to  explain  who  was  meant."    But  as  there  is  no  certainty  about  the 

87.  Holmes  v.  Jacques,  1  Q.  B.  376. 

88.  Fisher  v.  Ellis,  3  Pick.  322;  Rogers  v.  Gibson,  15  Ind.  21S;  Patton  v. 
Mclvillo,  21  Up.  Can.  Q.  B.  203;  Savers  v.  First  Nat.  Bank,  S9  Ind.  230. 

89.  iMcBrown  v.  Corporation  of  I^banon,  31  Ind.  20S;  Vutcr  v.  Lewis,  .30 
Ind.  293. 

90.  lOsley  v.  People  of  Illinois,  23  Kan.  .510. 

91.  Nave  v.  First  Nat.  Bank,  87  Ind.  201;  Dutch  v.  Boyd,  SI  Ind.  140;  Erwin 
Lane  Paper  Co.  v.  Farmers'  Nat.  Bank,  130  Ind.  307,  30  N.  E.  411;  Darby  v. 
Berney  Nat.  Bank,  97  Ala.  043,  11  So.  881. 

92.  Gibson  v.  Minet,  1  H.  Bl.  509.  That  the  fact  that  the  name  of  the  payee 
was  left  blank  is  not  fatal,  see  post,  §  145. 

93.  Brown  v.  Gilman,  13  Mass.  1.58.  See  also  Mayo  v.  Clicnoweth,  Breese, 
155;  Mathews  v.  Rodwine,  23  Miss.  233;  Enthoven  v.  Hoyle,  13  C  B.  373;  Rush  v. 
Haggard,  08  Tex.  075. 

94.  Douglass  v.  Wilkeson,  0  Wend.  637. 

95.  Mcintosh  v.  Lytle,  20  Minn.  330. 

96.  Green  v.  Davies,  4  B.  &  C.  235;  Ashby  v.  Ashby,  3  Moore  &  P.  180;  Chad- 
wick  v.  Allen,  2  Stra.  700.    See  ante,  §  99. 

97.  Kmney  v.  Flinn,  2  R.  I.  319;  Shackleford  v.  Hooker,  54  Miss.  716. 


S  103         ELEMENTS   AND    PHRASES    OF    BILLS   AND    NOTES  153 

payee  on  the  face  of  the  paper,  and  nothing  from  which  he  may  be 
ai^certained,  such  a  paper  could  not  consistently  with  accepted  prin- 
ciples be  held  negotiable. 

Pothier  puts  a  case  quite  similar:  "If,"  says  he,  "the  drawer 
should  omit  the  name  of  the  payee,  but  should  draw  the  bill  in  this 
form:  'Pay  a  thousand  livrcs  at  sight,  value  received  of  A.  B.,'  it 
appears  to  me  reasonable  to  presume  that  the  drawer  intended  that 
the  bill  should  be  payable  to  the  person  from  whom  the  value  had 
been  receivtxl,  as  no  other  person  is  named  to  whom  it  ought  to  be 
paid."*  He  adds  however  that  he  has  learned  from  an  exi>erienced 
merchant,  that  bankers  would  make  a  difficulty  as  to  paying  such  a 
bill.«' 

§  103.  Alternative  and  joint  payees. — A  note  payable  to  A.  or 
to  B.  is  not  negotiable,  for,  as  said  by  Abbott,  C.  J.,  in  an  English 
ciusc:  "For  if  a  note  is  made  payable  to  one  or  other  of  two  persons, 
it  is  payable  to  either  of  them  only  on  the  contingency  of  its  not 
having  been  paid  to  the  other,  and  is  not  a  gootl  promissory  note 
within  the  statute."  '  The  same  views  have  oi)taine(l  in  some  of  the 
United  Stat<'S,  but  the  cases  are  not  uniform  on  the  subject.  In 
Illinois,  where  the  note  was  payable  to  "Oliver  Fletcher  or  U.  II. 
Oakes,  administrators  of  Winslow  Fletcher,  decea.sed,"  Caton,  C  J., 
said:  "The  in.strument  sued  on  w;us  payable  in  the  alternative  to  one 
of  two  j)ersons,  and  for  that  reiuson  is  not  a  promissory  note,  and  could 
not  be  sueil  on  as  such.  ♦  •  ♦  Here  the  promise;  was  to  pay 
Fletcher  or  Oakes:  but  which,  is  uncertain;  which  of  them  had  the 
right  to  receive  the  pay  is  not  sp<'cified,  and  the  legal  right  to  the 
money  is  not  vested  in  either."  -    In  New  York  it  has  also  been  held 


98.  Pothier  do  ChanRp,  n.  31 ;  Stor>'  on  Hills,  §  .V). 

99.  Stor>'  on  IV\\U,  §  .l-'j. 

1.  Bhinrkonhugcn  v.  HlundpU,  2  H.  <t  Aid.  418  (1819);  Oskoo<1  v.  Pearson,  4 
Gray,  4.55;  Carjx'nter  v.  Fam.Hworth,  KXi  M>uw.  561;  Stor>'  on  liilLs,  §  54;  Thomi>- 
8<)n  on  BilL*,  12,  'M;  1  Piinwjn.'*  on  NotoM  and  Billw,  'M.  Under  a  statute  providing 
that  the  survivor  of  jx-rsons  holdinfi;  ixTsoniU  property  in  joint  tenancy  shall  have 
the  siime  rights  only  as  the  survivor  of  t<»nantfl  in  common  unless  otherwise  ex- 
pressed in  the  instrument,  it  was  held  that,  when'  notes  for  the  purchase  price  of 
land  owned  by  the  husband  were  made  payable  to  "the  order  of  W.  G.  C.  or 
M.  C,"  who  were  husband  and  wife,  and,  at  that  time  the  husband  had  ample 
property  to  pay  all  his  indebt fulness  but  at  the  time  of  his  death  his  estate  was 
insolvent,  the  wife  surv'iving  the  husband  ono  day,  the  estate  of  each  was  en- 
titUni  to  one  half  of  the  notes.    ColIy<r  v.  Cook,  28  Ind.  App.  272,  02  N.  E.  655. 

2.  Muflsehnan  v.  Oakes,  19  111.  81  (1857). 


154  FORMAL    REQUISITES   OF    BILLS   AND    NOTES  §   lU-l 

that  a  note  payiihlo  in  the  alternative  is  not  nopotiablc;  hut,  value 
received  being  expressed,  it  might  he  sued  on  as  a  nonnegotiahle  note.' 
And  likewise  in  New  Hampshire,  hut  it  was  thought  that  action 
might  he  hrought  in  the  name  of  all  the  payees.'  If  the  instrument 
were  payal)le  to  "A.,  B.,  and  C,  or  to  their  order  or  the  major  part 
of  them,"  it  would  suffice,  and  he  negotiahle,  for  it  would  mean,  as 
said  hy  Wilde,  B.,  "to  pay  to  all  three  or  their  order,  hut  1  allow  :my 
two  to  sign  for  them  all."  ^ 

Opposing  decisions  have  been  rendered  in  South  Carolina,"  and  by 
one  of  the  Circuit  Courts  of  th(>  United  States,'  when'  it  has  been 
held  that  a  note  payable  in  the  alternative  is  payable  to,  and  may 
be  sued  upon  by,  either  one  of  the  payees;  but  in  neither  ca.se  was  the 
English  precedent  above  qu<^ted  before  the  court.  And  it  may  be 
considered  as  settleil  that  a  bill  or  note  payable  in  the  alternative  is 
not  negotiahle.  Where  the  paper  is  j>ayable  to  joint  payees,  as,  for 
instance,  "to  A.  &  B.,"  and  they  are  not  in  fact  partners,  the  indcjrse- 
ment  by  both  of  them  is  necessary  to  pa.ss  title.**  Such  a  note  imports 
a  joint  and  coequal  interest  in  the  payees,  but  their  real  interest  may 
he  shown.^ 

Under  A^egotiahle  Instrument  .statute. — The  conflict  of  authority 
on  the  above  question  is  settled  on  the  adoption  of  the  statute,  de- 
claring that  a  negotiable  instrument  may  be  drawn  payable  to  the 
order  of  "one  or  some  of  several  jiayees."  '°  An  indorsement  by  either 
one  of  two  or  more  payees  therein  would  pass  title,  as  such  a  note  does 
not  fall  within  the  terms  of  the  provision  requiring  indorsement  by 
all  joint  payees  unless  the  one  indorsing  has  authority  to  indorse  for 
the  others.^' 

§  104.  In  the  eighth  place:  as  to  the  terms  of  negotiability.^ 
It  was  formerly  held  that  a  hill  payable  to  A.  or  bearer  was  not  ne- 

3.  Walrad  v.  Petrie,  4  Wend.  576  (1S30). 

4.  Willouphby  v.  Willoughby,  5  N.  H.  245  (1830),  approved  in  Quinby  v. 
Morritt,  11  Humphr.  440  (1850). 

5.  Watson  v.  Evans,  1  Hurl.  &  Colt,  663  (1863),  distinguishing  Blancken- 
hagen  v.  Blundell,  2  B.  &  Aid.  417  (1819).  See  post,  §684;  1  Ames  on  Bills 
and  Notes,  124;  Benjamin's  Chalmers'  Digest,  7,  134. 

6.  Ellis  V.  McLemore,  1  Bailey  (S.  C),  L.  R.  13  (1830). 

7.  Spaulding  v.  Evans,  2  McLean,  139  (1840). 

8.  Ryhiner  v.  Feickert,  92  111.  305;  post,  §  684. 

9.  Tisdale  v.  Maxwell,  58  Ala.  40. 

10.  Appendix,  sec.  8  (5). 

11.  Appendix,  sec.  41;  Union  Bank  of  Bridgewater  v.  Spies,  151  Iowa,  178,  130 
N.  W.  928. 


§  IW         ELEMENTS   AND    PHRASES   OF    BILLS   AND    NOTES  155 

gotiable  so  as  to  enable  the  holder  to  sue  the  drawer  in  his  own 
name;  ^-  but  the  contrary  doctrine  is  now  well  established.^'  It  was 
also  at  one  time  a  matter  of  doubt  whether  it  was  not  essential  to  the 
character  of  a  l)ill  of  exchange  that  it  should  be  negotiable — that  is  to 
say,  that  it  should  be  payable  "to  A.  or  order,"  or  "to  A.  or  bearer," 
or  "to  bearer;"  for  otherwise  it  was  thought  to  be  a  mere  common- 
law  contract.'^  But  it  is  now  well  settUxl  it  is  not  necessary  to  con- 
stitute a  bill  of  exchange  that  it  should  be  negotiable,  and  that  it  is 
entitled  to  grace,  and  is  in  all  respects  a  bill,  though  containing  no 
negotiable  words.  ^^  Nor  are  such  words  necessary  to  the  character 
of  a  promissory  note,  nor  to  entitle  it  to  grace,  though  wherever  the 
statute  of  Anne  has  been  adopted,  or  its  principles  obtain,  they  or 
some  .similar  words  are  requisite  to  its  negotiability;  '"  and  they  are 
also  requisite  to  the  negotiability  of  a  bill,  lus  without  some  such  words 
making  the  instrumrnt  payable  to  A.  or  order,  or  to  bearer,  or  to  A. 
or  assigns,  the  power  to  tran.sfer  it  so  as  to  give  a  right  of  action  to 
the  indorsee  against  prior  parties  is  not  imparted.'^    But  the  indorse- 

12.  IIodRofl  V.  Stfwaril,  1  Salk.  12.5  (1G91). 

13.  Grant  v.  VHUnlmn,  '.i  Hurr.  151(5  (17G4).  In  some  iStates  peculiar  phrasca 
ar*'  (*ss«>ntuil  to  nt-gcitiuhility  of  pn)mi.sHor>'  not**.  In  Alabama,  Indiana,  and 
VirRinia,  thrv  niu.st  \u'  i-xpn-wwd  to  Ix-  payable  in  bank.  (S«t'  anlf,  chapter  on 
Formal  Reijui-sit*-}*,  §  IKVj  Flare  of  |»ayment.)  In  .\rkan.sju<  the  wohIh  "without 
defalcation"  miLst  Ik*  u.'M'd  (twe  .\ct  of  .\pril  10,  ISIW);  and  in  .Mi.sHouri  "for  value 
received"  mu^t  Ix*  umhI  in  a  note,  but  not  in  a  bill;  IxjwenHtein  v.  Knopf,  2  Mo. 
App.  159  («CH'  Code  of  .MiHHouri,  chap.  8G,  §  15).  In  ver>'  many  States  similar  stal- 
utj-s  to  that  of  .\nne  have  b<'en  enacted.  In  lUinoi.s  a  note  payable  to  "A.  or 
bearer,"  in  not,  under  the  statute,  dt-^'nuxl  negotiable.  Clarvin  v.  Wi.swell,  H3 
III.  21S.  Siv  /Mw/,  §§  »><■>.■{,  1I*M».  In  Indiana  words  of  negotiability  are  n«'ces8ary; 
other\vLso  the  instrument  ia  claawed  with  bank  che<-ks.  Sinclair  v.  Johnson,  85 
Ind.  527. 

14.  Stor>'  on  Rills,  §  tK). 

16.  .\ven'tt's  Admr.  v.  liooker,  5  Gratt.  107;  Michigan  Hank  v.  Eldred,  9  Wall. 
544;  Wells  v.  Brigham,  i)  Cu.sh.  6;  Stor>'  on  Hills,  §  tK);  Chitty  on  Hills  [•159],  182. 

16.  Ibid;  Smith  v.  Kendall,  6  T.  R.  12.3,  1  V^p.  2.31;  Rex  v.  Hox,  6  Taunt.  328; 
Hurchell  v.  Slf)cock,  2  ]A.  Rjiym.  1545;  Hjink  of  Sherman  v.  App<'r8on,  4  Fed.  25; 
Graves  v.  Mining  Co.,  SI  Cal.  :i04;  Curtis  v.  Ilazen,  .5<)  Conn.  140;  Davis  v.  Helm, 
34  Mo.  .\pp.  332;  HLsford  v.  Stone,  7  N'ebr.  3.S0;  and  words  "without  defalcation 
or  discount"  will  not  suftice;  Maule  v.  Crawford,  14  Hun.  193;  Stcbbins  v.  Union 
Pac.  R.  Co.,  2  Wyo.  Ter.  78.  See  Ames  on  Hills  and  Notes,  77,  78;  Parsons  on 
Notes  and  Hills,  227.  In  some  states  words  of  negotiability  are  dispensed  with  by 
statute.  See  Cowan  v.  Ilallack,  9  Colo.  572;  Beckstrom  v.  Krone,  125  111.  App. 
376;  Russell  v.  Ho.sworth,  KM)  111.  App.  314. 

17.  Ellis  V.  Ilahn,  29  Tex.  Civ.  App.  .395,  OS  S.  W.  3.36;  Douglass  v.  Wilke.son, 
6  Wend.  6.37;  United  States  v.  White,  2  Hill  (X.  Y.),  59;  Story  on  Bills,  §  60;  Na- 
tional Bank  v.  Silke,  1  Q.  B.  435  (1890). 


156  FORMAL    IIKQUISITKS   OF    HILLS    AND    NOTES      §§  105,   1()6 

mont  would  j^ivc  a  ri^ht  of  action  jiKiiiust  Xhv  payrc  liimsrlf,  as  it 
is,  in  l<'p;al  cfTcct,  tin-  drawing  of  a  l)ill  on  tho  party  who  is,  or  is  to 
be,  primarily  liahh-  for  payment,  that  is,  tlu-  drawi'f,  acceptor,  or 
maker, '^ 

§  105.  Note  payable  to  certain  person  only,  not  negotiable.  If 
the  hill  or  note  he  payahle  to  a  certain  person  only,  it  is  not  ncucjtiahle 
so  as  to  hind  the  maker  or  drawer  in  the  hands  of  any  other  person 
than  the  payee,''-'  though  the  payee,  if  he  indorse  it,  will  he  hound 
thereon  to  his  innnediate  indorsee.-'"  If  it  he  jiayahle  "to  the  hearer 
A.,"  it  is  the  same  as  if  simply  payahle  to  A.,  and  is  not  negotiahle.-' 
But  if  payahle  to  A.  or  hearer,  it  is  the  same  as  if  payahle  to  bearer, - 
and  so  if  payable  to  \.  or  holder.-''  And  if  payahle  to  order  only,  it 
has  been  held  the  same  a.s  payable  to  bearer.'-'  Hut  if  payable  "to 
the  order  of  A."  it  is  the  same  as  if  payable  to  A.  or  order.-^ 

§  106.  Words  of  negotiability;  form.  No  precise  form  of  words 
is  necessary  to  impart  nej^otiability.  .\s  has  been  said  in  Pennsyl- 
vania, "'order'  or  'bearer'  are  convenient  and  expressive,  but  clearly 
not  the  only  words  which  will  comnumicate  the  quality  of  negotiabil- 
ity. Some  equivalent  words  should  be  used.  Worils  in  a  l/iU,  from 
which  it  can  be  inferred  that  the  person  makinp  it,  or  any  other  party 
to  it,  intended  it  to  be  negotiable,  will  give  it  a  transferable  quality 
against  that  person.  The  concession  therefore  may  be  made  that  if 
the  makers  of  this  note,  having  omitted  the  usual  words  to  express 
n(\gotiability,  had  said,  'this  note  is  and  shall  be  negotiable,'  it  would 
have  been  negotiable."  -'"' 

18.  Hill  V.  Lewis,  1  Salk.  132;  BullinRiills  v.  Glostcr,  3  Ea.st.  482;  Smallwood  v. 
Vernon,  1  Stni.  478;  Thomp.'^on  on  Hills,  .'j.'5;  Stf)ry  on  liillM,  §  CA). 

19.  Hackney  v.  Jones,  3  Humphr.  012;  Warren  v.  .Scott,  32  Iowa,  22;  Hill  v. 
Lewis,  1  Salk.  132;  Ames  on  Bills  and  Notes,  132.  See  post,  §  633;  De  Hjuss  v. 
Dibert,  17  C.  C.  A.  79,  70  Fed.  227. 

20.  See  Story  on  Bills,  §§  119,  199,  202;  De  Hasa  v.  Dibert,  17  C.  C.  A.  79, 
70  Fed.  227. 

21.  Warren  v.  Scott,  32  Iowa,  22. 

22.  Eddy  V.  Bond,  19  Me.  461. 

23.  Putnam  v.  Crymes,  1  McMull.  9.    See  ante,  §  99. 

24.  Davega  v.  Moore,  3  McCord,  482. 

25.  Frederick  v.  Cotton,  2  Shower,  8;  Smith  v.  McClure,  5  East.  476;  Story 
on  Bills,  §  56;  Howard  v.  Palmer,  64  Me.  86;  Dugin  v.  Bartol,  64  Me.  473. 

26.  Raymond  v.  Middleton,  29  Pa.  St.  530,  Porter,  J,  See  United  States  v. 
White,  2  Hill  (N.  Y.)  59;  Stadler  v.  First  Nat.  Bank,  22  Mont.  190,  56  Pac.  Ill, 
74  Am.  St.  Rep.  582. 


§  107         ELEMENTS    AND    PHRASES    OF    BILLS    AND    NOTES  157 

Under  Negotiable  Instrument  statute. — Under  the  statute,  a  note 
payable  to  order  or  to  bearer  and  negotiable  and  payable  at  a  certain 
place  is  negotiable  within  the  meaning  of  the  statute,^  and  a  note 
order  or  draft  which  is  not  payable  to  order  or  bearer  is  not  negoti- 
al)le.-"  The  term  "indorsement"  in  the  statute  applies  only  to 
negotiable  instruments,  and  an  indorsement  by  the  payee  of  a  note 
payable  to  a  person  named  does  not  render  the  note  negotiable.^ 

§  107.  EfiFect  of  making  note  negotiable  at  particular  bank. — A 
note  may  be  rn:i<ic  negotiable  :it  one  bank,  and  paj'able  at  another, 
the  word  "negotial)le"  not  importing,  as  we  have  already  seen,  that 
the  note  is  also  payable  where  it  is  negotiable.  But  making  the  note 
negotiable  at  a  particular  bank  has  in  itself  a  meaning.  And  in  a  case 
where  the  note  was  negotiable  at  the  Union  Bank  of  Cleorgetown, 
in  Marjiand,  but  payable  at  the  Bank  of  Potomac,  in  Aleximdria,  Vir- 
ginia, Chief  Justire  Marshall  said:  ^  "liy  making  a  note  negotiable 
in  bank,  the  maker  authorizes  the  bank  to  advante  on  his  creilit  to 
the  owner  the  sum  expressed  on  its  face.  It  would  be  a  fraud  in  the 
bank  to  set  up  ofTs«'ts  against  this  note  in  consecpience  of  any  trans- 
actions Ix'tween  the  parties.  These  offsets  are  waived,  and  cannot, 
after  the  note  has  Ix'en  di.scounteii,  Ix'  again  set  up."  At  the  time  of 
the  decision,  by  the  laws  in  force  in  Alexandria,  Virginia,  an  offset 
might  have  been  pleaded  against  the  lussignee,  as  the  note  was  not 
under  the  Virginia  laws  negotiable,  while,  if  governed  by  the  laws  of 
Maryland  in  force  in  (leorgett)wn,  it  wjis  a  negotiable  note;  but  the 
chief  justice  thought  it  entirely  immaterial  whether  the  question  was 
governed  by  the  laws  of  the  one  State  or  the  other,  on  the  grounds 
almve  state<l.^'  In  general,  a  not<*  made  negotiable  and  payable  at  a 
particular  bank  may  Ix*  negotiated  anywhere.'- 

27.  Apprndix,  sees.  1,  1H4.  Aloxandor  &  Co.  v.  Hazclrifo^,  123  Ky.  677,  97 
S.  W.  [ii):\;  Hiokok  v.  HiintinR,  73  N.  Y.  S.  9G7,  07  App.  Div.  r,m;  Gilloy  v.  Har- 
nll,  llSTonn.  ll.'j,  101  S.  W.  424. 

28.  ApiH-ndix,  84'c.s.  1,  12t).  I'uUon  v.  Vamoy,  102  N.  Y.  S.  OOS.  117  App.  Div. 
r>~2;  J()hn.>u)n  v.  I.^uwitcr,  I'ui  N.  C.  47,  71  S.  K.  23;  XW-stlxTK  v.  ChicuKo  Lumber 
A  C<nil  Co.,  117  Wi.>*.  'tSO,  94  X.  W.  572.  The  ubrt^-nce  of  the  words  "order"  or 
"bejirer"  do  not  affeet  tlie  validity  or  render  it  nontransferable  or  nonassignable; 
their  only  effeet  is  to  make  the  instrument  negotiable,  and  therefore  cut  off  de- 
fensi-s.    Wettlaufer  v.  Baxter,  137  Ky.  3ti2,  125  8.  W.  741. 

29.  Appendix,  sec.  9  (5).    Johnson  v.  I^assiter,  155  N.  C.  47,  71  S.  E.  23. 

30.  Mandeville  v.  I'nion  Bank,  9  Cranch.  9. 
81.  S<H«  iH)!il,  §§  32.V326. 

32.  Wardfll  v.  Hughes,  3  Wend.  416;  Schoharie  Nat.  Bank  v.  Bevard,  51  Iowa, 


158  FORMAL   REQUISITES    OF    HILLS    AND    NOTES  §   108 

§  108.  In  the  ninth  place:  as  to  the  words  of  consideration. — 
The  words  "viiluc  rci-civcd"  ure  almost  invarialjly  expressed  in  \n\\s 
of  exchange  and  promissory  notes,  and  they  were  at  one  time  thouglit 
essential,  by  the  custom  of  merchants,  to  impart  negotiability  to  the 
instrument.^''  But  it  is  now  well  settletl  that  they  only  express  what 
the  law  itself  implies  from  the  execution  of  the  paper; '■*  and  it  has 
been  said  that  th(>y  "are  only  inserted  ex  miijori  aiutchi,  in  order  that 
the  payee  may  be  able  to  recover  upon  it  in  an  action  for  money  lent, 
or  money  had  and  received,  in  case  the  instrument  should  be  defective 
in  other  respects,  as  a  bill  of  exchange.'^ 

Wlien  the  words  "value  received"  are  inserted  in  a  note,  it  is  ob- 
vious that  they  import  value  received  by  the  maker  from  the  payee;  ^ 
but  where  a  bill  is  drawn  payable  to  the  order  of  a  third  p<Tson,  they 
are  ambiguous. 

They  may  mean  cither  value  received  by  the  acceptor  from  the 
drawer,  or  by  the  drawer  of  the  payee.  But  the  latter  is  the  more 
natural  and  probai)le  construction;  for,  as  said  by  Lord  Kllenborough, 
it  is  more  natural  "that  the  party  who  draws  the  bill  should  inform 
the  drawee  of  a  fact  which  he  does  not  know,  than  one  of  which  he 
must  be  well  aware."  "  When  however  the  bill  is  drawn  payable  to 
the  drawer's  own  order,  the  words  "value  received"  must  mean  re- 

258;  Stadlcr  v.  First  Nat.  Bank,  22  Mont.  190,  56  Pac.  HI,  74  Am.  St.  Rep. 

582. 

33.  Bylea  on  Bills  (Sharswood's  ed.)  (♦82),  170;  Edwiu-ds  on  Bills,  .%.  Sec  2  Bl. 
Com.  468.  In  Missouri  they  are  essential  to  the  negotiability  of  promissory  note.s 
under  the  statute,  but  not  to  bills.  Code,  chap.  80,  §  15;  Bailey  v.  Smoek,  01  Mo. 
213;  Lowenstein  v.  Knopf,  2  Mo.  -Vpp.  159;  International  Bank  v.  Cicrman  Bank, 
3  Mo.  App.  302;  Taylor  v.  Newman,  77  Mo.  203;  Ixjwrey  v.  Danforth,  95  Mo. 
App.  441,  09  S.  W.  .39.  Also  to  certificates  of  deposit.  Savings  Bank  of  Kansas 
V.  National  Bank  of  Commerce,  38  Fed.  805. 

34.  Poplewell  v.  Wilson,  1  Stra.  274  (1719);  Macleod  v.  Snee,  2  Ld.  Raym. 
1481  (1727);  Grant  v.  Da  Costa,  3  Maule  &  S.  351  (1815);  Hatch  v.  Fraycs,  11 
Ad.  &  El.  702;  Underbill  v.  Philips,  10  Hun,  591;  Kendall  v.  Galvin,  15  Me.  131; 
Townsend  v.  Derby,  3  Mete.  (Mass.)  303;  Hubble  v.  Fogartie,  3  Rich.  413;  Leon- 
ard V.  Walker,  Brayton,  203;  Arnold  v.  Sprague,  34  Vt.  402;  Hughes  v.  ^Tieeler, 
8  Cow.  77;  People  v.  McDermott,  S  Cal.  288;  1  Parsons  on  Notes  and  Bills,  163; 
Bayley  on  Bills,  33;  Thompson  on  Bills,  53;  Byles  on  Bills  (Sharswood's  ed.)  [*82], 
177;  Chitty  on  Bills  [*161],  185;  Story  on  Bills,  §  63;  Story  on  Bills  and  Notes, 
§51;  Edwards  on  Bills,  56,  169;  Culbertson  v.  Nelson,  93  Iowa,  187,  61  N.  W. 
854,  57  Am.  St.  Rep.  266,  citing  the  text;  Martin  v.  Stone,  67  N.  H.  367, 
29  Atl.  845. 

35.  White  v.  Ledwick,  4  Doug.  247  (1785),  Ashurst,  J. 

36.  Clayton  v.  Gosling,  5  B.  &  C.  361  (11  Eng.  C.  L.),  8  Dowl.  &  R.  110. 

37.  Grant  v.  Da  Costa,  3  Maule  &  S.  351. 


§§  109,  110       ELEMENTS  AND  PHRASES  OF  BILLS  AND  NOTES       159 

ceived  by  the  acceptor  of  the  drawer;  and  in  such  a  bill,  if  the  declara- 
tion state  that  it  was  for  value  received  by  the  drawer,  it  will  be  a 
variance.^  A  declaration  in  an  action  on  a  bill  of  exchange  need  not 
state  that  any  value  has  been  received,  although  it  is  stated  on  the 
face  of  the  bill,^^  and  the  like  rule  applies  to  actions  on  notes.^  The 
statement  of  a  particular  consideration,  as,  for  instance,  "in  consid- 
eration of  foregoing  and  forbearing  a  certain  action-at-law,"  ^^  or 
"for  work  done  on  logs,"  •»'-  in  nowise  affects  the  character  of  the 
instrument.^' 

§  109.  In  the  tenth  place :  as  to  the  words  of  advice.— Sometimes 
the  words  "without  further  advice,"  or  "as  per  advice,"  are  inserted 
in  bills  of  exchange;  and  when  the  latter  appear,  they  warn  the  drawee 
not  to  accept  or  pay  the  bill  until  he  receives  advice  respecting  it. 
And  if  he  disregards  the  intimation,  he  act.s  at  his  peril. •'^  Such  words 
are  altogether  unneces.sar>';  but  by  admonishing  the  drawee  to  await 
advice,  they  sometimes  serve  as  safeguards  against  alterations;  antl 
Mr.  Chitty  says  that  every  prudent  drawer  ought  to  send  a  distinct 
letter  of  advice,  and  that  no  prudent  drawee  should  accept  without 
having  previously  received  one,  stating  the  sum  for  which  the  bill 
is  drawn.**^ 

§  110.  In  the  eleventh  place:  as  to  the  statement  of  account.— 
\\ords  are  frequently  in.serted  in  bills  of  exchange  indicating  the 
account  to  which  they  are  to  be  charged  (tus,  for  irustance,  "and 
place  the  same  to  account  cotton  shipment  as  advised"),^  in  which 


38.  HiRhmon'  v.  Primrose,  5  Maule  A  S.  65. 

39.  (Irani  v.  Dm  Co.sta,  3  Mmih-  A-  S.  ArA. 

40.  rmh-rhill  v.  Philliiw,  10  Hun,  o'Jl. 

41.  Shcnton  v.  Janu-s,  5  Q.  H.  UK). 

42.  Sylvt-ator  v.  Staph's,  44  Mr.  A[H\;  Corbett  v.  aark,  4rj  Wia.  403. 

43.  S.f  ante,  §§  'A,  (30»i,  and  i>ost,  §§  1.%,  797;  Jur>'  v.  Harki-r,  El.,  Bl.  &  El.  459; 
Biinl'-r  V.  The  Merchants'  I^an  &  Trust  Co.,  Iti4  111.  197,  45  X.  E.  512;  Dollar 
Sav.  &  Trust  Co.  v.  Crawford,  09  W.  \a.  109,  70  S.  E.  1089.  Where  notes  were 
Riven  reciting  that  they  were  "to  defray  the  cost  of  .s<-curing  the  right  of  way  for 
the  Covina  extension  of  the  Pacific  Electric  Railway,"  the  question  of  what  was 
the  meaning  of  the  words  "Covina  extension  of  the  Pacific  Electric  Railway"  was 
a  question  of  fact  to  be  determined  from  all  the  circum-stances  surrounding  their 
execution.    First  Nat.  Bank  v.  Ruddock  Co.,  158  Cal.  334,  111  Pac.  86. 

44.  Byles  on  Bills  ['SG],  182;  Edwards  on  Bills,  172;  Story  on  BiUs,  §  65. 
46.  Chitty  on  Bills  1*162],  187. 

46.  In  re  Entwistle,  3  Ch.  Div.  477. 


IGO  FORMAL   REQUISITES   OF    BILLS    AND    NOTES   §§111     112 

event  they  do  not  at  all  affect  the  qualities  of  the  paper.'"  And  they 
are  by  no  means  essential.*^  If  the  drawee  be  debtor  to  the  drawer, 
"put  it  to  your  account"  is  usually  inserted;  but  if  the  drawer  is 
himself  to  be  the  debtor,  he  inserts,  "and  put  it  to  my  account." 
And  where  the  amount  is  to  be  credited  to  a  third  person,  "  put  to  the 
account  of  A.  B."  ^« 

In   Indiana,   where  A.  sued   B.   upon  the  following  instrument: 

"Mr.  B.: 

"Sir,  Please  pay  to  'A.'  or  order  the  sum  of  one  hundred  and  nineteen  dollars 
on  said  bill  of  P^  in.  lumber,  and  oblige  the  firm  of 

(Si,;nlu1  "C.  &  Co." 

"I  accept."  [Signed!  "B." 

it  was  held  that  the  instrument  possessed  all  the  characteristics  of  a 
hill  of  exchanp;e.^ 

§  111.  Provision  in  case  of  need. — Sometimes  provision  is  made, 
in  the  bill,  that  the  holder  in  ca.se  of  need  shall  apply  to  another 
drawee;  by  which  is  meant,  that  if  the  first  drawee  refuse  to  honor 
the  bill,  the  second  shall  be  resorted  to.  The  holder  is  bound  to  apply 
to  the  party  so  indicated,  and  he  may  accept  or  pay  the  bill  without 
protest.  The  usual  form  is:  "/n  case  of  need,  apply  to  Messrs.  C.  & 
D.,  at  E.,"  '"^  or  in  French,  "au  bcsoin  chez  Messrs.  C.  &  D.,  d  /i\"  In 
th(^  event  that  the  party  so  jiointed  out  pays  the  bill,  the  drawer  will 
be  liable  to  him  for  the  full  amovmt.''- 

§  112.  In  the  twelfth  place:  as  to  the  attestation. — It  is  not 

necessary  that  there  should  be  an  attesting  witness  to  a  bill  or  note, 
though  in  many  cases  one  is  resorted  to  as  matter  of  convenience.*' 
Where  the  instrument  is  signed  by  a  marksman,  or  by  initials  only, 
it  may  be  important  to  have  the  act  attested  by  a  witness,  in  order 


47.  See  ante,  §  51. 

48.  Laing  v.  Barclay,  1  B.  &  C.  392,  2  Dowl.  &  R.  530;  Chitty  on  Bills  [♦1G2], 
186;  Jarvis  v.  Wilson,  46  Conn.  90. 

49.  Martin  v.  Lewis,  30  Gratt.  672. 

50.  Spurgin  v.  McPheeters,  42  Ind.  527.    See  Corbett  v.  Clark,  45  Wis.  403. 

51.  Chitty  on  Bills  [*165],  189;  Story  on  Bills,  §  65. 

52.  Ibid. 

53.  Chitty  on  Bills  (13th  Am.  ed.)  [n66],  190;  Story  on  Notes,  §  54;  Edwards 
on  Bills,  175;  1  Randolph  on  Commercial  Paper,  §  68.  The  agent  or  attorney  of 
the  payee  is  not  incompetent  to  act  as  the  attesting  witness  to  the  execution  of  a 
note.    Sowell  v.  Bank  of  Brewton,  119  Ala.  92,  24  So.  585. 


§   112         ELEMENTS   AND    PHRASES    OF   BILLS   AND   NOTES  IGl 

to  establish  the  genuineness  of  the  mark  or  initials,  and  the  occasion 
of  its  execution.^^  When  there  is  an  attesting  witness,  the  signature 
or  mark  to  the  instrument  must  be  proved  by  him  and  not  otherwise, 
unless  by  reason  of  liis  death,  absence  from  the  country,  or  other 
cause,  he  cannot  be  produced  at  the  trial ;  ^^  but  when  such  is  the 
case,  the  next  best  evidence,  that  is,  proof  of  the  party's  signature 
or  mark,  is  not  rociuired,  but  proof  of  the  attesting  witness'  signature 
is  required  instead.^  Such  is  also  the  rule  where  the  attesting  witness 
is  blintl  ^^  or  insane.^  Such  are  the  rules  of  evidence  of  the  common 
law  on  this  subject.  In  regard  to  promissory  notes  the  rule  has  been 
so  far  relaxed,  in  some  cases,  that  the  admission  of  the  party  that 
he  executed  the  instrument  may  be  sIionnti  without  calling  the  sub- 
scribing witness.^^  And  the  doctrine  htus  been  repudiated  that  those 
wIkj  attest  such  an  instrument  are  agreed  upon  as  the  only  witnesses 
to  prove  it;  but  only  applied  where  the  note  is  fully  identified,  and 
there  is  no  chance  of  mistake  in  respect  to  what  the  party  intended 
to  admit.^  In  England,  by  statute  of  1854,  such  instruments  may 
be  proved  by  other  than  subscril)iiig  witnesses.'* 

If  the  attesting  witness  is  not  able  to  prove  the  signature,  by  reason 
of  not  having  seen  the  party  write,  secondary  evidence  is  admissible.'^ 
So,  if  he  does  not  recollect  his  own  signature,  it  may  be  proved  l)y 
other  testimony; "  and  so  if  his  own  testiincjny  is  not  clear .'^ 


64.  Story  on  Notes,  §  54. 

66.  C.rconloaf  on  Evidence,  55  509,  572;  Chitty  on  Billa  I'lGOl,  190;  Edwards 
on  Hills,  175;  2  ParwonH  on  Noti*8  and  HilLs,  474;  Stone  v.  Metcalf,  1  Stark.  53; 
Lemon  V.  Dcane,  2  ('anij)h.  iV.H\;  M'Cniw  v.  Clcntry,  3  Canij)!).  2:i2;  Burt  v. 
Wiiik.r,  4  B.  A  Aid.  G97;  Hichard.s  v.  Krankum,  9  Car.  &  B.  21 1 ;  January  v.  Good- 
man,  I  Dall.  2()S. 

66.  (".n-tnlcaf  on  Evidence,  6  575;  Story  on  Notes,  §  54;  Chitty  on  Bills  (13th 
Am.  ed.)  [*\iM)\,  19();  2  Parsons  on  Notes  and  Bills,  4S();  Vimv  v.  Newman,  Moody 
&  M.  79;  Kay  v.  Brookman,  Moody  &  M.  2HG;  Shiver  v.  Johnson,  2  Brev.  397; 
Dunbar  v.  Marden,  13  N.  H.  311;  Lyons  v.  Holmes,  11  S.  C  429;  Bussey  v. 
Whitaker,  2  Nott  A  McC.  374. 

57.  Wo<k1  v.  Drury,  1  I>i.  Haym.  734.    But  see  Cronk  v.  Frith,  9  Car.  &  P.  197. 

68.  Nelson  v.  W  hittall,  1  B.  &  Aid.  22,  note;  Carrie  v.  Child,  3  Campb.  293. 

69.  Shaver  v.  Ehle,  16  Johns.  291;  Hall  v.  Pheljw,  2  Johns.  451;  Henry  v. 
Bishop,  2  Wend.  575;  Williams  v.  Floyd,  11  Pa.  St.  499;  Hodges  v.  Eastman,  12 
Vt.  358;  Edwards  on  Bills,  176. 

60.  Shaver  v.  Ehle,  15  Johns.  201;  Edwards  on  Bills,  170. 

61.  Edwards  on  Bills,  176. 

62.  Ix>mon  v.  Deane,  2  Campb.  636. 

63.  Shiver  v.  Johnson,  2  Brev.  .397;  Quimby  v.  Buzzoll,  16  Me.  470. 

64.  Walker  v.  Warlield,  6  Mete.  (Mass.)  466. 

11 


162  FORMAL   REQUISITES   OF   BILLS   AND   NOTES      §§  113,  114 

SECTION   III 

THE    SEVERAL    PARTS   OF   A    FOREIGN    BILL   CALLED    A    SET 

§  113.  In  order  to  avoid  delay  and  inconvenience  which  may  result 
from  the  loss  or  miscarriage  of  a  foreign  bill,  and  to  facilitate  and 
expedite  its  transmission  for  acceptance  or  payment,  the  custom  has 
prevailed  from  an  early  period  for  the  drawer  to  draw  and  deliver  to 
the  payee  several  parts  of  the  same  bill  of  exchange,  which  may  be 
forwarded  by  different  conveyances,  and  any  one  of  them  being  paid, 
the  others  are  to  be  void.  These  several  parts  are  called  a  set,  and 
constitute  in  law  one  and  the  same  bill.^"  Sometimes  there  are  four, 
but  usually  three  parts.^^  And  if  any  person  undertake  to  draw  or 
deliver  a  foreign  bill  to  another  person,  it  seems  that  he  is  bound  to 
deliver  the  usual  number  of  parts,*^^  and  it  has  been  thought  that  the 
promisee  may  in  such  a  case  demand  as  many  parts  as  he  pleases.®* 
But  this  is  questionable.*^ 

In  Europe  it  is  not  unusual  for  the  original  bill  to  be  forwarded  for 
acceptance,  and,  in  the  meantime,  a  copy  of  it  negotiated.™  But  this 
practice  is  not  followed  in  Englantl  or  in  the  United  States.'^ 

§  114.  Condition  in  each  part  of  set. — It  is  usual  for  the  drawer, 
and  to  his  protection  it  is  essential,  to  incorporate  in  each  part  of  the 
set,  a  condition  that  it  shall  only  be  payable  provided  the  other  remain 
unpaid;  in  other  respects  the  parts  are  identical  in  terms.  Thus  the 
first  part  should  be  expressed:  "  Pay  this  my  first  of  exchange — second 
and  third  remaining  unpaid;"  where  there  are  three  parts,  or  where 
there  are  four  parts,  there  should  be  added,  "Second,  third,  and  fourth 
remaining  unpaid."  ^"  This  condition  operates  as  notice  to  the  world 
that  all  the  parts  constitute  one  bill,  and  that  if  the  drawee  pay  any 

65.  Story  on  Bills,  §66;  Edwards  on  Bills,  161;  Byles  on  Bills  [*376],  555; 
Chitty  on  Bills  [*155],  178;  1  Parsons  on  Notes  and  Bills,  58,  60;  Thompson  on 
Bills,  45;  Bayley  on  Bills,  24;  1  Randolph  on  Commercial  Paper,  §  237. 

66.  Ibid. 

67.  Kearney  v.  West  Granada  Mining  Co.,  1  H.  «&;  N.  412;  Byles  on  Bills 
[*376],  555;  Thompson  on  Bills,  46,  92. 

68.  Chitty  on  Bills  [*154],  178;  Edwards  on  Bills,  151;  Byles  on  Bills  [*376],  556. 

69.  Story  on  Bills,  §  66. 

70.  Byles  on  Bills  (Sharswood's  ed.)  [*377],  557. 

71.  1  Parsons  on  Notes  and  Bills,  60. 

72.  Thompson  on  Bills,  45;  Bayley  on  Bills,  24;  Chitty  on  Bills  [*155],  178. 


§§  115,  116  A    FOREIGN   BILL  l63 

part  the  whole  is  extinguished."  The  condition  should  mention  every 
part  of  the  set,  for  if  a  person  intending  to  make  a  set  of  three  parts 
should  omit  the  condition  in  the  first,  and  make  the  second  ^\dth  a 
condition,  mentioning  the  first  only,  and  in  the  third  take  notice 
only  of  the  other  two,  he  might  be  obliged  to  pay  each,  for  it  would 
be  no  defense  to  an  action  by  a  bona  fide  holder  on  the  second  that 
Ik'  had  paid  the  third,  nor  to  an  action  on  the  first  that  he  had  paid 
either  of  the  others7^  But  an  omission  is  not  material  perhaps  which 
upon  the  face  of  the  condition  must  necessarily  have  arisen  from 
a  mistake,  as  if  mention  of  an  intermediate  part  were  omitted: 
for  instance,  "pay  this  my  first  of  exchange,  second  and  fourth 
unpaid."  ^^ 

§  115.  The  indorser  or  transferrer  is  bound  to  pass  to  his  trans- 
fcrt-f  all  the  parts  of  the  bill  in  his  possession,  and  he  may  be  even 
liable  to  hand  them  over  to  a  subsequent  transferee  if  he  have  them 
still  in  his  possession.^®  If  the  indorser  improperly  circulate  two  parts 
to  distinct  holders  he  may  be  liable  on  each." 

§  116.  Only  one  part  of  set  should  be  accepted. — The  drawee 
should  acfi'pt  but  one  part  of  the  set.  And  liaving  accepted  one 
part,  he  should  not  pay  another  part,  for  he  would  still  be  liable  on 
the  accepted  part.'*  When  however  he  pays  the  part  he  accepts,  the 
whole  bill  is  extinguished.'^^  The  party  entitled  to  the  bill  should 
claim  and  hold  all  the  parts,  for  payment  of  any  one  part  to  another 
person  might  defeat  him.^  But  he  to  whom  any  one  part  of  the  set 
is  first  transferred  acquires  a  property  in  all  the  other  parts,  and  may 
maintain  trover  even  against  a  bona  fide  holder,  who  subsequently. 


73.  Holdsworth  v.  Hunter,  10  B.  &  C.  449;  Wells  v.  Whitehead,  15  Wend. 
.•527;  Kenworthy  v.  Hopkin.s,  1  Johns.  Cas.  107;  Durkin  v.  Cranston,  7  Johns. 
4  JJ;  Ingrahain  v.  Gibbs,  2  Dall.  134;  Byles  on  Bills  1*3761,  555;  Edwards  on  Bills, 
Itil. 

74.  Davison  v.  Robertson,  3  Dow.  218;  Thompson  on  Bills,  45;  Byles  on  Bills 
(Sharswood's  ed.)  [*37Gl,  556;  Chitty  (*155],  178. 

75.  Chitty  on  Bills  CloS],  178. 

76.  Pinard  v.  Klockman,  43  L.  J.  Q.  B.  82;  3  Best  &  Smith,  388  (113  Eng. 
C.  L). 

77.  Holdsworth  v.  Hunter,  10  B.  &  C.  449. 

78.  Holdsworth  v.  Hunter,  10  B.  &  C  449;  Chitty  on  Bills  [*155],  178;  Byles 
on  Bills  1*377),  556. 

79.  Ibid. 

80.  Holdsworth  v.  Hunter,  10  B.  &  C.  449. 


104  FORMAL   REQUISITES   OF    BILLS   AND    NOTES  §   117 

by  transfer  or  otherwise,  gets  possession  of  another  part  of  the  set.**' 
For  it  is  the  chity  of  the  person  taking  one  part  to  inquire  after  the 
others;  and  he  is  advertised  by  their  absence,  that  they,  or  one  of 
them,  may  be  outstanding  in  the  hands  of  a  prior  buna  fide  holder .^^ 

§  117.  Production  of  set  in  evidence.— In  a  suit  against  tlie 
drawer  or  indorser,  the  very  i)art  of  the  set  which  has  been  protested 
must  be  produced,"^  and  there  is  authority  for  the  view  tliat  in  a  suit 
against  the  indorser  all  of  the  set  must  be  produced  or  their  nonpro- 
duction  satisfactorily  accounted  for.^*  But  the  United  States  Supreme 
Court  has  held  that,  when  the  part  which  has  been  protested  is  pro- 
duced, it  is  sufficient.  The  indorser  may  defentl  by  showing  that 
another  person  than  the  plaintiff  has  a  superior  adverse  claim  by 
reason  of  prior  acquisition  of  another  part,  but  unless  he  can  prove 
that  fact,  the  law  protects  him  in  making  payment  to  the  holder  of 
the  part  protested,  and  requires  no  explanation  from  him  as  to  the 
whereabouts  of  the  other  parts.'*' 

Under  Negotiable  Instrument  Statute.— \  bill  of  I'xchange  drawn  in 
two  parts  of  ev(>n  date  and  tenor  constitutes  one  bill,  and  a  valid  pay- 
ment by  the  drawee  of  one  part  of  such  a  1)111  discharges  the  whole 
bill.«« 


81.  Pcrrcira  v.  Jopp  (1793),  cited  10  H.  &  C.  450,  note  n;  Chitty  Jr.  1477; 
lloldsworlh  V.  Hunter,  10  H.  &  C  449;  Hyles  on  Hills  [♦:J7r)l,  5.50. 

82.  Lang  v.  Smyth,  7  Bing.  2S4,  294  (20  EnR.  C.  L.),  5  M.  &  P.  7.S. 

83.  Wells  V.  Whitehead,  15  Wend.  527;  Johnson  v.  Offut,  4  Mete.  (Ky.)  19; 
3  Kent's  Com.  109. 

84.  Bylt's  on  Bills  (Sharswood's  ed.)  ['S??!,  557;  2  Starkie  on  Evidence,  142. 
Two  s(>ts  of  drafts  are  in  law  to  be  regarded  as  but  one,  and  when  the  payee  pro- 
duced the  duplicates  duly  protested  with  notice  of  demand  given,  he  made  out 
a  prima  fiicu'  case,  as  no  duty  lay  upon  him  to  account  for  the  originals,  and 
if  the  originals  had  been  paiil,  that  fact  was  a  defense  to  be  affirmatively  proved 
by  the  drawers.    Kessler  v.  Armstrong  Cork  Co.,  158  Fed.  744. 

85.  Downes  v.  Church,  13  Pet.  205,  Story,  J.  But  see  Wells  v.  Whitehead, 
15  Wend.  527,  and  Edwards  on  Bills,  1(53;  Miller  v.  Palmer,  58  Md.  452. 

86.  Appendix,  sees.  178-183.  Caras  v.  Thelmann,  123  N.  Y.  S.  97,  138  App. 
Div.  297. 


CHAPTER  TV 

STAMPS    UPON    NEGOTIABLE    INSTRUMENTS 

§  118.  It  soems  that  stamp  duties  were  first  lovietl  on  the  con- 
tinent of  Europe,  in  Holland,  in  the  year  1624,  being  employed  to  raise 
revenues  for  the  prosecution  of  war  af^ainst  Sjiain.^  In  England,  they 
were  first  imposed  in  1094,  war  then  being  waged  against  France.^  In 
the  United  States,  individual  States  have  at  different  periotls  imposed 
stamp  duties;  but  such  duties  were  never  imposed  by  the  Federal 
government  until  July  1,  1802,  during  the  progress  of  the  war  against 
the  Confederate  States.  At  that  time  a  sweeping  act  requiring  deeds, 
bills,  notes,  checks,  and  other  agreements  and  evidences  of  debt  to 
be  stamped,  w:us  piussed,  being  framed  for  the  most  part  upon  the 
model  of  the  British  statute's.  The  statute  has  long  since  been  re- 
pealed, but  the  discussion  of  the  efTect  of  this  act  and  of  the  act  of 
1H*J8,  is  retainetl  here,  on  account  of  its  historic  interest  and  im- 
portance, and  because  the  information  may  be  of  value  in  the  event 
that  Congress  should  again  impose  such  duties  on  any  emergency 
arising. 

§  119.  The  original  provisioiLs  of  the  Stamp  Act  can  therefore 
Im'  now  of  but  limited  interest  to  the  legal  profession  and  the  public 
generally.  But  we  append  the  portion  of  tin;  schedule  in  fcjree  in 
1870.3 

1.  Edwards  on  Stamp  Act,  2. 

2.  Edward.s  on  Stamp  Act,  3. 

3.  Wo  transcribe  also  a  few  of  the  notes  of  Mr.  Orlando  F.  Bump  to  his  an- 
notated etlition  of  the  Stamp  Act : 

I.  Rank  chkck,  draft,  or  order  for  the  payment  of  any  sum  of  money  whatso- 
ever, drawn  \if)on  any  bank,  banker,  or  tnist  company,  or  for  any  sum  exceeding 
ten  doUars  drawn  ui)on  any  other  perwjn  or  persons,  companies,  or  corporations, 
at  sight  or  on  demand,  two  cents.  Checks  drawn  on  a  bank,  by  one  of  its  pro- 
prietors for  his  daily  expenses,  or  by  its  employees  (or  their  wages,  must  be 
stamped.  Bout.  344.  The  check  of  a  correspondent  on  money  to  his  credit,  to 
transfer  an  amount  of  money  collected  for  him,  must  be  stamped.  Checks  drawn 
by  a  State  for  moneys  belonging  to  the  State  are  exempt.  Bout.  345.  When  a 
note  is  ma<le  payable  at  a  certain  bank,  and  a  check  is  drawn  ufwn  the  .same  bank 
for  the  amount  thereof,  the  check  must  be  stamped.     When  the  note  is  simply 

165 


166  STAMPS   UPON    NEGOTIABLE    INSTRUMENTS  §  120 

§  120.  Schedule  B  of  the  act  of  Congress  of  July  1,  1862,  entitled 
"An  act  to  provide  internal  revenue  to  support  the  government, 

charged  at  the  bank  to  the  account  of  the  promisor  without  the  use  of  a  check,  no 
stamp  is  required.  Bout.  347.  If  a  check  upon  a  bookkeeper  is  used  merely  as  a 
memorandum  to  show  the  liabiHty  of  the  drawer  to  the  firm  of  which  he  is  a  mem- 
ber, it  is  exempt;  but  if  used  for  any  other  purpose,  and  especially  if  paid  out  or 
transferred,  or  negotiable  to  a  thin!  party,  it  should  be  stam[)ed.     Bout.  :i-l\). 

II.  Bill  of  exchange  (inland),  dnift,  or  order  for  the  payment  of  any  sum  of 
money  not  exceeding  one  hundred  dollars,  otherwise  than  at  sight  or  on  demand, 
or  any  promissory  note  (except  bank  notes  issued  for  circulaticjn,  and  checks  miuie 
antl  intended  to  be  forthwith  presented,  and  which  shall  be  presented  to  a  bank  or 
banker  for  payment),  or  any  memorandum,  check,  receipt,  or  other  written  or 
printed  evidence  of  an  amount  of  money  to  be  i)aid  on  demand,  or  at  a  time 
designated,  for  a  sum  not  exceeding  one  hundri^l  dollars,  five  cents,  and  for  every 
additional  one  hundre<l  dollars,  or  fractional  part  thereof  in  excess  of  one  hundn^l 
dollars,  five  cents.  Promi.ssory  notes  for  a  less  sum  than  one  hundred  dollars  are 
e.xempt.  A  cheek  payable  at  sight,  but  post-datetl,  which  has  been  put  into  cir- 
culation prior  to  the  day  of  its  date,  should  be  stamped  the  same  as  a  promissory 
note  and  not  as  a  check  payable  on  demand.  Pope  v.  Burnset  et  al.,  4  I.  R.  II. 
133.  An  agreement  jointly  and  severally  to  pay  the  sums  set  opposite  to  the 
respective  names  of  the  makers  is  a  i)romi.ssory  note.  Ballard  v.  Burnside,  49 
Barb.  102.  A  due-bill  is  a  promissory  note  under  the  Illinois  statutes,  and  in  that 
State  should  be  so  stamped.    Jacquin  v.  Warren,  40  111.  4t)l. 

III.  Bill  of  excuance  (foreign)  or  letter  of  credit,  drawn  in,  but  payable  out 
of,  the  United  States,  if  drawn  singly,  or  other\vise  than  in  a  set  of  three  or  more, 
according  to  the  custom  of  merchants  and  bankers,  shall  pay  the  same  rates  of 
duty  as  inland  bills  of  exchange  or  promissory  notes.  If  drawn  in  sets  of  three  or 
more;  for  every  bill  of  each  set  where  the  sums  made  payable  shall  not  exceed  one 
hundred  dollars,  or  the  equivalent  thereof,  in  any  foreign  currency  in  which  such 
bills  may  be  expressed,  according  to  the  standard  of  value  fixed  by  the  United 
States,  two  cents.  And  for  every  additional  one  hundred  dollars,  or  fractional 
part  thereof  in  excess  of  one  hundred  dollars,  two  cents.  A  foreign  bill  of  exchange 
or  letter  of  credit,  drawn  in,  but  payable  out  of,  the  United  States,  if  drawn  ac- 
cording to  the  custom  of  merchants  and  bankers,  is  liable  to  the  same  stamp  tax  as 
an  inland  bill  of  exchange,  i.  e.,  if  drawn  at  sight  or  on  demand,  it  is  liable  to  a 
tax  of  two  cents;  if  drawn  otherwise  than  at  sight  or  on  demand  it  should  be 
stamped  at  the  rate  of  five  cents  for  each  one  hundred  dollars,  or  fractional  part 
thereof.  Duplicates  require  the  same  amount  of  stamps  as  the  original.  9  I.  R.  R. 
165.  The  phrase  "letter  of  credit"  is  construed  to  refer  to  such  letters  as  are 
equivalent  to  a  bill  of  exchange,  the  payment  of  which  is  not  contingent  upon  any 
other  transaction.    Bout.  353. 

IV.  Bill  of  lading  or  receipt  (other  than  charter-party),  for  any  goods, 
merchandise,  or  effects,  to  be  exported  from  a  port  or  place  in  the  United  States 
to  any  foreign  port  or  place,  ten  cents.  An  inland  or  domestic  bill  of  lading  is 
exempt.  9  I.  R.  R.  161.  A  bill  of  lading  to  any  port  in  British  North  America  is 
exempt.    91.  R.  R.  161. 

V.  Bond  of  any  description,  other  than  such  as  may  be  required  in  legal  pro- 
ceedings, or  used  in  connection  with  mortgage  deeds,  and  not  otherwise  charged 


§  120  STAMPS   UPON    NEGOTIABLE    INSTRUMENTS  167 

and  to  pay  interest  on  the  public  debt,"  contained  the  provisions 
respecting  the  stamps  required  upon  negotiable  instruments,  includ- 
ing bills  of  exchange,  promissory  notes,  checks,  bills  of  lading,  nego- 
tiable bonds,  and  certificates  of  deposit;  and  this  schedule,  either  in 
its  original  form,  or  as  subsequently  amended,  continued  in  force 
until  the  1st  day  of  October,  1872,  when  it  was  repealed,  "excepting 
only  the  tax  of  two  cents  on  bank  checks,  drafts,  or  orders,"  by  the 
subjoined  section  of  the  act  of  that  date.^ 

in  this  schedule,  twenty-five  cents.  State  and  city  securities  are  exempt  from 
stamp  duty.    II.  R.  R.  75;  3  I.  R.  R.  14.    See  Bump's  ed.    Stamp  Act,  41. 

VI.  Certificate  of  stock  in  any  incorporated  company,  twenty-five  cents. 

VII.  Certificate  of  profits,  or  any  certificate  or  memorandum  showing  an 
intf-rest  in  the  jjrojxTty  or  accumuhitions  of  any  incorporated  company,  if  for  a 
Hum  not  l<'s.s  than  ton  dollars  and  not  excee<linK  fifty  dollars,  ten  cents.  Exceeding 
fifty  dollars  and  not  exceeding  one  thousand  dollars,  twenty-five  cents.  Exceed- 
ing $1,000,  for  every  additional  one  thousand  dollars,  or  fractional  part  thereof, 
twenty-five  cents. 

VIII.  Certificate.  Any  certificate  of  damage,  or  otherwise,  and  all  other 
(■••rtificates  or  documents  Lssued  by  any  port  warden,  marine  surveyor,  or  other 
jM-rson  acting  lus  such,  twenty-five  cents. 

IX.  Certificate  of  dejxjsit  of  any  sum  of  money  in  any  bank  or  trust  com- 
pany, or  with  any  banker  or  person  acting  as  such:  if  for  a  sum  not  exceeding  one 
hundred  dollars,  two  cents.  For  a  sum  exceeding  one  hundrinl  dollars,  five  cents. 
When  money  is  received  as  a  botia  fide  deix)sit,  against  which  the  depositor  may 
draw,  the  certificate  need  only  be  stamped  with  a  two-cent  or  a  five-cent  stamj), 
iiccording  to  whether  the  amount  exceeds  one  hundretl  dollars  or  not,  even  though 
the  dei)osit  draws  interest  for  part  or  for  all  the  time  it  remains  in  bank.  11 
I.  R.  R.  4,  5. 

X.  Certificate  of  any  other  description  than  those  specified,  five  cents. 
4.   17  U.  S.  Stat,  at  l^rge,  chap.  :}!.'),  §  30,  p.  250:  "Sec.  30.    That  on  and  after 

the  first  day  of  October,  eighteen  hundred  and  seventy-two,  all  the  taxes  imposed 
by  stamps  under  and  by  virtue  of  Schedule  B  of  section  one  hundred  and  seventy 
of  the  act  approved  June  thirtieth,  eighteen  hundre<i  and  sixty-four,  and  the  sev- 
eral acts  amendator>'  thereof,  be  and  the  same  are  hereby  repealed,  excepting  only 
the  tax  of  two  cents  on  bank  checks,  drafts,  or  orders:  Provided,  that  where  any 
mortgage  has  been  executed  and  recorded,  or  may  be  executed  and  recorded,  before 
the  first  day  of  October,  .\nno  Domini  eighteen  hundred  and  seventy-two,  to 
secure  the  payment  of  bonds,  or  obligations  that  may  be  made  and  issued  from 
time  to  time,  and  such  mortgage  not  being  stampeil,  all  such  bonds  or  obligations 
so  made  and  issued  on  or  after  the  first  day  of  October,  Anno  Domini  eighteen 
hundred  and  seventy-two,  shall  not  be  subject  to  any  stamp  duty,  but  only  such 
of  their  bonds  or  obligations  as  may  have  been  made  and  issued  before  the  day 
last  aforesaid:  And  provided  further.  That,  in  the  meantime,  the  holder  of  any 
instrument  of  writing  of  whatever  kind  and  description,  which  has  been  made  or 
i.ssued  without  being  duly  stamped,  or  with  a  defunct  [deficient]  stamp,  may  make 
application  to  any  collector  of  internal  revenue,  and  that  upon  such  application 
such  collector  shall  thereupon  affix  the  stamp  provided  by  such  holder  upon  such 


168  STAMPS   UPON    NEGOTIABLE    INSTRUMENTS      §§   121,  122 

§  121.  It  is  not  within  the  purview  of  this  work  to  treat  otherwise 
than  incidentally  and  briefly  on  the  subject  of  stamps.  In  "  Edwards 
on  the  Stamp  Act,"  "Bump's  Annotated  Edition  of  the  Stamp  Act," 
and  in  the  appentlix  to  the  second  volume  of  "  Parsons  on  Notes  and 
Bills,"  will  be  found  very  ample  information  respecting  the  act  of 
Congress,  with  the  decisions  of  the  American  courts,  and  also  of  the 
British  courts  in  jmri  materia.  Herein  we  shall  only  touch  upon  some 
of  the  most  prominent  and  important  points,  the  act  no  longer  hav- 
ing application  to  the  subject  of  this  treatise. 

§  122.  As  to  the  construction  of  the  stamp  act. — It  will  be  ob- 
served that  section  1()3  of  the  act  relating  to  stamps  did  not  in  terms 
apply  to  instruments  recorded,  admitted,  or  offered  as  evidence  in 
the  State  courts.  It  is  therefore  the  conclusion  of  reason,  and  of  the 
majority  of  the  adjudicated  cases,  that  Congress  did  not  intend  the 
act  to  apply  to  the  State  courts.  It  had  full  operation  and  elTect,  if 
construed  to  apply  to  those  courts  only  which  have  been  established 
under  the  Constitution  of  the  Ignited  States,  and  by  acts  of  Congress, 
and  over  which  the  Federal  legislature  can  legitimately  exercise 
control,  and  to  which  they  can  properly  prescribe  rules  regulating 


instrument  of  writing  a.s  (is)  required  by  law  to  be  put  upon  the  same,  and  subject 
to  the  provisions  of  section  one  hundred  and  fifty-ciRht  of  the  internal  revenue 
laws."  It  is  also  provided  by  chap.  4G2,  p.  250,  Stat.  1873-1874,  as  follows: 
"An  act  to  provide  for  the  stamping  of  unstamped  instruments,  documents,  or 
papers:  Be  it  enacted  by  the  Senate  and  House  of  Represent  at  ives  of  the  United 
States  of  America,  in  Congress  assembled,  That  all  instruments,  documents,  and 
papers,  heretofore  matle,  signed,  or  issuetl,  and  subject  to  a  stamp  duty  or  tax 
under  any  law  heretofore  existing,  and  remaining  unstamped,  may  be  stamped  by 
any  person  having  an  interest  therein,  or,  where  the  original  is  lost,  a  copy  thereof, 
at  any  time  prior  to  the  first  of  January,  eighteen  hundred  and  seventy-six.  And 
said  instruments,  documents,  and  papers,  and  any  record  thereof,  shall  be  as  valid, 
to  all  intents  and  purposes,  as  if  stamped  when  made,  signed,  or  issued,  but  no 
right  acquired  in  good  faith  shall  in  any  manner  be  affected  by  such  stamping  as 
aforesaid.  Provided,  That,  to  render  such  stamping  vaUd,  the  person  desiring 
to  stamp  the  same,  shall  appear  with  the  instrument,  document,  or  paper,  or  copy 
thereof,  before  some  judge  or  clerk  of  a  court  of  record,  and  before  him  affix  the 
proper  stamp;  and  the  said  judge  or  clerk  shall  indorse  on  such  writing  or  copy  a 
certificate,  under  his  hand,  when  made  by  said  judge,  and  under  his  hand  and  seal, 
when  made  by  said  clerk,  setting  forth  the  date  at  which,  and  the  place  where,  the 
stamp  was  so  affixed,  the  name  of  the  person  presenting  said  writing  or  copy,  the 
fact  that  it  was  thus  affixed,  and  that  the  stamp  was  duly  cancelled  in  his  pres- 
ence. Sec.  2.  That  all  laws  or  parts  of  laws  in  conflict  with  the  above,  are  hereby 
repealed.    Approved  June  23d,  1874." 


§§  123,  124      STAMPS   UPON   NEGOTIABLE    INSTRUMENTS  169 

the  course  of  justice,  and  the  mode  of  administering  the  law.^    But 
a  contrary  view  was  taken  .^ 

§  123.  Where  the  stamp  laws  of  the  United  States  are  recognized 
as  binding  in  the  State  courts,  the  defense  that  the  note  was  not 
stamped  until  after  it  was  issued,  is  not  permitted  to  be  made  against 
a  bona  fide  holder  for  value,  who  received  it  after  it  was  stamped/ 
Bearing  all  the  appearances  of  an  instrument  conforming  to  every  legal 
re(}uir('ment,  it  would  only  facilitate  fraud  to  permit  this  latent  defect 
to  be  pleaded  against  an  innocent  party;  and  therefore  the  instrument 
is  enforced. 

If  a  bill  or  note  be  void  for  want  of  a  stamp,  the  creditor  may 
nevertheless  recover  on  the  original  consideration.* 

§  124.  There  must  be  express  proof  that  the  stamp  was  omitted 
with  the  intent  to  evade  the  act,  in  order  to  invalidate  the  instru- 
ment. The  section  of  the  Stamp  .Vet  declaring  invalid  the  instrument, 
antl  subjecting  to  a  penalty  of  S50  every  person  who  makes,  signs, 
accepts,  or  issues  a  bill,  note,  or  draft  for  money  without  a  stamp, 
"with  intent  to  evade  the  provisions  of  this  act,"  has  been  the  sub- 
ject of  luimerous  adjudications;  and  it  is  distinctly  settled  by  weight 
of  authority,  that  the  words,  "with  intent  to  evade  the  provisions  of 
this  act,"  are  connected  with  and  (jualify  both  the  clause  declaring 
the  in.strument  invalid,  and  that  imposing  the  penalty  of  SoO.^  "It 
is  a  fraudulent  and  not  an  accidental  omission  at  which  the  penalty 


6.  Greene  v.  Holway,  101  M;uw.  243;  Moore  v.  Quirk,  105  Ma-ss.  49;  Car- 
pcntfT  V.  SnellinK,  97  .\Ia.ss.  4r>2;  Het-hc  v.  Hutton,  47  Hurb.  1S7;  Daily  v.  Coker, 
:v.i  Tox.  S15;  Davi.M  v.  Uichanlson,  4.')  .Mi.sw.  4'.M);  McHjre  v.  Moore,  47  N.  Y.  467; 
I'»-(i|)lc  V.  Gates,  4:}  N.  Y.  40;  Griffin  v.  Ramu-y,  3o  0)nn.  239;  Sammons  . 
H;i!l(nvay,  21  Mich.  Itl2;  FificlJ  v.  Clu.sc,  lo  .Mich.  '>()'};  Clement  v.  Conradt,  19 
.Mich.  170;  Bowen  v.  Hyme,  55  III.  4G7;  HuiniJa.«w  v.  Taggart,  2(5  Ark.  39S;  liurson 
V.  HuntinKton,  21  Mich.  415;  Atkins  v.  Plympton,  44  Vt.  21;  Fifieki  v.  Cluse,  22 
In.l.  27(5;  Rockwell  v.  Hunt,  40  Conn.  328;  Duffy  v.  Hobson,  40  Cal.  240  (over- 
rulinR  Hallock  v.  Jaudin,  34  Cal.  171). 

6.  City  of  Muscatine  v.  Stememan,  30  Iowa,  520. 

7.  Six>rry  v.  Ilorr,  32  Iowa,  1S4;  Robinson  v.  Law,  31  Iowa,  9;  Blackwell  v. 
Denie,  23  Iowa,  G3 ;  Pearson  v.  Cummings,  28  Iowa,  344. 

8.  WiLsrjn  V.  Carey,  40  Vt.  179. 

9.  Hallock  V.  Jaudin,  34  Cal.  167;  Sawyer  v.  Parker,  57  Me.  39;  Rowe  v. 
Bowman,  1S3  Mass.  48.S,  67  N.  E.  636;  Green  v.  Holway,  101  Mass.  243;  Desmond 
V.  Norris,  10  Allen,  250;  Redlich  v.  Doll,  54  N.  Y.  241;  Harper  v.  Clark,  17  Ohio 
St.  190;  Hitchcock  v.  Sawyer,  39  Vt.  412;  Rhem.stron  v.  Cone,  26  Wis.  163. 


170  STAMPS   UPON   NEGOTIABLE   INSTRUMENTS     §§  125,  126 

of  the  statute"  is  levied,  says  the  United  States  Supreme  Court, 
concurring  in  effect  with  the  State  authorities  herein  cited.  ^° 

§  125.  A  number  of  cases  concede  that  there  must  be  a  fraudulent 
"intent  to  evade  the  provisions  of  the  act,"  in  order  for  the  instru- 
ment to  be  invalid,  or  the  party  to  be  subject  to  the  penalty  imposed; 
but  maintain  that  the  mere  omission  to  put  the  proper  stamp  on  the 
paper  is  presumptive  evidence  that  such  intent  to  evade  the  act 
existed,  on  the  ground  that  every  person  must  be  presumed  to  know 
the  law,  and  is  chargeable  with  the  duty  to  comply  with  it.'^  But 
penal  laws  and  laws  concerning  revenues  must  be  strictly  construed. 
Stamps  are  frequently  omitted  by  inadvertence  or  mistake;  and  to 
throw  the  burden  of  proving  the  negative  proposition  that  he  had 
no  intent  to  evade  the  act  upon  the  party  would  be  a  harshness  of 
construction  unfamiliar  to  the  liberal  principles  of  the  common  law. 
And  the  cases  whit-ii  hold  that  the  intent  to  evade  the  act  must  be  af- 
firmatively shown,  in  addition  to  the  mere  fact  of  omission,  commend 
themselves  to  favor  as  embodying  the  better  opinion  of  this  qucstion.^^ 
It  will  therefore  never  avail  to  demur  to  an  unstamped  instrument.^' 

§  126.  Power  of  Congress. — The  gravest  question  which  the 
Federal  Stamp  Act  can  give  rise  to  is,  whether  or  not  Congress  has 
the  power  so  to  frame  its  laws  for  taxation  as  to  prescribe  the  formal- 
ities of  contracts,  and  records,  of  process  to  institute  suits,  and  of 
evidence  to  sustain  them.  The  power  of  Congress  to  raise  revenue  by 
taxation  is  admitted ;  but  still  it  must  be  remembered  that  the  Federal 
and  State  governments  can  neither  trench  upon  the  independent 
existence  of  the  other,  and  must  therefore  exercise  the  px)wers  existing 

10.  Campbell  v.  Wilcox,  10  Wall.  421. 

11.  Harper  v.  Clark,  17  Ohio  St.  190;  Miller  v.  Morrow,  3  Coldw.  587;  Beeba 
V.  Hutton,  47  Barb.  187;  Howe  v.  Carpenter,  53  Barb.  382;  Miller  v.  Larmon,  38 
How.  Pr.  417;  Maynard  v.  Johnson,  2  Nev.  16;  Wayman  v.  Torreyson,  4  Nev.  124. 

12.  Campbell  v.  Wilcox,  10  Wall.  421;  Daily  v.  Coker,  33  Tex.  815;  Moore  v. 
Moore,  47  N.  Y.  467;  Green  v.  Holway,  101  Mass.  243;  Moore  v.  Quirk,  105 
Mass.  49;  Powell  v.  Feely,  49  111.  143;  U.  S.  Express  Co.  v.  Haines,  48  111.  248; 
Craig  V  Dimock,  47  111.  308;  Morris  v.  McMorris,  44  Miss.  441;  Davis  v.  Richard- 
son, 45  Miss.  499;  Hallock  v.  Jaudin,  34  Cal.  167;  Mitchell  v.  Mitchell,  32  Iowa, 
421,  overruling  former  cases  in  order  to  conform  with  decisions  of  Supreme  Court 
of  United  States  (see  former  case  of  Muscatine  v.  Sterneman,  30  Iowa,  526); 
Trull  V.  Menetone,  12  Allen,  396;  Lynch  v.  Morse,  97  Mass.  458;  Sawyer  v.  Par- 
ker, 57  Me.  39;  Whiteman  v.  Sheckle,  43  Mo.  537;  McGovern  v.  Hoseback,  53 
Pa.  St.  177. 

13.  Campbell  v.  Wilcox,  supra 


§§  127,  127a      STAMPS   UPON   NEGOTIABLE   INSTRUMENTS  171 

in  each,  in  a  manner  consistent  with  the  legitimate  freedom  of  both 
within  their  proper  spheres.  The  United  States  Supreme  Court  has, 
accordingly,  held  that  a  State  cannot  tax  the  branches  of  the  national 
banks,  or  their  stocks  and  securities,  or  the  salaries  of  government 
officers.'^  And,  reciprocally,  the  doctrine  has  been  established  by 
preponderance  in  numbers  of  cases,  and  by  the  weight  of  reason  and 
authority,  that  the  Federal  government  has  no  power,  in  the  form  of 
taxation  or  otherwise,  to  prescribe  the  formalities  of  contracts, 
records,  process,  or  evidence;  and  that  in  so  far  as  the  Stamp  Act  of 
Congress,  or  any  other  act,  undertakes  so  to  do,  it  is  unconstitu- 
tional and  void.*^  They  might  therefore  be  admitted  as  evidence  in 
State  courts,  although  unstamped.  But  Congress  has  power  to 
establish  the  rules  of  evidence  in  the  Federal  courts,  and  also  to  pro- 
vide appropriate  remedies  by  fine  or  imprisonment  for  the  enforce- 
ment of  its  revenue  laws.^' 

§  127.  It  has  been  held  that  the  United  States  internal  revenue 
laws  were  not  in  operation  in  the  Confederate  States  during  the  war 
Ix'tween  them  and  the  United  States,  and  that  it  was  therefore  un- 
necessary to  stamp  promissory  notes  made  during  tlie  war,  in  order 
to  give  them  validity." 

§  127a.  Federal  Stamp  Act  of  1898— Negotiable  Instruments 
taxed. — For  the  purpose  of  raising  revenue  to  defray  tlie  expenses 
of  the  war  with  Spain,  Congress,  on  the  13th  day  of  June,  1898, 
enacted  "  An  act  to  provide  ways  and  means  to  meet  war  expenditures 
ami  for  other  purposes." 

The  act  referred  to  wiis  essentially  a  revenue  enactment,  and  among 
other  things,  negotiable  contracts  were  made  subject  to  revenue 
obligations.  By  the  twenty-fifth  section  of  this  statute,  it  was  pro- 
vided: 

"Bank  check,  draft,  or  certificate  of  deposit  not  drawing  interest, 
or  order  for  the  payment  of  any  sum  of  money,  drau-n  upon  or  issued 
l)y  any  bank,  trust  eomi)any,  or  any  person  or  persons,  companies,  or 
corporations,  at  sight  or  on  demand,  two  cents. 

14.  McCullough  V.  State  of  Marjland,  4  Wheat.  316;  Weston  v.  City  of  Charles- 
ton, 2  Pet.  442;  Dobbins  v.  Comrs.  of  Erie,  16  Pet.  435. 

15.  CraiR  v.  Dimock,  47  111.  308;  Latham  v.  Smith,  4.5  III.  29;  Bumpaas  v. 
Taggart,  20  Ark.  39S;  Davis  v.  Richardson,  45  Miss.  499;  Hunter  v.  Cobb,  1 
Bush  (Ky.),  239.    See  Ebert  v.  Gitt,  95  Md.  186,  52  Atl.  900. 

16.  Craig  v.  Dimock,  47  111.  308;  Clemens  v.  Conrad,  19  Mich.  170. 

17.  McElvam  v.  Mudd,  44  Ala.  48;  Susong  v.  Williams,  1  Heiak.  625. 


172  STAMPS   UPON    NEGOTIABLE    INSTRUMENTS  §   127b 

"Bill  of  exchange  (inland),  draft,  certificate  of  deposit  drawing 
interest,  or  order  for  the  payment  of  any  sum  of  money,  otherwise 
than  at  sight,  or  on  demand,  or  any  promissory  note,  except  bank 
notes  issued  for  circulation,  and  for  each  renewal  of  the  same,  for  a 
sum  not  exceeding  one  hundred  dollars,  two  cents;  and  for  each 
additional  one  hundred  dollars  or  fractional  part  thereof,  in  excess  of 
one  hundred  dollars,  two  cents.  And  from  and  after  the  first  day  of 
July,  eighteen  hundred  and  ninety-eight,  the  provisions  of  this  para- 
graph shall  apply  as  well  to  original  domestic  money  orders  issued 
by  the  government  of  the  United  States,  and  the  price  of  such  money 
orders  shall  be  increased  by  a  sum  equal  to  the  value  of  the  stamps 
herein  provided  for. 

"Bills  of  exchange  (foreign)  or  letter  of  credit  (including  orders 
by  telegraph  or  otherwise  for  the  payment  of  money  issued  by  ex- 
press or  other  companies  or  any  person  or  ])ersons),  drawn  in  but 
payable  out  of  the  United  States,  if  drawn  singly  or  otherwise  tlum 
in  a  set  of  three  or  more,  according  to  the  custom  of  merchants  and 
bankers,  shall  pay  for  a  sum  not  exceeding  one  hundred  dollars,  four 
cents,  and  for  each  one  humlred  dollars  or  fractional  part  thereof  in 
excess  of  one  hundred  dollars,  four  cents. 

"If  dra\\Ti  in  sets  of  two  or  more:  For  every  bill  of  each  set,  where 
the  sum  made  payable  shall  not  exceed  one  hundred  dollars,  or  the 
equivalent  thereof,  in  any  foreign  currency  in  which  such  bill  may  be 
expressed,  according  to  the  standard  of  value  fixed  by  the  United 
States,  two  cents;  and  for  each  one  hundred  dollars  or  fractional  part 
thereof  in  excess  of  one  hundred  dollars,  two  cents. 

"Bills  of  lading  or  receipt  (other  than  charter-party)  for  any  goods, 
merchandise,  or  effects,  to  be  exported  from  a  port  or  place  in  the 
United  States  to  any  foreign  port  or  place,  ten  cents." 

Section  14  provided: 

"That  any  bond,  debenture,  certificate  of  stock,  or  certificate  of 
indebtedness  issued  in  any  foreign  country  shall  pay  the  same  tax 
as  is  required  by  law  on  similar  instruments  when  issued,  sold,  or 
transferred  in  the  United  States;  and  the  party  to  w^hom  the  same 
is  issued,  or  by  whom  it  is  sold  or  transferred,  shall,  before  selling  or 
transferring  the  same,  afiix  thereon  the  stamp  or  stamps  indicating 
the  tax  required." 

§  127b.  Exemptions  from  stamp  tax. — Section  17  provides  as 
follows: 

"That  all  bonds,  debentures,  or  certificates  of  indebtedness  issued 


§  127c  STAMPS   UPON   NEGOTIABLE    INSTRUMENTS  175 

by  the  officers  of  the  United  States  government,  or  by  the  officers 
of  any  State,  county,  to^\^l,  municipal  corporation,  or  other  corpora- 
tion exercising  the  taxing  power,  shall  be,  and  hereby  are,  exempt 
from  the  stamp  taxes  required  by  this  act:  Provided,  That  it  is  the 
intent  hereby  to  exempt  from  the  stamp  taxes  imposed  by  this  act 
such  State,  county,  town,  or  other  municipal  corporations  in  the  ex- 
ercise only  of  functions  strictly  belonging  to  them  in  their  ordinary 
governmental,  taxing,  or  municipal  capacity:  Provided  further,  That 
stock  and  bonds  issued  by  co-operative  building  and  loan  associa- 
tions whose  capital  stock  does  not  exceed  ten  thousand  dollars,  and 
building  and  loan  associations  or  companies  that  make  loans 
only  to  their  shareholders,  shall  be  exempt  from  the  tax  herein 
provided." 

§  127c.  Penalties.— Sections  10,  11,  and  13  provide  the  penal- 
ties for  ti  willful  I'vasion  of  the  provisions  of  the  act,  and  it  should  be 
noted  that  while  the  penalties  for  an  intentional  violation  of  the  law 
were  severe,  the  law  w;is  quite  lil>eral  in  cases  where  the  party, 
through  accident  or  ignorance,  failed  to  affix  the  stamp  required. 
Section  10  provided : 

"That  if  any  person  or  persons  shall  make,  sign,  or  issue,  or  cause 
to  be  made,  signed,  or  issued,  or  shall  accept  or  pay,  or  caused  to  be 
accepted  or  paid,  with  design  to  evade  the  payment  of  any  stamp 
tiLX,  any  bill  of  exchange,  draft,  or  order,  or  promissory  note  for  the 
payment  of  money,  liable  to  any  of  the  taxes  imposed  by  this  act, 
without  the  same  being  duly  stamped,  or  having  thereupon  an  ad- 
hesive stamp  for  denoting  the  tax  hereljy  charged  thereon,  he,  she,  or 
they  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction 
thereof  shall  be  punished  by  a  fine  not  exceeding  two  hundred  dollars, 
at  the  discretion  of  the  court." 
Section  11  provided: 

"That  the  acceptor  or  acceptors  of  any  bill  of  exchange  or  order 
for  the  payment  of  any  sum  of  money  drawn,  or  purporting  to  be 
drawn,  in  any  foreign  country,  but  payable  in  the  United  States, 
shall,  before  paying  or  accepting  the  same,  place  thereupon  a  stamp, 
indicating  the  tax  upon  the  same,  as  the  law  requires  for  inland  bills 
of  exchange  or  promissory  notes;  and  no  bill  of  exchange  shall  be  paid 
or  negotiated  without  such  stamp;  and  if  any  person  shall  pay  or 
negotiate,  or  offer  in  payment,  or  receive  or  take  in  payment,  any 
such  draft  or  order,  the  person  or  persons  so  offending  shall  be  deemed 
guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  pun- 


174  STAMPS  UPON   NEGOTIABLE    INSTRUMENTS  §  127d 

ished  by  a  fine  not  exceeding  one  hundred  dollars,  in  the  discretion 
of  the  court." 

The  proviso  in  section  13  vviis  designed  to  provide  a  hberul  remedy 
for  all  cases  of  ignorant  or  accidental  failure  to  stamp  the  instrument. 
So  much  of  it  as  bore  directly  upon  this  subject  read  as  follows: 

"Provided,  That  hereafter,  in  all  cases  where  the  party  lias  not 
affixed  to  any  instrument  the  stamp  required  by  law  thereon  at  the 
time  of  issuing,  selling,  or  transferring  the  said  l)on(ls,  del)entures,  or 
certificates  of  stock  or  of  indebtedness,  and  he  or  they,  or  any  party 
having  an  interest  therein,  shall  be  subsequently  desirous  of  affixing 
such  stamp  to  said  instrument,  or,  if  said  instrument  be  lost,  to  a 
copy  thereof,  he  or  they  shall  appear  before  the  collector  of  internal 
revenue  of  the  proper  district,  who  shall,  upon  the  payment  of  the 
price  of  the  proper  stamp  required  by  law,  and  of  a  penalty  of  ten 
dollars,  and,  where  the  whole  amount  of  the  tax  denoted  by  the  stamp 
required  shall  exceed  the  sum  of  fifty  dollars,  on  jiayment  also  of 
interest,  at  the  rate  of  six  per  centum,  on  said  tax  from  the  day  on 
which  such  stamp  ought  to  have  been  affixed,  affix  the  proper  stamp 
to  such  bontls,  debenture,  certificate  of  stock  or  of  indebtedness  or 
copy,  and  note  upon  the  margin  thereof  the  date  of  his  so  doing 
and  the  fact  that  such  penalty  has  been  paid;  and  the  same  shall 
thereupon  be  deemed  and  held  to  be  as  valid,  and  to  all  intents 
and  purposes,  as  if  stamped  when  made  or  issued:  And  prodded 
further,  That  where  it  shall  appear  to  said  collector  ujion  oath  or 
otherwise,  to  his  satisfaction,  that  any  such  instrument  has  not  been 
duly  stamped,  at  the  time  of  making  or  issuing  the  same,  by  reason 
of  accident,  mistake,  inadvertence,  or  urgent  necessity,  and  without 
any  willful  design  to  defraud  the  United  States  of  the  stamp,  or  to 
evade  or  delay  the  payment  thereof,  then  and  in  such  case,  if  such 
instrument,  or,  if  the  original  be  lost,  a  copy  thereof,  duly  certified 
by  the  officer  having  charge  of  any  records  in  which  such  original  is 
required  to  be  recorded,  or  otherwise  duly  proven  to  the  satisfaction 
of  the  collector,  shall,  within  twelve  calendar  months  after  the  making 
or  issuing  thereof,  be  brought  to  the  said  collector  of  internal  revenue 
to  be  stamped,  and  the  stamp  tax  chargeable  thereon  shall  be  paid, 
it  shall  be  lawful  for  the  said  collector  to  remit  the  penalty  aforesaid 
and  to  cause  such  instrument  to  be  duly  stamped." 

§  127d.  Repealed.— Congress,  by  the  act  of  April  12,  1902,  ch.  500, 
sec.  7,  32  Stat.  L.  97,  repealed  the  act  of  1898,  so  far  as  it  related  to 
stamps  on  negotiable  instruments. 


CHAPTER  V 

IRREGULAR,    AMBIGUOUS,    AND    FICTITIOUS    INSTRUMENTS, 
AND    INSTRUMENTS    IN    BLANK 

SECTION   I 

IRREGULAR    AND    AMBIGUOUS    INSTRUMENTS 

§  128.  Same  persons  as  different  parties. — Ordinarily,  as  we 
have  alrt'tuly  seen,  a  1)111  of  cxchaiigi'  cunipriscs  three  separate  and 
distinct  parties,  a  tlrawer,  a  drawee,  and  a  payee.  But  sometimes  the 
drawer  and  payee  are  the  same  person,  as  where  the  drawer  expresses 
the  bill  to  be  payable  to  himself  only;  or  to  himself  or  order.  And 
in  such  ca.se  when  indorsed,  it  becomes  payable  to  order,  or  bearer, 
as  the  case  may  be.'  There  is  no  doubt  that  there  may  be  a  bill  to 
which  only  one  indivitlual  is  a  party,  as  where  the  drawer  draws  a  bill 
upon  himself,  payal>le  to  his  own  order;  -  and  the  same  person  may  be 
tlrawer,  payee,  and  acceptor.'  The  drawer  may  also  draw  a  bill  upon 
himself,  payable  to  the  order  of  a  third  party.*    But  in  all  cases  where 

1.  Rice  V.  HoRan,  S  Diina,  I'M;  Woods  v.  Ridley,  11  Hurnphr.  194;  Hall  v. 
Shorter,  4G  Ala.  453;  Columbus  Ins.  &  Hk^.  Co.  v.  First  Nat.  Hunk,  T.i  Miss. 
90,  15  Sti.  138. 

2.  Harvey  v.  Kay,  9  B.  &  C.  304;  Planters'  Bank  v.  Evans,  .30  Tex.  592;  Walton 
V.  Williams,  44  Ala.  347;  Randolph  v.  Pari.sh,  9  Port.  76;  Chitty  on  Bills  (13th 
Am.  ed.)  ['25],  3:i;  Byliy  on  Bills  (Sharswood's  c<l.)  1*89],  185. 

3.  As  in  Lovejoy  v.  Spafford,  93  U.  S.  (3  Otto)  430. 

4.  Roach  V.  Ostler,  1  Man.  &  Ry.  120;  Dehers  v.  Harriott,  1  Shower,  103  (1091); 
Rohin.son  v.  Bland,  2  Burr.  1077  (17<i());  Mayor  v.  Hammond,  Chitty,  Jr.,  1423; 
Harvey  v.  Kay,  9  B.  &  C.  304;  French  v.  Gordon,  10  Kan.  370;  Planters'  Bank  v. 
Evans,  36  Te.x.  592.  In  this  ca.se  suit  was  brought  by  an  ind(jrsee  against  the 
maker  of  the  following  paper:  "Ten  months  after  date  pay  to  the  order  of  my.self, 
thirty-nine  hundred  dollars,  for  value  received,  and  charge  to  account  of  yours, 
H.  E.  To  M.  C.  &  Co.,  New  Orleans,  La.;"  which  instrument  was  accepted  by 
NL  C.  &  Co.,  and  bore  the  indorsement  in  blank  of  the  maker  and  payee.  Held 
(1)  that  it  was  optional  with  the  indorsee,  either  to  treat  this  instrument  as  a  bill 
of  exchange,  and  sue  the  drawer  and  the  acceptor  together,  or  to  treat  it  as  a 
promissor>'  note,  and  sue  the  maker  alone.  Held  further  (2),  that  such  an  instru- 
ment, when  delivered  to  the  drawee,  imports  that  it  is  not  drawn  against  funds 
of  the  drawer,  in  the  hands  of  the  drawee.    And  as  the  indorsee  acquired  the 

175 


176  IRREGULAR   INSTRUMENTS  §  129 

the  drawer  and  drawee  are  the  same  person,  the  instrument,  although 
it  be  declared  upon  as  a  bill,  may  be  regardetl  as  in  legal  effect  a 
promissory  note;  in  which  case  the  drawer  will  be  bountl  without 
notice  of  dishonor;  •'  or  what  is  the  same  as  a  promissory  note,  it  may 
be  regarded  as  an  accepted  bill,  the  drawer's  engagement  that  he 
himself,  who  is  the  drawee  also,  will  pay  it,  being  equivalent  to  ac- 
ceptance.^ A  third  i)arty  writing  his  name  across  tlu;  face  of  such  a 
paper  could  not  be  the  acceptor,  because  not  the  drawee,  and  would 
be  regarded  as  an  indorserJ 

In  practice,  it  is  usual  to  declare  upon  such  instruments  as  bills 
of  exchange,  not  admitting  the  identity  of  the  drawer  and  drawee.^ 
And  their  identity,  as  it  seems,  must  be  proved  by  the  party  alleging 
it.^  Where  an  agent  draws  a  bill  upon  his  principal  by  his  authority, 
and  for  money  obtained  and  used  in  his  l)usiness,  the  drawer  and 
drawee,  it  has  been  held,  may  be  treated  as  in  fact  the  same  party, 
and  held  without  demand  or  notice.  ^"^ 

§  129.  Where  a  copartnership  carries  on  business  at  two  places, 
and  at  one  place  draws  a  bill  upon  the  firm  at  another,  the  drawer 
and  drawee  being  the  same,  the  bill  may  be  treated  as  a  promissory 
note,  or  as  a  bill  at  the  holder's  option.  Thus  where  the  manager  of 
a  branch  of  a  joint-stock  bank  drew  a  bill  upon  the  bank  at  another 
place,  Maule,  J.,  said:  "This  is  a  bill  drawn  by  the  whole  company, 
acting  by  their  directors  upon  the  whole  company.  It  is  a  promise, 
acting  on  behalf  of  the  company,  under  the  order  of  the  directors, 
that  the  company  shall  pay.  It  is  a  promise  made  by  the  company 
at  Dorking  to  pay  in  London.    It  is  therefore  in  effect  a  promissory 

instrument  before  maturity,  it  is  further  held  (3),  that  no  defense  was  presented 
by  an  answer  which  alleged  that  the  defendant  had  settled  it  with  M.  C.  &  Co., 
the  drawees,  without  notice  of  its  transfer  to  the  plaintiff.  Evans,  P.  J.,  dissent- 
ing.   Planters'  Bank  v.  Evans,  30  Tex.  592. 

5.  Roach  V.  Ostler,  1  Man.  &  Ry.  120;  Randolph  v.  Parish,  9  Port.  78;  Wardens 
of  St.  James'  Church  v.  Moore,  1  Ind.  (Carter)  289;  Chicago  R.  Co.  v.  West,  37 
Ind.  211;  Planters'  Bank  v.  Evans,  36  Tex.  592.  See  Armfield  v.  Allport,  27  L.  J. 
Exch.  42;  Funk  v.  Babbitt,  156  111.  408,  41  N.  E.  166,  citing  text. 

6.  Cunningham  v.  Wardwell,  3  Fairfax,  466;  Planters'  Bank  v.  Evans,  36  Tex. 
592. 

7.  Walton  v.  Williams,  44  Ala.  347. 

8.  Roach  V.  Ostler,  1  Man.  &  Ry.  120;  Harvey  v.  Kay,  9  B.  &  C.  364;  Starke  v. 
Cheeseman,  Carthew,  509. 

9.  Cooper  v.  Poston,  1  Duv.  92. 

10.  Raymond  v.  Mann.  45  Tex.  301  (1876);  McCormick  v.  Hickey,  24  M. 
App.  363. 


§  l^U  IRREGULAR   AND    AMBIGUOUS   INSTRUMENTS  177 

note."  ^^  In  a  House  of  Lords'  case  it  was  held  that  where  a  firm 
in  one  country  drew  upon  the  same  firm  in  another  country,  and  the 
bill  was  accepted,  the  paper  was  perhaps  strictly  a  promissory  note, 
but  the  holder  might  treat  it  either  as  a  bill  or  a  note;  and  where  it 
appears  to  have  been  the  intention  that  it  should  be  negotiable  in 
the  market  as  a  bill  of  exchange,  it  should  be  so  treated.^-  The  same 
principle  applies  where  the  duly  authorized  officer  of  an  incorporated 
company  draws  on  its  behalf  upon  another  officer,  having  custody 
of  its  funds;  and  the  instrument  may  be  treated  as  the  note  of  the 
corporation. '^ 

§  130.  Notes  payable  to  the  order  of  the  maker. — A  note  must 
have  two  parties,  a  maker  and  a  payee,  and  a  note  made  by  a  person 
{)ayable  to  himself,  or  to  himself  or  order,  is  a  nullity  until  it  is  in- 
dorsed by  him  and  negotiated;  ^^  it  then  becomes  in  legal  effect  pay- 
al)le  to  the  indorsee  and  it  may  be  so  treated  and  declared  on.^* 


11.  Miller  V.  Thompson,  3  M.  &  G.  576;  Funk  v.  Babbitt,  156  III.  408,  41  N.  E. 
IGG,  citing  text. 

12.  Williams  v.  Ayrps,  3  App.  Caa.  133. 

13.  See  chapter  XIV,  on  drafts  or  warrants  of  one  corporate  officer  upon  an- 
other. In  1  Parson.s  on  Notes  and  Bills,  63,  it  is  said:  "Where  a  duly  authorized 
aRent  or  officer  of  an  incorporated  company,  draws  in  behalf  of  the  company  upon 
the  treasurer,  cashier,  or  other  officer  of  the  company  who  has  the  custody  of, 
and  i.s  charged  with  the  duty  of  disbursing,  the  company's  funds,  this  is  in  sub- 
stance, it  should  seem,  a  draft  by  the  company  upon  itself,  and  may  be  treated 
either  as  a  bill  of  exchange  or  a  promi.ssorj-  note." 

14.  Germjui  Bank  v.  De  Shon,  41  Ark.  337;  Pickering  v.  Cording,  92  Ind.  306, 
47  Am.  Rep.  145,  citing  the  text;  Myers  v.  Wegcr,  62  N.  J.  L.  432;  Harnett  v. 
Holdrege,  5  Nebr.  (Unof.)  114,  97  N.  W.  443,  affirmed  on  rehearing  73  Nebr.  570, 
103  N.  W.  277,  119  Am.  St.  Rep.  905;  Reid's  Admr.  v.  Windsor,  69  S.  E.  1101, 
111  Va.  825;  Roach  v.  Sanborn  Land  Co.,  135  Wis.  354,  115  N.  W.  1102.  In 
Muhling  V.  Sattler,  3  Mete.  (Ky.)  2S6,  such  a  note  was  held  to  be  a  nullity,  the 
court  saying  that  the  statute  of  .\nne,  had  not  been  passed  in  that  State,  and  the 
utmost  effect  given  such  papers  being  to  admit  them  as  evidence  of  indebtedness 
from  maker  and  indorser  to  indorsee,  when  executed  for  such  indebtedness,  and 
not  then  unless  so  averred. 

16.  Norfolk  Nat.  Bank  v.  Griffin  (N.  C),  11  S.  E.  1049,  citing  the  text;  Wood 
V.  M>'tton,  10  Q.  B.  805  (1847);  Hooper  v.  Williams,  2  Exch.  13  (1848).  In  this 
case  Parke,  B.,  said:  "The  principal  question  was,  what  the  effect  of  this  instru- 
ment was  as  it  stood  originally  before  it  was  indorsed,  and  whether  it  was,  within 
the  statute  of  3  &  4  .\nne,  chap.  9,  a  good  and  valid  note  payable  to  the  order  of 
the  maker.  The  opinions  of  this  court  and  of  the  Queen's  Bench  a.s  to  this  point 
are  at  variance  with  one  another.  In  Flight  v.  Maclean,  this  court  held,  on  special 
demurrer  to  the  first  count  of  a  declaration— stating  a  note  payable  to  the  order 
of  the  maker,  and  indorsed  to  the  plaintiffs— that  the  count  was  bad,  such  a  note 

12 


178  IRREGULAR    INSTRUMENTS  §  130 

Notes  of  this  kind  are  of  common  use  in  England  and  in  this  country, 
and  though  characterized  as  "informal,  if  not  absurd  in  form,"  they 

not  being  within  the  statute  of  Anne.  The  case  of  Wood  v.  Mytton  afterward 
came  on  in  the  Queen's  Bench.  It  was  an  action  on  a  similar  note  indorsed  to 
the  plaintiff.  After  verdict  for  the  plaintiff,  a  motion  was  made  in  arreat  of  judg- 
ment, and  the  court  discharged  the  rule,  holding,  after  a  minute  examination  of 
all  the  provisions  of  the  statute  of  Anne,  that  such  a  note  was  within  that  statute, 
and  assignable  by  inilorsement.  Though  these  decisions  are  not  at  variance,  as 
will  be  afterward  explained,  the  construction  of  the  statute  by  the  two  courts 
dififers.  After  a  careful  perusal  of  the  statute,  we  must  say  that  we  do  not  think 
that  it  ever  contemplated  the  case  of  notes  payable  to  the  maker's  order,  which 
arc  incomplete  instruments,  and  have  no  binding  effect  on  any  one  till  indorsed. 
The  Court  of  Queen's  Bench  thought  that,  though  the  first  part  of  the  first  sec- 
tion of  the  statute  of  Anne  applied  only  to  notes  payable  to  another  person,  or 
his  order,  or  to  bearer,  which  notes  it  makes  obligatory  between  the  parties,  yet 
that  the  second  part  applies  to  every  note  payable  to  any  person  and  therefore 
includes  a  note  payable  to  the  maker  or  his  order.  It  appears  to  us  that  this  is 
not  the  meaning  of  this  part  of  the  section,  which  is,  as  we  think,  intended  to  make 
those  instruments  to  which  it  had  previously  given  an  obligatory  effect  between 
the  original  parties  transferable  to  third  persons,  so  as  to  enable  them  to  sue  upon 
them  as  upon  the  transfer  of  bills  of  exchange.  The  previous  pari  of  the  section 
had  given  to  the  payee  when  the  note  was  made  payable  to  another  person,  or 
to  another  person  or  order,  and  to  the  bearer,  whoever  at  any  time  he  might  be, 
a  right  to  sue,  thus  providing  entirely  for  notes  payable  to  bearer,  whether  in  the 
hands  of  the  original  or  a  subsequent  bearer;  and  then  the  section  proceeds  to 
make  the  class  of  notes  payable  to  a  person  or  order  transferable.  We  think  that 
the  legislature,  by  the  second  part  of  the  section,  could  only  mean  to  make  that 
instrument  which  gave  a  right  to  sue  assignable  and  no  right  to  sue  could  exist 
in  any  one  in  the  case  of  a  note  payable  to  the  maker's  order  until  the  order  was 
made  in  the  shape  of  an  indorsement.  Until  that  indorsement  was  made,  it  was 
an  imperfect  instrument,  and,  in  truth,  not  a  promissory  note  at  all,  and  conse- 
quently not  transferable  under  the  statute.  What  then,  is  the  effect  of  the 
indorsement  to  another  person?  We  think  it  was  to  perfect  the  incomplete  instru- 
ment, so  that  the  original  writing  and  indorsement  taken  together  became  a  bind- 
ing contract,  though  an  informal  one,  between  the  maker  and  the  indorsee;  and 
then,  and  not  till  then,  it  became  an  assignable  note.  *  *  *  It  appears  to  us, 
then,  that  the  instrument  in  this  case  was,  when  it  first  became  a  binding  promis- 
sory note,  a  note  payable  to  bearer,  and  consequently  was  properly  described  in 
the  declaration.  This  view  of  the  case  reconciles  the  decision  of  this  court  in 
FUght  v.  Maclean  with  that  of  the  Queen's  Bench  in  Wood  v.  Mytton,  but  not 
the  reasons  given  for  those  decisions.  In  the  case  in  this  court,  the  declaration 
was  bad  on  special  demurrer,  as  it  did  not  set  out  the  legal  effect  of  the  instru- 
ment. In  that  in  the  Queen's  Bench,  the  motion  being  for  arrest  of  judgment, 
the  declaration  was  in  substance  good,  for  it  set  out  an  inartificial  contract,  which 
had  the  legal  effect  of  a  valid  note  payable,  as  stated  on  the  record,  to  the  plaintiff. 
The  difference  between  the  two  courts  in  the  construction  of  the  statute  is  of  no 
practical  consequence,  as,  in  our  view  of  the  case,  securities  in  this  informal,  not 
to  say  absurd  form,  are  still  not  invalid;  and  it  might  be  of  much  inconvenience 


i  loU  IRREGULAR   A\D    AMBIGUOUS   INSTRUMENTS  179 

are  designed  to  enable  the  holder  to  pass  them  without  indorsement, 
and  are  simply  roundabout  notes  payable  to  bearer. 

The  fact  that  the  name  of  the  payee  is  the  same  as  that  of  the 
maker  does  not  show  that  they  are  the  same  person;  on  the  contrary, 
when  such  a  note  is  sued  on,  it  will  be  presumed  that  they  are  different 
persons  until  their  identity  is  proved.^^  It  might  be  urged  with  force 
that  the  maker  is  estopped  from  showing  his  identity  with  the  payee. 
Where  the  maker  of  a  note  payable  to  his  owti  order,  wrote  and  signed 
on  the  back  thereof  a  certificate  of  the  amount  of  his  property,  and 
delivered  the  same,  it  was  held  that  the  title  did  not  pass,  the  words 
on  the  note  not  indicating  his  intention  to  make  such  an  order  as 
would  create  liability  on  his  part.'^ 

Under  Negotiable  Instrument  statute. — By  the  terms  of  the  statute, 
a  negotiable  instrument  may  be  drawn  payable  to  the  order  of  the 
drawer  or  maker,'*  but  it  also  declares  the  rule  that  where  a  note 
is  drawn  to  the  maker's  o\\'n  order,  it  is  not  complete  until  indorsed 
by  him.'^ 


if  they  were,  for  there  i.s  no  douht  tlmt  tlii.s  form  of  note,  probably  introducod  long 
after  the  statute  of  Anni- — and  for  what  good  rea.son  no  one  can  tell — ha«  become, 
of  late  years,  exceedingly  common;  and  it  is  obvious  that,  until  they  are  indorsed, 
they  must  always  remain  in  the  hands  of  the  maker  himself,  and  so  he  can  never 
be  liable  upon  them."  See  Brown  v.  De  Winton,  17  L.  J.  C.  P.  280  (00  Eng.  C.  L.) 
Gay  V.  Lander,  17  L.  C.  J.  P.  2.S7  {m  Eng.  C.  L.);  Main  v.  Hilton,  54  Cal.  110; 
Bishop  v.  Rowe,  71  Me.  263;  Commonwealth  v.  Butterick,  \()()  Mutm.  12;  Com- 
monwealth V.  Dullinger,  118  Ma.ss.  439;  Dubois  v.  Miison,  127  Ma-ss.  37;  Bald- 
win V.  Shuter,  82  Ind.  .')()0;  United  States  v.  White,  2  Hill,  154;  Plcts  v.  John- 
son, 3  Hill,  114;  Hall  v.  Shorter,  46  Ala.  453;  Muldrow  v.  Caldwell,  7  Mo.  563; 
Scull  V.  Edwards,  6  Eng.  24;  Miller  v.  \V(«ks,  22  Pa.  St.  89;  Smalley  v.  White, 
44  Me.  442;  Woo<ls  v.  Ridley,  11  Humphr.  194;  Wilder  v.  De  Wolf,  24  111.  190; 
1  Parsons  on  Notes  and  Bills,  17,  18;  Byles  on  Bills  (Sharswood's  ed.)  [*6],  75, 
[*S71,  183;  Thomp.son  on  Bills,  52.  But  in  Flight  v.  Maclean,  16  M.  &  W.  51,  a 
flemurrer  to  a  declaration  charging  that  the  defendant  made  his  note,  and  thereby 
promised  to  pay  defendant  £500,  and  that  the  defendant  indorsed  the  same  to 
plaintiff,  was  .sustaine<l.  As  to  the  law  of  New  York  under  statute  and  decisions, 
sec  §  136,  and  note.  Bank  of  Winona  v.  Wofford,  et  al.  71  Miss.  711,  14  So.  262; 
Columbus  Ins.  &  Bkg.  Co.  v.  First  Nat.  Bank,  73  Miss.  96,  15  So.  138.  See  LowTie 
V.  Zunkel,  49  Mo.  App.  153;  Barling  v.  Bank,  1  C.  C.  A.  510,  50  Fed.  620,  text 
cited;  Bank  v.  Barling,  46  Fed.  357,  citing  text. 

16.  Cooper  v.  Poston,  1  Duv.  92;  First  Nat.  Bank  v.  Payne,  11  Mo.  291,  20 
S.  W.  41,  33  Am.  St.  Rep.  520,  citing  text. 

17.  Pickering  v.  Cording,  92  Ind.  306. 

18.  Appendix,  sec.  8.    Melton  v.  Pensacola  Bank  &  Trust  Co.,  190  Fed.  Rep. 
126,  111  CCA.  166. 

19.  Appendix,  sec.  184.     Sherman  v.  Goodwin,   11  Ariz.  141,  89  Pac.  517; 


180  IRREGULAR    INSTRUMENTS  §  131 

§  131.  Election  of  holder  of  ambiguous  instruments. — If  the 
instrument  bo  so  ambiguous  that  it  is  doubtful  whether  it  be  a  bill  or 
note,  the  holder  may  treat  it  as  either,  at  his  election.^  Thus,  where 
the  form  of  the  instrument  was — 

"£44  ILs.  'jd.  London,  5th  AuKUst,  1SS3. 

"Throe  montha  after  (hitc  I  i)rnnii.so  to  pay  Mr.  John  Hury,  or  order,  f(^rty- 
lour  pounds  eleven  shillings  and  five  pence.    \'aliie  reeeive<l. 

"JuUN    BUKY. 

"J.  B.  Grutherot, 

"35  Montague  Place,  Bedford  Place." 

and  Oruthcrot's  name  was  written  across  the  paper  as  an  acceptance, 
and  Bury's  name  on  the  back  as  an  indorsement;  it  was  lield  that 
Bury  might  be  treated  either  as  a  drawer  of  a  bill  on  Grutherot,  or  as 
the  maker  of  a  note,  and  therefore  was  bound  without  notice  of  dis- 
honor. Holroytl,  J.,  said:  "Until  Grutlierot  put  his  name  to  this 
instrument  it  was  clearly  in  terms  a  promissory  note,  and  having  been 
once  such,  the  fact  of  his  having  afterward  put  his  name  to  it  as 
acceptor  cannot  alter  the  nature  of  it."  -^  Where  the  instrument  ran, 
"On  demand  I  promise  to  pay  A.  B.,  or  bearer,  the  sum  of  £15  for 
value  received,"  and  was  addressed  in  the  margin  to  defendant,  who 
wrote  upon  it  "Accepted,  J.  Bell,"  it  was  considered  to  be  in  effect 
the  note  of  Bell,  as  it  contained  a  promise  to  pay,  although  in  terms 
it  was  an  acceptance.^-  In  Scotland,  where  J.  D.  accepted  a  paper 
drawn  on  him  payable  to  the  order  of  A.  D.,  but  there  was  no  sub- 
scription of  a  drawer's  name,  it  was  considered  to  contain  all  the 
essential  elements  of  a  promissory  note.'^  But  such  an  instrument 
has  been  more  properly  regarded  as  inchoate,  and  although  capable 
of  being  completed,  to  be  in  its  inchoate  form  neither  a  bill  nor  a 
note.^^ 

Where  the  language  is  doubtful  and  will  admit  of  more  than  one 
interpretation,  as  for  instance,  where  under  the  signature  of  the  maker 
there  is  a  memorandum  as  to  a  lien  on  personalty  to  secure  the  note, 
record  evidence  is  admissible  to  show  the  situation,  motives,  and 

Simon  v.  Mintz,  101  N.  Y.  S.  86,  51  Misc.  670;  Edelman  v.  Rams,  109  N.  Y.  S. 
816,  58  Misc.  561. 

20.  Heise  v.  Bumpass,  40  Ark.  547,  citing  the  text. 

21.  Edis  V.  Bury,  6  B.  &  C.  433  (13  Eng.  C.  L.). 

22.  Block  V.  Bell,  1  M.  &  R.  149. 

23.  Drummond  v.  Drummond,  Ct.  Sess.,  Feb.  8,  1785;  Morrison's  Dictionary 
of  Decisions;  Ames  on  Bills  and  Notes,  vol.  I,  p.  883. 

24.  See  cases  cited,  §  92. 


§§  132,  133      IRREGULAR   AND    AMBIGUOUS   INSTRUMENTS  181 

circumstancos  of  the  parties,  and  that  a  party  who  signed  the  mem- 
orandum intended  to  bind  himself  as  a  party  to  the  note.'-^ 

§  132.  Further  illustrations. — In  another  case,  where  the  instru- 
ment ran,  "Two  months  after  date  I  promise  to  pay  A.  B.  or  order 
£99,  (signed)  H,  Oliver,"  and  was  addressed  to  J.  E.  Oliver,  and 
accepted  by  him,  it  was  held  that  it  might  clearly  be  declared  on 
against  H,  Oliver  lus  a  bill  of  exchange.  Erie,  J.,  said:  "It  is  not  un- 
just to  presume  that  it  wius  drawn  in  this  form  for  the  purpose  of 
suing  upon  it  either  as  a  promissory  note  or  as  a  bill  of  exchange." 
And  Crompton,  J.,  said  it  was  most  important  that  the  decision 
should  not  be  impeached;  "that  equivocal  instruments  of  this  kind, 
j)ossessing  the  character  both  of  promissory  notes  and  bills  of  ex- 
change, may  be  treated  as  either,"  -^ 

§  133.  Sometimes  the  instrument  is  in  the  common  form  of  a  bill 
of  exchange,  except  that  the  word  "at"  is  substituted  for  "to"  before 
the  name  of  the  drawee — as  in  the  following  maimer: 

"Two  months  after  dato,  pay  to  the  order  of  John  Jenkinfl  £78  ll.t.,  value 
rHM'ivfil. 

"Thos.  Stevens. 
"At  Messrs.  John  Merson  &  Co." 

Such  an  instrument  may  be  undoubtedly  declared  on  as  a  bill,  and 
Ivijrd  Kllenborough  thought  that  perhaps  it  might  be  treated  as  a  note, 
at  the  option  of  the  holder."  But  in  a  later  case,  where  an  indict- 
ment for  forgery  described  a  similar  instrument  as  a  promissory  note, 
it  was  hekl  a  variance,  as  it  was  in  law  a  bill  of  exchange, ■^^  Mr.  Chitty 
says  that  if  such  word  "at"  before  the  drawee's  name  "is  written  so 
small,  or  in  a  manner  so  indistinct,  as  to  be  capable  of  deceiving,  it 
might  be  declared  on  either  lus  a  bill  or  as  a  promissory  note  after 
it  is  due."  ^  But  the  authority  cited  only  establishes  that  it  undoubt- 
edly is  a  bill,^  and  this  seems  to  us  the  correct  conclusion.^* 

26.  Bacon  v.  Do<1ko,  02  Vt.  401,  20  Atl.  197;  Winp  v.  Cooper,  37  Vt.  109. 

26.  Lloyd  v.  Oliver,  IS  Q.  B.  471  (S3  Eng.  C.  L.).  To  same  effect,  sec  Brazel- 
ton  V.  McMurray,  44  .\la.  323.    See  ante,  §  9S;  post,  §  4S.5. 

27.  Shuttleworth  v.  Stevens,  1  Campb.  407  (1808).  See  also  Allan  v.  Maw- 
son,  4  Campb.  115  (1814). 

28.  Rex  V.  Hunter,  Russ.  &  Ry.  C.  C.  511. 

29.  Chitty  on  Bilts  (13th  Am.  ed.)  [*25],  33,  citing  Allan  v.  Mawson,  4  Campb. 
1 1.').    See  also  Chitty,  Jr.,  11. 

30.  Alhin  V.  Mawson,  4  Campb.  115,  Gibbs,  C.  J. 

31.  Benjamin's  Chalmers'  Digest,  4. 


182  IRREGULAR    INSTRUMENTS  §§  134,  135 

§  134.  As  to  certified  notes. — There  is  no  such  thing  as  accept- 
ance of  a  regular  promissory  note ;  but  when  notes  are  expressed  to  be 
payable  at  a  particular  bank,  there  may  bo  a  custom  for  the  ])ank, 
with  the  consent  of  the  holder,  instead  of  paying  it  at  maturity,  when 
authorized  to  do  so,  to  certify  it  as  "good,"  in  like  manner  as  checks 
are  often  certified.  By  such  certificate  the  bank  becomes  the  debtor, 
and  the  parties  to  the  note  are  discharged;  and  the  bank  cannot  after- 
ward say  that  there  were  no  funds  of  the  maki-r  on  deposit,  or  that 
it  was  not  authorized  so  to  appropriate  them.  In  New  York  it  has 
been  said  on  this  subject:  "The  presentation  of  the  note  at  the  coun- 
ter of  the  bank,  on  its  maturity  for  payment,  was  in  the  ordinary 
course  of  business;  and  so  was  the  certificate  then  and  there  indorsed 
by  the  teller,  certifying  that  the  same  was  good.  The  legal  efTect  and 
force  of  such  certificate  was,  that  the  maker  had  deposited  funds  in  the 
bank  to  meet  said  note;  and  that  the  bank  then  held  the  same  in 
deposit  for  that  purpose,  and  would  pay  the  amount  upon  request. 
*  *  *  Tlie  indorsement  was,  in  effect,  an  absolute  engagement 
on  the  part  of  the  l)ank  to  pay  the  note,  and  dispense  with  protest, 
or  steps  to  charge  the  indorser,  as  much  so  as  if  the  defendant  had 
actually  received  the  casii  on  the  presentation  of  the  note,  instead 
of  taking  the  certificate  of  the  teller  that  the  note  was  good."  ^^ 

§  135.  In  another  New  York  case  it  appeared  that  on  the  day  a 
note  payable  at  the  Irving  Bank  matured,  it  was  there  presented, 
certifif^d  as  good,  and  charged  in  account  against  the  maker.  The 
maker  had  no  funds  to  meet  it,  which  was  discovered  before  3  o'clock 
on  the  same  day;  and  the  Irving  Bank  requested  that  its  certificate 
be  canceled.  This  was  refused ;  whereupon  the  Irving  Bank  took  up 
the  note,  presented  it  at  its  own  counter,  refused  payment,  and  noti- 
fied the  indorsers.  It  was  held  that  the  Ir\dng  Bank,  under  these  cir- 
cumstances, had  a  right  to  retract  its  certificate;  that  it  took  the  note 
as  a  purchaser,  and  not  as  a  payor,  and  that  although  it  was  marked 
as  paid  by  the  Seventh  Ward  Bank,  which  held  it  for  collection;  and 
therefore  that  the  maker  and  indorsers  were  bound  to  the  Irving 
Bank.33 

32.  Mead  v.  Merchants'  Bank,  25  N.  Y.  148. 

33.  Irving  Bank  v.  Wetherald,  36  N.  Y.  337;  Brooklyn  Trust  Co.  v.  Toler, 
65  Hun,  187,  19  N.  Y.  Supp.  975. 


136  FICTITIOUS   PARTIES  183 


SECTION  II 

BILLS  ANT)  NOTES  TO  WHICH  THERE  ARE  FICTITIOUS  OR  NONEXISTING 

PARTIES 

§  136.  The  law  abhors  fraud  and  discountenances  the  instruments 
by  which  it  may  be  committed.  For  this  reason  bills  and  notes  pay- 
able to  fictitious  payees  are  not  tolerated,  and  will  never  be  enforced, 
save  wlit-n  in  the  hands  of  a  bona  fide  holder,  who  received  them  with- 
out knowledge  of  their  true  character.  The  appearance  of  a  name 
upon  the  paper  as  a  payee  and  indorser  is  naturally  calculated,  and 
has  been  often  used  as  a  means  to  Rive  it  fictitious  credit,  whereby 
innocent  parties  are  bepuiled  into  purchasing  it.  The  use  of  fictitious 
names  in  this  manner  has  been  highly  censured,  and  the  person 
fraudulently  ind<»rsing  such  a  name  upon  a  bill  or  note,  to  give  it 
currency,  would  be  guilty  of  forgery.'^ 

There  is  no  doubt  that  if  the  holder  knew,  at  the  time  that  he  took 
the  bill,  that  the  payee  was  a  fictitious  pers<^n,  he  cannot  recover  upon 
it  against  the  acceptor,  though  the  acceptor  also  had  knowledge  of  the 
fiction,  it  l)eing  the  j)olicy  of  the  law  to  interdict  the  circulation  of 
such  deceptive  instruments.'^  Nor  is  there  any  doubt  that  such 
a  bill  or  note  is,  in  effect,  payable  to  bearer,  and  may  be  declared  on  ius 
such  by  a  Ixma  fide  holder,  who  acquired  it  in  ignorance  of  the  fact 
against  the  drawer,'*  and  also  against  the;  acceptor,  supra  -protest,  who 

34.  Thompson  on  Bills,  52.  See  chapter  on  Forgery.  Meridian  Nat.  Bank 
of  IndianaiKilia  v.  Firnt  Nat.  Bank  of  Sh«'U)yvilIe,  7  Intl.  .\pp.  ;i22,  33  N.  E. 
247,  34  N.  K.  flOS,  r)2  .\ni.  St.  H<p.  450,  quutinR  text;  The  Governor  v.  Vagliano 
BroH.,  L.  H.,  .\pp.  C:lk.  107  (IS'Jl). 

36.  Hunter  v.  JefTery,  Peake's  Adm.  Can.]  Chitty,  Jr.,  587  (1797);  Minet  v. 
Gibson,  3  T.  R.  4S1  (1789),  affirmed  in  the  House  of  Lords,  1  H.  Bl.  569;  2  Brown's 
Pari.  Cas.  48  (1791). 

36.  CoUis  V.  Emett,  1  H.  Bl.  313  (1790).  See  also  Vere  v.  Lewis,  3  T.  R.  298 
(17S9),  I»rd  Kenyon,  C.  J.,  Ashurat  and  Buller,  JJ.;  Kohn  v.  Watkins,  26  Kan. 
691;  Phillip.s  v.  Inthun,  18  J.  Scott  (X.  S.),  604  (114  Eng.  C.  L.);  18  C.  B.  (N.  S.) 
694;  ByU-s  on  BilU  (Sharswood'a  o«i.)  [•79],  173;  Lane  v.  Krekle,  22  Iowa,  404; 
Forbes  v.  &py,  21  Ohio  (N.  S.)  483;  Rogers  v.  Ware,  2  Nebr.  29.  In  New  York 
it  Ls  provided  by  statute  that  "notes  made  payable  to  the  order  of  the  maker 
thereof,  or  to  the  order  of  a  fictitious  person,  shall,  if  negotiated  by  the  maker, 
have  the  same  effect,  and  be  of  the  same  validity,  as  against  the  maker  and  all 
person.s  having  knowledge  of  the  facts,  as  if  payable  to  bearer"  (1  Rev.  Stat.  768). 
The  "knowle<lge  of  the  facts"  thenin  referre<]  to  has  been  held  to  be  "simply  that 
the  note  is  payable  to  the  order  of  the  maker,  or  of  a  fictitious  person.    If  so  pay- 


184  IRREGULAR   INSTRUMENTS  §  137 

is  RubroKutod  for  the  druvvor.'^  IIi-  may  also  recover  agaiast  an  ac- 
ceptor in  tiie  ordinary  course  of  business,  if  he  knew  of  the  fiction 
when  he  accepted,  and  thus  participated  in  the  fraud. ^ 

§  137.  Acceptor's  knowledge  of  fictitious  payee. — In  a  case  be- 
fore Lord  Ellenborough,  where  the  acceptor  of  a  bill  having  a  fictitious 
payee  was  sued,  it  was  held  that  such  a  bill  wius  neither,  in  elTect, 
payable  to  the  order  of  the  drawer,  or  to  bearer,  but  was  utterly  voitl. 
On  a  motion  for  a  new  trial  however  Lord  Kllenbon)Ugh  said  that  he 
conceived  himself  bound  by  Minet  v.  (libson,  and  other  cases  which 
had  l)(>en  carried  up  to  the  House  of  Lords,  and  though  by  no  means 
disposed  to  give  them  any  extension,  yet  if  it  had  app<'ared  tliat  the 
accej)t()r  knew  the  |)ayee  to  be  a  fictitious  person  when  he  accepted, 
h(!  sliould  have  directed  the  jury  to  hnil  for  the  plaintitT.''^    And  this 


able,  the  name  of  the  payoe  nood  not  ho  indorsod  thoroon  hi^foro  npRotiation. 
It  must  tlion  bo  troiitod,  witlumt  such  iruiorscinont,  as  a  note  payable  to  bearer." 
And  it  Ikus  been  also  conHidonnl  that  the  indorser  of  HUch  a  note  would  not  bo 
permitted  to  deny  knowledge  of  sueh  faets  to  defeat  the  note,  lus  he  must  be  taken 
to  have  known  the  contents.    Irvinp  Nat.  Bank  v.  Alley,  79  N.  Y.  536. 

37.  Phillips  v.  Inthun,  18  J.  Scott,  094  (114  Eng.  C.  L.). 

38.  Edwards  on  Bills,  125,  12ti,  128;  Hunter  v.  Blodgett,  2  Yeatcs,  480;  Tat- 
lock  V.  Harris,  3  T.  R.  174,  Chitty,  Jr.,  453;  Vere  v.  Lewis,  3  T.  R.  182,  Chitty, 
Jr.,  455;  Minet  v.  Gibson,  1  II.  lil.  5l)9;  Gikson  v.  Hunter,  2  H.  Bl.  187,  288. 

39.  Bennett  v.  Farnell,  1  Campb.  130  (1807).  Sec  also  Were  v.  Taylor,  therein 
cited,  and  Gibson  v.  Hunter,  2  H.  Bl.  187.  The  reporter  appends  the  following 
note  to  the  case  of  Bennett  v.  Farnell:  "Almost  all  the  modern  cases  upon  this 
question  arose  out  of  the  bankruptcy  of  Livcsay  &  Co.,  and  Gibson  &  Co.,  who 
negotiated  bills,  with  fictitious  names  upon  them,  to  the  amount  of  nearly  a 
million  sterling  a  year.  The  first  ca^e  wjis  Tatlock  v.  Harris,  3  T.  R.  174,  in 
which  the  Court  of  King's  Bench  hold  that  the  bona  fide  holder  for  a  valuable  con- 
sideration of  a  bill  drawn  payable  to  a  fictitious  perst)n,  and  indorsed  in  that 
name  by  the  drawer,  might  recover  the  amount  of  it,  in  an  action  against  the 
acceptor,  for  money  paid  or  money  had  and  received,  upon  the  idea  that  there 
was  an  appropriation  of  so  much  money  to  be  paid  to  the  person  who  should  be- 
come the  holder  of  the  bill.  In  Vere  v.  Lewis,  3  T.  R.  182,  decided  the  same  day, 
the  court  held  there  was  no  occasion  to  prove  that  the  defendant  had  re- 
ceived any  value  for  the  bill,  as  the  mere  circumstance  of  his  acceptance  was 
sufficient  evidence  of  this;  and  three  of  the  judges  thought  the  plaintiff  might 
recover  on  a  count  which  stated  that  the  bill  was  drawn  payable  to  bearer.  Minet 
V.  Gibson,  3  T.  R.  481,  put  this  point  directly  in  issue,  and  the  unanimous  opinion 
of  the  court  was,  that  where  the  circumstance  of  the  payee  being  a  fictitious 
person  is  known  to  the  acceptor,  the  bill  is  in  effect  payable  to  bearer.  Soon  after, 
the  Court  of  Common  Pleas  laid  dowTi  the  same  doctrine,  in  Collis  v.  Emett, 
1  II.  Bl.  313.  This  decision  was  acquiesced  in,  but  Minet  v.  Gibson  was  carried 
up  to  the  House  of  Lords,  1  H.  Bl.  5G9.    The  opinion  of  the  judges  being  then 


§§  138,  139  FICTITIOUS   PARTIES  185 

seems  to  be  the  rule  of  the  EngUsh  law,  that  the  acceptor  must  have 
participated  in  the  fraud  in  order  to  be  bound. ^° 

§  138.  We  cannot  perceive  the  wisdom  or  philosophy  of  applying 
the  test  of  the  acceptor's  knowledge  of  the  fiction.  If  the  holder  has 
acquired  the  bill  bona  fide,  he  may  certainly  sue  the  drawer,  although 
he  makes  title  against  him  through  the  name  of  a  fictitious  person — 
why  may  he  not  also  sue  the  acceptor,  who,  by  acceptance,  admits 
that  he  has  funds  of  the  drawer  in  his  hands?  If  indeed  the  name  of 
an  existing  payee  were  forged,  the  holder  could  not  sue  the  acceptor, 
because  tlu;  amount  in  his  hands  would  be  due  such  real  payee.  But 
where  the  payee's  name  is  fictitious,  the  acceptor  is  not  concerned ;  for 
the  reiuson  that  the  drawer  has  directed  him  to  pay  the  money  to  the 
ortler  of  that  name,  and  if  it  be  thereon  indorsed  by  the  tlrawer  or  by 
the  holder,  he  would  fulfill  that  direction  and  discharge  the  debt."*' 
The  language  of  Ix^rd  Ix)ughborough,  in  a  previous  case,  is  broad 
enough  to  sustain  our  view;  '-  and  the  better  opinion  is,  as  it  seems 
to  us,  that  a  bill  with  a  fictitious  payee  may  be  treated  by  the 
innocent  liolder  precisely  as  if  payable  to  bearer.^' 

§  139.  Rights  of  holder  when  payee  is  fictitious. — In  a  ease  of 
a  note  payable  to  a  fictitious  person,  it  appears  to  be  well  settled 
that  any  honafixle  holder  may  recover  on  it  against  the  maker  lus  upon 


taken,  Eyre,  C.  B.  (p.  618)  and  Heath,  J.  (p.  619),  were  for  rrversinn  the  judgment 
of  the  court  below,  and  Ixird  Thurlow,  C,  coincided  with  them  (p.  (Vi.'S);  but  the 
other  juiln****  thinkinR  otherwise,  judRment  was  afTirmeil  (Pari.  Cos.,  8  vo,  ii., 
48).  The  Ixst  cjiife  uiH)n  the  subject  reiMirted  is  Clibs*^)!!  v.  Hunter,  2  H.  Hi.  187, 
288,  which  came  tu-fore  the  Hous*'  of  Peers  upon  a  demurrer  to  evidence,  and  in 
which  it  wjw  held  that,  in  an  action  on  a  bill  of  this  .sf)rt  jmainst  the  accejjtor,  to 
show  that  he  was  aware  of  the  payee  bein^  fictitn»us,  evidence  is  admis-sible  of 
the  circumstances  under  which  he  had  accepted  other  bills  payable  to  fictitious 
persons." 

40.  Chitty  on  Hills  1*1571,  181  (1.3th  Am.  e<l.);  Edwards  on  Bills,  128;  1  Parsons 
on  Not(>s  and  Bills,  :?2;  Byles  on  Bills  (Sharswood's  e«l.)  [•79],  173;  Thomp.son  on 
Bills,  52;  Story  on  Bills,  §§  2(K),  .W. 

41.  Sec  chapter  XXIII,  on  .\ccei)tance,  .Vnderson  v.  Dundee  State  Bank,  66 
Hun,  013,  21  N.  Y.  SuF)p.  92.'),  quoting  with  approval  the  text;  Meridian  Nat. 
Bank  of  Indianapolis  v.  First  Xat.  Bank  of  Shclbyville,  7  Ind.  App.  322,  33  N.  E. 
247,  34  N.  E.  608,  52  Am.  St.  Rep.  45(),  citing  text. 

42.  See  Collis  v.  Emctt,  1  H.  Bl.  313. 

43.  See  Rogers  v.  Ware,  2  Nebr.  29.  Sec  also  the  Negotiable  Instruments 
Law  of  New  York,  §  28,  par.  3,  showing  the  adoption  of  the  author's  conclusion 
relative  to  this  question. 


186  IRREGULAR   INSTRUMENTS  §  139 

a  note  payable  to  bearer.^^  It  will  be  no  defense  against  such  bona 
fide  holder  for  the  maker  to  set  up  that  he  did  not  know  the  payee  to  be 
fictitious.  By  making  it  payable  to  such  person  he  avers  his  existence, 
and  he  is  estopped  as  against  a  holder  ignorant  of  the  contrary  to 
assert  the  fiction.''^  It  has  been  held  that  if  a  party  takes  a  note  pay- 
able to  a  fictitious  person  for  a  debt  due  himself,  he  may  recover 
on  the  common  counts,"'  though  not,  as  it  seems,  upon  the  note 
itself,  as  he  has  participated  in  the  wrong  by  taking  a  fictitious 
paper.  ^'^ 

Where  a  note  has  as  its  payee  a  fictitious  firm,  ami  the  holder  in- 
dorses it  assuming  the  firm's  name,  a  bona  fide  indorsee  may  recover 
against  the  maker."*  But  where  an  imjjostor  procured  a  check  to  be 
drawn  to  a  firm  in  a  distant  city,  of  which  he  represented  himself  to  be 
a  member,  such  firm  being  actually  in  existence,  and  then  indorsed 
the  check  to  a  bona  fide  holder  for  value  in  the  name  of  the  firm,  it  was 
held  that  the  maker  was  not  bound,  the  firm  not  being  a  fictitious 

44.  Farnaworth  v.  Drake,  11  Ind.  103;  Emporia  Nat.  Bank  v.  Shotwoll,  35  Kan. 
300;  Ort  v.  Fowler,  31  Kan.  478;  Robert.son  v.  Coleman,  141  Mius.s.  231;  Shaw, 
Kendall  &  Co.  v.  Brown,  128  Mieh.  573,  87  N.  W.  757  (under  statute);  Rogers  v. 
Ware,  2  Nebr.  29;  Blodjiett  v.  JaeLson,  40  N.  H.  20;  Forbes  v.  Esi)y,  21  Ohio 
(N.  S.),  483;  Re  Assignment  of  Pendleton  Hardware  Co.,  24  Oreg.  'iM,  33  Pac. 
544,  quoting  from  and  approving  text;  By  statute  in  New  York.  Plets  v.  John- 
son, 3  Hill  (N.  Y.),  115;  Stevens  v.  Strong,  2  Sandf.  139;  Odell  v.  Clyde,  38  App. 
Div.  333,  57  N.  Y.  Supp.  120;  First  Nat.  Bank  v.  American  Exch.  Nat.  Bank,  49 
App.  Div.  349,  03  N.  Y.  Supp.  58.  The  Court  of  .\ppeaLs,  construing  this  statute, 
held  that  such  paper  cannot  be  treated  as  payable  to  bearer,  unless  it  was  put  in 
circulation  by  the  maker  with  knowledge  that  the  name  of  the  payee  does  not 
represent  a  real  person.  Shipman  v.  Bank  of  the  State  of  New  York,  120  N.  Y. 
318,  27  N.  E.  371,  22  Am.  St.  Rep.  821.  Where  there  is  no  statute  on  the  subject, 
the  transfer  of  a  negotiable  instrument  to  a  fictitious  person  or  bearer  will  be 
treated  as  payable  to  bearer,  and  the  holder  of  such  paper  may  bring  suit  thereon 
in  his  own  name.    Keeman  v.  Blue,  240  111.  App.  177,  88  N.  E.  553. 

46.  Kohn  v.  Watkins,  20  Kan.  091,  approving  text,  and  applying  the  principle 
to  a  drawer;  Lane  v.  Krckle,  22  Iowa,  404.  Contra,  Armstrong  v.  National  Bank, 
40  Ohio  St.  518;  Chism,  Churchill  &  Co.  v.  Bank,  82  Hun,  559,  31  N.  Y.  St.  Rep. 
541.  But  in  New  York,  by  statute,  the  maker  is  not  bound  to  an  indorsee  even, 
unless  he,  the  maker,  knew  of  the  fiction  at  the  time  of  signing.  Maniort  v. 
Roberts,  4  E.  D.  Smith,  84;  Fifth  Nat.  Bank  v.  Central  Nat.  Bank,  82  Hun,  559, 
31  N.  Y.  St.  Rep.  541.  See  also  Clutton  v.  Attenborough  &  Son,  L.  R.,  App. 
Cas.  90  (1890);  Clutton  &  Co.  v.  Attenborough,  2  Q.  B.  300  (1895);  Clutton  & 
Co.  V.  Attenborough,  2  Q.  B.  707  (1895),  decided  on  the  EngUsh  Bills  of  Exchange 
Act,  under  sec.  7  (3),  corresponding  to  section  9  (3)  of  the  statute  in  the  Appendix. 

46.  Foster  v.  Shattuck,  2  N.  H.  447. 

47.  See  ante,  §  130. 

48.  Blodgett  v.  Jackson,  40  N.  H.  26. 


§§  140,  141  FICTITIOUS  PARTIES  187 


payee,  and  though  having  no  interest  in  the  paper,  its  genuine  in- 
dorsement was  necessary  to  pass  the  title  thereto."*^ 

Where  a  note  is  executed  in  the  name  of  a  fictitious  person,  it  has 
been  held  that  the  payee  who  indorses  it  with  knowledge  of  that  fact 
will  be  held  Uable  as  maker,  without  demand  or  notice  of  nonpay- 
ment.^ 

§  140.  If  the  bill  or  note  be  payable  to  some  person  who  had  no 
interest  in  it,  and  was  not  intended  to  become  a  party  to  it,  whether 
such  person  is  or  is  not  known  to  exist,  the  payee  may  be  deemed 
fictitious.  But  if  it  be  payable  to  some  person  knowTi  at  the  time 
to  exist,  and  present  to  the  mind  of  the  drawer  when  he  made  it,  as 
the  party  to  whose  order  it  was  to  be  paid,  the  genuine  indorsement 
oi  such  payee  is  necessary,  in  order  to  a  recovery  thereon  by  an  in- 
dorsee, even  though  he  had  no  interest  in  it,  and  the  drawer  knew  that 
fact." 

§  141.  Adopted  names. — Parties  sometimes  adopt  and  use  fic- 
titious names  as  tluir  (nvn,  and  when  there  is  a  real  party  in  exist- 
ence who  uses  a  fictitious  name  as  descriptive  of,  and  with  intent  to 
bind  him.self,  it  is  the  same  in  law  as  if  it  were  his  real  name;  and  he 
may  be  sued  by  the  holder,  and  declared  against  as  having  contracted 
i)y  such  adopted  name.''-    But  if  it  were  not  a  name  which  he  adoptccl 

49.  Rowe  V,  Putnam,  131  Mass.  281. 
60.  Bundy  v.  Jackson,  24  Fed.  629. 

51.  Rogors  V.  Ware,  2  Nebr.  29;  Phillips  v.  Mercantile  Nat.  Bank,  (17  Ilun,  37S, 
22  N.  Y.  Supp.  254  (affd.  in  140  N.  Y.  556,  35  N.  K.  982) ;  Re  Assignment  of  Pendle- 
ton Hardware  Co.,  24  Oreg.  330,  33  Par.  .544;  Phillips  v.  Mercantile  Nat.  Bank, 
67  Hun,  378,  22  N.  Y.  Supp.  254  (affd.  in  140  N.  Y.  556,  35  N.  E.  982,  quoting 
with  approval  the  text). 

52.  Ladd  v.  Rogers,  11  Allen,  209;  Fiore  v.  Ladd  &  Tilton,  22  Oreg.  202,  29 
Pac.  435.  In  this  case  held :  "  Where,  in  the  regular  course  of  business  and  without 
any  circumstances  tending  to  rouse  suspicion,  a  bank  receives  from  a  stranger, 
money  which  he  deposits  in  a  name  assumed  by  him,  the  bank  is  authorized  to 
repay  him  the  money  on  the  return  of  its  certificate  of  deposit  Issued  in  the  trans- 
action, indorsed  by  the  person  making  the  deposit,  although  the  indorsement  be 
in  the  assumed  name  and  the  money  in  fact  belonged  to  the  person  whose  name 
the  depositor  vsTongfully  assumed,  unless  before  such  repa>Tnent  something 
occurs  to  indicate  the  true  ownership  or  put  the  bank  on  inquiry  thereabout." 
The  reasoning  of  the  court  was:  '"They  contracted  with  him  under  the  name  of 
Savens  Fiore,  believing  that  to  be  his  true  name,  issued  and  deUvered  to  him  the 
certificate  of  deposit  in  such  name,  thereby  intending  to  make  it  payable  to  the 
person  to  whom  it  was  delivered;  and  although  they  may  have  been  mistaken  in 
the  name  of  the  man,  the  person  with  whom  they  dealt  was  the  person  intended 


188  IRREGULAR    INSTRUMENTS  §  142 

and  used  as  his  owti,  the  only  civil  remedy  of  the  liolder  would  be  a 
suit  in  tort  for  the  false  representation.^^ 

Under  Negotiable  Instrument  statute. — The  statute  declares  that 
an  instrument  is  payable  to  bearer  when  it  is  payable  to  the  order  of  a 
fictitious  or  nonexisting  person,  and  such  fact  was  known  to  the  per- 
son making  it  so  payable.^''  A  fictitious  person  is  one  who,  though 
named  as  payee,  has  no  right  to  the  instrument  because  the  tlrawer  of 
it  so  intentled,  and  it  therefore  matters  not  whether  the  name  of  the 
payee  used  by  him  be  that  of  one  living  or  dead,  or  of  one  who  never 
existed. ^^  Under  the  statute,  in  order  for  such  an  instrument  to  be 
payable  to  bearer,  the  fact  that  the  payee  is  a  fictitious  or  nonexisting 
person  must  be  coupled  with  knowledge  of  the  person  making  it,^ 
but  the  fact  that  the  maker  is  ignorant  of  the  existence  of  the  payee 
is  not  the  equivalent  of  knowledge  of  nonexistence.""^ 


SECTION   III 

NEGOTIABLE   INSTRUMENTS   EXECUTED    IN    BLANK 

§  142.  In  subsequent  portions  of  this  work  will  be  found  the  cita- 
tion and  discussion  of  cases  illustrating  the  rights  of  holders  of  nego- 

by  them  as  the  payee  of  the  certificate."  Anderson  v.  Dundee  State  Bank,  66 
Hun,  613,  21  N.  Y.  Supp.  925,  quoting  with  approval  the  text.  Where  a  note  was 
signed:  "People's  Sav.  Bank,  Geo.  H.  Simmons,  Pres.,"  and  Simmons  was  owner 
of  the  bank,  which  was  not  incorporated,  as  between  Simmons  and  the  payee  the 
case  stood  as  if  the  instruments  had  been  signed  simply  "Geo.  H.  Simmons." 
Union  Brewing  Co.  v.  Interstate  Bank  &  Trust  Co.,  240  111.  454,  88  N.  E.  997, 
144  111.  App.  415. 
63.  Bartlctt  v.  Tucker,  104  Mass.  345. 

54.  Appendix,  sec.  9. 

55.  Snyder  v.  Com  Exch.  Nat.  Bank,  221  Pa.  St.  599,  70  Atl.  876,  128  Am.  St. 
Rep.  780,  in  which  case  the  checks  were  drawn  by  an  agent,  in  fraud  of  his  prin- 
cipal, naming  a  certain  person  as  payee,  and  the  indorsement  of  the  name  of  the 
payee  was  a  forgery,  and  it  was  held  that  the  check  was  made  to  a  fictitious  per- 
son, and  that  this  under  the  statute  made  the  check  payable  to  bearer. 

56.  Boles  V.  Harding,  201  Mass.  103,  87  N.  E.  481;  Seaboard  Nat.  Bank  v. 
Bank  of  America,  193  N.  Y.  26,  85  N.  E.  829,  holding  that  a  draft  drawn  by  a 
bank  upon  an  existing  partnership  at  the  fraudulent  request  of  one  known  to  the 
bank  who  deposited  therefor  a  forged  check,  was  not  drawn  upon  a  fictitious 
person,  affirming  Seaboard  Nat.  Bank  v.  Bank  of  America,  103  N.  Y.  S.  1141, 
118  App.  Div.  907. 

57.  Seaboard  Nat.  Bank  v.  Bank  of  America,  100  N.  Y.  Supp.  740,  51  Misc. 
103,  aflarmed  103  N.  Y.  S.  1141,  118  App.  Div.  907. 


§   142      NEGOTIABLE    INbTRUMENTS   EXECUTED    IN    BLANK         189 

liable  instruments  intrusted  to  another  with  blanks,^^  and  of  holders 
of  such  instruments  altered  after  issue;  ^^  but  we  deem  it  proper  here 
to  state  the  general  principles  applicable  to  them.  Parties  often  lend 
their  mercantile  credit  to  others  by  signing  their  names  to  blank 
papers  to  be  afterward  filled  as  bills  of  exchange  or  promissory  notes 
written  over  their  signatures  as  drawers  or  makers;  or  by  signing 
their  names  in  the  appropriate  manner  to  indicate  that  they  design 
to  bind  themselves  as  acceptors  or  indorsers  of  the  instrument  which 
it  is  contemplated  to  complete  upon  such  blank  papers.  And  it  is  a 
settled  principle  of  commercial  law,  that  when  such  instruments  are 
afterward  completed  l)y  the  holder  of  such  blanks,  to  whom  they  are 
loaned,  such  parties  become  as  absolutely  bound  as  if  they  had 
signed  them  after  their  terms  were  ^\Titten  out;  and  further,  that  the 
presence  of  their  names  upon  blanks  purports  an  authority  granted 
to  the  holder  to  fill  them  for  any  sum,  and  N^th  any  terms  as  to  time, 
place,  and  conditions  of  payment.  And  that  although  the  party  may 
jirescribe  limits  to  the  holder,  a  bona  fide  transferee  from  him,  ignorant 
of  such  limitation  of  authority,  when  he  takes  an  instrument  which 
iiius  exceeded  it,  may  recover  upon  it.^ 

In  an  early  case,  where  the  party  had  indorsed  his  name  on  the 
back  of  five  copper-plate  checks,  blank  as  to  sums,  dates,  and  times 
of  payment,  and  Galley,  the  holder,  filled  them  up  as  his  own  notes, 

68.  See  chapter  XXVI,  §  3,  vol.  I,  §  843  et  seq. 

59.  See  chapter  XLIII,  §  6,  vol.  II,  §  1405,  et  seq. 

60.  This  text  Ls  approvinnly  cited  in  Frank  v.  Lilienfeld,  33  Gratt.  384.  In 
Snytler  v.  Van  Doren,  4t)  Wi.s.  G02,  Ihi.s  doctrine  was  applied  where  a  note  wa.s 
Higned  by  the  first  maker  for  aceomnioilation,  leaving  blanks  for  words,  making 
it  a  joint  or  .several  obligation,  and  in  that  form  he  delivered  it  to  the  person  ac- 
commodated. The  latter  procured  other  parties  to  sign  it  as  joint  makers  .with 
the  first;  and  the  first  maker  wxs  held  liable  to  the  holder,  although  but  for  the 
blanks  being  left,  the  note  would  have  been  regarded  as  altered  and  avoided. 
St-e  also  Binney  v.  Globe  Nat.  Bank,  6  Law.  Rep.  Annot.  381;  Farmers'  Nat. 
liank  V.  Thoma-s  79  Hun,  595,  29  N.  Y.  Supp.  837;  Whittle  &  Harrel  v.  National 
Bank,  7  Tex.  Civ.  App.  G16;  Prim  v.  Hammel,  134Ala.  G52,  32  So.  10()0,  92  Am.  St. 
Rep.  52;  Reddick  v.  Young  (Ind.),  98  N.  E.  813.  See  post,  §  843.  In  Dow-Hayden 
Grocery  Co.  v.  Muncy  (Ky.),  73  S.  W.  1030,  citing  text,  the  rule  was  recognized 
though  the  blank  was  filletl  in  by  an  agent  of  the  payee  for  a  greater  amount  than 
agreed,  of  which  the  payee  had  no  notice.  The  mere  ownership  by  a  corporation 
of  blank  notes  with  the  signature  of  an  accommodation  maker  affi.xed  thereto  does 
not  con.stitute  ownership  of  the  notes  as  legal  obligations  on  its  part  to  pay,  when 
it  appears  that  it  had  no  concern  in  filling  them  or  with  the  paper  in  its  com- 
pleted form,  but  that  it  was  filled  out  by  an  officer  of  the  corporation  not  having 
authority.  Pelton  v.  Spider  Lake  Sawmill,  etc.,  Co.,  132  Wis.  219,  112  N.  W. 
29,  122  Am.  St.  Rep.  963. 


190  IRREGULAR    INSTRUMENTS  §   112 

with  different  dates,  sums,  aiul  times  of  payment,  the  indorser  was 
\w\d  hound  to  the  plaintiff,  who  hail  discounted  them,  and  Lord 
Mansfield  said:  "The  indorsement  on  a  blank  note  is  a  letter  of  errdit 
for  an  indefinite  sum.  The  defendant  said:  'Trust  Clalley  to  any 
amount  and  I  will  he  his  security.'  It  does  not  lie  in  his  mouth  to  say 
the  indorsements  were  not  regular."  ®^  And  this  admirable  statement 
of  the  law  is  almost  universally  quotetl  with  approval,  and  foUowetl 
as  a  precedent,  applying  equally  to  maker,  acceptor,  and  drawer,  as 
to  the  indorser.*'-  The  United  States  Supreme  Court  has  said  on  the 
same  subject:  "Where  a  party  to  a  negotiable  instrument  intrusts  it 
to  the  custody  of  another,  with  blanks  not  filled  up,  whether  it  be  for 
the  purpose  to  accommodate  the  person  to  whom  it  was  intrusted,  or 
to  be  used  for  his  own  benefit,  such  negotiable  instrument  carries  on 
its  face  an  implied  authority  to  fill  up  the  blanks  and  perfect  the 
instrument;  and  as  iK'tween  such  party  and  innocent  third  parties, 
the  person  to  whom  it  was  so  intrusted  must  i)e  deemed  the  agent 
of  the  party  who  committed  such  instrum(>nt  to  his  custody — or,  in 
otluT  wortls,  it  is  the  act  of  the  principal,  antl  he  is  bound  i)y  it."  ®' 
And  again:"'  "But  the  authority  implied  from  the  existence  of  the 
blanks  would  not  authorize  the  person  intrusted  with  the  instrument 
to  vary  or  alter  the  material  terms  of  the  instrument  by  erasing  what 
is  written  or  printed  as  part  of  the  same,  nor  pervert  the  meaning  and 
scope  of  the  same  by  filling  the  blanks  with  stipulations  repugnant 
to  what  was  plainly  and  clearly  expressed  in  the  instrument  before 

61.  Russell  V.  LangstafTc,  2  Doug.  .514  (17S1). 

62.  Post,  §  843;  Ushor  v.  Daunooy,  4  Campb.  97  (1814)  (bill) ;  Bulkloy  v.  Butler, 
2  B.  &  C.  425  (bill  held  Rood,  tliouKh  sum  not  filled  up  till  after  bankruptcy  of 
acceptor);  Powell  v.  DufT,  3  Canipb.  182;  Schultz  v.  Astley,  29  Enp;.  C.  L.  414; 
Mahone  v.  Central  Bank,  17  C.a.  Ill;  Fullerton  v.  Sturpiss,  4  Ohio  (N.  S.),  529; 
Bank  of  Commonwealth  v.  Curry,  2  Dana,  142;  Bank  of  Limestone  v.  Perrick, 
5  T.  B.  Mon.  25;  Jones  v.  Shelbyville  Ins.  Co.,  1  Mete.  (Ky.)  58;  Michigan  Ins. 
Co.  V.  Leavenworth,  30  Vt.  11;  Androscoggin  Bank  v.  Kimball,  10  Cush.  373; 
Nichol  V.  Bate,  10  Yerg.  429;  Ives  v.  Farmers'  Bank,  2  Allen,  2:36;  Rich  v.  Star- 
buck,  51  Ind.  87;  Hardy  v.  Norton,  66  Barb.  527;  Joseph  v.  National  Bank,  17 
Kan.  259;  Waldron  v.  Young,  9  Heisk.  777;  Snyder  v.  Van  Doren,  46  Wis.  602; 
Coburn  v.  Webb,  56  Ind.  96;  Johnston  Harvester  Co.  v.  McLean,  57  Wis.  258; 
Hopps  V.  Savage,  68  Md.  516;  Thompson  on  Bills,  37. 

63.  Bank  of  Pittsburg  v.  Neal,  22  How.  107;  Davidson  v.  Lanier,  4  Wall.  457; 
Angle  V.  Northwestern,  etc.,  Ins.  Co.,  92  U.  S.  (2  Otto)  330;  Bradford  Nat.  Bank 
V.  Taylor,  75  Hun,  297,  27  N.  Y.  Supp.  96;  De  Pauw  v.  Bank  of  Salem,  126  Ind. 
553,  25  N.  E.  705,  26  N.  E.  151;  Market  &  Fulton  Nat.  Bank  v.  Sargeant,  85  Me. 
351,  27  Atl.  192,  35  Am.  St.  Rep.  376. 

64.  Angle  v.  Northwestern  Mut.  Life  Ins.  Co.,  92  U.  S.  (2  Otto)  331.  See  also 
Goodman  v.  Simonds,  20  How.  361;  Bank  of  Pittsburg  v.  Neal,  22  How.  108. 


§   143      NEGOTIABLE    INSTRUMENTS   EXECUTED    IN    BLANK         l9l 

it  was  so  delivered."  *  *  *  And  it  does  not  confer  authority 
to  make  any  additions  to  the  terms  of  the  note;  and  if  any  such  of  a 
material  character  are  made  by  such  a  party,  without  the  consent  of 
the  party  from  whom  the  paper  was  received,  it  will  avoid  the  note 
even  in  the  hands  of  an  innocent  holder."  ^^  It  has  been  held  that  if 
the  blank  space  be  filled  with  terms  forei^  to  the  apparent  object  of 
such  a  blank,  an  innocent  holder  cannot  recover.^^ 

§  143.  Illustrations  of  authority  implied. — The  authority  im- 
plied by  a  .signature  to  a  blank,  and  ihi-  credit  granted,  are  so  ex- 
tensive, that  the  party  so  signing  will  be  bound  to  a  bona  fide  transferee 
in  tlue  course,  though  the  holder  was  only  authorized  to  use  it  for  one 
purpose,  and  has  perverted  it  to  another,^  though  authorized  to  be 
lillcd  for  a  certain  amount  and  a  greater  is  inserted;  ^  and  though  the 
authority  was  limited  to  a  time  which  has  <'xpire(l,^^  or  was  only  to  be 
exercised  upon  a  condition  which  has  not  happened.''"  If  the  date  be 
left  blank,  any  holder  has  a  right  to  in.sert  the  true  date;  and  should 
he  insert  an  improper  date,  the  parties  will  still  be  bound  to  a  bona 
fiife  holder  for  value  and  without  notice  of  the  impropriety,^^  but  a 

66.  Coburn  v.  Wohb,  56  Iiul.  100;  Ivor\'  v.  Miohtu-l,  33  Mo.  4(X).  See  Mc- 
( irath  V.  Clark,  .56  N.  Y.  36,  and  vol.  II,  §  1  KXi;  post,  §  694;  Wiyerhauser  v.  Dun, 
100  N.  Y.  150;  Mcw<-  v.  I)o8<-her,  83  Hun,  5H0,  31  N.  Y.  Supp.  1072. 

66.  McCoy  V.  Ix>rkwoo<l,  71  Ind.  319. 

67.  Putnani  v.  Sullivan,  4  Ma.s8.  45;  Frank  v.  Lilienffld,  33  Gratt.  .384.  In 
tlii.s  ciuv  a  wife  in<lors<'<l,  for  hor  hashand's  accommodation,  a  note  blank  an  to 
date,  tiiu«-,  and  place  of  jjayment,  amount,  and  njime  of  payee.  It  wa.s  filled  up 
in  exces-s  of  authority,  ami  the  bona  fule  holder  recover'nl  agaiuHt  her,  and  .sub- 
jected her  separate  estate.  Se<'  chapter  XXVI,  on  Rinht.s  of  Bonn  Fide  Holder, 
§  S43  et  Ktq.,  and  chaptiT  XI,  for  Authority  of  .\gent.s;  First  Nat.  Bank  of  Decatur 
V.  John.ston,  97  Ala.  655;  Mechanics'  Bank  v.  Chardavoyne,  69  N.  J.  L.  2.56,  55 
Atl.  lOSO,  101  .\m.  St.  Rep.  701,  citing  text.  The  payment  of  a  note  by  the  maker 
is  a  ratification  of  the  filling  out.  Staunton  v.  Smith,  6  Penn.  (Del.)  193,  65  Atl. 
593. 

68.  London  &  S.  W.  Bank  v.  Wentworth,  42  L.  T.  R.  188;  Diercks  v.  Roberts, 
13  S.  C.  3.38;  Market  &  Fulton  Nat.  Bank  v.  Sargent,  85  Me.  351,  27  Atl.  192. 
In  Chestnut  v.  Chestnut,  1(M  Va.  539,  52  S.  E.  348,  2  L.  R.  A.  (N.  S.)  879,  citing 
text,  it  was  held  that  in  the  absence  of  evidence  that  the  blank  in  a  paper  sued  on 
w:us  the  result  of  a  mi.stake,  the  presumption  is  that  the  payee  haa  the  right  to 
fill  up  the  blank  with  any  amount  agreed  upon  between  him  and  the  maker,  and 
that  ri^ht  continues  for  a  reasonable  time. 

69.  Montague  v.  Perkins,  22  Eng.  L.  &  Eq.  516. 

70.  See  chapter  XXVI,  on  Rights  of  Bona  Fide  Holder,  §  7,  §  854  e<  seq. 

71.  Page  v.  Morrel,  3  Abb.  App.  Dec.  433;  Redlich  v.  Doll,  54  N.  Y.  238; 
Frank  v.  Lilienfeld,  .33  Gratt.  378;  Overton  v.  Mathews,  35  Ark.  154;  First  State 
Sav.  Bank  v.  Webster,  121  Mich.  149,  79  N.  W.  1068. 


192  IRREGULAR    INSTRUMENTS  §   1  l-ia 

party  having  notice  could  not  recover,  unless  he  acquired  it  from  one 
who  took  it  bona  fide  without  notice."  The  marginal  figures  being  no 
part  of  the  instrument,  it  has  l)een  held  that  where  the  holder  of  a 
note,  in  blank,  filled  it  up  and  negotiated  it  for  a  larger  amount  than 
was  indicated  by  the  marginal  figures,  this  did  not  vitiate  the  note, 
although  he  also  altered  the  figures^''  If  tlu'  place  of  payment  be  left 
blank,  the  i)rineiples  above  stated  apply ,'^'  and  so  if  tiiere  i)e  left  a 
blank  for  i\\v.  name  of  the  promisor,  so  that  words  may  be  inserted 
making  it  joint  or  several,  and  additional  makers  sign  and  unite  in 
the  note,  it  will  not  be  a  material  alteration  unless  it  was  known  to  the 
holder  that  authority  was  exceeded  to  fill  the  blanksj'^  If  a  blank  be 
left  for  the  rate  of  interest,  it  does  not  imply  authority  to  fill  in  a  rate 
greater  than  the  legal  rate,  and  the  party  doing  this  would  commit  a 
material  alteration."" 

§  143a.  Effect  of  acceptance  of  bill  blank  as  to  drawer. — A  bill 
without  a  drawer  is  a  contradiction  of  terms,  and  the  acceptance  of  a 
bill,  blank  as  to  the  drawer,  amounts  to  nothing  so  long  as  it  so  re- 
mains, as  already  seen.''^  But  if  the  acceptance  of  such  a  paper  be 
given,  and  it  be  delivered  in  that  form  to  a  creditor,  a  right  to  insert 
his  name  as  drawer  would  be  inferred,  and  also  to  use  the  paper  in 
negotiation,  the  transferee  inserting  his  own  name."^  And  it  might 
be  filled  up  by  the  personal  representative  of  the  holder  for  value 
after  the  latter's  death.^^  Even  where  there  had  been  given  no  au- 
thority to  insert  any  one's  name  as  drawer,  yet  when  the  insertion  of 
a  name  is  actually  made,  the  instrument  would  be  binding  as  an 
acceptance  to  a  bona  fide  holder  in  the  usual  course  of  business.®" 
There  are  some  cases  in  which  a  party  signing  his  name  on  the  back 

72.  Emmons  v.  Meeker,  55  Ind.  321. 

73.  Schryver  v.  Ilawkes,  22  Ohio  St.  308.    See,  ante,  §  86a. 

74.  Redlich  v.  Doll,  54  N.  Y.  23S;  Marshall  v.  Drescher,  68  Ind.  242  (semhle). 

75.  Snyder  v.  Van  Doren,  46  Wis.  602.  But,  there  is  no  implied  authority  given 
to  the  person  to  whom  the  same  was  delivered  to  fill  in  such  note  the  words  "with 
interest,"  when  there  is  no  blank  left  therefor,  or  to  write  in  the  blank  preceding 
the  words  "after  date,"  the  words  "on  demand."  See  Farmers'  Nat.  Bank  v. 
Thomas,  79  Hun,  595,  29  N.  Y.  Supp.  837. 

76.  Hoopes  v.  Collingwood,  10  Colo.  107. 

77.  See  ante,  §  92. 

78.  Harvey  v.  Cane,  34  L.  T.  R.  64  (1876);  Ames  on  Bills  and  Notes,  vol.  I, 
p.  881;  In  re  DufTy,  5  L.  R.,  Ireland,  92;  Whittle  &  Harrel  v.  National  Bank,  7 
Tex.  Civ.  App.  616. 

79.  In  re  Duffy,  5  L.  R.,  Ireland,  92. 

80.  Post,  §§  843,  844;  Whittle  &  Harrel  v.  National  Bank,  7  Tex.  Civ.  App.  616. 


§   144       NEGOTIABLE    INSTRUMENTS   EXECUTED    IN    BLANK         193 

of  a  bill  drauTi  payable  to  the  order  of  another,  with  a  view  to  guaran- 
tee its  payment  by  the  acceptor,  may  be  held  liable  as  a  drawer. 
Thus,  in  England,  before  the  bill  was  drawn,  the  defendant  wrote  his 
name  on  the  back  of  the  paper.  It  was  afterward  filled  up  payable  to 
the  drawer's  order,  and  accepted  by  the  drawee.  He  was  held  Uable 
a.s  drawer.*^ 

§  144.  Efifect  of  signing  a  blank  paper. — The  authority  implied 
by  one  signing  a  blank  paper  is  so  extensive  that  such  paper  will  be 
valid  in  the  hands  of  a  hofia  fide  holder,  whether  it  be  framed  as  a 
negotiable  instrument  or  otherwise.  In  Virginia,  where  a  paper  was 
signed  and  indorsed  in  blank,  and  intrusted  to  the  maker  for  whose 
accommodation  it  was  made,  it  was  held  that  a  bona  fide  holder,  who 
had  advanced  money  upon  it,  and  who  knew  that  it  was  made  in 
blank,  could  recover  against  such  party  whether  it  were  filled  up  as  a 
common  promissory  note  or  as  a  negotiable  note.^^    So  in  Indiana, 

81.  MiUhi'w.s  V.  Hloxsome,  33  L.  J.  R.  209  (1864).  This  case  is  questioned  in 
Steele  v.  MeKinhiy,  43  L.  T.  R.  3.58  (1880),  5  App.  Cas.  7'A,  Utrd  Watson  saying 
of  it,  "there  is  room  for  doubt  whether  the  decision  was  intende<l  to  go  so  far  as 
the  rei)orts  state.  If  it  was,  I  cannot  avoid  the  conclusion  that  it  is  at  variance 
witli  sound  principle." 

82.  Orriek  v.  Colston,  7  dratt.  189  (18.')0),  Daniel,  J.,  s.ayinp:  "It  is  well  settled 
that  a  blank  indorsement  on  a  negotiable  instrument,  blank  as  to  date  or  amount 
at  the  time  of  the  indorsement,  if  made  for  the  purfwse  of  giving  a  credit  to  the 
drawer,  is  as  effectual  to  bind  the  indorser  for  any  amount  with  which  the  instru- 
ment may  be  tilleii  up  by  the  drawer,  or  an  innocent  holder  for  value,  as  if  the 
instrument  h;ul  b(>en  e()mj)let(Hl  at  the  time  of  the  indorsement.  In  the  case  of 
Itu.ssell  V.  LangstafTe,  2  Doug.  514,  the  Court  of  King's  Bench  held,  in  the  lan- 
guage of  I^ord  Mansfield,  that  such  an  indorsement  'is  a  letter  of  credit  for  an 
indefinite  sum,' — that  the  indorser  in  effect  said,  'tru.st  the  drawer  to  any  amount, 
and  I  will  be  his  security.'  So  in  .Schultz  v.  Astley,  29  Kng.  C.  L.  414,  which  was 
the  case  of  an  acceptance  written  on  a  paper,  before  entirely  blank,  it  was  held  that 
the  blank  acceptance  was  an  acceptance  of  the  bill  aftenvard  put  upon  it;  and  that 
th(Te  is  no  di.stinction  in  principle,  when  the  bill  has  piusse<l  into  the  hands  of  third 
persons,  between  holding  the  acceptor  liable  to  a  given  amount,  when  the  bill  is 
afterward  drawn  in  the  name  of  the  party  who  h:is  obtained  the  acceptance,  and 
when  it  is  drawn  by  a  stranger,  who  becomes  the  drawer  at  the  in.stance  of  the 
party  to  whom  the  acceptance  is  given.  And  in  the  case  of  Dougla,ss  v.  Scott  & 
Fry,  decided  by  this  court,  8  Leigh,  43,  where  the  paper  was  signed  in  blank  and 
indorsed  in  blank,  and  delivered  to  another  to  be  filled  up  and  used  as  a  negotiable 
instrument  to  raise  money  on,  the  decision  was  founded  on  the  proposition  that 
the  negotiable  note  after^vard  drawn  over  the  .signature  of  the  maker,  did,  together 
with  its  indorsements,  bind  all  the  parties  to  the  same  extent  as  if  the  maker  had 
signeii  and  the  indorsers  indorsed  the  pai)er  in  its  perfect  form."  See  Morehead  v. 
Parkersburg  Nat.  Bank,  5  W.  Va.  74.     Mr.  Conway  Robinson,  in  his  Practice 

13 


194  IRREGULAR   INSTRUMENTS  §   1  tl 

where  a  note  was  filled  up  as  nonnegotiable,  under  express  stipulation 
with  the  indorsers,  for  accommodation  of  the  makers,  that  it  should 
not  be  payable  at  bank;  but  the  indorsee  had  inserted  a  provision 
making  it  payable  "at  the  Bank  of  Indiana,  at  the  Laporte  l^ranch," 
in  a  blank  space  left  on  the  face  of  the  note,  and  then  transferred  it, 
it  was  held  that  the  holder  could  recover;  and  Ray,  J.,  said:  "The 
surety  who  has  not  scrupled  to  trust  his  principal  with  the  semblance 
of  a  general  authority  to  make  the  delivery,  must  stand  the  hazard 
he  has  incurred."  ^'  So  where  the  paper  was  drawn  in  the  form  of  a 
blank  bill  of  exchange,  and  it  was  filled  up  by  the  party  for  whose 
accommodation  it  was  drawn  as  a  negotiable  note,  the  party  who 
signed  the  blank  was  held  liable.*''  When  indorsement  is  in  blank, 
the  holder  may  write  over  it  anything  consistent  with  its  character; 
but  not  a  waiver  of  demantl  antl  notice.**^ 

Under  Negotiable  Instrument  statute. — The  statute  provides  for  the 
filling  out,  and  declares  the  effect,  of  instruments  i'xecuted  in  l)lank.^" 
It  in  i^art  provides  that  a  signature  on  a  l)lank  paper  delivered  by  the 
person  making  the  signature  in  order  that  the  paper  may  be  con- 
verted into  a  negotiable  instrument  operates  as  a  jmmafdcic  authority 
to  fill  it  up  as  such  for  any  amount,**"  but  further  declares  that  in  order 

(vol.  II,  new  ed.,  p.  130),  dissonts  from  the  viow  pxproaaotl  in  this  opinion.  It  may 
be  observeti  that  he  w;i«  oppo.sinp;  counsel  in  the  case  when  it  wa.s  decided. 

83.  Spitler  v.  James,  32  Ind.  203  (1809);  Gillespie  v.  Kelley,  41  Ind.  loS; 
Wessell  V.  Glenn,  IDS  Pa.  St.  105  (1872).  See  contra,  Morehead  v.  Parkersburg 
Nat.  Bank,  5  W.  Va.  74.  In  this  ease  the  court  does  not  seem  to  have  paid  suffi- 
cient attention  to  the  fact  that  the  space  left  afforded  opportunity  for  the  altera- 
tion by  adding  the  place  of  payment,  which  made  the  note  negotiable.  See  post, 
§§  1405,  1409. 

84.  LucUen  v.  Hare,  32  Ind.  211  (1869).  This  doctrine  has  been  held  in  Indiana 
not  to  apply  to  a  nonnegotiable  note.    Cronkhite  v.  Nebeker,  81  Ind.  322. 

85.  Andrews  v.  Simmon,  33  Ark.  771;  Hood  v.  Robbins  &  Smith,  98  Ala.  484, 
13  So.  574. 

86.  Appendix,  sees.  6,  12,  13,  14,  52.  By  "material  particular"  in  section  14 
of  the  statute  is  not  meant  such  particulars  as  are  necessary  in  strictness  to  the 
creation  of  a  negotiable  instrument,  but  to  any  matter  which  is  proper  to  be 
inserted  in  such  an  instrument.  Johnston  v.  Hoover,  139  Iowa,  143,  117  N.  W. 
277. 

87.  In  Madden  v.  Gaston,  121  N.  Y.  S.  951, 137  App.  Div.  294,  it  was  held  that 
the  intentional  delivery  of  a  check  operates  as  prima  facie  authority  to  fill  up  the 
blanks  for  any  amount,  and  the  statute  imposes  the  burden  upon  the  drawer  to 
show  the  agreement,  and  that  its  terms  have  been  violated,  if  that  be  clahned. 
When  there  was  no  evidence  to  show  that  the  instrument  was  filled  up  in  accord- 
ance with  the  authority  given,  it  was  held  that  evidence  of  the  maker  that  he  gave 
no  authority  to  any  one  to  fill  the  blank  overcomes  any  presumption  of  authority 


§  144      NEGOTIABLE    INSTRUMENTS   EXECUTED    IN   BLANK         195 

that  any  such  instrument  when  completed  may  be  enforced  against 
any  person  who  became  a  party  thereto  prior  to  its  completion,  it 
must  be  filled  up  strictly  in  accordance  with  the  authority  given  ^ 
and  within  a  reasonable  time.^^  A  person  taking  such  instrument 
from  the  payee,  however,  is  upon  inquiry  as  to  his  authority  to  fill  up 
the  blank/-*"  though  it  has  been  held  that  the  law  has  been  so  far 
changed  by  the  statute  that  an  innocent  payee  is  not  a  holder  in  due 
course  and  cannot  recover  against  a  party  who  signed  and  delivered 
the  instrument  in  blank  to  a  third  person,  where  the  latter  in  fiUing 
up  the  blank  exceeded  his  authority .^^ 

A  promissorj'  note  may  be  valid  instrument  under  the  statute  as 
under  the  law  merchant  though  it  is  undated.^-  Another  section  of 
the  statute,  recognizing  the  right  of  a  holder  to  insert  the  true  date, 
declares  that  the  insertion  of  a  wTong  date  does  not  avoid  the  instru- 
ment in  the  hands  of  a  subsequent  holder  in  due  course,  but  as  to  him, 
the  date  so  inserted  is  to  be  regarded  as  the  true  date.^^    One  who  has 

arising  from  the  fact  that  it  was  delivered  in  blank.  Equitable  Trust  Co.  of  New 
York  V.  Lyons,  129  N.  Y.  S.  79. 

88.  Appendix,  sec.  14.  See  Union  Trust  Co.  of  New  Jersey  v.  McCrum,  129 
N.  Y.  S.  1078,  154  App.  Div.  409.  In  Herman  v.  Gregory  (Ky.),  115  S.  W.  809,  it 
was  held  that  where  a  signature  to  a  blank  note  was  obtained  on  the  understanding 
that  the  signer  was  to  be  surety  to  enable  the  other  person  to  borrow  money,  there 
was  no  diversion  when  the  other  filled  in  and  signed  the  note  for  an  amount  he 
individually  owed  as  one  of  the  purchasers  of  j)rof)erty,  and  made  the  note  payable 
to  his  co-purchasers  who  used  the  note  at  a  bank  to  pay  the  maker's  indebted- 
ness, and  the  first  signer  remained  liable  as  surety. 

89.  There  can  be  no  presumption  one  way  or  the  other  as  to  the  time  within 
which  blanks  in  a  check  were  filled  up,  and  therefore  the  burden  is  upon  the 
plaintiff  suing  ui)on  a  check  to  prove  that  the  blanks  were  filled  up  within  a 
"reasonable  time."  Madden  v.  Gaston,  121  N.  Y.  S.  951,  137  App.  Div.  294, 
holding,  in  the  case  of  a  check,  that  from  October  22  to  June  9  of  the  following 
year,  for  the  completion  of  the  instrument,  was  more  than  a  "reasonable  time." 

90.  Stanley  v.  Davis  (Ky.),  107  S.  W.  773;  Boston  Steel  &  Iron  Co.  v.  Steuer, 
1S3  Mass.  140,  66  X.  E.  646,  97  Am.  St.  Rep.  426. 

91.  Vandcr  Ploeg  v.  Van  Zuuk,  135  la.  3.50,  112  N.  W.  807,  13  L.  R.  A.  (N.  S.) 
4'.)0,  holding  that  where  a  note  was  made  out  in  blank  by  several  makers  and  was 
wrongfully  filled  out  and  deUvered  by  one  of  the  makers  to  the  payee,  without 
notice  to  the  payee  that  the  instrument  as  delivered  was  not  filled  out  in  accord- 
ance with  the  authority  given  by  the  other  makers  to  one  who  thus  filled  it  out 
and  deUvered  it,  the  payee  was  not  a  holder  in  due  course,  and  could  not  recover 
from  the  other  makers.  See  Hermann's  Executor  v.  Gregory  (Ky.),  115  S.  W. 
809,  as  to  a  note  filled  up  in  accordance  with  the  authority  given,  and  a  discussion 
as  to  whether  the  common  law  rule  had  been  changed  by  the  statute. 

92.  Appendix,  sec.  6.    Bank  of  Houston  v.  Day  (Mo.  App.),  122  S.  W.  756. 

93.  .\ppendix,  sec.  13.    See  also  sees.  6,  12. 


196  IRREGULAR    INSTRUMENTS  §   145 

inserted  an  untrue  date  or  a  date  not  contemplated  by  the  parties  in 
an  instrument  when  he  was  possessed  of  knowledge  of  the  true  date 
of  its  issue  or  of  the  date  contemplated,  is  not  "a  subsequent  holder 
in  due  course"  within  the  meaning  of  the  statute.^^ 

§  145.  Payee  in  blank. — Bills  and  notes  are  also  often  executed 
in  full  witli  the  exception  of  the  name  of  the  payee,  which  is  left  i)laiik 
in  order  that  it  may  l)e  afterward  filletl  up  with  the  name  of  the 
actual  holder  who  demands  payment,  the  design  of  this  form  of  paper 
being  to  enable  the  owner  to  pass  it  off  to  another  without  incurring 
the  responsibility  of  an  indorser,  and  without  risking  a  depreciation 
of  its  current  value,  which  might  possibly  result  from  indorsing  it 
"  without  recourse."  °''  The  same  result  might  be  attained  by  making 
the  instrument  payable  to  the  drawer's  or  maker's  order,  or  to  bejirer; 
but  a  bill  or  note  with  the  payee  blank  is  to  almost  every  legal  intent 
and  purpose  payable  to  bearer.  It  passes  from  hand  to  hand  by  de- 
livery,^''' ami  if  it  was  filled  in  with  the  wrong  name,  this  would  not 
affect  one  who  was  a  bona  fide  holder  for  value.^^  Any  bona  fide  holder 
for  value  may  fill  it  up  with  his  own  name  and  sue  upon  it.^^    And 


94.  Bank  of  Houston  v.  Day,  145  Mo.  Apj).  410,  122  S.  W.  7.')(). 

95.  Brutnnu4  v.  Entlorn,  IS  Gratt.  SOf);  Schooler  v.  Tildon,  71  Mo.  .5S1 ;  Harding 
V.  State,  r)4  Iiul.  3")0;  Annstrong  v.  Harslunan,  Gl  Ind.  52;  People  v.  Gorharn,  •) 
Cal.  App.  .341,  99  Pac.  391,  citing  text.  Where  a  note,  which  was  blank  ;us  to  the 
payee,  .shows  upon  its  face  that  it  was  intended  to  be  made  payable  only  to  some 
person  or  to  that  person's  order,  a  person  in  possession  is  not  impliedly  authorized 
to  fill  the  blank  contrary  to  the  intention  of  the  maker,  and  the  maker  is  not 
estopped  from  setting  up  a  defense  to  the  note.  Smith  v.  Willing,  123  Wis.  377, 
101  N.  W.  692,  68  L.  R.  A.  940,  holding  further  that  such  a  note  is  not  a  nego- 
tiable promissory  note. 

96.  Wookey  v.  Pole,  4  B.  &  Aid.  6,  6  Eng.  C  L.  323.    In  Elliott  v.  Dea.son,  64 

Ga.  63,  note  was  made  payable  "to  W^  L.  P.,  or ."    Held  negotiable.    Steel 

V.  Rathbun,  42  Fed.  390,  citing  the  text;  Manhattan  Sav.  Inst.  v.  New  York  Nat. 
Exch.  Bank,  42  App.  Div.  147,  59  N.  Y.  Supp.  51. 

97.  Melton  v.  Pensacola  Bank  &  Trust  Co.,  190  Fed.  126,  111  C.  C.  A.  166. 

98.  Roth  V.  Donnelly  Grocery  Co.,  70  S.  E.  140,  Ga.  App.  851;  Gothrapt  v. 
Williamson,  61  Ind.  590;  Rich  v.  Starpack,  51  Ind.  87;  Eretwell  v.  Carter,  78  S.  C 
531,  59  S.  E.  639;  Frank  v.  Lilienfeld,  33  Gratt.  378.  In  Brummel  v.  Enders,  18 
Gratt.  895,  the  case  of  a  note  blank  originally  as  to  the  name  of  the  payee,  it  was 
said  by  Joynes,  J.:  "The  question  as  to  the  effect  of  such  an  instrument  came 
before  the  Court  of  King's  Bench  in  the  year  1813,  in  the  case  of  Crutchley  v. 
Clarence,  2  Maule  &  S.  90,  which  is  the  leading  case.    That  was  an  action  against 

the  drawer  of  a  bill  of  exchange  payable  to  the  order  of (the  name  of  the 

payee  being  left  blank).     It  was  indorsed  to  the  payee  by  one  Vashon,  and  the 
plaintiff  inserted  his  own  name  as  payee,  and  the  case  was  distinguished  from 


§  145      NEGOTIABLE    INSTRUMENTS   EXECUTED    IN    BLANK         197 

although  thus  brought  in  apparent  privity  with  the  maker  or  drawer, 
he  may,  by  proving  that  he  was  not  the  party  to  whom  it  was  first 
deUvered,  exclude  defenses  valid  as  against  such  first  party,  and 
enjoy  all  the  rights  of  a  bona  fide  holder  for  value  and  without  notice.^^ 
But  the  holder  must  actually  fill  up  the  blank  with  his  name  before 
he  can  recover  upon  the  instrument,  as  until  then  it  does  not  import 
a  contract  with  him.^  And  unless  so  filled  up,  a  description  of  it  as  a 
bill  or  note  in  an  indictment  would  not  be  sustained.^ 


Russell  V.  Langstaffe,  2  Doug.  514  (Chitty,  Jr.,  415),  because  the  bill  in  that  case 
was  filled  up  by  one  of  the  original  parties.  But  the  court  overruled  the  objection, 
and  held  that  the  plaintiff  was  entitled  to  recover.  Lord  Ellenborough,  C.  J.: 
'As  the  defendant  ha.s  chosen  to  send  the  bill  into  the  world  in  thi.s  form,  the 
world  ought  not  to  be  deceived  by  his  acts.  The  defendant,  by  leaving  the  blank, 
undertook  to  be  answerable  for  it  when  filled  up  in  the  shape  of  a  bill.'  *  *  * 
Though  the  bill  in  this  case  was  indorsed  to  the  plaintiff,  the  title  to  it  did  not 
pass  by  the  indorsement  because  the  name  of  the  indorser  was  not  in  the  bill. 
It  passed  by  the  delivery.  In  the  following  year  the  same  question  came  before 
the  Court  of  Common  Bench  in  an  action  again.st  the  acceptor  of  the  same  bill. 
Crutchley  v.  Mann,  5  Taunt.  529,  1  Eng.  C.  L.  179.  It  was  objected  that  the 
authority  given  to  the  person  to  whom  the  bill  w:ls  first  delivered,  to  insert  his 
name  as  payee,  was  not  transferable  from  hand  to  hand.  But  the  court  held  that 
the  plaintiff  had  a  right  to  insert  his  name  a.s  payee,  and  was  entitled  to  recover. 
Upon  the  authority  of  these  cases,  it  is  laid  down  in  all  the  treatises  that  any  bona 
fide  holder  of  a  bill  or  note  which  is  blank  as  to  the  name  of  the  payee  may  in- 
sert his  own  name,  and  thus  actjuire  all  the  rights  of  the  payee." 

99.  Brummel  v.  Enders,  18  (Jratt.  905;  Frank  v.  Lilienfeld,  33  Gratt.  387; 
Nelson  v.  Cowing,  ()  Hill,  330;  Pindar  v.  Barlow,  31  Vt.  539;  Rich  v.  Starbuck, 
51  Ind.  87.    See  also  chapter  VII,  on  Consideration,  §  175,  and  cases  cited. 

1.  Greenhow  v.  Boyle,  7  Blackf.  5G;  Seay  v.  Bank  of  Tennessee,  3  Sneed,  568; 
Thompson  v.  Rathbun,  22  Pac.  837,  citing  the  text.  Where  two  officers  of  a  cor- 
poration individually  indorsed  a  note  of  the  corporation,  blank  as  to  the  payee, 
before  its  discount  for  the  benefit  of  the  corporation,  and  one  of  such  officers  paid 
the  note,  in  an  action  by  him  against  the  other  for  contribution,  the  dispute  being 
whether  they  signed  as  joint  makers  or  as  indorsers,  it  was  error  for  the  court  to 
allow  the  plaintiff  during  the  trial  to  insert  the  name  of  the  bank  of  discount 
as  payee,  as  the  contention  of  the  defendant  would  be  weakened  if  not  overcome 
thereby.    Keyser  v.  Warfield,  100  Md.  72,  59  Atl.  189. 

2.  In  Rex  v.  Randall,  Russ.  &  Ry.  C.  C.  195,  it  was  held  that  a  bill  blank  as  to 
the  name  of  the  payee  did  not  answer  the  description  of  a  bill  of  exchange  in  an 
indictment.  But  however  that  may  be,  "the  cases  cited  abundantly  establish 
that  a  party  to  such  a  bill  is  Uable  upon  it  as  if  it  was  filled  up.  It  has  been  held, 
too,  that  while  a  bill  or  note  is  blank  as  to  the  payee,  the  holder  cannot  sue  upon 
it  as  bearer,  but  that  he  must  insert  his  name  as  payee.  Greenhow  v.  Boyle, 
7  Blakf.  56;  Seay  v.  Bank  of  Tennessee,  3  Sneed,  558.  But  these  cases  fully 
recognize  the  doctrine  of  the  case  of  Crutchley  v.  Clarence.  See  ante,  §§  144,  145, 
and  notes.    They  only  hold  that  the  insertion  of  the  name  of  the  plaintiff,  so  that 


198  IRREGULAR    INSTRUMENTS  §§  14G,  147 

§  146.  How  far  a  holder  may  go  in  filling  up  blanks. — Not  only 
may  tlie  holder  of  a  note  in  which  there  is  left  a  hlank  as  to  the  name 
of  the  payee  fill  it  up  with  his  own  name,  but  where  it  is  delivered 
with  such  blank  to  a  part}',  and  by  him  indorsed  in  blank,  the  holder 
may  fill  up  the  blank  in  the  body  of  it  with  the  name  of  the  indorser, 
and  then  complete  the  indorsement  by  filling  it  up  to  himself.  He 
thus  perfects  the  instrument  upon  its  skeleton  form,  and  makes  it 
what  it  was  evidently  designed  to  be.^ 

In   Massachusetts  the  following  skeleton  note — 

"$1,585.90.  Brooklyn,  September  20,  18.58. 

after  date  promise  to  pay  to  the  order  of  Dec.  23, 

dollars  at  value  received. 

Geo.  R.  Ives." 

was  delivered  to  Yale  as  a  mere  memorandum,  and  not  to  be  used  as 
a  note.  Yale  filled  it  up  as  a  note  for  S1,58.').'.M),  payable  to  his  own 
order  at  the  Atlantic  Bank,  New  York,  and  indorsed  it  to  the  plaintiff, 
who  discounted  it  for  him.  The  court,  held  all  evidence  as  to  any 
agreement  between  the  original  parties  inadmissible,  anil  the  holder 
entitled  to  recover.^ 

It  is  clear  however  that  a  holder  who  knew  when  he  took  the  paper 
that  the  authority  to  fill  it  up  had  been  departed  from  camiot  recover.* 

§  147.  When  holder  exceeds  authority  to  fill  blanks. — If  the 
holder  exceed  the  terms  of  his  authority  in  filling  up  the  blank,  he 
can  have  no  benefit  from  it,  even  to  the  extent  of  his  authority,  for 
his  wrongful  act  is  an  utter  nullity  as  to  himself; '^  and  if  the  party 
who  takes  such  paper  from  the  holder  have  notice  that  he  has  ex- 
ceeded his  authority,  he  participates  in  the  wrongful  act  by  negotiat- 
ing for  it,  and  cannot  recover  against  the  party  who  signed  the  blank.'^ 

the  paper  may  on  its  face  import  a  contract  with  him,  is  necessary  to  enable  him 
to  sue  upon  it."    See  Rees  v.  Conococheague  Bank,  5  Rand.  326. 

3.  Elliott  V.  Chesnut,  30  Md.  562. 

4.  Ives  V.  Farmers'  Bank,  2  Allen,  236;  Brummol  v.  Enders,  18  Gratt.  897; 
Cox  V.  Alexander,  30  Oreg.  438,  46  Pac.  794. 

5.  Wagner  v.  Diedrich,  50  Mo.  484;  Glower  v.  Wynn,  59  Ga.  246. 

6.  Van  Duzer  v.  Howe,  21  N.  Y.  531;  Putnam  v.  Sullivan,  4  Mass.  45. 

7.  Davidson  v.  Lanier,  4  Wall.  456.  The  court  said:  "The  delivery  of  a  bill 
of  exchange  signed  and  indorsed  in  blank,  only  authorizes  the  receiver  to  fill  it 
up  in  conformity  with  the  authority  given  him.  If  there  has  been  no  agreement, 
the  authority  is  general;  if  there  has,  it  must  be  pursued.  The  burden  of  proof 
that  there  was  an  agreement,  and  that  its  terms  have  been  violated,  is  in  such  a 
case,  upon  the  defendant;  but  if  he  can  make  the  proof  it  will  avail  him.    No  per- 


§   148      NEGOTIABLE    INSTRUMENTS   EXECUTED    IN    BLANK         199 

But  what  charges  the  transferee  with  notice  is  a  matter  on  which  the 
authorities  differ.  By  some  authorities  it  is  held  that  if  he  knew  that 
the  paper  had  been  signed  as  a  blank,  and  filled  up  by  force,  of  au- 
thority by  the  holder,  he  should  inquire  as  to  the  extent  of  such  au- 
thority, and  if  he  fails  to  do  so,  he  takes  the  paper  at  his  peril.^  And 
Vice-Chancellor  Stuart  said  in  an  English  case:  "If  the  holder  has 
notice  of  the  imperfection  [that  the  signature  was  made  in  blank]  he 
can  be  in  no  better  situation  than  the  person  who  gave  it  in  blank."  ^ 
But  this  qualification  of  Lord  Mansfield's  doctrine,  that  the  blank 
signature  is  "a  letter  of  credit  for  an  indefinite  sum,"  does  not  impress 
us  as  an  improvement  upon  it.  The  paper,  being  limitless  in  its 
terms,  is  prima  facie  limitless  as  to  the  authority  it  confers.  The 
holder  is  invested  with  a  general  authority  as  to  that  paper,  ^°  and 
the  graj)hic  phrase  of  Lord  Mansfield  describes  it  to  perfection.  High 
authorities,  including  Story  and  Parsons,  concur  in  these  views, 
which  seem  to  us  clearly  the  most  philosophical.^^ 

§  148.  Bonds  with  blanks. — A  bond — that  is,  "a  deed  whereby 
the  obligor  promises  to  pay  a  sum  of  money  to  another  on  a  day  ap- 
pointed "  ^- — stands  upon  a  footing  entirely  different  from  bills  and 
notes  and  other  negotiable  instruments.  It  cannot  be  left  blank 
either  as  to  the  sum,  name  of  the  obligee,  or  other  material  part,  and 
filled  up  afterward  l^y  an  agent,  so  as  to  bind  the  obligor.  In  other 
words,  it  must  be  perfected  in  every  respect  before  it  amounts  to  any- 
thing. The  reason  of  the  distinction  is,  that  authority  to  make  a 
deed  can  only  be  imparted  to  an  agent  by  an  instrument  of  equal 
dignity — that  is,  by  deed.  In  an  early  English  case,  a  different  doc- 
trine was  announced  by  Lord  Mansfield,^'  and  it  has  been  followed 

son,  unless  authorized,  either  directly  or  by  ju.st  inference  from  the  nature  of  the 
transaction,  can  fill  up  a  blank  bill  for  his  own  benefit,  nor  can  such  a  bill  be  en- 
forced against  the  drawer  and  indorser  in  favor  of  any  one  who  takes  it  in  bad 
faith — that  is,  with  knowledge  that  it  h:us  been  filled  up  without  authority  or  in 
fraud."  Hatch  v.  Searles,  2  Smale  &  G.  147;  John.son  v.  Blasdale,  1  Smedes  &  M. 
17;  Hemphill  v.  Bank  of  Alabama,  0  Sme<les  &  M.  44. 

8.  Van  Duzer  v.  Howe,  21  \.  Y.  iiil;  Byles  (Sharswood's  ed.)  [*182],  308. 

9.  Hatch  V.  Searles,  2  Smale  &  G.  147. 

10.  Chitty  on  Bills  [*29),  38. 

11.  Orrick  v.  Colston,  7  Gratt.  189;  Huntington  v.  Branch  Bank,  3  Ala.  186; 
Snyder  v.  Van  Doren,  46  Wis.  602;  Story  on  Bills,  §  222;  1  Parsons  on  Notes  and 
Bills,  109.    See  also  Edwards,  252-253,  and  -post,  §  843. 

12.  2  Bl.  Com.  34G;  Preston  v.  Hull,  23  Gratt.  602,  Staples,  J. 

13.  Texira  v.  Evans,  cited  in  Master  v.  Miller,  4  T.  R.  320;  2  Robinson's  Prac- 
tice (new  ed.),  13. 


200  IRREGULAR    INSTRUMENTS  §  148 

in  some  American  cases. ^^  But  that  decision  has  been  overruled  in 
England;  '^  and  in  the  United  States  the  tloctrin(>  of  the  text  has  U-en 
approved.  *®  It  may  be  stated  however,  as  a  limitation  of  this  doctrine, 
that  it  does  not  extend  so  far  as  to  apply  to  that  peculiar  cUlss  of 
instruments  which  pass  under  the  general  title  of  "coupon  bonds." 
They  are  now  universally  regarded  as  negotiable,  when  so  framed 
as  to  indicate  an  intention  to  make  them  so.  And  being  negotiable, 
are  governed,  for  the  most  part,  by  the  rules  api)licai)l('  to  coinnicnial 
securities,  and  not  by  common-law  principles.'^  Individual  bonds, 
when  made  negotiable  by  statute,  would  doubtless  stantl  on  the 
same  footing. 

14.  Woolley  v.  Constant,  4  John.s.  GO;  Ex  jxirlc  Decker,  0  Cow.  GO;  Kx  parte 
K.rwin,  S  Cow.  US;  Duncan  v.  IkK^nc.>^,  4  McCord,  '2M;  Cionalin  v.  Commander, 
etc.,  (i  Uicli.  l'.»7. 

15.  Hibblewhite  v.  McMowri.-,  0  M.  &  W.  200;  Enthoren  v.  lloyle,  9  Eng. 
L.  iV:  Eq.  434;  She|)pard'.s  Touelistone,  G8. 

16.  Preston  v.  Hull,  23  C.ratt.  002;  Penn  v.  Hamlet,  27  Cratt.  337;  Davenport 
V.  SleiRht,  2  Dev.  &  Bat.  (Law).  3.S1;  Burden  v.  Sutherland,  70  N.  C.  528;  Bland 
V.  O'lla^an,  04  N.  C  471.    See  §§  (i8,  856. 

17.  White  V.  Vermont,  etc.,  R.  Co.,  21  How.  575;  Preston  v.  Hull,  23  Gratt. 
613;  Lyon  Co.  v.  Savings  Bank,  40  C  C  A.  391,  100  ImhI.  337. 


CHAPTER  VI 

MEMORANDA    UPON    BILLS    AND    NOTES,    AND    COLLATERAL 

AGREEMENTS 


SECTION   I 

MEMORANDA   UPON   BILLS   AND  NOTES 

§  149.  As  to  memoranda  upon  bills  and  notes,  questions  have 
frequently  arisen  as  to  whether  or  not  they  were  to  be  regarded  as 
incorporated  into  the  instruments  themselves.  In  an  English  case, 
where  the  words  "with  hxNv^ul  interest"  were  written  in  the  corner 
of  a  note  after  its  execution,  and  without  the  maker's  consent,  Lord 
Campbell,  C.  J.,  said:  "This  forms  part  of  the  contract.  It  would 
clearly  have  Iseen  so  if  it  had  been  written  in  the  body  of  the  note, 
and  we  think  a  memorandum  of  this  kind  written  in  the  corner  of 
the  note  is  equally  part  of  the  contract,  because  the  contract  must 
be  collected  from  the  four  comers  of  the  document,  and  no  part  of 
what  appears  there  is  to  be  excluded."  '  And  this  rule  has  been 
applieil  in  numerous  English  and  American  cases.  Such  memoranda, 
if  made  by  agreement  of  the  parties  before  signing,  will  l)ind  all  the 
parties  to  the  instrument,  and  all  who  have,  or  are  legally  presumed 
to  have,  notice  thereof,  and  may  be  pleaded  by  either  plaintiff  or 
defendant.^     How  far,  and  under  what  circumstances,  a  bona  fide 


1.  Warrington  v.  Early,  2  El.  &  BI.  763,  75  Eng.  C.  L.  See  also  Benedict  v. 
Cowden,  49  N.  Y.  402;  Dewey  v.  Reed,  40  Barb.  21;  Wait  v.  Pomeroy,  20  Mich. 
427;  Bow-ie  v.  Hume,  13  App.  Ca.s.  (D.  C)  286;  WTiite  v.  Gushing,  88  Me.  342, 
34  Atl.  164,  51  Am.  St.  Rep.  402. 

2.  Gift  V.  Hall,  1  Humphr.  480;  Hatfield  v.  Griffith,  1  Lea,  301;  Perry  v.  Bige- 
low,  128  Mass.  129;  2  Parsons  on  Notes  and  Bills,  539;  Byles  on  Bills  (Shars- 
wood's  ed.)  [*94],  193.  See  ante,  §§  59,  60;  Goldman  v.  Blum,  58  Tex.  636,  citing 
the  text;  Solomon  Solar  Salt  Co.  v.  Barber,  58  Kan.  419,  49  Pac.  524,  citing  text. 
The  clause  below  the  signature  is  a  part  of  the  instrument  as  much  as  the  clause 
above  the  signatures;  the  presumption  is  that  it  was  a  contemporaneous  agree- 
ment, and  the  meaning  of  the  entire  instrument  is  to  be  gathered  from  its  four 
comers.  Black  v.  Epstein,  93  Mo.  App.  459,  67  S.  W.  736.  The  words  "not 
transferable"  written  in  the  lower  left  hand  corner  of  a  printed  blank  by  adding 

201 


202  MEMORANDA    UPON    BILLS   AND    NOTES  §   IM 

transferee  of  the  paper  is  affected  by  the  addition,  erasure,  or  obliter- 
ation of  such  memoranda  is  elsewhere  considered.^ 

§  150.  Illustrations  of  memoranda  affecting  negotiability. — The 
principle  above  stated  has  been  applied,  in  the  United  States,  and 
construed  as  part  of  the  instrument,  where  the  memorandum  was 
written  at  the  bottom  of  the  note,  "one-half  payable  in  twelve 
months,  the  balance  in  twenty-four  months;"  '  where  on  the  lower 
left-hand  margin  was  written  "Brandon  money,"  ^  and  "Ints.  at 
1234  per  cent.;"^  where  on  the  margin  was  written,  "payable  in 
fulled  cloth  one  year  from  the  month  of  October  ncxt;"^  where  on 
the  back  of  the  note  was  written  a  condition  making  it  payable  in 
five  years,  in  a  certain  contingency;"  where  the  word  "facilitates," 
signifying  certain  bank  notes,  was  written  on  a  note  under  the  names 
of  the  subscribing  witnesses;  ^  where  the  words  "[foreign  bills]"  were 
written  in  ])rackets  under  the  note,  its  negotiability  being  thereby 
destroyed;  ^^  where,  under  the  maker's  signature,  was  written,  "If 
the  machine  should  not  be  delivered,  this  note  not  to  be  paid;"  '* 
where  there  was  indorsed  on  a  note  payable  on  its  face,  on  demand,  a 
condition  that  it  was  not  to  be  payable  until  the  happening  of  a 
certain  event,  ^-  or  that  the  maker  was  not  to  be  compelled  to  pay 
liefore  a  certain  time;  '•"'  where  there  was  written  under  the  maker's 
signature  a  memorandum  that  it  was  not  to  be  collected  until  a 

the  letter  /  to  the  abbreviation  "No."  and  writing  the  word  "  transferrable"  in  the 
short  blank  space  an  inch  long  between  "No,"  and  the  word  "Due,"  were  held 
not  to  be  so  obscurely  written  as  to  deceive  an  innocent  purchaser,  and  on  the 
facts  it  was  held  that  there  was  no  fraud  or  negligence  in  making,  endorsing,  or 
delivering  the  note.  Tanners'  Nat.  Bank  v.  Lacs,  120  N.  Y.  S.  669,  136  App.  Div. 
92.  In  Recke  v.  Sayers,  106  111.  App.  283  it  was  held  that  a  mere  moranranchim 
on  the  margin  of  a  note  is  not  a  part  of  the  note,  as  to  a  note  which  contained 
in  the  margin  the  figure  6  and  a  character  ordinarily  used  as  an  abbreviation  for 
"per  cent.,"  and  that  this  would  not  authorize  a  judgment  for  interest. 

3.  See  chapter  XLIII,  on  Alterations,  §  1407. 

4.  Heywood  v.  Perrin,  10  Pick.  228;  Bowie  v.  Hume,  13  App.  Cas.  (D.  C.)  286. 

5.  Gift  V.  Hall,  1  Humphr.  4S0. 

6.  Hatfield  v.  Griffith,  1  Lea,  300. 

7.  Fletcher  v.  Blodgctt,  16  Vt.  26. 

8.  Henry  v.  Colman,  5  Vt.  403. 

9.  Springfield  Bank  v.  Merrick,  14  Mass.  322. 

10.  Jones  V.  Falcs,  4  Mass.  254. 

11.  Wait  V.  Pomeroy,  20  Mich.  425.  See  also  the  State  v.  Stratton,  27  Iowa, 
424. 

12.  Effinger  v.  Richards,  35  Miss.  540. 

13.  Franklin  Sav.  Inst.  v.  Reed,  125  Mass.  365. 


§  151  MEMORANDA    UPON   BILLS   AND    NOTES  203 

certain  event  transpired;  ^^  where  the  words  ''given  as  collateral 
security  with  agreement"  were  indorsed  on  the  margin  of  a  note;^^ 
and  where  the  words  "bank  book  of  the  depositor  must  accompany  this 
order,"  were  written  under  an  order  in  a  savings  bank.^^  The  simple 
memorandum  that  the  note  is  issued  as  collateral  security,  it  would 
seem,  impairs  its  negotiability.^^  So,  also,  a  memorandum  that  the 
note  will  be  renewed  at  maturity.^*  But  the  mere  recital  that  it  is 
given  to  secure  the  payment  of  a  certain  debt,  or  other  recital  of  the 
consideration,  will  not  make  the  obligation  conditional.^^ 

§  151.  Memoranda  on  back. — It  seems  that  the  purport  of  the 
instrument  is  not  only  to  be  collected  from  "the  four  comers,"  but 
from  "the  eight  comers,"  a  memorandum  on  the  back,  affecting  its 
operation,  being  regarded  the  same  as  if  written  on  its  face.-"  This 
view  has  been  applied  where  a  note  payable  absolutely  on  its  face 
bore  an  indorsement  that  pajment  was  not  to  be  compelled,  but  to 
be  received  when  convenient  to  the  maker  to  make  payment;  ^^  where 
a  note  absolute  on  its  face  bore  on  the  back,  "This  note  is  given  on 
the  condition  that  if  any  dispute  shall  arise  between  Lady  Wray  and 
D.  Hartley  respecting  the  sale  of  the  within-mentioned  fir,  then  the 
note  to  be  void;"  ^-  where  there  was  indorsed  on  the  back  of  the 
note  that  it  was  "to  be  taken  for  security  of  all  such  balances  as 
J.  M.  may  happen  to  owe  to  T.  L.  &  Co.,  not  extending  farther  than 


14.  Johnson  v.  Heagan,  23  Me.  329. 

15.  Costello  V.  Crowoll,  127  Mass.  293,  Lord,  J.:  "Any  language  put  upon  any 
portion  of  the  face  or  back  of  a  i)romissory  note,  which  ha.s  relation  to  the  subject- 
matter  of  the  note  by  the  maker  of  it  before  delivery,  is  a  part  of  the  contract." 
American  Nat.  Bank  v.  Sprague,  14  R.  I.  410.    See  ante,  §  60. 

16.  White  V.  Gushing,  SS  Me.  342,  34  Atl.  104,  .')!  Am.  St.  Rep.  402. 

17.  AskcU  V.  Lambert,  10  Gray,  592;  American  Nat.  Bank  v.  Sprague,  14 
R.  L  410;  Gibson  v.  Hawkins,  69  Ga.  354;  ante,  §  60. 

18.  Citizens'  Nat.  Bank  v.  Piollet,  126  Pa.  St.  194. 

19.  Clanin  v.  Esterly  Mach.  Co.,  118  Ind.  373;  ante,  §  60a. 

20.  Farmers'  Bank  v.  Ewing,  7S  Ky.  266;  Morris  v.  Cain,  39  La.  Ann.,  citing 
the  text;  ante,  §  60;  Van  Zandt  v.  Hopkins,  151  HI.  248,  37  N.  E.  845,  citing  text; 
the  Kalamazoo  Nat.  Bank  v.  Clark,  .52  Mo.  App.  593.  A  memorandum  written 
on  the  back  of  a  promissory  note  at  the  time  of  execution  which  limits  its  consider- 
ation, affects  its  operation,  and  was  intended  to  be  a  part  of  the  contract,  must 
be  regarded  as  a  substantive  part  of  the  note.  Kurth  v.  Farmer's  &  Merchant's 
State  Bank,  77  Kan.  475,  94  Pac.  798,  15  L.  R.  A.  (N.  S.)  612,  127  Am.  St.  Rep. 
428,  quoting  text. 

21.  Barnard  v.  Gushing,  4  Mete.  (Mass.)  231. 

22.  Hartley  v.  Wilkinson,  4  Campb.  127  (1814). 


2U4  MEMORANDA    UPON    BILLS   AND    NOTES  §  lo2 

the  within-named  sum  of  £200,  but  this  note  to  be  in  force  for  six 
months,  and  no  money  to  be  called  for  sooner  in  any  case;"  -"'  where, 
on  the  back  of  a  note  was  indorsed,  "the  within  note  is  given  for 
securing  certain  floating  advances;"  ^*  so  where  it  was  indorsetl  on  the 
back  of  a  note  tliat  payment  was  not  to  l^e  expected  until  a  mill  was 
sold;  -^  so  where  condition  was  written  on  the  back  of  the  note  pro- 
viding for  deductions  on  certain  contingencies,-''  or  that  the  note  was 
to  \)v:  paid  "in  wheat  at  ninety-five  cents  a  bushel."  -"  So  where  the 
words,  "the  indorsers  waive  presentment,  protest,  and  notice  of 
dishonor,"  were  written  on  the  back  of  the  note.-* 

§  152.  The  New  York  cases  do  not  seem  to  be  uniform  and  con- 
sistent on  this  sul)ject.  In  one  ca.se  it  was  held  that  a  memoraiKlum 
on  the  back  of  the  note  that  it  was  to  be  delivered  as  consideration 
for  a  judgment  to  S.  &  O.,  "was  no  part  of  the  note,  and  tlie  effect 
of  it  was  only  to  show  the  consideration  and  operate  as  a  notice  to 
any  person  who  might  purchase  the  note."  '^  And  in  another,  that 
an  indorsement  on  the  back  of  a  note  of  a  condition  that  it  was  to 
be  delivered  to  the  payees  as  security  for  a  certain  acceptance,  and 
was  to  be  void  in  a  certain  event,  did  not  affect  its  negotiability,  and 
was  not  a  part  of  it.^°    But  it  has  been  there  held  that  a  memorandum 

23.  Leeds  v.  Lancashire,  2  Campb.  205  (1809),  Lord  Ellenborough  said:  "  In  the 
hands  of  a  bona  fide  holder  who  received  it  as  a  promis.sory  note,  it  might  possibly 
be  considered  as  such,  but  the  present  plaintiffs  (the  payees)  can  only  treat  it  as 
a  guaranty  for  Marriott  to  the  amount  of  £200.  As  to  them  the  indorsement 
mu.st  be  incorporated  with  the  body  of  the  note."  But  when  the  ca.se  came  be- 
fore the  King's  Bench,  as  reported  in  ,5  Maule  &  S.  25  (1815),  the  above  obiter  dic- 
tum as  to  a  bona  fide  holder  w;us  not  rei)eated,  and  Lord  Ellenborough,  C.  J.,  t-aid: 
"How  can  it  be  said  that  this  note  i.s  a  negotiable  in.strimient  for  the  payment  of 
money  absolutely,  when  it  i.s  apparent  that  the  party  taking  it  must  inquire  into 
an  extrinsic  fact  in  order  to  ascertain  if  it  be  payable?  By  the  indorsement  the 
party  takes  nothing  but  a  contingent  benefit,  dependent  upon  the  happening  or 
not  of  a  particular  dispute  about  the  property."  Bayley,  J.,  said:  "This  note 
cannot  be  said  to  be  payable,  at  all  events."  And  Dampier,  J.,  said:  "The  argu- 
ment is,  that  a  promissory  note  to  pay,  'unless  a  dispute  shall  arise  between  A.  & 
B.,'  imports  an  unconditional  promise  to  pay." 

24.  Cholmeley  v.  Darley,  14  M.  &  W.  344. 

25.  Blake  v.  Coleman,  22  Wis.  416. 

26.  Henry  v.  Colman,  5  Vt.  402. 

27.  Polo.  Man.  Co.  v.  Parr,  8  Nebr.  379. 

28.  Farmers'  Bank  v.  Ewing,  78  Ky.  264. 

29.  Sanders  v.  Bacon,  8  Johns.  485  (1811).    See  Edwards  on  Bills,  147,  281. 

30.  Tappan  v.  Ely,  15  Wend.  363  (1836).  To  same  effect,  see  Bowie  v.  Hume, 
13  App.  (D.  C.)  286. 


§§  153,  154         MEMOIL\NDA    UPON    BILLS   AND    NOTES 


205 


on  the  margin  of  a  note  specifying  no  place  of  payment,  running 
"payable  at  the  Bank  of  America,"  entered  into  its  terms,  and,  bemg 
made  without  the  maker's  consent,  materially  altered  and  avoided 
it.^^  The  like  view  prevailed  as  to  a  memorandum  added  on  the  face 
of  a  note,  "interest  to  be  paid  semi-annually,"  ^^  and  as  to  a  memo- 
randum under  the  maker's  signature,  "the  above  note  to  be  paid 
from  the  profits  of  machines  when  sold."  ^^  And  in  the  last  quoted 
case  it  was  doubted  whether  the  earlier  cases  could  be  regarded  "as 
the  deliberate  adjudications  of  the  Supreme  Court  of  this  State.  "  "' 


>J  34 


§  153.  Memorandum  merely  to  identify  instrument.— If  the 
memorandum  be  intended  merely  to  identify  and  earmark  the  in- 
strument, it  will  not  affect  its  operation;  ^^  and  it  has  been  regarded 
of  this  character  where  it  was  intlorsed  upon  a  note  by  the  payee 
that  he  desired  his  executors  not  to  call  in  the  money  until  three  years 
after  his  death.^^ 

§  154.  Parol  evidence  as  to  memoranda. — It  is  competent  for 
either  party  to  show  by  parol  testimony  the  time  when,  the  person 
by  whom,  and  tiie  circumstances  under  which  a  memorandum  upon 
a  bill  or  note  was  made.  If  made— and  it  will  be  presumed  that 
it  was  made — contemporaneously  with  the  execution  of  the  instru- 
ment, and  as  a  constituent  part  thereof,"  it  will  be  given  full  effect 

31.  Woodworth  v.  Bank  of  America,  19  Johns.  391  (1821),  overruling  same 
oas(>  in  IS  Johns.  31t)  (1S20).    Sec  §  1383. 

32.  Dewcv  V.  Rood,  40  Barb.  17  (1SG3). 

33.  Bono(iict  v.  Cowdon,  49  X.  Y.  390  (1872). 

34.  Benedict  v.  Cowdon,  49  X.  Y.  40.'),  Allen,  J. 

35.  Benedict  v.  Cowdon,  49  N.  Y.  402;  Brill  v.  Crick,  1  M.  &  W.  232;  Fitch 
V.  Jones,  5  El.  &  Bl.  238,  85  Eng.  C  L.;  Byles  on  Bills  (Sharswood's  ed.)  [*94], 
193. 

36.  Stone  v.  Metcalf,  4  Campb.  217. 

37.  Fletcher  v.  Blodgott,  16  Vt.  26.  In  this  case,  memorandum  on  margin 
of  note  was  paj-able  in  merchantable  fulled  cloth  one  month  from  the  month 
of  October  next.  The  note  was  for  $41.50,  payable  one  day  after  date,  with 
interest  annually.  Held,  the  memorandum  was  part  of  the  note,  and  was  to  be 
presumed  to  have  been  made  at  time  of  signing.  Henry  v.  Colman,  5  Vt.  402. 
Condition  written  on  back  of  note  created  as  part  of  it.  Jones  v.  Fales,  4  Mass. 
253.  In  this  case  the  words  [foreign  bills]  were  written  on  the  margin  of  the  note. 
Parsons,  C.  J.,  said:  "It  is  a  reasonable  conclusion  that  these  words  must  all  be 
taken  to  be  the  words  of  the  maker  of  the  note,  written  before  it  was  deUvered 
to  the  promisee."  Tuckerman  v.  Hartwell,  3  Greenl.  147.  In  Harvey  v.  Effinger, 
35  Miss.  552,  a  written  agreement  was  appended  to  or  indorsed  on  the  note  that 
it  was  not  to  be  jxiyablc  until  the  happening  of  a  certain  event.    Smith,  C  J., 


200  MEMORANDA    UPON    BILLS    AND    NOTES  §   155 

as  above  stated;  if  made  after  its  execution  and  with  the  consent  of 
all  parties,  it  will  modify  and  control  its  operation;  and  if  made  by 
a  stranger  without  the  consent  of  any  party,  will  bo  a  spoliation,  and 
be  disregarded;  while,  if  made  by  the  holder  witiiout  consent  of  the 
parties,  it  will  vitiate  and  avoid  it,  being  a  material  alteration.** 
And  when  any  of  these  questions  of  fact  are  raised,  they  are  to  he 
put  in  issue  jukI  tried  by  a  jviry.-'-*  When  the  memorimtlum  is  a  part 
of  the  instrument,  parol  testimony  is  inadmissible  to  alter  or  vary 
its  terms,  as  it  is  part  of  a  written  contract;  '°  and  if  it  be  repugnant 
and  contradictory,  such  evidence  is  inadmissible,  as  it  should  be 
rejected  as  surplusage."" 

§  155.  Although  an  agreement  be  written  upon  the  same  paper 
that  the  note  is  written  on,  and  yet  if  it  be  evident  that  it  was  not 
intended  to  incorporate  the  terms  of  the  agreement  in  the  instru- 
ment itself,  the  tnmsferability  and  negotiability  of  the  instrument 
will  not  be  affected  by  it.  Thus,  where  the  payee  of  a  note,  at  the 
time  of  taking  it,  wrote  underneath  it  an  agreement  to  take  the 
above  note  in  certain  lalx)r  if  done  in  six  months,  there  being  no 
evidence  that  the  promisor  had  ever  performed  or  ofTered  to  per- 
form the  labor,  and  the  six  months  having  expired,  it  was  held  that 

said:  "According  to  the  well-settled  rule  on  the  subject,  the  note  and  the  agree- 
ment constituted  one  instrument."  See  also  Leetls  v.  Lancashire,  5  Maule  &  S. 
25;  ante,  §  151,  note.  Profe.ssor  Parsons  does  not  seem  to  concur  with  the  text. 
He  says  in  vol.  II,  Notes  and  Bills,  p.  .544:  "It  hjis  been  held  that  words  written 
on  the  back  of  a  note  are  no  part  of  the  body  theref)f,  prima  facie,  but  are  pre- 
sumed to  be  done  after  the  note  is  completed."  This  view  is  taken  in  Buy  v. 
Sprader,  50  Mi&s.  330,  where  Simrall,  J.,  says:  "If  such  memoranda  are  at  the 
foot  or  on  the  back  of  the  note  or  other  instrument  when  executed,  they  constitute 
a  part  of  the  contract.  But  being  disconnected  from  the  body  of  the  instrument 
to  which  the  maker's  name  is  signed,  it  forms  no  original  part  of  it,  until  shown 
to  have  been  upon  it  when  executed."  And  when  the  written  memorandum  on 
the  back  of  the  instrument  constitutes  a  part  only  of  the  agreement,  it  is  com- 
petent to  prove  by  parol  the  portion  of  the  agreement  that  wtis  not  reduced  to 
writing.  See  Vickers  v.  Battershall,  84  Hun,  496,  32  N.  Y.  Supp.  314;  Bacon  v. 
Dodge,  G2  Vt.  460,  20  Atl.  197;  Edelen  v.  Worth,  69  Mo.  App.  124,  citing  text; 
Maddox  v.  Wyman,  92  Cal.  674,  28  Pac.  838;  Van  Zandt  v.  Hopkins,  151  III. 
248,  37  N.  E.  845,  citing  text;  ante,  §  131. 

38.  Ibid.;  Dewey  v.  Reed,  40  Barb.  16;  Brill  v.  Crick,  1  M.  &  W.  231;  Morris 
V.  Cain,  39  La.  Ann.  731. 

39.  Makepeace  v.  Harvard  College,  10  Pick.  303. 

40.  HejTVOod  v.  Perrin,  10  Pick.  228. 

41.  Way  V.  Batchelder,  129  Mass.  361.  So  if  it  be  too  indefinite  to  admit  of  con- 
struction.   Krouskop  V.  Shoutz,  51  Wis.  204. 


§  156 


COLLATEKAL   AGREEMENTS  207 


the  two  instruments  were  not  to  be  construed  together  as  parts  of 
the  same  contract,  and  that  an  indorsee  might  recover  on  it  m  his 


42 

own  name. '^ 


SECTION  II 

COLLATERAL   AGREEMENTS 

§  156.  Contemporaneous  agreements.— When  there  is  a  contem- 
poraneous written  contract  aiYccting  the  terms  of  the  bill  or  note,  it  is 
to  be  construed  together  with  the  bill  or  note,  in  so  far  as  each  may  be 
given  effect,  and  there  is  no  repugnancy  between  them;  '^  as  between 

42  Odiorne  v.  Sargent,  6  N.  H.  401.  See  ante,  §§  Gl,  02;  Ewing  v.  Clark,  76 
Mo  545;  American  Gaa  Co.  v.  Wood,  90  Me.  516,  38  Atl.  548. 

43  Commercial  Bank  of  Selma  v.  Crenshaw.  103  Ala.  497,  15  So.  741,  citmg 
the  text;  Ileisler,  Admr.,  etc.  v.  Lyon,  4  Colo.  App.  10,  34  Pac  841;  Montgomery 
V    Hunt,  99  Ga.  499,  27  S.  E.  701;  Montgomery  v.  Hunt,  93  Ga.  438   21  fe^^. 
59-  Heitman  v.  Commercial  Bank  of  Savannah,  6  Ga.  App.  584,  65  S.  E.  590; 
Scimueckle  v.  Waters,  125  Ind.  205,  25  X.  E.  281;  Continental  Ins^  Co.  v.  Dor- 
man   125  Ind.  189,  25  N.  E.  213;  Bundrant  v.  Boyce  (Ind.  App.),  91  N.  E.  908, 
Middaugh  V.  Wilson,  30  Ind.  App.  112,  65  N.  E.  ^55;  McDonald  v.  Huestis   1 
Ind  App  275  27  N.  E.  509;  Brooke  v.  Struthers,  110  Mich.  562,  08  N.  W.  272. 
citing  tex't;  Gr'egory  v.  McCormic,  120  Mo.  057,  25  S.  W.  505;  Lawson  v.  Spencer, 
81  Mo.  App.  109;  Hawes  v.  Mulholland,  78  Mo.  App.  493;  Missouri  T^c.  R  Co^ 
V.  Atkinson,  17  Mo.  App.  494,  citing  the  text;  Talbott  v.  Heinze,  25  Mo^t.  4,  63 
Pac  6'>4-  Fisher  v.  Briscoe,  10  Mont.  124,  25  Pac.  30;  Specht  v.  Beindorf,  56  Nebr. 
553'76  N  W  1059;  Seicroe  v.  First  Nat.  Bank,  50  Nebr.  012,  70  N.  W.  220;  Farr 
V   Nichols   132  N.  Y.  327,  30  N.  E.  834;  Scarsdale  Pub.  Co.— Colonial  Press  v. 
Carter    116  N    Y.  S.  731,  63  Misc.  Rep.  271;  Central  Trust  Co.  v.  New  York 
Equipment  Co.,  74  Hun,  405,  26  N.  Y.  Supp.  850;  Hinsdale  v.  Jerman.  115  N.  C. 
152   20  S.  E.  294;  Montgomery  v.  Page,  29  Greg.  320,  44  Pac.  689;  Bratton  v. 
Lowrv  39  S.  C.  383,  17  S.  E.  832;  Allen  v.IIerrick  Hardware  Co.(Tex.  Civ.  App.  , 
118  S  W  1157;  Gross  v.  Bennington,  52  Wm.h.  417,  100  Pac.  846;  Pagal  v.  Nickel, 
107  Wis  471  83  N.  W.  767.    See  ante,  §  81(i.    Where  a  note  was  given  m  payment 
for  property!  and  at  the  same  time  an  additional  contract  with  an  agent  of  the 
payee  was  made  providing  that  the  purchaser  might  return  the  property  at  any 
time  within  a  specified  time,  in  an  action  on  the  note  the  maker  may  prove  his 
offer  to  deliver  the  property  and  his  readiness  to  do  so  at  any  tune.     Alley  v 
Jesse  French  Piano  &  Organ  Co.,  148  Ala.  303,  42  So.  623.    W  here  by  a  collatera 
contract,  the  payee  of  a  note  agrees  that  on  certain  conditions  upon  maturity  of 
the  note,  he  will  accept  in  payment  a  stipulated  number  of  shares  in  a  certain 
company,  the  option  to  pay  in  stock  must  be  exercised  on  the  day  the  note  matures 
or  the  note  is  payable  thereafter  only  in  money.    Tranter  v.  Hibberd,  108  Ky. 
205  56  S  W.  169.    WTien,  at  the  time  a  note  was  given  in  payment  of  property, 
the  payee  gave  a  receipt  for  the  note  reserving  his  right,  title  and  interest  m  the 
propertv  in  case  the  note  was  not  paid  at  maturity,  the  receipt  wa^  merely  a  res- 
ervation bv  the  seller  of  a  right  to  secure  and  enforce  the  collection  of  the  purchase- 
money  debt  by  a  seizure  or  reprisal  of  the  property  sold.    Vapereau  v.  Holcombe, 


208  MEMORANDA    UPON    BILLS   AND    NOTES  §  156 

the  original  parties  to  the  note,  any  hiwful  condition  annexed  to  it 
by  a  collateral  written  agreement  may  be  recognizi'd  and  enforced," 
and  a  purchaser,  after  maturity,  of  a  negotiable  instrument  would  be 
bound  by  such  an  agreement  when  proven.''^  Thus,  where  a  note  and 
mortgage  were  executed  on  the  same  day  and  an^  parts  of  the  same 
transaction,  they  must  be  construed  together,  '^  and  especially  where  a 

122  Iowa,  400,  98  N.  W.  279.    Where  the  maker  of  a  note,  by  a  separate  agree- 

nicnl,  1)11(1  tho  privilege  of  paying  the  note  l)y  deliveries  of  coal,  if  made  before 
the  maturity  of  the  note,  the  failure  to  satisfy  the  note  by  such  deliveries  before 
maturity  ended  the  privilege,  and  the  payee  could  enforce  payment  in  money. 
McFarlane  v.  York,  ^K)  Ark.  89,  117  S.  W.  773.  Where  the  holder  of  a  note  had 
agreed  that  he  would  not  place  the  notes  in  the  hands  of  an  attorney  for  collec- 
tion or  suit,  i)rovided  he  waa  notified  by  11  o'clock  of  that  day  that  the  money  waa 
ready  to  pay  ofT  said  notes,  this  meant  a  p<'rsonal  notice  that  the  money  waa 
ready,  and  a  notice  about  12  o'clock  that  da}'  that  parties  wanted  to  talk  to  him 
over  the  telejjhone  wius  not  a  compliance  with  the  condition.  Ilonaker  v.  Jones 
(Tex.  Civ.  App.),  115  S.  W.  M9.  A  separate  agreement  signed  by  the  agents  of 
the  payee  of  a  note,  in  their  individual  capacity  and  not  purporting  to  bind  their 
principal,  and  in  fact  made  outside  the  scope  of  their  authority,  is  not  admissible 
in  evidence  to  bind  the  holder  in  an  action  on  the  note.  Thoma.s  v.  H.  C.  Hagley 
<fe  Co.,  119  Ga.  77S,  47  S.  K.  177.  \  written  agreement,  made  by  the  payee  of  a 
promi.ssory  note  with  the  maker  thereof,  evidencing  a  part  of  the  contract  between 
them,  stipulating  that  the  maker  is  never  to  be  sued  on  the  note,  relieves  the 
maker  from  all  liability  upon  the  note;  and  a  subs(>quent  voluntary  promi.se  of 
the  maker  to  pay  the  note,  made  without  consideration,  to  the  executor  of  the 
payee,  is  a  nadum  pactum,  and  not  enforceable.  Monroe  v.  Martin,  137  Ga. 
134,  73  S.  E.  341. 

44.  Goodwin  v.  Nickerson,  51  Cal.  166;  State  Bank  of  Indiana  v.  Cook,  125 
la.  Ill,  100  N.  W.  72  (with  respect  to  acondition  a.s  to  the  payment  of  the  notes); 
Lebanon  Sav.  Bank  v.  Penney  (Minn.),  46  N.  W.  331,  citing  the  text;  Adeu  v. 
Doub,  146  N.  C.  10,  59  S.  E.  162;  Keller  v.  Cohen,  217  Pa.  522,  66  Atl.  862  (that 
the  note  was  to  be  paid  out  of  a  particular  fund);  State  Bank  v.  Burton-Garden, 
14  Utah,  420,  48  Pac.  402;  Solenberger  v.  Gilbert,  86  Va.  778,  11  S.  E.  789.  The 
right  of  the  maker  to  rely  upon  the  contemporaneous  contract  can  be  taken  from 
him  only  by  discounting  the  note  in  bank,  thereby  raising  it  to  the  dignitj'  of  a 
foreign  bill  of  exchange,  as  provided  in  Ky.  St.  §  483.  Tranter  v.  Hibberd,  108 
Ky.  265,  56  S.  W.  169.  Where  an  agreement  was  entered  into  contemporarily  with 
the  execution  of  a  note  that  the  maker  should  not  be  primarily  liable,  and  provide 
affirmatively  how  payment  should  be  made,  and  the  note  was  given  for  appear- 
ances in  order  to  avoid  question  with  the  bank  examiner,  the  maker  of  the  note  is 
not  liable.  National  Bank  of  Kennett  Square  v.  Shaw,  218  Pa.  St.  612,67  Atl.  875. 

45.  Munro  v.  King,  3  Colo.  238. 

46.  Ray  v.  Baker,  165  Ind.  74,  74  N.  E.  619,  holding  that  where  a  mortgage 
securing  a  principal  note  and  coupon  interest  notes  provided  that  the  note  should 
become  due  upon  the  event  of  default  being  made  in  the  payment  of  interest, 
one  who  purchased  the  notes  after  failure  of  the  maker  to  pay  at  maturitj'  the  first 
coupon  interest  note  could  not  be  regarded  as  a  holder  in  good  faith,  as  the  prin- 


§   156  COLLATERAL   AGREEMENTS  209 

note  refers  on  its  face  to  a  mortgage,  the  conditions  and  stipulations 
embodied  in  the  mortgage  must  be  construed  to  enter  into  and  con- 
stitute a  part  of  the  note.^^    So,  where  a  note  is  payable  in  five  years, 
with  interest  at  10  per  cent.,  and  at  the  time  of  its  execution  a  mort- 
gage is  given  to  secure  its  payment,  in  which  it  is  stipulated  that 
interest  shall  be  payable  annually,  the  mortgage  as  between  the 
parties  will  control  the  payment  of  interest;  ^  where  a  mortgage,  given 
as  security  to  a  note,  authorizes  the  mortgagee,  if  he  feels  unsafe  or 
insecure  at  any  time  to  declare  the  note  due  at  his  option,  he  has  the 
right  to  declare  it  due  at  any  time  he  has  reasonable  grounds  for  feel- 
ing unsafe  and  insecure;  "'^  and  when  the  mortgage  contains  a  pro- 
vision rendering  the  note  nonnegotiable,  a  purchaser  of  the  note  is  in 
no  better  position  than  the  payee  named  in  the  note.^    And,  if  there 
be  a  contemporaneous  written  contract  recognizing  the  note,  and 
promising  to  pay  an  additional  sum  on  a  contingency,  for  the  same 
consideration,  it  is  a  good  bargain,  and  merges  all  prior  stipulations,^^ 
and  the  payee  and  maker  of  a  note  may  make  a  separate  agreement 
that  when  the  note  comes  due  the  maker  and  the  payee  may  have  a 
settlement  by  setting  off  certain  claims  against  the  note  which  other- 
wise would  not  be  the  subject  of  set-off.^-    The  time  of  payment,  as 
fixed  in  the  note,  may  be  controlled  by  a  separate  written  agreement 
cipal  note  had  become  absolutely  due  and  payable  before  it  was  transferred. 
See  also  Stoy  v.  Bledsoe,  31  Ind.  App.  G43,  68  N.  E.  907;  Trustees  of  Westminster 
College  V.  Piersol,  IGl  Mo.  270,  61  S.  W.  811;  Bauzer  v.  Richter,  123  N.  Y.  S. 
67S,  68  Misc.  Rrp.  192.    Where  a  promi.ssory  note  provides  that  default  in  the 
payments  of  interest  shall  mature  the  whole  debt,  at  the  option  of  the  holder  and 
a  mortRage  given  to  secure  payment  of  the  note  provides  that  defaults  shall  ma- 
ture the  debt,  but  makes  no  mention  of  an  option  in  the  holder,  the  provision  in 
the  note  will  control.    Kennedy  v.  Gibson,  68  Kan.  612,  75  Pac.  1044. 

47.  Cornish  v.  Woolverton,  32  Mont.  456,  81  Pac.  4,  108  Am.  St.  Rep.  598. 
See  also  ante,  §  51a. 

48.  Muzzy  v.  Knight,  8  Kan.  456.  See  also  Meyer  v.  Graeber,  19  Kan.  165; 
Dobbins  v.  Parker,  46  Iowa,  358;  post,  §  835;  Clark  v.  Jones,  93  Tenn.  639,  42  Am. 
St.  Rep.  931,  27  S.  W.  1009;  Evans  v.  Baker,  5  Kan.  App.  68;  Phelps  v.  Mayers, 
126  Cal.  549,  58  Pac.  1048.    Contra,  Keys  v.  Lardner,  55  Kan.  331,  40  Pac.  644. 

49.  Warren  v.  Osborn  (Tex.  Civ.  App.),  97  S.  W.  851. 

60.  Allen  v.  Dunn,  71  Nebr.  831,  99  N.  W.  6S0. 

61.  Fiske  v.  Williams,  4  App.  Div.  488,  38  N.  Y.  Supp.  899;  Stutts  v.  Strayer, 
60  Ohio  St.  384,  54  N.  E.  368,  71  Am.  St.  Rep.  723;  Cuthbert  v.  Bowie,  10  Ala. 
163.  Where  two  rent  notes  were  given  on  an  agreement  that  one  was  to  be  paid 
in  cash  and  the  other  in  services  to  be  performed  on  the  farm,  such  work  to  be 
designated  by  the  lessor,  the  lessor  could  not  defeat  this  part  of  the  agreement 
by  refusing  to  designate  work  and  recover  money  payment  on  the  note.  Hume 
V.  Hale,  146  Mo.  App.  659,  125  S.  W.  871  (1910). 

62.  McGuiness  v.  Kyle,  94  N.  E.  700,  208  Mass.  443. 

14 


210  MEMOItANDA    UPON    BILLS    AND    NulKb  §   15G 

made  at  the  time  of  the  execution  of  the  note,  which  will  bind  sub- 
sequent parties  with  notice  of  the  agreement.^' 

Tlic  foregoing  must  1)0  understood  as  fully  recognizing  the  principle 
that  any  agreement  between  the  payee  and  the  maker  of  a  note  not 
written  on  its  face  could  not  affect  a  bona  fide  indorsee  for  value,  and 
without  notice,""'  though  it  would  be  binding,  of  course,  upon  an  in- 
dorsee having  notice." 

63.  Supporting  the  principle  announced  in  the  text,  see  Leach  v.  Hill,  160 
Iowa,  171,  76  N.  W.  667;  Miihtuska  County  Hank  v.  Christ,  82  Iowa,  56,  47  N.  W. 
886;  Jacobs  v.  Mitchell,  46  Ohio  St.  «>().'>;  C.huw  v.  Adone  &  Lobit,  39  Tex.  Civ. 
App.  21,  86  S.  W.  79S.  A  note  payable  "one  day  after  date,"  but  made  together 
with  an  agreement  that  the  note  ia  not  to  become  due  until  certain  state  land  is 
awarded  to  the  maker  after  making  the  proper  ai)|)lication  therefor,  is  due  as 
soon  as  the  land  is  awarded  to  the  maker  of  the  note  as  a  purchaser,  regardless 
of  when  he  made  the  application,  or  when  the  land  was  placed  upon  the  market 
for  sale  to  actual  purchasers.  Taylor  v.  McFatter  (Tex.  Civ.  App.),  109  S.  W. 
395  (1908).  Where  citizens  of  a  city  subsidized  the  establishing  and  carrying  on  of 
a  business,  and  for  the  money  advanced  by  them  the  manufacturer  gave  his  note 
due  in  ten  years,  to  be  credited  jus  paid  on  the  note  with  one  tenth  of  the  amount 
paid  each  year  for  labor,  a  collateral  contract  referred  to  in  the  note  providing 
that  the  balance  due  upon  the  note  should  becone  due  and  payable  on  the  aban- 
donment or  permanent  stopping  of  the  operation  of  the  plant,  the  note  has  be- 
come due  and  payable  when  there  has  been  a  voluntary  stopping  of  all  active 
operation  of  the  plant  continuing  for  nearly  two  years  without  prospect  of  change. 
Castle  v.  Logan,  140  Fed.  707. 

64.  First  Nat.  Bank  v.  Alexander,  152  Ala.  585,  44  So.  866;  Bothell  v.  Fletcher 
&  Stobaugh,  94  Ark.  100,  125  S.  VV.  645;  Edmonston  v.  Ascough,  43  Colo.  55,  95 
Pac.  313;  First  Nat.  Bank  v.  Mineral  Farm  Consol.  Min.  Co.,  17  Colo.  App.  452, 
68  Pac.  981;  Mater  v.  The  American  Nat.  Bank  of  Denver,  8  Colo.  App.  325; 
46  Pac.  221;  Wilkes  v.  Pope,  4  Ga.  App.  36,  60  S.  E.  823;  Beattyville  Bank  v. 
Roberts,  117  Ky.  689,  78  S.  W.  901;  Black  v.  First  Nat.  Bank,  96  Md.  399,  54 
Atl.  88;  Hunter  v.  Johnson,  119  Mo.  App.  487,  94  S.  W.  311,  citing  text;  Hodges 
V.  Shuler,  24  Barb.  68;  Heinbach  v.  Doubleday,  Page  &  Co.,  114  N.  Y.  S.  278, 
130  App.  Div.  34;  Higgins  v.  O'Donnell,  22  N.  Y.  Supp.  610,  68  Hun,  100.  While 
an  accommodation  maker  can  impose  any  restrictions  upon  the  use  of  accommo- 
dation paper  that  he  may  see  fit  at  the  time  it  is  issued,  still,  unless  such  restric- 
tions are  wTitten  upon  the  paper  or  otherwise  brought  to  the  knowledge  of  the 
transferee  for  value  before  he  has  purchased  the  paper,  such  restrictions  constitute 
no  defense  to  the  paper.  Keenan  v.  Blue,  240  111.  177,  78  N.  E.  553.  An  accom- 
modation indorser  of  a  note,  who  paid  full  value  for  the  note  before  maturity  is 
not  affected  by  a  written  agreement  between  the  maker  and  the  paj'ee  under  the 
terms  of  which  the  note  had  been  given,  when  such  purchaser  had  no  knowledge 
of  the  agreement  at  the  time  of  indorsement,  in  the  absence  of  bad  faith.  Aldrich 
V.  Peckham,  74  N.  J.  L.  711,  68  Atl.  345.  Sureties  cannot  show,  by  parol,  that 
the  payee  of  a  note  told  them  when  they  signed  that  he  would  not  require  them 
to  pay  the  note.    Altman  v.  Anton,  91  Iowa,  612,  60  N.  W.  191. 

65.  Johnson  County  Savings  Bank  v.  Redfearn,  141  Mo.  App.  386,  125  S.  W. 


§  157  COLLATERAL   AGREEMENTS  211 

§  157.  Subsequent  agreements. — After  a  bill  or  note  has  been 
executed  and  delivered,  it  is  a  subject  of  contract  like  any  other  prop- 
erty or  chose  in  action;  ^^  and  evidence  therefore  will  be  admitted  to 
show  a  subsequent  bargain  upon  a  good  consideration  to  extend  the 
time  of  payment, ^^  or  an  agreement  that  payment  might  be  made  to 

224.  Even  if  a  payee  did  promise  not  to  negotiate  or  transfer  the  note,  this  would 
not,  alone,  afford  a  defense  against  a  purchaser  with  notice,  unless  it  should  also 
be  found  that  the  maker  also  had  a  defense  to  it  as  against  the  payee.  State  Bank 
of  Indiana  v.  Mentzer,  125  Iowa,  101,  100  N.  W.  09.  Where  a  negotiable  promis- 
sory note  was  executed  in  payment  of  the  premiums  on  some  life  insurance  policies, 
and  at  the  time  of  the  delivery  of  the  note  to  the  payee,  who  was  agent  for  the  in- 
surance company,  the  payee  executed  a  written  agreement  that  if  the  maker  of  the 
note,  within  a  stipulated  time,  investigated  the  company  and  found  it  not  satis- 
factory- or  as  represented,  the  note  or  the  amount  thereof  in  ca.sh  would  be  refunded 
to  the  maker  by  the  payee,  it  was  held  that  the  contemporaneous  agreement  did 
not  constitute  the  delivery  of  the  note  a  conditional  delivery  or  deny  to  the  payee 
the  right  to  transfer  the  same,  and  that  one  who  purchased  the  note  in  due  course 
of  business,  before  maturity,  for  a  valuable  consideration,  could  recover  in  an 
action  thereon,  although  at  the  time  of  the  transfer  he  had  notice  of  the  contem- 
poraneous agreement,  a.s  the  refund  of  the  note  might  be  made  by  a  refund  of 
the  amount  paid  or  by  return  of  the  note.  Farmers'  Bank  of  Roff  v.  Nichols,  25 
Okl.  547,  100  Pac.  834,  138  Am.  St.  Rep.  931.  The  burden  of  proof,  as  to  a  col- 
lateral agreement  that  a  note  should  be  paid  only  out  of  the  proceeds  of  a  certain 
estate,  is  upon  the  maker  to  show  that  notice  of  the  agreement  reached  an  lussignee 
before  he  paid  in  full  for  the  note  the  sum  for  which  he  bought  it.  Norlin  v. 
Becker,  138  111.  App.  488.  The  maker  of  a  negotiable  note  which  on  its  face 
purports  to  be  for  value  received,  and  negotiated  before  maturity,  cannot  escape 
liability  upon  what  is  at  most  a  mere  guess  that  the  purchaser  had  knowledge 
at  the  time  of  the  purchase  of  an  agreement  between  the  maker  and  the  payee. 
Heinbach  v.  Doubleday,  Page  &  Co.,  114  N.  Y.  S.  278,  130  App.  Div.  34. 
66.  Heaton  v.  Myers,  4  Colo.  63. 

57.  Solomons  v.  Jones,  3  Brev.  54;  Moffatt  v.  Blake,  145  Fed.  40;  Bell  v.  San 
Francisco  Savings  Union,  153  Cal.  64,  94  Pac.  225;  Drake  v.  Pueblo  Nat.  Bank,  44 
Colo.  49,  96  Pac.  999  (as  to  the  consideration  of  an  unrecorded  United  States 
patent  to  land  issued  to  and  standing  in  the  name  of  the  maker— held  sufficient); 
Abraham  Lincoln  Building  &  Homestead  Ass'n  v.  Zuelk,  124  111.  App.  109;  Lahn 
v  Koep  139  la.  349,  115  N.  W.  877;  Fisher  v.  Stevens,  143  Mo.  181,  44  S.  W.  769, 
text  chU;  Commercial  Bank  v.  Nart,  10  Wash.  303,  38  Pac.  1114.  A  mere  re- 
quest for  an  extension  is  not  sufficient.  Woolwine  v.  Storrs,  148  Cal.  7,  82  Pac. 
434,  113  Am.  St.  Rep.  183.  Where  the  parties  entered  into  a  mutual  oral  agree- 
ment whereby  the  defendant  bound  himself  to  keep  the  money  and  pay  interest 
thereon  for  a  specified  time  beyond  the  written  date  of  its  maturity,  and  the 
plaintiff  extended  the  time  of  payment  for  the  period  agreed  upon,  such  mutual 
promises  were  a  sufficient  consideration,  each  for  the  other.  Lahn  v.  Koep,  139 
la.  349,  115  N.  W.  877  (1908).  Where  an  extension  of  time  was  agreed  upon  for  a 
period  of  two  months  at  a  charge  of  $50  for  each  of  the  two  months  in  addition  to 
the  regular  interest  named  in  the  note,  the  agreement  for  the  additional  charge  re- 


212  MEMORANDA    UPON    BILLS   AND    NOTES  §  158 

a  third  person,^  or  that  the  contract  for  which  the  paper  was  given 
has  been  rescinded,  and  thus  the  consideration  failed. ^°  But  where  a 
note  contains  a  stipulation  to  the  effect  tliat  the  makers  agreed  to 
waive  notice  of  protest  and  extension  of  time,  it  cannot  be  shown  that 
after  the  note  was  signed  the  payee  agreed  to  collect  it  at  maturity, 
when  no  consideration  was  shown  for  such  an  agreement.^ 

§  158.  Discharge  by  subsequent  agreement. — Where  there  is  an 
agreement  sul)S('(iueut  to  the  execution  of  the  instrument,  upon  a 
valid  consideration,  to  do  or  receive  something  else  for  and  instead 
of  the  note,  and  such  agreement  has  been  actually  carried  out,  it 
operates  as  a  discharge  of  the  instrument,  and  there  can  be  no  re- 
covery upon  it.^'  But  if  the  agreement  be  still  executory,  it  has  been 
held  that  it  must  be  enforced  in  another  suit.  Thus,  a  defense  to  a 
note  payable  in  one  year,  that  an  oral  collateral  agreement  provided 
that  payment  should  not  be  demanded  until  the  expiration  of  five 
years,  is  no  bar  to  a  suit  brought  before  the  lapse  of  five  years.^^  So, 
where  the  payee  of  a  note,  who  had  sold  a  certain  article,  warranted 
it,  and  promised,  if  bad,  to  furnish  a  duplicate  befori-  the  note  should 
be  paid,  it  was  held  no  defense  to  the  note.^^  Peculiar  statutes  may, 
in  some  States,  change  these  common-law  principles. 


lated  only  to  the  two  months,  and  not  to  such  further  time  in  excess  of  the  two 
months  as  the  payee  might  voluntarily  refrain  from  suing  on  the  note.  Rowland 
V.  Watson,  4  Cal.  App.  176,  88  Pac.  49.5  (1906).  It  is  not  necessary  that  in  order  to 
make  an  agreement  for  an  extension  of  time  valid  the  time  should  have  been  ex- 
tended for  some  definite  period,  as  between  the  parties.  Drake  v.  Pueblo  Nat. 
Bank,  44  Colo.  49,  96  Pac.  999;  see,  post,  §  1319,  as  to  definiteness  of  period  to  re- 
lease sureties.  But  the  agreement  being  independent  of  and  collateral  to  the  origi- 
nal contract,  such  extension  does  not  continue  the  commercial  characteristics  of 
the  note  as  live  immatured  negotiable  paper.  Swan  v.  Craig,  73  Nebr.  182,  102 
N.  W.  471,  citing  text  to  the  general  proposition. 

58.  Low  V.  Treadwell,  12  Me.  441. 

59.  Allen  v.  Furbish,  4  Gray,  504;  Newton  v.  Jackson,  23  Ala.  335;  Rogers  v. 
Bedell,  97  Tenn.  240,  36  S.  W.  1096,  cited  in  note  10  to  §  813. 

60.  First  Nat.  Bank  of  Milan  v.  Wells,  98  Mo.  App.  573,  73  S.  W.  293. 

61.  Crossman  v.  Fuller,  17  Pick.  171.  As  illustrative  of  the  general  doctrine  of 
the  text,  see  Steven  v.  Lord,  84  Hun,  353,  32  N.  Y.  Supp.  309. 

62.  Dow  v.  Tuttle,  4  Mass.  414;  2  Parsons  on  Notes  and  Bills,  530,  531 .  Contra, 
Grafton  Bank  v.  Woodward,  5  N.  H.  99;  Erwin  v.  Saunders,  1  Cow.  249. 

63.  Kelso  V.  Frye,  4  Bibb,  493.  It  has  also  been  held  in  New  York,  that  where 
a  promissory  note  is  given  for  a  proper  consideration,  and  an  oral  agreement  that 
it  shall  not  be  collected,  or  that  its  payment  shall  not  be  enforced,  is  entirely 
nugatory,  and  an  action  may  be  maintained  upon  the  note  when  it  becomes  due, 


§  159  COLLATERAL   AGREEMENTS  213 

§  159.  Agreements  to  renew. — An  agreement  to  renew  a  bill  or 
note  would  be  binding,''*  but  unless  it  otherwise  expressed  the  num- 
ber of  times  of  renewal,  it  would  be  construed  as  an  agreement  to 
renew  once  only.^^  If  contemporaneous  with  the  execution  of  the 
instrument,  such  agreement  would  not  be  bindmg  unless  in  writing, 
for  the  reason  that  it  would  contradict  the  terms  of  a  written  contract, 
and  parol  evidence  for  that  purpose  is  inadmissible.  But  if  after  the 
note  is  made,  such  agreement,  though  oral,  would  be  binding  if  for  a 
consideration.*'''  In  an  action  on  a  note  payable  in  ninety  days  from 
date,  but  containing  on  its  face  a  provision  that  if  the  maker  pay  one- 
half  the  note,  and  the  interest  on  the  other  half,  in  advance,  for  ninety 
days,  the  payment  of  that  half  should  be  extended  for  that  further 
length  of  time — it  should  be  described  according  to  its  terms  in  a 
declaration,  and  a  description  of  it  as  payable  in  ninety  days  from 
date  would  be  a  variance.^^  But  if  the  agreement  for  extension  or 
renewal  were  on  a  separate  paper,  it  should  not  be  noticed  in  the 
declaration.^^  In  England  it  has  been  held  that  when  there  has  been 
a  valid  subsequent  agreement  for  renewal,  the  defendant  must  show 
that  he  applied  for  a  renewal,  or  the  plaintiff  will  prevail.^^ 


notwithstanding  such  promise.    See  Mead  v.  National  Bank  of  Pawling,  89  Hun, 
102,  34  N.  Y.  Supp.  1054. 

64.  Inncs  v.  Munro,  1  Exch.  473.  But  an  offer  to  renew,  not  accepting  before 
suit  filed,  would  not  constitute  agreement  to  renew.  Albertype  Co.  v.  Kent  & 
Stanley  Co.,  19  R.  I.5G1. 

65.  Inncs  v.  Munro,  1  Exch.  473. 

66.  Grafton  Bank  v.  Woodward,  5  N.  II.  99;  Fleming  v.  Gilbert,  3  Johns.  520; 
Hoare  v.  Graham,  3  Campb.  57;  Gibbon  v.  Scott,  2  Stark.  286.  Compare  Ellis  v. 
Randle,  24  Tex.  Civ.  App.  475;  Wolz  v.  Parker,  134  Mo.  458,  35  S.  W.  1149; 
Commercial  Bank  v.  Wood,  52  Mo.  App.  214;  American  Nat.  Bank  v.  Love,  62 
Mo.  App.  378;  Ilonehan  v.  Hast,  127  Cal.  656;  New  London  Credit  Syndicate  v. 
Neale,  2Q.  B.  487  (1898). 

67.  Woodstock  Bank  v.  Downer,  27  Vt.  482;  Barnard  v.  Gushing,  4  Mete. 
(Mass.)  230. 

68.  Smalley  v.  Bistol,  1  Mich.  153. 

69.  Gobbin  v.  Scott,  2  Stark.  286. 


CHx\PTEH  VTT 

CONSIDERATION    OF    NEGOTIABLE    INSTRUMENTS 

§  160.  By  consideration  is  meant  a  benefit  or  gain  of  some  kind 
to  the  party  making  the  promise,  or  a  loss  or  injury  of  some  kind  to 
the  party  to  whom  it  is  made.  By  the  common  huv  a  jiromise  made 
without  consideration  was  invahd,  and  in  orch'r  to  enforce  any  con- 
tract it  was  necessary  to  aver  and  prove  a  consideration. 

The  most  ancient  exception  to  this  rule  was  made  in  reference  to 
promises  under  seal,  the  solemn  act  of  the  party  in  attaching  a  seal 
to  the  evidence  of  his  contract  being  regarded  as  importing  a  consider- 
ation and  estopping  him  from  denying  it.  The  necessities  of  trade 
soon  produced  another  relaxation  of  the  rule;  and  by  the  usage  and 
custom  of  merchants,  bills  of  exchange  and  promissory  notes  came  to 
be  regarded  as  prima  facie  evidences  of  consideration;  and  peculiar 
qualities  were  accorded  to  them  which  were  possessed  by  no  other 
securities  for  debt.  These  qualities,  so  far  as  they  relate  to  the  con- 
sideration of  such  instruments,  we  propose  now  to  discuss. 

SECTION  I 

WHAT   INSTRUMENTS   IMPORT   A    CONSIDERATION 

§  161.  There  is  no  doubt  that  if  the  instrument  sued  on  be  a  bill 
of  exchange— although  it  lacks  the  words  "payable  to  order,"  or 
"bearer,"  which  are  essential  to  its  negotiability — it  is  unnecessary 
to  aver  or  prove  a  consideration,  for  it  imports  a  consideration  in 
itself  by  the  very  fact  that  it  is  a  bill  of  exchange.^    But  if  it  is  shorn 

1.  Averett's  Admr.  v.  Booker,  15  Gratt.  169  (1859);  Josceline  v.  Lassere,  10 
Mod.  294,  317  (1714);  Haydock  v.  Lynch,  2  Ld.  Raym.  1563;  Louisville  R.  Co.  v. 
Caldwell,  98  Ind.  251,  citing  the  text;  Cowan  v.  Hallack,  9  Colo.  576,  citing  the 
text;  Dalrymple  v.  Wyker,  60  Ohio  St.  108,  53  X.  E.  713;  Cox  v.  Sloan,  158  Mo. 
411,  citing  text;  Milino  Nat.  Bank  v.  Cobbs,  (Tex.  Civ.  App.)  128  S.  W.  151. 
Where  an  order  drawn  by  a  debtor  for  his  creditor  on  a  third  person  was  accepted, 
it  does  not  matter  that  there  was  no  consideration  passing  to  the  acceptor,  when 
the  creditor  relied  on  the  acceptance,  paying  no  further  attention  to  the  debtor, 
and  while  doing  so  the  debt  became  barred.  Chattanooga  Grocery  Co.  v.  Liv- 
ingston, (Tenn.  Ch.  App.)  59  S.  W.  470  (1900).    Where  an  owner  of  property 

214 


§  161        WHAT   INSTRUMENTS    IMPORT   A    CONSIDERATION  215 

of  its  character  as  a  bill  of  exchange  by  being  made  payable  out  of  a 
particular  fund,  or  upon  a  condition,  or  in  a  different  medium  than 
money,  it  does  not,  per  se,  import  a  consideration.  And  consideration 
must  be  averred  and  proved;  -  unless  it  be  stated  on  its  face  that  it 
was  given  for  "value  received,"  or  some  equivalent,  or  there  are  ex- 
pressions in  it  inconsistent  with  any  other  theory  than  that  upon  a 
consideration,  in  which  cases  it  would  be  prima  fade  evidence  of 
consideration.^  If  its  terms  are  just  as  consistent  with  the  existence 
of  consideration  as  they  are  with  the  theory  of  a  total  want  thereof, 
for  instance,  a  draft  addressed  to  "the  trustee  of  N.  and  A.,"  directing 
the  payment  of  a  sum  "out  of  any  money  in  his  hands  belonging  to 
me,"— it  would  not  afford  such  a  legal  presumption  of  consideration 
as  to  dispense  with  proof  of  it.^  If  an  order  be  so  drawn  as  to  imply 
that  the  drawee  has  funds  in  his  hands  to  meet  it,  acceptance  of  it 
is  an  admission  of  the  funds  in  hand  and  their  sufficiency.^ 

accepted  an  order  for  a  certain  amount  drawn  by  a  contractor  in  favor  of  a  mate- 
rial man,  and  the  owner  has  paid  a  part  of  the  order,  the  balance  of  the  order  can- 
not be  recovered,  when  the  drawee  never  credited  the  drawer  with  the  amount  of 
the  order,  or  any  part  of  it,  except  aa  it  was  paid,  when  the  order  was  accepted  un- 
der the  mistaken  belief  that  the  amount  covered  all  liens  and  claims  against  the 
property,  and  the  contract  price  has  been  fully  paid.  Canady,  Gillium  &  Key  v. 
Webb  (Ky.),  80  S.  W.  172. 

2.  Averett's  Admr.  v.  Booker,  supra;  Atkin.son  v.  Manks,  I  Cow.  691;  De 
Forest  v.  Frary,  6  Cow.  151;  Belderback  v.  Burlingame,  27  111.  338,  order  payable 
"in  lumber";  Josceline  v.  Lassere,  10  Mod.  294,  317  (1714);  Haydock  v.  Lynch, 
2  Ld.  Raym.  1563:  1  Robinson's  Practice  (new  ed.),  143. 

3.  Averett's  Admr.  v.  Booker,  15  Gratt.  169;  Frank  v.  Irgens,  27  Minn.  43; 
1  Parsons  on  Notes  and  Bills,  226,  228,  note.  See  Joliffe  v.  Higgins,  6  Munf.  3; 
Booth  v.  Dexter  Fire  Engine  Co.,  118  .\la.  369,  24  So.  40.5.  In  an  action  by  the 
holder  against  the  drawer  of  a  domestic  bill  of  exchange  which  has  been  dis- 
counted at  a  bank,  evidence  showing  the  drawing  of  the  bill  and  the  failure  of  the 
drawee  to  accept,  or  a  failure  on  the  part  of  the  acceptor  to  pay  according  to  the 
tenor  of  the  bill,  makes  a  prima  fade  case,  and  any  matter  relied  upon  to  dis- 
charge the  drawer  must  be  set  up  by  way  of  defense.  Bank  of  Ricliland  v.  Nichol- 
son, 120  Ga.  622,  48  S.  E.  240.  . 

4.  Averett's  Admr.  v.  Booker,  15  Gratt.  170,  Lee,  J.,  saying:  '  Taking  all 
the  terms  of  the  paper  together  they  are  at  least  consistent  with  the  theory  of  the 
absence  of  all  considerations,  as  they  are  with  that  of  any  value  received.  The 
terms  of  the  order  would  admit  equally  well  of  several  different  constructions. 
The  drawer  might  have  known  that  he  ha^i  ju-st  such  a  sum  in  the  hands  of  the 
drawee,  and  intended  merely  to  give  authority  to  the  latter  to  deliver  the  same  to 
the  payee  for  him;  or  without  knowing  whether  the  trustee  had  received  funds 
for  him  or  not,  might  have  merely  given  the  order,  if  he  had,  to  authorize  the 
payee  to  receive  them  for  him  as  agent." 

5.  Vamer  v.  Nobleborough,  2  Greenl.  123;  Maber  v.  Massias,  2  Bl.  Rep.  1072. 


210  CONSIDERATION    OK    NKCJOTIABLE    INSTUl'MENTS  §   ir,2 

§  162.  At  common  law  an  action  of  debt  cannot  i)e  sustained  upon 
a  promissory  note,  as  of  itself  importinp;  a  debt;  hut  the  plaintiff 
must  declarer  upon  the  contract  as  in  assumpsit,  antl  must  both  aver 
and  prove  a  valuable  consideration.  And  the  note,  though  it  could 
not  be  declared  on,  might  be  given  in  evidence  in  support  of  the  con- 
tract stated,  as,  for  instance,  on  account  for  money  lent.*'  One  effect 
of  the  English  statute  of  Anne,  which  has  been  quoted,'  was,  that  an 
action  of  debt  might  be  maintained  on  a  promis.sory  note  without 
alleging  a  consideration,  and,  of  consequ(^nce,  without  proving  any,** 
that  is  to  say,  that  a  negotiable  note  implies  or  imports  a  valid  con- 
sideration,^ and  there  is  a  presumption  in  favor  of  its  sufficiency,'" 
and,  consequently,  that  the  production  of  a  negotiable  note  makes  a 
prima  facie  case."    And  such  is  the  effect  of  all  statutes  whidi  make 


6.  Pensley  v.  RoatwriRht,  2  LciRh,  198  (1S,30);  Jackson  v.  Jackson,  10  LciRh, 
4r^2  (1S30);  Rmirno  v.  Wjml,  51  Mr.  191;  Bristol  v.  Warner,  19  Conn.  7;  Hirclo- 
biick  V.  Wilkins,  22  Pa.  St.  20;  Clarke  v.  Martin,  2  Ld.  Raym.  757;  Story  v. 
Atkins,  2  1x1.  Raym.  H'MV,  Trier  v.  HridKnian,  2  Eiust,  359. 

7.  Afite,  §  5. 

8.  Peasley  v.  Boatwright,  2  Lc'iRh,  19S;  Sprague  v.  SpraKUe,  80  Hun,  285,  30 
N.  Y.  Supp.  1C)2;  Wootl  v.  Flancry,  89  Mo.  App.  G32,  citing  text;  Alexander  v. 
Munroe,  54  Or.  500,  101  Pac.  903,  103  Pac.  514.  Where  promissory  notes  were 
executed  and  delivered  in  due  form,  it  does  not  follow  that  they  are  without  con- 
eideralion  when  a  collateral  written  contract  wius  not  properly  execute<l  and  is  of 
no  force  or  validity.  Owen.s  v.  National  Hatchet  Co.,  147  la.  393,  121  N.  W. 
107G. 

9.  Rogers  v.  Rogers,  G  Pcnne.  (Del.)  2G7,  GO  Atl.  374  (until  the  contrary  appears 
from  the  evidence) ;  Ellison  v.  Simmons,  G  Penne.  (Del.)  2(XJ,  Go  Atl.  591;  Being  v. 
Bank  of  Kingston,  5  Ga.  App.  578,  G3  S.  E.  G52;  Zimbleman  &  Otis  v.  Einnegan, 
141  Iowa,  358,  118  N.  W.  312;  Dawson  v.  Womhles,  123  Mo.  App.  340,  100  S.  W. 
547;  Niles  v.  Unit<Ml  States  Ozocerite  Co.,  38  Utah,  .307,  113  Pac.  1038. 

10.  Moore  v.  Gould,  151  Cal.  723,  91  Pac.  GIG;  Keating  v.  Morrissey,  6  Cal. 
App.  1G3,  91  Pac.  G77;  Woodworth  v.  Veitch,  29  Ind.  App.  ,589,  64  N.  E.  932; 
Power  v.  Hambrick  (Ky.),  74  S.  W.  6G0;  Musscy  v.  Dempsey,  113  N.  Y.  S.  271, 
60  Misc.  317;  Hicok  v.  Bunting,  86  N.  Y'.  S.  1059,  92  App.  Div.  1G7.  Though  a 
note  docs  not  contain  the  recital  "for  value  received,"  yet  when  it  is  negotiable  in 
form  there  is  a  presumption  that  such  a  note  is  based  upon  a  consideration. 
Taylor  v.  Taylor's  Estate,  138  Mich.  658,  101  N.  W.  832.  The  giving  of  a  check 
is  presumptive  evidence  of  the  payment  of  a  debt.  Meyer  v.  Doherty,  133  Wis. 
398,  113  N.  W.  671  (1907).  Metal  checks  issued  by  an  employer  and  containing 
a  promise  to  pay,  are  presumed  to  be  based  on  an  adequate  consideration.  Ken- 
tucky Coal  Mining  Co.  v.  Mattingly,  133  Ky.  526,  118  S.  W.  350. 

11.  Brown  v.  Johnson  Bros.,  135  Ala.  608,  33  So.  683;  Martin  v.  Foster,  83 
Ala.  213,  3  So.  422;  Creditors'  Union  v.  Lundy,  16  Cal.  App.  567,  117  Pac.  624; 
McMickeir  v.  Safford,  100  111.  102,  affirmed  197  111.  540,  64  N.  E.  540;  Harper 
V.  Davis,  115  Md.  349,  SO  Atl.  1012. 


§  163        WHAT   INSTRUMENTS    IMPORT   A    CONSIDERATION  217 

promissory  notes  negotiable/-  or  which  authorize  actions  of  debt 
upon  them  though  nonnegotiable.  But  such  notes  as  are  not  ne- 
gotiable by  statute,  or  upon  which  no  action  of  debt  is  authorized 
by  statute,  remain  as  at  common  law;  and  not  importing  a  considera- 
tion, it  must  be  alleged  and  proved. ^^ 

§  163.  These  general  principles  are  affected  more  or  less  by  statutes 
in  the  United  States,  and  it  has  been  said  by  a  learned  author  that  the 
only  conclusion  to  which  he  is  led  by  the  authorities  respecting  non- 
negotiable  notes  is  that  in  some  of  the  States  the  "presumption  of 
consideration  would  be  denied,  and  in  others,  perhaps  admitted."  ^^ 
It  is  quite  certain  however  that  the  transferee  of  a  nonnegotiable 
instrument  can  stand  on  no  better  footing  respecting  the  original 
parties  than  his  transferrer,  and  that  the  consideration  may  be  in- 
quired into,  though  "value  received"  is  expressed. ^^  Whenever  a 
note  is  expressed  to  be  "for  value  received,"  or  states  a  consideration, 
it  is  prima  facie  evidence  of  consideration,'^  though  it  may  not  be 
negotiable,  and  whether  it  be  payable  in  money  or  specific  articles.'^ 

12.  Glasscock  v.  Glasscock,  66  Mo.  627;  Camwright  v.  Gray,  127  N.  Y.  92, 
27  N.  E.  835,  24  Am.  St.  Rpp.  424,  citing  text. 

13.  Peaslcy  v.  Boatwright,  supra,  Averett's  Admr.  v.  Booker,  1.5  Gratt.  165; 
Courtnoy  v.  Doylo,  10  Allen,  12.3.  In  this  case  the  note  ran,  "I  promi.se  to  pay 
A.  B.  three  hundred  dollars  with  interest  from  date  (signed)  C.  D."  Held,  that 
consideration  must  be  averred  and  proved. 

14.  1  Parsons  on  Notes  and  Bills,  227.  In  Kimball  v.  Huntington,  10  Wend. 
675,  a  note  running,  "Due  A.  B.  $.325  payable  on  demand,"  was  held  to  import 
consideration.  In  the  ca.se  of  Mortimer  v.  Chambers,  63  Hun,  3.35,  17  N.  Y. 
Supp.  874,  held,  that  a  nonnegotiable  note  im[X)rts  a  consideration,  as  against 
a  devisee  and  its  production  makes  a  jrrima  facie  ease  against  him,  the  court  saj'- 
ing:  "We  have  examinetl  the  statute  and  the  authorities  cited  but  find  nothing 
in  them  which  sustained  the  \iew  contendetl  for.  And  in  Carnright  v.  Gray,  57 
Hun,  518,  11  N.  Y.  Supp.  278,  it  was  held  that  a  nonnegotiable  note  imported  a 
consideration  as  against  the  executors  of  the  deceased  maker  as  well  as  the  maker 
himself.  If  the  question  were  a  new  one,  we  should  be  inclined  to  adopt  the  view 
expressed  by  Learned,  J.,  in  the  ver>'  able  and  exhaustive  dissenting  opinion  which 
he  wrote  in  that  case,  and  held  that  a  nonnegotiable  note  does  not  import  a  con- 
sideration against  anybody.  But  that  case  holds  to  the  contrary,  and  there  is 
other  authority  to  the  same  effect." 

15.  Chamberlain  v.  Gorham,  20  Johns.  144;  1  Parsons  on  Notes  and  Bills, 
228;  Edwards  on  Bills,  217.  See  Gardner  v.  Walsh,  95  Mich.  505,  55  N.  W.  355; 
Fink  v.  Chambers,  95  Mich.  508,  55  N.  W.  375. 

16.  Redding  v.  Redding,  69  Vt.  503,  38  Atl.  230. 

17.  Walrad  v.  Petrie,  4  Wend.  575;  Bourne  v.  Ward,  51  Me.  191;  Edwards  on 
Bills,  210;  1  Parsons  on  Notes  and  Bdls,  226;  Noyes  v.  Smith,  2  New  Eng.  Rep. 
705;  Frank  v  Irgens,  27  Minn.  43.    Competent  to  show  other  and  additional  con- 


218  CONSIDERATION    OF   NEGOTIABLE   INSTRUMENTS         §  163 

The  plaintiff  may  rely  upon  the  strength  of  this  presumption,  but  if, 
anticipating  an  attack  upon  the  consideration,  he  should  fail  to  es- 
tablish it  affirmati\ely,  he  will  be  no  longer  aided  by  the  statement 
which  the  instrument  contains.  ^^  The  transferee  of  a  nonnegotiable 
note  must  aver  and  prove  consideration  for  the  transfer.  ^^ 

Under  Negotiable  Instrument  statute.— Under  the  express  terms  of 
the  statute,  every  negotiable  instrument  is  deemed  prima  fade  to 
have  been  issued  for  a  valuable  consideration;-"  such  presumption 
arises  though  there  is  no  recital  of  a  valuable  consideration  therein,-^ 
and  where  a  person  has  accepted  a  bill  of  exchange,  he  is  presumed 
to  have  accepted  it  for  a  valuable  consideration.^^  But  under  that 
rule  and  further  provisions, -^  such  an  instrument  is  open  to  the  de- 
fense of  want  of  consideration,'-^  as  against  all  persons  but  a  holder 
in  due  course.-^ 


sideration  than  that  named  in  the  instrument.  Hill  v.  Whidden,  158  Mass.  267, 
33  N.  E.  526.  A  promissory  note,  although  a  proviso  annexed  thereto  destroys 
its  negotiability,  purports  a  valuable  consideration.  Pyle  v.  Gallaher,  6  Pen. 
(Del.),  407,  75  Atl.  373. 

18.  Bruyn  v.  Russell,  52  Hun,  17. 

19.  Barrick  v.  Austin,  21  Barb.  241. 

20.  Appendix,  sec.  24.  Towles  v.  Tanner,  21  App.  D.  C.  530;  Bank  of  Monti- 
cello  V.  Dooly,  113  Wis.  590,  89  N.  W.  490. 

21.  Ryan  v.  Sullivan,  128  N.  Y.  S.  632,  143  App.  Div.  471. 

22.  National  Park  Bank  v.  Saitta,  111  N.  Y.  S.  927,  127  App.  Div.  624,  affirmed 
196  N.  Y.  548,  89  N.  E.  1106,  wherein  the  court  quoted  from  Heuertennatte  v. 
Morris,  101  N.' Y.  63,  4  N.  E.  1,  54  Am.  Rep.  657,  as  follows:  "If  a  party  becomes 
a  bona' fide  holder  for  value  of  a  bill  before  its  acceptance,  it  is  not  essential  to  his 
right  to  enforce  it  against  a  subsequent  acceptor  than  an  additional  consideration 
should  proceed  from  him  to  the  drawee.  The  bill  itself  implies  a  representation  by 
the  drawer  that  the  drawee  is  already  in  receipt  of  funds  to  pay,  and  his  contract  is 
that  the  drawee  shall  accept  and  pay  according  to  the  terms  of  the  draft.  *  *  * 
By  such  acceptance  the  drawee  admits  the  truth  of  the  representation,  and  hav- 
ing obtained  a  suspension  of  the  holder's  remedies  against  the  drawer  and  on  ex- 
tension of  credit  by  his  admission,  is  not  afterward  at  liberty  to  controvert  the 
fact  as  against  a  bona  fide  holder  for  value  of  the  bill." 

23.  Appendix,  sees.  28,  56. 

24.  St.  Paul's  Episcopal  Church  v.  Fields,  81  Conn.  670,  72  Atl.  145;  Fassett 
V.  Boswell  (Or.),  117  Pac.  302.  Where  a  person  was  appointed  agent  to  negotiate 
a  loan  by  means  of  a  note  payable  to  his  order,  and  such  person  transferred  the 
note  as  security  for  a  loan,  the  relation  of  the  maker  and  the  payee  is  governed 
by  the  law  of  principal  and  agent  and  not  by  the  law  merchant,  and  the  maker 
cannot  plead  want  of  consideration  as  between  himself  and  the  payee,  his  agent. 
Sublette  v.  Brewington,  139  Mo.  App.  410,  122  S.  W.  1150. 

25.  Jobcs  V.  Wilson,  140  Mo.  App.  281,  124  S.  W.  548;  Johnson  County  Sav. 
Bank  v.  Rapp,  47  Wash.  30,  91  Pac.  382. 


§  164        WHAT   INSTRUMENTS    IMPORT   A    CONSIDERATION  219 

§  164.  Weight  of  evidence.— Many  cases  hold  that,  as  a  bill  or 
negotiable  note  imports  a  consideration,  this  requires  the  defendant 
to  carry  the  burden  of  proof  of  a  plea  of  no  consideration.-^  Some  of 
the  cases  supporting  the  foregoing  rule  will  be  found  to  rest  upon 
statutory  provisions  declaring  that  such  an  instrument  shall  be 
deemed  prima  facie  evidence  of  consideration.  Though  the  instru- 
ment imports  a  consideration,  the  better  rule  would  seem  to  be,  es- 
pecially in  the  absence  of  any  statutory  provision  declaring  this 
prima  fade  effect,  that  when  evidence  has  been  introduced  to  rebut 
the  presumption  which  it  raises,  the  burden  is  upon  the  plaintiff  to 
satisfy  the  jury  upon  all  the  evidence,  and  by  the  preponderance  of 
evidence  that  there  was  a  consideration."    The  production  of  the 

26.  Towles  v.  Tanner,  21  App.  D.  C  530;  Gates  v.  Morton  Hardware  Co.,  146 
Ala.  692,  40  So.  509;  Ragsdale  v.  Gresham,  141  Ala.  308,  37  So.  367;  Brown  v. 
Johnson  Bros.,  135  Ala.  608,  33  So.  683;  Martin  v.  Foster,  83  Ala  213,  3  So.  422; 
Thompson  v.  Thompson,  140  Cal.  545,  74  Pac.  21;  Creditors'  Union  v.  Lundy, 
16  Cal.  App.  567,  117  Pac.  624;  Ruth  v.  Krone,  10  Cal.  App.  770,  103  Pac.  960; 
Wehner  v.  Bauer,  10  Cal.  App.  171,  101  Pac.  417;  Keating  v.  Morrissey,  6  Cal. 
App.  163,  91  Pac.  677;  Gallagher  v.  Kiley,  115  Ga.  420,  41  S.  E.  613;  Webb  v. 
Simmons,  3  Ga.  App.  639,  60  S.  E.  334;  McMicken  v.  Safford,  100  111.  App.  102, 
affirmed  197  111.  540,  64  N.  E.  540;  Chicago  Title  &  Trust  Co.  v.  Ward,  113  111. 
App.  327;  Perry  State  Bank  v.  EUedge,  109  111.  App.  179;  Ewen  v.  Templeton, 
148  111.  App.  46;  Holmes  v.  Horn,  120  111.  App.  359;  Luke  v.  Koenen,  120  Iowa, 
103,  94  N.  W.  278;  Culbertson  v.  Salinger  &  Brigham  (Iowa),  117  N.  W.  6;  Bron- 
Bton's  Adm'r  v.  Lakes,  135  Ky.  173,  121  S.  W.  1021;  Amett  v.  Pinson  (Ky.),  108 
S.  W.  852;  Cox  v.  Cox's  Ex'r.  (Ky.),  79  S.  W.  220;  Kiesewetter  v.  Kress  (Ky.), 
70  S.  W.  1065;  Glascock  v.  Glascock,  217  Mo.  362,  117  S.  W.  67;  Bogie  v.  Nolan, 
96  Mo.  85;  Merchants'  Nat.  Bank  v.  Brisch,  140  Mo.  App.  246,  124  S.  W.  76; 
Winfrey  v.  Ragan,  136  Mo.  App.  250,  117  S.  W.  83;  Holmes  v.  Farris,  97  Mo. 
App.  305,  71  S.  W.  116;  Tapley  v.  Herman,  95  Mo.  App.  537,  69  S.  W.  482,  Lowrey 
V.  Danforth,  95  Mo.  App.  441,  69  S.  W.  39;  Durland  v.  Durland,  153  N.  Y.  67, 
47  N.  E.  42;  Foote  v.  Valentine,  48  Hun,  475;  Emerson  v.  Sheffer,  98  N.  Y.  S. 
1057,  113  App.  Div.  19;  New  York  Metal  Ceiling  Co.  v.  Leonard,  96  N.  Y.  S. 
187,  48  Misc.  500;  Harris  v.  Buchanan,  91  N.  Y.  S.  484,  100  App.  Div.  403; 
Columbian  Conservatory  of  Music  v.  Dickenson,  158  N.  C  207,  73  S.  E.  900; 
Tinker  v.  Midland  Valley  Mercantile  Co.,  25  Okl.  160,  105  Pac.  333;  South  Da- 
kota Cent.  R.  Co.  v.  Smith,  22  S.  D.  210,  116  N.  W.  1120;  Preas  v.  Vollintine, 
53  Wash.  137,  101  Pac.  706.  In  an  action  against  a  surety,  the  defense  being  want 
of  consideration,  under  a  statute  the  burden  of  showing  that  there  was  no  con- 
sideration for  the  note  rests  upon  the  defendant;  the  execution  of  the  note  being 
admitted.  Frick  Co.  v.  Ho£f  (S.  D.),  128  N.  W.  495.  If  the  defendant  shows  that 
the  consideration  of  a  note  was  a  promise  of  the  payee  to  do  certain  things  in  the 
future,  the  burden  is  still  on  him,  in  order  to  make  a  defense  of  failure  of  considera- 
tion complete,  to  show  that  the  promise  was  broken.  Webb  v.  Simmons,  3  Ga. 
App.  639,  60  S.  E.  334. 

27.  Best  v.  Rocky  Mountain  Nat.  Bank,  37  Colo.  149,  85  Pac.  1124,  7  L.  R.  A. 


220  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  164 

note,  as  has  been  said,  is  a  prima  facie  evidence  of  a  consideration, 
sufficient,  if  not  rebutted,  to  maintain  the  plaintiff's  ciuse.  But  to 
hold  that  such  an  admission  in  the  note  of  a  consideration  therefor 
(as  the  words  "value  received")  changes  the  burden  of  proof,  and 
compels  the  defendant  to  assume  it,  would  be  to  hold  that  such  an 
admission  when  made  orally,  and  when  not  contained  in  the  instru- 
ment, would  have  the  same  effect."^  Antl  again:  "  As  the  burden  is  on 
the  plaintiff  to  prove  a  good  consideration  (for  the  note),  if  the  whole 
evi(len<'e  offered  on  both  sides  leaves  it  in  doubt  whether  there  was  a 
good  consideration  or  not  the  phiiiitiff  fails  of  making  out  his  Ciuse,  and 
the  defendant  will  be  entitled  to  a  verdict."  ^  But  if  the  defendant 
allege  a  failure  of  the  consideration,  the  burden  will  be  upon  him  to 
prove    it,^   and    also   upon    a   defense    of    illegality    of    considera- 

(N.  S.),  1035;  McCiillum  v.  DriRKS,  3')  Fla.  277,  17  So.  407;  Sm:ill  v.  Clowley,  02 
Mc.  ISr);  Slate  v.  Flye,  20  Mo.  312;  Hlack  River  SaviriKs  Hank  v.  EdwanLs,  10 
Gray,  3S7;  Crowingshicld  v.  CrowinRshioId,  2  Gray,  r)29;  Humham  v.  Allen.  1 
Gray,  fjOl ;  Delano  v.  Bartlctt,  6  Gush.  3(34;  Smith  v.  Kinney,  32  Nehr.  102;  Seurch 
V.  Miller,  9  Nehr.  30;  Camphell  v.  MrConnack,  [)0  N.  C.  492;  Kenney  v.  Walker, 
2i)  OreR.  41;  Flint  v.  Phipps,  16  Oreg.  448;  Gutla  Percha  &  Ruhher  Mfg.  Co. 
V.  Cleburne  (Tex.  Civ.  App.),  107  S.  W.  157.  In  Ivonihard  v.  Hryne,  194  Maw.s. 
230,  80  N.  E.  489,  the  court  said:  "This  is  not  like  a  ciust;  where  the  defendant 
seeks  to  avoid  the  effort  of  irrimn  fncir  evidence  by  the  proof  of  an  independent 
fact  outside  of  the  issue,  whereby  he  is  relieved  from  liability.  In  such  a  ciuse 
the  defendant  has  the  burden  of  proving  the  fact,  and  if  he  fails,  the  orininal  prima 
facie  case  prevails."  The  rule  is  not  changed  merely  because  the  note  contains 
the  words  "value  received."  Iluntington  v.  Shute,  180  Mass.  371,  02  N.  E.  ;380, 
91  Am.  St.  Rep.  309.  Distinguishing  want  of  consideration  and  failure  of  consid- 
eration, the  court  in  Ginn  v.  Dolan,  81  Ohio  St.  121,  90  N.  E.  141,  said:  "A  i)lea 
of  failure  of  consideration,  or  of  payment,  presents  a  case  verj'  dilTerent  from 
this.  These  defenses,  as  it  were,  confess  and  avoid.  They  are  allirniative  de- 
fenses, and  upon  such  the  burden  is  upon  the  defendant  from  the  beginning  to 
the  end." 

28.  Commonwealth  v.  McKie,  1  Bennett  &  Heard's  Leading  Criminal  Cases, 
note  16,  Am.  Rep.  412;  Small  v.  Clewley,  02  Me.  155;  Bruyg  v.  Russell,  60  Hun, 
2S1,  14  N.  Y.  Supp.  591,  quoting  with  approval  the  text. 

29.  Burnham  v.  Allen,  1  Gray,  501;  Small  v.  Clewly,  62  Me.  155;  Whitney  v. 
Clary,  145  Mass.  159;  Perley  v.  Perley,  144  Mass.  107;  Manistee  Nat.  Bank  v. 
Seymour,  64  Mich.  74. 

30.  Lynds  v.  Van  Valkenburgh,  77  Kan.  24,  93  Pac.  615;  SoUenberger  v.  Ste- 
vens, 46  Kan.  386,  26  Pac.  690;  Kearney  v.  Whitehead,  34  La.  Ann.  530;  McCor- 
mick  Machine  Co.  v.  Jacobson,  77  Mich.  584;  Marquette  Nat.  Bank  v.  Steams, 
111  Minn.  218,  126  N.  W.  726;  Rhodes  v.  Guhman,  137  S.  W.  88,  156  Mo.  App. 
344;  Crosby  v.  Ritchey,  47  Nebr.  924,  66  N.  W.  1005;  Violet  v.  Rose,  39  Nebr. 
660,  58  N.  W.  216;  Sprague  v.  Sprague,  80  Hun,  285,  30  N.  Y.  Supp.  162;  Master- 
son  V.  F.  W.  Heitmann  &  Co.,  38  Tex.  Civ.  App.  476,  87  S.  W.  227;  Kampman 


§  IGo        WHAT   INSTRUMENTS   IMPORT   A    CONSIDERATION  221 

tion,^^  or  that  it  was  obtained  by  false  or  fraudulent  representa- 
tions ^^  or  by  duress.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statute,^"*  the 
burden  of  showing  that  there  was  a  want  of  consideration  rests  upon 
the  defendant,  and  if  the  defendant  offers  any  evidence  that  shows  or 
tends  to  show  want  of  consideration,  then  it  is  incumbent  upon  the 
plaintiff  to  show  by  a  fair  preponderance  of  evidence,  upon  the  whole 
case,  that  there  was  consideration.  ^^ 

§  165.  Proof  of  consideration  when  bill  or  note  is  in  hands  of 
third  parties. — When  the  bill  or  note  has  passed  into  the  hands  of 
a  third  party,  wo  have  already  seen  that  the  defendant,  if  he  be  not 
the  immediate  indorser  of  the  indorsee,  has  a  double  burden  imposed 
upon  him.  He  must  show  in  such  cases  not  only  the  want  or  failure 
of  the  original  consideration,  but  he  must  go  farther  and  show  want 
or  failure  of  the  consideration  between  the  plaintiff  and  his  immediate 
indorser.  It  is  important  to  observe,  however,  that  the  rules  of 
evidence  conform  themselves,  in  some  respects,  to  suit  the  circum- 
stances under  which  the  parties  are  presumed  to  be  placed ;  and  there 
are  two  leading  principles  which  are  well  settled. 

The  first  is,  tliat  proof  of  a  total  want  of  consideration,  as  that  the 
i)ill  or  note  was  executed  for  accommodation,  or  was  intended  as  a 
gift,  or  was  given  for  a  balance  erroneously  supposed  to  be  due,  will 
not  shift  it  upon  the  plaintiff  to  show  that  he  acquired  it  upon  a 
sufficient  consideration,^^  and  subsequent  failure  of  consideration 

V.  McCormick,  24  Tex.  Civ.  App.  462;  Citizens'  Savings  Bank  v.  Houchens,  64 
W:ush.  275,  116  Pac.  866  (as  to  breach  of  warranty).    See  post,  §  165. 

31.  Alabama  Nat.  Bank  v.  C.  C.  Parker  &  Co.,  146  Ala.  513,  40  So.  987; 
Pritehett  v.  Sheridan,  29  Ind.  App.  81,  63  N.  E.  865;  Fisher  v.  Fisher,  8  Ind. 
App.  665,  36  N.  E.  296;  Yowell  &  Williams  v.  Walker,  118  La.  28,  42  So.  635; 
Tinker  v.  Midland  Valley  Merrantile  Co.,  25  Okl.  160,  105  Pac.  333.  But  in 
Eflisto  Phosphate  Co.  v.  Sandford,  112  Ala.  493,  it  wa.s  held  that  on  an  allegation 
that  the  note  \va.s  given  for  the  purcha.se  of  goods  and  that  the  plaintiff  did  not 
have  a  license  authorizing  the  sale,  the  burden  was  on  the  plaintiff  to  show  that  he 
did  have  a  license. 

32.  Halliwell  Cement  Co.  v.  Stewart,  103  Mo.  App.  182,  77  S.  W.  124;  Citizens' 
Savings  Bank  v.  Houchens,  64  Wash.  275,  116  Pac.  866;  Pierce  v.  Stolhand,  141 
Wis.  286,  124  Pac.  259. 

33.  Bullard  v.  Smith,  28  Mont.  387,  72  Pac.  761. 

34.  Appendix,  sec.  24. 

35.  Bringman  v.  Von  Glahn,  75  N.  Y.  S.  845,  71  App.  Div.  537;  Ginn  v.  Dolan, 
(Ohio)  90  N.  E.  141. 

36.  See  chapter  XXIV,  on  Bona  Fide  Holder,  §§  777,  810,  sees,  ii  and  vii. 


222  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  HiO 

stands  on  the  same  footing."  Respecting  accommodation  bills,  it  was 
said  by  the  Court  of  Excheciuer,  Lord  Abingcr  delivering  the  opinion:^ 
If  a  man  comes  into  court  without  any  suspicion  of  fraud,  but  only  as 
the  holder  of  an  accommodation  bill,  it  may  fairly  be  presumed  that 
he  is  a  holder  for  value.  The  proof  of  its  being  an  accommodation 
bill  is  no  evidence  of  the  want  of  consideration  in  the  holder.  If  the 
defendant  says,  I  lent  my  name  to  the  tlrawer  for  the  purpose  of  his 
raising  money  upon  the  bill,  the  prol)ability  is  that  money  was  ob- 
tained upon  the  bill.  Unless,  therefore,  the  bill  be  connected  with 
some  frautl,  and  a  suspicion  of  a  fraud  be  raised  from  its  being  shown 
that  something  has  been  done  with  it  of  an  illegal  nature — as  that  it 
has  been  clandestinely  taken  away,  or  has  been  lost  or  stolen,  in 
which  case  the  holder  must  show  that  he  gave  value  for  it — the  onus 
probandi  is  cast  upon  the  defendant." 

§  166.  Second.— But  if  the  defendant  show  that  there  was  fraud 
or  illegality  in  the  origin  of  the  bill  or  note,  a  new  coloring  is  imparted 
to  the  transaction.  The  plaintiff,  if  he  ha.s  become  innocently  the 
holder  of  the  paper,  is  not  permitted  to  suffer;  but  as  the  knowledge 
of  the  manner  in  which  it  came  into  his  hands  must  rest  hi  his  bosom, 
and  the  means  of  showing  it  must  be  much  easier  to  him  than  to  the 
defendant,  he  is  required  to  give  proof  that  he  became  possessed  of  it 
for  a  sufficient  consideration.^^ 

This  rule  was  first  laid  down  by  Parke,  J.,  in  Heath  v.  Sansom,  2  B.  &  Ad.  291, 
dissenting  from  the  opinion  of  the  court,  but  it  is  now  well  settled  in  England  as 
well  as  in  the  United  States.  Whitaker  v.  Edmunds,  1  Moody  &  R.  366;  Mills  v. 
Barker,  1  M.  &  W.  425;  Pcrcival  v.  Frampton,  2  Cromp.,  M.  &  R.  180;  EUicott  v. 
Martin,  6  Md.  509;  Ross  v.  Bedell,  5  Duer,  465;  Harger  v.  Worrall,  69  N.  Y. 
370;  Ewing  v.  Clark,  76  Mo.  545;  School  District  v.  Sheidley,  138  Mo.  672,  40 
S.  W.  656,  60  Am.  St.  Rep.  576;  Murphy  v.  Gumaer,  12  Colo.  App.  480,  55  Pac. 
951,  citing  and  approving  text.  In  an  action  by  an  indorsee  who  is  not  a  bona  fide 
holder  of  the  note,  a  defense  of  failure  or  want  of  consideration  is  the  same  as  if 
the  payee  were  suing.  Iowa  Nat.  Bank  v.  Sherman,  23  S.  D.  8,  119  N.  W.  1010 
(1909). 

37.  Wilson  v.  Lazier,  11  Gratt.  477;  Knight  v.  Pugh,  4  Watts  &  S.  445. 

38.  Mills  V.  Barber,  1  M.  &  W.  425. 

39.  See  §§  810,  819;  Crampton  v.  Perkins,  65  Md.  24;  Second  Nat.  Bank  v. 
Brady,  96  Ind.  508,  citing  the  text;  Mace  v.  Kennedy,  68  Mich.  389;  McNamara 
V.  Gargett,  68  Mich.  454;  Sutton  v.  Beckwith,  68  Mich.  300.  The  three  last- 
named  cases  are  known  in  Michigan  as  the  "Bohemian  Oat  Cases."  Jones  v. 
Hanna,  22  Pac.  884,  citing  the  tex-t;  Vathir  v.  Zane,  3  Gratt.  246.  In  Harvey  v. 
Towers,  6  Exch.  656,  Pollock,  C.  B.,  said:  "It  is  now  well  settled  that  if  a  bill 
be  founded  in  illegality  or  fraud,  or  has  been  the  subject  of  felony  or  fraud,  upon 
that  being  proved,  the  holder  is  compelled  to  show  that  he  gave  value  for  it." 


§§  167,  168     BY   WHAT   LAWS   CONSIDERATION    DETERMINED      223 

If  he  is  innocent,  the  burden  must  generally  be  a  light  one;  and  if 
guilty,  it  is  but  a  proper  shield  to  one  who  would  be,  but  for  its  pro- 
tection, his  victim. 

§  167.  It  was  formerly  considered  necessary,  in  order  to  enable  the 
defendant  to  put  the  plaintiff  on  proof  of  consideration,  that  defend- 
ant should  have  given  the  plauitiff  notice  to  prove  consideration;  "*" 
but  it  is  well  settled  now  that  no  such  notice  is  necessary,  and  it  is 
seldom  given."  It  was,  also,  formerly  held  that  where  the  considera- 
tion given  by  the  plaintiff  was  disputed,  and  a  notice  to  that  effect 
had  been  given,  the  plaintiff  must  go  into  his  whole  case,  in  the  first 
instance,  and  could  not  reserve  proof  of  consideration  as  an  answer 
to  the  defendant. ''2  But  now  the  plaintiff  is  only  required  to  give 
affirmative  proof  of  consideration  after  the  defendant  has  given 
evidence  tending  to  rebut  the  prima  fade  case  which  the  production 
of  the  instrument  makes  out.^^ 


SECTION   II 

BY  WHAT  LAWS  THE   LEGALITY   OF   CONSIDERATION   IS  DETERMINED- 
CONFEDERATE   OBLIGATIONS 

§  168.  The  laws  in  force  at  the  time  a  note  is  given  determine  its 
legality  and  effect;  and  where  a  law  prohibiting  the  sale  of  spirituous 
liquors  has  been  repealed,  it  does  not  thereby  validate  a  note  given 

Smith  V.  Braine,  16  Q.  B.  244,  overruling  Brown  v.  Phillpot,  2  Moody  &  R.  285; 
Bailey  v.  Bidwell,  13  M.  &  W.  73;  Sperry  v.  Spaulding,  45  Cal.  544;  Campbell 
V  Patton,  113  N.  C.  481,  18  S.  E.  687,  citing  and  approving  text;  Cunmngham 
V.  Scott,  90  Hun,  410,  35  N.  Y.  Supp.  881.  In  this  connection,  see  authorities 
cited  in  notes  to  section  791.  Commercial  Bank  v.  Burgwyn,  108  N.  C.  62,  12 
S  E  952  23  Am.  St.  Rep.  49,  citing  text;  Hazard  v.  Spencer,  17  R.  I.  561,  23  Atl. 
729,  citing  text;  Knowlton  v.  Schultz,  6  N.  Dak.  417,  71  N.  W.  550;  Rossiter  v. 
Loeber,  18  Mont.  372,  45  Pac.  560,  quoting  text. 

40.  Paterson  v.  Hardacre,  4  Taunt.  Ill;  Byles  on  BUls  (Sharswood  s  ed.) 

[*115,  116],  221,  note  d.  „   t  v    t,  •, 

41.  Mann  v.  Lent,  1  M.  &  W.  240,  10  B.  &  C.  877  (21  Eng.  C.  L.);  BaUey  v. 

Bidwell,  13  Mees.  &  W.  75. 

42.  Delaney  v.  Mitchell,  1  Stark,  439  (2  Eng.  C.  L.). 

43.  Byles  (Sharswood's  ed.)  [116],  221,  note  d;  Rossiter  v.  Loeber,  18  Mont 
372,  45  Pac.  560,  quoting  text;  Taylor  v.  Taylor's  Estate,  138  Mich.  658,  101 
N.  W.  832. 


224      CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS      §§   169,   170 

in  violation  of  the  statute  when  it  was  in  force;  and  a  renewal  of  the 
note  will  be  tainted  with  the  original  illegality.''* 

§  169.  The  legality  of  the  consideration  of  a  contract  is  to  be  de- 
termined by  the  laws  of  the  State  or  country  where  the  contract  is 
made,  and  not  by  those  of  the  State  or  count r>'  where  the  suit  is 
brought.  Tlio  rules  of  every  nation  from  ('t)mity  admit  that  the  laws 
of  every  other  nation  in  force  within  its  own  limits  ought  to  have  the 
same  force  everywhere,  so  far  as  they  do  not  prejudice  the  rights  of 
other  governments  or  their  citizens.  '^  The  ruh^  is  founded  not  merely 
on  the  convenience,  but  on  the  necessity  of  nations;  for  otherwise  it 
would  be  impractical)le  for  them  to  carry  on  an  extensive  intercourse 
or  commerce  with  each  other,'"'  or  even  for  social  order  to  exist. 

§  170.  Confederate  transactions. — These  principles  have  been 
appHed  by  the  courts  of  the  Tniteil  States,  since  the  close  of  the  war 
against  the  Confederate  States,  to  instruments  executed  during  the 
war  for  the  loan  of  Confederate  States  treasur>'  notes,  or  which  were 
payable  in  that  medium — it  having  been  the  only  currency  in  general 
circulation  within  tiie  Confederate  lines;  and  al.so  to  those  executed 

44.  Holden  v.  Cosgrove,  12  Gray,  216.  See  §§  871,  970.  But  if  the  note  Riven 
vvus  in  consiiloration  of  a  transact i(jn  Krowing  out  of  the  liquor  traffic  at  a  time 
when  said  traffic  was  Ic>jal,  a  suhsc(|ucnt  enactment  by  the  I<>Ki.sIatiire  (l«>clarinK 
said  traffic  to  f)e  illegal  will  not  render  illegal  tlie  consideration  supporting  said 
note.    I'hillii)s  v.  (iilTord,  104  Iowa,  A'^S,  7:i  N.  W.  KW:}. 

45.  See  eliapter  XWII,  on  Conflict  of  Laws,  §  Sd.')  d  seq.;  Thorington  v.  Smith, 
8  Wall.  11.  Chief  Justice  Chiuse  after  speaking  of  tfic  supremacy  of  the  Confeder- 
ate Government  in  the  seceded  States,  says:  "It  must  follow  as  a  neces.s;iry  con- 
sequence from  this  actual  supremacy  of  the  insurgent  government,  a.s  a  belligerent 
within  the  territory  where  it  circulated,  and  from  the  unity  of  civil  obedience  on 
the  part  of  all  who  remained  in  it,  that  this  currency  mu.st  be  considere<l  in  courts 
of  law  in  the  same  light  lus  if  it  had  been  i.ssued  by  a  foreign  government  tem|)orarily 
occupying  a  part  of  the  territory  of  the  United  States.  Contracts  stipulating 
for  payments  in  tliis  currency  cannot  be  void  for  that  reason  only,  as  made  in 
aid  of  the  foreign  invasion  in  the  one  case,  or  of  domestic  in.surrect ion  in  the  other. 
They  have  no  necessary  relations  to  the  government,  whether  invading  or  in- 
surgent. They  are  transactions  in  the  ordinary  course  of  civil  society,  and,  though 
they  may  inilircctly  and  remotely  serve  the  ends  of  the  unlawful  government,  are 
without  blame,  except  when  they  have  been  entered  into  with  actual  intent  to 
further  invasion  or  insurrection.  We  cannot  doubt  that  such  contracts  should 
be  enforced  in  the  courts  of  the  United  States,  after  the  restoration  of  peace,  to 
the  extent  of  their  just  obligation."  Approved  in  Cook  v.  Lillo,  103  U.  S.  (13 
Otto)  793. 

46.  Boyce  v.  Tabb,  18  Wall.  548.    Sec  §  866. 


§§   171,  172     BY   WHAT    LAWS    CONSIDERATION    D'ETERMINED      225 

in  payment  of  hire  or  purchase  money  of  slaves  after  slavery  had  been 
abolished. 

The  United  States  Supreme  Court  has  held  unanimously  that  a 
promissory  note  payable  in  Confederate  States  treasury  notes,  made 
between  parties  within  the  lines  of  the  Confederate  States  during  the 
war,  was  not  executed  upon  an  illegal  consideration,  unless  it  was 
executed  with  the  intent  to  aid  the  Confederate  cause;  ^^  and  the 
courts  of  some  of  the  reconstructed  Southern  States  and  of  the  other 
States  have  adopted  similar  views. ^^  Confederate  currency  having 
been  the  only  medium  of  exchange  in  the  Confederate  lines  for  the 
better  part  of  the  war,  any  other  view  would  seem  peculiarly  rigorous 
and  cruel,  and  utterly  opposed  to  that  spirit  of  comity  and  humanity 
which  should  ameliorate  as  far  as  possil)le  the  disadvantages  and 
hardsliips  of  conflicts  between  nations.  But  partisan  judges  have  not 
been  lacking  in  the  conquered  States,  and  their  extreme  and  violent 
notions  have  found  exjiression  in  decisions  which  will  remain  as  an 
enduring  sttun  upon  the  records  of  the  American  judiciary.^^ 

§  171.  Bonds  i.ssued  by  the  convention  of  a  secession  State  to  raise 
revenues  to  carry  on  war  against  the  United  States  have  been  held 
by  the  United  States  Supreme  Court  to  be  upxjn  an  illegal  considera- 

§  172.  Promissory  notes  for  slaves. — In  respect  to  promissory 
notes  given  for  slaves,  before  President  Lincoln's  emancipation 
proclamation  was  issued,  the  Supreme  Court  of  the  United  States 
has  set  the  (juestion  of  their  valiility  at  rest.  It  has  been  decided  by 
that  tribunal  that  a  note  dated  March  26,  1861,  and  given  for  a  slave, 
could  l)e  recovered  u]xm,  notwithstanding  that  slavery  was  abolished 
on  the  1st  of  January,  lSr)2,  and  the  contract  of  sale  contained  the 

47.  Osbom  v.  Nicholson,  13  Wall.  6.5G. 

48.  KckU's  v.  ratillo,  5  Bu.sh,  271;  Kivcrs  v.  Moss,  6  Bush,  600;  Bearing  v. 
RuckcT,  IS  Gratt.  42t);  lioulware  v.  N't-wton,  IS  Gratt.  708;  Ixihrnan  v.  Crouch, 
19  Gratt.  331;  .Mapill  v.  Man.son,  20  Gratt.  527;  Green  v.  Sizer,  40  Miss.  350; 
Murnll  V.  Jonos,  40  Miss.  505. 

49.  Note  for  loan  of  Conftnierate  States,  treasun.-  notes  void:  Lawson  v.  Miller, 
44  Ala.  616;  Calfee  v.  Burgess,  3  W.  Va.  274;  Prigeon  v.  Smith,  31  Tex.  171; 
Reavis  v.  Blackshear,  30  Tex.  753.  Contracts  solvable  in  Confederate  money 
held  void.  Blossat  v.  Sullivan,  21  La.  Ann.  565;  Latham  v.  Clark,  25  Ark.  574. 
And  this  has  been  held  to  apply,  although  the  paper,  on  its  face,  was  payable 
simply  in  dollars.    Donley  v.  Tindall,  32  Tex.  43. 

60.  Hanauer  v.   Woodruff,    15   Wall.  439. 

15 


226  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  173 

warranty,  "the  said  negro  to  be  a  slave  for  life,"  ^^  and  Jtlso  notwith- 
standing the  Thirteenth  Amendment  to  the  Constitution,  made  in 
1865,  by  which  it  is  ordained  that  "neither  slavery  nor  involuntary 
servitude  shall  exist  in  the  United  States  nor  in  any  place  subject  to 
their  jurisdiction." 

In  the  State  tribunals  of  the  Southern  States,  where  this  question 
has  been  of  much  consequence,  conflicting  views  have  been  taken, 
but  many  of  the  cases  concur  in  judgment  with  the  Supreme  Court  of 
the  United  States,''-  and  in  other  States  of  the  Union,  both  before  and 
since  the  war,  the  principles  of  these  decisions  have  been  asserted. ^^ 

§  173.  A  recovery  upon  instruments  executed  for  slaves,  or  for 
Confederate  money,  has  been  sought  to  be  prevented  by  articles  in 
the  new  Constitutions  of  some  of  the  States,  denying  jurisdiction  to 
the  courts  to  enforce  them;  or  in  some  such  language  declaring  that 
they  shall  be  deemed  void.  But  such  declarations,  whether  of  a 
State  Constitution  or  of  a  legislative  enactment,  evidently  violate  the 
provision  of  the  national  Constitution  prohibiting  the  passage  of  any 
law  impairing  the  obligation  of  a  contract.  The  United  States  Su- 
preme Court  has  so  held,^^  and  the  decision  is  obviously  just;  but 
some  of  the  Southern  tribunals  have  held  otherwise. ^^ 

In  some  of  the  States  it  has  been  held  that  notes  for  slaves  sold  after 
Lincoln's  emancipation  proclamation  were  as  valid  as  those  for  slaves 
sold  before,^^  and  according  to  the  principles  of  the  text,  which  the 
authorities  amply  sustain,  there  can  be  substantially  no  difference  in 

51.  Osborn  v.  Nicholson,  13  Wall.  655;  Boyce  v.  Tabb,  18  Wall.  548.  In 
Fitzpatrick  v.  Hearno,  44  Ala.  171,  it  was  held  that  a  warranty  on  the  sale  of 
slaves  "that  the  title  of  said  slaves  was  warranted  for  the  life  of  said  negro  slaves," 
was  not  broken  by  the  subsequent  emancipation  of  the  slaves.  To  same  effect, 
Hand  v.  Armstrong,  34  Ga.  232;  Wilkinson  v.  Cook,  44  Miss.  367;  McNealy 
V.  Gregory,  13  Fla.  417. 

52.  McElvain  v.  Mudd,  44  Ala.  48;  Thompson  v.  Warren,  5  Coldw.  644; 
Dowdy  V.  McClallan,  52  Ga.  408;  Calhoun  v.  Calhoun,  2  S.  C.  283.  Contra, 
Laprice  v.  Bowman,  20  La.  Ann.  234;  Lytle  v.  Wheeler,  21  La.  Ann.  192. 

53.  Roundtree  v.  Baker,  53  111.  241,  in  which  case  it  was  held  that  an  obliga- 
tion for  the  purchase  of  a  slave  in  Kentucky,  when  slavery  was  legal,  might  be 
sued  upon  in  lUinois,  and  the  subsequent  aboUtion  of  slavery  did  not  affect  the 
note. 

54.  White  v.  Hart,  13  Wall.  646;  Boyce  v.  Tabb,  18  Wall.  548;  McElvain  v. 
Mudd,  44  Ala.  48;  McNealy  v.  Gregory,  13  Fla.  417. 

55.  Graham  v.  Magviire,  39  Ga.  531;  Green  v.  Clark,  21  La.  Ann.  567;  Lawson 
V.  Miller,  44  Ala.  616;  Barrow  v.  Pike,  21  La.  Ann.  14. 

56.  McElvain  v.  Mudd,  44  Ala.  48;  Hall  v.  Keese,  31  Tex.  504. 


§  174  CONSIDERATION    OPEN   TO    INQUIRY  227 

the  cases,  the  Confederate  Government  being  in  power  and  protecting 
slavery  within  its  Hnes  as  a  legal  institution.  But  the  Supreme  Court 
of  the  United  States,  in  the  case  above  quoted,  especially  withheld 
any  opinion  as  to  cases  arising  after  emancipation. 


SECTION  III 

BETWEEN    WHAT    PARTIES    THE    CONSIDERATION    IS    OPEN    TO    INQUIRY 

§  174.  Who  are  parties  privy  in  negotiable  instruments. — The 
same  rule  which  admits  inquiry  into  tlie  consideration  of  negotiable 
paper  between  the  original  payor  and  payee  extends  to  admit  such 
inquiry  in  any  suit  between  parties  between  whom  there  is  a  privity. 
That  is  to  say,  between  the  immediate  parties  to  any  contract  evi- 
denced by  the  drawing,  accepting,  making,  or  indorsing  a  bill  or  note, 
it  may  be  shown  that  there  was  no  consiilcration  (as,  that  it  was  for 
accommodation) ;  ^^  or  that  the  consideration  has  failed,  or  a  set-off 
may  be  pleaded;  but  as  between  other  parties  remote  to  each  other, 
none  of  these  defenses  are  admissible.  It  becomes  important  then  to 
determine  who  are  to  be  regarded  as  the  immediate  parties,  or  parties 
between  whom  there  is  a  privity,  to  a  negotiable  instrument,  and  who 
are  remote.  Among  the  former  may  be  classed:  (1)  The  drawer  and 
acceptor  of  a  bill ;  ^  or  (2)  The  drawer  and  payee  ''^  of  a  bill  as  a  general 

67.  Murphy  v.  Keyes,  39  N.  Y.  Sup.  Ct.  18;  Bank  of  British  North  America 
V.  Ellis,  G  Sawy.  98;  Wilson  v.  Ellsworth,  25  Nebr.  246;  Remington  v.  Dental 
Mfg.  Co.,  101  Wis.  307,  77  N.  W.  178;  Higgins  v.  Ridgway,  153  N.  Y.  130,  47 
N.  E.  32;  Hawkins  et  al.  v.  CoUier,  101  Ga.  145.  And  accordingly  it  has  been 
held  that  as  between  the  maker  and  the  payee  parol  evidence  is  admissible  to 
show  that  the  consideration  is  different  from  that  recited  in  the  note.  Sec  Burke 
V.  Napier,  106  Ga.  327;  Smith  v.  Kinney,  32  Nebr.  162,  49  N.  W.  341;  Fall  v. 
Glover,  34  Nebr.  .522,  52  N.  W.  168;  Fellers  v.  Penrod,  57  Nebr.  463,  77  N.  W. 
1085;  Branch  v  Howard,  4  Tex.  Civ.  App.  271,  23  S.  W.  478;  Stapylton  v.  Taegue, 
29  C.  C.  A.  229,  85  Fed.  407.  See  ante,  §  81a.  Though  the  promise,  being  made  by 
the  cashier  of  a  bank  and  beyond  his  authority,  did  not  bind  the  bank,  if  the  note 
had  been  made  without  consideration  it  could  not  be  enforced.  State  Bank  v. 
Fursyth,  41  Mont.  249,  108  Pac.  914. 

58.  Thomas  v.  Thomas,  7  Wis.  476,  where  it  was  held  that  acceptors  could 
Bhow  as  against  drawers  that  they  accepted  for  too  much.  Spurgin  v.  McPhee- 
ters,  42  Ind.  527;  Trego  v.  Lowr>',  8  Nebr.  238.  \\Tien  a  check  was  given  to  the 
payee  without  consideration,  and  the  drawee  refused  to  pay  it,  the  payee  had  no 
right  of  action  thereon  against  the  drawer.  Roney  v.  Dunleary,  39  Ind.  App. 
108,  79  N.  E.  398  (1906). 

69.  MoCuUoch  v.  Hoffman,  10  Hun,  133;  Spurgin  v.  McPheeters,  42  Ind.  527. 


228  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS       §  174a 

rule;  (3)  The  maker  and  payee  of  a  note;  ^  and  (4)  The  indorser  and 
immediate  indorsee  of  a  bill  or  note.^' 

§  174a.  Who  are  remote  parties  in  negotiable  instruments. — But 

the  want  of  consideration,  or  the  failure  thereof,  cannot  be  pleaded  in 
a  suit  brought:  (1)  By  an  indorsee  against  the  maker  of  a  note;  ^'^ 

Where  a  promissory  note  is  executed  and  delivered,  and  suit  instituted  in  name 
of  original  payee,  and  defendant  in  his  answer  pleads  want  of  consideration,  alleg- 
ing that  deed  to  property  had  been  placed  in  escTow  by  payee,  to  be  delivered  to 
the  maker  of  the  note  on  its  payment,  and  also  alleging  that  the  payee  had  with- 
drawn said  deed  from  escrow  before  commencing  his  suit,  he  should  be  permitted 
to  prove  such  facts.    Maydole  v.  Peterson,  7  Idaho,  502,  63  Pac.  1048. 

60.  Puget  de  Bras  v.  Forbes,  1  Esp.  117;  Jeffries  v.  Austin,  2  Stra.  674;  Saul 
V.  Southern  Seating  etc.,  Co.,  6  Ga.  App.  843,  65  S.  E.  1065;  Lacey  v.  Hutchinson, 
5  Ga.  App.  865,  64  S.  E.  105;  Kennedy  v.  Goodman,  14  Nebr.  585;  Voice  v.  Rosen- 
berry,  12  Nebr.  448,  a  case  where  the  alleged  consideration  moved,  not  from  the 
payee,  but  from  a  third  pai'ty,  creditor  of  the  maker,  who  caused  the  note  to  be 
executed  to  the  payee;  Flaum  v.  Wallace,  103  N.  E.  296,  9  S.  E.  571;  Johnson  v. 
Parshley  (Or.),  117  Pac.  661;  EULson  v.  Simmons,  6  Penne.  (Del.)  200,  65  Atl.  591; 
Pyle  v.  Gallaher,  6  Penne.  (Del.)  407,  75  Atl.  373;  Rouse,  Hempstone  &  Co.  v. 
Sarratt,  74  S.  C.  575,  54  S.  E.  757.  A  surety  may  defend  upon  the  ground  of  an 
absence  or  failure  of  consideration  of  a  promissory  note  to  which  he  is  a  party, 
if  the  action  thereon  is  by  the  original  payee.  Menzel  v.  Primm,  6  Cal.  App.  204, 
91  Pac.  754  (1907).  If  a  note  was  made  and  delivered  to  an  attorney  for  his  client, 
and  delivered  by  him  to  the  client,  being  payable  on  its  face  to  the  attorney  or 
bearer,  the  absence  of  a  consideration  between  the  attorney  personally  and  the 
maker  of  the  note  would  not  affect  its  status,  but  the  question  would  turn  upon 
whether  there  was  a  valid  consideration  as  between  the  client  and  the  maker. 
Dicks  V.  Andrews,  132  Ga.  601,  64  S.  E.  788. 

61.  Easton  v.  Pratchett,  1  Cromp.,  M.  &  R.  798, 2  Cromp.,  M.  &  R.  542;  Holi- 
day V.  Atkinson,  5  B.  &  C.  501;  Abbott  v.  Hendricks,  1  M.  &  G.  791;  Piatt  v. 
Snipes,  43  Ark.  23;  Spurgin  v.  McPheeters,  42  Ind.  527;  Klein  v.  Keyes,  17  Mo. 
326;  Brannock  v.  Magoon,  141  Mo.  App.  316,  125  S.  W.  535;  Clement  v.  Reppard, 
15  Pa.  St.  Ill;  Barnett  v.  Offerman,  7  Watts,  130;  Bank  of  the  Ohio  Valley  v. 
Lockwood,  13  W.  Va.  392.  The  indorsement  of  a  note  by  a  bank  by  its  cashier 
after  it  had  been  delivered  to  the  bank  was  not  without  consideration,  when  the 
note  had  been  accepted  by  the  bank  by  the  cashier  and  director  in  violation  of 
law,  in  disregard  of  their  obligations  to  the  bank,  and  subjected  themselves  to 
removal  if  they  failed  to  restore  the  money  unlawfully  loaned.  McAtee  v.  Shade, 
185  Fed.  442. 

62.  Price  v.  Keen,  40  N.  J.  L.  332;  post,  §  814;  Etheridge  v.  Gallagher,  55 
Miss.  464;  Burnes  v.  Scott,  117  U.  S.  582;  Chemical  Light  Co.  v.  Howard,  148 
Mass.  359;  Cooke  v.  Pearce,  23  S.  C.  240;  Hawkins  v.  Neal,  60  Miss.  257;  Coffing 
v.  Hardy,  86  Ind.  372;  Bearden  v.  Moses,  7  Lea,  459;  Potter  et  al.  v.  Sheets,  5 
Ind.  App.  506,  32  N.  E.  811;  Herman  v.  Gunter,  83  Tex.  66,  18  S.  W.  428,  29 
Am.  St.  Rep.  632,  text  cited;  Banister  v.  Kenton,  46  Mo.  App.  464;  Grand  River 
Cottage  V.  Robertson,  72  Mo.  App.  7.    In  a  suit  by  an  indorsee  of  a  promissory 


§  174a  CONSIDERATION    OPEN   TO    INQUIRY  229 

(2)  By  an  indorsee  against  a  prior,  but  not  his  immediate,  indorser;  ^^ 

(3)  By  the  indorsee  against  the  acceptor  of  a  bill/^  nor  by  the  payee 
against  the  acceptor  of  a  bill,  as  a  general  rule.^^    They  are  regarded 


note  against  the  maker  thereof,  the  defendant  cannot  controvert  the  title  of  the 
plaintiff  upon  the  ground  of  an  assignment  by  him  as  executor  to  himself  as  an 
individual,  such  assignment  not  being  void,  but  merely  voidable  at  the  election 
of  those  who  are  parties  at  interest  in  the  estate  represented  by  the  executor. 
Tyson  v.  Bray,  117  Ga.  689,  45  S.  E.  74.  In  an  action  by  the  transferee  of  a  note 
against  the  maker,  the  maker  cannot  set  up  a  defense  of  want  of  consideration  for 
the  transfer  or  that  the  tran.sf('rrer  was  so  weak  mentally  as  to  have  been  over- 
reached by  the  transferee;  if  the  transferrer  had  been  insane,  this  would  have 
rendered  the  note  and  transfer  void.  Walker  v.  Winn,  142  Ala.  560,  39  So.  12, 110 
Am.  St.  Rep.  50. 

63.  Etheridge  v.  Gallagher,  55  Miss.  464;  1  Parsons  on  Notes  and  Bills,  176. 

64.  Flower  v.  Sadler,  10  Q.  B.  Div.  572,  37  Eng.  Rep.  453,  Cotton,  L.  J.,  say- 
ing: "The  defense  in  this  case  is  that  the  bills  were  indorsed  (by  the  drawer)  upon 
an  illegal  consideration.  *  *  *  I  am  of  opinion  that,  in  strict  law,  the  defendant 
cannot  raise  this  point,  for  he  is  an  acceptor,  and  in  order  to  escape  Hability,  he 
must  show  that  the  bills  of  exchange  were  indorsed  to  the  plaintiff  in  fraud  of 
himself."  See  also  Gresham  v.  Ragsdale,  145  Ala.  683,  40  So.  99;  Johnson  County 
Sav.  Bank  v.  Kramer,  42  Ind.  App.  54S,  86  N.  E.  84. 

66.  Hoffman  &  Co.  v.  Bank  of  Milwaukee,  12  Wall.  181;  Law  v.  Brinker,  6 
Colo.  556;  Floumoy  v.  First  Nat.  Bank,  79  Ga.  814;  Tolerton  Stetson  Co.  v. 
Anglo-California  Bank,  1 12  Iowa,  706,  84  N.  W.  930,  .50  L.  R.  A.  777;  Vanstrum  v. 
Liljengren,  37  Minn.  191;  Blaistlell  Jr.  Co.  v.  Citizens'  Nat.  Bank,  96  Tex.  626, 
75  S.  W.  292,  62  L.  R.  A.  968,  97  Am.  St.  Rep.  944.  In  Laflin  &  R.  Powder  Co.  v. 
Sinsheimer,  48  Md.  411,  Robinson,  J.,  said:  "The  payee  or  holder  gives  value  to 
the  drawer,  and  if  he  is  ignorant  of  the  equities  between  the  drawer  and  acceptor, 
he  is  in  the  position  of  a  bona  fule  indorsee."  In  Arpin  v.  Owens,  140  Ma.ss.  144, 
a  consignor  who  had  been  in  the  habit  of  drawing  bills  of  exchange  on  his  con- 
signee, with  bills  of  lading  attached  to  the  drafts  drawn,  drew  bills  on  him  with 
forged  bills  of  lading  attached  to  the  drafts,  and  had  the  drafts,  with  the  forged 
bills  of  lading  so  attached,  discounted  in  the  ordinarj'  course  of  business  by  a 
bank  ignorant  of  the  fraud,  and  the  consignee,  not  knowing  of  the  forgery,  paid 
the  drafts,  and  it  was  held  that  there  was  no  recourse  by  the  consignee  against  the 
bank.  See  the  opinion  of  the  court,  p.  190.  In  Marsh  v.  Low,  55  Ind.  271,  breach 
of  warranty  on  sale  of  personal  property  by  the  drawee  to  drawer  was  held  no 
defense  to  acceptor.  The  rule  does  not  apply  to  nonnegotiable  paper.  Hunt  v. 
Williams,  10  Atl.  645.  An  exception  to  the  rule  Ls  found  in  those  cases  where  the 
acceptance  is  qualified  or  conditional,  as,  e.  g.,  "Subject  to  contract."  Haseltine 
v.  Dunbar,  62  Wis.  162.  When  at  the  time  an  order  was  drawn,  the  drawer  was 
indebted  to  the  payee  and  the  drawee  owed  the  drawer  an  amount  sufficient  to 
pay  the  order,  the  acceptance  of  the  order  rendered  the  drawee  the  principal  and 
original  debtor  to  the  payee  of  the  order  for  the  entire  amount  of  the  order,  and 
the  acceptor  could  not,  in  an  action  on  the  order,  introduce  evidence  purporting 
to  show  a  want  of  consideration  for  drawing  the  order.  Ragsdale  v.  Gresham,  141 
Ala.  308,  37  So.  367. 


230  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  175 

as  remote  parties  to  each  other,  and  between  such  parties  two  distinct 
considerations  must  be  inquired  into  in  order  to  perfect  a  defense 
against  the  holder:  (1)  The  consideration  which  the  defendant  re- 
ceived for  his  HabiHty;  and  (2)  That  which  the  plaintiff  gave  for  his 
title.^^  And  if  any  intermediate  holder  gave  value  for  the  instrument, 
that  intervening   consideration   will   sustain   the   plaintiff's   title.^^ 

§  175.  Real  relations  of  parties. — Who  are  the  immediate  par- 
ties to  a  bill  or  note,  however,  does  not  always  appear  on  its  face. 
The  name  of  the  payee  is  often  left  blank,  or  there  is  an  indorsement 
in  blank  upon  the  instrument,  and  in  such  cases  when  the  blank  is 
filled  up  with  the  holder's  name,  he  would  appear  to  be  the  original 
payee  or  indorsee.^^  In  such  cases  the  holder  may  show  that  his 
ostensible  is  not  his  real  relation  to  the  paper;  and  the  want  or  failure 
of  consideration  cannot  be  pleaded  against  him  if  he  show  that  it  has 
passed  through  intermediate  hands,  and  that  he  is  not  the  immediate 
promisee  of  the  party  attempting  the  defense.^^ 

And  so  the  holder  of  a  note  who  is  the  payee  may  show  that  the 
transaction  originally  was  in  the  form  of  a  note  made  by  the  maker 

66.  Hoffman  &  Co.  v.  Bank  of  Milwaukee,  12  Wall.  181;  Goetz  v.  Bank  of 
Kansas  City,  119  U.  S.  556;  Craig  v.  Sibbett,  15  Pa.  St.  240;  United  States  v. 
Bank  of  Metropolis,  15  Pet.  393;  Swift  v.  Tyson,  16  Pet.  1;  Robinson  v.  Rey- 
nolds, 2  Q.  B.  196  (42  Eng.  C.  L.);  Thiedcmann  v.  Goldsmith,  1  De  Gex,  F.  &  J. 
4;  Hunter  v.  Wilson,  19  L.  J.  Exch.  8,  4  Exch.  489;  Spurgin  v.  McPheeters,  42 
Ind.  527;  National  Park  Bank  v.  Saitta,  111  N.  Y.  S.  927,  127  App.  Div.  624, 
affirmed  196  N.  Y.  548,  89  N.  E.  1106,  citing  text. 

67.  Byles  on  Bills  (Sharswood's  ed.),  236;  1  Parsons  on  Notes  and  Bills,  192; 
Hunter  v.  Wilson,  4  Exch.  489;  Boyd  v.  McCann,  10  Md.  118;  Howell  v.  Crane, 
12  La.  Ann.  126;  Watson  v.  Flanagan,  14  Tex.  354;  Roscoe  on  Bills,  111;  Kyd  on 
Bills,  277;  Story  on  Bills,  §  188;  Johnson  on  Bills,  80.  See  chapter  XXIV,  on 
Rights  of  Bona  Fide  Holder  or  Purchaser,  §  803  et  seq.  Farber  v.  National  Forge 
&  Iron  Co.,  140  Ind.  54,  39  N.  E.  239,  citing  the  text. 

68.  Brummel  v.  Enders,  18  Gratt.  873;  Hoffman  &  Co.  v.  Bank  of  Milwaukee, 
12  Wall.  193. 

69.  Ibid.;  Cagle  v.  Lane,  49  Ark.  467,  citing  the  te.xt;  Munroe  v.  Bordier,  8 
C.  B.  862;  Arbouin  v.  Anderson,  1  Q.  B.  498;  Glasscock  v.  Rand,  14  Mo.  550; 
Horn  V.  Fuller,  6  N.  H.  511;  ante,  §  145,  Sib;  Bank  v.  Layne,  101  Tenn.  45,  46 
S.  W.  762;  Bank  v.  Jefferson,  92  Tenn.  537,  22  S.  W.  211,  36  Am.  St.  Rep.  100; 
Montgomery  v.  Page,  29  Oreg.  320,  44  Pac.  689;  Lockhart  v.  Ballard,  113  N.  C. 
292,  18  S.  E.  34;  Reynolds  v.  Roth,  61  Ark.  317,  33  S.  W.  105.  In  an  action  against 
several  persons  on  a  check,  one  sued  as  the  maker  and  the  others  as  indorsers, 
the  payee  may  show  by  parol  that,  although  the  form  was  that  of  an  indorsement, 
the  parties  were  joint  makers  or  sureties.  James  v.  Calder,  7  Ga.  App.  107,  67 
S.  E.  1125. 


§  176  CONSIDERATION    OPEN   TO    INQUIRY  231 

for  the  accommodation  of  one  who  indorsed  it  to  the  holder;  and 
that  it  was  renewed  by  the  original  maker,  who  substituted  the  holder 
as  payee.  The  rights  of  the  parties  having  been  fixed  by  the  original 
note,  the  new  one  would  be  upon  sufl&cient  consideration  as  between 
the  payee  and  the  holder^® 

If  the  note  were  made  to  the  payee  for  his  accommodation,  and 
indorsed  by  him  to  a  holder  who  parts  with  nothing  on  the  faith  of 
its  transfer,  and  had  notice  of  its  accommodation  character,  upon 
these  facts  appearing,  the  holder  could  not  recover J^  And  an  accom- 
modation maker  is  entitled  to  the  benefit  of  any  defense  which  the 
payee  has  against  his  indorsee/^ 

§  176.  As  parol  evidence  is  admissible  to  show  that  the  relation  of 
the  parties  to  a  promissory  note  is  different  from  its  legal  effect,'^  it 
may  be  shown  that  there  was  an  agreement  that  one  signer  should 
assume  the  relations  of  principal  as  to  the  other,^*  so,  also,  that  the 
drawer  is  the  primary  debtor,  and  bound  to  the  acceptor,  although 
as  to  third  parties  the  acceptor  would  be  the  principal.  As,  for  in- 
stance, where  the  acceptance  has  been  upon  letters  of  credit,'^  or  for 
the  drawer's  accommodation.^^  So,  if  A.,  for  a  good  consideration 
moving  from  B.  to  him,  should  procure  C.  to  make  his  note  in  favor 
of  B.,  it  would  seem  that  it  would  be  no  sufficient  answer  in  an  action 
by  B.  against  C.  that  the  latter  received  no  consideration  from  A.," 
or  that  it  had  failed.^^    But  if  it  were  shown  that  there  was  no  con- 

70.  Mathiaa  v.  Kirsch,  87  Me.  526,  33  Atl.  19. 

71.  Powers  v.  French,  1  Hun,  .582;  Schultz  v.  Noble,  77  Cal.  79;  Hood  v.  Rob- 
bins  &  Smith,  98  Ala.  484,  13  So.  74. 

72.  SchwartzkoF)f  v.  Hill  (Pa.),  3  Cent.  913. 

73.  Enterprise  Brewing  Co.  v.  Canning,  210  Mass.  288,  96  N.  E.  673. 

74.  Canney  v.  Corey  (Me.),  83  A.  062. 
76.  Turner  v.  Browden,  5  Bush,  216. 

76.  Turner  v.  Browden,  5  Bush,  210.  See  also  Stark  v.  Alford,  29  Tex.  260; 
Trego  V.  Lowery,  8  Nebr.  238. 

77.  Ibid.;  Railroad  v.  Chamberlain,  44  X.  H.  497;  Lea  v.  Cassen,  61  Ala.  312; 
Yeatman  v.  Mattison,  59  Ala.  382. 

78.  South  Boston  Iron  Co.  v.  Brown,  63  Me.  139,  Barrows,  J.:  "Where,  at 
the  request  of  the  party  with  whom  he  deals,  one  makes  his  promissory  note, 
which  is  to  be  a  partial  paj-ment,  for  a  piece  of  work  to  be  done  for  him,  payable  to 
a  third  party,  who  is  a  creditor  of  the  party  with  whom  he  contracts  for  the  work, 
and  it  is  credited  by  the  payor  to  such  party,  in  good  faith,  the  maker  cannot  set 
up  the  defense  of  failure  of  consideration  as  between  himself  and  the  party  with 
whom  he  deals  in  defense  of  a  suit  upon  such  note  in  the  name  of  the  payee." 
Brown  v.  Weldon,  27  Mo.  App.  259,  citing  the  text. 


232  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  176 

sideration  between  A.  and  C.  the  maker,  or  that  such  consideration 
had  failed,  it  would  then  be  necessary  for  the  payee  B.  to  show  a 
consideration  moving  from  him  to  AJ^ 

And  if  the  consideration  between  the  party  requesting  the  execu- 
tion of  the  note  and  the  maker  were  illegal,  the  note  would  not  be 
valid,  notwithstanding  the  consideration  between  such  party  and 
the  payee  were  good,  if  the  payee  knew  the  consideration  moving 
the  maker  were  illegal.  To  hold  otherwise  would  furnish  an  easy  sub- 
terfuge to  escape  the  consequences  of  illegal  dealings.  Thus,  where  A. 
was  indebted  to  B.  for  intoxicating  liquors  sold  in  violation  of  law,  and 
B.  was  indebted  to  C.  for  a  legal  consideration,  and  A.,  at  B.'s  request, 
executed  a  note  with  mortgage  to  C,  who  knew  the  illegality  of  the 
debt  to  B.,  it  was  held  that  such  note  and  mortgage  was  invalid.**" 

So,  if  A.,  for  a  good  consideration  moving  from  B.  to  him,  au- 
thorizes him  to  draw  a  bill  on  C.  to  a  certain  amount  on  his  (A.'s) 
account,  and  B.  draws  accordingly,  and  C.  accepts,  C.  will  be  ab- 
solutely bound  to  B.,  the  drawer,  as  to  any  subsequent  bona  fide 
holder  for  value.^^  But  the  consideration  of  the  acceptance  failing, 
we  should  think  the  consideration  for  the  authority  from  A.  to  B. 
would  have  to  be  proven  .^^ 

79.  Aldrich  v.  Stockwell,  9  Allen,  4,5.  The  defendant  offered  to  show  that 
th(5  note  was  for  a  water-wheel  sold  by  Thompson  to  him  with  warranty,  which 
had  failed,  the  wheel  being  worthless,  and  had  been  made  payable  to  plaintiff 
at  Thompson's  request.  The  court  below  ruled  that  these  facts  constituted  no 
defense,  but  the  Supreme  Court  held  otherwise,  and  Gray,  J.,  said:  "If  such 
were  the  facts,  the  defendant  was  entitled  to  treat  the  sale  as  a  nullity;  and  the 
proof  of  entire  failure  of  consideration  would  have  rebutted  the  presumption  of 
consideration  arising  from  the  admission  of  the  making  of  the  note,  and  would 
have  established  a  complete  defense  as  between  the  original  i)arties  to  the  note. 
One  consideration  of  the  note  having  been  proved,  there  could  be  no  presumption, 
in  the  absence  of  evidence,  that  there  was  any  other,  and  the  defendant  was  not, 
therefore,  obliged  to  prove  that  there  was  no  other  consideration  for  the  note. 
If  there  was  any  other  consideration,  it  was  for  the  plaintiff  to  show  it.  As  the 
case  stood,  the  plaintiff  might  have  held  the  note  in  trust,  or  as  agent  for  Thomj)- 
son.  The  presiding  judge,  by  ruling  that  the  facts  offered  to  be  proved  by  the 
defendant  would  constitute  no  defense,  left  nothing  upon  which  he  could  go  to  the 
jury.  The  verdict  to  which  he  submitted  under  this  ruling  must,  therefore,  be 
set  aside.  Upon  a  new  trial,  it  will  be  open  to  the  plaintiff  to  show,  if  he  can, 
that  the  consideration  which  failed  was  not  the  only  consideration  for  the  note, 
but  there  was  another  valuable  consideration  for  it  moving  from  the  plaintiff  to 
Thompson." 

80.  Baker  v.  Collins,  9  Allen,  253. 

81.  Wilson  V.  Crosnoe,  53  Mo.  App.  241,  citing  text;  Pillaus  v.  Van  Mierop, 
3  Burr.  1663;  1  Parsons  on  Notes  and  Bills,  183. 

82.  Aldrich  v.  Stockwell,  9  Allen,  45. 


§   177  CONSIDERATION    OPEN    TO   INQUIRY  233 

If  the  original  consideration  were  tainted  with  fraud  or  illegahty, 
or  has  failed  in  whole  or  in  part,  and  the  bill  or  note  has  passed  into 
the  hands  of  a  bona  fide  holder  for  value  without  notice,  yet  if  it  be 
returned  for  a  valuable  consideration  to  the  payee  who  is  a  privy  to 
the  original  consideration,  he  could  stand  upon  no  better  footing  than 
if  the  instrument  had  remained  in  his  hands.^^ 

§  177.  Defenses  between  privy  parties. — That  the  bill  or  note 
has  been  lost  or  stolen,*^  or  was  executed  under  the  exercise  of  undue 
influence,^^  or  under  duress,^^  or  under  fraudulent  misrepresenta- 

83.  Sawyer  v.  Wisewell,  9  Allen,  42;  Kost  v.  Bender,  25  Mich.  616  (see  post, 
§  805);  Cline  v.  Templeton,  78  Ky.  550. 

84.  Mills  V.  Barber,  1  M.  &  W.  425. 

85.  Bade  v.  Feay,  63  W.  Va.  166,  61  S.  E.  348  (1908). 

86.  Southern  Hardware  &  Supply  Co.  v.  Lester,  166  Ala.  86,  52  So.  328  (as  to  a 
check  obtained  by  dureas);  Ilensinger  v.  Dyer,  147  Mo.  219,  48  S.  W.  912;  Clark 
V.  Peace,  41  N.  li.  414;  Grifnth  v.  SitKreaves,  90  Pa.  St.  161;  City  Nat.  Bank  v. 
Kusworm,  91  Wis.  160;  City  Nat.  Bank  of  Dayton,  Ohio,  v.  Kusworm,  88  Wis. 
89;  Knott  v.  Tudyman,  86  Wis.  164,  56  N.  W.  632.  See  §  847.  If  a  note  and  raort- 
pape  were  void  because  contrary  to  pubhc  policy  on  account  of  duress,  their 
delivery  without  duress  would  not  render  them  valid.  Henry  v.  State  Bank  of 
Laurens,  131  la.  97,  107  N.  W.  1034.  In  Nebraska  Mut.  Bond  Ass'n  v.  Klee,  70 
Nebr.  383,  97  N.  W.  476,  the  court  said  that  this  State  has  taken  its  place  in  line 
with  the  more  advanced  position;  to  constitute  duress  sufficient  to  avoid  a  con- 
tract in  this  State,  the  means  atioptetl  need  only  be  of  a  character  necessary  to 
overcome  the  will  and  desire  of  the  injured  party,  wh(>ther  that  person  be  below 
or  above  the  average  person  in  firmness  and  courage,  and  whether  the  means 
employetl  come  within  the  common  law  definition  of  duress  or  otherwise;  and 
under  this  view  of  the  law,  the  jury  is  properly  directed  to  inquire  into  the  mental 
capacity  of  the  defendant,  and  whether  the  threats,  whatever  they  were,  prob- 
ably deprived  him  of  his  free  will,  inducing  him  to  make  a  contract  that  he 
would  not  otherwise  have  made,  rather  than  to  the  particular  threats  made  to 
see  whether  they  meet  with  an  arbitrary  .stanthird  which  may  or  may  not  be 
applicable  to  the  person  injured.  In  the  following  cases  the  circumstances  were 
held  to  show  duress:  Brueggestra<lt  v.  Ludwig,  184  111.  24,  56  N.  E.  419,  affirming 
82  111.  App.  435  (conduct  amounting  to  moral  duress);  Henry  v.  State  Bank  of 
Laurens,  131  la.  97,  107  N.  W.  1034  (threat  to  a  woman  to  prosecute  her  brother); 
Thompson  v.  Hicks  (Tex.  Civ.  App.),  100  S.  W.  357  (threat  to  prosecute  for  a 
criminal  offense,  where  the  payee  was  not  connected  with  the  crime,  and  though 
the  offense  was  actually  committed);  Delta  County  Bank  v.  McGranahan,  37 
Waah.  307,  79  Pac.  796  (threat  of  criminal  prosecution  of  maker's  husband). 
Under  a  statute  pro\nding  that  an  apparent  consent  is  not  real  or  free  when  ob- 
tained through  duress,  and  that  "duress  consists  in  unlawful  detention  of  the 
property  of  any  such  person,"  where  an  order  was  obtained  from  the  drawer  as  a 
condition  to  releasing  property  which  was  held  under  an  attachment  issued  with- 
out jurisdiction,  the  property  was  illegally  detained  and  the  order  was  made  under 


234  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  177 

tions,^^  or  for  fraudulent  consideration,^  or   for  illegal  considera- 

duress,  under  the  statute.    Harlan  v.  Gladding,  McBean  &  Co.,  7  Cal.  App.  49, 
93  Pac.  400.     Under  statutes  essentially  modifying  the  strictly  defined  doctrine 
of  duress  at  common  law,  it  was  held  that  a  plea  presented  a  good  plea  of  duress 
when  it  alleged  in  substance  that  the  makers,  the  year  before  the  note  was  given, 
had  placed  the  payee  in  control  of  their  business  in  North  Carolina;  that  he  had  a 
thorough  knowledge  and  control  of  such  business;  that  he  had  entered  into  nu- 
merous contracts  involving  large  sums  of  money;  that  he  had  collected  and  had 
in  possession  money  belonging  to  the  makers;  that  he  had  control  of  contracts  and 
other  property  relating  to  their  business;  that  no  one  but  the  payee  could  carry  on 
the  business  without  financial  loss,  that  payee  was  insolvent;  and  that  payee 
threatened  to  leave  the  employ  of  makers  and  take  with  him  their  money,  con- 
tracts and  other  property,  unless  they  gave  him  the  notes.    Whitt  v.  Blount,  124 
Ga.  671,  53  S.  E.  205.    This  would  seem  to  be  an  extreme  ruling  on  what  con- 
stitutes duress.     In  the  following  cases  it  was  held  that  the  circumstances  did 
not  amount  to  duress:  Bond  v.  Kidd,  122  Ga.  812,  50  S.  E.  934  (threat  to  insti- 
tute a  civil  action);  Jones  v.  Peterson,  117  Ga.  58,  43  S.  E.  417  (given  while  maker 
was  under  arrest  under  a  warrant  charging  him  with  being  the  father  of  a  bastard 
child);  Barger  v.  Farnham,  130  Mich.  487,  90  N.  W.  281  (threat  to  maker  while  in 
jail  to  furnish  damaging  information  to  prosecuting  officer,  occurring  two  weeks 
before  executing  note);  Slade  v.  Montgomery,  65  N.  Y.  S.  709,  53  App.  Div.  343; 
Fred  Rueping  Leather  Co.  v.  Watke,  135  Wis.  616,  116  N.  W.   174  (maker 
knew  that  his  partner  had  purchased  property  from  thief) ;  Bennett  v.  Luby, 
112  Wis.  118,  88  N.  W.  37  (made  in  settlement  two  weeks  after  maker  had 
been  told  by  his  partner  that  he  had  enough  evidence  to  send  the  maker  to  the 
State's  prison);  Barrett  v.  Mahnken,  6  Wyo.  541,  48  Pac.  202,  71  Am.  St.  Rep. 
953  (threat  to  kill  a  third  person  who  at  the  time  was  in  a  distant  State).    A  threat 
of  arrest,  imprisonment,  and  prosecution  does  not  constitute  duress,  unless  the 
person  so  threatened  is  charged  with  having  committed  an  act  or  acts  constituting 
a  crime  or  misdemeanor.    Bond  v.  Kidd,  1  Ga.  App.  798,  57  S.  E.  944.    A  threat- 
ened lawful  arrest  or  prosecution,  which  does  not  imply  harsh  or  unusual  use  of 
criminal  process,  and  where  no  warrant  has  been  issued,  and  there  is  no  danger  of 
the  threat  being  immediately  carried  out,  does  not  constitute  duress.    Wolff  v. 
Bluhn,  95  Wis.  257,  70  N.  W.  73,  60  Am.  St.  Rep.  115.    The  fact  that  the  pres- 
ident of  a  corporation  told  the  manager  that  for  a  shortage  a  recovery  would  be 
had  on  his  bond  was  not  a  threat  of  arrest  invalidating  notes  given  for  such 
shortage,  though  the  manager  believed  that  his  failure  to  pay  might  result  through 
the  bonding  company  in  a  prosecution  for  embezzlement.    Murray  Show  Case  & 
Fixture  Co.  v.  Sullivan,  15  Cal.  App.  475,  115  Pac.  259.    Where  a  contract  is 
procured  by  duress,  it  is  not  void  but  voidable,  and  if  the  party  elects  to  repudiate, 
he  must  do  so  within  a  reasonable  time  after  the  duress  has  been  removed;  if  the 
maker  makes  partial  payments  on  a  note  for  years,  he  caimot  defend  on  the  ground 
that  it  was  obtained  by  duress.    Bushnell  v.  Loomis,  137  S.  W.  257,  234  Mo.  371, 
36  L.  R.  A.  (N.  S.)  1029.    The  burden  is  upon  the  defendant  to  prove  that  the 
note  was  obtained  from  him  by  duress.    Nebraska  Mut.  Bond  Ass'n  v.  Klee,  70 
Nebr.  383,  97  N.  W.  476. 

87.  Hass  V.  Hall  &  Farley,  111  Ala.  442,  20  So.  78;  Case  of  Cunyus  v.  Guenther, 

88.  Rogers  v.  Morton,  12  Wend.  484;  Leavitt  v.  Taylor,  163  Mo.  158.    Persona 


§  177  CONSIDERATION    OPEN   TO    INQUIRY  235 

tion,^^  or  has  been  fraudulently  obtained  from  an  intermediate 
holder,^  or  been  in  any  way  the  subject  of  fraud  or  felony,^'  or  has 

96  Ala.  564,  11  So.  869;  House  v.  Martin,  125  Ga.  642,  54  S.  E.  735;  Farkas  v. 
Monk,  119  Ga.  515,  46  S.  E.  670;  Turner  v.  Ware,  2  Ga.  App.  57,  58  S.  E.  310; 
Tucker  v.  Roach,  139  Ind.  275,  38  N.  E.  822;  Union  Central  Life  Ins.  Co.  v. 
Huyck,  5  Ind.  App.  474,  32  N.  E.  580;  Hutchinson  v.  Bogg,  28  Pa.  St.  294;  Ameri- 
can Nat.  Bank  v.  Cruger  et  al,  91  Tex.  446,  44  S.  W.  278;  City  Nat.  Bank  of  Col- 
umbus, Ohio,  V.  Jordan,  139  la.  499,  117  N.  W.  758;  Ditto  v.  Slaughter  (Ky.),  92 
S.  W.  2;  Merchants'  &  Farmers'  Bank  v.  Cleland  (Ky.),  77  S.  W.  176,  719;  McNeill 
V.  Bay  Springs  Bank  (Miss.),  55  So.  333;  Pha^nix  Ins.  Co.  v.  Owens,  81  Mo.  App. 
201;  Mueller  v.  Buch,  71  N.  J.  L.  486,  58  Atl.  1092;  Bank  of  Commerce  v.  Broyles, 
16  N.  M.  414,  120  Pac.  670;  Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108 
S.  W.  1068;  Mayes  v.  McElroy  (Tex.  Civ.  App.),  81  S.  W.  344;  Vathir  v.  Zane,  6 
Gratt.  246;  Daniel  v.  Glidden,  38  Wash.  556,  80  Pac.  811.  See  also  post,  under 
§  193.  But  not  the  fraudulent  misrepresentations  of  a  co-obligor.  Vass  v.  Rid- 
dick,  89  N.  C.  6.  Fraudulent  conduct  of  a  person  other  than  the  payee  or  some 
person  in  privity  with  him,  is  no  defense.  Roth  v.  Donnelly  Grocery  Co.,  70 
S.  E.  140,  8  Ga.  App.  851.  The  fraudulent  representations  must  have  been  the 
moving  cause.  Southard  v.  Arkansas  Valley,  etc.,  R.  Co.,  24  Okl.  408,  103  Pac. 
750.  So  long  as  the  drawer  of  a  check  remains  undischarged,  a  defense  that  the 
check  was  obtained  under  false  pretenses  is  open  both  to  him  and  to  the  bank. 
Times  Square  Automobile  Co.  v.  Rutherford  Nat.  Bank,  77  N.  J.  L.  649,  73  Atl. 
479.  Where  a  note  is  given  in  purchase  of  a  business,  assertions  that  the  business 
would  make  a  bushel  of  money  a  day,  and  similar  prophecies  and  puffs  are  not 
such  false  representations  as  will  avoid  the  note.  Black  v.  Epstein,  93  Mo.  App. 
459,  67  S.  W.  736.  A  debtor  who  gives  his  note  to  a  creditor  for  a  valid  subsisting 
debt,  induced  to  do  so  by  certain  statements  of  the  creditor,  cannot  set  up  as  a 
defense  to  said  note  that  such  statements  were  fal.se  and  fraudulent,  without 
also  alleging  and  proving  injury  and  damage.  Bowen  v.  E.  A.  Waxelbaum  & 
Bro.,  2  Ga.  App.  521,  58  S.  E.  784.  In  an  action  by  the  payee  of  a  note  against 
an  indorser,  wherein  the  indorser  alleges  that  he  was  induced  to  become  an  in- 
dorser  through  false  and  fraudulent  representations  made  to  him  by  the  payee,  it 
is  not  necessarj'  to  offer  to  rescind  the  maker's  contract  or  to  restore  that  which  the 
maker  may  have  received  as  consideration  for  the  note,  as  the  contract  of  the  in- 
dorser is  separate  and  distinct  from  the  maker's  contract  as  maker.  Roesslc  v. 
Lancaster,  104  N.  Y.  S.  217,  119  App.  Div.  368,  114  N.  Y.  S.  387,  130  App.  Div.  1. 

who  have  signed  a  note  knowing  that  the  conditions  to  the  purchase  of  the  prop- 
erty for  which  the  note  was  given  have  not  been  carried  out,  waived  any  fraud. 
Hakes  v.  Thayer,  131  N.  W.  174,  165  Mich.  476. 

89.  Edmonds  v.  Groves,  2  M.  &  W.  642;  Bingham  v.  Stanley,  2  Q.  B.  117; 
Shirley  v.  Howard,  53  111.  455;  Holden  v.  Cosgrove,  12  Gray,  216. 

90.  1  Parsons  on  Notes  and  Bills,  188.  An  agreement  by  the  makers  of  a  note 
for  its  transfer  from  the  payee  to  another,  and  recognizing  its  validity,  does  not 
preclude  the  defense  that  its  execution  was  fraudulently  procured  and  that  it 
was  without  consideration,  where  the  makers  were  not  aware  of  the  fraud  nor 
want  of  consideration  when  the  agreement  was  made,  and  where  the  indorsee  and 
holder  was  acquainted  with  these  facts.     Murchison  v.  Nies  (Kan.),  123  P.  750. 

91.  Holden  v.  Cosgrove,  12  Gray,  216;  Western  Bank  v.  Mills,  7  Cush.  546; 


236  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  177 

been  misappropriated  and  diverted,^-  or  that  it  was  given  as  collat- 
eral security j**^  or  for  a  loss  for  which  party  was  not  liable,  or  that 
otherwise  it  was  without  valuable  consideration,^^  is  a  good  defense 
as  between  the  parties  privy  to  it.  And  in  some  cases  that  it  was 
given  by  mistake  for  too  great  a  sum,  or  when  no  sum  was  due,  the 
evidence  showing  fraud  or  a  total  or  partial  want  of  consideration.^^ 

Gibson  v.  Feency,  6G  Wash.  531,  120  Pac.  97.  Whore  the  defense  of  fraud  in  the 
medical  treatment  of  defendant  wtus  set  up  in  an  action  on  a  note,  and  it  waa  ad- 
mitted that  the  note  was  given  in  place  of  a  previous  note  given  for  medical  treat- 
ment of  defendant's  wife,  evidence  of  the  fraud  alleged  was  properly  rejected. 
Hoag  V.  Nanstad,  139  Wis.  455,  121  N.  W.  125.  The  presumption  that  the  maker 
of  a  note,  who  signed  it  with  his  mark,  was  acquainted  with  the  contents  of  the 
note,  cannot  be  overcome  without  evidence  that  imposition  or  fraud  was  prac- 
ticed upon  him  to  procure  his  signature  to  the  note.  Dawson  v.  Wombles,  123 
Mo.  App.  340,  100  S.  W.  547. 

92.  Merchants'  Nat.  Bank  v.  Comstock,  55  N.  Y.  24. 

93.  Leighton  v.  Bowen,  75  Me.  504. 

94.  Dexter  Sav.  Bank  v.  Copeland,  77  Me.  269.  See  State  v.  Hardware  Co., 
147  Mo.  366,  48  S.  W.  927.  Where  a  new  note  was  given  in  renewal  of  the  maker's 
joint  obligation  on  another  note  under  representations  that  the  payee  of  the 
other  note  had  instructed  an  attorney  to  collect  the  amount  due  thereon,  when 
in  fact  the  original  note  had  been  satisfied  by  one  of  the  other  parties  to  it  and 
an  assignment  of  it  taken  by  him,  the  new  note  was  without  consideration.  Gil- 
lespie V.  Salmon,  2  Cal.  App.  501,  84  Pac.  310. 

95.  Forman  v.  Wright,  11  C.  B.  481.  A  case  where  payee  induced  maker  to 
give  note  for  too  great  a  sum,  through  mistake;  Southall  v.  Rigg,  11  C.  B.  481. 
In  this  case  nothing  was  due  payee,  and  there  was  deception.  Held,  that  as  in 
Forman  v.  Wright,  consideration  was  wanting  in  part,  here  it  was  wanting  in 
tolo.  See  post,  §  201;  Earle  v.  Robinson,  91  Hun,  303,  36  N.  Y.  Supp.  178;  Ault- 
man.  Miller  &  Co.  v.  Seichting,  126  Ind.  137,  25  N.  E.  894;  Fellers  v.  Penrod, 
57  Nebr.  463,  77  N.  W.  1085;  Hardison  v.  Davis,  131  Cal.  635,  63  Pac.  1905. 
That  a  note  is  given  in  settlement  of  a  balance  mistakenly  supposed  to  exist  in 
favor  of  the  payee,  when,  in  truth,  nothing  is  due,  is  always  a  defense  in  an  ac- 
tion brought  by  the  original  payee  of  the  promise,  or  by  an  indorsee  with  notice 
of  the  alleged  affirmity.  Widlerman  v.  Donnelly,  86  Minn.  184,  90  N.  W.  366. 
The  right  to  resist  a  recovery  of  the  whole  amount  for  which  a  check  was  given 
on  account  of  a  mistake  of  fact  cannot  be  defeated  because  the  maker  of  the 
check  was  careless  in  thinking  that  he  owed  the  amount  stated.  Thompson  v. 
National  Bank  of  Commerce,  132  Mo.  App.  225,  110  S.  W.  681.  Where  a  maker, 
admits  the  execution  of  the  note,  but  alleges  a  mistake  of  the  draftsman  in  writ- 
ing the  notes  for  a  certain  sum  more  than  was  right,  a  judgment  for  the  uncon- 
troverted  part  of  the  note  was  proper.  Bitzer  v.  Utica  Lime  Co.  (Ky.),  76  S.  W. 
20.  In  the  case  of  Bergmann  v.  Salmon,  79  Hun,  456,  29  N.  Y.  Supp.  968,  it 
was  decided  that  where  a  note  and  collateral  security  thereto  were  given  under  a 
mistake  of  the  maker  as  to  the  personality  of  the  party  receiving  them,  and  were 
accepted  by  such  person,  with  knowledge  of  the  maker's  mistake,  and  of  the 
rights  of  the  other  party  thereto,  such  note  was  void  in  its  inception  for  fraud. 


§  178  CONSIDERATION    OPEN    TO    INQUIRY  ^37 

The  same  defense  which  the  defendant  might  make  to  an  action  by 
an  indorsee  of  the  note  given  b}^  him,  and  the  same  requirement  of 
proof  may  be  made  by  him  in  an  action  on  a  renewal  of  a  former 
note,  both  notes  being  regarded  as  given  upon  the  same  considera- 
tion.96 

§  178.  Consideration  of  bills  purchased  for  remission  of  money. — 

Th(!  writers  upon  foreign  bills  contt'mplate  f(nir  parties  to  the  trans- 
action. 1.  The  giver  of  value  or  purchaser  of  the  bill  which  is  drawn 
for  remittance — such  purchaser  desiring  the  draft  for  money  on  a 
foreign  place  being  called  the  remitter.  2.  The  drawer  of  the  bill. 
3.  The  drawee  abroad.  4.  The  payee.  The  ordinary  course  of  dealing 
with  reference  to  such  foreign  bills  begins  by  the  sale  of  the  bill  by 
the  drawer  to  some  person  other  than  the  payee;  and  it  does  not 
contemplate,  therefore,  that  the  consideration  for  the  bill  should 
necessarily  move  from  the  payee  to  the  drawer,  or  that  no  person 
but  the  drawer  should  have  a  right  to  confer  a  title  to  the  bill  upon 
the  payee.^^     In  such  case  there  would  be  no  privity  between  the 

96.  First  Nat.  Bank  of  Dalton  v.  Black,  lOS  Ga.  538,  34  S.  E.  143;  Pearson  v. 
Brown,  10.5  Ga.  802,  31  S.  E.  746;  McDonald  v.  Aufdengarten,  41  Nebr.  41,  59 
N.  W.  7G2.    See  §§  179,  205. 

97.  Munroe  v.  Bordier,  8  C.  B.  802  (05  Eng.  C.  L.).  In  thi.s  case  it  w:us  held 
that  where  the  purchaser  or  remitter  in  Ix)ndon  of  a  foreign  bill  pets  from  the 
drawer,  according  to  the  usage  in  Ix)n(lon,  credit  until  the  next  foreign  post-<iay 
for  the  amount,  and  delivers  the  bill  to  the  payee,  who  receives  it  hona  fitle  and 
for  value,  the  drawer  is  liable  for  the  amount  to  the  payee,  although,  in  conse- 
quence of  the  purchaser's  or  remitter's  failure  before  the  next  foreign  post-day, 
the  drawer  never  receives  value  for  it.  The  declaration  stated  that  A.  (the  de- 
fendant) made  a  bill  of  exchange,  and  directed  it  to  B.,  a  merchant  in  France, 
requiring  him  to  pay  th<>  amount  to  the  order  of  C.  (the  i)laintifT);  that  A.  de- 
livered the  bill  to  D.,  who  delivered  it  to  C;  and  that  B.  refu.sed  payment,  etc. 
A.  pleaded  that  he  made  and  deliv<'red  the  bill  to  D.  for  the  use  of  C,  on  the 
faith  and  terms  of  being  paid  the  price  and  value  thereof  according  to  the  usage 
of  merchants  in  that  behalf;  that  is  to  say,  on  the  next  foreign  post-day;  that 
neither  C.  nor  any  other  person,  then  or  at  any  time  before  or  since,  paid  him  the 
said  price  or  value  of  the  bill,  or  any  part  thereof;  that  he  never  had  any  value 
or  consideration  for  the  making  or  delivery  of  the  bill;  and  that  C.  always  held 
and  still  held  the  same  without  any  value  or  consideration  whatever  to  him  (A.) 
for  the  same.  Replication  that,  after  the  making  of  the  bill  and  before  it  became 
due,  D.,  who  appeared  to  be,  and  whom  C.  believed  to  be,  the  lawful  holder,  de- 
livered the  bill  to  him  for  a  good  and  valuable  consideration,  and  without  notice 
of  the  premises  in  the  plea  mentioned.  Held,  that  the  plea  was  no  answer  to  the 
action;  and  that  even  if  it  were  sufficient  to  call  upon  C.  to  show  bona  fides,  he 
did  so  by  his  replication.  In  Kyd  on  Bills  it  is  said  the  parties  to  bills  of  exchange 
are  generally  four,  two  at  the  place  where  the  bill  is  drawn  and  two  at  the  place 


238 


CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  178 


drawer  and  payee,  and  the  former  could  not  plead  against  the  latter 
for  the  want  or  failure  of  consideration. 

If  the  bill  be  delivered  by  the  drawer  to  the  remittee  upon  a  promise 
to  pay  the  price  next  day,  and  the  remitter,  witlujut  paying,  transmit 
the  bill  to  the  payee,  the  drawer  might  plead  no  consideration  to  the 
suit  of  the  latter,  provided  the  remitter  were  his  ag(>nt.'''^  But  if  the 
remitter  purchase  the  bill  on  credit  for  himself,  and  sell  it  in  good 
faith  to  the  payee,  the  drawer  could  not  resist  the  payee's  suit  for 
want  of  consideration  if  the  remitter  failed  to  pay  the  purchase 
money .^^  Thus,  if  Duncan,  Sherman  &  Co.,  of  New  York,  being 
indebted  to  Gilliatt  &  Sons,  of  London,  procure  Fisk  &  Hatch,  New 
York,  to  draw  a  bill  on  London,  in  favor  of  Gilliatt  &  Sons,  and  remit 
it  to  the  latter  in  payment  of  the  debt,  the  liability  of  Fisk  &  Hatch 
to  Gilliatt  &  Sons  will  be  absolute,  whether  any  consideration  for 
the  drawing  of  the  bill  has  been  paid  by  Duncan,  SluTman  &  Co.  or 
not.  But  if  Duncan,  Sherman  &  Co.  were  agents  of  Gilliatt  &  Sons 
in  purchasing  the  bill,  there  would  then  be  a  privity  between  Gilliatt 
&  Sons  and  Fisk  &  Hatch,  and  want  of  consideration  could  be 
pleaded. 


of  payment;  as  where  A.,  a  merchant  at  Amsterdam,  owes  money  to  B.,  a  mer- 
chant in  London,  instead  of  sending  the  money  in  specie  to  B.,  he  appHes  to  C, 
another  merchant  in  Amsterdam,  to  whom  D.,  a  fourth  person,  residing  in  London, 
is  indebted  to  an  equal  amount.  A.  pays  to  C.  the  money  in  question,  and  re- 
ceives from  him  a  bill  directed  to  D.  to  pay  the  amount  to  B.,  or  to  any  one  ap- 
pointed by  him,  who  sends  it  to  his  correspondent  B.,  with  an  order  that  the 
money  be  paid  to  him  by  D.    Kyd  on  Bills,  3. 

98.  Pugct  de  Bras  v.  Forbes,  1  Esp.  117.  The  plaintiff  resided  in  Holland, 
and  having  money  in  England,  employed  Aga.ssiz,  Rengcment  &  Co.,  as  his 
agents,  to  sell  it  out  and  to  remit  it  to  him  in  bills  on  Holland.  The  agents  bought 
of  the  defendants  bills  on  Holland  in  favor  of  the  plaint ifT;  and  it  was  proved  to 
be  the  custom  of  London,  for  persons  in  the  habit  of  remitting  foreign  bills,  to 
give  the  bills  on  one  day,  but  not  to  receive  the  money  for  them  until  the  next 
post-day.  The  bills  were  bought  on  February  17th,  and  the  next  post-day  was 
Tuesday,  February  21st.  On  Monday,  the  20th,  Agassiz,  Rengement  &  Co. 
stopped  payment,  so  that  the  defendants,  in  fact,  never  received  any  value  for 
the  bills  which  they  had  so  drawn  on  Holland  in  favor  of  the  plaintiff;  and  they 
having  ordered  their  correspondent  abroad  not  to  pay  the  bills,  an  action  was 
brought  against  them  by  the  plaintiffs,  as  drawers.  It  was  held  that  they  were 
not  bound. 

99.  Munroe  v.  Bordier,  8  C.  B.  872  (65  Eng.  C.  L.);  2  Rob.  Pr.  (new  ed.)  145. 


§  179  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  239 

SECTION   IV 

WHAT   ARE    SUFFICIENT   AND    LEGAL    CONSIDERATIONS 

§  179.  Valuable  and  gratuitous  considerations. — When  it  has 
been  determined  that  the  relations  of  the  parties  are  such  as  to 
admit  an  inquiry  into  the  consideration,  it  becomes  then  important 
to  ascertain  what  is  such  a  consideration  as  will  support  an  action 
upon  a  negotiable  instrument.  A  valuable  consideration  is  neces- 
sary to  support  any  contract,  and  the  rule  makes  no  exception  as 
to  the  character  of  the  consideration  respecting  negotiable  instru- 
ments when  the  consideration  is  open  to  inquiry.'  Therefore,  a  con- 
sideration founded  on  mere  love  and  affection,  or  gratitude,  is  not 
sufficient  to  sustain  a  suit  on  a  bill  or  note;  as,  for  instance,  when  a 
bill  or  note  is  accepted  or  made  l)y  a  parent  in  favor  of  a  child,  or 
vice  versa,  it  coukl  not  be  enforced  between  the  original  parties,  the 
engagement  being  gratuitous  upon  what  is  called  a  good,  in  contra- 
distinction to  a  valuable,  consideration.^ 

1.  Maynard  v.  Maynard,  105  Me.  567,  75  Atl.  299,  quoting  text.  Where  one 
exoruted  and  delivered  a  note  to  another  in  furtherance  of  a  common  venture, 
the  fact  that  there  is  a  partnership,  or  that  the  affairs  of  the  partnership  are  still 
unsettled,  con.stitutes  no  defense  note;  it  might  furnish  good  ground  for  trans- 
ferring the  action  to  the  equity  calendar.  Vapereau  v.  Holcombe,  122  Iowa, 
406,  98  N.  W.  279.  A  consideration  moving  to  one  of  several  joint  makers  of  a 
promi.ssor>'  note  Ls  good  aa  to  all.  First  Nat.  Bank  of  Scribner  v.  Colder,  89  Nebr. 
377,  131  N.  W.  6(X).  A  contract  giving  an  interest  in  land  to  the  maker  of  a  note 
is  sufficient  consideration  for  the  note.  Latzke  v.  Albrecht,  113  Minn.  322,  129 
N.  W.  508  (1911). 

2.  Story  on  Bills  (Bennett's  ed.),  181 ;  1  Parsons  on  Notes  and  Bills,  178;  Chitty 
on  Bills  (13th  Am.  ed.),  89;  HoUiday  v.  Atkin.son,  5  B.  &  C.  .501;  Easton  v.  Pra- 
chett,  1  Cromp.,  M.  &  R.  798,  2  Cromp.,  M.  &  R.  .542;  Sullivan  v.  Sullivan,  122 
Ky.  707,  92  S.  W.  966,  7  L.  R.  A.  (N.  S.)  156,  quoting  text;  Maynard  v.  May- 
nard, 105  Me.  567,  75  Atl.  299,  quoting  text;  Fuller  v.  Lambert,  78  Me.  325; 
Hill  v.  Buckminster,  5  Pick.  391,  overruling  Bowers  v.  Hurd,  10  Mass.  427; 
Brooks  v.  Owen,  112  Mo.  251,  19  S.  W.  723,  20  S.  W.  792,  citing  text;  Penning- 
ton V.  Gittings,  2  Gill.  &  J.  208;  Fink  v.  Cox,  18  Johns.  145;  Pearson  v.  Pearson, 
7  Johns.  26;  Shugart  v.  Shugart,  HI  Tenn.  179,  76  S.  W.  821,  102  Am.  St.  Rep. 
777,  citing  text;  Smith  v.  Kittridge,  21  Vt.  238;  Parker  v.  Carter,  4  Munf.  273. 
A  promissory  note  given  by  a  son  to  his  widowed  mother  for  money  paid  by  her 
for  his  board  while  at  college  and  his  college  education,  after  such  expenditure, 
without  promise  or  expectation  of  repayment  on  the  fact  of  either,  at  the  time 
of  such  expenditure,  wants  legal  consideration,  and  is  not  enforceable.  Gooch  v. 
Gooch,  70  W.  Va.  38,  73  S.  E.  56. 


240  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  180 

And  if  a  note  is  executed  and  delivered  with  the  intention  of 
presenting  it  as  a  gift,  and  is  afterward  taken  up  and  a  new  note 
given  in  its  stead,  the  renewed  note  is  without  valuable  considera- 
tion.^ And,  of  course,  a  note  given  by  a  parent  to  his  child  during 
his  lifetime  could  not  be  enforced  after  his  death  against  his  estate."* 

Under  Negotiable  Instrument  statute. — The  statute  defines  "value" 
as  any  consideration  sufficient  to  support  a  simple  contract,''  and  it 
has  been  said  thereunder  that  where  the  consideration  for  a  promise 
is  in  part  an  act  done  by  the  promisee  at  the  request  of  the  promisor 
by  which  the  former  sustains  any  loss,  trouble,  or  inconvenience  and 
of  a  benefit  to  him  who  makes  the  promise,  courts  of  law  or  of  equity 
will  not  in  the  absence  of  fraud  interfere  with  the  valuation  which  the 
parties  themselves  placed  upon  the  considerations  that  induced  the 
contract.* 

§  180.  Gift  of  note,  bill,  or  check. — It  seems  now  to  be  settled, 
that  a  bill,  note,  or  check,  delivered  by  the  maker  or  drawer  to  the 
payee  as  a  gift,  and  without  any  adequate  consideration,  but  in- 

3.  Copp  V.  Sawyer,  6  N.  11.  386;  Hill  v.  Buckminster,  5  Pick.  391.  See  §  205. 
But  if  one,  being  an  accommodation  indoracT,  upon  the  oriRinal  note,  thereaftcr- 
ward  indorses  a  renewal  of  the  same,  the  obligation  created  ther(>by  is  founded 
upon  a  sufficient  consideration.  See  Cutler  v.  Parsons,  13  App.  Div.  377,  43 
N.  Y.  Supp.  187;  First  Nat.  Bank  of  Dalton  v.  Black,  108  Ga.  538,  34  S.  E.  143; 
Pearson  v.  Brown,  105  Ga.  802,  31  S.  E.  746. 

4.  Callender  v.  Callender  (Ky.),  70  S.  W.  844;  Phelps  v.  Phelps,  28  Barb.  121. 
But  it  has  been  held  in  Massachusetts  that  a  promissory  note  given  by  one  to 
the  parents  of  a  child  with  the  proviso  that  said  child,  then  new-born,  be  named 
for  the  maker  and  giver  of  the  note  was  a  valid  consideration,  for  the  court  de- 
clared that  the  child  was  affected  more  than  any  one  else  by  this  name  being 
given  him,  inasmuch  as  it  deprived  him  of  the  advantage  of  receiving  any  other 
name,  and  subjected  him  to  the  possibility  of  detriment  because  he  bore  the 
name  imposed.  Further  than  this,  the  court  held  that,  "Assuming  that  the 
privilege  belonged  to  the  parents,  if  they  waive  the  right  in  favor  of  another,  we 
think  the  child  has  an  interest  in  the  name  which  it  shall  bear  analogous  to  the 
interest  which  the  child  has  in  its  own  services,  which  belong  to  the  father,  but 
which,  if  the  father  waives  his  right,  furnish  a  good  consideration  for  a  promis- 
sory note  given  to  the  child  by  a  person  to  whom  they  have  been  rendered.  Night- 
ingale V.  Withington,  15  Mass,  272.  See  Eaton  v.  Libbey,  165  Mass.  218,  42 
N.  E.  1127,  52  Am.  St.  Rep.  511,  for  above  opinion;  Richardson  v.  Richardson, 
148  111.  563,  36  N.  E.  608. 

6.  Appendix,  sec.  25.  Where  the  holder  of  a  note  for  $2,000,  upon  which  $500 
had  been  paid,  surrendered  the  note  for  another  note  for  $1,500,  the  holder  parted 
with  value.  Van  Norden  Trust  Co.  v.  Rosenberg,  114  N.  Y.  S.  1025,  62  Misc. 
285. 

6.  Russell  Electric  Co.  v.  Bassett,  79  Conn.  709,  66  Atl.  531. 


§  180  SUFFICIENT   AND    LgGAL   CONSIDERATIONS  241 

tended  by  him  to  be  paid,  cannot  be  enforced  as  against  the  donor 
or  his  personal  representative.^  But  a  note  given  "for  value  received 
and  his  kindness  to  me,"  would  be  good,  the  first  part  of  the  sentence 
denoting  an  adequate  consideration.^  The  indorsee  could  not  enforce 
against  his  indorser  a  note  indorsed  to  him  as  a  gift.^ 

Whore  a  note  without  consideration  was  delivered  to  the  payee 

7.  HoUiday  v.  Atkinson,  5  B.  &  C.  501,  8  Dowl.  &  R.  163;  Cloyes  v.  Cloyes, 
43  Sup.  Ct.  Rep.  145;  Simpson  College  v.  Tuttle,  71  Iowa,  596;  Loudermilk  v. 
Loudermilk,  93  Ga.  443,  21  S.  E.  77;  Mader  v.  Cool,  14  Ind.  App.  299,  42  N.  E. 
945,  56  Am.  St.  Rep.  304.  See  authorities  cited  in  notes  to  §§  24  and  24a.  A 
gift  of  money  by  check  is  not  consummated  until  there  has  been  a  payment  of 
the  check,  and  where  the  check  has  not  been  paid  during  the  lifetime  of  the  maker, 
the  gift  is  not  complete.  Pullen  v.  Placer  County  Bank,  138  Cal.  169,  71  Pac.  83, 
66  Pac.  740,  94  Am.  St.  Rep.  19.  See  also  Cox  v.  Walker,  140  Ky.  172,  130  S.  W. 
984,  and  Foxworthy  v.  Adams,  136  Ky.  403,  124  S.  W.  381,  27  L.  R.  A.  (N.  S.) 
308,  holding  further  that  where  a  check  has  been  accepted  upon  condition  that 
it  was  not  payable  until  the  death  of  the  maker,  it  was  not  good  as  a  gift  inter 
vivo.s.  The  intention  to  make  a  gift  and  payment  of  the  check  are  sufficient. 
Pickslay  v.  Starr,  149  N.  Y.  432,  44  N.  E.  163,  52  Am.  St.  Rep.  740.  A  note 
given  merely  as  evidence  of  an  advancement  paid  by  a  parent,  and  on  which  the 
maker  may  be  required  to  pay  interest  during  the  life  of  such  parent,  is  without 
consideration.  Baum  v.  Palmer,  105  Ind.  513,  76  N.  E.  108;  Nowack  v.  Leh- 
mann,  139  Mich.  474,  102  N.  W.  992;  Graham  v.  Alexander,  123  Mich.  168,  81 
N.  W.  1084.  A  note  given  by  a  son  to  his  father  was  without  consideration  when 
the  father  intended  to  give  his  son  the  money  when  he  paid  it.  Boblett  v.  Bar- 
low (Ky.),  83  S.  W.  145.  The  delivery  of  a  bank  book  and  an  order  for  less  than 
the  amount  of  deposit  is  sufficient  to  constitute  a  gift.  Wetherow  v.  Lord,  58 
N.  Y.  S.  778,  41  App.  Div.  413.  But  the  more  possession  of  a  bank  book  and  check 
signed  more  than  a  month  before  the  death  of  the  maker  of  the  check  is  not  suffi- 
cient evidence  of  a  gift  inter  vivos  of  the  moneys  deposited  in  the  bank.  Dinlay  v. 
McCuUagh,  36  N.  Y.  S.  1007,  92  Hun,  454.  Where  the  delivery  of  a  bank  check 
as  a  gift  is  coupled  with  an  intention  to  transfer  a  present  interest  in  the  money 
represented  by  the  check  and  no  revocation  is  attempted,  the  intent  of  the  donor 
should  be  given  effect  and  the  transaction  be  held  to  transfer  a  present  interest 
and  a  right  to  the  payment  of  the  check  after  the  default  of  the  drawer,  as  well  as 
before.  See  May  v.  Jones,  87  Iowa,  189,  54  N.  W.  231;  Richardson  v.  Richard- 
son, 148  111.  563,  36  N.  E.  608;  Beatty  v.  Western  College,  177  111.  281,  52  N.  E. 
432,  69  Am.  St.  Rep.  242.  Where  a  husband  made  notes  payable  to  his  wife  and 
deposited  them  in  a  bank  to  her  credit,  and  the  money  when  collected  was  de- 
posited to  her  credit,  this  constituted  a  gift  to  the  wife.  Planner  v.  Butler,  131 
N.  C.  151,  42  S.  E.  557,  92  Am.  St.  Rep.  773.  And  when  the  maker  directed  the 
payee  of  the  note  to  sell  the  same  in  his  lifetime  and  to  retain  the  proceeds  of 
such  sale,  the  gift  is  extended  by  the  negotiation  of  the  note.  Armstrong  v.  Arm- 
strong, 142  111.  App.  507. 

8.  Woodbridge  v.  Spooner,  3  B.  &  Aid.  2.35;  Cotton  v.  Graham,  84  Ky.  675; 
Mascolo  v.  Montesanto,  61  Conn.  50,  23  Atl.  714,  29  Am.  St.  Rep.  170. 

9.  Easton  v.  Pratchett,  1  Cromp.,  M.  &  R,  798. 

16 


242  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  181 

in  a  sealed  envelope,  on  the  condition  that  the  seal  should  not  be 
broken  in  the  maker's  lifetime,  and  the  maker  dying,  the  envelope 
was  opened,  it  was  held  that  the  payee  could  recover,  although 
he  did  not  know  the  contents  of  the  envelope  until  it  was  opened. ^° 

A  request  written  by  the  maker  below  a  promissory  note  that 
the  payee  will  accept  the  note  from  his  true  friend  the  writer,  is 
not  conclusive  as  matter  of  law  that  the  note  was  without  consid- 
eration, although  the  note  was  delivered  in  a  sealed  envelope,  whereon 
was  indorsed  a  request  not  to  open  it  till  after  the  writer's  death. ^^ 

Evidence  of  a  party's  pecuniary  circumstances  is  not  competent 
to  show  want  of  consideration.^-  In  general  the  mere  inadequacy 
of  consideration,  except  as  a  circumstance  bearing  upon  the  ques- 
tion of  fraud  or  undue  influence,  is  not  a  defense  to  a  promissory 
note.  If  no  part  of  the  consideration  was  wanting  at  the  time,  and 
no  part  of  it  subsequently  failed,  although  inadequate  in  amount, 
the  note  is  a  valid  obligation,  while  a  want  or  failure  of  consideration, 
in  whole  or  in  part,  is  a  good  defense  to  the  whole  note,  or  to  the 
extent  of  such  failure. ^^ 

§  181.  A  gift  of  a  negotiable  instrument  of  a  third  party  inter  vivos 
may  be  evidenced  by  the  circumstances  which  usually  attend  gifts 
of  personal  property,  as  that  it  must  be  voluntary  and  absolute,  and 
take  effect  at  once,  and  must  be  accompanied  by  a  delivery  to  the 
donee  or  to  someone  for  his  use  and  benefit.  ^^    Such  a  gift,  however, 

10.  Worth  V.  Case,  42  N.  Y.  362. 

11.  Dean  v.  Carruth,  108  Mass.  242;  Gammon  Theological  Seminary  v.  Rob- 
bins,  128  Ind.  85,  27  N.  E.  341. 

12.  Hartman  v.  Shaffer,  71  Pa.  St.  312. 

13.  Earl  v.  Peck,  64  N.  Y.  598;  Worth  v.  Case,  42  N.  Y.  362;  Cowee  v.  Cornell, 
75  N.  Y.  91;  Farber  v.  National  Forge  &  Iron  Co.,  140  Ind.  54,  39  N.  E.  249, 
citing  the  text;  Hertf elder  &  Cochran  v.  Clark  (Ga.  App.),  73  S.  E.  608. 
A  distinction  is  to  be  observed  between  want  or  failure  of  consideration, 
which  is  a  defense  or  defense  pro  tanto  to  an  action  between  the  parties,  and 
inadequacy  of  consideration,  which  does  not,  in  law,  constitute  a  defense.  Furber 
V.  Fogler,  97  Me.  585,  55  Atl.  514.  See  §  201.  Where  the  maker  of  the  note 
recognized  the  right  of  the  payee  to  rent  he  agreed  to  pay,  the  fact  that  he  stipu- 
lated to  pay  more  than  the  payee's  interest  in  the  property  was  actually  worth, 
affords  no  sufficient  reason  for  reUeving  him  of  the  effect  of  the  contract  fairly 
entered  into  by  himself.    Smith  v.  McLennan,  101  111.  App.  196. 

14.  Malone  v.  Lebus,  116  Ky.  975,  77  S.  W.  180;  Burchett  v.  Fink,  139  Mo. 
App.  381,  123  S.  W.  74;  Blazo  v.  Cochrane,  71  N.  H.  585,  53  Atl.  1026;  Clark  v. 
Gurley  (Tex.  Civ.  App.),  106  S.  W.  394.  See  also  Slade  v.  Mutrie,  156  Mass.  19, 
30  N.  E.  168,  holding  further  that  the  delivery  of  a  promissory  note  by  the  holder 
to  the  maker,  with  the  intention  of  transferring  to  him  the  title  to  the  note,  is  an 


§  182  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  243 

is  not  such  a  negotiation  of  it  in  the  usual  course  of  business  as  to  give 
the  donee  the  full  protection  which  is  extended  a  bona  fide  holder 
for  value.  And  if  the  donee  afterward  transfer  it  for  less  than  its 
value,  or  for  a  wholly  inadequate  consideration,  his  indorsee  can 
recover  from  a  prior  party  having  a  defense  against  the  donor  only 
what  he  himself  paid  for  it.^^  But  as  to  all  prior  parties  having  no 
defense  against  the  donor,  the  donee  can  himself  recover  the  whole 
amount,  ^^  and  a  fortiori,  an  indorsee  who  has  paid  only  a  partial 
consideration  may  recover  the  whole  amount  against  all  prior  parties 
who  have  no  defense  against  his  immediate  indorser." 

§  182.  A  mere  moral  obligation  not  sufficient.— A  mere  moral 
obligation,  although  coupled  with  an  express  promise,  will  not  con- 
stitute a  valuable  consideration,  and  it  is  only  where  there  is  a  pre- 
cedent duty  which  would  create  a  sufficient  legal  or  equitable  right 
if  there  had  been  an  express  promise  at  the  time,  or  where  there  is  a 
precedent  consideration,  that  an  express  promise  will  create  or  revive 
a  cause  of  action.^* 

extinguishment  of  the  note,  and  a  discharge  of  the  obligation  to  pay  it.  When  a 
note  was  delivered  to  a  third  person  as  the  agent  of  the  donor  and  not  as  trustee 
for  the  donee,  the  gift  faile<i  for  want  of  a  complete  delivery  to  the  donee.  Bick- 
ford  V.  Mattocks,  9.5  Me.  .547,  50  Atl.  894;  Clapper  v.  Frederick,  199  Pa.  St.  609, 
49  Atl.  218;  Jarrell  v.  Crow,  30  Tex.  Civ.  App.  629,  71  S.  W.  397.  A  delivery 
of  promissory  notes  of  another  by  the  donor  to  a  trustee,  with  direction  to  collect, 
and,  when  collected,  distribute  the  proceetls  among  name<l  cestuis  que  trustenl,  is 
a  good  gift  inter  i-ivos.  Calvin  v.  Free,  66  Kan.  466,  71  Pac.  823.  The  indorse- 
ment and  delivery  by  the  donor  of  a  check  payable  to  order  constitutes  a  valid 
donation  of  the  fund  represented  by  such  check.  Succession  of  Desina,  123  La. 
468,  49  So.  23. 

15.  Byles  on  Bills  (Sharswood's  e<l.),  227;  Nash  v.  Brown,  Chitty  on  Bills 
(13th  Am.  ed.),  89;  Brown  v.  Mott,  7  Johns.  361;  Holeman  v.  Hobson,  8  Humphr. 
127;  Bethune  v.  McCrary,  8  Ga.  114;  Chicopee  Bank  v.  Chapin,  8  Mete.  (Mass.) 
40;  Youngs  v.  Lee,  18  Barb.  187.  See  ante,  chap.  1,  §24;  Commonwealth  v. 
Donovan,  170  Mass.  228,  49  N.  E.  104;  First  Nat.  Bank  v.  Wood,  128  N.  Y.  35, 
27  N.  E.  1020;  McCrady  v.  Jones,  44  S.  C  407,  22  S.  E.  414. 

16.  Milnes  v.  Dawson,  5  Exch.  948. 

17.  Moore  v.  Candell,  11  Mo.  614;  Turner  v.  Brown,  3  Smedes  &  M.  425;  Farbell 
v.  Sturtevant,  26  Vt.  513;  Reid  v.  Furnival,  5  C  &  P.  499;  Callahan  v.  Crow, 
91  Hun,  346,  36  N.  Y.  Supp.  225;  Meyer  v.  Koehring,  129  Mo.  15,  31  S.  W.  449. 

18.  Services  rendered  by  a  daughter  to  her  mother  are  such  a.s  she  is  morally 
bound  to  render  without  compensation,  and  do  not  constitute  valuable  considera- 
tion for  a  note  subsequently  given  to  her  by  her  father,  as  no  compensation  can 
be  recovered  in  the  absence  of  an  express  promise.  Shugart  v.  Shugart,  111  Tenn. 
179,  76  S.  W.  821,  102  Am.  St.  Rep.  777,  citing  text.  See  also  Harper  v.  Davis, 
115  Md.  349,  80  Atl.  1012.    See,  however,  notes  vmder  §  188.    But  in  Henton  v. 


244  CONSIDERATION    OF    NEGOTIABLE    INSTRUMENTS         §  182 

Thus,  a  promissory  note  made  after  full  age  for  necessaries  fur- 
nished to  the  promisor  during  infancy;  ^^  or  a  note  executed  for  the 
payment  of  a  debt  discharged  in  bankruptcy,^  or  barred  by  the  stat- 
ute of  limitations,-^  or  voluntarily  released,--  or  for  the  reimbursement 
of  a  person  who  has  voluntarily  paid  a  debt  of  the  promisor,-^  would 
be  valid,  as  upon  any  other  valuable  consideration.  And  in  any  case 
where  the  contract  was  merely  voidable,  l)ut  otherwise  founded  on  a 
valuable  consideration,  a  bill  or  note  given  to  discharge  it  will  be 
valid — but  otherwise  if  the  contract  were  void.^^ 

But  it  has  been  held  in  England  by  the  Court  of  Exchequer,  that 

Henton,  143  111.  App.  53,  it  was  held  that  a  moral  obligation  to  compensate  a 
person  for  personal  ser\-ices  aln^ady  rendered  and  to  be  rendered,  constitutes  a 
sufficient  consideration  for  the  transfer  of  notes. 

19.  Hawkes  v.  Saunders,  Cowp.  289;  Eastwood  v.  Kenyon,  11  Ad.  &  El.  438 
(39  Eng.  C.  L.);  Chitty  on  Bills  (13th  Am.  ed.),  87. 

20.  Wislizenus  v.  O'Fallon,  91  Mo.  184.  By  statute  in  a  number  of  the  States, 
part  payment  alone  constitutes  a  new  promise.  See  Park  v.  Brooks,  38  S.  C.  300, 
17  S.  E.  22;  Succession  of  F.  Andrieu,  44  La.  Ann.  103,  10  So.  388.  A  note  exe- 
cuted by  a  married  woman  has  no  consideration  to  support  it,  when  the  creditor 
had  at  the  time  an  unsecured,  unenforcible  debt,  against  the  husband,  which  had 
been  discharged  in  in.solvency,  and  was  worthless,  except  as  it  might  furnish 
a  consideration  for  a  promise  that  would  bind  the  husband  if  he  should  choose  to 
waive  the  benefit  of  his  discharge,  and  make  an  unequivocal  new  promise  to  pay 
the  debt.    Widger  v.  Baxter,  190  Mass.  130,  76  N.  E.  509,  3  L.  R.  A.  (N.  S.)  436. 

21.  Eastwood  v.  Kenyon,  11  Ad.  &  El.  438  (39  Eng.  C.  L.);  Trueman  v. 
Fenton,  Cowp.  544;  McGrath  v.  Barnes,  13  S.  C.  328  (note  given  by  executor 
for  debt  barred  after  his  qualification);  Giddings  v.  Giddings,  51  Vt.  227;  Glover 
V.  Cheatham,  19  Mo.  App.  661,  citing  the  text. 

22.  Stafford  v.  Bacon,  25  Wend.  384;  Valentine  v.  Foster,  1  Mete.  (Mass.) 
520;  Snevely  v.  Read,  9  Watts,  396. 

23.  Hayes  v.  Warren,  2  Stra.  933;  Stokes  v.  Lewis,  1  T.  R.  20.  Or  renewal  of 
note  given  when  one  was  mentally  incompetent — disability  not  existing  when  new 
note  given.    Bank  v.  Sneed,  97  Tenn.  120,  36  S.  W.  716,  56  Am.  St.  Rep.  788. 

24.  Eastwood  v.  Kenyon,  11  Ad.  &  El.  438  (39  Eng.  C.  L.);  Littlefield  v.  Shee, 
2  B.  &  Ad.  811;  Howell  v.  Wright,  41  Hun,  167,  citing  the  text.  In  South  Caro- 
lina it  has  been  decided  that  a  written  promise  to  pay  a  debt  is  binding  on  the 
promisor  if  based  upon  a  perfect  moral  obligation,  even  though  such  moral  ob- 
ligation did  not  arise  from  a  once  existing,  but  now  extinguished  legal  obligation. 
See  Ferguson  v.  Harris,  39  S.  C.  323,  17  S.  E.  782,  39  Am.  St.  Rep.  731,  note. 
Though  a  lease  of  property  of  a  minor  is  voidable  because  certain  statutory  con- 
ditions as  to  the  making  of  such  a  lease  were  not  complied  with,  an  assignee  of 
the  lease  who  has  enjoyed  all  the  benefits  of  possession  under  the  lease  cannot 
set  up  invalidity  of  the  lease  as  a  defense  in  a  suit  upon  a  note  given  in  considera- 
tion of  the  assignment  of  the  lease.  Norton  v.  Stroud  State  Bank,  17  Okl.  295, 
87  Pac.  848.  A  verbal  promise,  to  pay  a  note  which  is  void  under  the  statute, 
is  void  for  want  of  consideration.  Swinney  v.  Edwards,  8  Wyo.  54,  55  Pac.  306, 
80  Am.  St.  Rep.  916. 


§  183  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  245 

a  bill  given  since  the  repeal  of  the  usury  laws  to  pay  a  debt  with  usu- 
rious interest,  contracted  during  the  existence  of  the  usury  laws,  was 
binding.-^    And  a  note  given  by  the  purchaser  of  an  estate  to  the  ven- 
dor for  the  purchase  money,  is  made  on  sufficient  consideration  though 
the  contract  be  void  by  the  statute  of  frauds.^«    The  indorsement  of  a 
note  of  a  bankrupt  by  the  payee  gives  it  no  effect  as  to  the  bankrupt; 
and  it  has  been  held  that  a  new  promise  by  the  bankrupt  after  his 
discharge  in  bankruptcy,  and  after  the  indorsement,  does  not  revive 
his  liability;  ^^  but  it  has  been  held  in  Massachusetts  that  a  promise 
by  the  maker  of  a  note  after  his  discharge  in  bankruptcy  to  pay  it  is 
a  contract  to  pay  it  acccording  to  its  tenor,^-«  and  we  cannot  see  that 
there  is  any  just  reason  to  the  contrary.    If  the  bankrupt  could  bind 
himself  by  a  renewal,  why  insist  on  that  form  of  obligation  when  the 
same  result  is  attainable  by  his  recognition  of  his  old  one?    It  is,  in 
effect,  a  renewal  of   its  vitality  without  the  circumvention  of  re- 
quiring a  new  execution  of  it. 

§  183.  Not  only  will  money  paid,  or  advances  made,  or  credit  given 
or  work  and  labor  done,  constitute  a  sufficient  consideration  for  a  bill 
or  note,  but  it  will  be  equally  sufficient  to  enforce  the  engagement 
that  it  was  made  in  consideration  of  the  discharge  of  the  maker 
from  liability  as  surety  on  a  bond,^^  of  the  surrender  of  a  guar- 

25.  Flight  V.  Reed,  22  L.  J.  Exch.  2G5,  1  H.  &  C  708  (S.  S.).  And  it  haa  been 
hold  in  Indiana  that  a  note  executed  by  husband  and  wife  '"/^"^^  ^^  ^f^^ 
for  money  loaned  the  wife  and  used  by  the  husband,  prior  to  the  Act  of  18S1,  ,s  a 
valid  and  binding  obligation  of  the  husband,  and  sai.l  renewal  note  laying  been 
execute<l,  subsequent  to  the  passage  of  the  said  enabling  statute,  is  not  without 
consideration  as  to  the  wife,  ahhough  the  original  note  aa  to  her  was  void.  Lackey 
V    Hnniff    152  Ind.  'M\,  r>:i  N.  E.  412. 

26?  Canli;n  v.  Tompkins,  72  Hun.  113,  25  N.  Y.  Supp.  305.  Contra,  Kraak 
y  Fries  21  D.  C  UK);  Jones  v.  Jones,  6  M.  &  W.  84.  While  an  oral  promise  to 
pay  a  commission  to  a  broker  for  the  sale  of  real  estate  is  unenforceabk.  because 
of  the  statute  of  1897  (Laws  1897,  p.  304.  c.  57),  so  long  a.s  it  rests  in  parol,  it  con- 
stitutes a  sufficient  consideration  to  support  a  promissory  note  gu^en  in  payment 
of  such  commission.    Mohr  v.  Rickgauer,  82  Nebr.  398   117  V  W-  9o0  (1908K 

27  Walbridge  v.  Harron,  18  Vt.  448;  White  v.  Woodruff  (Conn.),  1  Root,  309. 
Wheehr  V.  Simmons,  60  Hun,  404.  15  N.  Y.  Supp.  462. 

28.  Way  v.  Siu>rrv,  6  Cush.  238.  , .  ^  ,      *        oA-i 

29.  Court  Valhalla.  No.  16,  Foresters  of  America  v.  Olson.  14  Colo.  App.  243, 
59  Pac  8.83  \\Tiere  a  note  waa  given  to  a  bank  partly  to  secure  future  advances, 
and  through  mistake  the  bank  extended  certain  additional  credit,  and  the  maker 
o?then^te  overdrew  his  account  to  cover  the  amount  thereof,  this  wa.  an  advance 
covered  by  the  note.  Haines  v.  Cadwell,  40  Or.  229,  66  Pac.  910.  Where  one  who 
loaned  his  check  at  a  sale  by  a  trustee  in  bankruptcy  as  a  payment  of  a  percent- 


246  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  183 

anty;  ^°  or  on  a  legal  obligation  to  reimburse  a  purchaser  of  property 
surrendered  because  the  sale  was  void;  ^^  as  also  that  it  was  given  in 
settlement  of  a  dispute;  ^^  on  an  arbitration;  ^^  on  compromise  of  a 

age  to  assure  a  sale,  on  representations  that  a  certain  absent  person  had  author- 
ized the  bidder  to  act  for  him,  was  misled  as  to  the  authority  to  bid  for  such 
person,  and  a  conveyance  was  refused,  the  maker  of  the  check  is  hable  thereon, 
as  the  termination  of  the  auction  sale  by  the  award  of  the  premises  wa.s  considera- 
tion for  the  check,  and  this  though  both  the  maker  of  the  check  and  the  trustee 
were  ignorant  of  the  nonauthority  of  the  bidder  to  act  for  the  absent  person. 
Levy  V.  Huwer,  81  N.  Y.  S.  191,  80  App.  Div.  499,  affirmed  176  N.  Y.  612,  68 
N. E.  1119. 

30.  Fitch  V.  Fraser,  82  N.  Y.  S.  138,  84  App.  Div.  119. 

31.  Hobson  v.  Marsh,  (Wash.)  124  P.  912. 

32.  Williams  v.  First  Nat.  Bank,  216  U.  S.  582,  54  L.  Ed.  625,  30  S.  Ct.  441, 
affirming  20  Okl.  274,  95  Pac.  457;  Baldwin  v.  Hart,  136  Cal.  222,  68  Pac.  698; 
Root  V.  New  Haven  Trust  Co.,  82  Conn.  600,  74  Atl.  9.50;  Johnson  v.  Redwine, 
98  Ga.  112,  25  S.  E.  924;  Robinson  v.  Robinson,  147  la.  615,  125  N.  W.  216; 
First  State  Bank  of  Corwith  v.  Williams,  143  la.  177,  121  N.  W.  702,  23  L.  R.  A. 
(N.  S.)  1234,  136  Am.  St.  Rep.  759;  Barger  v.  Famham,  130  Mich.  487,  90  N.  W. 
281;  Northern  Pac.  R.  Co.  v.  Holmes,  88  Minn.  389,  93  N.  W.  606;  Lane  v. 
Pollard,  88  Mo.  App.  326;  Bullard  v.  Smith,  28  Mont.  387,  72  Pac.  761;  Fourth 
Nat.  Bank  of  Cadiz  v.  Craig,  1  Nebr.  (Unof.)  849,  96  N.  W.  185;  Armijo  v. 
Henry,  14  N.  Mex.  181,  89  Pac.  305;  Warshawsky  v.  Grand  Theatre  Co.,  94 
N.  Y.  S.  522,  47  Misc.  Rep.  615;  Brooks  v.  Wage,  85  Wis.  12,  54  N.  W.  997. 
The  existence  of  a  claim  founded  upon  an  equitable  duty  such  as  would  be 
enforced  by  a  court  of  chancery,  is  a  sufficient  consideration  for  a  promise  to  pay 
it  and  such  promise  may  be  enforced  in  a  court  of  law.  Hcnton  v.  Henton,  143 
111.  App.  53.  A  note  given  to  a  bank  as  compensation  for  the  bank's  injury  through 
a  clerk's  embezzlement  and  in  discharge  of  the  clerk's  civil  liability,  is  enforcible. 
Lomax  v.  Colorado  Nat.  Bank,  46  Colo.  230,  104  Pac.  85.  The  compromise  of  a 
disputed  claim  is  a  sufficient  consideration  to  support  an  express  promise,  al- 
though there  may  have  been  no  merit  or  foundation  for  such  claim.  Fender  v. 
Helterbrandt  (Ark.),  142  S.  W.  184.  But  to  sustain  a  compromise  and  settle- 
ment it  must  appear  that  the  claim  or  controversy  settled,  though  perhaps  not  in 
fact  valid  in  law,  was  presented  and  demanded  in  good  faith  and  upon  reasonable 
grounds  for  inducing  the  belief  that  it  was  enforcible.  Montgomery  v.  Grenier, 
(Minn.)  136  N.  W.  9.  In  Andrews  v.  Schmidt,  10  N.  D.  1,  84  N.  W.  568,  it  was 
held  that  where  a  note  was  given  on  the  supposition  that  the  amount  thereof 
had  been  received  by  the  maker,  and  if  it  was  found  that  he  had  not  in  fact  re- 
ceived the  amount  the  note  was  to  be  returned,  it  was  without  consideration  when 
it  was  discovered  that  the  amount  had  not  been  received.  Where  undue  influence 
and  moral  coercion  induced  a  clerk  to  make  admissions  to  his  employer  of  theft 
and  embezzlement,  and  notes  were  made  by  the  clerk  to  the  amount  stated  to  be 
misappropriated,  in  an  action  to  cancel  the  notes,  it  was  held  that  they  were  made 
without  consideration  when  the  charges  were  specifically  denied,  and  the  maker 
of  the  notes  testified  minutely  to  all  the  money  he  received  during  his  employ- 

33.  Downmg  v.  Lee,  98  Mo.  App.  604,  73  S.  W.  721. 


§  183  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  247 

suit;  ^^  on  forbearance  to  sue,  ^^  or  extension  of  time  on  past  due 
debt  or  note;  ^^  on  release  of  a  lien;  ^^  the  purchase  of  a  promissory 

ment  and  showed  that  the  money  he  received  from  his  employment  and  other 
legitimate  sources  was  ample  to  meet  all  his  expenditures.  Peckham  v.  Van- 
Bergen,  10  N.  D.  43,  84  N.  W.  566.  Where  it  appears  that  the  only  consideration 
for  the  note  was  the  maker's  UabiUty  on  a  bond  which  was  never  signed  by  him, 
nor  by  any  of  the  obligors  whose  names  were  attached  thereto,  but  their  names 
wore  cut  off  another  bond  which  had  been  signed  by  them,  and  pasted  to  the  paper 
on  which  was  written  the  body  of  the  bond  for  which  the  note  was  given,  without 
their  knowledge  or  consent,  the  instrument  on  which  the  names  were  pasted  was 
a  forgery  and  could  not  form  the  consideration  for  the  note.  Terrill  v.  TilHson, 
75  Vt.  193,  54  Atl.  187.  A  note  given  by  an  executor  in  settlement  of  a  supposed 
claim  of  the  payee  as  a  legatee  of  the  testator  was  without  consideration,  when  the 
payee  was  not  in  fact  one  by  the  legatees.    Russell  v.  Wright,  98  Ala.  652. 

34    Sharp  v.  Bowie,  142  Cal.  462,  76  Pac.  62;  Bank  of  Commerce  v.  Scofield, 
126  Cal.  156,  58  Pac.  451 ;  McClure  v.  McClurc,  100  Cal.  339,  34  Pac.  822;  Murray 
Show  Case  &  Fixture  Co.  v.  Sullivan,  15  Cal.  App.  475,  115  Pac.  259;  Court 
Harmony  v.  Court  Lincoln,  70  Conn.  634;  Humphereys  v.  Smith,  128  Ga.  596, 
58  S.  E.  26;  Jones  v.  Peterson,  117  Ga.  58,  43  S.  E.  417;  Parker  v.  Enslow,  102 
111.  276;  Jones  v.  Rittenhouse,  87  Ind.  348;  Power  v.  Hambrick  (Ky.),  74  S.  W. 
660-  Fay  v.  Hunt,  190  Mass.  378,  77  N.  E.  502;  Brown  v.  Ladd,  144  Mass.  310; 
Rogers  v.  Mercantile  Adjuster  Pub.  Co.,  118  Mo.  App.  1,  93  S.  W.  328;  Chapman 
V.  Ogden,  56  N.  Y.  S.  73,  37  App.  Div.  355;  General  Electric  Co.  v.  Nassau 
Electric  R.  Co.,  55  N.  Y.  S.  858,  36  App.  Div.  510,  affirmed  161  N.  Y.  656,  57 
N   E.  1110;  McGlynn  v.  Scott,  4  N.  Dak.  18,  58  N.  W.  460;  Baines  v.  Coos  Bay, 
etc..  Railroad,  etc.,  Co.,  49  Ore.  192,  89  Pac.  371;  Fred  Rueping  Leather  Co.  v. 
Watkc,  135  Wis.  616,  116  N.  W.  174.    See  post,  §  1966.     A  promissory  note  exe- 
cuted and  delivered  by  a  married  woman  for  the  purpo.se  of  settling  a  pending  ac- 
tion against  her  hu.sband  and  herself,  wherein  the  plaintiff  alleged  that  both  were 
liable,  is  binding  upon  her,  although  in  point  of  fact  the  debt  declared  upon  was  ex- 
clusively that  of  the  hu.sband.     The  consideration  of  such  a  note  is  not  the  hus- 
band's debt,  but  the  settlement  of  the  Utigation.    Thornton  v.  Lemon,  114  Ga. 
155,  39  S.  E.  943.    The  rule  that  the  compromise  of  an  action  is  a  sufficient  consid- 
eration for  a  note,  can  have  no  application  where  the  claim  involved  was  wholly 
based  upon  an  unlawful,  ius  distinguished  from  a  merely  insufficient,  consideration, 
and  an  attempted  compromise  of  a  claim  based  on  a  note  given  from   money 
lost  at  gambling,  whether  before  or  after  institution  of  action  thereon,  looking  to 
the  ratification  of  the  illegal  contract,  cannot  be  enforced.    Union  Collection  Co.  v. 
Buckman,  150  Cal.  159,  88  Pac.  708,  9  L.  R.  A.  (N.  S.)  568,  119  Am.  St.  Rep.  164. 
35    Meltzer  v.  Doll,  91  N.  Y.  368;  Chapman  v.  Ogden,  56  N.  Y.  S.  73,  37  App. 
Div.  355;  Brandenstein  v.  Ebensberger,  71  Tex.  268;  Bank  of  Ohio  Valley  v. 
Lockwood,  13  W.  Va.  392.    See  post,  §  1966. 

36.  Wesphal  v.  NeviUs,  92  Cal.  545,  28  Pac.  676;  Coffin  v.  Trustees,  92  Ind. 
337;  First  State  Bank  of  Corwith  v.  Williams,  143  Iowa,  177,  121  N.  W.  702, 
23  L.  R.  A.  (X.  S.)  1234,  136  Am.  St.  Rep.  759;  Wormer  &  Sons  v.  Waterloo 
Agricultural  Works,  50  Iowa,  262  (to  uphold  note  obtained  in  fraud);  Sanders  v. 
Smith,  (Miss.)  5  So.  514;  Finch  v.  Skilton,  29  N.  Y.  S.  925,  79  Hun,  531. 

37    Blythe  v.  Cordingly,  20  Colo.  App.  508,  80  Pac.  495  (as  to  release  of  a  valid 


248  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  183 

note;  ^*  the  surrender  of  a  prior  note;  ^^  in  compromise  of  a  claim 
against  a  third  person;  "*"  or  in  pursuance  of  an  agreement  made  be- 
fore delivery  that  another  signature  should  be  obtained  as  joint 
makers,''^  A  note  on  condition  that  the  payee  abstain  for  a  certain 
time  from  intoxicating  drink  would  be  valid.'-  A  note  to  a  railroad 
corporation,  to  be  paid  when  the  road  is  constructed,  is  upon  suf- 
ficient consideration/^  The  "good  will"  of  a  business  is  a  sufficient 
consideration,  although  the  business  subsequently  proves  unsuccess- 
ful/'* And  the  execution  and  delivery  of  a  policy  by  an  insurance 
company  is  ample  consideration  for  the  indorsement  and  delivery  of 
a  note  taken  by  an  agent  in  payment  for  the  premium/^  So,  also,  a 
note  in  consideration  of  the  release  of  an  inchoate  right  of  dower.  ""^ 
Under  Negotiable  Instrument  statute. — Under  the  definition  that  the 
value  is  any  consideration  sufficient  to  support  a  simple  contract, "'^ 
an  agreement  to  advance  money  is  a  sufficient  consideration  for  a 
note.'*^    And  under  the  provision  that  any  negotiable  instrument  is 


and  subsisting  judgment);  Hillenbrand  v.  Shippen  (Ky.),  58  S.  W.  525  (though 
the  lion  may  not  have  been  valid);  Pranell  v.  Davenport,  3G  Mont.  571,  93  Pac. 
939;  Scanlon  v.  Wallach,  102  N.  Y.  S.  1090,  53  Misc.  104;  Crcveling  v.  Sahulino, 
89  N.  Y.  S.  834,  97  App.  Div.  202  (though  there  may  have  been  differences  b<- 
tween  the  parties  as  to  the  amount  due).  Releasing  of  property  covered  by  chattel 
mortgages,  is  a  sufficient  consideration  for  a  note  made  by  a  third  person.  Doxy 
v.  Exchange  Bank  of  Perry,  19  Okl.  183,  92  Pac.  150  (1907). 

38.  Crampton  v.  Nevvton,  132  Mich.  149,  93  N.  W.  250  (1907). 

39.  Scribner  v.  Hanke,  116  Cal.  613,  48  Pac.  714  (executed  by  a  different 
maker);  Brewster  v.  Baker,  97  Ind.  260  (between  the  same  parties  for  the  same 
amount) ;  Dykman  v.  Northbridge,  36  N.  Y.  S.  962,  1  App.  Div.  26. 

40.  Root  V.  New  Haven  Tru.st  Co.,  82  Conn.  600,  74  Atl.  950;  National  Bank 
of  Newbury  v.  Sayer,  73  N.  H.  595,  64  Atl.  189,  rehearing  denied  65  Atl.  254; 
General  Electric  Co.  v.  Nassau  Electric  R.  Co.,  55  N.  Y.  S.  858,  36  App.  Div. 
510  affirmed  161  N.  Y.  656,  57  N.  E.  1110;  Dooley  v.  Houston  Land,  etc., 
Co.,  24  Tex.  Civ.  App.  275,  59  S.  W.  619;  Barrett  v.  Mahnen,  6  Wyo.  541,  48  Pac. 
202,  71  Am.  St.  Rep.  953. 

41.  Winders  v.  Sperry,  96  Cal.  194,  31  Pac.  6. 

42.  Lindell  v.  Rokes,  60  Mo.  249. 

43.  Rose  v.  San  Antonio  R.  Co.,  31  Tex.  49.  See  also  Cedar  Rapids  Bank  v. 
Hendrie,  49  Iowa,  402,  disapproving  Holiday  v.  Patterson,  5  Oreg.  177. 

44.  Smock  v,  Pierson,  68  Ind.  405. 

45.  MuUer  v.  Swanton,  140  Cal.  249,  73  Pac.  994. 

46.  Nichols  v.  Nichols,  136  Mass.  256;  Aultman,  Miller  &  Co.  v.  Seichting, 
126  Ind.  137,  25  N.  E.  894. 

47.  Appendix,  sec.  25. 

48.  Marling  v.  Fitzgerald,  138  Wis.  93,  120  N.  W.  388,  23  L.  R.  A.  (N.  S.) 
177,  131  Am.  St.  Rep.  1003,  the  court  saying  that  a  note  is  not  without  considera- 


§  183a  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  249 

deemed  prima  facie  to  have  been  issued  for  a  valuable  consideration,^^ 
it  has  been  held  that  where  a  check  was  given  on  a  contract  for  the 
purchase  of  property,  this,  under  the  statute,  imports  a  consider- 
ation, and  want  of  consideration  cannot  be  maintained  as  a  defense 
to  a  suit  thereon  upon  a  contention  that  the  property  was  never 
accepted  by  the  purchaser.^ 

§  183a.  Bankers  receiving  the  bills  or  notes  of  their  customers  for 
collection  are  considered  holders  for  sufficient  consideration,  not  only 
to  the  extent  of  advances  already  made  by  them  either  specifically  or 
upon  account,  but  also  for  future  responsibilities  incurred  upon  the 
faith  of  them.^^  The  balances  upon  an  account  are  a  shifting 
consideration  for  bills  and  notes  deposited  as  security  with  the 
banker.^'  Thus,  where  one  bank,  which  we  may  call  A.,  sent  an 
accommodation  bill  accepted  by  C,  to  another  bank,  which  we  may 
call  B,,  to  secure  an  indebtedness  upon  account;  and  when  the  bill 
became  due,  the  latter  ])ank  had  become  indebted  to  the  former,  but 
the  bill  was  not  withdrawn,  and  subsequently  the  indebtedness 
shifted  back,  and  the  original  debtor,  bank  A.,  became  bankrupt, 
owing  to  the  correspondent,  B.,  a  sum  upon  account,  it  was  held  that 
the  latter  could  recover  against  C.  upon  the  accommodation  bill 
accepted  by  him."  Where  a  bank  discounts  a  bill  before  maturity, 
paying  part  of  the  proceeds  in  money,  and  applies  the  residue  in  pay- 
ment of  a  past-<lue  note  of  the  payee  which  is  surrendered,  it  is  a 
holder  for  valuable  consideration.^^  Where  a  note  was  delivered  by 
the  maker  to  the  payee  to  be  discounted  for  the  maker's  benefit,  and 
the  paj'ee  left  it  at  the  bank  with  the  understanding  that  he,  the  payee, 
might  draw  against  it,  it  wa.s  hold  in  a  suit  against  the  maker,  of  whose 
interest  in  the  note  the  bank  had  no  notice,  that  the  maker  was  liable 
for  the  sums  drawn  against  the  note  by  the  payee,  the  payment  of 

tion  to  support  it  merely  berauso  the  money  called  for  thereby  waa  not  advanced 
a't  the  timo  it  wiw  niven,  nor  at  all. 

49.  Appendix,  sec.  24. 

50.  Hawkin  v.  Windhorst,  82  Kan.  522,  lOS  Pac.  805. 

51.  Byles  on  Bills  (Sharswood's  ed.),  230;  Bosanquet  v.  Dudman,  1  Stark.  1; 
Pcrcival  v.  Frampton,  2  Cromp.,  M.  &  R.  180. 

52.  Bank  of  Metropolis  v.  New  England  Bank,  1  How.  239,  17  Pet.  174;  Swift 
V.  Tyson,  10  Pet.  21. 

53.  Atwood  V.  Crowdie,  1  Stark.  483  (2  Eng.  C.  L.). 

54.  Mechanics,  etc.,  Bank  v.  Crow,  60  N.  Y.  85;  Brown  v.  Leavitt,  31  N.  Y. 
113;  Pratt  v.  Coman,  37  N.  Y.  440;  Bookheim  v.  Alexander,  64  Hun,  4.59,  19  N.  Y. 
Supp.  776;  Weems  v.  Shaughnesay,  70  Hun,  175,  24  N.  Y.  Supp.  271. 


250  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  184 

which  sums  was  in  effect  a  discount  of  the  note  to  the  amount  so 
paid;  also  that  the  result  would  be  the  same  if  it  should  be  considered 
that  the  note  was  simply  pledged  for  the  sums  paid  upon  the  draft. ^* 

§  184.  As  to  pre-existing  debts. — There  is  no  doubt  that  a  pre- 
existing debt  of  the  drawer,  maker,  or  acceptor  is  a  valid  considera- 
tion for  his  drawing  or  accepting  a  bill  or  executing  a  note,  and  indeed 
is  as  frequently  the  consideration  of  negotiable  paper  as  a  debt  con- 
tracted at  the  time,^"  and  it  is  equally  as  valid  and  sufficient  considera- 
tion for  the  indorsement  and  transfer  to  the  creditor  of  the  bill  or  note 
of  a  third  party  which  is  in  his  hands.  And  the  best-considered,  as 
well  as  the  most  numerous,  authorities  regard  the  creditor  who  re- 
ceives the  bill  or  note  of  a  third  party  from  his  debtor  either  in  pay- 
ment of,"  or  as  collateral  security  for,  his  debt,  as  entitled  to  the  full 

65.  Piatt  V.  Beebe,  57  N.  Y.  339. 

56.  Scott  V.  Fairlamb,  35  L.  J.  R.  47;  Swift  v.  Tyson,  16  Pet.  1;  Townsley  v. 
Sumrall,  2  Pet.  170;  Levy  &  Cohn  Mule  Co.  v.  Kauffman,  114  Fed.  170;  Gates  v. 
Morton  Hardware  Co.,  146  Ala.  692,  40  So.  509;  Hamiter  v.  Brown,  88  Ark.  97, 
113  S.  W.  1014;  Hart  v.  Church,  126  Cal.  471,  58  Pac.  910,  77  Am.  St.  Rep.  195; 
Merchants'  Bank  v.  McClelland,  9  Colo,  citing  the  text ;  Mclntyre  v.  Yates,  104 
111.  500;  Barber  v.  Aetna  Fuel  Co.,  92  111.  App.  380;  Henry  v.  State  Bank  of 
Laurens,  131  la.  97,  107  N.  W.  1034;  German  Sav.  Bank  v.  Geneser,  116  la.  119, 
89  N.  W.  201;  Des  Moines  Nat.  Bank  v.  Chisholm,  71  Iowa,  675;  Lovelace  v. 
Lovelace,  136  Ky.  452,  124  S.  W.  400,  136  Am.  St.  Rep.  271;  Cox  v.  Sloan,  158 
Mo.  411,  quoting  text;  Stitzer  v.  Whittaker,  3  Nebr.(Unof.)  414,  91  N.  W.  713 
(in  settlement  of  a  judgment) ;  Brown  v.  Spohr,  180  N.  Y.  201,  73  N.  E.  14,  affirm- 
ing 84  N.  Y.  S.  995,  87  App.  Div.  522;  Macaulay  v.  Holsten,  114  N.  Y.  S.  611; 
Le  Tulle  Mercantile  Co.  v.  Rugeley  (Tex.  Civ.  App.),  98  S.  W.  438.  Promissory 
notes  executed  for  a  pre-e-xisting  indebtedness,  and  involving  new  benefits  to  the 
maker  and  obligations  by  the  payee,  are  based  on  a  good  consideration.  Richard- 
son v.  Wren,  11  Ariz.  395,  95  Pac.  124,  16  L.  R.  A.  (N.  S.)  190  (1908).  An  agree- 
ment for  an  extension  of  time  will  be  implied  if  the  debt  is  then  due,  and  the  note  is 
made  payable  at  a  future  day.  Zimbleman  &  Otis  v.  Finnegan,  141  la.  358,  118 
N.  W.  312  (1908).  Where,  in  accommodating  a  customer  of  the  bank,  the  cashier 
had  committed  a  technical  conversion  of  notes  and  an  actual  conversion  of  funds  of 
the  bank,  a  note  given  by  the  cashier  to  make  the  amount  good  was  supported  by 
a  good  consideration.  Behrens  v.  Poetker,  175  Ind.  504,  92  N.  E.  339.  Where 
a  note  and  mortgage  were  executed  payable  to  a  certain  person,  and  such  note 
and  mortgage  were  given  to  secure  an  indebtedness  then  existing  and  evidenced 
by  a  separate  note  and  also  to  cover  future  advances  for  which  as  made  from  time 
to  time  separate  notes  were  to  be  given,  the  note  and  mortgage  were  simply  dupli- 
cate evidence  which  was  to  be  held  until  the  debt  was  paid,  and  were  without 
consideration  as  independent  evidence  of  indebtedness.  First  Nat.  Bank  v. 
Henry,  156  Ind.  1,  58  N.  E.  1057. 

57.  See  chapter  XXIV,  on  Bona  Fide  Holder;  Byles  [*121],  229;  Marks  v.  First 


§  185  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  251 

protection  of  a  bona  fide  holder  for  value,  free  from  all  equities  which 
might  have  been  pleaded  between  the  original  parties. ^^  But  there  is 
much  controversy  on  this  subject,  and  it  is  hereinafter  more  fully- 
treated.^^ 

Under  Negotiable  Instrument  statute. — By  the  express  provisions  of 
the  statute,  "an  antecedent  or  pre-existing  debt  constitutes  value";  ^° 
under  this  statutory  definition  of  value,  the  receipt  of  a  note  as 
security  for  a  debt  on  forbearance  to  sue  upon  a  present  claim,  is 
sufficient  to  enforce  the  maker's  obligation,®^  and  the  rule  has  been 
applied  to  the  case  of  a  bank  giving  credit  for  a  certificate  of  deposit 
issued  by  another  and  indorsed  for  collection.®^ 

§  185.  As  to  debts  of  third  persons. — A  valuable  consideration, 

Nat.  Bank,  79  Ala.  558;  Swift  v.  Tyson,  16  Pet.  1;  Southern  Sand  &  Material 
Co.  V.  People's  Savings  Bank  &  Trust  Co.  (Ark.),  142  S.  W.  178  (as  to  a  check); 
Bank  of  St.  Albans  v.  Gilliland,  23  Wend.  31;  Bank  of  Sandusky  v.  Scoville,  24 
Wi'nd.  115;  Youngs  v.  Lee,  18  Barb.  187;  Bertrand  v.  Barkman,  8  Eng.  150; 
Henry  v.  Ritenour,  31  Ind.  13G;  Robinson  v.  Lair,  31  Iowa,  9;  Smith  v.  Isaacs, 
23  La.  Ann.  4.54;  Schepp  v.  Carpenter,  51  N.  Y.  602  (1873).  In  this  case.  Car- 
penter made  his  note  to  and  for  accommodation  of  Church,  without  restriction, 
and  Church,  being  indebted  to  plaintiff  in  a  larger  sum,  transferred  the  note  to 
him  on  account  thereof,  and  was  credited  with  the  amount.  Johnson,  C.,  said: 
"The  existence  of  the  debt  from  Church  to  the  plaintiff  was  a  sufficient  considera- 
tion between  them  to  sustain  a  promise  to  pay  it,  or  a  transfer  of  property  to  se- 
cure its  payment,  and  according  to  the  doctrine  which  has  i)revailed  in  this  State 
for  many  years,  to  sustain  the  transfer  of  a  note  m;ide  for  the  debtor's  accom- 
modation and  general  benefit."  This  question  is  more  fully  discussed,  and  the 
New  York  cases  more  fully  cited  in  chapter  XXV,  §§  826,  827,  831;  Langford  v. 
Varner,  65  Mo.  App.  370. 

68.  See  chapter  XXV,  section  1,  §  832;  Devendorf  v.  West  Virginia,  O.  &  O.  L. 
Co.,  17  W.  Va.  176;  Bank  of  Commerce  v.  Wright,  63  Ark.  604,  40  S.  W.  81. 
Contra,  Thomp)son  v.  Miuldu.v,  117  Ala.  468,  23  So.  157;  Barker  v.  Lichtenbcrger, 
41  Xebr.  751,  60  N.  W.  79. 

59.  §§820,  826,  827,  831. 

60.  Appendix,  sec.  25.  Bigelow  Co.  v.  Automatic  Gas  Producer  Co.,  107  N.  Y. 
S.  894,  56  Misc.  Rep.  389;  Murchison  Nat.  Bank  v.  Dunn  Oil  Mills  Co.,  150 
N.  C.  718,  64  S.  E.  885;  Singer  Mfg.  Co.  v.  Summers,  143  N.  C.  102,  55  S.  E. 
522.  Under  sections  24  and  25,  it  has  been  held  that  when  a  note  was  given  by 
one  of  two  joint  debtors  in  satisfaction  of  the  debt,  the  indorsement  of  the  note 
by  the  other  was  supported  by  a  sufficient  consideration,  and  it  is  immaterial 
whether  he  indorsed  before  or  after  the  note  had  been  delivered  to  the  agent  of 
the  payee.    Young  v.  Hayes  (Mass.),  99  N.  E.  327. 

61.  Zimbleman  &  Otis  v.  Finnegan,  141  la.  358,  118  N.  W.  312;  Mohhnan  v. 
McKane,  69  N.  Y.  S.  1046,  60  App.  Div.  546. 

62.  Commercial  Nat.  Bank  v.  Citizens  State  Bank,  132  Iowa,  706,  109  N.  W. 
198. 


252  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  185 

moving  from  the  maker  to  a  third  person  will  support  the  obligation 
in  favor  of  the  payee  of  a  note.^'^  Thus,  if  goods  be  furnished  by  A, 
to  B.  at  the  request  of  C,  it  is  a  good  consideration  for  the  note  of 
C.  to  A.^^  There  is  no  doubt  that  a  debt  due  from  a  third  person,  as 
from  A.  to  B.,  is  a  good  consideration  for  a  note  as  from  D.  to  B., 
provided  there  were  an  express  agreement  for  delay ,^^  or  an  implied 

63.  Harrison  v.  State  Bank  of  Monticello,  47  Ind.  App.  568,  94  N.  E.  1020, 
holding  further  that  such  third  party  need  not  know  when  the  note  is  executed 
that  it  is  payable  to  him,  in  order  to  enforce  collection.  The  execution  and  de- 
livery of  a  note  and  mortgage  to  secure  the  debt  of  another  is  sufficient  compli- 
ance with  the  statute  of  frauds.  McLanahan  v.  Chamberlain,  85  Nebr.  850,  124 
N.  W.  684.  Where  a  party  promises  to  pay  the  note  of  another  to  satisfy  the 
importunity  of  the  owner  of  the  note,  such  promise,  to  be  valid,  must  be  in  writ- 
ing, unless  there  be  a  novation  by  the  substitution  of  a  new  debtor  and  a  release 
of  the  old  one.  Hanson  v.  Nelson,  82  Minn.  220,  84  N.  W.  742.  A  contract  to 
indorse  a  note  of  one,  provided  another  will  di.scount  it,  is  a  promise  to  answer  for 
the  debt  of  another,  and  therefore  within  the  provisions  of  the  statute  of  frauds; 
such  a  promise  is  not  an  original  one,  but  collateral.  Greenwich  Bank  v. 
Oppenheim,  118  N.  Y.  S.  297,  133  App.  Div.  586. 

64.  Lipsmeier  v.  Vehlsage,  29  Fed.  175;  Atherton  v.  Marcy,  59  Iowa,  651. 
It  seems  to  be  well  established  by  the  authorities  that  when  the  consideration  be 
a  benefit  bestowed  or  a  detriment  suffered  by  the  payee,  or  at  his  instance — in 
other  words,  both  the  maker  of  the  obligation  and  the  payee  thereof  must  be  con- 
nected with  the  consideration.  The  decisions  of  the  Indiana  courts  seemingly 
do  not  make  this  distinction.  See  Moore  v.  Hubbard,  15  Ind.  App.  85,  42  N.  E. 
962,  and  other  cases  therein  cited;  Harris  v.  Harris,  180  111.  157,  54  N.  E.  180; 
Elmer  v.  Loper,  66  N.  J.  L.  50,  48  Atl.  550;  Smith  v.  Hightower,  3  Ga.  App.  197, 
59  S.  E.  593.  Where  the  amount  named  in  a  note  was  received  by  the  maker 
through  another  person  and  used  by  such  other  person  for  th(!  maker's  benefit,  this 
was  a  sufficient  consideration,  though  the  money  was  furnished  by  a  third  per- 
son for  the  payee  of  the  note.  Hale  v.  Harris  (Ky.),  91  S.  W.  660,  5  L.  R.  A. 
(N.  S.)  295.  The  borrowing  of  money  by  a  mother  to  set  her  sons  up  in  business 
is  sufficient  consideration  for  a  note  signed  by  the  mother;  when,  in  such  a  case, 
the  maker  of  the  note  directs  the  money  to  be  paid  into  the  hands  of  another,  he 
thereby  constitutes  such  person  his  agent  for  the  purpose  of  receiving  it  from  the 
lender,  and  the  act  of  delivery  in  this  manner  transfers  the  title  to  him.  Van- 
deventer  v.  Davis,  92  Ark.  604,  123  S.  W.  766.  Where  a  sum  of  money  was 
furnished  by  the  payee  of  a  note  for  the  use  of  a  company  in  which  the  makers 
of  the  note  were  interested,  the  makers  of  the  note  cannot  be  heard  to  complain 
on  the  ground  of  inadequacy  or  want  of  consideration.  Helvie  v.  McKain,  32 
Ind.  App.  507,  70  N.  E.  178. 

65.  Beebe  v.  Wells,  153  Fed.  133  (as  to  notes  signed  by  a  new  corporation  to 
settle  claims  against  an  insolvent  corporation  which  had  transferred  its  property 
to  the  maker);  Guy  v.  Bibend,  41  Cal.  324;  Davis  v.  Meisner,  127  Ind.  343,  26 
N.  E.  829;  Lambert  v.  Clewley,  80  Me.  480;  Mansfield  v.  Corbin,  2  Gush.  151; 
Fuch  V.  Yawger,  47  N.  J.  L.  157;  Goll  v.  Fehr,  131  Wis.  141,  111  N.  W.  235  (as  to  a 
note  executed  by  a  married  woman  to  secure  an  extension  on  a  note  made  by  her 


§  185  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  253 

agreement  which  would  arise  if  the  debt  were  then  due,  and  the  note 
were  made  payable  at  a  future  day.®^  So  the  surrender  up  of  an 
obligation  of  a  third  person  is  a  sufficient  consideration.^^     If  the 

husband).  On  a  defense  of  want  of  consideration  for  a  note  given  to  secure  the 
debt  of  another,  there  must  be  an  agreement,  express  or  impHed  that  the  plaintiff 
would  forbear  to  sue;  but  while  forbearance  to  sue  is  evidence  from  which  an 
agreement  to  forbear  may  be  inferred,  it  is  not  conclusive.  Saunders  v.  Bank 
of  Mecklenburg  (Va.),  71  S.  E.  714.  A  promise  to  forbear  whore  there  is  no  pres- 
ent liability  and  the  promise  is  indefinite,  does  not  present  a  sufficient  considera- 
tion. Funk  v.  Ilossack,  129  111.  Ai)p.  421.  Where  the  forbearance  is  no  more 
than  that  of  any  creditor  who  risks  a  delay  in  bringing  a  suit,  the  debtor  remain- 
ing under  the  same  liability  and  the  croilitor  retaining  the  same  right,  there  is 
no  new  consideration.  Betlford's  E.x'r  v.  Chandler,  81  Vt.  270,  69  Atl.  874,  17 
L.  R.  A.  (N.  S.)  1239,  130  Am.  St.  Rep.  1057. 

66.  1  Parsons  on  Notes  and  Bills,  195;  Balfour  v.  Sea  Fire  &  Life  Ins.  Co.,  3 
C.  B.  (N.  S.)  300  (91  Eng.  C.  L.);  Thompson  v.  Gray,  63  Me.  228;  York  v.  Pear- 
son, 63  Me.  5S7;  Yeatman  v.  MattLson,  59  Ala.  382;  Fulton  v.  Loughlin,  118 
Ind.  288,  citing  the  text;  Remington  v.  Dental  Mfg.  Co.,  101  Wis.  307,  77  N.  W. 
178,  citing  the  text;  Murphy  v.  Illinois  Trust  &  Sav.  Bank,  57  Nebr.  519,  77 
N.  W.  1102;  Zimbleman  &  Otis  v.  Finnegan,  141  Iowa,  358,  118  N.  W.  312;  Pitt 
V.  Little,  58  Wash.  355,  108  Pac.  941,  citing  text.  A  promissory  note  given  by 
the  drawee  of  a  draft  on  presentment  of  the  draft  for  payment,  is  founded  on  a 
valid  consideration.  Torpey  v.  Tebo,  184  Mass.  307,  68  N.  E.  223.  Where  notes 
were  overdue,  an  arrangement  whereby  the  obligee  should  receive  drafts  ac- 
cepted by  a  third  party  and  not  press  for  payment  of  the  notes  until  the  drafts 
should  mature,  there  was  a  sufficient  consideration  for  the  drafts.  In  re  Stevens, 
74  \'t.  4US,  .52  Atl.  1034.  No  specific  time  of  forbearance  was  mentioned,  but  it 
became  the  duty  of  the  obligee  to  wait  a  reasonable  time  before  seeking  enforce- 
ment of  the  original  indebtedness.  Any  time,  however  short,  was  a  sufficient  con- 
sideration for  the  note.    Emerson  v.  Sheffer,  98  N.  Y.  S.  1057,  113  App.  Div.  19. 

67.  Ilobson  v.  Haasit,  76  Cal.  203;  W.  S.  Broom  &  Co.  v.  Harrah,  143  111.  App. 
476;  Brewster  v.  Baker,  97  Ind.  250;  Henry  v.  Ritenour,  31  Ind.  136;  Wm.  Deer- 
ing  Co.  V.  Veal  (Ky.),  78  S.  W.  886  (a.s  to  a  note  executed  by  a  wife  in  settle- 
ment of  outstanding  notes  of  the  husband);  Iberia  Cypress  Co.  v.  Christen,  112 
La.  448,  36  So.  490;  Crombie  v,  McGrath,  139  Mass.  550;  State  Bank  of  Moore 
v.  Forsyth,  41  Mont.  249,  108  Pac.  914,  28  L.  R.  A.  (N.  S.),  501;  Osborne  v. 
Doherty,  38  Minn.  430;  Holm  v.  Sundberg,  32  Minn.  427;  Flour  City  Nat.  Bank 
v.  Shire,  84  N.  Y.  S.  810,  88  App.  Div.  401;  affirmed  179  N.  Y.  587,  72  N.  E. 
1141;  Bacon  v.  Montauk  Brewing  Co.,  115  N.  Y.  S.  617,  130  App.  Div.  737; 
Doxy  V.  E.xchange  Bank  of  Perry,  19  Okl.  183,  92  Pac.  150;  Bromley  v.  Hawley 
(Vt.),  12  Atl.  222.  A  wife's  note,  given  to  a  third  person  in  payment  of  her  hus- 
band's debt,  is  for  a  valuable  consideration;  but  a  note  given  as  security  for  such 
a  debt,  previously  exi.sting,  is  not;  to  make  a  note  of  the  latter  kind  valid,  there 
must  be  a  new  consideration.  Widger  v.  Baxter,  190  Ma.s3.  130,  76  N.  E.  509, 
3  L.  R.  A.  (N.  S.)  436.  A  note  given  to  a  bank  by  the  brother  of  an  embezzler 
from  the  bank,  accompanied  by  a  memorandum  that  the  note  was  in  "settlemc^nt 
of  the  indebtedness"  of  his  brother  to  the  bank,  is  supported  by  a  consideration; 
the  word  "settlement"  as  used  meant  payment  of  an  ascertained  debt  or  liability. 


254  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  185 

original  debt  from  the  third  person  were  payable  simultaneously 
with  the  note,  there  might  be  a  want  of  consideration  unless  credit 
for  the  original  debt  had  been  given  upon  a  promise  of  the  note, 
which  would  be  sufficient.^^  Whenever  one  person  signs  a  note  to 
induce  another  to  take  it,  the  consideration  is  sufficient."^  A  note 
given  for  the  payee's  assumption  of  the  debt  of  the  maker  evidenced 
by  another  note  is  upon  sufficient  consideration.^"*  So  a  note  given 
by  a  father  for  the  benefit  of  his  son  to  be  applied  by  the  latter  in  part 
payment  of  a  defalcation.^^  So  any  other  thing  done  at  his  request 
by  the  promisee  for  a  third  person  will,  in  general,  be  a  sufficient 
consideration — such  as  forbearing  to  sue  on  a  debt  due  by  such 
person,  or  guaranteeing  his  debt,  or  becoming  liable  for  his  acts  or 
defaults."    But  the  mere  naked  debt  of  another  without  some  cir- 

Lomax  v.  Colorado  Nat.  Bank,  46  Colo.  230,  104  Pac.  85.  Where  one  of  two  sure- 
ties, equally  bound  on  a  note,  has  paid  his  part  of  the  note,  and,  the  principal 
being  insolvent,  executes  another  note  by  mistake  for  his  co-surety's  part  of  the 
indebtedness,  such  further  note  was  executed  without  consideration.  Allnutt  v. 
Allnutt's  Executrix  (Ky.),  127  S.  W.  986.  Where  a  note  was  given  in  by  several 
joint  makers  in  renewal  of  outstanding  notes  of  part  of  the  makers,  due  and  pay- 
able, this  is  a  sufficient  consideration  as  against  all  the  makers  of  the  new  note. 
In  re  Kemp's  Estate,  100  N.  Y.  S.  221,  49  Misc.  Rep.  396.  A  promise  to  pay  a 
certain  person  a  debt  due  him  from  a  third  person  on  or  before  a  day  named,  is 
not  a  promissory  note  importing  a  consideration.  Bradt  v.  Krank,  164  N.  Y. 
515,  58  N.  E.  657,  79  Am.  St.  Rep.  662,  reversing  54  N.  Y.  S.  1096.  Where  the 
drawer  of  an  order  was  not  indebted  to  his  agent,  in  whose  favor  the  order  was 
drawn,  but  such  agent  was  indebted,  as  shown  by  notes,  to  the  drawee,  there 
was  no  consideration  to  support  the  order  notwithstanding  the  drawee  credited 
the  agent  on  the  notes  with  the  amount  of  the  order.  Smith  v.  Southern,  Eap. 
Co.,  139  Ala.  519,  36  So.  621. 

68.  Crofts  V.  Beale,  11  C.  B.  172  (73  Eng.  C.  L.);  1  Parsons  on  Notes  and  Bills, 
195;  Carter  et  al.  v.  Odom,  121  Ala.  162,  25  So.  774. 

69.  Robbins  v.  Brooks,  42  Mich.  62;  Savage  v.  Fox,  60  N.  H.  17;  Ballard  v. 
Barton,  64  Vt.  387,  24  Atl.  769.    See  Winders  v.  Sperry,  96  Cal.  194,  31  Pac.  6. 

70.  Turner  v.  Rogers,  121  Mass.  12.  But  see  Studenmire  v.  Ware,  48  Ala. 
589;  McCormal  v.  Redden,  46  Nebr.  776,  65  N.  W.  881. 

71.  Papple  V.  Day,  123  Mass.  521. 

72.  Story  on  Bills,  §  183;  Howe  v.  Taggart,  133  Mass.  284;  Judd  v.  Martin, 
97  Ind.  175;  Parsons  v.  Frost,  55  Mich.  232;  Crears  v.  Hunter,  19  L.  R.,  Q.  B. 
Div.  341;  Mascolo  v.  Montesanto,  61  Conn.  50,  23  Atl.  714,  29  Am.  St.  Rep.  170; 
Ditmar,  Guardian  of  West  v.  West,  7  Ind.  App.  637,  held  in  this  case  that  where 
a  guarantor  of  a  promissory  note,  after  the  same  was  due,  went  to  the  payee  and 
offered  to  pay  him  the  full  amount  due  on  the  note,  and  have  the  note  delivered 
to  him  for  collection,  but  the  payee  refused  to  accept  the  amount  and  deliver  the 
note,  and  promised  to  release  the  guarantor  upon  his  forbearance  to  sue,  the  sur- 
render of  the  right  to  sue  by  the  guarantor  was  sufficient  to  sustain  the  contract 
of  release.    Ballard  v.  Barton,  64  Vt.  387,  24  Atl.  769;  Murphey  v.  Illinois  Trust 


§  186  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  255 

cumstance  of  advantage  to  the  debtor,  or  disadvantage  to  the  creditor, 
would  not  be  a  consideration;  and  the  maker  of  a  note  for  such  a  debt 
might  defend  against  the  payee  on  that  groundJ^ 

§  186.  Discharge  of  debt  of  another. — As  a  general  rule,  the 
discharge  of  a  debt  of  a  third  person  will  be  a  valid  consideration 
for  a  bill  or  note/'*    So,  the  note  of  a  husband  given  in  settlement  of 

&  Sav.  Bank,  57  Nebr.  519,  77  N.  W.  1102;  Janis  v.  Roentgen,  59  Mo.  App.  75; 
Bumis  V.  Davis,  67  Mo.  App.  210. 

73.  Ryan  v.  McKerral,  15  Ont.  464;  Wright  v.  Byrne,  129  Cal.  614,  62  Pac. 
176;  Leveronc  v.  Hildreth,  80  Cal.  139;  Currier  v.  Clark,  15  Colo.  App.  6,  60  Pac. 
958;  Saul  v.  Southern  Seating,  etc.,  Co.,  6  Ga.  App.  843,  65  S.  E.  1065;  Wilson  v. 
Tricker,  64  Ind.  41;  West  Coast  Co.  v.  Bradley,  111  Minn.  343,  127  N.  W.  6; 
Security  Bank  v.  Bell,  32  Minn.  409;  Produce  Bank  v.  Bache,  31  Hun,  351,  dis- 
tinguished from  Grocers'  Bank  v.  Penficld,  69  N.  Y.  502;  Tyler  v.  Jaeger,  93 
N.  Y.  S.  558,  47  Misc.  Rep.  84.  A  note  given  by  a  mother  for  a  debt  of  a  mi- 
nor son,  not  dated  and  therefore  due  on  demand,  was  held  not  to  be  enforcible, 
when  there  was  no  credit  given  to  the  maker  as  a  part  of  the  bargain  between  the 
payee  and  the  son,  no  discharge  or  extinguishment  of  the  minor's  indebtedness, 
no  forbearance  to  sue  nor  an  agreement  therefor,  nor  any  new  consideration. 
Gilbert  v.  Wilbur,  105  Me.  74,  72  Atl.  868.  Where  a  wife  was  disappointed  as 
to  the  financial  condition  of  her  husband  and  urged  a  settlement  upon  her,  as  had 
been  promised  before  marriage,  a  note  procured  by  the  husband  from  his  brother, 
and  delivered  by  the  husband  to  his  wife,  which  was  not  given  for  any  debt  or  legal 
obligation  as  between  the  husband  and  his  brother,  was  without  consideration,  and 
the  wife  cannot  recover  from  the  maker  thereon.  Kramer  v.  Kramer,  181  N.  Y. 
477,  74  N.  E.  474,  reversing  86  N.  Y.  S.  129,  90  App.  Div.  176. 

74.  Brainard  v.  Capella,  31  Mo.  428;  Arnold  v.  Sprague,  34  Vt.  402;  Thatcher 
v.  Dinsmore,  5  Mass.  299;  Byles  on  Bills  (Sharswood's  ed.)  [*123],  233;  Poplewell 
V.  Wilson,  1  Stra.  264;  Railroad  v.  Chamberlain,  44  N.  H.  497;  anle,  §  184;  Mc- 
Cormal  v.  Redden,  46  Nebr.  776,  65  X.  W.  881.  Where,  by  mutual  agreement, 
a  note  was  given  by  J.  to  A.,  the  latter  having  accepted  the  former  as  a  substitute 
for  his  original  debtor,  W.,  this  was  a  novation,  and  the  debt  from  W.  to  A.  was 
abrogated.  Dillard  v.  Dillard,  118  Ga.  97,  44  S.  E.  885.  To  create  a  novation 
by  the  making  of  a  note  by  a  third  person,  there  must  be  the  consent  of  all  parties 
to  be  substitution  resulting  in  the  extinction  of  the  old  obligation.  Held  v.  Cald- 
well-Easton  Co.,  89  N.  Y.  S.  954,  97  App.  Div.  301;  Mount  v.  Dehaven,  29  Ind. 
App.  127,  63  N.  E.  330.  The  mere  taking  of  a  note  from  a  third  person  is  not  a 
novation.  In  order  to  make  a  case  of  that  kind  there  must  be  a  mutual  agree- 
ment among  the  parties,  the  creditor,  his  immediate  debtor  and  the  new  debtor, 
for  the  substitution  of  the  new  debt  in  the  place  and  stead  of  the  original  debt;  if 
the  draft  or  note  be  taken  contemporaneously  with  the  creation  of  the  debt,  the 
presumption  would  prevail  that  it  was  taken  in  payment  of  the  debt,  but  if  a 
note  or  draft  is  taken  for  a  precedent  debt  the  presumption  is  that  it  was  not 
taken  as  payment  and  the  burden  of  removing  that  presumption  would  rest  on 
the  party  as-serting  it.  Gimbell  &  Sons  v.  King,  43  Tex.  Civ.  App.  188,  95  S.  W. 
7.    A  note  for  the  debt  of  another  must  show  the  consideration  on  its  face,  other- 


256  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  186 

a  claim  against  his  deceased  wife's  estate  is  valid.^^  And  a  note  given 
by  a  widow  to  a  creditor  of  her  deceased  husband  is  made  upon  a 
sufficient  consideration,  when  the  estate  is  solvent  and  she  is  interested 
therein,"^  but  such  a  note  is  void  for  want  of  consideration  if  the  hus- 
band has  left  no  estate  or  assets."    And  a  promissory  note  given  by 

wise  it  is  not  binding  under  the  statute  of  frauds.  Stanford  v.  Horwitz,  49  Md. 
525.  In  Maryland  it  was  held  a  note  given  by  a  vestryman  of  a  church  to  pay  a 
debt  of  the  church  was  without  consideration,  and  void;  and  the  fact  that  it  was 
payable  at  a  future  day  to  raise  no  presumption  of  forbearance  to  sue,  it  appear- 
ing that  it  was  made  for  the  purpose  of  closing  an  account.  Rogers  v.  Waters, 
2  Gill  &  J.  84.  Before  the  enabling  act,  a  married  woman's  note  given  for  a  claim 
against  her  husband  was  held  void,  there  being  no  other  consideration.  Linder- 
man  v.  Farquharson,  101  N.  Y.  434. 

75.  Nye  v.  Chace,  139  Mass.  379;  Union  &  Planters'  Bank  of  Memphis  v. 
Jefferson,  101  Wis.  452,  77  N.  W.  889. 

76.  Carpenter  v.  Page,  144  Mass.  316.  In  California,  where  the  widow  was 
executrix  and  the  estate  community  property,  so  that  she  had  an  interest  in  it, 
her  note  to  a  creditor  of  her  husband  was  enforced,  though  the  debt  was  out- 
lawed and  she  thought  otherwise.  Mull  v.  Van  Trees,  50  Cal.  547.  In  Indiana, 
where  she  elected  to  take  under  the  husband's  will,  instead  of  under  the  statute 
of  distributions,  she  was  held  bound  upon  a  note  given  for  his  debt.  Kayser  v. 
Hodopp,  116  Ind.  428.  A  note  made  by  a  widow  to  a  creditor  of  the  decreased 
husband's  estate,  in  which  she  promised  to  pay  the  creditor's  debt,  provided  it 
was  not  paid  by  the  estate,  the  consideration  for  the  note  being  the  withdrawal 
by  the  creditor  of  objections  filed  by  him  to  the  allowance  of  a  year's  support  to 
her  out  of  the  estate,  is  in  the  absence  of  fraud,  a  valid  contract.  And,  when  the 
creditor  to  whom  the  note  was  made  payable  failed  by  reason  of  the  insolvency 
of  the  estate  to  collect  therefrom  the  amount  of  his  debt,  the  contingency  of  the 
widow's  liability  on  the  note  to  such  creditor  was  determined.  Golding  v.  Mc- 
Call,  5  Ga.  App.  545,  63  S.  E.  706.  Where  an  executrix,  who  was  also  a  legatee, 
executed  a  note  in  settlement  of  litigation  against  the  estate,  the  facts  that  the 
matter  was  kept  secret  at  her  request  and  that  the  settlement  was  made  without 
knowledge  of  or  consultation  with  the  attorneys,  do  not  show  fraud.  Young  v. 
Shepard's  Estate,  124  Mich.  552,  83  N.  W.  403.  In  Alabama,  where  the  husband 
has  assets,  the  widow,  who  gave  a  note  for  his  debt,  was  held  not  bound,  the  payee 
having  represented  to  her  that  she  was  liable  to  pay  the  debt,  the  court  resting 
its  decision  partly  on  the  view  that  there  was  no  consideration,  and  partly  on  the 
view  that  the  representation  was  fraudulent.  Maull  v.  Vaughn,  45  Ala.  141. 
See  also  Watson  v.  Reynolds,  54  Ala.  192,  where  it  is  held  that  a  widow's  note 
for  debt  of  deceased  husband,  not  taken  in  payment,  and  where  there  was  no 
suspension  of  the  remedy,  or  receipted  account,  is  without  consideration.  But 
in  the  same  State  a  widow  who  gave  her  own  notes  in  exchange  for  her  late  hus- 
band's, which  were  of  value,  and  enforcible  in  her  hands  against  his  estate,  and 
secured  them  by  mortgage,  and  extended  time  of  payment,  was  held  bound. 
Hixon  V.  Hetherington,  57  Ala.  165,  overruling  46  Ala.  29. 

77.  Williams  v.  Nichols,  10  Gray,  83,  Dewey,  J.,  saying:  "The  widow  would 
derive  no  benefit  from  the  discharge  of  a  debt  due  by  her  deceased  husband. 


§  186  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  257 

an  heir  in  settlement  of  a  debt  due  by  the  estate  is  founded  upon  a 
sufficient  consideration.^^  It  is  clear  that  if  a  mere  voluntary  note  is 
given  it  cannot  be  enforced  as  between  immediate  parties;  but  if  an 
element  of  value  to  the  promisor,  or  disadvantage  to  the  promisee, 
enters  into  the  transaction,  without  fraud  or  misrepresentation,  it 
would  violate  first  principles  not  to  hold  it  valid. 

Under  Negotiable  Instrument  statute. — And  under  the  statute,  where 
the  payee  of  a  note  paid  off  a  debt  of  the  maker,  he  is  a  holder  for 
valued® 

Nor  do  we  perceive  how  any  possible  damage  to  such  creditor  could  arise  from 
having  given  a  receipt  to  the  widow  purporting  to  discharge  such  a  demand." 
It  is  said  in  England  that  it  is  a  sufficient  consideration  for  a  note  that  it  be  given 
by  a  widow  out  of  respect  to  the  memory  of  her  husband.  Chitty  on  Bills  (13th 
Am.  ed.),  82.  No  such  decision  would,  we  think,  be  now  rendered.  Stockton 
Bros.  V.  Reed,  G5  Mo.  App.  605.  Where  a  note  had  been  executed  by  a  husband 
and  wife  which  was  void  aa  to  her,  the  execution  of  her  own  note  in  hen  thereof 
after  the  death  of  her  husband,  was  without  consideration,  where  no  property 
subject  to  execution  was  received  by  her  from  the  estate  of  her  deceased  husband. 
Gilbert  v.  Brown,  123  Ky.  973,  97  S.  W.  40,  7  L.  R.  A.  (N.  S.)  1053  (1906).  In 
York  V.  Pearson,  63  Me.  587,  such  a  note  was  held  valid  though  the  husband's 
estate  was  in.solvent. 

78.  McCormal  v.  Redden,  46  Nebr.  776,  65  N.  W.  881.  In  Safe  Deposit  & 
Trust  Co.  v.  Wright,  105  Fed.  155,  with  respect  to  a  claim  against  an  estate  and  a 
note  given  by  the  widow  and  heirs  after  the  lien  of  the  claim  had  been  lost  for 
failure  to  prosecute  it  against  the  estate  within  two  years,  Circuit  Judge  Gray 
said:  "The  debt  wa.s  not,  however,  extinguished,  and  would  have  supported  a 
suit  against  the  adminLstration  of  the  intestate's  estate.  The  giving  of  the  note, 
with  warrant  to  confess  judgment,  by  the  widow  and  heirs  at  law,  was  in  effe(!t 
a  continuance  of  that  lien  against  the  same  lands  in  their  hands,  and  a  recogni- 
tion of  a  moral  obligation  to  restore  to  the  plaintiff  the  legal  advantage  of  which  it 
had  been  deprived  by  operation  of  law.  The  notes  thus  given  come  clearly  within 
the  rule  which  sanctions  a  promise  made  in  consideration  of  a  pre-existing  legal 
obligation,  though  at  the  time  determined  by  a  positive  legal  requirement.  Such 
a  moral  obligation  is  now  universally  recognized  in  American  and  English  juris- 
prudence as  sufficient  consideration  to  sufjport  a  promise."  The  forbearance  of  a 
bank  from  prosecuting  or  pressing  a  valid  claim  against  an  estate  is  a  valid  consid- 
eration for  a  note  made  by  a  son  of  the  deceased.  Galena  Nat.  Bank  v.  Ripley, 
55  Wash.  615,  104  Pac.  807.  Where  a  note  executed  by  husband  and  wife,  was 
renewed  after  his  death  by  the  widow,  and,  upon  maturity  of  the  widow's  note, 
a  new  note  waa  signed  by  the  widow  and  a  daughter,  to  whom  had  been  trans- 
ferred all  the  property  owned  at  the  time  of  the  husband's  death,  the  new  note 
being  payable  one  day  after  date,  there  was  a  sufficient  consideration  for  the 
daughter's  signature.  Whelan  v.  Swain,  132  Cal.  389,  64  Pac.  560.  In  Didlake 
V.  Robb,  1  Woods,  680,  it  was  held  that  a  promissory  note  given  by  the  heir,  in 
renewal  of  one  made  by  his  ancestor,  which  was  barred,  by  limitation  at  the  time 
of  the  latter's  death,  was  void  for  want  of  consideration. 

79.  Appendix,  sec.  25.    Hermans'  Ex'r  v.  Gregory  (Ky.),  115  S.  W.  809. 

17 


258  CONSIDEEATION    OF   NEGOTIABLE    INSTRUMENTS         §  187 

§  187.  Cross-notes  and  acceptances  and  other  instances. — If  one 
gives  his  acceptance  to  another,  that  will  be  a  good  consideration 
for  another  bill  or  acceptance,  although  such  first  acceptance  be 
unpaid.^  ''By  the  exchange  of  the  obligation  of  one  for  that  of 
another,  a  good  consideration  is  raised  for  the  undertaking  of  each."  ^^ 
A  note  given  by  a  borrower  for  the  amount  of  cash  loaned,  and 
including  also  a  note  given  for  the  balance  of  the  loan,  is  upon  good 
consideration  to  the  whole  amount.^^  And  cross-acceptances,  or 
cross-notes,  bills,  or  checks  for  the  mutual  accommodation  of  the 
parties,  are  respectively  considerations  for  each  other ,^^  and  a  defense 
that  the  notes  given  on  one  side  were  subsequently  worthless  is  un- 
availinff.®*    And  a  contract  between  two  accommodation  indorsers 


80.  Rose  V.  Sims,  1  B.  &  Ad.  521  (20  Eng.  C.  L.).  The  surrender  of  his  note  to 
the  payee  of  a  draft,  ia  a  sufficient  consideration  for  the  transfer  of  the  draft. 
Gray  Tie  &  Lumber  Co.  v.  Farmers'  Bank,  109  Ky.  694,  60  S.  W.  537. 

81.  Newman  v.  Frost,  52  N.  Y.  424,  Folger,  J.;  Union  Trust  Co.  v.  Rigdon, 
93  111.  459,  notes;  Farber  v.  National  Forge  &  Iron  Co.,  140  Ind.  54,  39  N.  E.  249, 
citing  the  text. 

82.  Backus  v.  Spalding,  116  Mass.  418.  Notes  exchanged  for  mutual  con- 
venience are  not  accommodation  paper,  since  each  is  a  consideration  for  the  other. 
State  Bank  of  Fillmore  v.  Hayes,  16  S.  D.  365,  92  N.  W.  1068,  holding  that  where 
a  person  owed  another  $300,  and  executed  a  note  for  $800,  receiving  in  return  a 
note  for  $500,  the  note  for  $800,  was  not  an  accommodation  note. 

83.  Newman  v.  Frost,  52  N.  Y.  427;  Wooster  v.  Jenkins,  3  Den.  187;  Mickles  v. 
Colvin,  4  Barb.  304;  Adams  v.  Soule,  33  Vt.  539;  Stickney  v.  Mohler,  19  Md.  490; 
Whittier  v.  Eager,  1  Allen,  449;  Shannon  v.  Langhorne,  9  La.  Ann.  526;  Eaton  v. 
Carey,  10  Pick.  211;  Bacon  v.  Holloway,  2  E.  D.  Smith,  159;  Dowe  v.  Schutt,  2 
Den.  621;  Rankin  v.  Knight,  1  Cin.  515;  Crescent  Bank  v.  Hernandez,  25  La. 
Ann.  43;  State  Bank  of  Lock  Haven  v.  Smith,  85  Hun,  200,  32  N.  Y.  Supp.  999; 
Lock  Haven  State  Bank  v.  Smith,  155  N.  Y.  185,  49  N.  E.  1102;  Rice  v.  Grange, 
131  N.  Y.  149,  30  N.  E.  46;  Newmarket  Sav.  Bank  v.  Hanson,  67  N.  H.  502,  32 
Atl.  774;  Kettner  v.  Shippy,  8  Cal.  App.  342,  96  Pac.  912;  Shannon  v.  Hawley,  66 
N.  Y.  S.  471,  32  Misc.  Rep.  623.  The  correspondence  in  date,  amount,  and  term 
of  the  notes  raises  a  presumption  that  there  was  such  an  exchange  as  to  constitute 
a  consideration  each  for  the  other,  but  it  is  a  presumption  that  might  be  capable 
of  refutation.  Mutual  Loan  Ass'n  v.  Brandt,  71  N.  Y.  S.  770,  35  Misc.  Rep.  270, 
reversed  69  N.  Y.  S.  652,  34  Misc.  Rep.  400. 

84.  First  Nat.  Bank  v.  Engebretson,  (S.  D.)  132  N.  W.  786.  The  fact  that  the 
maker  of  a  note  may  be  irresponsible  does  not  change  the  rule  that  one  buying  a 
note  buys  property,  and  that  the  giving  of  a  note  therefor  is  given  for  good  con- 
sideration. Crampton  v.  Newton's  Estate,  132  Mich.  149,  93  N.  W.  250.  Where 
notes  have  been  exchanged,  payment  on  one  of  the  notes  may  be  enforced  not- 
withstanding the  payee  of  that  note  has  defaulted  in  the  payment  of  the  note  ho 
made  and  gave  at  the  same  time  pursuant  to  the  agreement.  Milius  v.  Kauffmann, 
93  N.  Y.  S.  669,  104  App.  Div.  442. 


§  187a  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  259 

that  they  will  share  any  loss  equally  between  them,  is  upon  sufficient 
consideration.^^ 

Where  one  has  given  his  own  note  in  purchase  of  the  note  of  another 
from  the  payee,  notice  to  him  by  the  maker  not  to  pay  his  note  given 
in  purchase,  and  that  the  bought  note  originated  in  fraud,  does  not 
deprive  him  of  the  character  of  a  bona  fide  holder  for  value,  and  he 
need  pay  no  attention  to  such  notice.^^  Where  a  note  is  given  for  a 
draft  assigned  by  the  payee  to  the  maker,  and  an  agreement  was 
made  at  the  same  time  that  in  the  event  the  maker  of  the  note  could 
not  collect  or  realize  on  the  draft  he  was  to  be  released  from  payment 
of  the  note,  no  recovery  can  be  had  on  the  note,  if  the  maker  has 
been  unable  to  realize  on  the  draft.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statutory  dec- 
laration that  value  is  any  consideration  sufficient  to  support  a  simple 
contract,^  where  there  is  an  exchange  of  commercial  paper,  each 
instrument  forms  a  sufficient  consideration  for  the  other .^^ 

§  187a.  Marriage  and  promise  of  marriage  are  good  legal  con- 
siderations. Delay  in  fulfilling  a  promise  to  marry,  and  services 
rendered  during  the  engagement,  constitute  a  good  consideration 
for  a  note;  ^  and  in  Scotland  it  has  been  held  that  a  bill  granted  to  a 
woman  as  a  security  for  a  promised  marriage  is  valid,  and  may  be 
enforced  against  the  man  if  he  break  his  promise.^^    The  meritorious 

85.  Phillips  V.  Preston,  2  How.  278.  Likewise  held  that  "the  makers  of  the  note 
being  stockholders  in  the  company  they  cannot  be  held  as  accommodation  makers 
merely,  but  the  fact  of  their  interest  in  the  company  and  their  ownership  of  its 
property  constitutes  a  sufficient  consideration  for  their  contract,  and  makes  them 
all  liable  as  principal  debtors."  Reed  v.  First  Nat.  Bank,  23  Colo.  383,  48  Pac. 
507. 

86.  Adams  v.  Soule,  33  Vt.  538;  Rice  v.  Grange,  131  N.  Y.  149,  30  N.  E.  46. 

87.  Ilallv.  Henderson,  84111.  611. 

88.  Ai)pendix,  sec.  25. 

89.  Matlock  v.  Scheuerman,  51  Ore.  49,  93  Pac.  823,  17  L.  R.  A.  (N.  S.)  747 
(as  to  checks).  A  note  given  in  place  of  checks  which  had  been  dishonored  by 
the  bank  on  which  they  were  drawn  was  based  on  a  good  consideration.  Craw- 
ford County  State  Bank  v.  Stegemann,  137  La.  13,  114  N.  W.  549. 

90.  Prescott  v.  Ward,  10  Allen,  203;  Blanshan  v.  Russell,  32  App.  Div.  103, 
52  N.  Y.  Supp.  963,  it  is  held  that  where  a  betrothal  has  existed  for  some  time 
before  the  notes  were  given,  and  the  notes  were  made  and  given  not  in  considera- 
tion for  the  engagement,  the  mere  existence  of  the  engagement  will  not  in  itself 
support  a  contract  to  pay. 

91.  Thompson  on  Bills  (Wilson's  ed.),  72,  citing  Caldcr  v.  Provan  (Scotch 
case).  In  Love  v.  Peers,  4  Burr.  2225,  judgment  was  arrested  on  a  bond  which 
defendant  had  agreed  to  pay  plaintiff  if  he  married  any  one  else  but  her.    This 


260  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  188 

consideration  arising  out  of  the  duty  of  a  husband  to  support  his  wife, 
is  not  sufficient  in  equity  to  sustain  a  note,  given  by  the  husband  to 
the  wife,  as  against  the  husband's  collateral  heirs.^^ 

§  188.  Services. — Professional  services,  whether  of  a  physician, 
attorney,  or  other  person,  in  the  learned  or  skilled  professions,  con- 
stitute, in  general,  a  sufficient  consideration  for  a  bill  or  note;  and 
consideration  that  the  plaintiff,  an  attorney,  should  prevent  the 
approval  of  the  commanding  general  to  the  sentence  of  a  military 
court  condemning  a  guerrilla  to  death,  is  valid.^^  Services  of  any 
business  character  are  sufficient,^^  and  the  inadequacy  of  the  services, 
or  the  extravagance  of  the  compensation,  are  not  material.^^     An 

case  is  clearly  distinguishable  from  the  principle  of  the  text  of  Thompson,  though 
he  seems  to  think  it  in  conflict. 

92.  Whitaker  v.  Whitaker,  52  N.  Y.  368. 

93.  Thompson  v.  Wharton,  7  Bush,  463.  Attorney's  fees  are  a  sufficient  con- 
sideration for  a  bill  or  note,  even  in  those  jurisdictions  (e.  g.,  Ontario)  whore  an 
action  will  not  lie  upon  a  quantum  meruit  for  such  services.  Mowat  v.  Brown, 
19  Fed.  87. 

94.  Foxworthy  v.  Adams,  136  Ky.  403,  124  S.  W.  381,  27  L.  R.  A.  (N.  S.)  308; 
Velie  v.  Titus,  15  N.  Y.  S.  467,  60  Hun.  405  (for  services  rendered  by  a  grand- 
daughter to  her  grandfather);  Price  v.  White,  (Tex.  Civ.  App.)  117  S.  W.  484 
(securing  a  purchaser  of  property  to  sign  a  contract);  Pierce  v.  Stolhand,  141 
Wis.  286,  124  N.  W.  259.  Extra  services  to  be  performed  are  a  sufficient  con- 
sideration for  a  note.  Dikson  v.  Fowler,  114  Md.  344,  79  Atl.  519.  Where  a 
father,  after  marriage  to  a  second  wife,  executed  two  notes  for  .|2,000  each,  payable 
to  a  son  who  had  remained  working  for  him  without  wages  for  fifteen  years  after 
he  became  of  age,  and  to  a  daughter  who  had  performed  without  help  all  the 
household  duties  and  had  nursed  her  invalid  sister  and  mother  through  years  of 
illness,  until  their  death,  and  both  had  done  all  they  could  to  save  their  father's 
heavily  incumbered  property,  this  was  a  sufficient  consideration  and  the  notes 
were  enforcible  against  the  father's  estate.  In  re  Sutch's  Estate,  201  Pa.  305, 
50  Atl.  943.  Where  a  decedent,  just  prior  to  his  death,  had  given  to  his  house- 
keeper a  check  for  $500,  and  the  deceased  left  directions  with  the  person  who  had 
charge  of  his  estate  stating  that  what  he  was  leaving  to  the  housekeeper  was  his 
own  voluntary  act  and  that  he  was  more  dependent  upon  her  than  any  other 
person,  the  check  was  based  on  a  valid  and  sufficient  consideration.  Clay  v. 
Lay  ton,  134  Mich.  317,  96  N.  W.  458.  Where  a  note  was  executed  for  services, 
although  it  was  not  an  extinguishment  of  the  debt,  the  payee  is  not  entitled  to 
recover  without  producing  the  note.  Dawdy  v.  Dawdy's  Estate,  118  Mo.  App. 
336,  94  S.  W.  767. 

96.  Barthe  v.  Lacroix,  29  La.  Ann.  326;  Famsworth  v.  Fraser,  137  Mich.  296, 
100  N.  W.  400;  Thomas  v.  Miller,  (Minn.),  40  N.  W.  358;  Cowee  v.  Cornefi,  75 
N.  Y.  91;  In  re  Bradburg,  93  N.  Y.  S.  418, 105  App.  Div.  250.  A  promissory  note 
given  to  a  near  relative,  by  a  person  in  declining  years,  by  way  of  compensation 
or  reward  for  services  rendered  and  to  be  rendered,  is  so  much  in  the  nature  of 


§  188a  SUFFICIENT  AND    LEGAL   CONSIDERATIONS  261 

agreement  to  perform  services  is  a  sufficient  consideration  for  a 
note,^^  and  if  services,  received  and  accepted,  were  for  the  benefit  of 
the  person  to  whom  they  were  rendered,  this  is  sufficient  without  any- 
express  request  therefor  or  promise  to  pay  for  the  same.®^  Services 
rendered  in  procuring  a  pardon  for  an  offense  have  also  been  re- 
spected;^^ though  it  has  been  said  by  some  of  the  authorities  that 
this  would  contravene  public  policy  unless  done  by  leave  of  the 
court.^^  This  is,  we  think,  too  severe.  Services  exerted  in  procuring 
the  passage  of  an  act  through  a  legislative  body  are  not  recognized 
as  the  legitimate  exercise  of  the  legal  profession;  and  compensation 
for  them  cannot  be  recovered.^  If  contingent  upon  the  passage  of  a 
bill,  it  would  be  obvious  that  they  were  illegitimate.^ 

§  188a.  Subscriptions. — A  subscription  to  a  fund,  either  for  busi- 
ness or  charitable  purposes,  founded  upon  a  sufficient  consideration, 
constitutes,  therefore,  a  binding  obligation,  provided  said  subscription 
induced  others  to  subscribe  to  the  same  purpose.^    In  a  case  in  In- 

a  testamentary  disposition  of  property  that  ordinarily  the  maker's  estimate  of 
the  value  of  the  services  will  not  be  disturbed  on  the  ground  of  disparity  between 
the  actual  value  thereof  and  the  amount  of  the  note.  Bade  v.  Feay,  63  W.  Va. 
16G,  Gl  S.  E.  348.  See  also  In  re  Simmons  Estate,  96  N.  Y.  S.  1103,  48  Misc. 
Rep.  484. 

96.  Morrison  v.  Hart,  122  Ga.  660,  50  S.  E.  471;  Pierce  v.  Stolhand,  141  Wis. 
286,  124  N.  W.  259. 

97.  Yarwood  v.  Trusts  &  Guarantee  Co.,  87  N.  Y.  S.  947,  94  App.  Div.  47. 
When  services  have  been  rendered  gratuitously,  they  are  not  a  sufficient  considera- 
tion to  sustain  an  executory  promise.  Strevell  v.  Jones,  94  N.  Y.  S.  627,  106  App. 
Div.  334,  affirming  92  N.  Y.  S.  719;  Blanshan  v.  Russell,  52  N.  Y.  S.  963,  32  App. 
Div.  103.  But  where  the  services  rendered  constitute  a  legal  and  valid  considera- 
tion for  the  obligation,  this  would  not  be  destroyed  or  impaired  by  the  fjict  that 
the  obligor  declared  a  sense  of  gratitude.  Yarwood  v.  Trust  &  Guarantee  Co., 
87  N.  Y.  S.  947,  94  App.  Div.  47. 

98.  Meadow  v.  Bird,  22  Ga.  246. 

99.  Chitty  on  Bills  (13th  Am.  ed.),  100;  Thompson  on  Bills  (Wilson's  ed.), 
70,  citing  Stewart  v.  Earl  of  Galloway  (Scotch  case);  Norman  v.  Cole,  3  Esp. 
253. 

1.  Marshall  v.  Bait.  &  O.  R.  Co.,  16  How.  334;  Clippinger  v.  Hepbaugh, 
5  Watts  &  S.  315.    See  Sharswood's  Legal  Ethics  (2d  ed.),  99. 

2.  Mills  V.  Mills,  40  N.  Y.  543. 

3.  Subscriptions  to  stock  in  a  proposed  corporation  may  lawfully  be  evidenced 
by  promissory  notes  given  for  the  price  thereof  and  made  payable  to  some  person 
in  the  nature  of  a  trustee  who  holds  them  for  the  purposes  of  the  proposed  cor- 
poration. The  payee  may  upon  the  charter  being  obtained  sue  upon  the  notes 
for  the  use  of  the  corporation.  Bing  v.  Bank  of  Kingston,  5  Ga.  App.  578,  63 
S.  E.  652.    A  note  given  for  the  price  of  shares  of  stock  which  the  payee  had  pre- 


262  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  189 

diana,  it  was  held  that  a  promissory  note  given  for  a  certain  specified 
sum,  expressing  a  desire  therein,  "to  advance  the  cause  of  missions 
and  to  induce  others  to  contribute  to  that  purpose,"  is  a  vaUd  obHga- 
tion  and  may  be  enforced  by  suit.  And  in  New  York,  the  same  doc- 
trine has  been  upheld.  In  the  New  York  case  referred  to,  the  de- 
fendant made  a  subscription  of  $500  toward  the  founding  of  Keuka 
College,  and  gave  his  promissory  note  to  the  treasurer  of  that  in- 
stitution, providing  in  the  note  that  the  sum  named,  was  given  for 
the  purpose  of  contributing  to  the  endowment  of  said  college,  and  it 
was  further  stipulated  in  the  note,  "and  in  case  I  shall  die  previous 
to  that  date,  then  this  note  shall  become  due  and  payable  in  one 
year  from  my  decease."  The  subscription  referred  to  was  one  of  the 
causes  that  induced  others  to  subscribe  the  balance  of  the  fund 
wanted.  It  was  held  that  the  note  was  based  upon  sufficient  con- 
sideration and  enforceable.'* 

§  189.  Accommodation  bills  and  notes. — The  mercantile  credit  of 
parties  is  frequently  loaned  to  others  by  the  signature  of  their  names 
as  drawer,  acceptor,  maker,  or  indorser  of  a  bill  or  note,  used  to  raise 
money  upon,  or  otherwise  for  their  benefit.  Such  instruments  are 
termed  accommodation  paper.  An  accommodation  bill  or  note, 
then,  is  one  to  which  the  accommodating  party  has  put  his  name, 
without   consideration,   for  the   purpose   of   accommodating   some 

viously  owned  and  which  were  deposited  with  the  payee  as  collateral  security, 
so  that  the  maker  was  the  owner  of  the  equitable  interest  in  the  stock,  was  sup- 
ported by  a  good  consideration.  Linnell  v.  Leon,  206  Mass.  71,  91  N.  E.  895.  A 
check  given  on  a  subscription  for  stock  in  a  corporation  not  yet  in  existence  has 
no  vaUd  consideration  to  support  it,  but  the  delivery  of  scrip  of  shares  of  stock 
in  a  company  incorporated,  for  which  subscription  had  been  made,  is  a  sufficient 
consideration  for  a  check.  Avon  Springs  Sanitarium  Co.  v.  Kellogg,  109  N.  Y.  S. 
153,  125  App.  Div.  51,  affirmed  194  N.  Y.  567,  88  N.  E.  1132.  A  note  given  by  a 
candidate  as  a  contribution  to  a  fimd  intended  to  be  and  in  fact  used  to  pay 
expenses  of  a  contest,  was  supported  by  a  consideration.  Day  v.  Long  (Ky.), 
80  S.  W.  774. 

4.  Garrigus,  Admr.  v.  Home  Frontier  and  Foreign  Missionary  Soc,  3  Ind. 
App.  91,  28  N.  E.  1009,  50  Am.  St.  Rep.  262;  Keuka  College  v.  Ray,  41  App. 
Div.  200,  58  N.  Y.  Supp.  745.  A  contribution  to  a  church  debt  in  consideration  of 
obtaining  pledges  to  pay  the  balance,  is  sufficient  to  support  a  promissory  note. 
Roberts  v.  Cobb,  103  N.  Y.  600.  See  also  Irwin  v.  Lombard  University,  56  Ohio 
St.  9,  as  to  a  note  executed  to  an  incorporated  college,  to  which  others  has  been 
induced  to  contribute,  and  on  account  of  which  the  college  had  incurred  obliga- 
tions, and  Beatty  v.  Western  College,  177  111.  281,  52  N.  E.  432,  69  Am.  St.  Rep. 
242. 


§  189  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  263 

other  party  who  is  to  use  it  and  is  expected  to  pay  it.^  Credit  given 
to  the  accommodation  party  is  sufficient  consideration  to  bind  the 
accommodation  maker  or  indorser.*  Between  the  accommodating 
and  accommodated  parties  the  consideration  may  be  shown  to  be 

6.  Byles  on  Bills  (Sharswood's  ed.)  [*125],  237;  Citizens'  Bank  v.  Frederickson, 
83  Nebr.  755,  120  N.  W.  462;  Peoria  Mfg.  Co.  v.  Huff,  45  Nebr.  7,  63  N.  W.  121; 
Brown  Carriage  Co.  v.  Dowd,  155  N.  C.  307,  71  S.  E.  721 ;  Allen  v.  Chambers,  13 
Wash.  327,  43  Pac.  57;  Fant  v.  Miller,  17  Gratt.  47;  Robertson  v.  WilHams, 
5  Munf.  381;  De  Land  v.  Dixon  Bank,  14  111.  App.  219.  In  this  case  the  note  was 
for  the  accommodation  of  a  person  not  a  party  thereto.  Jefferson  County  v. 
Railroad  Co.,  66  Iowa,  389,  citing  the  text,  and  applying  the  definition  given  in 
ascertaining  the  character  of  certain  municipal  bonds  issued  in  aid  of  a  railroad. 
For  illustration  of  what  constitutes,  see  Beacon  Trust  Co.  v.  Robbins,  173  Mass. 
261,  53  N.  E.  868.  Held,  in  North  Carolina,  that  if  one  indorses  at  the  request 
of  a  member  of  the  firm  for  the  purpose  of  obtaining  money  for  the  use  of  the  firm 
and  the  proceeds  wore  so  used,  the  indorser,  upon  payment  of  the  note,  can  re- 
cover therefor  against  the  firm,  though  no  member  of  the  firm  signed  the  note. 
Springs  v.  McCoy,  122  N.  C.  629,  29  S.  E.  903.  Where  sureties  were  liable  on  a 
contract  and  borrowed  money  to  satisfy  the  liability,  a  person  who  was  induced 
to  sign  a  note  with  them  for  the  borrowed  money  was  an  accommodation  maker  for 
the  sureties'  benefit.  Lamberson  v.  Love,  165  Mich.  460,  130  N.  W.  1126.  A 
note  which  was  not  intended  or  given  as  an  accommodation  note  is  not  made 
accommodation  paper  by  a  subsequent  instrument  signed  by  the  makers  author- 
izing the  holder  to  use  the  note  as  security  for  a  loan,  as  to  persons  who  were  never 
deceived  by  the  subsequent  in.strument  and  unaware  of  its  existence.  Bouton 
V.  Cameron,  205  111.  50,  68  N.  E.  800,  affirming  99  111.  App.  600.  Where  a  payee 
of  a  note  indorsed  the  same  in  blank  for  the  accommodation  of  the  maker,  and 
accompanied  it  with  a  letter  to  the  bank  in  which  it  was  deposited  stating  that 
it  was  deposited  "as  security  for  any  obligation  that  may  be  due  or  that  may 
hereafter  become  due"  by  the  maker,  and  the  note  was  largely  in  excess  of  the 
then  indebtedness,  and  the  indorser  and  the  maker  both  testified  that  it  was 
deposited  for  the  purpose  of  securing  future  credit,  the  letter  must  be  interpreted 
as  showing  an  intention  to  secure  future  advances.  Banker's  Iowa  State  Bank 
v.  Mason  Hand  Lathe  Co.,  121  Iowa,  570,  97  N.  W.  70,  90  N.  W.  612. 

6.  Bank  of  Morgan  City  v.  Herwig,  121  La.  513,  46  So.  611.  First  Nat.  Bank 
of  St.  Cloud  V.  Lang,  94  Alinn.  261,  102  N.  W.  700.  Hill  v.  Coombs,  93  Mo.  App. 
264.  MarUng  v.  Jones,  138  Wis.  82,  119  N.  W.  931, 131  Am.  St.  Rep.  996.  Where 
the  indorsee  of  a  note  made  payable  to  the  order  of  the  maker  refused  to  accept 
the  note  and  advance  money  thereon  unless  it  was  indorsed  by  someone  in  addi- 
tion to  the  maker,  this  was  sufficient  consideration  for  such  additional  indorsement. 
Blatchford  v.  Harris,  115  111.  App.  160.  Where  a  bank  required  notes  in  addition 
to  those  already  held,  and  received  them  with  the  understanding  that  there  should 
be  no  extension  of  time  on  the  notes  previously  held  and  that  the  makers  of  those 
notes  would  still  be  held  responsible,  and  that  the  new  notes  should  be  accepted 
and  carried  by  the  bank  as  five  paper,  the  new  notes  were  supported  by  a 
consideration  when  all  were  given  as  security  for  a  debt  of  another  person  to 
the  bank.     Meigs  v.  Bromley,  131  Mich.  408,  91  N.  W.  627. 


264  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  189 

wanting/  but  when  the  instrument  has  passed  into  the  hands  of  a 
third  party  for  value,  and  in  the  usual  course  of  business,  it  cannot 
be,^  for  as  between  remote  parties,  as  we  have  already  seen,  the  con- 

7.  Bank  of  British  North  America  v.  EUis,  6  Sawy.  98,  citing  the  text;  Boqua  v. 
Brady,  90  Ark.  512,  119  S.  W.  677,  quoting  text;  Keenan  v.  Blue,  240  111.  177, 
88  N.  E.  553,  affirming  130  111.  App.  312;  Marsh  v.  Chown,  104  Iowa,  556,  73  N.  W. 
1046;  Nesson  v.  Millen,  205  Mass.  515,  91  N.  E.  995;  Brown  v.  Smedley,  136  Mich. 
65,  98  N.  W.  856;  National  Citizens'  Bank  of  Mankato  v.  Bowen,  109  Minn.  473, 
124  N.  W.  241;  Conrad  v.  Clarke,  106  Minn.  430,  119  N.  W.  214,  482;  Evansville 
Nat.  Bank  v.  Kaufman,  93  N.  Y.  273,  45  Am.  Rep.  204,  citing  the  text;  Higgins 
V.  Ridgway,  90  Hun,  398,  35  N.  Y.  Supp.  944;  Breitengross  v.  Farr,  100  Wis. 
215,  75  N.  W.  893.  The  mere  fact  that  one  not  a  party  to  the  note,  requests  an- 
other to  sign  for  accommodation  of  the  maker,  will  not  open  the  paper  to  the 
defense  of  accommodation  uses  should  he  afterward  acquire  it.  Lockwood  v. 
Twitchell  (Mass.),  16  N.  E.  731.  The  fact  that  an  indorser  before  delivery,  for 
the  payee,  subsequently  paid  interest  on  the  notes  when  not  obliged  to  does  not 
estop  or  prevent  him  from  setting  up  want  of  consideration  in  an  action  against 
him  in  which  the  payee  seeks  to  recover  on  the  indorsements.  Nesson  v.  Millen, 
205  Mass.  515,  92  N.  E.  995.  Where  a  note  was  made  by  a  husband,  it  is  a  suffi- 
cient defense  that  the  note  was  executed  and  delivered  to  a  bank  of  which  the 
defendant  is  the  receiver  as  an  accommodation  to  the  bank,  and  was  not  executed 
for  the  benefit  of  the  community  existing  between  the  defendants  as  husband 
and  wife  or  on  behalf  of  the  community,  it  not  appearing  that  the  husband  and 
wife,  or  either  of  them,  were  interested  in  the  bank  at  or  prior  to  that  time.  Shuly 
v.  Holmes,  20  Wash.  13,  54  Pac.  540.  A  note  given  to  a  bank  to  cover  the  amount 
of  unsubscribed  stock,  merely  for  accommodation  and  to  enable  the  bank  officials 
to  deceive  the  comptroller,  on  which  the  maker  paid  no  interest,  the  bank  apply- 
ing the  dividends  on  the  shares  of  its  own  stock  it  held  tt)  such  interest  payment, 
could  not  be  sued  on  by  the  bank,  and  where  the  bank  is  in  the  hands  of  a  re- 
ceiver liability  on  the  note  will  not  be  adjudged  when,  in  the  absence  of  proof  on 
the  subject,  it  may  be  assumed  that  the  fruit  of  a  judgment  would  not  be  used 
for  the  payment  of  creditors,  but  in  relief  of  stockholders  from  an  assessment  by 
the  comptroller.  Lyons  v.  Westwater,  173  Fed.  111.  Where  the  note  was  exe- 
cuted, and  indorsed  by  the  payee  in  order  to  obtain  money  with  which  to  carry 
out  a  contract  entered  into  between  the  maker  and  the  payee,  the  payee  is  not  an 
accommodation  indorser,  but  is  liable  as  an  indorser  of  the  note  and  as  having 
been  benefited  by  it.  Vitkovitch  v.  Kleinecke,  33  Tex.  Civ.  App.  20,  75  S.  W.  544. 

8.  Violett  v.  Patton,  5  Cranch  (S.  C),  142;  Yeaton  v.  Bank  of  Alexandria,  5 
Cranch  (S.  C),  49;  French  v.  Bank  of  Columbia,  4  Cranch  (S.  C),  59,  141;  Con- 
solidated Lumber  Co.  v.  FideUty  &  Deposit  Co.  of  Maryland,  161  Cal.  397,  119 
P.  506;  Bankers'  Iowa  State  Bank  v.  Mason  Hand  Lathe  Co.,  121  Iowa,  570,  90 
N.  W.  612,  97  N.  W.  70;  Bank  of  Morgan  City  v.  Herwig,  121  La.  513,  46  So.  611; 
Massachusetts  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E.  959;  Mehlinger  v. 
Harriman,  185  Mass.  245;  70  N.  E.  51;  Conrad  v.  Clarke,  106  Minn.  430,  119 
N.  W.  214,  482;  Proctor  v.  Blanchard,  75  N.  H.  186,  72  Atl.  210;  Polhemus  v. 
Prudential  Realty  Corp.,  74  N.  J.  L.  570,  67  Atl.  303;  Walde  Asphalt  Paving 
Co.  V.  National  Trading  Co.,  120  N.  Y.  S.  11,  135  App.  Div.  391;  Willoughby  v. 
Ball,  18  Okl.  535,  90  Pac.  1017;  Stephens  v.  Monongahela  Nat.  Bank,  88  Pa.  St. 


§  189  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  265 

sideration  which  the  plaintiff  gave  for  his  title,  as  well  as  that  for 
which  the  defendant  contracted  the  Hability,  must  be  impeached  in 
order  to  defeat  a  recovery.^  The  circmnstance  that  the  accommoda- 
tion maker  was  assured  that  the  payee  would  protect  it  being  known 
to  the  holder,  does  not  weaken  in  any  degree  his  title  to  recover,  ^°  and 
in  an  action  against  an  indorser  of  a  note  for  the  accommodation  of 
the  maker,  a  defense  personal  to  the  maker  of  the  note  cannot  be  set 
up  by  the  accommodation  indorser.  ^^ 

Under  Negotiable  Instrument  statute. — Under  sundry  provisions  of 
the  statute, ^^  it  has  been  held,  as  between  the  immediate  parties,  it 
may  be  shown  that  it  was  given  or  indorsed  by  one  party  for  the 
accommodation  of  the  other  party,^^  but  that  there  was  a  lack  of  con- 
sideration to  the  accommodation  party  cannot  be  set  up  against  a 
holder  for  value. ^^  When  the  indorsement  of  a  note  was  a  requisite 
to  its  acceptance,  this  furnished  a  sufficient  consideration,^^  and  it 
has  been  held  that  a  person  who  introduces  the  payee  of  a  check  to  a 
bank,  which  has  been  raised  by  the  payee,  and  who  is  informed  by 

157;  Fant  v.  Miller,  17  Gratt.  47;  Robertson  v.  Williams,  5  Munf.  381;  Bank  of 
Ohio  Valley  v.  Lockwood,  13  W.  Va.  392;  Marling  v.  Jones,  138  Wis.  82, 119  N.  W. 
931,  131  Am.  St.  Rep.  996.  One  of  two  joint  makers  of  a  note  cannot  defend  on 
the  ground  that  he  signed  it  as  an  accommodation  to  his  brother,  with  the 
understanding  that  the  signing  of  hi.s  name  waa  a  mere  mat  ter  of  form  to  comply 
with  the  provisions  of  the  national  banking  laws,  and  that  ho  would  not  subject 
himself  to  any  liability  by  signing  it,  and  that  the  cashier  of  the  bank  had  made 
these  representations  to  the  brother  at  the  time  the  loan  was  maxle  and  afterwards 
said  the  same  thing  to  the  defendant.  Lebanon  Nat.  Bank  v.  Long,  220  Pa.  556, 
69  Atl.  1033. 

9.  Ante,  chapter  VII,  section  III,  §  174. 

10.  Thatcher  v.  West  River  Nat.  Bank,  19  Mich.  196. 

11.  Fleitmann  v.  Ashley,  69  N.  Y.  S.  1099,  GO  App.  Div.  201,  aflarmed  172 
N.  Y.  628,  65  N.  E.  1116. 

12.  Appendix,  sees.  28,  29,  196. 

13.  People's  Nat.  Bank  v.  Schepflin,  73  N.  J.  L.  29,  62  Atl.  333;  Morgan  v. 
Thompson,  72  N.  J.  L.  244,  62  Atl.  410;  Haddock,  Blanchard  &  Co.  v.  Haddock, 
192  N.  Y.  499,  85  N.  E.  682,  19  L.  R.  A.  (N.  S.)  136.  Where  the  maker  and  payee 
of  notes  agreed  that  each  was  to  receive  J^  of  the  proceeds  of  the  notes  when  dis- 
counted, the  paper  thus  issued  was  not  accommodation  paper,  and  could  not  give 
to  the  maker  the  character  or  rights  of  an  accommodation  maker.  Reyburn  v. 
Queen  City  Sav.  Bank  &  Trust  Co.,  171  Fed.  609.  Reading  section  115  with 
section  29,  it  means  that  the  indorser  for  whose  accommodation  the  instrument 
was  made  or  accepted  is  one  who  receives  value  therefor,  and  not  one  who  signs 
it  simply  for  the  purpose  of  lending  his  name  to  some  other  person.  First  Nat. 
Bank  v.  Bickel,  137  S.  W.  790,  143  Ky.  754. 

14.  Lowell  V.  Bickford,  201  Mass.  543,  88  N.  E.  1. 

16.  Bank  of  Monticello  v.  Dooly,  113  Wis.  590,  89  N.  W.  490. 


266     CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS     §§  190,  191 

the  bank  that  the  check  is  good,  and  indorses  the  same  for  accommo- 
dation, is  liable  on  the  check.  ^^ 

§  190.  An  accommodation  indorser,  who  has  paid  the  amount  of 
the  note  to  a  subsequent  indorsee,  may  recover  of  the  maker  without 
being  subject  to  an  offset  of  the  maker  against  the  payee,  although 
he  knew  when  he  indorsed  it  that  the  maker  was  a  creditor  of  the 
payee  for  an  amount  greater  than  the  amount  of  the  note.^^  And 
the  payee  may  recover  against  the  acceptor,  although  he  knew  when 
he  took  the  bill  that  the  acceptance  was  for  accommodation  of  an- 
other party.  ^^  And  it  has  been  held  that  the  accommodation  payee 
and  indorser  may  recover  the  full  amount  of  the  note,  although  he 
took  it  up  by  paying  only  a  part.^^  But  this  is,  we  think,  erroneous. ''-'° 
If  one  member  of  a  firm  obtains  an  accommodation  note  payable  to 
himself,  and  afterward  indorses  it  to  a  third  person,  who  reindorses 
it  to  the  same  firm,  before  maturity,  and  for  good  consideration,  such 
firm  cannot  recover  against  the  maker,  both  parties  being  affected 
with  the  notice  of  a  want  of  consideration.-^ 

§  191.  An  accommodation  bill  or  note  is  not  considered  a  real 
security,  but  a  mere  blank,  until  it  has  been  negotiated,  and  it  then 
becomes  binding  upon  all  the  accommodation  indorsers,  in  like  manner 
and  to  the  like  effect  as  if  they  were  successive  indorsers;  ^'^  but  until 
it  has  been  negotiated  any  party  may  withdraw  his  indorsement, 
acceptance,  or  other  liability  upon  it,  and  rescind  his  engagement;  ^^ 
and  that  right  is  not  impaired  by  the  circumstance  that  he  may  be 
indemnified  by  an  assignment  or  other  security.^"* 

16.  Smith  V.  State  Bank,  104  N.  Y.  S.  750,  54  Misc.  550. 

17.  Barker  v.  Barker,  10  Gray,  339. 

18.  Spurgeon  v.  McPheeters,  42  Ind.  527;  Milino  Nat.  Bank  v.  Cobbs  (Tex. 
Civ.  App.)  128  S.  W.  151,  citing  text. 

19.  See  chapter  XLI,  on  Principal  and  Surety,  §  1353,  note. 

20.  This  section  is  cited  in  Berkely  v.  Tinsley,  88  Va.  1005,  14  S.  E.  842,  by 
Lacy,  J. 

21.  Quinn  v.  TuUer,  7  Cush.  244. 

22.  Whitworth  v.  Adams,  5  Rand.  342;  Taylor  v.  Bruce,  Gilmer,  42;  May  v. 
Boisseau,  8  Leigh,  164;  Downes  v.  Richardson,  5  B.  &  Aid.  674;  Macaulay  v. 
Holsten,  114  N.  Y.  S.  611. 

23.  Second  Nat.  Bank  v.  Howe,  40  Minn.  390,  citing  the  text. 

24.  May  v.  Boisseau,  8  Leigh,  164;  Patterson  v.  Bank,  26  Oreg.  509,  38  Pac. 
818,  citing  the  text.  In  this  case  a  number  of  persons,  among  them  the  plaintiff, 
T.  Patterson,  gave  their  promissory  notes  for  the  accommodation  of  the  payee, 
to  enable  it  to  obtain  advances  from  a  bank.    Said  notes  passed  into  the  hands  of 


§§  192,  193       SUFFICIENT   AND    LEGAL   CONSIDERATIONS  267 

§  192.  A  person  who  indorses  a  note  as  an  accommodation  indorser 
for  the  payee,  such  note  having  been  made  by  an  acconmiodation 
maker,  is  subject  to  all  the  obligations  and  acquires  all  the  rights  of 
a  party  to  negotiable  paper. 

If  obliged  to  take  up  such  note,  the  accommodation  maker  cannot 
set  up  fraud  on  the  part  of  the  payee,  in  the  inception  of  the  note, 
as  a  defense  to  his  suit.^^ 

§  193.  Fraudulent  considerations. — "Fraud  cuts  down  every- 
thing" is  the  sharp  phrase  of  the  Lord  Chief  Baron  Pollock  in  an 
English  case."-^  And  between  immediate  parties  it  at  once  destroys 
the  validity  of  a  bill  or  note  into  the  consideration  of  which  it  enters.^ 


the  bank  as  a  pledge  as  collateral  security  for  future  advances  to  the  extent  of 
$100,000.  The  bank  had  notice  at  the  time  that  the  notes  were  all  executed  solely 
for  the  accommodation  of  the  Smelting  Company,  and  for  a  specified  purpose, 
that  of  securing  the  bank  for  future  advances  to  the  company.  Judge  Wolverton, 
in  delivering  his  opinion,  thought  that  all  the  note-makers,  acting  in  unison  in 
giving  notice,  and  demanding  a  cessation  of  credit,  could  oblige  the  bank  to  deal 
with  the  Smelting  Company  upon  its  own  credit,  assimilating  the  makers  to  that 
of  guarantors  under  a  continuing  guaranty  which  would  be  revocable  at  any  time 
by  notice,  but  in  so  far  as  the  guaranty  had  been  acted  upon,  the  notice  was  with>- 
out  effect.  These  note-makers  are  all  principals  upon  the  face  of  the  notes, 
their  engagements,  several,  not  joint,  nor  joint  and  several;  but  as  between  them- 
selves, they  are  sureties  by  virtue  of  their  collateral  written  contract.  The  plain* 
tiff,  T.  Patterson,  a  single  one  of  these  note-makers,  if  allowed  to  fix  his  liability 
to  and  stay  the  credit,  created  by  his  note,  would  violate  the  spirit  of  the  agree- 
ment, and  it  would  be  inequitable  and  unjust  to  permit  the  correlative  relationship 
and  liability  of  the  parties  thereto  to  be  thus  changed  or  severed;  and  that  other 
note-makers  were  at  least  entitled  to  notice  of  plaintiff's  intention  to  terminate 
his  liability  for  further  advances  by  the  bank. 

25.  Laubach  v.  Pursell,  35  N.  J.  L.  434;  Rossi  v.  National  Bank,  71  Mo.  App. 
150. 

26.  Rogers  v.  Hadley,  32  L.  J.  Exch.  (N.  S.)  248  (1863). 

27.  Grinnell  v.  Hill,  1  Cal.  App.  492,  82  Pac.  445;  Clayton  v.  Cavender,  1 
Maw.  (Del.)  191,  40  Atl.  956;  Barco  v.  Taylor,  5  Ga.  App.  372,  63  S.  E.  224; 
Crooker  v.  Hamilton,  3  Ga.  App.  190,  59  S.  E.  722;  Cox  v.  Clime,  147  la.  353, 
126  N.  W.  330;  Roberts  v.  Sholes,  144  Mich.  215,  107  X.  W.  904;  Hightower  v. 
Mobile  &  R.  Co.,  83  Miss.  708,  36  So.  82,  102  Am.  St.  Rep.  476;  Champion  Fund- 
ing &  Foundry  Co.  v.  Heskett,  125  Mo.  App.  516,  102  S.  W.  1050;  Catterlin  v. 
Lusk,  98  Mo.  App.  182,  71  S.  W.  1109;  Anderson  v.  Stapel,  80  Mo.  App.  115; 
Douglass  V.  Richards,  101  N.  Y.  S.  299,  116  App.  Div.  27;  Benson  v.  Keller,  37 
Ore-z.  120,  60  Pac.  918;  Wisegarver  v.  Yinger  (Tex.  Civ.  App.),  128  S.  W.  1190, 
122  S.  W.  925;  Hall  v.  Grayson  County  Nat.  Bank,  36  Tex.  Civ.  App.  317,  81 
S.  W.  762;  Webb  v.  Moseley,  30  Tex.  Civ.  App.  311,  70  S.  W.  349;  Cummingham 
v.  Morris,  56  Wash.  341,  105  Pac.  839;  Hynes  v.  Plastino,  45  Wash.  190,  87  Pac. 


2G8  CONSIDERATION    OF    NEGOTIABLE    INSTRUMENTS         §  193 

We  have  seen  that  if  a  horse  or  other  personal  chattel  is  warranted, 
and  a  bill,  note,  or  cheek  given  for  the  price,  the  breach  of  the  war- 

1127;  Du  Clos  v.  Batcheller,  17  Wash.  389,  49  Pac.  488;  Prewett  v.  Citizens  Nat. 
Bank,  66  W.  Va.  184,  66  S.  E.  231;  Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  192. 
As  to  fraud  going  on  the  character  of  the  paper,  see  Gillespie  v.  Hester,  160  Ala. 
444,  49  So.  580;  Peoples  State  Bank  v.  Ruxer,  31  Ind.  App.  245,  67  N.  E.  542; 
Biddeford  Nat.  Bank  v.  Hill,  102  Me.  346,  66  Atl.  721,  120  Am.  St.  Rep.  499; 
Minneapolis  Brewing  Co.  v.  Grathen,  111  Minn.  265,  126  N,  W.  827;  Ribner  v. 
Kleinberg,  122  N.  Y.  S.  239.  That  a  mere  expression  of  an  opinion  does  not 
constitute  fraud,  see  Consumers'  Brewing  Co.  v.  Tobin,  19  App.  Cas.  (D.  C.)  353; 
Court  Valhalla,  No.  16,  Foresters  of  America  v.  Olson,  14  Colo.  App.  243,  59  Pac. 
883;  State  Bank  of  Indiana  v.  Mentzer,  125  la.  101,  100  N.  W.  69;  State  Bank  of 
Indiana  v.  Gates,  114  la.  323,  86  N.  W.  311.  Where  statements  were  made  as  to 
the  capacity  machine,  based  upon  the  payee's  own  observation  and  knowledge, 
this  was  a  representation  of  a  fact  which  was  exclusively  within  the  knowledge 
of  the  payee,  and  was  not  the  expression  of  a  mere  opinion,  and  tends  to  show 
fraud  in  procuring  a  note  given  for  the  purchase  of  the  machine.  Merillat  v. 
Plummer,  111  la.  643,  82  N.  W.  1020.  Mere  pufTmg  of  property  sold  does  not 
show  fraud.  Harrison  v.  Walden,  89  Mo.  App.  164.  As  to  the  necessity  to  use 
diligence  to  guard  against  fraud  and  imposition,  see  Clodfelter  v.  Hulett,  72  Ind. 
137;  Smith  v.  McDonald,  139  Mich.  225,  102  N.  W.  738;  Hall  v.  Grayson  County 
Nat.  Bank,  36  Tex.  Civ.  App.  317,  81  S.  W.  762.  As  to  the  duty  of  the  maker  to 
read  the  note,  see  Bank  of  Morgan  City  v.  Herwig,  158  Fed.  744;  Barco  v.  Taylor, 
5  Ga.  App.  372,  63  S.  E.  224;  Branan  v.  Warfield  &  Lee,  3  Ga.  App.  586,  60  S.  E. 
325;  Bank  of  Morgan  City  v.  Herwig,  121  La.  513,  46  So.  611 ;  Graham  v.  Mercan- 
tile Town  Mut.  Ins.  Co.,  110  Mo.  App.  95,  84  S.  W.  93;  Catterlin  v.  Lusk,  98  Mo. 
App.  182,  71  S.  W.  1109;  Guthrie  &  W.  R.  Co.  v.  Rhodes,  19  Okl.  21,  91  Pac. 
1119.  If  the  printed  matter  was  unintentionally  obscured  from  the  defendant's 
view,  and  he  carelessly  signed  the  paper  without  ascertaining  its  contents,  there 
is  no  reason  for  relieving  him  from  the  obligation  assumed.  On  the  other  hand,  if 
the  printed  matter  was  canceled  by  the  agent  of  the  payee  with  the  design  of 
obtaining  some  advantage  over  defendant,  that  is,  if  it  was  fraudulently  done,  the 
defendant  is  not  bound.  Palo  Alto  Stock  Farm  v.  Brooker,  131  la.  229,  108  N.  W. 
307.  Where  the  maker  of  a  note  is  an  ignorant  man,  unskilled  in  the  use  or  under- 
standing of  technical  or  legal  language,  and  the  contents  of  a  long  printed  mort- 
gage note  were  deliberately  misrepresented  to  him,  he  was  not  negligent  in  not 
stopping  to  read  all  its  terms.  Wickerman  v.  Evans,  133  la.  552,  110  N.  W.  1046. 
On  ignorance  of  the  payee  of  the  fraud  practiced  on  the  maker  by  another,  the 
maker  is  bound.  McCrea  v.  Murphy,  90  111.  App.  434;  Lovelace  v.  Lovelace, 
136  Ky.  452,  124  S.  W.  400,  136  Am.  St.  Rep.  271;  Hays  v.  Bostick,  96  Miss.  794, 
51  So.  462.  Where  one  enters  into  a  binding  contract  to  give  certain  promissory 
notes  for  named  amounts,  and  subsequently  gives  them,  fraud  in  procuring  him 
to  sign  the  notes,  or  drunkenness  at  the  time  of  their  execution,  is  no  defense, 
when  the  notes  amount  to  no  more  than  a  compliance  with  his  previous  valid 
contract.  Strickland  v.  Parlin  &  Orendorf  Co.,  118  Ga.  213,  44  S.  E.  997.  The 
indorser  of  a  note  before  delivery  cannot  avail  himseK  of  a  defense  of  fraud 
evidenced  by  a  contract  under  seal  between  other  parties  than  those  who  executed 
the  note.    Elliott  v.  Brady,  192  N.  Y.  221,  85  N.  E.  69.    Concurring  in  the  opinion, 


§  193  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  269 

ranty  is  no  defense  to  the  action  on  the  bill,  note,  or  check  (unless  au- 
thorized by  statute) ;  but  if  it  appear  that  the  seller  knew  that  there 
was  unsoundness  in  the  horse  or  other  chattel,  the  element  of  fraud 
enters  into  the  transaction.  There  was,  in  fact,  no  contract,  and  proof 
of  the  fraud  at  once  defeats  the  action  on  the  bill,  note,  or  check. ^^ 

Cullen,  C.  J.,  added:  "It  would  be  a  good  defense  to  the  appellants'  liability  as 
indorsers  of  the  note  in  suit  to  show  that  such  indorsement  was  obtained  by  fraud, 
and  I  concede  the  claim  that  the  fraud  practiced  on  the  vendee  in  the  contract  of 
sale  might  be  the  same  fraud  which  induced  the  indorsement  of  the  obligation  of 
the  vendee  for  the  purchase  money.  In  pleading  such  a  fraud  the  indorsers  would 
be  availing  themselves  neither  of  the  vendee's  right  to  rescind  the  contract  nor 
of  the  latter'a  cause  of  action  for  damages.  But  the  difficulty  in  this  case  is  that 
the  indorsement  of  the  appellants  on  the  note  sued  upon  was  made  after  their 
knowledge  of  the  fraud  practiced  on  the  vendee  and  was  given  with  such  knowl- 
edge to  secure  a  renewal  of  the  original  note  for  which  the  note  in  suit  was  sub- 
stituted. Therefore  the  appellants'  relief  if  any,  must  be  had  in  an  equitable 
action."  Where  notes  were  given  for  stock  in  a  business,  representations  as  to 
the  manner  in  which  the  payee  of  the  notes  could  or  would  conduct  the  business 
and  of  his  intentions  in  regard  to  it,  do  not  constitute  fraud  in  law.  Lowry  Nat. 
Bank  v.  Hazard,  223  Pa.  520,  72  Atl.  889  (1909).  Where  notes  were  executed  and 
delivered  in  payment  of  the  premium  on  a  life  insurance  policy,  the  fact  that  the 
agent  made  a  verbal  agreement  that  the  company  should  loan  the  money  does 
not  show  that  there  was  any  fraud,  trick  or  device  in  obtaining  the  execution  of  the 
notes.  Poindexter  v.  McDowell,  110  Mo.  App.  233,  84  S.  W.  1133.  Where  notes 
were  given  in  subscription  for  stock,  the  fact  that  the  promoters  had  a  secret 
agreement  with  one  whose  name  appeared  on  the  list  of  subscribers  under  which 
stock  was  transferred  to  him  at  a  lower  rate  than  that  at  which  stock  was  sold  to 
the  maker  of  the  note  does  not  charge  such  fraud  as  would  relieve  the  maker  of 
the  note  from  liability.  State  Bank  of  Indiana  v.  Gates,  114  la.  323,  86  N.  W. 
311.  Where  parties  have  signed  notes  for  the  purchase  of  property  and  have 
alleged  fraud  in  the  transaction,  to  avail  themselves  of  the  fraud  mentioned  as  a 
complete  defense,  the  contract  must  have  been  rescinded.  Cox  v.  Cline,  147  la. 
353,  126  N.  W.  330  (1910).  Where  a  note  was  given  for  the  purchase  of  timber  on 
land  under  a  contract  in  writing  for  the  purchase,  the  defendant,  after  having  en- 
joyed parts  of  the  fruits  of  the  contract,  cannot  defend  an  action  on  the  note  on 
a  defense  depending  upon  a  parol  contract  anterior  to  the  date  of  the  writing,  by 
virtue  of  which  a  part  of  the  land  was  alleged  to  have  been  omitted  from  the  writ- 
ten contract  because  of  fraud  of  the  maker  or  mistake  on  his  part,  without  first 
praying  for  a  reformation  of  the  contract.  Harris  v.  P.  H.  &  W.  D.  Brandon,  135 
G:i.  131,  68S.  E.  1040. 

28.  Lewis  v.  Cosgrove,  2  Taunt.  2;  Waterbury  v.  Andrews,  67  Mich.  281; 
Wickham  v.  Grant,  28  Kan.  521;  Snyder  v.  Hargus,  26  Kan.  416;  Wenzel  v. 
Schultz,  20  Pac.  404,  citing  the  text.  It  has  been  held  that  equity  has  jurisdic- 
tion to  compel  cancellation  and  deUverj'  of  negotiable  instruments  apparently 
valid,  but  in  fact  invahd,  in  the  hands  of  holders,  with  notice  before  maturity. 
Scott  V.  Town  of  Menasha,  84  Wis.  73,  54  N.  W.  263;  Knott  v.  Tidyman,  86  Wis. 
164,  56  N.  W.  632;  Selby  v.  Case,  87  Md.  459,  39  Atl.  1041. 


270  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  193 

While  inadequacy  of  consideration  in  the  origin,  or  transfer  of  a 
negotiable  instrument,  is  not,  in  itself,  a  defense  to  a  suit  upon  it, 
yet  it  is  oftentimes  a  circumstance  strongly  tending  to  show  a  fraud 
in  the  contract  in  which  it  was  given  or  transferred.  Evidence, 
therefore,  in  a  suit  on  a  note  for  certain  pictures,  is  not  admissible 
for  the  purpose  of  reducing  the  damages  by  proving  that  they  were 
of  inferior  value;  but  it  would  be  good  to  show  that  they  were  fraudu- 
lently palmed  off  on  the  defendant."^  A  note  is  not  vitiated  by  repre- 
sentations of  what  others  say  as  to  the  value  of  property  sold,  unless 
the  payee  making  them  knew  they  were  false.^^ 

If  the  defendant  repudiate  the  contract  on  the  ground  of  fraud,  he 
must  return  the  consideration — otherwise  the  plaintiff  may  recover 
on  the  bill  or  note.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statute, ^^  it  is 
competent  to  show,  under  a  plea  of  partial  or  total  failure  of  con- 
sideration, that  the  purchaser  was  induced  to  execute  the  instrument 
sued  on  by  the  false  and  fraudulent  representations  of  the  seller  as 
to  the  quality,  quantity,  value,  or  character  of  the  property  which 
formed  the  consideration  that  moved  the  contract,  as  that  is  one 
mode  of  showing  a  failure  of  consideration,^^  and  the  title  of  a  person 
who  negotiates  commercial  paper  is  defective  when  he  has  obtained 
any  signature  thereto  by  fraud,  and  if  the  party  so  defrauded  be  re- 
lieved from  liability  thereon  it  has  been  held  that  such  fraud  makes 
such  paper  voidable  by  all  the  other  persons  who  signed  it,  though 

29.  Solomon  v.  Turner,  1  Stark.  51  (2  Eng.  C.  L.).  See  also  Rudderow  v. 
Huntington,  3  Sandf .  252,  where  goods  were  sold  by  an  auctioneer  with  warranty 
or  misrepresentation,  and  turned  out  to  be  spurious.  Held  no  defense,  it  not 
appearing  that  the  auctioneer  knew  the  fact.  Hodges  v.  Traux  et  al.,  19  Ind. 
App.  651,  49  N.  E.  1079;  Brook  v.  Teague,  52  Kan.  119,  34  Pac.  347.  A  statement 
by  the  payee  which  amounted  to  nothing  more  than  a  promise  does  not  constitute 
fraud,  as  that,  on  making  notes  for  the  purchase  of  lots,  the  maker  would  not  have 
to  use  any  money,  and  the  obligation  would  only  be  to  sell  the  lots  and  turn  the 
proceeds  over  to  the  payee  until  payment  was  made;  but  such  a  statement  may  be 
considered  on  the  issue  of  fraud.  State  Bank  of  Iowa  Falls  v.  Brown,  142  la.  190, 
119  N.  W.  81,  134  Am.  St.  Rep.  412. 

30.  Davidson  v.  Jordan,  47  Cal.  351. 

31.  Archer  v.  Bamford,  3  Stark.  175;  Macaltimer  v.  Croasdale,  3  Houst.  365; 
Sternbury  v.  Bowman,  103  Mass.  326;  Heaton  v.  Knowlton,  53  Ind.  357.  Contra, 
Bell  v.  Sheridan,  21  D.  C.  370;  Regensburg  v.  Notestine,  2  Ind.  App.  97,  27  N.  E. 
108;  Starke  v.  Dicks,  2  Ind.  App.  125,  28  N.  E.  214. 

32.  Appendix,  sees,  9,  10. 

33.  Taft  v.  Myerscongh,  197  111.  600,  64  N.  E.  711,  reversing  92  111.  App. 
560. 


§  194  SUFFICIENT   AND    LEGAL   CONSIDERATIONS  271 

they  did  not  participate  in  and  were  ignorant  of  such  fraudulent  con- 
duct at  the  time  they  signed  it.^^ 

§  194.  Fraud  on  third  persons  vitiates  consideration. — Fraud 
upon  third  persons  vitiates  a  bill  or  note  given  in  furtherance  of  it 
as  between  the  parties;  and  the  most  frequent  instance  in  which  fraud 
of  this  kind  appears  is  in  undue  advantage  claimed  by  one  or  more 
creditors  when  the  debtor  enters  into  a  composition  in  which  all 
appear  to  stand  on  the  same  footing. ^^  If  the  creditor  refuses  to  enter 
into  the  agreement  of  composition  until  he  receives  a  note  for  the 
residue  of  his  debt,^''  or  receives  a  note  as  inducement  to  his  consent, ^^ 
such  note  will  be  fraudulent  and  void;  and  the  transaction  is  none  the 
less  fraudulent,  and  the  note  none  the  less  void,  because  it  is  given 
after  the  composition  was  entered  into,  having  been  agreed  on  before,^^ 
and  the  fraud  extends  to  the  composition  notes  given  to  such  creditor, 
and  vitiates  them  also.^^  If  the  note  for  the  residue  be  given  by  a  third 
person  who  is  indemnified  by  the  debtor,  it  will  be  void."*"  In  these 
cases  the  creditor  and  insolvent  are  "particeps  criminis,"  but  not 
"in  pari  delicto."  It  can  never  be  par  delictum  when  one  holds  the 
rod  and  the  other  bows  to  it.^^  If  a  third  person  pay  money  for  the 
debtor,  in  fraud  of  the  composition,  the  debtor's  note  to  such  person 
for  the  amount  is  void.''"  When  a  note  given  by  the  debtor  in  com- 
position in  fraud  of  creditors  is  paid,  the  debtor  cannot  recover  back 
the  amount."*^ 

Where  a  statute  provides  that  fraudulent  conveyances,  bonds, 
notes,  etc.,  shall  be  void  "as  against  the  parties  whose  right  or  debt 
is  attempted  to  be  avoided,"  it  has  been  held  a  note  given  with  such 
fraudulent  intent  will  be  valid  as  between  maker  and  payee.^''    But 

34.  Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  192,  under  section  55  of  the 
Btatute. 

35.  O'Shea  v.  Colher  W.  L.  Co.,  42  Mo.  397;  Bastian  v.  Dreyer,  7  Mo.  App.  332. 

36.  Cockshott  V.  Bennett,  2  T.  R.  763;  Knight  v.  Hunt,  5  Bing.  432  (15  Eng. 
C.  L.);  Rice  v.  Maxwell,  13  Smedes  &  M.  289. 

37.  Winn  v.  Thomas,  55  N.  H.  294;  Huckins  v.  Hunt,  138  Mass.  366. 

38.  Howe  V.  Litchfield,  3  Allen,  444;  Took  v.  Tuck,  4  Bing.  224;  Fay  v.  Fay, 
121  Mass.  561 ;  Tinker  v.  Hurst,  70  Mich.  160. 

39.  Dougherty  v.  Savage,  28  Conn.  146. 

40.  Bryant  v.  Christie,  1  Stark.  329. 

41.  Smith  V.  Cuff,  6  Maule  &  S.  160. 

42.  Bryant  v.  Christie,  1  Stark.  329. 

43.  Solinger  v.  Earle,  82  N.  Y.  393;  Wilson  v.  Ray,  10  Ad.  &  El.  (37  Eng. 
C.  L.),  82,  2  Per.  &  Dav.  253;  s.  c,  overruling  Turner  v.  Hoole,  1  D.  &  R.  27. 

44.  Carpenter  v.  McClure,  39  Vt.  13;  Davis  v.  Sittig,  65  Tex.  500. 


272    CONSIDERATION    OF   NEGOTIABLE   INSTRUMENTS   §§  195,  195a 

it  has  been  held  that  the  maker  of  such  notes,  the  contract  being 
unexecuted,  may  make  the  defense  that  they  were  given  in  fraud 
of  others,  though  the  rule  would  not  extend  so  as  to  admit  of  his 
pleading  against  executed  contracts.^^ 


SECTION  V 

WHAT  ARE   ILLEGAL   CONSIDERATIONS 

§  195.  (1)  As  to  illegal  considerations  by  the  common  law. — A 

•bill  or  note  which  is  founded  upon  an  illegal  consideration,  in  whole 
or  in  part,^®  is  void;  for  the  law  will  not  aid  one  who  seeks,  or  has 
consented  to,  its  violation.  Sometimes  the  consideration  is  illegal,  be- 
cause opposed  to  the  general  principles  of  the  common  law;  and  some- 
times because  it  is  specially  interdicted  by  statute.  The  considera- 
tions which  are  illegal  at  common  law  are:  1.  Such  as  violate  the  rules 
of  religion,  moral  or  public  decency;  and,  2.  Such  as  contravene  public 
policy. 

A  bond  given  in  consideration  of  future  illicit  cohabitation  would 
be  void;  but  not  so  if  given  for  past  cohabitation;  ^"^  nor  is  it  void  if 
given  to  support  a  putative  child ;  ''^  but  a  bill  or  note  as  between 
immediate  parties  would  not  be  enforced  if  given  for  past  cohabitation, 
because  not  founded  upon  a  consideration. 


49 


§  195a.  Wagers — Futures. — As  a  general  rule,  wagers  were  not 
illegal  by  the  common  law.^°  But  wagers  upon  the  sex  of  a  person;  ^^ 
that  an  unmarried  female  would  bear  a  child;  ^^  upon  the  result  of  a 
prize  fight;  ^^  or  the  result  of  a  criminal  trial;  ^*  or  the  result  of  an 

45.  Hamilton  v.  Scull's  Admr.,  25  Mo.  166;  Brown  v.  Finley,  18  Mo.  375.  See 
McCausland  v.  Rulston,  12  Nev.  195;  Bank  v.  Keith,  85  Mo.  App.  409. 

46.  Frick  v.  Moore,  82  Ga.  163;  post,  §  204;  Swing  v.  Cider  and  Vinegar  Co., 
77  Mo.  App.  391;  Ball  v.  Putman,  123  Cal.  134,  55  Pac.  773. 

47.  Beaumont  v.  Reeve,  8  Q.  B.  483;  Friend  v.  Harrison,  2  C.  &  P.  584;  Brown 
V.  Kinsey,  81  N.  C.  245;  People  v.  Hayes,  70  Hun,  111,  24  N.  Y.  St.  Rep.  194. 

48.  Hook  V.  Pratt,  78  N.  Y.  371;  Marshall  v.  Bell,  1  Ind.  App.  506,  27  N.  E. 
988. 

49.  1  Parsons  on  Notes  and  Bills,  214;  Byles  (Sharswood's  ed.)  [*132],  246. 

50.  De  Costa  v.  Jones,  Cowp.  729. 

61.  Good  V.  Elliott,  3  T.  R.  693. 

62.  Ditchburn  v.  Goldsmith,  4  Campb.  152. 

63.  Hunt  V.  Bell,  1  Bing.  1,  7  Moore,  212. 

64.  Allen  v.  Hearn,  1  T.  R.  57;  Rust  v.  Gott,  9  Cow.  169. 


S  195a  WHAT   ARE    ILLEGAL   CONSIDERATIONS  273 

election;  ^^  or  upon  the  question  of  war  or  peace, "^  would  be  illegal  as 
opposing  public  policy  and  sound  morals.  And,  as  a  general  rule,  in 
the  United  States  all  manner  of  wagers  are  declared  illegal  by  statu- 
tory enactments;  and  even  where  not  prohibited  by  statute,  they 
are  regarded  as  opposed  to  public  policy  and  sound  morality."  Put- 
ting up  margins  in  stock  speculations  is  regarded  as  a  species  of  gam- 
Ijling,  and  notes  given  for  such  margins  are  void  as  upon  illegal  con- 
sideration.^ In  Massachusetts  one  who  pays  a  gambling  debt  for 
another  cannot  recover  the  amount.^^  And  also,  as  a  general  rule,  in 
the  United  States,  contracts  for  the  sale  or  purchase  of  commodities, 

65.  Lockhart  v.  HuUinger,  2  111.  App.  465;  At  wood  v.  Weeden,  12  R.  I.  293; 
Thompson  v.  Harrison,  S.  C,  Texas,  Dallam's  Decisions,  466. 

66.  Ibid.;  Woolfolk  v.  Duncan,  80  Mo.  App.  421. 

67.  Eldrod  v.  Malloy,  2  Colo.  320;  Boughner  v.  Mayer,  5  Colo.  75;  Spies  v. 
Rosonstock,  87  Md.  14,  39  Atl.  268;  Schmueckle  v.  Waters,  125  Ind.  265,  25  N.  E. 
281 ;  Payne  v.  Raubinck,  82  Iowa,  588,  48  N.  E.  995.  In  this  case  held  that  "  what 
are  familiarly  known  as  '  Bohemian  oats'  contracts  are  void  as  being  against  pub- 
lic policy,  and  a  promissory  note  given  in  pursuance  of  such  contract  is  void  in  the 
hands  of  a  purchaser  thereof  with  notice  of  the  character  of  the  transaction." 
Morris  v.  White,  83  Mo.  App.  194.  A  note  given  for  money  lost  at  a  gambling 
game  is  given  for  an  unlawful  consideration,  and  the  payee  cannot  recover  thereon. 
Union  Collection  Co.  v.  Buckman,  150  Cal.  159,  88  Pac.  708,  9  L.  R.  A. 
(N.  S.)  568,  119  Am.  St.  Rep.  164.  See  also  Vennum  v.  Carr,  130  111.  App.  309. 
Where  a  note  is  given  to  a  third  person  for  money  to  be  used  by  the  maker  in 
paying  a  gambling  debt,  the  payee  not  having  been  informed  of  the  fact  that  it 
was  for  a  gambling  debt,  the  lender  may  recover  on  the  note.  Cooley  v.  Allen, 
(Ky.),  90  S.  W.  1048.  A  note  given  in  consideration  of  money  borrowed  to  en- 
able the  borrower  to  engage  in  a  gambling  game  is  not  on  the  same  footing  as  a 
note  given  in  settlement  of  a  gambling  debt ,  and  an  innocent  j)urchaser  of  such  a 
note  for  value  may  recover  from  the  maker  thereof.  Higginbotham  v.  McGready, 
1S3  Mo.  06,  SI  S.  W.  883,  105  Am.  St.  Rep.  461.  A  check  i.ssued  for  money  ad- 
vanced for  the  purpose  of  gambling,  where  the  payee  wins  the  money,  is  void 
between  the  parties,  when  it  wa.s  for  money  advanced  before  it  had  been  lost  as 
well  for  money  after  it  has  been  won,  under  a  statute  which  must  be  reasonably 
construed  to  include  both  conditions,  and  not  only  the  latter.  Ash  v.  Clark,  32 
Wash.  390,  73  Pac.  351.  Where  a  person  received  a  check  knowing  that  it  was 
for  a  gambling  debt,  and  the  check  had  been  drawn  by  a  husband  on  funds  of  his 
wife  deposited  in  his  name,  the  wife  may  recover  the  amount  from  the  drawee  of 
the  check.    Murray  v.  Aull,  47  Colo.  572,  107  Pac.  1068,  1120. 

58.  Fareira  v.  Cabell,  89  Pa.  St.  89.  A  check  given  in  consideration  of  money 
won  from  the  maker  at  a  game  of  chance  is  utterly  void.  See  Cunningham  v. 
Cans,  79  Hun,  434,  29  N.  Y.  Supp.  979;  Benson  v.  Dublin  Warehouse  Co.,  99 
Ga.  303;  Kain  v.  Bare,  4  Ind.  App.  441,  31  N.  E.  205.  People's  Sav.  Bank  v. 
Gifford,  108  Iowa,  277,  79  N.  W.  63;  Bank  v.  Arnold,  187  Pa.  St.  356,  40  Atl.  794, 
contra. 

69.  ScoUuns  v.  Flyn,  120  Mass.  271.  See  also  Little  v.  Stokely,  99  Ga.  306, 
25  S.  E.  650. 

18 


274  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  196 

such  as  cotton  or  grain,  when  no  actual  delivery  of  the  same  is  con- 
templated or  intended,  such  transactions  being  commonly  known  as 
"futures,"  are  held  contrary  to  public  policy  and  void.  A  bona  fide 
contract  for  the  future  delivery  of  any  article  is  valid,  but  if  the  con- 
tract amount  to  a  mere  staking  of  margins  to  cover  the  difference  be- 
tween the  price  of  the  article  at  the  time  of  purchase  and  the  time  of 
delivery,  it  is  void.^° 

§  196.  As  to  considerations  which  oppose  public  policy. — Con- 
siderations which  oppose  public  policy  are  never  respected  by  the 

60.  Such  contracts  have  been  held  illegal  in  the  following  cases:  Irvin  v.  Villiar, 
110  U.  S.  499;  Root  v.  Merriam,  27  Fed.  909;  Lee  v.  Boyd,  86  Ala.  283;  Hawley 
V.  Bibb,  69  Ala.  52;  Cunningham  v.  Bank,  71  Ga.  400;  Davis  v.  Davis,  119  Ind. 
511;  Hare  v.  Robinson,  37  La.  Ann.  814;  Gregory  v.  Wendell,  30  Mich.  337; 
Stewart  v.  Hutchinson,  120  Mo.  App.  32,  96  S.  W.  253;  Zeller  v.  Lcitcr,  189  N.  Y. 
361,  82  N.  E.  158;  Bigelow  v.  Benedict,  70  N.  Y.  202;  Nichols  v.  Lumpkin,  51 
N.  Y.  Supp.  Ct.  88;  Yerker  v.  Salomon,  18  N.  Y.  Sup.  Ct.  473;  Kahn  v.  Walton, 
46  Ohio  St.  197;  Kirkpatrick  v.  Bonsall,  72  Pa.  St.  89;  Waugh  v.  Beck,  114  Pa.  St. 
422;  Seeligson  v.  Lewis,  65  Tex.  215;  Barnard  v.  Backhaus,  53  Wis.  599;  Crawford 
V.  Spencer,  4  S.  W.  713;  Beadier  v.  McEhath,  3  S.  W.  152;  Grizewood  v.  Blain, 
11  C.  B.  526.  See  also  Bishop  on  Contracts,  §  534.  And  such  a  note  based  upon 
such  consideration  is  void  even  as  against  a  bona  fide  purchaser  of  the  note  with- 
out notice.  See  Lulley  v.  Morgan,  21  D.  C.  88,  approving  Justh  v.  Holliday,  2 
Mack.  346.  Where  a  payee  of  a  note  in  good  faith  advanced  money  to  another 
person  for  the  purchase  of  stock,  and  to  enable  the  maker  of  the  note  to  complete 
the  purchase  of  stock  originally  purchased  on  margin,  recovery  upon  the  note 
cannot  be  defeated  on  the  ground  of  want  of  good  consideration  by  reason  of  the 
payee's  general  knowledge  of  the  marginal  character  of  the  contract  as  between 
the  maker  of  the  note  and  the  broker.  Foster  v.  Beau  de  Zart,  13  Cal.  App.  52, 
108  Pac.  875  (1910).  Such  transactions  have  been  sustained  under  various  circum- 
Btances  in  the  following  cases:  Sondheim  v.  Gilbert,  117  Ind.  76;  Third  Nat.  Bank 
V.  Tinsley,  11  Mo.  App.  498;  Shaw  v.  Clark,  49  Mich.  384;  Hentz  v.  Jewell,  20  Fed. 
592;  St.  Louis  Bank  v.  Harrison,  3  McCrary,  etc.,  316;  Jackson  v.  City  Nat. 
Bank,  125  Ind.  347,  25  N.  E.  430;  Morris  v.  Norton,  21  C.  C.  A.  553,  75  Fed.  912. 
When  a  wagering  contract  has  been  executed,  and  its  fruits  paid  to  the  agent  of 
the  winner,  the  agent  cannot  hold  it  against  the  winner,  and  a  draft  made  by  cot- 
ton dealers  for  money  collected  for  the  payee  of  the  draft  on  a  cotton  future  sale, 
is  valid.  Russell  v.  Kidd,  37  Tex.  Civ.  App.  411,  84  S.  W.  273.  \Miere  a  note 
was  given  for  cotton  purchased  under  the  New  York  Cotton  Exchange  rules,  by 
which  deUvery  of  the  cotton  is  required,  and  the  holder  of  the  note  knew  nothing 
of  any  intention  of  the  maker  not  to  receive  the  cotton  bought  for  him  under  his 
contracts  upon  his  orders,  the  note  is  valid.  Springs  &  Co.  v.  Carpenter,  154 
Fed.  Rep.  487.  The  mere  negotiation  of  the  note  by  payments  thereon  and  a 
promise  to  pay  the  balance,  would  not  relieve  it  from  its  illegality,  or  estop  the 
maker  from  urging  that  as  a  defense.  Treat  v.  Suydecker,  Tyffe  &  Co.,  92  III. 
App.  458. 


196 


WHAT   ARE    ILLEGAL   CONSIDERATIONS  275 


law;  and  contracts  founded  upon  them  are  universally  condemned." 
Contracts  in  general  restraint  of  trade;  ^-  or  restraining  or  prevent- 

61.  Barnhart  v.  Goldstein,  27  Ind.  App.  101,  59  N.  E.  1067  (note  given  for 
machine  which  was  made  and  could  not  be  used  for  a  lawful  purpose);  Hubbard 
V.  Freiburger,  133  Mich.  139,  94  N.  W.  727;  Dickson  v.  Baker,  75  Minn.  168,  77 
N.  W.  820,  74  Am.  St.  Rep.  447  (note  to  a  trustee  to  secure  the  election  of  another 
to  the  office  of  trustee,  as  constituting  a  breach  of  trust) ;  Bank  of  Ozark  v.  Hanks, 
142  Mo.  App.  110,  125  S.  W.  221;  Cobb  v.  Wm.  Kenefick  Co.,  23  Okl.  440,  110 
Pac.  545  (note  given  to  a  construction  company  to  induce  it  to  construct  the  rail- 
road off  the  survey  and  to  a  certain  town);  McGuffin  v.  Coyle  &  Guss,  16  Okl. 
648,  85  Pac.  954,  G  L.  R.  A.  (N.  S.)  524  (note  payable  personally  to  an  officer  of  a 
railroad  company  on  condition  that  a  raih-oad  is  built  to  a  certain  point  by  a 
certain  time).  A  note  given  for  Uquors  unlawfully  sold  or  with  knowledge  that 
they  were  to  be  unlawfully  sold,  is  without  consideration  in  law.  Levy  &  Son 
v.  Stegman  (Iowa),  104  N.  W.  372;  Jones  v.  Yokum,  24  S.  D.  176,  123  N.  W. 
272;  In  re  Lemerise,  73  Vt.  304,  50  Atl.  10G2.  In  the  Union  Cent.  Life  Ins.  Co.  v. 
Cha'mplin,  11  Okl.  184,  65  Pac.  836,  55  L.  R.  A.  109,  it  waa  held  that  a  stipula- 
tion in  a  note  that  the  right  of  the  maker  to  make  payment  at  any  time  is  waived, 
providing  the  money  tendered  is  borrowed  in  whole  or  in  part  elsewhere,  is  con- 
trary to  public  policy,  and  is  therefore  void,  as  the  stipulation  forbids  the  maker 
from  discharging  his  obligation  by  tendering  to  the  payee  money  which  was  not 
borrowed,  in  whole  or  in  part,  elsewhere.  To  the  contrary,  see  Lasher  v.  Union 
Cent.  Life  Ins.  Co.,  115  la.  231,  88  N.  W.  375.  Under  a  statute  providing  that 
no  recoverj-  shall  be  had  to  recover  the  purchase  price  of  any  sale  on  credit  of  any 
liquor,  to  be  drunk  on  the  premises  where  the  same  shall  be  sold,  and  that  all 
securities  given  for  such  debt  shall  be  void,  a  promissor>'  note  is  a  security  within 
the  meaning  of  the  statute  and  a  note  given  for  the  price  of  liquor  thus  sold  is 
not  enforceable.  Wagner  v.  Scherer,  85  N.  Y.  S.  894,  89  App.  Div.  202.  A  note 
given  in  consideration  of  the  written  consent  of  the  payee,  as  adjacent  property 
owner,  to  the  maintenance  of  a  saloon  by  the  maker  upon  certain  premises,  waa 
given  for  an  illegal  consideration.  O'Connor  v.  Klennan,  143  la.  435,  121  N.  W. 
1088  (1909).  A  license  fee,  the  payment  of  which  is  a  condition  precedent  to  issumg 
the  license,  is  in  no  sen.se  a  debt  owing  the  municipality,  and  the  fact  that  a  person 
had  been  selling  liquor  for  some  months  without  a  license  did  not  make  him  in- 
debted to  the  town  for  the  hcense  fee;  he  simply  violated  the  ordinance,  and  a 
note  given  for  a  license  under  such  circumstances  is  without  consideration,  as  a 


62.  Chitty  on  Bills  (13th  Am.  ed.)  [*83l,  99.  But  contracts  in  partial  restramt 
of  trade,  on  fair  and  beneficial  terms,  are  supported.  Bunn  v.  Gray,  4  East,  190; 
Jenkins  v.  Temples,  39  Ga.  655,  when  the  contract  was  not  to  trade  m  the  same 
place-  Nobles  v.  Bates,  7  Cow.  307 ;  Perkins  v.  Lyman,  9  Mass.  522.  A  note  given 
for  manufactured  goods  purchased  is  enforceable  though  the  payee  may  be  a 
trust  or  combination  organized  for  the  purpose  of  carrynng  out  restrictions  in 
trade  contrary-  to  the  common  law  or  to  the  Federal  and  State  anti-trust  acts;  this 
is  not  a  contract  which  is  itself  in  restraint  of  trade,  but  is  based  on  a  transaction 
in  itself  legal.  ConnoUy  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  540,  22  S.  Ct.  431, 
46  L.  ed.  679. 


276  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS         §  195 

ing  marriage  even  for  a  time;^^  or  to  assist  another  in  furthering 
a  marriage  where  the  promisor  has  no  right  to  interfere;  ^^  champ- 
ertous  contracts  between  attorney  and  client  '^•'  to  procure  or  sell 
a  public  office/^  or  votes;  or  to  induce  a  candidate  to  withdraw;  ^^ 
to  suppress  evidence  or  interfere  with  the  course  of  justice  by 
dropping  a  criminal  prosecution;^^  and  contracts  to  indemnify  a 
person  in  doing  an  act  of  known  illegality,  as  inducement  thereto ;  ^^ 
or  to  do  anything  reprehensible  for  its  injurious  effects  upon  the 
feelings  of  third  persons;  or  in  fraud  of  the  rights  and  interests  of 

license  issued  without  payment  of  the  Hcense  fee  is  void.  Ristine  v.  Clements, 
31  Ind.  App.  338,  66  N.  E.  924.  A  note  taken  from  one  confined  in  jail,  at  the 
expiration  of  his  term,  for  the  amount  of  costs  in  his  case,  is  void  when  the  statutes 
have  not  provided  for  that  mode  of  release.  Horner  v.  Simpson,  10  Kan.  App. 
582,  63  Pac.  604.  A  promise  in  writing  to  pay  a  certain  sum  "on  the  day  after 
my  nomination  for  county  clerk  in  the  year  1900,  for  value  received,"  while  not 
a  valid  negotiable  promissory  note,  is  valid  as  a  promise  to  pay  money,  unless 
evidence  aliunde  be  adduced  from  which  illegality  in  the  inception  of  the  contract 
may  reasonably  be  inferred.  Harris  v.  Firth  (N.  J.),  68  Atl.  1064  (1908).  A 
promissory  note  or  obligation,  payable  to  a  railroad  company  in  aid  of  the  construc- 
tion of  its  line  between  two  given  points  through  a  certain  point,  is  not  void  as 
against  public  policy.  Southard  v.  Arkansas  Valley,  etc.,  R.  Co.,  24  Okl.  408,  103 
Pac.  750  (1909).  And  in  Sparks  v.  Oklahoma  Const.  Co.,  19  Okl.  55,  91  Pac.  839,  it 
was  held  that  a  petition,  praying  for  judgment  upon  a  promissory  note,  contain- 
ing a  provision  showing  that  it  was  executed  in  consideration  of  the  benefits  aris- 
ing to  the  maker  by  reason  of  the  construction  of  a  railroad  from  a  given  place 
to  another  place  named,  by  a  time  stated,  and  which  is  made  payable  to  a  con- 
struction company,  without  naming  the  railroad  to  be  built,  or  any  railroad  com- 
pany as  an  interested  party,  does  not  present  such  a  question  of  public  policy  as 
to  make  such  petition  demurrable  upon  the  ground. 

63.  Hartley  v.  Rice,  10  East,  22;  Lowe  v.  Peers,  4  Burr.  2225. 

64.  Roberts  v.  Roberts,  3  P.  Wms.  66;  1  Parsons  on  Contracts,  555,  556. 

65.  Million  v.  Ohmsberg,  10  Mo.  App.  432. 

66.  Richardson  v.  Mellish,  2  Bing.  229  (9  Eng.  C.  L.);  Martin  v.  Wade,  37 
Cal.  168. 

67.  Ham  v.  Smith,  87  Pa.  St.  63. 

68.  Edgecombe  v.  Rodd,  5  East,  294;  Fallows  v.  Taylor,  7  T.  R.  475;  Porter 
V.  Havers,  37  Barb.  343;  Gardner  v.  Maxey,  9  B.  Mon.  90;  Commonwealth  v. 
Johnson,  3  Cush.  454;  Soule  v.  Bonney,  37  Me.  128;  Clark  v.  Ricker,  14  N.  H. 
44;  Hinesburgh  v.  Sumner,  9  Vt.  23;  Ozanne  v.  Haber,  30  La.  Ann.,  part  II, 
1384;  Merrill  v.  Carr,  60  N.  H.  114;  Rosenbaum  Bros.  v.  Levitt,  109  Iowa,  292; 
Kirkland  v.  Benjamin,  67  Ark.  480,  55  S.  W.  840;  Friend  v.  Miller,  52  Kan.  139, 
34  Pac.  397,  39  Am.  St.  Rep.  340;  Case  v.  Smith,  107  Mich.  215,  65  N. 
W.  279. 

69.  Chitty  on  Bills  (13th  Am.  ed.)  [*85],  102;  Edwards  on  Bills,  340;  Good- 
ale  V.  Holdridge,  2  Johns.  193;  Welborn  v.  Norwood,  1  Tex.  Civ.  App.  164, 
S.  20  W.  1129. 


§  196a  What  are  illegal  considerations  277 

third  persons  ^°  are  instances  of  the  kind  of  contracts  which  the  law 
will  not  recognize. 

Of  the  like  kind  are  contracts  founded  on  consideration  to  resign 
a  public  office;  '^  to  induce  the  withdrawal  of  a  bid  for  a  government 
contract;  ^-  to  withdraw  the  papers  in  defense  in  a  divorce  suit;  ^' 
to  get  possession  of  goods  wrongfully  held ;  ^^  for  the  sale  of  libelous 
or  immoral  works;  ^^  or  for  the  supply  of  drinks  to  influence  votes  for 
a  public  office;  ^^  or  to  influence  a  public  officer  in  the  discharge  of  his 
duty;  '^^  or  to  procure  the  appointment  of  a  party  as  administrator  of 
an  estate; '^  or  to  prevent  competition  in  bidding  at  an  administra- 
tor's sale;  ^^  or  to  prevent  examination  of  the  public  records.^ 

§  196a.  Compounding  felonies  and  misdemeanors. — Abandon- 
ment of  the  prosecution  of  an  offense  against  the  public,  of  which  the 
law  requires  prosecution,  is,  as  we  have  seen,  not  a  good  considera- 
tion. It  is  a  high  requirement  of  public  policy  that  felonies  should 
be  investigated  and  punished,  and  compounding  a  felony,  as  such  a 
compromise  is  called,  is  frowned  upon  by  the  courts,  and  is  never 
permitted  to  be  enforced.^^    It  is  not  necessary  to  stamp  the  transac- 

70.  Ibid.  When  a  note  ia  made  in  fraud  of  creditors,  none  but  a  creditor 
can  a.ssail  it.  Sullivan  v.  Bonesteel,  79  N.  Y.  631;  Ward  v.  Doano  (Mich.),  43 
N.  W.  980;  Goodrich  v.  McDonald  (Mich.),  43  N.  W.  1019;  Milwaukee  Masons 
&  Builders'  Assn.  v.  Niezerowski,  95  Wis.  129,  70  N.  W.  166,  60  Am.  St.  Rep.  97. 
Or  an  agreement  by  a  notar>'  to  charge  bank  by  which  he  is  employed,  one-half 
the  usual  and  legal  fees.    See  Ohio  Nat.  Bank  v.  Hopkins,  8  App.  U.  C.  146. 

71.  Meachum  v.  Dow,  32  Vt.  721. 

72.  Kennedy  v.  Murdick,  5  Harr.  (Del.)  458. 

73.  Stoutenburg  v.  Lybrand,  13  Ohio  (X.  8.),  228;  Merrill  v.  Peaslee,  146 
Ma.ss.  462.    But  see  Adams  v.  Adams,  91  N.  Y.  383. 

74.  White  v.  Heylman,  10  Ca.sey,  142. 

75.  Fores  v.  Johnes,  4  E.sp.  97;  Turk  v.  Richmond,  13  Barb.  533. 

76.  Jackson  v.  Walker,  5  Hill,  27,  7  Hill,  387. 

77.  Cook  V.  Shipm.an,  52  111.  316;  Boyd  v.  Cochrane,  18  Wash.  281,  51  Pac. 
383;  Douai  v.  Lutjens,  21  App.  Div.  254,  47  N.  Y.  Supp.  659.  So  a  note  given 
without  consideration,  and  under  a  threat  of  the  payee  that  he  will  influence 
the  city  counsel  not  to  pay  a  claim  by  the  maker,  is  void.  French  v.  Talbot 
Paving  Co.,  100  Mich.  443,  59  N.  W.  166. 

78.  Porter  v.  Jones,  52  Mo.  399. 

79.  Goldman  v.  Oppenheim,  118  Ind.  96.  In  Nebraska  it  is  held  that  a  note 
given  to  prevent  bidding  at  a  chattel  sale  is  against  public  policy  and  void.  Mc- 
Clellan  v.  Citizens'  Nat.  Bank,  60  Nebr.  90,  82  N.  W.  319;  Atlas  Nat.  Bank  v. 
Holm,  19  C.  C.  A.  94,  71  Fed.  489. 

80.  Parsons  v.  Randolph  (Mo.),  4  West.  864;  Montjoy  v.  Delta  Bank,  76  Miss. 
402,  24  So.  870. 

81.  Bishop  V.  Matney  (Ky.),  78  S.  W.  856;  Corbett  v.  Clute,  137  N.  C.  546, 


278  CONSIDERATION   OF   NEGOTIABLE   INSTRUMENTS       §  196a 

tion  with  illegality  that  a  felony  should  have  been  committed.  It  is 
sufficient  if  it  be  charged,  for  the  investigation  of  the  charge  is  the 
policy  of  law  which  is  sought  to  be  protected.^^ 

But  compounding  a  private  misdeameanor,  such  as  a  suit  for  slan- 
der,^^  or  bastardy  proceedings,^^  or  other  civil  action,  is  a  good  con- 

50  S.  E.  216;  Henderson  v.  Palmer,  71  111.  579;  Commonwealth  v.  Pease,  16  Mass. 
91;  Wallace  v.  Hardacre,  1  Campb.  45;  Collins  v.  Blantern,  2  Wils.  347;  Pierce 
V.  Kibbe,  51  Vt.  559;  National  Bank  v.  Kirk,  90  Pa.  St.  49;  Armstrong  v.  Southern 
Express  Co.,  4  Baxt.  376;  Ozanne  v.  Huber,  30  La.  Ann.  1384;  Johnston  v.  Allen, 
22  Fla.  224  (see  Geier  v.  Shade,  109  Pa.  St.  180,  as  to  legaUty  of  settlement  after 
institution  of  criminal  proceedings);  Haynes  v.  Rudd,  102  N.  Y.  372;  Williams 
V.  Walker,  18  S.  C.  577;  Frick  v.  Moore,  82  Ga.  160;  Crowder  v.  Reed,  80  Ind. 
1 ;  Ricketts  v.  Harvey,  106  Ind.  565.  And  the  objection  prevails  although  there 
be  other  and  valid  considerations.  Fernekes  v.  Bergenthal,  69  Wis.  466;  Bell 
V.  Riddell,  2  Ont.  25;  Graham  v.  Keyes,  137  Mass.  583.  See  Sumner  v.  Summers, 
54  Mo.  340,  where  it  is  held  that  a  note  given  under  an  agreement  to  secure  dis- 
missal of  a  prosecution  for  felony  is  void.    Groesbeck  v.  Marshall,  44  S.  C.  538, 

22  S.  E.  743;  Bleckley  v.  Goodwin,  51  S.  C.  362,  29  S.  E.  3;  Ro.senbaum  Bros. 
V.  Levitt,  109  Iowa,  292;  Friend  v.  Miller,  52  Kan.  139,  34  Pac.  397,  39  Am.  St. 
Rep.  340;  Welbom  v.  Norwood,  1  Tex.  Civ.  App.  164,  20  S.  W.  1129.  See 
ante,  under  §  196.  A  claim  that  notes  were  given  to  avoid  prosecution,  and  hence 
were  illegal  and  void,  cannot  be  sustained  when  there  is  neither  allegation  nor 
proof  of  an  agreement  not  to  prosecute  the  maker  for  any  offense.  P'rcd  Rueping 
Leather  Co.  v.  Walke,  135  Wis.  616,  116  N.  W.  174  (1908).  A  promissory  note 
given  to  secure  the  payment  of  a  debt  contracted  by  the  debtor,  under  circum- 
stances which  subjected  him  to  criminal  prosecution,  is  not  rendered  invalid  by 
reason  of  the  fact  that  it  was  made  under  pressure  of  a  threat  by  the  creditor  that 
he  would  procure  the  indictment  of  the  debtor,  unless  the  debt  was  paid.  Mullin 
v.  Leamy,  80  N.  J.  L.  484,  79  Atl.  257.  If  the  consideration  of  a  note  is  partly 
illegal,  the  whole  note  is  void;  and,  where  the  note  is  given  in  settlement  of  pre- 
existing debts,  in  addition  to  certain  sums  of  money  advanced  to  one  of  the  makers 
at  the  time  of  signing  the  same,  and  also  for  the  agreed  purpose  of  discontinu- 
ing a  pending  prosecution  against  one  of  the  makers  thereof  for  a  crime,  such  note, 
being  entire  and  indivisible,  is  void,  and  there  can  be  no  recovery  thereon.  Stan- 
ard  V.  Sampson,  23  Okl.  13,  99  Pac.  796,  citing  text  (1909). 

82.  Rogers  v.  Blythe,  51  Ark.  523,  citing  the  text;  Chandler  v.  Johnson,  39 
Ga.  85;  Lucas  v.  Castelow,  8  Ga.  App.  812,  70  S.  E.  184;  Joyce  Co.  v.  Rohan, 
134  Iowa,  12,  111  N.  W.  319,  120  Am.  St.  Rep.  410;  Smith  Premier  TypewTiter  Co. 
V.  Mayhew,  65  Nebr.  65,  90  N.  W.  939;  Cass  County  Bank  v.  Bricker,  34  Nebr. 
516,  52  N.  W.  575,  33  Am.  St.  Rep.  649. 

83.  Walbridge  v.  Arnold,  21  Conn.  424;  Clark  v.  Reker,  14  N.  H.  44;  Drage 
V.  Ibberson,  2  Esp.  643;  Gardner  v.  Maxey,  9  B.  Mon.  90. 

84.  Merrill  v.  Fleming,  42  Ala.  234;  Billingsley  v.  Clelland,  41  W.  Va.  234, 

23  S.  E.  812.  It  is  no  defense  to  such  note  that  the  mother  and  guardian  of  such 
infant  made  an  unlawful  agreement  not  to  prosecute  the  putative  father  for  statu- 
tory rape,  unless  such  infant  knowingly  participated  in  such  unlawful  agreement. 
Griffin  V.  Chriswisser,  84  Neb.  196,  120  N.  W.  909. 


§  196b  WHAT   ARE    ILLEGAL   CONSIDERATIONS  279 

sideration  for  a  note;  ^^  and  a  good  bill  substituted  for  a  forged  one 
without  any  agreement  to  stifle  the  prosecution,  is  valid.^  So  is  a 
note  given  to  the  prosecutor  after  the  trial  and  conviction  for  ex- 
penses of  the  prosecution.^^  So,  also,  a  note  given  for  a  fine  imposed 
upon  conviction  of  a  misdemeanor;  ^  and,  also,  a  note  for  expenses 
incurred  in  defending  a  person  charged  with  crime.^^  Embezzled 
money  is  a  good  consideration,^  and  it  has  been  held  in  Alabama  that 
a  note  given  for  embezzled  funds  would  not  be  invalidated  by  an 
accompanying  agreement  not  to  prosecute  for  a  felony .^^  The  true 
question,  however,  in  such  a  case  seems  to  be,  was  the  note  given  for 
the  money,  or  to  settle  the  prosecution?  and  in  the  first  event  it 
would  be  valid,  in  the  latter  illegal  and  void.^^ 

Under  Negotiable  Instrument  statute. — Under  the  several  provisions 
of  the  statute  with  respect  to  consideration,^^  it  has  been  held  that 
parties  to  a  note  which  was  given  to  take  up  a  forged  note,  which  one 
of  the  parties  had  indorsed,  are  liable  thereon  whether  or  not  they 
knew  that  the  note  was  forged,  when  it  was  not  given  to  compound 
the  felony .^^ 

§  196b.  Forbearance  and  compromise. — Forbearance  to  prose- 

85.  Keating  v.  Morrissey,  6  Cal.  App.  1G3,  91  Pac.  677,  holding  that  a  note 
given  in  settlement  of  the  civil  liability  resulting  from  the  commission  of  a  crime, 
is  enforceable.  Where  a  check  was  given  for  the  return  of  property  believed  to 
have  been  stolen  and  the  amount  of  the  check  was  used  to  obtain  and  return  it, 
and  it  was  not  part  of  the  agreement  to  interfere  with  the  apprehension  of  the 
criminal,  and  payment  of  the  check  wa.s  stopped,  a  recovery  could  be  had  thereon. 
Schirm  v.  Wieman,  103  Md.  541,  03  Atl.  1056,  7  L.  R.  A.  (N.  S.)  175,  115  Am.  St. 
Rep.  373. 

86.  Wallace  v.  Ilardacre,  1  Campb.  45. 

87.  Kirk  v.  St  rick  wood,  4  B  &  Ad.  421  (24  Eng.  C.  L.). 

88.  Bhiin  v.  Hitch,  70  Ga.  276;  County  v.  McWilUams,  69  Ga.  840. 

89.  Hutchinson  v.  Dornin,  23  Mo.  App.  575. 

90.  Thorn  v.  Pinkham,  S4  Mo.  101,  24  Atl.  718,  30  Am.  St.  Rep.  335;  Armstrong 
v.  Southern  Express  Co.,  4  Baxt.  376.  A  note  given  to  settle  the  embezzlement 
of  an  agent  Ls  valid  if  there  is  no  agreement  to  stifle  a  prosecution.  Wolf  v. 
Troxell  Estate,  94  Mich.  215,  54  N.  W.  383.  A  note  given  by  the  sureties  on  a 
postmaster's  official  bond,  as  an  extension  of  time  granted  by  a  postoffice  in- 
spector to  pay  an  amount  embezzled  by  the  postmaster,  was  held  to  be  invalid, 
as  the  act  of  the  inspector  was  unauthorized.  United  States  v.  Kanhoe,  147  Fed. 
185. 

91.  Bibbs  V.  Hitchcock,  49  Ala.  468. 

92.  Godwin  v.  Crowell,  56  Ga.  566;  Welborn  v.  Norwood,  1  Tex.  Civ.  App. 
164,  20  S.  W.  1129;  First  Nat.  Bank  v.  Gregg,  74  Mo.  App.  639. 

93.  Appendix,  sees.  24,  25,  26. 

94.  Jennings  v.  Law,  199  Mass,  124,  85  N.  E.  157. 


280  CONSIDERATION    OF   NEGOTIABLE    INSTRUMENTS       §  196b 

cute  a  claim,  or  the  compromise  of  a  doubtful  one,  is  a  good  considera- 
tion for  a  note  or  bill.^^  But  the  compromise  of  one;  clearly  illegal  is 
not,'-*^  and  if  there  be  no  ground  for  assertion  of  liability,  it  seems 
that  forbearance  to  sue  will  not  supply  a  consideration.''^    Resignation 

96.  Keefe  v.  Volge,  36  Iowa,  87;  Muirhead  v.  Kirkpatrick,  21  Pa.  St.  237; 
Stewart  v.  Ahrenfeldt,  4  Den.  189;  Phelps  v.  Younger,  4  Ind.  450;  Anstell  v. 
Rice,  5  Ga.  472;  Stephens  v.  Spiers,  25  Mo.  38G;  Wyatt  v.  Evins,  52  Ala.  285; 
Bozeman  v.  Rushing,  51  Ala.  529;  Heaps  v.  Dunham,  95  111.  .583;  Boone  v.  Boone, 
58  Miss.  820;  Lipsmeier  v.  Vehlsage,  29  Fed.  175;  Tyson  v.  Woodruff,  108  Ga. 
3G8,  33  S.  E.  981;  Morcy  v.  Laird,  108  Iowa,  670,  77  N.  W.  835;  French  v.  French, 
84  Iowa,  655,  51  N.  W.  145.  To  equalize  shares  on  partition  of  lan<l.  Badger  v. 
Stephens,  61  Mo.  App.  387.  Withdrawing  a  contest  over  a  will,  which  had  been 
begun  in  good  faith,  is  a  sufficient  consideration  for  a  note  given  to  the  contestant 
by  one  of  the  beneficiaries  under  the  will.  Wright  v.  Bayless  (Ky.),  1 18  S.  W.  918. 
A  note  executed  by  a  widow  in  settlement  of  an  apparent  shortage;  in  the  accounts 
of  her  deceased  husband  as  executor  of  an  estate,  and  for  the  dismissal  of  a  suit 
which  had  been  brought  against  a  surviving  execut(jr,  was  given  for  a  good  con- 
sideration. Rohrbacher  v.  Aitken,  145  Cal.  485,  78  Pac.  1054.  A  note  given 
for  th(!  dismissal  of  a  proceeding  to  remove  executors,  and  respecting  the  payment 
of  attorneys'  fees,  eoniinissions  and  other  expenses,  is  not  ba.sed  on  a  good  con- 
sideration, as  the  suit  does  not  involve  a  dispute  as  to  property  rights  between 
the  parties,  and  the  expenses  of  administration  are  matters  to  be  determined  by 
the  court.    Currier  v.  Clark,  15  Colo.  App.  6,  60  Pac.  958. 

96.  Sullivan  v.  Collins,  18  Iowa,  228.  See  Tucker  v.  Ronk,  43  Iowa,  80.  The 
discontinuance  of  a  suit  brought  upon  an  illegal  demand  (void  note)  is  not  a 
sufficient  consideration  to  8Uj)port  a  new  note  when  the  illegal  element  which 
avoided  the  first  note  enters  into  the  new  note.  Kenneily  v.  Welch,  196  Mass. 
.592,  83  N.  E.  11  (1907).  When;  an  order  was  given  in  an  originid  transaction 
tainted  with  fraud,  and,  on  threats  being  made  that  the  order  would  be  sued,  a 
note  was  given  in  compromise,  the  original  fraud  is  carried  forward  into  the  note 
and  there  cannot  be  a  recovery  thereon.  Kirby  v.  Berguin,  15  S.  D.  444,  90 
N.  W.  856.  See  also  Ormsbee  v.  Howe,  54  Vt.  182,  41  Am.  Rep.  841.  But  see 
to  the  contrary  Paekham  v.  Hendren,  76  Ind.  47. 

97.  Tuciker  v.  Roach,  139  Ind.  275,  38  N.  E.  822.  In  Foster  v.  Mills,  55  Miss. 
80,  a  mail  contractor  gave  his  note  for  money  stolen  by  his  agent  from  the  mail, 
and  it  was  held  that  there  was  no  consideration,  as  he  w;us  under  no  liability,  and 
although  payee  agreed  not  to  sue  him.  In  order  that  forbearance  to  sue  may 
constitute  a  valid  consideration  for  a  contract,  the  party  forbearing  must  have, 
as  against  the  party  to  whom  the  favor  is  gi-anted  a  bona  fide  claim  which  might 
give  rise  to  an  action  to  enforce  it.  Bank  of  Ontario  v.  Hoskins,  33  Mont.  306, 
83  Pac.  493,  holding  that  where  a  person  signed  a  note  in  terms  due  30  days  after 
date,  under  an  agreement  to  postpone  the  bringing  of  any  action  on  the  note 
against  the  maker  until  the  happening  of  certain  contingencies,  only  upon  the 
happening  of  which  the  maker  would  be  liable,  this  was  not  a  forbearance  of  any 
legal  right.  A  note  executed  by  a  husband  and  the  wife  is  supported  by  con- 
sideration as  against  both  when  the  amount  was  due  by  the  husband  on  a  lease, 
and  the  payee,  by  taking  it,  extended  the  time  of  payment,  waived  the  forfeiture 


§  197  WHAT   AEE    ILLEGAL   CONSIDERATIONS  281 

of  an  office  in  a  corporation  is  a  good  consideration :  ^^  so,  also,  the 
surrender  of  a  certificate  of  entry  on  public  lands.^ 

§  197.  (2)  As  to  considerations  illegal  by  statute. — It  is  an  in- 
variable rule  that  when  a  note  has  been  given  for  a  consideration 
which  is  illegal  by  statute,  it  is  not  enforceable  between  the  parties.^ 
It  has  been  so  held  as  to  a  note  given  for  a  transfer  of  a  liquor  license, 
such  a  transfer  being  prohibited  by  statute;  ^  for  the  services  of  one 
practicing  medicine  without  a  license  duly  issued;  ^  for  the  balance 
of  a  premium  on  a  contract  of  insurance  in  the  case  of  a  rebate  of 
part  of  the  premium;  "*  to  an  employment  agency  for  an  amount 
greatly  in  excess  of  the  fees  provided  for  by  statute,^  or  in  settle- 
ment of  a  bucket  shop  transaction.^ 

The  bona  fide  holder  for  value  who  has  received  the  paper  in  the 
usual  course  of  business  is  unaffected  by  the  fact  that  it  originated  in 
an  illegal  consideration,  without  any  distinction  between  cases  of 
illegality  founded  in  moral  crime  or  turpitude,  which  are  termed  incila 
in  se,  and  those  founded  in  positive  statutory  prohibition  which  are 
termed  mala  pruhibita.  The  law  extends  this  peculiar  protection  to 
negotiable  instruments,  because  it  would  seriously  embarrass  mer- 
cantile transactions  to  expose  the  trader  to  the  consequences  of 
having  the  bill  or  note  passed  to  him  impeached  for  some  covert 
defect/    There  is,  however,  one  exception  to  this  rule:  that  when  a 

of  the  leas(%  and  allowed  ilw  niaki-rs  io  remain  in  |)osat'iwion.    Emerj'  v.  Lowe, 
MOCal.  379,  73Par.  981. 

98.  Peck  V.  Rogua,  13  Gray,  407. 

99.  Thornp.son  v.  IIan.st)n,  28  Minn.  4S4. 

1.  A  note  given  for  a  Htallion,  which  does  not  have  the  words  on  its  face  required 
by  statuU',  written  or  print«'(l  thentjn  that  the  note  is  "for  the  sale  of  a  stalHon 
or  inti-nwi  therein,"  is  void,  l)ecau.He  th«'  giving  of  it  is  an  illegal  aet.  Quiggle  v. 
Herman,  131  Wi.s.  379,  111  N.  \V.  479.  A  promi.s«ory  note  given  for  a  deed  of 
land  from  the  payee  to  the  payor,  in  possession  of  the  payee,  and  held  by  him  in 
violation  of  Act  Cong.  July  1,  1902,  c.  13G2,  32  Stat.  641,  the  transaction  being 
in  violation  of  Rev.  St.  U.  S.,  §  2118,  was  given  for  an  illegal  consideration.  Mc- 
Laughlin V.  Ardmore  Loan,  etc.,  Co.,  21  Okl.  173,  95  Pac.  779.  See  Combs  v. 
Miller,  24  Okl.  576,  103  Pac.  .580  (1908). 

2.  Kennedy  v.  Welch,  196  Mass.  592,  83  N.  E.  11  (1907). 

3.  Hill  v.  Ward,  45  Ind.  App.  458,  91  N.  E.  38  (1910). 

4.  Heflron  v.  Daly,  133  Mich.  613,  95  N.  W.  714. 
6.  Hapgoods  V.  Barrett,  106  N.  Y.  S.  189. 

6.  Wilson  V.  National  Fowler  Bank,  47  Ind.  App.  689,  95  N.  E.  269. 

7.  Thompson  on  Bills  (Wilson's  ed.),  68;  Grimes  v.  Hillenbrand,  4  Hun,  354; 
Town  of  Eagle  v.  Kohn,  84  111.  292;  Smith  v.  C«jlumbia  State  Bank,  9  Nebr.  34; 
New  V.  Walker,  108  Ind.  365,  citing  the  text;  Thompson  v.  Samuela  (Te.\.),  14 


28^  CONSIDERATION   OF   NEGOTIABLE    INSTRUMENTS         §  197 

statute,  expressly  or  by  necessary  implication,  declares  the  instrument 
absolutely  void,  it  gathers  no  vitality  by  its  circulation  in  respect  to 
the  parties  executing  it;^  though  even  upon  such  instruments  an 
indorser  may,  as  we  shall  hereafter  see,  be  held  liable  to  a  bona  fide 
holder  without  notice.^ 

There  are  a  very  few  cases  in  which  the  statute  renders  such  in- 
struments absolutely  void;  and  the  most  important  are  the  statutes 
against  usury  and  gaming.^" 

S.  W.  143,  citing  the  text;  Schmueckle  v.  Waters,  125  Ind.  265,  25  N.  E.  281; 
Hart  et  al.  v.  Livermore  Foundry  &  Machine  Co.,  72  Miss.  809,  17  So.  769;  Camp- 
bell V.  Jones,  2  Tox.  Civ.  App.  263,  21  S.  W.  723,  citing  text;  Atlas  Nat.  Bank  v. 
Holm,  19  C.  C.  A.  94,  71  Fed.  489;  Press  Co.  v.  City  Bank,  7  C.  C.  A.  248,  58  Fed. 
321,  citing  text;  Union  Nat.  Bank  v.  Brown,  101  Ky.  354,  41  S.  W.  273,  72  Am. 
St.  Rep.  420,  38  L.  R.  A.  503.  See  further,  post,  §  198.  A  bona  fide  holder  of  a 
note  made  by  a  foreign  corporation  which  had  not  complied  with  the  laws  of  the 
State  authorizing  it  to  do  business  therein,  may  maintain  an  action  thereon. 
State  Bank  of  Chicago  v.  Holland  (Tex.),  126  S.  W.  564,  citing  text  (1910). 
Commercial  paper  is  valid  in  the  hands  of  an  innocent  holder,  even  though  the 
consideration  for  the  note  arises  out  of  some  contract  or  transaction  prohibited 
by  law,  unless  the  law  in  express  terms  declares  the  instrument  void.  Gray  v. 
Boyle,  55  Wash.  578,  104  Pac.  828,  133  Am.  St.  Rep.  1042,  citing  text.  See  also 
Wilson  v.  National  Fowler  Bank,  47  Ind.  App.  689,  95  N.  E.  269,  as  to  a  bucket 
shop  transaction. 

8.  See  also  chapter  XXIV,  on  Bona  Fide  Holder,  §  807  et  seq:.  Bayley  v.  Taber, 
5  Mass.  286.  In  Vallett  v.  Parker,  6  Wend.  615,  Savage,  C.  J.,  said:  "Wherever 
the  statutes  declare  notes  void,  they  are,  and  must  be  so,  in  the  hands  of  every 
holder;  but  where  they  are  adjudged  by  the  court  to  be  so,  for  failure  of  or  the 
illegality  of  the  consideration,  they  are  void  only  in  the  hands  of  the  original 
parties,  or  those  who  are  chargeable  with,  or  have  had  notice  of,  the  considera- 
tion." German  Bank  v.  De  Shon,  41  Ark.  340,  citing  the  text;  Hanover  Nat. 
Bank  v.  Johnson  (Ala.),  8  So.  42,  citing  the  text;  Glen  v.  Farmers'  Bank,  70 
N.  C.  191 ;  Town  of  Eagle  v.  Kohn,  84  111.  292;  Hatch  v.  Burroughs,  1  Woods,  439; 
Woods  V.  Armstrong,  54  Ala.  150;  Bacon  v.  Lee,  4  Clarke  (Iowa),  49;  Smith  v. 
Columbus  S.  B.,  9  Nebr.  34;  Robertson  v.  Cooper,  1  Ind.  App.  78,  27  N.  E.  104; 
Bohons,  Assignee,  v.  Brown,  etc.,  101  Ky.  354,  41  S.  W.  273,  72  Am.  St.  Rep.  420; 
Furman  Farm  Improvement  Co.  v.  Long,  117  Ala.  581,  23  So.  527;  Rodecker  v. 
Littauer,  8  C.  C.  A.  320,  59  Fed.  857;  Pope  v.  Hanke,  155  111.  617,  40  N.  E.  839, 
citing  text. 

9.  See  chapter  XXI,  section  I,  §  673  et  seq. 

10.  3  Kent  Com.  44;  Story  on  Bills  (Bennett's  ed.),  §  189;  post,  §  807;  Sond- 
heim  v.  Gilbert,  117  Ind.  76,  citing  the  text;  Traders'  Bank  v.  Alsop,  64  Iowa, 
98;  Hollingsworth  v.  Moulton,  53  Hun,  91;  Savings  Bank  v.  National  Bank  of 
Commerce,  38  Fed.  800;  Union  Nat.  Bank  v.  Eraser,  63  Miss.  231;  Angier  et  al. 
V.  Smith,  101  Ga.  844,  28  S.  E.  167;  Fidelity  Loan  &  Guarantee  Co.  v.  Baker,  54 
Mo.  App.  79.  Under  a  statute  making  all  usurious  contracts  absolutely  void 
usury  may  be  pleaded  as  against  an  innocent  holder,  but  when  the  usurious  con- 
tract is  void  or  voidable,  at  the  instance  of  the  debtor,  only  as  to  the  usury,  an 


§  198  WHAT   ARE    ILLEGAL   CONSIDERATIONS  283 

In  England,  the  policy  of  declaring  the  instrument  a  nullity  in  the 
hands  of  a  bona  fide  holder  no  longer  prevails,  the  statute  of  8  &  9 
Victoria,  c.  109,  having  relaxed  the  ancient  rule  on  the  subject;  ^^  and 
in  some  of  the  States  similar  statutes  have  been  enacted.  ^^  But  the 
change  has  not  become  general,  and  in  the  States  where  contracts 
founded  on  gaming  or  usurious  considerations  are  declared  void, 
bills  and  notes  given  to  secure  them  are  held  void  in  the  hands  of 
every  holder. 

Prior  to  the  act  of  March  24,  1874,  all  contracts  and  assurances 
for  the  loan  or  forbearance  of  money  founded  on  usurious  considera- 
tion, were  void  by  statute;  but  since  then,  they  are  illegal  only,  and 
hence  a  negotiable  instrument  originating  on  such  consideration 
would  be  valid  in  the  hands  of  a  bona  fide  holder,  who  gave  value 
without  notice.  ^^ 

Under  Negotiable  Instrument  statute. — Under  the  statute,^"*  it  has 
been  held  that  the  title  is  defective,  within  the  meaning  of  the  statute, 
when  the  only  consideration  for  the  note  was  interest  which  had 
accrued  on  a  previous  note  which  called  for  a  higher  than  the  legal 
rate  of  interest.  ^^ 

§  198.  How  bona  fide  holder  affected. — When  the  statute  merely 
declares  expressly,  or  by  implication,  that  the  consideration  shall  be 
deemed  illegal,  the  bill  or  note  founded  upon  such  consideration 
will  be  valid  in  the  hands  of  a  bona  fide  holder  without  notice ;  '^  but 

innocent  purchaser  is  not  affected  thereby.  Bradshaw  v.  Van  Valkenburg,  97 
Tonn.  316,  37  S.  W.  88.  In  Reed  v.  Bank  of  Ukiah,  148  Cal.  96,  82  Pac.  845,  it 
was  held,  where  a  substantial  part  of  the  amount  included  in  the  notes  was  made 
up  of  items  of  interest  at  10  per  cent,  per  annum,  compounded  monthly,  upon 
sums  due  on  open  account,  and  there  had  not  been  any  written  agreement  to  pay 
the  excess  over  7  per  cent.,  except  that  contained  in  the  notes  sued  on,  which  were 
made  after  the  excess  had  accrued,  that  as  to  this  excess,  the  notes  were  with- 
out consideration. 

11.  See  Parsons  v.  Alexander,  5  El.  &  Bl.  263,  30  Eng.  L.  &  Eq.  299. 

12.  Vallett  V.  Parker,  6  Wend.  615;  Kendall  v.  Roberston,  12  Cush.  156; 
Wortendyke  v.  Mechan,  9  Nebr.  221;  Savings  Bank  v.  Scott,  10  Nebr.  83. 

13.  Lynchburg  Nat.  Bank  v.  Scott,  91  Va.  654,  22  S.  E.  487,  50  Am.  St.  Rep. 
860;  Woolf  V.  Hamilton,  2  Q.  B.  337  (1898). 

14.  Appendix,  sec.  55. 

15.  Keene  v.  Behan,  40  Wash.  505,  82  Pac.  884. 

16.  Wyatt  v.  Bulmer,  2  Esp.  538;  Rhodes  v.  Beall,  73  Ga.  643;  State  Bank  of 
Greentown  v.  Lawrence  (Ind.),  96  N.  E.  947;  Henry  v.  State  Bank  of  Lawrens, 
131  Iowa,  97,  107  N.  W.  1034;  Sistermans  v.  Field,  9  Gray,  331;  Paton  v.  Coit, 
5  Mich.  505;  Citizens'  State  Bank  v.  Nore,  67  Nebr.  69,  93  N.  W.  160,  60  L.  R.  A. 
737  (as  to  a  note  given  for  medical  services  by  an  unlicensed  practitioner,  not- 


284  CONSIDERATION   OF  NEGOTIABLE   INSTRUMENTS  §  198 

the  burden  of  proof  will  be  upon  the  plaintiff,  when  the  illegal  con- 
sideration appears,  to  show  that  he  is  a  bona  fide  holder  without  no- 
tice. ^^  And  if  the  statute  in  terms  only  forbids  suit  to  be  brought 
upon  bills  and  notes  founded  on  certain  considerations,  "except  by  a 
bona  fide  holder  who  has  received  the  same  upon  a  valuable  and  fair 
consideration,  without  notice  or  knowledge,  etc.,"  they  will  be  good 
in  the  hands  of  such  holder;  but  the  burden  of  proof  will  be  devolved 
upon  him  in  hke  manner,  if  it  appear  that  the  instrument  originated 
in  such  a  consideration.^^  But  want  or  failure  of  consideration  do  not 
require  such  proof  of  the  holder.  ^^ 

Where  a  statute  provided  that  wherever,  in  an  action  brought  on  a 
contract  for  the  payment  of  money,  it  shall  appear  that  unlawful 
interest  has  been  taken,  the  plaintiff  shall  forfeit  threefold  the  amount 
of  the  unlawful  interest  so  taken,  etc.,  it  was  held  to  apply  to  the 
innocent  indorsee  of  a  note  who  received  it  in  due  course  of  trade;  * 
and  as  a  general  rule  all  contracts  founded  on  considerations  which 
embrace  an  act  which  the  law  prohibits  under  a  penalty,  are  void.-^ 

withstanding  the  statute  declared  such  practice  a  crime) ;  Savings  Bank  v.  Scott, 
10  Nebr.  83;  Wortendyke  v.  Mechan,  9  Nebr.  221;  Bank  v.  Arnold,  187  Pa.  St. 
356,  40  Atl.  794;  Campbell  v.  Jones,  2  Tex.  Civ.  App.  263,  21  S.  W.  723,  citing 
text;  Lynchburg  Nat.  Bank  v.  Scott,  91  Va.  6.54,  22  S.  E.  487;  Gray  v.  Boyle,  55 
Wash.  578,  104  Pac.  828,  133  Am.  St.  Rep.  1042  (as  to  a  note  given  in  part  pay- 
ment of  the  premium  on  a  policy  of  insurance  on  which  a  rebate  was  allowed  in 
violation  of  an  anti-rebate  law).    See  also,  ante,  §  197. 

17.  Ibid.;  New  v.  Walker,  108  Ind.  365,  citing  the  text.  And  it  follows  that  if 
the  usurious  character  of  the  contract  appears  on  its  face,  the  indorsee  acquires 
no  rights  to  recover  on  the  instrument  or  to  recover  of  the  maker  on  the  original 
consideration  for  which  the  note  was  given.  Bank  v.  Mann,  94  Tenn.  17,  27 
S.  W.  1015;  Wing  v.  Ford,  89  Me.  140,  35  Atl.  1023. 

18.  Baton  v.  Coit,  5  Mich.  505;  Johnson  v.  Meeker,  1  Wis.  436;  Doe  v.  Burn- 
ham,  11  Post.  426;  Story  on  Bills,  §  193;  Bottomley  v.  Goldsmith,  36  Mich.  29. 

19.  Ross  V.  Bedell,  5  Duer,  462;  Wilson  v.  Lazier,  11  Gratt.  478. 

20.  In  Kendall  v.  Robertson,  12  Cush.  1.56,  Shaw,  C.  J.,  said:  "The  former 
law  extended  the  entire  forfeiture  to  any  holder  of  the  note,  though  an  innocent 
indorsee;  the  natural  conclusion  is,  in  the  absence  of  express  words  changing  the 
operation  of  the  law,  that  it  was  the  intention  of  the  legislature  to  extend  such 
partial  forfeiture  in  like  manner,  and  attach  it  as  before  to  the  note,  although 
held  by  an  innocent  indorsee  without  notice.  In  both  cases  the  intention  of  the 
legislature  appears  to  have  been  the  same,  to  suppress  a  mode  of  lending  regarded 
as  dangerous  and  injurious  to  society,  by  attainting  the  contract,  and  attaching 
the  penal  consequences  to  the  contract  itself,  whenever  set  up  as  a  proof  of  a 
debt."  As  to  rule  in  Nebraska,  see  Wortendyke  v.  Mechan,  9  Nebr.  221,  2  N.  W. 
339;  Savings  Bank  v.  Scott,  10  Nebr.  83,  4  N.  W.  314. 

21.  Woods  V.  Armstrong,  54  Ala.  150.  Compare  Kreibohm  v.  Yancay,  154 
Mo.  69,  55  S.  W.  260;  Ward  v.  Sugg,  113  N.  C.  492,  18  S.  E.  17,  citing  text. 


§  199  WHAT   ARE    ILLEGAL   CONSIDERATIONS  285 

§  199.  Where  a  statute  declared  that  all  payments  made  for  spirit- 
uous liquors  sold  contrary  to  law  "should  be  held  and  considered  to 
have  been  received  in  violation  of  law,  without  consideration,  and 
against  law,  equity,  and  good  conscience,"  it  was  held  that  a  bill 
given  for  liquors  so  sold  was  valid  in  the  hands  of  a  bona  fide  holder 
without  notice. 22  A  bill  accepted  to  secure  payment  of  money  taken 
in  at  an  unlicensed  theater  is  void  in  the  hands  of  all  knowing  the 
consideration  for  which  it  was  given. ^^ 

If  the  paper  be  susceptible  of  a  legal  and  an  illegal  construction, 
the  courts  will  enforce  it  according  to  the  most  favorable  construction, 
ut  res  magis  valeat  quam  pereat.  Thus,  where  a  due-bill  was  made 
payable  in  Confederate  bonds,  or  Tennessee  money,  the  first-named 
medium  was  deemed  illegal,  but  payment  in  Tennessee  money  was 
enforced.  2^ 

Under  Negotiable  Instruments  statute. — Under  the  provision  de- 
claring that  the  title  of  a  person  who  negotiates  an  instrument  is 
defective  when  he  obtained  the  instrument  for  an  illegal  consider- 
ation,2^  and  the  further  provision  declaring  that  a  holder  in  due  course 
holds  the  instrument  free  from  any  defect  of  title  of  prior  parties,^^ 
it  has  been  held  that  the  rule  that  a  note  executed  on  a  consideration 
declared  absolutely  void  by  statute  can  be  successfully  defended 
though  it  is  owned  and  held  by  an  innocent  purchaser  for  value  with- 
out notice  of  the  infirmity  or  illegal  consideration  of  the  note,  has  not 
been  changed,^^  though  the  contrary  has  also  been  held.^*    In  a  Dis- 

22.  Cazct  V.  Field,  9  Gray,  329.  But  such  bill  is  void  aa  between  the  original 
parties.  Weil  v.  Golden  (Mass.),  2  New  Eng.  Rep.  235;  Campbell  v.  Jones,  2 
Tex.  Civ.  App.  203,  21  S.  W.  723,  citing  text;  Press  Co.  v.  City  Bank,  7  C.  C.  A. 
248,  58  Fed.  321. 

23.  De  Bignis  v.  Armistcad,  10  Bing.  107  (25  Eng.  C.  L.). 

24.  Hanauer  v.  Gray,  25  Ark.  350. 
26.  Appendix,  sec.  55. 

26.  Appendix,  sec.  57. 

27.  Lawson  v.  First  Nat.  Bank  of  Fulton  (Ky.),  102  S.  W.  324  (as  to  a  peddler's 
not  indorsed  "Peddler's  note");  Alexander  &  Co.  v.  Hazelrigg,  123  Ky.  677,  97 
S.  W.  353  (under  a  statute  declaring  all  gaming  contracts  void).  In  the  Lawson 
v.  Bank  case,  the  court  discusses  the  effect  of  the  Negotiable  Instrument  law, 
does  not  favor  implied  repeal,  says  that  the  law  goes  into  the  minutest  detail, 
applies  only  to  paper  that  might  have  been  obligatory  between  the  parties,  and 
declares  that  the  prevention  of  crime  is  of  more  importance  than  the  fostering 
of  commerce. 

28.  Wirt  V.  Stubblefield,  17  App.  D.  C.  283;  Samson  v.  Ward,  147  Wis.  48,  132 
N.  W.  629  (as  to  a  note  for  a  part  of  the  price  of  a  stalUon,  and  not  showing  such 
consideration  on  its  face  aa  required  by  statute);  Arnd  v.  Sjoblom,  131  Wis.  642, 


286  CONSIDERATION   OF   NEGOTIABLE   INSTRUMENTS        §  199a 

trict  of  Columbia  case,  it  was  held  that  a  promissory  note,  although 
made  upon  a  gambling  consideration,  is  good  in  the  District  of  Col- 
umbia in  the  hands  of  a  bona  fide  purchaser  for  value  without  notice 
under  the  act  of  Congress  of  January  12,  1899,  known  as  the  Nego- 
tiable Instrument  Law,  though  before  the  enactment  of  that  statute, 
under  the  law  in  force  in  the  District  of  Columbia,  the  defense  of 
gaming  consideration  for  the  note  might  have  been  set  up  in  an  action 
by  such  holder.  The  court  said:  "It  is  difficult  to  conceive,  if  we 
bear  in  mind  the  object  and  policy  intended  to  be  promoted  by,  as 
well  as  the  entire  scope  and  express  provisions  of  the  'Negotiable 
Instrument  Law/  that  the  framers  of  that  act  ever  intended  to  save 
and  preserve  unrepealed,  as  part  of  the  law  governing  negotiable 
instruments,  the  old  English  statutes  of  16  Car.  2,  and  9  Anne, 
against  gaming.  On  the  contrary,  it  was  most  clearly  among  the 
objects  and  purposes  of  that  act,  to  get  rid  of  all  such  impediments 
and  hindrances  to  the  circulation  of  negotiable  instruments  as  had 
been  created  by  those  old  statutes,  and  to  embody  the  entire  law  upon 
the  subject,  as  far  as  practicable,  into  one  well  digested  and  consistent 
act.  *  *  *  This  construction  of  the  latter  act  is  strongly  fortified 
by  the  general  provision  of  that  act  which  declares  that '  In  any  case 
not  provided  for  in  this  act  the  rules  of  the  law  merchant  shall  gov- 
ern.' ^^  We  know  that  no  such  prohibition  or  nuUity  as  that  declared 
in  the  old  statutes  against  gaming  has  any  recognition  in  the  law 
merchant."  ^° 

§  199a.  Statement  of  consideration  in  note. — The  statement  of 
consideration  in  a  bill  or  note  may  be  explained  or  contradicted  in 
any  case  in  which  the  consideration  may  be  disputed  between  the 
parties;  and  it  may  be  shown  either  that  the  consideration  was  differ- 
ent from  that  stated,  or  that  there  was  none  at  all.^^  In  some  of  the 
States,  notes  given  in  purchase  of  patent  rights  are  required  by  statute 
to  have  the  fact  written  or  printed  on  the  face,  under  heavy  penalties, 
the  frauds  arising  out  of  such  transactions  being  very  frequent,  and 

111  N.  W.  666,  10  L.  R.  A.  (N.  S.)  847  (as  to  a  note  given  in  payment  for  light- 
ning rods  and  not  containing  the  words  of  consideration  as  required  by  the  stat- 
ute). 

29.  Appendix,  sec.   196. 

30.  See  also  Schlesinger  v.  Gilhooly,  189  N.  Y.  1,  81  N.  E.  619  (as  to  a  defense 
of  usury);  and  Schlesinger  v,  Kelly,  99  N.  Y.  S.  1083,  114  App.  Div.  546. 

31.  Abbott  V.  Hendricks,  1  M.  &  G.  791;  Foster  v.  Jolly,  1  Cromp.,  M.  &  R. 
703;  Smith  v.  Brooks,  18  Ga.  440;  Litchfield  v.  Falconer,  2  Ala.  280;  Matlock  v. 
Livingstone,  9  Smedes  &  M.  489;  Barker  v.  Prentiss,  6  Mass.  430. 


§  200  WHAT   ARE    ILLEGAL   CONSIDERATIONS  287 

the  legislatures  seeking  to  suppress  them,  and  such  notes  are  open  to 
the  same  defenses  in  the  hands  of  a  bo7ia  fide  holder  as  when  held  by 
the  paj'^ee.^^  But  under  such  a  statute,  if  the  patent  right  considera- 
tion were  not  expressed  in  the  note,  a  bona  fide  holder  would  be  pro- 
tected according  to  the  general  principles  of  the  law  merchant.^^  In 
those  States  where  no  statute  upon  the  subject  exists,  the  purchaser 
is  not  put  upon  inquiry  by  his  knowledge  of  the  fact  that  the  note  was 
given  for  a  patent  right.^^ 

§  200.  Efifect  of  knowledge  of  illegal  use  of  article  sold. — It  is 

stated  as  a  general  principle,  by  some  of  the  text  writers,  that  if  goods 
be  sold  by  a  trader  with  mere  knowledge  that  the  purchaser  intends 
an  illegal  use  of  them,  but  without  lending  any  aid  to  his  unlawful 
purpose,  he  may  sustain  an  action  on  the  contract;  and  a  number  of 
cases  would  seem  to  support  such  a  declaration ;  ^^  especially  as 
applicable  to  the  sale  of  articles  innocent  in  themselves.^® 

32.  Questions  arising  out  of  these  statutes  are  so  peculiarly  local  that  we  deem 
their  detailed  discussion  beyond  the  scope  of  this  treatise.  For  a  number  of  cases 
construing  such  statutes,  see  Ozan  Lumber  Company  v.  Union  County  Nat. 
Bank,  207  U.  S.  251,  28  S.  Ct.  89,  52  L.  Ed.  195;  Woods  &  Son  v.  Carl,  203  U.  S. 
358,  27  S.  Ct.  99,  51  L.  Ed.  219;  Brown  v.  Pergain,  125  Fed.  577;  Hogg  v.  Thur- 
man,  90  Ark.  93,  117  S.  W.  1070;  Columbia  County  Bank  v.  Emerson,  86  Ark. 
155,  110  S.  W.  214;  Wyatt  v.  Wallace,  67  Ark.  574,  55  S.  W.  1105;  Parr  v.  Erick- 
son,  115  Ga.  873,  42  S.  E.  240;  Lee  v.  Hightower,  3  Ga.  App.  226,  59  S.  E.  597; 
First  Nat.  Bank  of  Petersburg  v.  Beach,  34  Ind.  App.  80,  72  N.  E.  287;  State 
Nat.  Bank  v.  Bennett,  8  Ind.  App.  769,  36  N.  E.  551;  Bolte  v.  Sparks,  85  Kan. 
13,  116  Pac.  224;  Tredick  v.  Walters,  81  Kan.  828,  106  Pac.  1067;  Nyhart  v. 
Kubach,  76  Kan.  154,  90  Pac.  796;  Pinney  v.  First  Nat.  Bank  of  Concordia,  70 
Kan.  879,  78  Pac.  151;  Pinney  v.  First  Nat.  Bank  of  Concordia,  68  Kan.  223,  75 
Pac.  119;  Hays  v.  Walker  (Ky.),  76  S.  W.  1099;  Benton  v.  Sikyta,  84  Nebr.  808, 
122  N.  W.  61,  24  L.  R.  A.  (N.  S.)  1057;  Haskell  v.  Jones,  86  Pa.  St.  175;  State  v. 
Cook,  107  Tenn.  499,  64  S.  W.  720,  62  L.  R.  A.  174;  Twentieth  Century  Co.  v. 
Quilling,  130  Wis.  318,  110  X.  W.  174;  J.  H.  Clark  Co.  v.  Rice,  127  Wis.  451,  106 
N.  W.  231.  Notes  which  were  given  in  payment  for  stock  of  a  corporation  to 
which  patents  had  been  assigned,  were  not  given  for  a  patent  right  within  the 
contem.plation  of  such  a  statute.    Showell  v.  Barr,  228  Pa.  42,  76  Atl.  718. 

33.  Palmer  v.  Minor,  8  Hun,  342  (1876);  Bohons,  Assignee,  v.  Brown,  etc., 
101  Ky.  354,  41  S.  W.  273,  72  Am.  St.  Rep.  420. 

34.  Gerrish  v.  Bragg,  55  Vt.  330. 

35.  Byles  on  Bills  (Sharswood's  ed.)  [*132],  247;  1  Parsons  on  Notes  and  Bills, 
215;  Gardner  v.  Maxey,  9  B.  Mon.  90;  Clark  v.  Recker,  14  N.  H.  44;  McGavock 
v.  Puryear,  6  Coldw.  34;  Purj'ear  v.  McGavock,  9  Heisk.  461;  Coppock  v.  Bower, 
4  M.  «fe  W.  361;  Jackson  v.  City  Nat.  Bank,  125  Ind.  347,  25  N.  E.  430. 

36.  Henderson  v.  Waggoner,  2  Lea,  133;  Benjamin  on  Sales,  §  506;  Treacy  & 
Wilson  V.  Chinn,  79  Mo.  App.  648. 


28S  CONSIDERATION   OF  NEGOTIABLE    INSTRUMENTS  §  200 

But  the  proposition  is  certainly  of  limited  application,  and  the 
courts  are  careful  not  to  extend  it.  If  the  articles  be  sold  with  dis- 
tinct knowledge  that  they  are  to  be  used  for  any  illegal  purpose,  it  is 
doubtful  if  the  courts  should  allow  a  recovery  of  the  purchase  money : 
for  public  morality  and  good  government  must  condemn  the  furnish- 
ing of  means  to  violate  the  law;  and  when  the  use  contemplated  in- 
volves a  heinous  crime,  as  when  one  sells  arsenic  with  knowledge  that 
the  purchaser  intends  to  poison  his  wife  with  it,"  or  sells  noxious 
drugs,  knowing  that  the  brewer  who  buys  them  intends  to  use  them 
in  his  manufacture,^^  it  is  clear  that  the  recovery  should  not  be  al- 
lowed. And  it  has  been  held,  both  in  England  and  in  this  country, 
that  money  lent  to  a  man  to  enable  him  to  settle  his  losses  on  an 
illegal  stock-jobbing  transaction  cannot  be  recovered  back.^^  No  man 
ought  to  furnish  another  with  the  means  of  transgressing  the  law, 
knowing  that  he  intended  that  use  of  them."  '*" 

Following  the  principle  of  the  text  (but  applying  it  to  political 
circumstances  which  it  is  now  needless  to  discuss),  the  United  States 
Supreme  Court  has  held  that  a  due-bill  for  goods,  sold  to  be  used  by 
the  Confederate  States  in  prosecuting  the  war  against  the  United 
States,  was  void  as  upon  an  illegal  consideration,  and  that  an  action 
could  not  be  maintained  by  the  seller  or  by  any  holder  of  the  bill  who 
was  cognizant  of  the  purpose  for  which  the  goods  were  purchased.'*^ 
And  in  Massachusetts  it  has  been  held  that  there  can  be  no  recovery 
upon  a  note  by  the  plaintiff  against  a  defendant  who  executed  it  to 
him  for  liquors,  the  defendant  well  knowing  that  they  were  to  be 

37.  Lightfoot  V.  Tenant,  1  Bos.  &  P.  551. 

38.  Langton  v.  Hughes,  1  Maule  &  S.  593. 

39.  Canaan  v.  Bryce,  3  B.  &  Aid.  179,  Abbott,  C.  J.,  saying:  "If  it  be  unlawful 
in  one  man  to  pay,  how  can  it  be  lawful  for  another  man  to  furnish  him  the  means 
of  payment?" 

40.  De  Groot  v.  Van  Duzer,  20  Wend.  390;  Tompkins  v.  Compton,  93  Ga. 
520,  21  S.  E.  79. 

41.  Hanauer  v.  Doane,  12  Wall.  342,  Bradley,  J.:  "With  whatever  impunity 
a  man  may  lend  money  or  sell  goods  to  another  who  he  knows  intends  to  devote 
them  to  a  use  that  is  only  malum  prohibitum,  or  of  inferior  criminality,  he  cannot 
do  it  without  turpitude  when  he  knows,  or  has  every  reason  to  believe,  that  such 
money  or  goods  are  to  be  used  for  the  perpetration  of  a  heinous  crime,  and  that 
they  were  procured  for  that  purpose.  *  *  *  There  are  cases  to  the  contrary; 
but  they  are  either  cases  where  the  unlawful  act  contemplated  to  be  done  was 
merely  malum  prohibitum,  or  of  inferior  criminality,  or  cases  in  which  the  unlawful 
act  was  ah-eady  committed,  and  the  loan  was  an  independent  contract,  made 
not  to  enable  the  borrower  to  commit  the  act,  but  to  pay  obligations  which  he 
had  already  incurred  in  commiting  it." 


§  200  WHAT   ARE    ILLEGAL   CONSIDERATIONS  289 

resold  in  violation  of  law,  and  co-operating  to  that  end."*^  And  in 
Arkansas,  where  the  payee  sold  guns  to  be  used  in  the  war  against  the 
United  States,  he  was  not  permitted  to  recover.^^  Like  decisions 
have  been  rendered  where  the  party  selling  a  horse  knew  he  was  to  be 
used  in  the  Confederate  States  cavalry  service;  ^^  and  where  the  lender 
of  money  knew  that  iron  was  to  be  bought  with  it  for  military  uses 
against  the  United  States.'*^ 

Money  lent  for  the  purpose  of  being  used  in  gaming  cannot  be 
recovered  back  by  the  lender;  and  a  bill  or  note  given  for  such  purpose 
is,  as  between  the  parties,  void."*^  But  where  it  was  not  used  for  the 
purpose  for  which  it  was  lent — it  was  held  that  it  might  berecovered.^^ 
It  is  fully  settled  that  the  repayment  of  money  lent  for  the  express 
purpose  of  accomplishing  an  illegal  object  cannot  be  enforced.^^  But 
knowledge  that  the  money  was  to  be  so  used  must  be  distinctly  proved 
and  the  mere  fact  that  the  borrower  was  a  gambler,  and  that  any  one 
might  expect  him  to  game  with  the  money,  would  not  suffice,  of 
course,  to  show  it."*^  When  illegal  transactions  have  been  concluded, 
and  a  settlement  between  the  partners  in  them  has  been  made,  a  note 
given  by  one  of  the  partners  to  another  for  profits  which  arose  out  of 
them,  is  deemed  by  many  and  weighty  authorities  to  be  valid  and 
enforceable — public  policy  not  being  regarded  as  requiring  more  than 
the  avoidance  of  contracts  made  with  a  view  to  its  breach.^  And 
this  doctrine  obtains  in  the  United  States  Supreme  Court,  as  seen 
by  the  cases  cited.    But  in  a  number  of  cases  it  is  doubted  or  denied.^' 

42.  Hubbell  v.  Flint,  13  Gray,  277. 

43.  Tatum  v.  Kelly,  25  .\rk.  209.  See  also  Oxford  Iron  Co.  v.  Spradley,  51 
Ala.  171. 

44.  Booker  v.  Robbins,  26  Ark.  660.  Contra,  Thctford  v.  McClintock,  47  Ala. 
650;  though  otherwise  if  he  intended  such  use.  To  same  effect,  see  Henderson  v. 
Waggoner,  2  Lea,  133;  Murphy  v.  Weems,  69  Ga.  687. 

45.  Oxford  Iron  Co.  v.  Spradley,  46  Ala.  98;  Logan  v.  Plummer,  70  N.  C.  388. 

46.  M'Kinnel  v.  Robinson,  3  M.  &  W.  434;  Cutler  v.  Welsh,  43  N.  H.  497; 
Mordecai  v.  Dawkins,  9  Rich.  202. 

47.  Corbin  v.  Wachorst,  73  Cal.  411. 

48.  M'Kinnel  v.  Robinson,  3  M.  &  W.  434;  Lee  v.  Boyd,  86  Ala.  288,  citing 
the  text. 

49.  1  Parsons  on  Notes  and  Bills,  214. 

50.  De  Leon  v.  Trevino,  49  Tex.  88.  See  in  accord,  Brooks  v.  Martin,  2  Wall. 
70;  Planters'  Bank  v.  Union  Bank,  16  Wall.  483;  Sharp  v.  Taylor,  2  Phillips' 
Ch.  801;  Finkney  v.  Reynous,  4  Burr.  2069;  Petrie  v.  Hannay,  3  T.  R.  418;  Bog- 
gess  V.  Lilly,  18  Tex.  200;  Armstrong  v.  Toler,  11  Wheat.  258;  McBlair  v.  Gibbes, 
17  How.  236;  Buchanan  v.  Drovers'  Nat.  Bank,  5  C.  C.  A.  83,  55  Fed.  223. 

51.  See  Aubert  v.  Maze,  2  Bos.  &  P.  373;  MitcheU  v.  Cockburne,  2  H.  Bl.  379; 

19 


290  CONSIDERATION   OF   NEGOTIABLE   INSTRUMENTS  §  201 

SECTION   VI 

PARTIAL   WANT,    FAILURE,    AND    ILLEGALITY    OF   CONSIDERATION 

§  201.  (1)  As  to  partial  want  of  consideration. — Whenever  the 
defendant  is  entitled  to  go  into  the  question  of  consideration,  he 
may  set  up  the  partial  as  well  as  the  total  want  of  considc^ration.'^^ 
Thus,  where  the  drawer  of  a  bill  for  £19  5s.,  payable  to  his  own  order, 
sued  the  acceptor,  and  it  appeared  that  the  bill  was  accepted  for  value 
as  to  £10,  and  as  an  accommodation  to  the  plaintiff  as  to  the  residue, 
it  was  held,  that  although  with  respect  to  third  persons  the  amount 

Canaan  v.  Bryce,  3  B.  &  Aid.  183;  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68 
Pa.  St.  173;  Woodworth  v.  Burnett,  34  N.  Y.  273,  and  notes  of  editor,  30  Am.  Rep. 
106,  112.  The  execution  of  a  note  in  settlement  of  an  illegal  contract  does  not 
purge  the  new  promise  from  the  illegal  consideration.  Muckin  v.  Shannon,  1G5 
Fed.  Rep.  98,  holding  that  where  an  agreement  of  the  partnership  was  illegal  on  ac- 
count of  the  consideration  moving  between  the  parties,  or  the  character  of  the  bus- 
iness to  be  transacted,  the  court  would  not,  ■a.Hor  the  business  had  been  transacted, 
aid  either  of  the  parties  to  recover  from  another  who  showed  that  a  note  had  been 
executed  in  settlement  thereof,  no  other  vahd  or  adequate  consideration  interven- 
ing, and  a  settlement  and  execution  of  a  note  would  not  take  the  case  out  of 
the  rule. 

62.  Thompson  on  Bills  (Wilson's  cd.),  64;  Byles  on  Bills  (Sharswood's  ed.), 
239;  McGregor  v.  Bishop,  14  Ont.  10,  citing  the  text.  But  alleging  total  failure 
which  cannot  show  partial  failure.  Stocks  v.  Scott,  188  111.  267,  58  N.  E.  990. 
A  defense  of  want  of  consideration  is  personal  to  the  maker  of  the  note  and  can- 
not be  set  up  by  an  accommodation  indorser.  Fleitmann  v.  Ashley,  69  N.  Y.  S. 
1099,  60  App.  Div.  201,  affirmed  172  N.  Y.  628,  65  N.  E.  1116.  To  support  » 
defense  of  want  of  consideration  for  notes,  it  is  competent  to  prove  the  alleged 
purpose  for  which  they  were  given  and  that  the  purpose  has  been  carried  out. 
Independent  Brewing  Ass'n  v.  Klett,  114  111.  App.  1.  See  also  ante,  §  816.  When 
a  note  is  given  for  a  certain  sum,  a  part  of  which  is  for  a  good  consideration  and 
the  balance  is  without  consideration,  and  afterwards  the  amount  that  is  for  a 
legal  consideration  is  paid  and  indorsed  on  the  note,  the  note  then  being  without 
consideration  as  to  the  unpaid  balance,  no  recovery  can  be  had  upon  it.  Little- 
field  v.  Perkins,  100  Me.  96,  60  Atl.  707.  Where  a  note  was  made  for  the  full 
amount  of  the  purchase  price  of  property  when  in  fact  only  part  of  the  purchase 
price  remained  unpaid,  and  the  agent  of  the  payees  stated  that  when  the  note 
reached  the  office  of  the  payee  the  amount  paid  would  be  credited  on  it,  the  note 
was  obtained  without  consideration.  Jobes  v.  Wilson,  140  Mo.  App.  281,  124 
S.  W.  548  (1910).  Where  a  guarantor  gave  a  note  to  a  bank  upon  representations 
that  the  amount  of  the  note  embraced  the  unpaid  parts  of  loans  covered  by  the 
guaranty  whereas  the  amount  included  loans  not  covered  by  the  guaranty,  the 
note  was  without  consideration  as  to  the  excess.  National  Bank  of  Commerce 
V.  Rockefeller,  174  Fed.  22. 


§  202  PARTIAL   WANT   OF   CONSIDERATION  291 

of  the  bill  might  be  £19  5s.,  yet  as  between  these  parties  it  was  an 
acceptance  to  the  amount  of  £10  only.^^  So  where  a  note  was  given 
by  A.  to  B.,  for  the  sum  of  £32  6s.  lOd,  upon  B.'s  representation  and 
assurance  that  that  amount  was  due,  whereas  A.  owed  B.  £10  14s. 
lid,  and  no  more,  the  note  was  held  good  only  for  the  amount  that 
was  actually  due.^^  So,  where  a  father  gives  his  son  a  note  partly  for 
services,  and  partly  as  a  gratuity,  the  partial  want  of  consideration 
might  be  pleaded  as  to  such  portion  of  the  amount  as  was  gratuitous; 
and  it  would  be  no  objection  that  no  distinct  amount  was  fixed  upon 
as  compensation  for  the  services,  but  it  would  be  for  the  jury  to  settle 
what  amount  was  founded  on  the  one  consideration,  and  what  on  the 
other.^^  If  a  note  be  given  by  mistake  on  settlement  of  accounts  for 
an  amount  greater  than  that  actually  due,  there  is  want  of  considera- 
tion as  to  the  excess,  and  between  the  parties  it  may  be  pleaded.^^ 

§  202.  Where  an  article  sold  is  received  upon  delivery,  but  does 
not  answer  the  description  given  of  its  quality  or  value,  the  party 
who  has  given  his  bill  or  note  in  payment,  cannot  make  the  breach 
of  warranty  a  defense  in  England  and  in  many  of  the  States — it 
being  necessary  that  he  should  resort  to  his  cross-action  for  damages 
for  breach  of  contract,"  unless  indeed  the  article  be  of  no  value,  in 
which  case  the  consideration  would  be  regarded  as  having  entirely 
failed,^  others  holding  that  it  may  be  set  up  as  a  defense.^^    There 

63.  Darnell  v.  Williams,  2  Stark.  166  (3  Eng.  C.  L.);  Barber  v.  Backhouse, 
Peake,  61;  Clarke  v.  Lazarus,  2  M.  &  G.  167. 

64.  Forman  v.  Wright,  11  C.  B.  481.  The  words  of  the  plea  "fraudulently  and 
deceitfully,"  were  rejected  afl  surplusage. 

55.  Parish  v.  Stone,  14  Pick.  198.  Sec  Guild  v.  Belcher,  119  Mass.  257;  Lan- 
ning,  Antrim  &  Co.  v.  Bums,  36  Nebr.  2.36,  54  N.  W.  427,  quoting  text. 

56.  Seeley  v.  Engell,  13  N.  Y.  542;  Cla.xon  v.  Demaree,  14  Bush,  173.  In  Buck 
V.  Steffey,  65  Ind.  58,  it  is  held  that  mistake  must  be  mutual.  See  ante,  §§  81, 
177.  But  a  defense  of  mistake  or  fraud  will  not  avail  against  the  holder  for  value. 
See  Lanier  v.  Union  Mortgage  Co.,  64  Ark.  39,  40  S.  W.  466. 

67.  Washburn  v.  Picot,  3  Dev.  390;  Warwick  v.  Nairn,  10  Exch.  726;  El- 
minger  v.  Drew,  4  McLean,  388.  But  see  Peden  v.  Moore,  1  Stew.  &  P.  71; 
Spalding  v.  Vandercook,  2  Wend.  431;  Harrington  v.  Stratton,  22  Pick.  510; 
McNeel  v.  Smith,  106  Ga.  214,  32  S.  E.  119;  Choate  v.  Kimball,  56  Ark.  55, 
19  S.  W.  108;  Rublee  v.  Davis,  33  Nebr.  779,  51  N.  W.  135,  29  Am.  St.  Rep.  509. 

68.  Shepherd  v.  Temple,  3  N.  H.  455;  Danforth  v.  Crookshanks,  68  Mo.  App. 
311.  The  payment  of  interest  coupons  does  not  estop  the  maker  of  the  note, 
given  for  the  purchase  of  machinery',  from  offering  as  a  defense  such  breach  of 
warranty  of  sale  as  enables  him  to  deny  the  consideration  of  the  note  in  suit. 
Huntington  v.  Lombard,  22  Wash.  202,  60  Pac.  414. 

59.  Cornish  v.  Friedman,  94  Ark.  282,  126  S.  W.  1079  (1910).    Tygart  v. 


292  CONSIDERATION   OF   NEGOTIABLE    INSTRUMENTS         §  203 

should  be  an  offer  in  such  a  case  to  return  the  property  and  rescind 
the  contract,  according  to  some  cases/"  but  according  to  others  this 
is  unnecessary.^^ 

If  the  article  be  of  any  value  at  all,  although  entirely  speculative, 
the  contract  will  be  enforced.^- 

§  203.  (2)  As  to  total  and  partial  failure  of  consideration. — The 

total  failure  of  consideration  is  as  good  a  defense  to  a  suit  upon  a 
bill  or  note  as  the  original  want  of  it,  and  is  confined  to  the  like  par- 

Sutton,  8  Ga.  App.  20,  68  S.  E.  488.  Pratt  v.  Johnson,  100  Me.  443,  G2  Atl.  242. 
Warder,  Bushnell  &  Glessner  Co.  v.  Myers,  70  Nebr.  15,  96  N.  W.  992.  Davia 
V.  Schmidt,  126  Wis.  461,  106  N.  W.  119,  110  Am.  St.  Rep.  938.  Cormish  v. 
Friedman,  94  Ark.  282,  126  S.  W.  1079;  TyRart  v.  Sutton,  8  Ga.  App.  20,  68  S.  E. 
488;  Pratt  v.  Johnson,  100  Me.  443,  62  Atl.  242;  Warder,  Bushnell  ct  Gle.s.sn(>r  Co. 
V.  Myers,  70  Nebr.  Ifj,  96  N.  W.  992;  Davis  v.  Schmidt,  126  Wis.  461,  106  N.  W. 
119,  110  Am.  St.  Rep.  938.  "As  an  incident  to  a  sale  of  a  chattel  the  law  implies 
a  warranty,  which  the  parties  may  waive  or  change  by  express  agreement.  The 
warranty,  whether  express  or  implied,  necessarily  enters  into  the  consideration  of 
the  article  sold.  A  plea  of  breach  of  warranty  is  the  substantial  eciuivalent  of  a 
plea  of  failure  of  consideration;  and  the  defense  is  allowed  upon  the  priruipl(>  that 
the  consideration  of  a  note  between  the  parties  is  always  open  to  intjuiry  so  far 
as  the  promise  to  pay  depends  upon  its  existence,  continuance,  or  amount,  and 
that,  as  a  warranty  is  incident  to  every  sale  of  a  chattel,  parol  eviilence  is  admis- 
sible, not  for  the  purpose  of  showing  t  hat  a  different  promise  from  the  written  one 
was  made,  but  that  it  is  diflferent  in  legal  effect  as  a  con.sequence  of  the  want, 
cessation,  or  shrinkage  of  the  consideration."  Pryor  v.  Ludden  &  Bates  Southern 
Mu.sic  House,  134  Ga.  288,  67  S.  E.  654,  28  L.  R.  A.  (N.  S.)  267.  Where  a  note  is 
given  for  goods  sold  under  such  circumstances  as  to  give  the  buyer  the  right  to 
rescind  the  contract,  if  the  buyer  rescinds  the  note  is  avoided  a.s  between  him  and 
the  seller;  but  if  the  buyer  does  not  rescind,  but  allows  the  contract  (o  stand,  the 
seller  can  recover  upon  the  note,  subject  to  the  right  of  the  buyer  to  reduce  the 
amount  as  though  the  action  were  brought  on  the  contract  of  sale.  Daniel  v. 
Learned,  188  Mass.  294,  74  N.  E.  322. 

60.  Thornton  v.  Wynn,  12  Wheat.  183;  Rogers  v.  Mercantile  Adjuster  Pub. 
Co.,  118  Mo.  App.  1,  93  S.  W.  328;  Fenwick  v.  Bowling,  50  Mo.  App.  516;  Iowa 
Nat.  Bank  v.  Sherman,  23  S.  D.  8,  119  N.  W.  1010;  Moore  v.  Vogcl,  22  Tex.  Civ. 
App.  235,  54  S.  W.  1061. 

61.  Shepherd  v.  Temple,  3  N.  H.  455. 

62.  Johnson  v.  Titus,  2  Hill,  606;  Harness  v.  Home,  20  Ind.  App.  134,  50  N.  E. 
395.  Contra,  Danforth  v.  Crookshanks,  68  Mo.  App.  311.  Under  a  statute, 
section  645,  Rev.  St.  1899,  providing  that  in  suits  upon  written  contracts  the  de- 
fendant may  prove  want  or  failure  of  consideration  either  in  whole  or  in  part, 
when  a  note  was  given  for  the  purchase  of  property  and  the  defendant  has  pleaded 
breach  of  warranty,  he  can  avail  himself  of  the  plea  of  want  of  consideration 
notwithstanding  he  has  admitted  that  the  property  haa  some  value.  Broderick 
V.  Andrews,  135  Mo.  App.  57,  115  S.  W.  519. 


§  203  PARTIAL   WANT   OF   CONSIDERATION  293 

ties.^'  If  the  contract  is  rescinded,  the  consideration  of  the  bill  or 
note  totally  fails,  and  payment  of  it  cannot  be  enforced,^^  Thus,  if 
the  vendee  give  his  bill  or  note  for  goods  of  a  certain  manufacture, 
growth,  or  description,  and  the  payee  fails  to  deliver  goods  of  the 
character  contracted  for,  the  former  may  rescind  the  contract,  and 
refuse  to  pay  his  bill  or  note,  there  being  a  total  failure  of  considera- 
tion.^* So,  where  a  purchaser  of  a  patent  gave  his  note  for  it,  and 
the  patent  proved  void,  it  was  held  that  the  consideration  had  totally 

63.  Pyle  v.  Gallaher,  6  Penn.  (Del.)  407,  75  Atl.  373;  Slaton  v.  Fowler,  124 
Ga.  955,  53  S.  E.  567;  Wells  v.  Potter,  120  Ga.  889,  48  S.  E.  354;  First  State  Bank 
V.  Morton,  146  Ky.  287,  142  S.  W.  694;  German-American  Security  Co.  v.  Mc- 
CuUoch  (Ky.),  89  S.  W.  5;  McNeill  v.  Bay  Springs  Bank  (Miss.),  56  So.  333; 
Holmea  v.  Farris,  97  Mo.  App.  305,  71  S.  W.  116;  McCormick  Ilarv.  Mach.  Co. 
V.  WilUams,  83  Mo.  App.  275;  South  Dakota  Cent.  R.  Co.  v.  Smith,  22  S.  D.  210, 
1 16  N.  W.  1 120.  Where  note8  were  given  as  accessory  contracts  to  a  contract  for 
Kubscriptions  to  stock  in  a  certain  compjiny,  and  the  company  was  never  formed 
and  no  shares  of  stock  were  ever  issued,  there  was  no  consideration  as  between 
the  makers  and  the  payt^'.  Howe  v.  Raymond,  74  Conn.  ()S,  49  Atl.  S54.  The 
motive  or  indu<'ement  which  prompted  an  acceptance  of  a  bill  of  exchange,  and 
the  failure  of  the  induceim-nt,  cannot  be  considered  on  the  qu<'.stion  of  considera- 
tion aa  affecting  the  payee.    Ix-vy  &  Cohn  Mule  Co.  v.  KaufTraan,  114  Fed.  170. 

64.  Thompson  on  Bills  (Wilson's  cd.),  06;  Kreiss  v.  Faron,  118  Cal.  143,  50 
Pac.  388;  Risley  v.  Gray,  98  Cal.  40,  32  Pac.  884;  Langan  v.  Langan,  89  Cal.  186, 
26  Pac.  764.  Tice  v.  Moore,  82  Conn.  244,  73  Atl.  133.  Home  Ins.  Co.  v.  Dauben- 
speck,  115  Ind.  lHyCf,  Fle«>twoo<l  v.  Brown  (Ind.),  6  West.  256;  Cooper  v.  King, 
73  Iowa,  136;  Sunderland  v.  Bell,  39  Kan.  21;  Fort  Payne  Coal  &  Iron  Co.  v. 
Webster,  163  Miuss.  134,  39  N.  E.  7St);  Curtis  v.  Clark,  133  Mjuss.  509;  Maltz 
v.  Fletcher,  52  Mich.  484;  Hacker  v.  Brown,  HI  Mo.  6S;  Sydnor  v.  Boyd,  119 
N.  C.  481,  26  S.  E.  91;  Shuey  v.  Holmes,  20  Wash.  13,  54  Pac.  540.  WTiere  a  note 
had  been  given  payable  to  one  with  whom  a  contract  for  a  year's  services  had  been 
made,  for  the  full  amount  of  the  yejir's  contract,  the  contract  having  been  re- 
scindi'd,  in  an  action  on  the  note  the  full  amount  of  the  note  may  be  recovered  and 
not  only  such  portion  then-of  as  would  remain  after  deducting  an  amount  earned 
by  the  payee  in  other  employment.  Russell  P^lectric  Co.  v.  Ba.s.sett,  79  C<jnn.  709, 
06  Atl.  531.  A  note  given  in  consideration  of  the  payeti's  agreement  to  furnish 
water  for  irrigation  on  the  maker's  land  is  supported  by  a  valuable  consideration, 
and  no  failure  of  consideration  can  occur  until  after  the  date  fixed  in  the  agree- 
ment to  furnish  the  water.  Moyses  v.  Bell,  62  Wash.  534,  114  Pac.  193.  Where  a 
check  was  given  on  a  purchase  price  of  real  estate,  the  vendor  agreeing  in  WTiting 
to  convey  the  real  estate  and  to  sign  a  contract  the  next  day,  a  refusal  of  the  vendor 
to  make  the  second  contract  the  same  in  terms  as  the  first  did  not  defeat  the 
consideration  for  the  check,  as  the  first  contract  was  good  against  the  vendor. 
Caren  v.  Liebovitz,  99  N.  Y.  S.  952,  113  App.  Div.  074. 

66.  Wells  V.  Hopkins,  6  M.  &  W.  7;  The  Stockton  Sav.  &  Loan  Society  v. 
Giddings,  96  Cal.  84,  30  Pac.  1016,  31  Am.  St.  Rep.  181;  Sayre  v.  Mohney,  30 
Oreg.  238,  47  Pac.  197,  citing  text;  Sydnor  v.  Boyd,  119  N.  C.  481,  26  S.  E.  92; 
Brevoort  v.  Hughes,  10  Colo.  App.  379,  50  Pac.  1050.    The  fact  that  goods  were 


294  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS         §  203 

failed.^*  But  proof  that  another  patent  had  been  issued  for  the  same 
invention  to  another  person  would  not  show  that  the  first  was  void." 
Where  the  patented  machine  is  worthless  and  unsuited  to  the  purpose 
for  which  it  was  made,  the  consideration  of  a  note  given  for  the  right 
to  sell  it  totally  fails.  The  adaptation  of  a  machine  to  the  uses  for 
which  it  was  made  is  always  warranted.^^  So  generally,  if  the  thing 
purchased  was  utterly  worthless  when  purchased,  there  is  a  total 
failure  of  consideration,^^  but  not  if  it  was  of  value  when  purchased 
but  has  depreciated  in  value  by  subsequent  events.'*^    So,  also,  if  there 

not  such  as  to  meet  the  demands  of  the  defendant's  trade,  as  represented  by  the 
plaintiff's  agent  it  would  do,  would  not  amount  to  a  failure  of  consideration  of 
a  note  given  for  the  purchase  of  the  goods.  Shiretzki  v.  Julius  Kessler  &  Co., 
147  Ala.  678,  37  So.  422.  The  giving  of  a  promissory  note  for  the  purchase  money 
of  an  article  will  not  preclude  the  maker  from  setting  up  the  defense  that  the 
consideration  thereof  has  failed  for  the  reason  that  the  article  sold  was  defective, 
unless  it  be  shown  that  at  the  time  the  note  was  given  the  maker  had  full  and 
complete  knowledge  of  the  fact  that  the  article  was  defective,  or  had  inspected, 
and  examined  the  article,  and  the  defects  therein  were  of  such  a  character  as  to  be 
patent  to  the  person  making  the  inspection  or  examination.  Means  v.  Subers, 
115  Ga.  371,  41  S.  E.  633. 

66.  Hathom  v.  Wheelwright,  99  Me.  351,  59  Atl.  517;  Dickinson  v.  Hall,  14 
Pick.  217;  Hodge  v.  Ma.son,  21  D.  C.  181;  Lofland  v.  Gobcn,  16  Ind.  App.  67, 
44  N.  E.  553,  651 ;  Comings  v.  Leedy,  114  Mo.  454,  21  S.  W.  804.  See  McCroskey 
V.  Ladd,  96  Cal.  455,  31  Pac.  558. 

67.  Crow  V.  Eichinger,  34  Ind.  65  (1870). 

68.  Smith  v.  Hightower,  76  Ga.  630;  Herman  v.  Gray,  79  Wis.  183,  48  N.  W. 
113.  As  to  resulting  damages  arising  from  defective  machinery,  which  was  the 
consideration  of  the  note.  Heebner  v.  Shephard,  5  N.  Dak.  56,  63  N.  W.  892; 
Humbert  v.  Larson,  99  Iowa,  275,  68  N.  W.  1103;  McCormick  Machine  Co.  v. 
Gustafson,  54  Nebr.  276,  74  N.  W.  576;  Comings  v.  Leedy,  114  Mo.  454,  21  S.  W. 
804,  citing  text. 

69.  Taft  v.  Myerscough,  197  111.  600,  64  N.  E.  711;  Dille  v.  WTiite,  132  la.  327, 
109  N.  W.  909,  10  L.  R.  A.  (N.  S.)  510;  Arnold  v.  Wilts,  86  Ind.  368;  Brown  v. 
Weldon,  27  Mo.  App.  251.  Following  the  principle  announced  in  the  text,  it  has 
been  held  that  where  a  purchaser  of  property  gives  his  note  therefor  and  after- 
ward rescinds  the  contract  of  sale  on  the  ground  of  breach  of  warranty,  he  may 
recover  the  amount  of  the  note  and  interest,  without  first  paying  same,  when  the 
note  was  negotiated  before  maturity  to  an  innocent  purchaser  for  value.  Fahey 
V.  Esterley  Machine  Co.,  3  N.  Dak.  220,  55  N.  W.  580,  44  Am.  St.  Rep.  554,  note; 
Canham  v.  Piano  Mfg.  Co.,  3  N.  Dak.  229,  55  N.  W.  583. 

70.  Leonard  v.  Draper,  187  Mass.  536,  73  N.  E.  644,  holding  that  a  note  given 
by  a  corporation  for  capital  stock  of  the  corporation  was  given  for  a  valuable  con- 
sideration though  it  subsequently  proved  to  be  worthless.  See  also  Furber  v. 
Fogler,  97  Me.  585,  55  Atl.  514.  Where  a  note  and  chattel  mortgage  was  trans- 
ferred for  notes,  consideration  for  the  notes  has  not  failed  by  the  bankruptcy  of 
the  maker  of  the  note  and  mortgage  when  the  note  had  indorsers  against  whom  it 


§  203  PARTIAL   WANT   OF   CONSIDERATION  295 

is  defect  or  failure  of  title  to  property  for  the  purchase  price  of  which 
a  note  was  given/ ^  or  if  the  property  has  been  taken  under  execu- 
tion/- or  on  a  breach  of  covenant  against  incumbrances/^  and  may 

would  be  enforcible.  Central  Sav,  Bank  v.  O'Connor,  132  Mich.  578,  94  N.  W. 
11,  102  Am.  St.  Rep.  433. 

71.  Watkins  v.  American  Nat.  Bank,  134  Fed.  36;  Williams  v.  Neeley,  134 
Fed.  1,  69  L.  R.  A.  232;  Thurgood  v.  Spring,  139  Cal.  596,  73  Pac.  456;  Meeks 
V.  Meeks,  5  Ga.  App.  394,  63  S.  E.  270;  Martin  v.  Turner  (Ky.),  115  S.  W.  833; 
Siglin  V.  Frost,  173  Mass.  284,  .53  N.  E.  143,  820;  Morris  v.  Brown,  38  Tex.  Civ. 
App.  266,  75  S.  W.  1015;  Acme  Food  Co.  v.  Older,  64  W.  Va.  255,  61  S.  E.  235, 
17  L.  R.  A.  (N.  S.)  807.  In  Maine  the  rule  had  prevailed  that  a  partial  failure  of 
title  constituted  no  defense  to  a  suit  on  a  note  given  for  real  estate,  but  this  rule 
was  abrogated  by  statute  in  1897  (Rev.  St.,  ch.  84,  §  40).  Hathom  v.  Wheel- 
wright, 99  Me.  351,  59  Atl.  517.  The  measure  of  damages  to  be  set  off  against 
purchase-money  notes  is  the  fair  vendible  value  of  the  quantity  of  land  lost,  when 
considered  with  reference  to  the  whole  tract.  Burkholder  v.  Farmers'  Bank 
(Ky.),  67  S.  W.  832.  Where  a  note  was  executed  in  pursuance  of  a  contract  for 
the  purchase  of  certain  property  and  indorsed  for  accommodation,  the  right  of 
the  seller  to  maintain  hi.s  action  again.st  the  principal  on  the  note  was  not  affected 
by  the  seller's  making  a  bill  of  sale  to  the  property  for  which  the  note  was  given, 
after  its  maturity,  to  the  indorser  at  the  latter's  solicitation,  as  at  that  time  the 
seller  had  no  title  in  the  prop)erty  to  convey.  Ketterson  v.  Inscho,  55  Tex.  Civ. 
App.  150,  118  S.  W.  626.  Failure  of  title  to  real  estate  purchased  by  the  de- 
fendant will  not  be  a  sufficient  defense  to  an  action  on  notes  given  for  the  pur- 
chase money,  when  he  retains  the  doed,  remains  in  j>os.ses8ion,  and  has  been  sub- 
jected to  no  inconvenience  or  expense  on  account  of  the  alleged  defective  title. 
Grubbs  v.  Barber,  102  Ind.  132;  See  also  Manzy  v.  Flint,  42  Ind.  App.  386,  83 
N.  E.  757.  When  a  note  wa.'»  given  for  a  tract  of  land  agreed  on  but  the  maker 
of  the  note  refu-sed  to  accept  the  deed,  claiming  that  it  did  not  correctly  describe 
the  land,  and  the  grantor  changed  the  boundaries  as  requested  so  that  a  tract 
was  described  which  the  grantor  did  not  own,  whereas  in  fact  the  deed  as  orig- 
inally tendered  did  not  correctly  describe  the  tract  and  was  a  good  conveyance 
of  the  tract  agreed  on,  the  note  was  given  for  a  good  consideration.  Fox  v.  Smith, 
73  Conn.  144,  46  Atl.  879.  A  note  given  in  consideration  of  a  quitclaim  deed  to 
land  in  which  the  grantor  claimed  no  interest  (the  deed  being  sought  in  aid  of  a 
loan  being  negotiated  by  the  grantee),  cannot  be  canceled  on  the  ground  that  it 
is  subsequently  discovered  that  the  grantor  had  no  interest  to  convey.  Mullen 
V.  Hawkins,  141  Ind.  363,  40  N.  E.  797.  Where  a  not«  was  given  in  part  for  trans- 
fer of  government  concessions,  the  forfeiture  of  the  concessions  will  not  work  a 
partial  failure  of  consideration  for  the  notes  where  the  forfeiture  might  have  been 
prevented  by  performing  the  terms  and  conditions  of  the  concessions.  McGue 
v.  Rommel,  148  Cal.  539,  83  Pac.  1000. 

72.  Chenault  v.  Bush,  84  Ky.  528. 

73.  Dahl  v.  Stakke,  12  X.  D.  325,  96  N.  W.  353.  When  at  the  time  notes  were 
given  for  the  purchase  price  of  property,  and  at  the  time  of  the  execution  of  the 
notes  there  was  an  unpaid  mortgage  upon  the  property,  of  which  fact  the  maker 
of  the  notes  had  no  knowledge,  there  was  a  failure  of  consideration.  Stoy  v. 
Bledsoe,  31  Ind.  App.  643,  68  N.  E.  907.     In  an  action  on  a  note  given  for  the 


296  CONSIDERATION   OF  NEGOTIABLE   INSTRUMENTS  §  203 

set  off  legal  damages  actually  sustained  in  getting  possession  of  the 
property.^'*  Where  a  note  was  given  for  an  insurance  premium  in  a 
company,  which  had  not  compHed  with  the  laws  of  a  State  in  procur- 
ing authority  to  transact  business  therein,  it  was  held  void  between 
the  partiesJ^ 

And  a  partial  failure  of  the  consideration  is  a  good  defense  pro 
tantoJ^  But  such  part  as  is  alleged  to  have  failed  must  be  distinct 
and  definite,  for  only  a  total  failure,  or  the  failure  of  a  specific  and 
ascertained  part,  can  be  availed  of  by  way  of  defense;  and  if  it  be 
an  unliquidated  claim  the  defendant  must  resort  to  his  cross-action 7^ 

purcihaso  of  land,  the  defendant  is  entitled  to  a  set-off  of  the  amount  he  was  com- 
pelled to  pay  to  redeem  the  land  from  taxes  which  were  a  lien  at  the  time  of  the 
conveyance.    Swope  v.  Missouri  Trust  Co.,  20  Te.x.  Civ.  App.  133,  62  S.  W.  947. 

74.  Weatherbee  Bros.  v.  Lillybeck,  86  Miss.  156,  38  So.  284. 

75.  Barber  v.  Boehm,  21  Nebr.  450. 

76.  Story  on  Bills,  §  184;  Story  on  Notes,  §  187;  1  Parsons  on  Notes  and  Bills, 
207;  Thompson  on  Bills  (Wilson's  ed.),  04;  Drew  v.  Towle,  7  Fost.  412;  Star  Pad 
Co.  v.  Greenwood,  5  Ont.  28;  Agnew  v.  .Mden,  S4  Ala.  502;  Lanier  v.  Union  Mort- 
gage Co.,  64  Ark.  39,  40  S.  W.  400;  Whitt  v.  Blount,  124  (la.  071,  53  S.  E.  205; 
Byrd  v.  Campbell  Printing  Press  Mfg.  Co.,  94  Cla.  41,  20  S.  E.  253;  Robertson  v. 
Merriain,  100  111.  App.  tilt);  S(;hatTner  v.  Kober,  2  Ind.  App.  409,  28  N.  E.  871; 
City  Deposit  Bank  v.  Green,  138  la.  150,  115  N.  W.  893  (as  to  an  agreement  that  a 
note  should  be  signed  by  a  certain  number  of  responsible  signers  and  a  fraudulent 
substitution  of  an  insolvent  person  jis  a  signer);  Dodge  v.  Oatis,  27  Kan.  702; 
SuUivan  v.  SulUvan,  122  Ky.  707,  92  S.  VV.  900,  7  L.  R.  A.  (N.  S.),  156;  Brown  v. 
Roberta,  90  Minn.  314,  96  N.  W.  793;  Torinus  v.  Buckham,  29  Minn.  128;  Currey 
v.  Harden,  109  Mo.  App.  578,  83  S.  W.  770;  Catterlin  v.  Lusk,  98  Mo.  App.  182, 
71  S.  W.  1109;  Bouton  v.  Hill,  4  App.  Div.  252,  38  N.  Y.  Supp.  498;  Blanks  v. 
Ripley,  8  Tex.  Civ.  App.  156,  27  S.  W.  732.  Under  a  statute  (V.  S.,  §  1152)  pro- 
viding that  in  actions  between  the  original  parties  to  a  note,  the  defendant  may 
show  partial  failure  of  consideration,  it  h:is  been  held  that  evidence  offered  tend- 
ing to  show  a  partial  failure  of  consideration  was  properly  excluded  when  the 
action  was  not  between  the  original  parties  to  the  note,  but  the  plaintiff  wa.s  an 
indorsee  after  maturity,  without  value,  and  solely  for  the  purpose  of  collection — 
two  justices  dissenting.  Russell  v.  Rood,  72  Vt.  238,  47  Atl.  789.  A  partial  failure 
of  consideration  may  be  shown  against  the  original  payee  of  a  promissory  note 
without  alleging  fraud.  Rouse,  Hempstone  &  Co.  v.  Sarratt,  74  S.  C.  575,  54 
S.  E.  757.  Where  there  are  two  or  more  independent  considerations  for  a  promis- 
sory note,  and  there  is  a  failure  of  consideration  as  to  one,  the  law  will  allow  the 
defendant,  in  an  action  between  the  original  parties,  or  between  others  standing 
in  no  better  position,  to  show  such  partial  failure  of  consideration  in  reduction  of 
damages.    Tuttle  v.  George  H.  Tuttle  &  Co.,  101  Me.  287,  64  Atl.  496. 

77.  Pulsifer  v.  Hotchkiss,  12  Conn,  234;  Elminger  v.  Drew,  4  McLean,  388; 
Drew  v.  Towle,  7  Fost.  412;  Stone  v.  Peake,  16  Vt.  213;  Ferguson  v.  Oliver.  8 
Smedes  &  M.  332;  Kernodle  v.  Hunt,  4  Blackf.  57;  Bisbee  v.  Torinus,  26  Minn. 
165.    Where  the  defendant  is  sued  upon  promissory  notes,  and  he  relies  for  his 


§  203  PARTIAL   WANT   OF   CONSIDERATION  297 

Thus,  where  bills  have  been  accepted  in  consideration  of  the  payee 
giving  the  acceptor  the  lease  of  a  house,  and  he  let  him  into  possession, 
but  gave  no  lease,  it  was  held  no  defense  to  an  action  on  the  bill,  but 
that  there  was  merely  a  counterclaim  for  damages/^  So  where  the 
bill  was  given  for  work  to  be  done,  and  the  work  when  done  was 
bungled  in  part,  and  not  worth  the  amount  of  the  bill  7^  It  may  be 
observed,  however,  that  in  most  of  the  States  the  common-law  rule 
restricting  the  defense  of  set-off  to  liquidated  claims,  is  so  far  modified 
as  to  admit  equitable  defenses  in  the  nature  of  set-off,  as  fraud  or 
mistake  in  the  procurement  of  a  contract,  or  any  other  matter  en- 
titling the  party  to  relief  in  equity  against  the  obligation  of  the  con- 
tract.^ 

But  failure  of  consideration  cannot  be  set  up  as  a  defense  when  it 
is  based  on  matters  relating  to  contemplated  and  future  events  and 
not  to  past  transactions  or  then  existing  conditions,^^  nor  where  it 
rests  upon  the  failure  of  an  obligation  of  a  third  person.®^    It  was  said 

defense  upon  failure  of  the  consideration,  and  the  evidence  shows  that  the  failure 
of  ron.sidcnit  ion  has  not  been  total,  he  mu.st,  in  order  to  authorize  any  iliniinution 
of  the  phiintifT's  recovery  introduce  evidence  showing  the  extent  of  the  failure; 
merely  to  prove  that  there  has  been  a  partial  failure  of  consideration,  without 
giving  the  jury  any  facts  from  which  they  could  calculate  the  extent  of  the  failure 
is  not  sufficient.  Krauss  v.  Floumoy,  7  Ga.  App.  322,  GG  S.  E.  805.  Where  notes 
were  given  under  a  contract  by  which  they  were  not  to  be  paid  in  any  other  way 
than  out  of  the  profits  of  a  venture,  to  the  extent  that  the  profits  were  insuffi- 
cient there  has  been  a  failure  of  consideration.  Ilatzel  v.  Moore,  125  Fed.  828. 
Where  a  note  was  given  in  consideration  of  the  good  will  in  a  business,  accom- 
panied by  an  agreement  on  the  part  of  the  vendor  of  the  good  will  not  to  resume 
business  in  the  same  localitj',  a  breach  of  the  agreement  does  not  defeat  an  action 
on  the  not*',  but  the  maker  of  the  note  may  set  up  such  breach  and  set  off  against 
the  note  such  damages  afl  results  from  the  breach.  Bradford  &  Carson  v. 
Montgomery  Furniture  Co.,  115  Tenn.  610,  92  S.  W.  1104,  9  L.  R.  A.  (N.  S.) 
979. 

78.  Moggridge  v.  Jones,  14  East  485,  3  Campb.  38. 

79.  Trickey  v.  Larne,  6  M.  &  W.  278;  Hays  v.  Plumer,  126  Cal.  107,  58  Pac. 
447,  77  Am.  St.  Rep.  153. 

80.  Applegarth  v.  Robin.son,  65  Md.  493;  Wuest  v.  Moehrig,  24  Tex.  Civ.  App. 
124,  57  S.  W.  124;  Bums  v.  Weesner,  134  Ind.  442,  34  N.  E.  10. 

81.  State  Bank  of  Indiana  v.  Gates,  114  la.  323,  86  N.  W.  311.  Where  a  note 
was  given  towards  the  endowment  of  a  chair  in  a  University  located  in  the  town 
in  which  the  maker  resided,  the  consideration  has  not  failed  by  the  consolidation 
of  the  University  with  a  college  and  the  removal  of  the  institution  to  another 
town.  Central  Univ.  of  Ky.  v.  Walters'  Ex'rs.,  122  Ky.  65,  90  S.  W.  1066.  See 
also  Miller  v.  Central  University  (Ky.),  112  S.  W.  669. 

82.  Page  v.  Geiser  Mfg.  Co.,  17  Okl.  110,  87  Pac.  851;  Terwilliger  v.  George  O. 
Richardson  Mach.  Co.,  15  Okl.  664,  83  Pac.  715. 


298  CONSIDERATION  OF  NEGOTIABLE   INSTRUMENTS  §  204 

in  Story  on  Bills,^'  as  it  is  said  in  a  number  of  English  cases,*^  that  a 
partial  failure  of  consideration  is  no  defense;  but  it  is  conceived  that 
the  distinction  already  taken  is  the  correct  one,  and  the  cases  in 
which  the  contrary  dictum  occurs  are  those  in  which  the  sum  was 
unascertainable  by  mere  computation,  and  was  matter  of  unliquidated 
damages.**^ 

Under  Negotiable  Instrument  statute. — Under  the  provision  of  the 
statute  that  in  the  hands  of  a  holder  other  than  a  holder  in  due  course, 
a  negotiable  instrument  is  subject  to  the  same  defenses  as  if  it  were 
nonnegotiable,^^  it  has  been  held  that  a  breach  of  warranty  may  be 
set  up  as  a  defense  in  an  answer  when  it  was  based  not  upon  an 
independent  and  separate  transaction,  but  grew  out  of  the  original 
transaction  for  which  the  note  was  given;  it  is  not  necessary  that  such 
breach  of  warranty  should  be  alleged  as  a  counterclaim.^^ 

§  204.  (3)  As  to  partial  illegality  of  consideration. — Wlien  the 
defense  is  founded  on  illegality  of  consideration  it  is  to  be  distin- 
guished from  a  defense  on  the  ground  of  a  want  (jr  failure  in  the 
consideration  by  this  peculiarity — that  a  i)artial  illegality  vitiates 
the  bill  or  note  in  toto,  while  the  partial  want  or  failure  of  consid- 
eration only  vitiates  it  pro  tanto.^    And  a  mortgage  to  secure  a  bill 

83.  Story  on  Bills  (Bonnott's  ed.),  §  184. 

84.  Morgan  v.  Richardson,  1  Campb.  40;  Obbard  v.  Bet  ham.  Moody  &  M. 
483;  Tyo  v.  Gwynne,  2  Campb.  346. 

85.  Chitty  on  Bills  (13th  Am.  ed.)  [♦76],  91  Roscoc  on  Bills,  10.5;  Bayley  on 
Bills,  344;  1  Parsons  on  Notes  and  Bills,  207;  Day  v.  Nix,  9  J.  B.  Moore,  1.59; 
Edwards  on  Bills,  335;  Story  on  Note.s,  §  187.  In  an  early  ca.se  Lord  Kenyon  left 
it  to  the  jury  to  consider  what  damages  had  been  suffered  by  the  defendant  in  a 
suit  on  a  note,  in  the  transaction  in  which  it  was  given;  but  the  case  has  not  been 
followed  as  a  precedent.  Ledger  v.  Ewer,  Peake,  210.  In  American  Nat.  Bank  v. 
Watkins,  119  Fed.  545,  the  court  said  that  the  English  rule  that  partial  failure  of 
consideration  is  not  a  good  defense  at  law,  the  amount  being  unliquidated,  was 
formerly  followed  in  the  United  States,  but  the  rule  is  now  generally  otherwise. 

86.  Appendix,  sec.  58. 

87.  American  Seeding  Machine  Co.  v.  Slocum,  108  N.  Y.  S.  1042. 

88.  Scott  V.  Gillmore,  3  Taunt.  226;  Robinson  v.  Bland,  2  Burr.  1077;  Hay  v. 
Ayling,  3  Eng.  L.  &  Eq.  416;  Hanauer  v.  Doane,  12  Wall.  342;  Wadsworth  v. 
Dunnam,  117  Ala.  661,  23  So.  699;  Wynne  v.  Whesenant,  37  Ala.  46;  McTighe  v. 
McKee,  70  Ark.  293,  67  S.  W.  754;  Chandler  v.  Johnson,  39  Ga.  85;  First  Nat. 
Bank  of  El  Paso  v.  Miller,  235  111.  135,  85  N.  E.  312;  Douthart  v.  Congdon,  197 
111.  349,  64  N.  E.  348,  90  Am.  St.  Rep.  167;  Keiser  v.  Jarrett,  119  111.  App.  472; 
Burns  v.  Weesner,  134  Ind.  442,  34  N.  E.  10;  Ricketts  v.  Harvey,  106  Ind.  564; 
O'Connor  v.  Kleiman,  143  Iowa,  435,  121  N.  W.  1088;  Bugg  v.  Holt  (Ky.),  97 
S.  W.  29;  Kimbrough  v.  Lane,  11  Bush,  556;  Oakes  v.  Merrifield,  93  Me.  297,  45 


§  204  PARTIAL   WANT   OF   CONSIDERATION  299 

or  note  of  whidi  the  consideration  is  in  part  illegal,  is  also  wholly 
void  ''  The  reason  of  the  distinction  is  based  mainly  upon  the  ground 
of  public  policy,  the  court  not  undertaking  to  unravel  a  web  of  fraud 
for  the  benefit  of  the  party  who  has  woven  it.^  If,  however  the  legal 
portion  of  the  consideration  were  distinctly  severable,  the  party 
could  still  recover  by  the  proper  action  to  its  proportionate  extent 
though  not  upon  the  bill  or  note.^^  There  is  authority,  however  to 
the  effect  that  there  may  be  recovery  on  the  bill  or  note  to  the  extent 
of  the  distinctly  severable  and  valid  consideration.^^    Where  the  legal 

Atl  31-  Wirth  V.  Roche,  92  Me.  383,  42  Atl.  794;  Deering  v.  Chapman  22  Me. 
t^;  Brigham  V.  Potter,  'l4  Gray.  522;  Carlton  v.  Bailey  7  Fost^230;  McNamara 
V  6^gett,  68  Mich.  454;  Wisner  v.  Bardwell,  38  M.ch.  278,  Snyder  v_^^mey, 
33  Mich  483;  Cotten  v.  McKenne,  57  Miss.  418;  Padget  v-  O  Connor  71  Nbr 
314  98  N  W  870;  Griflith  v.  Short,  14  Nebr.  259;  Kidder  v.  Blake,  45  N.  H.  o30, 
cik  V  Rcker  4  N.  H.  44;  Ilvslop  v.  Chuke,  14  Johns.  465;  Covington  v. 
Threadgm  ^N.  C.  187;  Widoe  v.  Webb,  20  Ohio  (N.  S.),  037;  No^^ley^- f^^^ 
(Tex.  Civ.  App.).  54  S.  W.  655;  W.-gner  v.  B.cnng  65  lex.  511,  N\oodrufT  v. 
Hcniman  U  Vt.  592;  Femekes  v.  B^rgenthal,  69  \\  i.s.  4M3. 

SsTate  V    Wilson,  73  Kan.  334,  84  Pac.  737,  80  Pa.-.  639    quoting  text 
Brlhun   V   letter,  14  Grav,  5-2-2;  Denny  v.  Dana,  2  Cash.  16().    And  when  such 
d^fcnri-s  nlde.  the  burd;;  us  on  the  defendant  to  establish  it.    bee  Usher  v. 
Fisher,  8  Ind.  App.  6r)5,  36  N.  E.  290. 

90    Bvlcfl  on  BilLs  (ShiirswtXjd'sed.)  1*1401, 256.  .       ,     ,     r         i„ 

n.  Carlton  V.  Woo<ls,  8  Font.  29<1.  where  it  is  held  that  if  entire  stock  o   goods 
be  ild  aTone  and  the  same  time,  but  eu.h  article  for  a  separate  and  ^^^^ 
the  contract  of  sale  is  divisible;  and  if  the  sale  of  some  =-t'c  '  be  prohib   ed  by 
law   the  sale  of  the  others  will  neverthek^  be  enforced  .us  legal,    n  an  action  tor 
,  :ds  sold  and  delivered.    Robinson  v.  Bland,  2  Burr.  U>^7    ^^  u  oe  v^  ^  c^bb  ^0 
Ohio  St.  431,  f.37;  H.,vt  v.  Macon,  2  O.lo.  .508;  Cotton  -  ^^;;^-"-^^"^J,^^3'f,  '^ 
92    Robinson  v    Bland,  2  Burr.  1077;  Hanauer  v.  Doane,  12  Wall.  34-.     in 
wfd';e  vl^Z  20  Ohio  St.  431,  there  wa.s  action  on  a  note  given  in  sett  ement  of 
al  a    ount  If  w:iuch  some  of  the  items  were  for  intoxicating  lu.uorssoM^^^^^^ 
tion  of  law.    Scott.  C.  J.,  said :  "  With  respect  to  the  items  "^  f^ J^^^^^^f^^^^^^^^^^^^^^ 
which  were  unconne<-tc>d  with  the  illegal  sales,  he  might  well  ^^^  ™^'"^^  "^'^^ 
:  tion  on  the  original  contracts  of  sale,  even  after  the  gumg  of  thi.s  no  .or 
beine  utterly  void,  it  dischargcKl  none  of  the  ju-st  mdebtedness  of  the  J^fen.Unt 
Bu   he  It  to  su;  upon  the  note,  which  was  ^-^f^.^^'Z:^^^^^^^^^^^^ 
to  the  extent  of  the  whole  sum  promis.«d  to  be  paid,  and  thus  attempted  to  throw 
uUnthf  defendant  the  burden  of  showing  how  much  of  it  was  given  upon  an 
rCl  consid^^^^^^^        and  upon  the  court  the  task  of  separating  the  sound^^^^^^  the 
un^und     If  this  effort  should  result  in  his  losing  what  was  ]U.stb'  due  him,  we  can 
bufrepeat  what  was  said  in  a  similar  case:  'It  is  but  a  reasonable  Pun.hmenHor 
his  including  with  his  just  due  that  which  he  had  no  nghtto  t^ake^      B^  gham  v^ 
Potter,  14  Gray.  522;  Perkins  v.  Cummings,  2  Gra,'.  2o8,  Clark  v^  Ricker. 
N.  H.  44;  Carlton  v.  Bailey.  7  Post.  234;  Carlton  v.  Ws,  8  Fost^290. 

93    Clopton  V.  Elkin,  46  Miss.  95.    See  Guild  v.  Belcher,  119  Ma.ss.  257,  as  to 


300  CONSIDERATION   OF   NEGOTIABLE   INSTRUMENTS  §  205 

part  of  the  consideration  exceeds  the  amount  of  the  note,  thou^;}i 
another  part  of  tlie  consideration  be  illegal,  the  note  will  be  valid.'-*^ 
And  it  has  been  held  that  where  a  bill  is  given  in  renewal  of  other  bills, 
one  of  which  was  upon  an  illegal  consideration,  it  would  be  valid  as 
to  the  amount  which  the  legal  bills  evidenced,  and  void  as  to  the  rest 
for  want  of  consideration.**^ 


SECTION  VII 

RENEWAL   BILLS    AND    NOTES;    HOW    ILLEGALITY    MAY    BE    PURGED 

§  205.  As  to  bills  and  notes  given  in  renewal. — An  agreement 
to  renew  a  bill  or  note  is  not  valid  unless  upon  consideration;'-"'  the 
surrender  and  cancellation  of  a  valid  and  enforcible  obligation, 
however,  is  generally  considered  a  sufficient  consideration  for  the 
execution  of  a  renewal  note,"  and  when  the  first  note  was  without 

reoovory  apainst  partnora  whoro  one  j)artnor  is  not  privy  to  the  entire  considera- 
tion. GhusH  V.  Murphy,  4  Ind.  Apj).  fWiO,  m  N.  E.  Um,  31  N.  E.  545.  Where 
Beveral  noteH  were  given  for  indcix-ndent  ileliveries  of  fertiUzer,  the  want  of  a 
tag  upon  a  single  sack  woukl  defeat  a  recovery  upon  the  note  of  which  that  sack 
formed  in  part  the  consideration,  but  this  would  not  serve  to  defeat  a  recovery 
upon  the  other  notes.  Alabama  Nat.  Bank  v.  C.  C.  Baker  &  Co.,  146  Ala.  513, 
40  So.  987. 

94.  Warren  v.  Chapman,  105  Mass.  87. 

95.  Doty  V.  Knox  County  Bank,  10  Ohio  (N.  S.),  133. 

96.  Howe  V.  Klein,  89  Me.  37(),  .'}()  Atl.  ()20. 

97.  Garriguc  v.  Keller,  1()4  Ind.  ()7(),  74  N.  E.  523,  69  L.  R.  A.  870,  108  Am. 
St.  Rep.  324;  Dorris  v.  Cronan,  149  Mo.  App.  177,  129  S.  W.  1014;  Zuendt  v. 
Docrner,  101  Mo.  App.  528,  73  S.  W.  873;  Siemans  &  Halske  Electric  Co.  v.  Ten 
Broek,  97  Mo.  App.  173,  70  S.  W.  1092.  That  the  original  note  is  still  in  posses- 
sion of  the  holder  is  immaterial  when  the  maker  can  obtain  possession  by  demand- 
ing it.  First  Nat.  Bank  of  Chattanooga  v.  Reid  (Tenn.  Ch.  App.),  58  S.  W.  1124. 
Where  the  indorser  of  a  note  was  unable  to  pay  and  sought  time  thereon,  a  new 
note  payable  on  demand  signed  by  himself  and  wife  was  good  given  as  collateral; 
the  promise  of  the  bank  to  forbear  suing  on  the  original  note  was  a  binding 
promise,  as  in  delivering  to  the  bank  another  note  signed  by  his  wife  as  well  as  by 
himself,  the  indorser  did  something  he  was  not  theretofore  bound  to  do.  Lowell  v. 
Bickford,  201  Mass.  543,  88  N.  E.  1.  Where  a  demand  note  was  executed  by 
several  persons,  and  the  holder  agreed  to  accept  in  payment  thereof  a  note  signed 
by  one  of  them  only  payable  three  months  after  date,  there  was  a  sufficient  con- 
sideration to  support  the  second  note  as  a  payment  of  the  original.  Brink  v. 
Stratton,  98  N.  Y.  S.  421,  112  App.  Div.  299,  affirmed  188  N.  Y.  620,  81  N.  E. 
1160.  WTiere  a  joint  note  was  surrendered  to  one  of  the  makers  on  the  execution 
of  a  new  note  by  him  and  the  widow  of  his  co-maker  of  the  old  note,  this  is  a 


§  205  RENEWAL   BILLS   AND    NOTES  301 

consideration,  a  renewal  note  is  also.^^  If  the  consideration  of  the 
original  bill  or  note  be  illegal,  a  renewal  of  it  will  be  open  to  the  same 
objection  and  defense,^^  except  that  any  illegality  by  reason  of  de- 
sufficient  consideration;  though  the  widow  may  have  been  mistaken  as  to  her 
legal  relation  to  hor  deceased  husband's  estate  or  to  his  debts,  this  does  not  re- 
lieve her  from  liability  on  the  new  note,  as  prejudice  suffered  by  the  promisee  may 
be  the  consideration.  Lyon  v.  Robertson,  127  Cal.  XVIII,  59  Pac.  990.  A  note 
and  mortgage  given  by  the  heirs  in  renewal  of  a  note  and  mortgage  given  by  their 
ancestor  is  based  on  a  good  consideration,  and  the  circumstances  that  the  old  note 
was  not  delivered  up  and  the  old  mortgage  canceled  of  record  may  be  regarded  as 
immaterial.  Humboldt  Savings  &  Loan  Soc.  v.  Dowd,  137  Cal.  408,  70  Pac. 
274.  In  Locknor  v.  Holland,  81  N.  Y.  S.  730,  the  court  said  that  when  the  original 
note  was  given  for  an  adequate  consideration,  no  new  or  additional  consideration 
i.s  nece.s.sary  to  give  validity  to  a  renewal  note. 

98.  Cochran  v.  Perkins,  14G  Ala.  G89,  40  So.  351 ;  Earle  v.  Robinson,  3G  N.  Y.  S. 
178,  91  Hun.  363;  See  also  Pelton  v.  Spider  Lake  Sawmill,  etc.,  Co.,  132  Wis.  219, 
112  N.  W.  29,  122  Am.  St.  Rep.  963,  as  to  a  renewal  of  an  accommodation  note. 
Though  a  married  woman  is  not,  under  statute,  liable  on  a  nott?  signed  as  an 
accommodation  maker  for  her  hu.sband,  her  moral  obligation  is  suiruricnt  to 
support  a  renewal  note  nuuie  by  her  aft<T  the  death  of  her  hu.sband,  and  antedated 
to  a  time  previou.s  to  his  death,  there  being  notliing  to  show  any  illegal  or  fraud- 
ulent i)uri)ose.  Rathfon  v.  Ix)eher,  215  Pa.  571,  64  Atl.  790.  Th<'  (lefen<lants 
below  had  every  opportunity,  before  the  e.xeeution  of  the  renewal  note  sued  on,  by 
the  exercise  of  ordinary  diligence,  to  discover  whether  they  had  any  claim  for 
damages  on  account  of  the  failure  to  ship  the  machinery  according  to  contract. 
Such  a  defen.se  was  waive<l  by  the  execution  of  the  renewal  note.  Hj'er  v.  York 
Mfg.  Co.,  58  Kla.  2.83,  50  Son.  485.  One  who  execut^'d  and  delivered  a  i)romissory 
note  in  n^newal  of  a  balance  due  u[)on  a  like  note  previously  given  for  the  j)urchiuse 
of  {XTsonalty,  an<l  who  at  the  time  of  giving  the  second  note  knew  that  the 
personalty  was,  when  pureluused,  d<>fe<'tive  or  worthless,  was  not,  in  defens<'  to  an 
action  on  that  note,  entitled  to  s<'t  up  that  the  consideration  thereof  had  failed 
because  of  the  defectiveness  or  worthlessness  of  the  property.  Hogan  v.  Brown, 
112  Ga.  6<)2,  37  S.  E.  880.  The  rule  as  to  a  renewal  given  with  the  knowledge  that 
th(>  proiMTty  is  defective  Ls  subject  to  exceptions,  and  is  not  api)lieable  where  a 
renewal  note  is  given  under  such  cireuni-stanees  as  to  indieate  that  it  w:us  given 
and  taken  with  a  contnu-y  understanding.  McDaniel  v.  Mallary  Pros.  Machinery 
Co.,  6  Ga.  App.  848,  tJO  S.  E.  146.  \\'here  a  note  was  given  by  two  {)ersons,  and 
one  of  them  was  relieved  from  payment  by  the  holder,  a  renewal  of  the  note 
signed  by  both  is  without  consideration  as  to  the  one  previously  reheved. 
Farmers'  &  Mechanics'  Bank  v.  Hawn,  79  N.  Y.  S.  524,  79  App.  Div.  640. 

99.  Alabama  Xat.  Bank  v.  Halsey,  109  Ala.  196,  19  So.  522;  Scudder  v.  Thomas, 
35  Ga.  364;  Kain  v.  Bare,  4  Ind.  App.  441,  31  N.  E.  205;  Sawjer  v.  Wiswell,  9 
Allen  39;  Holden  v.  Cosgrove,  12  Gray,  216;  Union  Nat.  Bank  v.  Eraser,  63  Miss. 
231;  Hunt  v.  Rumsey,  47  N.  W.  105;  Farmers'  Bank  v.  Oliver,  55  Nebr.  774,  76 
N.  W.  449;  McDonald  v.  Aufdengarden,  41  Nebr.  41,  59  N.  W.  762;  Levey  v. 
Allien,  72  Hun,  321,  25  N.  Y.  Supp.  352;  Union  Bank  v.  Gilbert,  83  Hun,  417,  31 
N.  Y.  Supp.  945,  citing  Swartwout  v.  Payne,  19  Johns.  294,  10  Am.  Dec.  228; 
Merchants'  Nat.  Bank  v.  Tracey,  77  Hun.  443,  29  N.  Y.  Supp.  77;  Schutt  v. 


302  CONSIDERATION   OF   NEGOTIABLE    INSTRUMENTS         §  205 

fective  authority  or  execution  which  might  have  affected  a  note  does 
not  attach  to  a  renewal  note  validly  authorized  and  executed.^  And 
if  the  original  instrument  was  obtained  by  fraud,  a  renewal  of  it  by 
the  original  parties  without  knowledge  of  the  fraud,  would  stand  upon 
the  same  footing,^  but  if  at  the  time  the  renewal  was  executed  the 
parties  signing  knew  of  the  fraud  in  the  original  or  of  the  failure  of 
consideration,  they  will  be  regarded  as  purging  the  contract  of  the 
fraud  or  of  the  defense  of  failure  of  consideration,  and  cannot  then 
plead  it.^    So  if  the  maker  of  a  note  held  by  an  indorsee  executes  to 

Evans,  109  Pa.  St,  627;  Mason  v.  Jordan,  13  R.  I.  193;  Wegnor  v.  BiorinK,  05  Tex. 
611;  Seeligson  v.  Lewis,  65  Tex.  115;  Bank  of  Ohio  Valley  v.  Lockwood,  13  W.  V'a. 
392.  In  National  Bank  v.  Lewis,  75  N.  Y.  524,  the  renewal  note  was  held  to  be 
tainted  with  usury;  and  forfeiture  of  interest  following  that  credit  must  be  given 
for  all  interest  charged  from  beginning  of  the  loan.  A  note  given  solely  in  renewal 
of  another,  tainted  with  usury  and  void,  is  equally  tainted  and  alike  condemned 
because  it  operates  merely  a.s  a  renewal  or  continuance  of  the  usurious  contract, 
but  if  the  usurious  contract  be  mutually  abandoned  by  the  parties  and  the  secur- 
ities canceled  or  destroyed  so  that  they  may  not  become  the  foundation  of  an 
action,  the  borrower  then  makes  a  contract  to  pay  the  amount  actually  received 
by  him,  the  last  contract  will  not  be  tainted  by  the  original  usury  and  may  be 
enforced.    Levey  v.  AUien,  72  Hun,  321,  25  N.  Y.  Supp.  352. 

1.  Smith  v.  New  Hartford  Waterworks,  73  Conn.  626,  48  Atl.  754. 

2.  SawTcr  v.  Wiswell,  9  Allen,  39;  Brown  v.  James,  2  App.  Div.  105,  37  N.  Y. 
Supp.  529.  citing  text;  Gilpin  v.  Netograph  Mach.  Co.,  25  Okl.  408,  108  Pac.  382. 
Following  the  doctrine  of  the  text,  it  has  been  held  that  where  a  security  tainted 
with  usury  is  given,  and  a  new  security  is  substituted,  the  substituted  security 
is  void.  See  Feldman  v.  McGraw,  1  App.  Div.  (N.  Y.)  574,  37  N.  Y.  Supp.  434. 
A  maker  of  a  note  is  not  estopped  from  setting  up  the  defense  of  fraud  to  an  action 
on  renewal  notes,  because  of  the  fact  that  he  paid  the  discount  upon  the  several 
renewals,  without  at  the  time  making  any  protests  as  to  the  misrepresentations 
which  induced  the  giving  of  the  original  note,  when  the  discounting  of  the  various 
notes  given  in  renewal  was  not  done  at  the  instance  of  the  maker  nor  when  it  was 
not  in  any  way  for  his  benefit.     Adams  v.  Ashman,  203  Pa.  536,  53  Atl.  375. 

3.  Tenney  v.  Porter,  61  Ark.  329,  33  S.  W.  211;  Franklin  Phosphate  Co.  v. 
International  Harvester  Co.  of  America  (Fla.),  57  So.  206;  Monteford  v.  Amer- 
ican Guano  Co.,  108  Ga.  12,  33  S.  E.  636;  Edison  Elec.  Co.  v.  Blount,  96  Ga.  272, 
23  S.  E.  306;  Turner  v.  Pearson,  93  Ga.  515,  21  S.  E.  104;  Long  v.  Johnson,  151 
Ind.  App.  498,  44  N.  E.  552;  Calvin  v.  Sterrett,  41  Kan.  215,  citing  text;  Sawyer  v. 
Wiswell,  9  Allen,  39;  National  Bank  of  Cleburne  v.  Carper,  28  Tex.  Civ.  App.  334, 
67  S.  W.  188,  citing  text.  And  where  one  giving  such  renewal  note  either  had 
knowledge  of  such  facts  and  circumstances,  or  by  the  exercise  of  ordinary  diligence 
could  have  discovered  them  and  ascertained  his  rights,  it  became  his  duty  to  make 
such  inquiry  and  investigation  before  executing  the  renewal  note,  and  if  he  fails  so 
to  do  he  is  as  much  bound  as  if  he  had  actual  knowledge  thereof.  Padgett  v.  Lewis, 
54  Fla.  177,  45  So.  29.  A  renewal  or  an  extension  of  time  of  payment  constitutes 
a  sufficient  consideration  for  a  waiver  on  the  part  of  the  vendee  of  any  breach  of 


§  205  RENEWAL   BILLS   AND   NOTES  303 

him  a  new  note,  it  is  a  waiver  of  a  defense  to  the  old  note  of  failure 
of  consideration,^  of  fraudulent  representations  in  obtaining  the  old 
note,^  or  of  the  defectiveness  or  worthlessness  of  property  for  which 
the  old  note  was  given.^ 

When  a  note  secured  by  mortgage  or  deed  of  trust,  or  other  se- 
curity, is  renewed,  the  mortgage  or  other  security  is  valid  as  a  security 
for  the  renewal  note/  A  change  in  the  mode  of  time  of  payment  of 
the  note  does  not  affect  the  validity  of  the  mortgage,^  and  if  the 
renewal  note  be  a  forgery,  or  be  obtained  by  fraud,^  it  does  not  dis- 
charge the  original,  although  the  original  was  surrendered  up,  nor  is 
the  indorser  of  the  original  discharged,  his  liability  having  been  fixed 
by  notice.^"  "When  a  dealer  at  bank  pays  off  a  note  by  renewal,  the 
debt  is  the  same;  the  debt  remains  unpaid;  the  credit  is  extended."  ^^ 

warranty  or  of  any  failure  of  consideration  of  the  article  purchased  and  for  which 
he  gave  his  promissory  note  in  the  first  instance.  Sheffield  v.  International  Har- 
vesting Mach.  Co.,  3  Ga.  Aj)p.  374,  59  8.  E.  1113,  the  court  saying:  "While  we  are 
inclined  to  the  opinion  that  the  mere  extension  of  time  of  payment  does  not  itself 
estop  the  maker  of  the  note  from  setting  up  as  a  defense  a  total  failure  of  consider- 
ation, yet,  where  the  evidence  discloses  the  fact  of  his  knowledge  of  such  failure  of 
consideration  at  the  time  that  he  gave  the  renewal  note,  and  in  the  renewal  note 
he  e.\i)ressly  waives  any  failure  of  consideration  we  think  he  would  untjuestion- 
ably  be  bound." 

4.  Gill  V.  Morris,  11  Hei.sk,  014.  So  where  the  new  note  waa  executed  to  the 
payee.  Keyes  v.  Mann,  03  Iowa,  500,  19  N.  W.  000.  Though  a  person  was 
notified  by  a  maker  that  a  note  was  without  con.sideration,  this  is  not  sufficient 
to  impeach  the  consideration  of  a  renewal  note  subsequently  executed  by  him  for  a 
balance  due,  in  the  hands  of  such  person  as  an  innocent  purchaser  for  value. 
Beattyville  Bank  v.  Roberts,  117  Ky.  (j89,  78  S.  W.  901. 

6.  Odbert  v.  Marquet,   103  Fed.  S92. 

6.  Atlantic  City  St.  R.  Co.  v.  American  Car  Co.,  103  Ga.  254,  29  S.  E.  925; 
American  Car  Co.  v.  Railway  Co.,  UK)  Ga.  254,  28  S.  E.  40;  Blount  v.  Edison  Gen. 
Elec.  Co.,  106  Ga.  197,  32  S.  E.  113. 

7.  Aillet  v.  Woods,  24  La.  Ann.  193;  McNamara  v.  Coudon,  2  McArthur, 
304;  Colhns  v.  Dawley,  4  Colo.  138;  Wiener  v.  Peacock,  31  Mo.  App.  244;  Bar- 
rington  v.  Skinner,  117  N.  C.  47,  23  S.  E.  9;  Moore  v.  Thompson,  100  Ky.  231, 
37  S.  W.  1012;  Willis  v.  Sanger  Bros.,  15  Tex.  Civ.  App.  055,  40  S.  W.  229.  See 
post,  §  748. 

8.  California  Nat.  Bank  v.  Ginty,  108  Cal.  149,  41  Pac.  38;  Buck  v.  Wood, 
85  Me.  209,  27  Atl.  103.    See  post,  §  835. 

9.  Stratton  v.  McMakin,  82  Ky.  220;  First  Nat.  Bank  v.  Gaines,  87  Ky.  597, 
9  S.  W.  396;  Alpena  Nat.  Bank  v.  Greenebaum,  44  N.  W.  1123;  Tucker  v.  Coffin, 
7  Tex.  Civ.  App.  415,  20  S.  W.  323.  Payment  by  a  forged  note  is  no  payment. 
Bass  v.  Inhabitants  of  Wellesley,  192  Mass.  526,  78  N.  E.  543.  Central  Nat. 
Bank  v.  Copp,  184  Mass.  328,  08  N.  E.  334. 

10.  Ritter  v.  Singmaster,  73  Pa.  St.  400. 

11.  Farmers'  Bank  v.  Mutual  Ass.  Society,  4  Leigh,  88;  Moses  v.  Trice,  21 


304      CONSIDERATION   OF  NEGOTIABLE   INSTRUMENTS    §§  206,  207 

And  as  a  general  rule  the  surrender  of  the  pre-existing  note  does  not 
discharge  it.^^ 

§  206.  Partial  illegality  of  instrument. — If  a  note  or  bill  he 
given  for  a  consideration  which  is  in  part  illegal,  a  new  note  for  the 
same,  or  in  renewal  of  the  first,  is  equally  void,^*  But  a  new  note  for 
that  part  of  the  consideration  which  is  legal,  is  good  and  valid.  And 
if  several  new  notes  are  given  for  the  old  one,  some  of  the  new  ones 
may  be  taken  to  be  for  the  legal  part,  and  so  be  valid,  especially  if 
they  are  only  adequate  to  this  part,  or  if  the  deduction  be  otherwise 
favored  by  circumstances." 

§  207.  In  what  way  illegal  consideration  may  be  purged. — When 
there  is  such  illegality  in  the  consideration  of  a  bill  or  note  which 
vitiates  it  in  all  hands,  there  are  several  ways  in  which  it  may  be 
purged  and  a  new  security  become  valid.  Thus,  Firstly:  If  there 
was  usury  in  the  consideration,  and  it  is  either  paid  up  or  is  remitted, 
there  is  no  doubt  that  if  a  new  bill  or  note  were  given,  and  the  usury 
in  the  original  instrument  excluded,  such  new  bill  or  note  would  be 
valid. ^^  Secondly:  If  the  usurious  or  otherwise  invalid  security  had 
been  acquired  by  a  bona  fide  holder  for  value,  and  without  notice,  a 
new  bill  or  note  executed  by  the  drawer,  maker,  acceptor,  or  other 
party  bound  upon  the  first  to  such  bona  fide  holder,  would  be  valid.  ^'^ 

Gratt.  556;  Tardy  v.  Boyd,  26  Gratt.  638;  Wheelock  v.  Berkeley,  138  111.  153, 
27  N.  E.  942. 

12.  Sec  vol.  II,  §  1266. 

13.  1  Parsons  on  Notes  and  Bills,  217;  Chapman  v.  Black,  2  B.  &  Aid.  588; 
Wynne  v.  Callander,  1  Russ.  293;  Preston  v.  Jackson,  2  Stark,  237;  Seeligson 
V.  Lewis,  65  Tex.  115;  Sydner  v.  Mt.  Sterling  Nat.  Bank,  94  Ky.  231;  McDonald 
V.  Beer,  42  Nebr.  437,  60  N.  W.  868. 

14.  Hubner  v.  Richardson,  Bayley  on  Bills,  362;  Crookshank  v.  Rose,  5  C.  & 
P.  19.  And  it  has  been  held  that  where  the  consideration  for  which  promissory 
notes  were  given  has  failed,  there  can  be  no  recovery  against  the  maker  upon  re- 
newal notes,  which  merely  included,  as  a  new  consideration  therefor,  the  interest 
due  upon  old  notes  and  extend  the  time  of  payment.  See  Earle  v.  Robinson,  91 
Hun,  363,  36  N.  Y.  Supp.  178. 

15.  De  Wolf  v.  Johnson,  10  Wheat.  367;  Hammond  v.  Hopping,  13  Wend. 
505;  Barnes  v.  Hedley,  2  Taunt.  184,  1  Campb.  157;  2  Parsons  on  Notes  and  Bills, 
420;  Bayley  on  Bills,  361;  McConkey  v.  Petterson,  15  App.  Div.  77,  44  N.  Y. 
Supp.  286;  Garvin  v.  Linton,  62  Ark.  370,  35  S.  W.  430;  Johnson  v.  Lasker,  etc., 
Assn.,  2  Tex.  Civ.  App.  494,  21  S.  W.  961. 

16.  Torbett  v.  Worthy,  1  Heisk,  107;  Calvert  v.  Williams,  64  N.  C.  168;  Drake 
V.  Chandler,  18  Gratt.  912;  Cuthbert  v.  Haley,  8  T.  R.  390;  Alabama  Nat.  Bank 
v.  Halsey,  109  Ala.  196,  19  So.  522. 


§  207  RENEWAL  BILLS  AND   NOTES  305 

Thirdly:  If  the  usurious  or  otherwise  invalid  security  is  lifted,  and 
a  third  party,  a  stranger  in  whole  or  part  to  the  original  security, 
intervenes,  and  for  motives  peculiar  to  himself,  and  unaffected  by  the 
illegal  consideration,  supplants  it  by  a  new  security  made  by  himself 
to  the  original  payee,  it  would  be  valid,  ^^  and  it  matters  not  that  the 
principal  in  the  original  becomes  a  surety  upon  the  new  security. ^^ 
If  the  new  party  be  released,  and  the  old  contract  is  revived,  the 
novation  is  rescinded,  and  usury  may  be  pleaded.^'  Fourthly:  If  A. 
makes  a  usurious  or  otherwise  illegal  agreement  with  B.,  and  gives  a 
bill  or  note  to  him  for  the  amount,  and  then  makes  a  new  bill  or  note 
to  C,  to  whom  B.  is  indebted,  the  new  note  is  valid. ^ 

Fifthly:  It  has  also  been  held  that  if  A.  makes  a  usurious  or  other- 
wise illegal  note  to  B.,  and  afterward  supplant  it  by  the  joint  note  of 
himself  and  C.  to  B.,  the  joint  note  is  valid;  ^^  and  Com>Ti  says, 
"Where  third  persons  are  mixed  up  with  the  new  transaction,  the 
courts  regard  it  with  a  favorable  eye."  ^^  Sixthly:  It  has  also  been 
held  that  if  a  joint  note  be  illegal,  the  note  of  one  joint  promisor. 


17.  Stone  v.  Smith,  6  Munf.  541;  Law's  Exr.  v.  Sutherland,  5  Gratt.  357; 
Drake  v.  Chandler,  IS  Gratt.  912;  Keckley  v.  Union  Bank,  75  Ga.  458;  Wales 
V.  Webb,  5  Conn.  154;  Windham  v.  Doles,  59  Ga.  266;  Lanier  v.  Union  Mort- 
gage Banking  &  Trust  Co.,  64  Ark.  39,  40  S.  W.  466. 

18.  Drake  v.  Chandler,  18  Gratt.  909. 

19.  Archer  v.  McCray,  59  Ga.  547;  Horn  v.  McKinney,  5  Ind.  App.  348,  32 
N.  E.  334. 

20.  Ilegina  v.  Sowel,  7  Mod.  118;  Drake  v.  Chandler,  18  Gratt.  912;  Sher- 
wood V.  Archer,  10  Hun,  73.  In  Macungie  Sav.  Bank  v.  Hattenstein,  89  Pa.  St. 
328,  B.  indorsed  to  a  bank  the  note  of  A.,  which  was  tainted  with  usury;  and 
the  bank  took  in  settlement  the  note  of  B,  indorsed  by  C,  and  surrendered  the 
note  of  A.  Held  usury  purged.  In  King  v.  Perry  Ins.  Co.,  57  Ala.  118,  where  the 
indorser  of  an  usurious  bill  took  it  up  with  a  new  bill  of  which  he  was  acceptor, 
it  was  held  affected  by  the  original  taint. 

21.  Hulme  v.  Turner,  4  Esp.  N.  P.  C.  111.  In  this  case  the  payee  of  a  note 
given  for  a  usurious  consideration  arrested  the  maker,  and  to  procure  his  liberation 
a  third  person  joined  the  maker  of  the  note  in  another  note  for  the  amount  of  the 
debt;  and  the  chief  justice  said  he  was  clearly  of  opinion  the  consideration  of  the 
first  note  could  not  be  questioned  in  an  action  on  the  second,  unless  it  could  be 
shown  that  it  was  a  colorable  shift  to  evade  the  statute,  devised  when  the  money 
was  originally  lent  and  the  first  note  granted.  See  Drake  v.  Chandler,  18  Gratt. 
912.  We  have  seen  it  decided  in  a  nisi  prius  Virginia  case,  that  the  liberation  of  the 
party  was  the  consideration  of  the  new  joint  note,  and  that  only  upon  that  ground 
could  the  decision  of  Hulme  v.  Turner  be  sustained.  In  Drake  v.  Chandler  there 
is  no  allusion  to  this  view. 

22.  Comyn  on  Usury,  186. 

20 


306  CONSIDERATION   OF   NEGOTIABLE  INSTRUMENTS  §  207 

with  a  new  party  as  surety  thereon,  would  be  valid. ^^  Seventhly:  If 
the  party  principal  in  the  original  and  invalid  security  executes  a  new 
one,  leaving  off  a  surety  upon  the  first — or  adding  a  surety  where 
there  was  none  upon  the  first — or  substituting  a  new  surety  for  one 
that  was  upon  the  first — in  all  these  cases  there  would  be  a  straight 
and  unbroken  line  of  obligation  from  the  principal  to  the  payee.  And 
we  should  say  that  the  new  security  was  a  mere  renewal  of  the  first, 
and  would  be  in  valid. ^^  Eighthly:  It  has  been  held  that  where  an 
indorser  upon  a  note  void  for  usury  gives  his  own  note  for  the  amount 
apparently  due,  it  is  tainted  with  the  original  usury  and  invalid.-^ 
But  if  the  original  note  were  not  usurious,  usury  in  the  renewal  note 
would  not  prevent  recovery  of  the  amount  due  on  the  first,  and  an 
indorser  of  the  first  by  indorsing  the  second,  waives  the  necessity  of 
protest  and  notice  thereon  in  order  to  charge  him.-® 

23.  Gresham  v.  Morrow,  40  Ga.  487.  In  this  case  it  was  hold  that  where 
one  who  held  the  note  of  two  joint  promisors,  given  for  slaves,  and  in  full  satis- 
faction thereof  took  the  note  of  one  joint  promisor,  with  a  stranger  as  his  security, 
it  was  a  novation  of  the  debt,  and  the  consideration  of  the  new  note  was  not  slaves, 
but  the  satisfaction  of  the  first  note. 

24.  Campbell  v.  Sloan,  62  Pa.  St.  481. 

25.  First  Nat.  Bank  v.  Plankinton,  27  Wis.  177;  Pardoe  v.  Iowa  State  Nat. 
Bank,  106  Iowa,  345,  76  N.  W.  800;  First  Nat.  Bank  v.  Turner,  3  Kan.  App. 
352,  42  Pac.  936. 

26.  Leary  v.  Miller,  61  N.  Y.  490. 


BOOK  II 

WHO   MAY  BE  PARTIES 
CHAPTER  VIII 

PERSONS    PARTIALLY  OR    WHOLLY    DISQUALIFIED 

§  208.  It  was  once  thought  that  none  but  merchants  could  be 
parties  to  bills  and  notes,  as  they  are  purely  mercantile  instruments, 
but  this  notion  long  since  became  obsolete.^  And  it  is  well  settled 
that  any  person  laboring  under  no  personal  or  political  disability 
may  be  a  party  to  any  negotiable  contract.  We  shall  first  speak  of 
those  who  are  partially  or  wh(^ly  disqualified  by  such  disability,  and 
who  are  (I.)  lunatics,  (II.)  alien  enemies,  (III.)  infants,  (IV.)  married 
women,  (V.)  persons  under  guardianship,  (VI.)  bankrupts.  We  shall 
then  speak  of  those  who  may  be  parties,  other  than  private  individ- 
uals, and  who  are  (I.)  personal  representatives,  (II.)  guardians, 
(III.)  trustees  who  may  be  included  under  the  head  of  fiduciaries — • 
and  (IV.)  agents,  (V.)  copartnership  firms,  (VI.)  private  corporations, 
(VII.)  pubHc  corporations,  and  (VIII.)  government. 

SECTION   I 

LUNATICS,    IMBECILES,    AND   DRUNKARDS 

§  209.  Every  person  is  presumed  to  be  of  sane  mind  until  the  con- 
trary be  shown  by  him  who  asserts  it;  -  and  insanity  or  imbecility 
cannot  in  England  be  sho\\Ti  under  a  general  plea  that  the  defendant 
did  not  execute  the  bill,  note,  or  other  instrument  declared  on,  but 
must  be  specially  pleaded.^ 

1.  Chitty  on  Bills  [*15],  20. 

2.  Rogers  v.  Rogers,  6  Penne  (Del.)  267,  66  Atl.  374;  Ireland  v.  White,  102 
Me.  233,  66  Atl.  477;  Jackson  v.  King,  4  Cow.  207;  Jackson  v.  Van  Dusen,  5 
Johns.  144;  Edwards  on  Bills,  64;  1  Parsons  on  Notes  and  Bills,  150. 

3.  Harrison  v.  Richardson,  1  Moody  &  R.  504;  Byles  (Sharswood's  ed.)  [*601, 
150. 

307 


308  PERSONS   PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  210 

The  earlier  authorities  of  the  English  law  held  that  a  man  should 
not  be  allowed  to  stultify  himself  by  alleging  his  own  lunacy  or  im 
becility;  ^  but  such  a  doctrine  sounds  more  like  the  gibberish  of  a 
lunatic  than  like  the  decree  of  a  humane  and  enlightened  lawgiver. 
The  maxim  of  the  civil  law,  "furiosus  nullum  negotium  gerere  potest, 
quia  non  intelligit  quid  agit,"  expresses  the  sense  of  modem  juris- 
prudence on  the  subject.  And  it  may  now  be  regarded  as  a  general 
rule  of  universal  law,  that  the  contracts  of  a  lunatic,  idiot,  or  other 
person  non  compos  mentis,  from  age  or  personal  infirmity,  are  utterly 
void.^ 

§  210.  Lunatic  protected,  though  other  party  ignorant  of  his  in- 
capacity.— Prof.  Parsons  qualifies  the  doctrine  stated  in  the  text, 
by  observing,  that  "possil)ly  this  defense  (of  insanity,  iml)ecility,  or 
aberration),  to  be  effectual  must  go  far  enough  to  show  that  this 
defect  of  mind  was  known  to  the  other  contracting  party."  ^  And 
this  view  has  obtained  in  a  number  of  cases  in  England  and  the  United 
States.  Thus  it  has  been  held  no  defense  to  an  action  for  labor  done 
and  goods  sold,  that  the  defendant  was  of  unsound  mind,  unless  the 
plaintiff  knew  the  fact,  or  took  advantage  of  it.^    But  we  can  see  no 

4.  Beverley's  Case,  4  Rep.  126;  Stroud  v.  Marshall,  Cro.  Eliz.  398;  1  Parsons 
on  Contracts,  383. 

5.  Edwards  on  Bills,  63;  Story  on  Bills,  §  106;  Story's  Eq.  Jur.,  §  223;  Byles 
on  Bills  (Sharawood's  ed.)  [*60],  150.  See  1  Parsons  on  Notes  and  Billrt,  149; 
Dickcrson  v.  Davis  (Ind.),  19  N.  E.  145,  citing  the  text;  Hosier  v.  Beard,  54 
Ohio  St.  398,  43  N.  E.  1040,  56  Am.  St.  Rep.  720;  American  Trust  &  Banking 
Co.  V.  Boone,  102  Ga.  202,  66  Am.  St.  Rep.  167,  29  S.  E.  182,  quoting  text;  Milli- 
gan  V.  Pollard,  112  Ala.  465,  20  So.  620.  A  transfer  of  a  note  by  an  insane  payee 
is  void,  and  the  payor  may  impeach  the  contract  of  transfer  by  showing  the  in- 
sanity of  the  transferrer  at  the  time  the  contract  was  made.  Walker  v.  Winn, 
142  Ala.  560,  39  So.  12,  110  Am.  St.  Rep.  50.  In  Sebree  v.  Crutchfield,  142  S.  W. 
1017,  146  Ky.  517,  it  was  held  that  where  a  note  was  executed  by  a  person  not 
having  mental  capacity,  for  money  loaned,  a  holder  with  notice  can  recover  only 
to  the  extent  that  the  estate  of  the  maker  received  the  benefit  of  the  proceeds  of 
the  note. 

6.  1  Parsons  on  Notes  and  Bills,  149,  150. 

7.  Molten  V.  Camroux,  4  Exch.  17;  Elliott  v.  Ince,  7  De  G.,  M.  &  G.  478; 
Brown  v.  Todrell,  3  Car.  &  P.  30,  Moody  &  M.,  105;  Beals  v.  Shee,  10  Pa.  St.  56. 
See  also  Loomis  v.  Spencer,  2  Paige,  153;  Lancaster  County  Bank  v.  Moore,  78 
Pa.  St.  407;  Behrens  v.  McKenzie,  23  Iowa,  333;  Wilder  v.  Weakly,  34  Ind.  181; 
Shoulters  v.  Allen,  51  Mich.  530;  Matthiessen  v.  McMahon,  38  N.  J.  L.  536; 
Byles  (Sharswood's  ed.)  [*61],  151.  In  Moore  v.  Hershey,  90  Pa.  St.  196,  quite 
a  conservative  and  well-considered  view  of  the  question  is  taken,  but  one  which, 
we  think,  goes  beyond  what  right  and  equity  require  in  holding  imbeciles  to  re- 


§  210  LUNATICS,    IMBECILES,    AND    DRUNKARDS        '  309 

just  philosophy  in  the  doctrines  held.  If  the  defendant  had  no 
faculties  of  discretion,  and  were  in  fact  deranged,  the  mere  circum- 
stance that,  for  the  time  being,  he  so  deported  himself  as  to  conceal 
his  lunacy  or  imbecility,  cannot  alter  his  right  to  be  protected  against 
his  own  misfortune.  And  though  honest  persons  may  be  ignorant  of 
his  condition,  that  is  their  misfortune,  and  they  should  not  be  allowed 
to  throw  it  upon  one  already  helpless.^  "  It  is  a  hard  case  either  way, 
but  it  is  very  important  that  courts  of  justice  should  afford  protection 
to  those  individuals  who  are  unfortunately  unable  to  be  their  own 
guardians,"  is  the  language  of  Lord  Tenterden,  C.  J.,  in  a  case  where 
a  note,  drawn,  in  an  unusual  form,  by  an  imbecile,  was  held  void  in 
the  hands  of  an  innocent  indorsee.^    And  no  matter  how  perfect  the 

Bp<jnfiibility.  The  court  said,  per  Puxson,  J.:  "I  know  of  no  case  in  which  it  haa 
bcrn  held  that  a  lunatic,  when  sued  ujion  hi«  contract,  may  not  show  want  of 
consideration.  The  most  that  hius  been  decided  is,  that  when  a  man  deals  fairly 
with  a  lunatic,  and  without  knowledge  of  his  lunacy,  he  is  entitled  to  recover  the 
value  of  what  he  honestly  parted  with.  It  was  held,  however,  by  the  learned 
judge  of  the  court  below,  that  as  this  was  commercial  paper,  and  the  plaintiff  a 
holder  for  value,  the  consideration  could  not  be  inquired  into.  It  is  doubtful  if 
this  rule,  even  if  applicable  to  the  facts  of  this  cjise,  would  exclude  the  evidence 
referred  to,  as  said  evidence  tends  to  show  plaintiff's  knowledge  of  the  want  of 
consideration.  Hut  we  are  not  called  upon  to  decide  this  question,  as  we  place  our 
ruling  upon  the  broad  ground  that  the  prineipU'  of  commercial  law  above  referred 
to,  does  not  apply  to  the  case  of  commercial  paper  made  by  madmen.  If  it  did 
we  would  soon  have  before  us  this  state  of  things:  It  is  well  known  that  there 
are  a  large  number  of  lunatics  under  restraint  in  this  State  who  are  possessed  of 
large  estates.  It  would  be  easy  for  a  designing  knave  to  obtain  the  paper  of  such 
person  for  a  large  amount.  The  making  of  it  might  even  be  a  source  of  delight 
to  the  unfortunate  lunatic.  If  such  i)aper  can  be  {)rotected  in  the  hands  of  a 
holder  who  has  paid  value,  however  trifling,  this  helpless  cla.ss  would  have  little 
protection.  A  principle  that  renders  such  results  possible  mu.st  be  es-sentially 
and  radically  wrong;  we  believe  that  none  such  exists.  On  the  contrary,  the  true 
rule  applicable  to  such  cases  is,  that  while  the  purchaser  of  a  promissory  note  is 
not  bound  to  inquire  into  its  consideration,  he  is  affected  by  the  status  of  the 
maker,  as  in  the  case  of  a  married  woman  or  minor.  In  neither  of  these  cases  can 
he  recover  against  the  maker.  In  the  case  of  a  lunatic,  however,  he  may  recover, 
provifled  he  had  no  knowledge  of  the  lunacy,  and  the  note  was  obtained  without 
fraud  and  upon  a  proper  consideration.  But  the  lunatic  or  his  committee  may 
defend  upon  either  of  these  grounds.  This  rule  affords  rea.sonable  protection 
to  the  estates  of  lunatics,  and  causes  no  serious  injury  to  commercial  interests, 
as  it  is  believed  the  amount  of  such  paper  that  can  be  Boated  in  the  face  of  such  a 
rule  will  be  inconsiderable." 

8.  Van  Patton  v.  Beals,  46  Iowa,  63;  Wierbach  v.  First  Nat.  Bank,  97  Pa.  St. 
543;  American  Trust  &  Banking  Co.  v.  Boone,  102  Ga.  202,  66  Am.  St.  Rep.  167, 
29  S.  E.  1S2,  citing  text;  Voris  v.  Harshbarger,  11  Ind.  App.  .555,  39  N.  E.  521. 

9.  Sentance  v.  Poole,  3  Car.  &  P.  (1827);  Chitty  on  Bills  (13th  Am.  ed.)  [♦18], 


310     PERSONS    PARTIALLY   OR   WHOLLY    DISQUALIFIED  §§  211,  212 

note  may  be  in  form,  it  would  be  void  in  tlie  hands  of  every  person, 
however  innocent,  as  against  the  imbecile  or  lunatic;  '"  but  in  this 
view,  so  obviously  reasonable  and  just  as  it  seems  to  us,  the  authori- 
ties are  not  entirely  concurrent.  And  in  New  York  they  are  strongly 
against  the  text." 

§  211.  Mere  weakness  of  mind,  not  amounting  to  imbecility  or 
insanity — mere  immaturity  of  reason,  or  want  of  experience  and  skill 
in  business,  is  no  ground  of  defense  either  in  law  or  equity,  provided 
no  fraud  has  been  practiced  on  the  party. ^^  But  if  the  weakness  of 
mind  be  so  great  as  to  incapacitate  the  party  to  guard  against  im- 
position and  undue  influence,  it  will  suffice  to  vacate  his  contracts,'^ 
though  one  who  assails  an  instrument  as  having  been  procured  by 
undue  influence  bears  the  burden  of  proving  both  mental  weakness 
and  undue  influence,  when  both  are  relied  on.^"* 

§  212.  In  respect  to  necessaries  an  exception  arises.  In  this  re- 
gard an  imbecile  stands  upon  the  footing  of  an  infant.  And  his 
executed  contracts  for  necessaries,  made  while  he  was  temporarily 
or  apparently  sane,  with  a  party  acting  in  entire  good  faith,  would 
be  enforced. ^^  And  if  a  bill  or  note  were  executed  by  him  for  neces- 
saries under  such  circumstances,  it  would  doubtless  be  valid,  at  least 

24;  Thompson  on  Bills  (Wilson's  ed.),  555;  Voris  v.  Harshbarger,  11  Ind.  App. 
555. 

10.  Seaver  v.  Phelps,  11  Pick.  304,  where  it  was  held  that  an  imbecile  could 
not  pledge  a  note,  although  the  pledgee  were  entirely  ignorant  of  his  condition, 
and  innocent  of  fraud.    Van  Patton  v.  Beals,  46  Iowa,  63. 

11.  Mutual  Life  Ins.  Co.  v.  Hunt,  79  N.  Y.  541  (1880),  and  cases  cited. 

12.  Stewart  v.  Lispenard,  26  Wend.  299;  Farnum  v.  Brooks,  9  Pick.  212;  Os- 
mond V.  Fitzroy,  3  P.  Wms.  129;  Lewis  v.  Pcad,  1  Ves.  Jr.  19.  Where  a  person, 
at  the  time  he  executed  a  note,  was  capable  of  exercising  thought,  reflection,  and 
judgment,  knew  what  he  was  doing  and  had  sufficient  memory  and  understanding 
to  comprehend  the  nature  and  character  of  the  transaction,  he  was  capable  of 
making  the  note.  Rogers  v.  Rogers,  6  Penn.  (Del.),  267,  66  Atl.  374  (1907).  Notes 
executed  by  an  aged  woman  in  favor  of  a  religious  sect  which  she  had  lately  joined, 
who  had  attempted  suicide  and  showed  other  symptoms  of  insanity  such  as 
hallucinations  with  respect  to  her  children,  depression,  neglect  of  her  family, 
belief  in  imaginary  diseases,  and  thoughts  and  conversations  but  upon  one  sub- 
ject, namely  her  new  religious  order,  are  not  valid  claims  against  her  estate.  In  re 
Killen's  Estate,  223  Pa.  301,  72  Atl.  521. 

13.  Johnson  v.  Chadwell,  8  Humphr.  145. 

14.  Bade  v.  Feay,  63  W.  Va.  166,  61  S.  E.  348  (1908). 

16.  McCulHs  V.  Bartlett,  8  N.  H.  569;  La  Rue  v.  Gilkyson,  4  Pa.  St.  375; 
Richardson  v.  Strong,  13  Ired.  106. 


§  213  LUNATICS,    IMBECILES,    AND    DRUNKARDS  311 

to  the  extent  of  their  actual  and  proven  value.  ^^  A  lunatic  has  been 
held  bound  for  medical  services  rendered  his  wife;  ^^  and  in  England, 
where  a  nobleman  ordered  carriages  suitable  to  his  rank,  and  the 
coachmaker  supplied  them  bona  fide  and  they  were  actually  used,  it 
was  held  that  an  action  was  maintainable  on  the  contract,  notwith- 
standing there  had  been  an  inquisition  of  lunacy  finding  him  to  be  of 
unsound  mind  at  the  time  the  carriages  were  ordered. ^^  The  recovery 
for  necessaries,  instead  of  being  condemned,  is  encouraged  by  con- 
siderations of  humanity.  And  the  courts  may  safely  go  farther,  and 
authorize  recovery  where  the  consideration  has  been  full  and  fair,  and 
has  entered  into  the  betterment  of  the  lunatic's  estate,  it  being  fol- 
lowed like  trust  money  into  his  hands,  and  restored  in  kind  or  its 
equivalent. 

§  213.  Inquisitions  of  lunacy. — In  the  United  States,  inquisi- 
tions of  lunacy,  under  statutes  providing  for  the  appointment  of 
guardians  over  persons  of  unsound  mind,  have  been  frequently  re- 
garded as  conclusive  evidence  of  lunacy  as  against  all  persons.^' 
But  other  authorities  hold  the  inquisition  conclusive  evidence  only 
as  against  the  parties  to  it;  and  permit  others  to  rebut  it  by  clear 
evidence.^    And  this  seems  to  us  the  best  view.^^    In  England,  the 

16.  1  Parsons  on  Notes  and  Bills,  149;  Van  Patton  v.  Marks,  46  Iowa,  63; 
McCurmick  v.  Littler,  85  111.  62.  Once  the  mental  incapacity  of  the  maker  is 
established,  it  is  a  complete  defense  to  an  action  on  a  note  signed  by  him,  and  the 
burden  would  then  be  upon  the  plaintiff  to  prove  the  consideration  for  the  note, 
and  other  facts  necessary  to  overcome  such  defense,  and  entitled  him  to  recover 
as  for  necessaries.  Hosier  v.  Beard,  54  Ohio  St.  398,  56  Am.  St.  Rep.  720,  43  N.  E. 
1040. 

17.  Pearl  v.  McDowell,  3  J.  J.  Marsh.  658;  Fitzgerald  v.  Reed,  9  Smedes  &  M. 
94. 

18.  Baxter  v.  Earl  of  Portsmouth,  7  Dowl.  &  Ry.  614,  2  Car.  &  P.  178.  In 
Dane  v.  Kirkall,  8  Car.  &  P.  679,  it  was  held  that  a  lunatic  was  bound  by  agree- 
ment for  use  and  occupation  of  a  house,  although  not  necessary  for  her,  it  not 
appearing  that  the  plaintiff  knew  she  was  a  lunatic. 

19.  Leonard  v.  Leonard,  14  Pick.  280;  Wadsworth  v.  Sherman,  14  Barb.  169; 
Fit/hugh  V.  Wilcox,  12  Barb.  235. 

20.  Den  v.  Clarke,  5  Halst.  217;  Rogers  v.  Walker,  6  Pa.  St.  371;  Edwards  on 
Bills,  64;  Moore  v.  Hershey,  90  Pa.  St.  196. 

21.  Hicks  V.  Marshall,  8  Hun,  328  (1876).  In  this  case  suit  was  brought  against 
the  maker  of  note  by  bona  fide  holder  for  value  without  notice  of  any  defect. 
Proceedings  upon  an  inquisition  of  lunacy,  had  after  making  of  the  note  and  bring- 
ing of  the  suit,  were  given  in  evidence,  and  the  defendant  declared  to  be  of  un- 
sound mind  when  he  made  the  note.  It  was  held  that  the  inciuisition  established 
prima  facie  the  insanity  of  the  defendant  at  the  time  he  made  the  note,  and  that 


312  PERSONS    PARTIALLY    OR   WHOLLY   DISQUALIFIED        §  214 

inquisition  is  only  presumptive  evidence  of  lunacy.^^  Before  office 
found,  the  acts  of  a  lunatic  have  been  said  to  be  voidable  only;  ^^ 
afterward  void.^*  But  this  distinction  would  not  extend  so  far  as  to 
prevent  the  contract  of  a  lunatic  from  being  ratified  and  confirmed 
after  his  restoration  to  sanity.^^  And  if  after  restoration,  he  continues 
to  receive  benefits  under,  instead  of  disaffirming,  the  contract,  it  will 
be  deemed  a  ratification.-'' 

§  214.  Drunkenness  is  a  species  of  mental  aberration,  produced 
by  intoxicating  stiinuhints.  And  if  a  person  become  so  drunk  as  to  be 
deprivetl  of  understanding  and  reason,  there  is  no  doubt  that,  while 
in  such  a  condition,  he  has  no  capacity  to  enter  into  a  contract.  And 
if  he  should  sign  a  negotiable  instrument,  either  as  maker,  drawer, 
indorser,  or  acceptor,  it  would  certainly  be  void  as  to  all  parties 
having  notice  of  the  condition  in  which  he  signed  it.-^  If  the  drunken- 
ness were  so  complete  as  to  suspend  all  rational  thought,  the  better 

in  order  to  recover,  the  plaintiffs  must  show  cither  that  he  was  sane  at  the  time, 
or  that  he  had  received  such  a  consideration  for  the  note,  that  justice  and  equity 
required  it  to  be  paid  out  of  his  estate.  In  Osterhout  v.  Shoemaker,  3  Hill,  516, 
Bronson,  J.,  says:  "I  see  no  principle  upon  which  the  incjuisition  taken  upon  a 
commission  of  lunacy  can  be  given  in  evidence  to  defeat  the  rights  of  third  per- 
sons who  were  strangers  to  the  proceedings.  *  *  *  jj^t  it  seems  to  be  settled 
that  such  evidence  is  admissible,  though  not  conclusive."  See  also  Hart  v.  Deamer, 
6  Wend.  497;  Goodell  v.  Harrington,  3  Thomp.  &  C.  345;  Hoyt  v.  Adee,  3  Lans. 
173. 

22.  Sergeson  v.  Sealey,  2  Atk.  412;  Faulder  v.  Silk,  3  Campb.  126.  Where 
after  notes  had  been  discounted  at  a  bank,  the  makers  sought  and  obtained  re- 
newals with  new  negotiable  notes,  this  would  estop  the  makers  from  setting  up  a 
defense  of  fraudulent  representations  so  far  as  the  bank,  a  holder  for  value,  is 
concerned.  Odbert  v.  Marquet,  175  Fed.  44,  affirming  163  Fed.  892.  See  also 
Harfst  V.  State  Bank  of  El  Campo  (Tex.  Civ.  App.),  119  S.  W.  694,  wherein  the 
court  said  that  in  such  case  the  new  notes  were  in  effect  but  a  voluntary  payment 
of  the  first  notes  and  that  this  was  not  the  case  of  an  illegal  consideration  nor  a 
case  of  forgery. 

23.  Jackson  v.  Gumaer,  2  Cow.  552. 

24.  Pearl  v.  McDowell,  3  J.  J.  Marsh.  658;  Edwards  on  Bills,  64. 
26.  1  Parsons  on  Notes  and  Bills,  151. 

26.  Arnold  v.  Richmond  Iron  Works,  1  Gray,  434.  But  see  Berkley  v.  Cannon, 
4  Rich.  (Law)  136. 

27.  Gore  v.  Gibson,  13  M.  &  W.  623;  Pitt  v.  Smith,  3  Campb.  33;  Molton  v. 
Camrony,  2  Exch.  487,  4  Exch.  17;  Wigglesworth  v.  Steers,  1  Hening  &  M.  154; 
Jenners  v.  Howard,  6  Blackf.  240;  Clark  v.  Caldwell,  6  Watts,  139;  1  Parsons  on 
Contracts,  383-384;  Knott  v.  Tidyman,  86  Wis.  164,  56  N.  W.  632;  Taylor  v. 
Purcell,  65  Ark.  606;  Benton  v.  Sikyta,  84  Nebr.  808,  122  N.  W.  61,  24  L.  R.  A. 
(N.  S.)  1057. 


§  214  LUNATICS,    IMBECILES,    AND   DRUNKARDS  313 

opinion  is  that  any  instrument  signed  by  the  party  would  be  utterly 
void  even  in  the  hands  of  a  bona  fide  holder  without  notice,  for,  al- 
though it  may  have  been  the  party's  own  fault  that  such  an  aberra- 
tion of  mind  was  produced,  when  produced,  it  suspended  for  the  time 
being  his  capacity  to  consent,  which  is  the  first  essential  of  a  con- 
tract."^* " It  is  just  the  same,"  says  Alderson,  B.,  "as  if  the  defendant 
had  written  his  name  on  the  bill  in  his  sleep  in  a  state  of  somnam- 
bulism." ^  But  it  has  been  thought  and  held,  that  even  when  the 
drunkenness  was  complete,  a  bill  or  note  then  signed  would  be  valid 
in  the  hands  of  a  bona  fide  holder  without  notice."^"  If  the  party  were 
fully  aware  of  what  he  was  doing  when  he  signed  the  paper  it  would 
clearly  be  binding,  as  we  think,  in  the  hands  of  a  bona  fide  holder.^^ 
Clearly,  "the  merriment  of  a  cheerful  cup,  which  rather  revives  the 
spirits  than  stupefies  the  reason,  is  no  hindrance  to  the  contracting 
of  just  obligations."  ^^ 


28.  1  Parsons  on  Notes  and  Bills,  151. 

29.  Gore  v.  Gibson,  13  M.  &  W.  623. 

30.  State  Bank  v.  McCoy,  09  Pa.  St.  204;  McSparran  v.  Neely,  91  Pa.  St. 
17;  J()hn.son  v.  Medlicott,  3  P.  Wms.  130;  Thomp.son  on  Bills  (Wilson's  ed.), 
63;  Chitty  on  Bills  (13th  Am.  ed.)  ['ISl  24.  That  one  indorsed  an  obliRation  as 
surety  while  in  a  drunken  condition  will  not  affect  the  riRhts  of  a  payee  who  had 
no  knowledge  of  such  drunkenness  and  no  hand  in  causing  it.  Abbevill  Trading 
Co.  V.  Butler,  Stevens  &  Co.,  3  Ga.  App.  138,  59  S.  E.  450. 

31.  In  Miller  v.  Finley,  26  Mich.  249,  it  was  claimed  that  a  father  who  signed 
a  note  already  signed  by  his  son,  while  in  such  a  state  of  drunkenness,  procured 
by  the  payee,  that  he  wjis  not  responsible  for  his  acts.  The  evidence  for  the  j)lain- 
tiff  tended  to  show  that  he  was  fully  aware  of  the  transaction  between  his  son  and 
the  payee,  and  took  some  part  in  it.  The  evidence  of  the  son  did  not  indicate  his 
extreme  intoxication;  and  the  father  himself  seemed  to  recollect  signing  the  note. 
Campbell,  J.,  said:  "The  defense  rests  upon  the  ground  of  fraud,  and  not  of 
illegality,  and  while  if  the  old  man's  story  is  true,  the  note  would  be  voidable  as 
against  the  payee,  it  would  not  be  a  nullity  as  to  all  persons." 

32.  Puffendorf,  book  3,  chap.  6,  §  4;  Story  on  Contracts,  §  27;  Cook  v.  Clay- 
worth,  18  Ves.  12,  Sumner's  note.  A  charge  to  the  jury  that  if  the  maker  of  a 
note  was  unable,  from  intoxication,  to  give  "proper  attention"  to  a  transaction, 
the  note  was  void,  was  held  to  be  erroneous.  Wright  v.  Waller,  127  Ala.  557, 
29  So.  57,  54  L.  R.  A.  440,  the  court  saying:  "The  foregoing  texts  and  adjudica- 
tions clearly  declare  and  thoroughly  establish  the  modem  doctrine  on  this  sub- 
ject, departing  from  the  ancient  rule,  which  forbade  a  party  to  a  contract  to  stultify 
himself  by  setting  up  his  want  of  mental  capacity  to  enter  into  it,  to  the  extent, 
and  only  to  the  extent,  of  allowing  him  to  show  in  avoidance  that  from  insanity, 
drunkenness,  and  the  like  he  was  incapable  of  exercising  judgment,  understand- 
ing the  proposed  engagement,  and  of  knowing  what  he  was  about  when  he  entered 
into  the  contract  sought  to  be  avoided." 


314     PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED  §§  215,  216 

§  215.  Preconcerted  drunkenness. — If  the  party  made  himself 
drunk  for  the  purpose  of  entering  into  agreements  and  then  avoid- 
ing them,  the  fraudulent  intent  antedating  his  drunkenness  would 
render  it  incompetent  for  him  to  avail  of  the  defense.^^ 

Drunkenness,  when  relied  upon  as  a  defense,  must  be  specially 
pleaded.^''  If  the  party  buy  goods  when  drunk,  and  keep  them  when 
sober,  he  estops  himself,  and  cannot  then  plead  his  drunkenness.^^ 
Where  a  note  based  on  insufficient  consideration  was  obtained  from 
a  person  under  the  influence  of  li(}uor  at  the  time  of  its  execution,  and 
enfeebled  in  body  and  mind  by  long-continued  disease  and  drunken- 
ness, it  was  held  in  Alabama  that  a  presumption  of  fraud  arises, 
which  must  be  countervailed  by  proof  of  fair  consideration,  and  fair 
dealing  on  the  part  of  the  holder  seeking  to  enforce  payment.'^^ 

SECTION   II 

ALIENS   AND    ALIEN    ENEMIES 

§  216.  The  mere  fact  that  a  person  is  an  alien  and  a  resident  of 
a  foreign  country  in  nowise  impairs  the  right  of  the  citizens  of  another 
country  to  contract  with  him,  or  his  right  to  contract  with  them.  On 
the  contrary,  commercial  intercourse  between  different  nations,  undcT 
relations  of  amity  with  each  other,  are  to  be  favored  and  encouraged. 
But  if  war  should  break  out  between  two  countries,  it  at  once  inter- 
poses a  barrier  to,  and  an  interdiction  of,  all  commercial  correspon- 
dence, intercourse,  and  dealing  between  the  citizens  of  the  two  coun- 
tries. The  hostile  countries  become  sealed  as  against  each  other;  and 
both  for  the  purpose  of  identifying  the  citizen  thoroughly  and 
emphatically  with  the  policy  and  interests  of  his  country,  and  of 
preventing  communications  to  the  enemy  which  might  be  damaging 
in  their  character,  the  law  of  nations  absolutely  prohibits  all  inter- 
course between  the  citizens  df  belligerent  countries,  and  pronounces 
all  contracts  between  them  utterly  void.^''    Such  contracts  are  not 

33.  1  Parsons  on  Notes  and  Bills,  151;  1  Parsons  on  Contracts,  384,  385. 

34.  Gore  v.  Gibson,  13  M.  &  W.  623;  Byles  on  Bills  (Sharswood's  ed.)  [*61], 
152. 

35.  Gore  v.  Gibson,  13  M.  &  W.  623. 

36.  Holland  v.  Barnes,  53  Ala.  83. 

37.  Griswold  v.  Waddington,  16  Johns.  438,  Chancellor  Kent  sajdng  of  this 
interdiction:  "It  reaches  to  all  interchange  or  removal  of  property,  to  all  negotia- 
tions and  contracts,  to  all  communication,  to  all  locomotive  intercourse,  to  a  state 


§  217  ALIENS   AND   ALIEN   ENEMIES  315 

merely  voidable,  but  ab  origine  void,  and  incapable  of  being  enforced 
or  confirmed.^  And  the  rule  applies  not  only  to  citizens  and  native 
subjects,  but  as  well  to  all  persons  domiciled  in  the  respective  coun- 
tries.^^ 

This  disability  of  alien  enemies  to  contract  does  not  rest  upon  any 
pecuHarity  of  English  or  American  law,  but  upon  the  universal  public 
law  of  nations,  as  stated  and  approved  by  the  most  eminent  writers, 
such  as  Grotius,  Puffendorf,  Vattel,  Bjmkershoek;  and  in  the  present 
age,  Wheaton,  Story,  Kent,  Parsons,  and  others.'"' 

§  217.  Alien  enemy  as  drawer. — It  results  from  these  prin- 
ciples, that  if  the  United  States  and  the  United  Kingdom  of  Great 
Britain,  Scotland,  and  Ireland  were  at  war,  a  citizen  of  the  United 
Kingdom  could  not  legally  draw  a  bill  of  exchange  upon  a  citizen  of 
the  United  States;  ^^  nor  could  a  citizen  of  the  United  States  draw  a 
bill  upon  a  citizen  of  the  United  Kingdom.^-  This  latter  proposition 
of  law  has  been  denied  in  one  of  the  Circuit  Courts  of  the  United 
States,  and  in  Kentucky;  *^  but  the  weight  of  authority,  as  well  as  the 

of  utter  8('clu.sion,  to  any  intercourse  but  one  of  open  hostility,  to  any  meeting 
but  in  actual  combat."    The  Julia,  8  Cranch,  131. 

38.  Griswold  v.  VV'addington,  16  Johns.  438;  Thompson  on  Bills,  73;  Story  on 
Note.s,  §  94. 

39.  McConnell  v.  Heetor,  3  Bos.  &  P.  707;  Roberts  v.  Hardy,  3  Maule  &  S. 
533. 

40.  Wheaton's  International  Law,  556;  Story  on  Bills,  §  99;  1  Parsons  on 
Notes  and  Bills,  152;  1  Kent  Com.  67. 

41.  Willi.-<on  v.  Patteson,  7  Taunt.  439,  1  Moore,  133  (1817).  In  this  case, 
a  British  subject,  resident  in  England,  had  in  his  hands  funds  of  an  alien  enemy, 
who  drew  on  him  a  bill  payable  to  the  drawer's  order,  and  indorsed  it  to  the  plain- 
tiff, an  EnglLsh-bom  subject  resident  in  hostile  territory'.  Held,  that  the  indorsee 
could  not  recover.  In  Moon  v.  Foster,  decided  by  Chase,  C.  J.,  in  United  States 
Circuit  Court  at  Richmond,  Va.,  in  1868  (Chase's  decisions  reported  by  Johnson, 
p.  222),  it  appeared  that  during  the  late  Confederate  war  the  drawer  at  Winslow, 
N.  C,  drew  on  a  drawee  at  Portsmouth,  Va.,  the  latter  place  being  within  the 
United  States  military  lines.  The  chief  justice  in.structed  the  jur>'  that  "if  they 
should  find  that  Winslow  was  not,  at  the  time  of  making  and  i.s.suing  the  draft, 
in  the  occupation  or  control  of  the  national  forces,  then  the  draft  in  controversy, 
being  an  act  of  prohibited  commercial  intercourse,  was  not  valid,  negotiable  pa- 
per." Cited  in  19  Gratt.  433;  Billgerry  v.  Branch,  19  Gratt.  393,  433;  Woods  v. 
Wilder,  43  N.  Y.  164;  Wheaton  on  International  Law,  §  317;  1  Kent  Com.  67; 
Story  on  Bills,  §  100;  Thompson  on  Bills,  73:  1  Parsons  on  Notes  and  Bills,  152; 
Tarleton  v.  Southern  Bank,  49  Ala.  229. 

42.  Ibid. 

43.  United  States  v.  Barker,  1  Paine  C.  C.  156  (1820).  On  the  2d  of  July, 
1814,  a  bill  of  exchange  was  drawn  by  a  citizen  of  the  United  States  on  a  British 


310  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  2l8 

clearly  defined  principles  of  international  law,  which  have  been 
already  stated,  overwhelmingly  sustain  the  text.  And  it  has  been 
observed,  in  respect  to  the  Circuit  Court  decision  above  referred  to, 
that  "even  that  case  contains  special  circumstances  not  existing  in 
the  present  case.  The  bill  in  that  case  was  drawn  here  by  a  citizen 
of  the  United  States  against  funds  which  he  hatl  in  England,  and  was 
indorsed  to  the  United  States  (iovernment,  and  prosecuted  in  its 
name  and  behalf."  "  It  was  not  upon  these  special  circumstances 
that  the  decision  turned,  Jnit  they  suggest  an  exception  to  the  general 
rule  in  favor  of  the  (Iovernment,  which,  upon  considerations  of  public 
policy,  may  govern  itself  difTerently  from  its  subjects. 

§  218.  Alien  enemy  as  acceptor,  indorser,  or  indorsee.— In  like 
manner,  the  citizen  of  a  country  cannot  accept  a  bill  drawn  by  an 
alien  enemey — that  is,  a  citiz(>n  of  a  country  at  war  with  his  own,"*^ 
nor  indorse  a  bill  or  note  to  such  alien  enemy,  nor  be  indorsee  of  one 
from  him.'^  Nor  can  he  (>xecute  a  note  to  such  alien  enemy,  nor  be 
payee  of  a  note  made  by  him;  '"  though  it  would  seem  that  if  the  note 
were  given  Ijy  an  agent  acting  imder  authority  given  before  the  war, 
and  in  renewal  of  a  note  made  before  the  war,  it  would  be  valid.''* 

In  the  late  war  between  the  Confcnlerate  States  antl  the  United 
States,  many  transactions  between  parties  on  opposite  sides  of  the 
hostile  line  occurred,  and  the  principle  that  forliids  communication 
between  alien  enemies  ha,s  been  regarded  by  the  courts  of  the  United 
States,  and  of  the  several  States  as  applicable  to  them.  For  while 
the  Confederate  States  were  short-lived,  for  the  time  being  they 

subject  in  Liverpool,  in  favor  of  the  United  States,  which  was  then  at  war  with 
Grout  Britain.  It  was  held  a  lawful  transaction,  and  Livingston,  J.,  said:  "The 
opinion  of  the  court,  then,  is,  that  the  plaintiff,  by  drawing  the  bill  in  question, 
violated  neither  the  laws  of  nations  nor  any  municipal  regulation  of  his  own 
country;  that  he  did  an  act  perfectly  innocent,  if  not  meritorious,  anfl  which  has 
too  long  received  the  sanction  of  public  opinion  and  general  usage  to  render  it 
necessary  or  proper  to  be  checked  by  the  interposition  of  a  court  of  justice,  which 
could  not  be  done  without  sacrificing  the  interest  of  our  innocent  and  unsuspect- 
ing merchants,  to  gratify  the  cupidity  of  those  who  may  since  have  been  advised 
that  the  transaction  was  unlawful,  and  may  be  desirous  of  taking  advantage  of  it." 
Followed  and  approved  in  Haggard  v.  ConkwTight,  7  Bush,  16  (1869). 

44.  Woods  V.  Wilder,  43  N.  Y.  164,  Rapallo,  J. 

45.  Woods  V.  Wilder,  43  N.  Y.  164. 

46.  Billgerry  v.  Branch,  19  Graft.  393. 

47.  Billgerry  v.  Branch,  19  Gratt.  393;  McVeigh  v.  Bank  of  Old  Dominion, 
26  Graft.  785. 

48.  McVeigh  v.  Bank  of  Old  Dominion,  26  Graft.  785. 


§§  219,  220  ALIENS   AND   ALIEN    ENEMIES  317 

waged  war  like  an  independent  nation,  and  were  accorded  belligerent 
rights.'*^ 

§  219.  Indorsee's  knowledge  of  invalidity  by  reason  of  alienage 
of  parties. — The  subject  of  a  country  at  war  with  another  cannot 
acquire  the  rights  of  an  indorsee  of  a  bill  drawn  by  an  alien  enemy 
upon  a  citizen  of  his  owti  country,  provided  he  know  at  the  time  of 
the  state  of  war  between  them;  for  by  receiving  a  bill  which  is  the 
enemy's  property,  he  makes  himself  an  instrument  to  enable  such 
enemy  to  sue  in  the  courts  of  his  own  country,  anil  either  encourages 
or  participates  in  that  intercourse  and  correspondence  which  the  laws 
of  nations  interdict.^  If  it  does  not  appear  that  the  indorsee  knew 
that  the  instrument  wa.s  invalid  as  between  the  original  parties  on 
account  of  the  existence  of  war  between  their  respective  countries, 
they  would  be  liable  to  him  upon  it ;  but,  as  a  general  rule,  the  place 
where  the  bill  or  note  is  dated,  and  the  names  or  addresses  of  the  i)art- 
ies  thereon  noted,  will  indicate  its  true  nature;  and  a  declaration  of  war 
is  always  matter  of  such  immediate  and  general  notoriety  that  no 
one  can  long  remain  ignorant  of  it.^'  It  has  been  held,  however,  that 
an  assignment  of  a  certificate  of  deposit  issued  by  a  bank  within  the 
lines  of  a  hostile  government,  is  valid. ^^ 

§  220.  Rights  of  neutrals. — Although  a  bill  or  note  drawn,  in- 
dorsed, or  accepted  in  favor  of  an  alien  enemy,  may  not  l)e  valid  as 
between  the  original  parties,  yet  if  it  lie  drawn  upon  the  citizen  of  a 
hostile  country  by  an  alien  enemy,  in  favor  of  a  neutral,  and  no 
illegal  use  of  it  were  intended  or  participated  in,  it  would  be  valid  in 
the  hands  of  the  neutral  a.s  against  the  drawer,  and  also  as  against 
the  drawee  if  he  accepted.  And  the  same  rule  would  apply  to  indorse- 
ments to  neutrals  of  bills  or  notes  executed  between  citizens  of  coun- 
tries at  war;  and  to  the  drawing  of  bills,  making  of  notes,  and  indorsing 
of  bills  or  notes  by  neutrals  in  favor  of  fellow-subjects  or  other  neu- 


49.  RillRom-  v.  Branch,  19  Graft.  393;  Moon  v.  Foster,  Chief  Justice  Chase's 
decision,  rited  in  19  Gratt.  433;  Cha-se's  Deci.sions,  222;  Wood  v.  Wilder,  43  N.  Y. 
164;  Ward  v.  Smith,  7  Wall.  447;  The  Prize  Caat>8,  2  Black,  f)35;  The  Venice,  2 
Wall.  2.tS;  The  Hampton,  5  Wall.  372;  The  William  BaRuley,  5  Wall.  377;  Hanger 
V.  Abbott,  6  Wall.  .532;  Tarleton  v.  Southern  Bank,  49  Ala.  229;  McVeigh  v.  Bank 
of  Old  Dominion,  2G  Gratt.  785 

60.  Thompson  on  Bilb,  74. 

51.  'I'liomjKson  on  Bills,  74. 

62.   Morrison  v.  Lovell,  4  Hagan,  346. 


318     PERSONS    PARTIALLY    OR    WHOLLY    DISQUALIFIED  §§  221,  222 

trals;  for  a  state  of  war  does  not  suspend  commerce  between  neu- 
trals. ^^ 

§  221.  Exceptions  to  general  rule. — There  are  some  exceptions 
to  the  general  interdiction  of  intercourse  between  alien  enemies. 
Thus,  if  a  prisoner  of  war  should  draw  a  bill  on  a  fellow-citizen  in 
his  own  country,  or  should  make  or  indorse  a  note,  that  bill  or  note, 
whether  payable  or  indorsed  to  an  alien  enemy,  would  be  valid  if  it 
were  drawn,  made,  or  indorsed  for  the  purpose  of  obtaining  necessary 
articles  of  subsistence  or  comfort.^''  So,  if  it  were  drawn,  made,  or 
indorsed  for  the  ransom  of  a  captured  ship,^^  or  for  the  repairs  of  a 
ship  in  an  enemy's  country,  protected  by  cartel  l)otween  the  belliger- 
ents,^^ And  such  instruments  might  be  sued  upon  on  the  return  of 
peace.  But  it  would  have  to  appear  affirmatively  that  the  considera- 
tion of  the  bill  or  note  exempted  it  from  the  general  rule.  After  the 
expiration  of  a  temporary  act  prohibiting  the  payment  of  bills  drawn 
during  a  state  of  war,  under  a  penalty,  a  mere  verbal  promise  to  pay 
such  bills  would  be  valid." 

§  222.  Effect  of  war  on  agency. — The  effect  of  war  between  two 
countries  is  to  suspend  at  once  all  contracts  between  the  citizens  of 
those  countries  which  require  communication  between  them.^  But 
if  an  alien  enemy  has  an  agent  in  the  hostile  country,  war  does  not 
revoke  the  agency;  and  the  agent  may  still  act  for,  receive,  and  pay 
out  money  for  his  principal;  give  or  receive  notice  of  dishonor  of  his 
commercial  paper,  and  represent  his  principal  in  all  transactions  not 
contrary  to  the  policy  or  interests  of  the  government  wherein  the 
agent  resides,  ^^  that  is  to  say,  provided  they  can  be  conducted  with- 
out intercourse  or  communication  between  the  citizens  or  subjects 

53.  Story  on  Bills,  §§  103,  104;  Story  on  Notes,  §§  98,  99;  Edwards  on  Bills,  74. 

64.  Daubuz  v.  Morehead,  6  Taunt.  332;  Edwards  on  Bills,  74. 

65.  Ricord  v.  Benttenhem,  3  Burr.  1734;  Comu  v.  Blackburne,  2  Doug.  641; 
Yates  V.  Hall,  1  T.  R.  73. 

66.  Patts  V.  Bell,  8  T.  R.  548;  Sackley  v.  Furse,  15  Johns.  338;  Edwards  on 
Bills,  74,  75;  Story  on  Notes,  §  97;  Story  on  Bills,  §  102. 

67.  Duhammel  v.  Pickering,  2  Stark.  90. 
58.  Griswold  v.  Waddington,  16  Johns.  438. 

69.  Ward  v.  Smith,  7  Wall.  447;  Dennistoun  v.  Imbrie,  Wash.  C.  C.  396; 
Manhattan  Ins.  Co.  v.  Warwick,  20  Gratt.  614;  Hale  v.  Wall,  22  Gratt.  424; 
Monseaux  v.  Urquhart,  9  La.  485;  Clarke  v.  Morey,  10  Johns.  70;  Fisher  v. 
Krutz,  9  Kan.  510;  Hubbard  v.  Matthews,  54  N.  Y.  48;  Maloney  v.  Stephens, 
11  Heisk.  738. 


§  223  INFANTS  319 

of  the  contending  powers — such  as  agencies  to  collect  and  preserve, 
but  not  to  transmit  money  or  property .^°  But  it  seems  they  must  be 
created  before  the  war  begins.^ ^  Of  the  character  described  is  an 
agency  to  receive  notice  of  protest  of  commercial  paper.^^ 

SECTION   III 

INFANTS 

§  223.  In  the  next  place,  as  to  infants.  Persons  under  twenty-one 
years  of  age  are  minors,  or  infants  as  they  are  more  generally  termed, 
and  contracts  made  by  them  have  been  divided  into  three  classes: 
First,  void  contracts,  which  are  those  clearly  to  the  infant's  dis- 
advantage— as,  for  instance,  a  bond  made  with  a  penalty;  second, 
voidable  contracts,  which  are  those  which  may  or  may  not  be  for  his 
benefit,  according  to  circumstances — as,  for  example,  a  lease  of  his 
lands  rendering  rent;  and  third,  valid  contracts,  which  are  such  as 
are  entered  into  for  necessaries.^^  And  by  necessaries  are  meant  those 
things  which  are  needed  by  the  infant,  and  are  suited  to  his  means 
and  rank  in  life. 

But  this  distinction  as  to  void  and  voidable  contracts  is  now  re- 
garded as  practically  obsolete;  all  the  contracts  of  an  infant,  not  in 
themselves  illegal,  being  capable  of  ratification  by  him  after  he  has 
attained  his  majority,  and,  therefore,  being  voidable  only.  For  if 
absolutely  void,  they  would  be  incapable  of  ratification.^* 

60.  Small's  Admr.  v.  Lumpkin,  28  Gratt.  835.    See  cajses  in  preceding  note. 

61.  United  States  v.  Lapine,  17  Wall.  602;  United  States  v.  Groeamayer,  9 
Willi.  72;  Small's  Admr.  v.  Lumpkin,  28  Gratt.  835;  Hubbard  v.  Matthews, 
54  \.  Y.  44. 

62.  Hubbard  v.  Matthews,  54  N.  Y.  44. 

63.  Story  on  Notes,  §  77. 

64.  1  Parsons  on  Contracts,  295;  Byles  on  Bills  (Sharswood's  ed.)  [*59],  145; 
Edwards  on  Bills,  65;  2  Kent  Com.  1*234],  Lect.  31;  Bingham  on  Infancy,  45. 
Chancellor  Kent,  in  his  Commentaries,  says  (see  2  Kent  Com.,  Lect.  31):  "It  is 
held  that  a  negotiable  note  given  by  an  infant,  even  for  necessaries,  is  void,  and 
his  acceptance  of  a  bill  of  e.xohange  is  void ;  and  a  bond  with,  a  penalty  though  given 
for  necessaries,  is  void.  It  must  be  admitted,  however,  that  the  tendency  of  the 
modem  decisions  is  in  favor  of  the  reasonableness  and  policy  of  a  very  liberal 
extension  of  the  rule,  that  the  acts  and  contracts  of  infants  should  be  deemed 
voidable  only,  and  subject  to  their  election,  when  they  become  of  age,  either  to 
affirm  or  disallow  them.  If  their  contracts  were  absolutely  void,  it  would  follow 
as  a  consequence  that  the  contract  could  have  no  effect,  and  the  party  contracting 


320     PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED   §§  224,  225 

§  224.  Necessaries  and  torts. — For  necessaries  an  infant  may 
undoubtedly  bind  himself,  and  the  better  opinion  is  that  he  may 
execute  a  note  not  negotiable  for  the  amount,  the  consideration  of 
which  might  be  inquired  into,  and  his  protection  from  imposition 
insured — he  being  bound  not  absolutely  for  the  amount  of  the  note, 
but  only  for  the  real  value  of  the  necessaries  for  which  it  was  given.^* 
But  it  is  denied  by  some  of  the  authorities  that  an  infant  can  execute 
any  note  whatever,  of  any  binding  force,  even  for  necessaries.''*  In 
England  it  has  been  hold  that  an  infant  may  execute  a  single  bill  (a 
bond  without  a  penalty)  for  the  exact  sum  due  for  ne(;essaries;  but 
not  a  bond  with  a  penalty,  or  carrying  interest.*^  An  infant  cannot 
bintl  himself  for  necessaries  when  he  h.'is  a  parent  or  guardian  who  sup- 
plies his  wants;  "^  but  when  he  has  authority  from  his  guardian  or 
parent,  he  may  purchase  them  and  bind  himself  for  them.^^  An  infant 
is  in  general  liable  for  his  torts  a-s  any  other  jierson  would  be;  ^°  and 
if  he  give  a  note  in  satisfaction  of  damages  it  has  been  held  that  he  is 
bound  thereby.^' 

§  225.  Negotiable  paper  signed  by  infants. — In  respect  to  ne- 
gotiable paper  to  which  infants  have  signed  their  names  as  parties, 
it  may  be  stated  as  a  general  principle,  universally  recognized  wher- 
ever the  common  law  prevails,  that  an  infant  cannot  bind  himself 
absolutely  as  drawer,  indorser,  acceptor,  or  maker  of  a  bill  of  exchange 
or  negotiable  note;  '^  the  contract  is  voidable  and  may  l)e  disaffirmed 
after  attainment  of  majority ,^^  unless  it  was  executed  for  necessaries.^ ' 
In  a  case  where  the  acceptor  of  a  bill  pleaded  infancy,  and  it  was 

with  the  infant  would  be  equally  discharged."    See  Harner  v.  Dipple,  31  Ohio 
St.  72;  Reed  v.  Batchelder,  1  Mete.  (Masa.)  559. 

65.  Bradley  v.  Pratt,  23  Vt.  378;  Ray  v.  Tubba,  50  Vt.  688;  1  Parsons  on  Notes 
and  Bills,  68. 

66.  Bouchell  v.  Clary,  3  Brev.  194;  Chitty  on  Bills  [*19],  26. 

67.  Russell  v.  Lee,  1  Lev.  86;  Byles  (Sharswood's  ed.)  [*57],  144;  Chitty  on 
Bills  [*19],  26;  Bateman  v.  Kingston,  6  L.  R.,  Ireland,  328  (1880). 

68.  Angel  v.  McClellan,  16  Mass.  28;  Guthrie  v.  Murphy,  4  Watts,  80. 

69.  Rundel  v.  Keeler,  7  Watts,  237;  Watson  v.  Heasel,  7  Watts,  344. 

70.  Cooley  on  Torts,  103  et  seq. 

71.  Ray  v.  Tubbs,  50  Vt.  688. 

72.  Williamson  v.  Harrison,  Holt,  359  (1690),  Carthew,  160,  3  Salk.  197  (1691); 
Chitty,  Jr.,  180.  The  court  said:  "Here  the  infant  was  a  trader,  and  the  bill  of 
exchange  was  drawn  in  the  course  of  trade,  and  not  for  necessaries."  Story  on 
Notes,  §  78;  Edwards  on  Bills,  65. 

73.  Watson  v.  Ruderman,  79  Conn.  687,  66  Atl.  515. 

74.  Heflfington  v.  Jackson,  43  Tex.  Civ.  App.  560,  96  S.  W.  108. 


§  226  INFANTS  321 

replied  that  it  was  given  for  necessaries,  Lord  Mansfield,  C.  J.,  said: 
"Did  any  one  ever  hear  of  an  infant  being  liable  as  an  acceptor  of  a 
bill  of  exchange?  The  replication  is  nonsense,  and  ought  to  have 
been  demurred  to."  ^"^  And  although  the  tenor  of  the  modem  au- 
thorities is  to  liberalize  the  law  on  the  subject  of  infancy,  the  doctrine 
is  generally  followed  that  an  infant  cannot  be  a  party  to  a  negotiable 
instrument — the  reason  assigned  being,  that  otherwise,  should  it  be 
transferred  to  a  bona  fide  holder  for  value,  and  without  notice  of  the 
infancy,  the  infant,  if  bound  at  all,  would  be  bound  for  the  entire 
sum,  and  if  inquiry  were  admitted  into  the  consideration,  the  in- 
strument would  lose  its  character  as  negotiable  paper.^^ 

§  226.  Liabilities  of  infant. — The  views  of  this  subject  which 
strike  us  as  the  most  reasonable  may  be  stated  as  follows:  If  the 
payee  of  a  note  made  by  an  infimt  were  to  sue  him  upon  it  as  maker, 
and  he  pleaded  infancy,  the  payee  might  reply  that  it  was  executed 
for  necessaries,  and  that  such  necessaries  were  reasonably  worth  the 
amount  specified  in  the  note.  The  burden  of  proof  would  rest  upon 
the  plaintiff  to  show  that  the  consideration  was  necessaries,  and  also 
to  show  their  value;  and  no  more  than  the  value  proved  could  be 
recovered.  And  this  view  would  apply  whether  the  note  were  in 
form  negotiable  or  not."  If  the  indorsee  of  the  payee  of  such  a  note 
were  to  sue  the  indorser,  the  latter  would,  of  course,  be  bound  to 
him  whether  the  maker  were  an  infant  or  not,  for  by  indorsement  he 
warrants  the  capacity  of  prior  parties  and  the  entire  validity  of  the 
paper.'**  And  were  the  indorsee  to  sue  the  maker,  antl  he  were  to 
plead  infancy,  there  seems  to  be  no  good  reason  why  it  might  not  be 
replied  that  the  note  was  given  for  necessaries,  and  that  they  were 
worth  the  amount  specified;  and  that  the  indorsee,  like  the  payee, 
should  be  entitled  to  recover  upon  proving  the  consideration  to  have 

75.  William-son  v.  Watt.s,  1  Campb.  5.')2. 

76.  Swiusey  v.  Vandcrheyden,  10  Johns.  3.3;  Wamsley  v.  Lindenberger,  2 
Rand.  47S;  McCrilli.s  v.  How,  2  N.  H.  348;  Conn  v.  Coburn,  7  N.  H.  .368;  McMinn 
V.  Ric-hmond.s,  6  Yorg.  9;  Hrndorstin  v.  Fox,  5  Ind.  489;  Aycrs  v.  Bums,  87  Ind. 
245;  Fenton  v.  White,  1  South.  100;  BouchcU  v.  Clary,  3  Brev.  194;  Morton  v. 
Steward,  5  111.  App.  533;  1  Parsons  on  Notes  and  Bills,  69;  Story  on  Notes,  §  68; 
Stor>'  on  Bills,  §  84. 

77.  See  Earle  v.  Reed,  10  Mete.  (Mass.)  387;  Du  Bois  v.  Wheddon,  4  McCord, 
221  (1827);  Haines'  Admr.  v.  Tannant,  2  Hill  (S.  C),  400  (1834).  See  Edwards 
on  BilLs,  65;  Kyd  on  Bilk,  29;  Gregory  v.  Lee,  64  Conn.  407,  30  Atl.  53;  Hyman  v. 
Kain,  3JonesL.  (N.C.)  111. 

78.  See  chapter  XXI,  on  Transfer  by  Indorsement,  §  675. 

21 


322  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  226 

been  necessaries,  and  upon  showing  their  value."^  The  distinction 
taken  in  some  cases,^  that  the  payee  may  sue  the  infant  as  maker, 
but  that  an  indorsee  cannot  do  so,  seems  extremely  technical  and 
unreasonable.  If  not  absolutely  void  as  to  the  payee,  we  cannot  per- 
ceive why  it  should  be  so  held  as  to  an  indorsee,  who,  while  he  could 
not  stand  upon  a  better  footing  than  the  indorser  as  against  the  infant, 
certainly  should  not  be  placed  upon  a  worse;  for  the  payee  must 
generally  have  a  better  opportunity  to  know  the  fact  of  infancy  than 
he.  Nor  can  we  see  that  holding  the  original  consideration  to  be 
open  to  proof,  upon  infancy  being  shou-n,  would  damage  the  character 
of  a  negotiable  note  more  thtm  declaring  it  utterly  void. 

Justice  seems  to  require  that  the  mere  negotiable  form  of  the 
paper  should  not  destroy  all  validity;  and  although  it  could  not 
be  said  to  be  negotiable  in  the  full  sense  of  that  term — protection 
to  the  infant — which  is  the  sole  object  of  the  law — requires  no  more 
than  that  his  infancy  should  shield  him  from  all  liability  beyond  the 
actual  value  of  the  necessaries  furnished;  and  justice  to  the  holder 
demands  that  at  least  that  should  be  given  him.**^  The  Scotch  law  is 
entirely  in  harmony  with  these  views.*^ 

79.  This  doctrine  is  intimated  in  Du  Bois  v.  Wheddon,  4  McCord,  221,  by 
Chancellor  Nott,  who  saiti:  "I  see  no  reason  why  he  (an  infant)  may  not  be 
bound  by  a  bond  or  a  bill  of  exchange.  It  is  not  true  that  no  inquiry  can  be  made 
into  the  consideration.  The  statutes  against  usury  and  gaming  are  every  day  set 
off  as  dcfenises  to  actions  on  bills  of  exchange  and  negotiable  notes,  ev(>n  in 
the  hands  of  innocent  indorsees."  In  Bradley  v.  Pratt,  23  Vt.  378,  Redfield,  J., 
favors  this  view,  but  says  it  could  not  probably  be  recognized  "without  too 
great  an  infringement  of  the  rules  of  law  in  regard  to  negotiable  paper  while 
current." 

80.  Earlc  v.  Reed,  10  Mete.  (Mass.)  387. 

81.  In  a  note  to  Byles  on  Bills  [♦59],  148,  note  1,  the  learned  American  editor, 
Judge  Sharswood,  says:  "A  note  may  be  valid  as  such,  though  not  negotiable;  in 
other  words,  though  it  may  be  so  circumstanced  as  to  let  in  all  inquiries  as  to 
consideration  in  the  hands  even  of  a  bona  fide  holder.  So  here,  on  proof  that  the 
maker  is  an  infant,  the  negotiability  of  the  note  is  at  an  end,  but  it  doe.s  not  cease 
to  be  a  note.  It  may  be  sued  on  by  the  holder  in  his  own  name.  He  stands  in  the 
shoes  of  the  original  payee,  and  can  recover  whatever  he  would  have  been  entitled 
to  recover.  If  the  note  is  voidable,  then  without  ratification  it  cannot  be  sued  on 
at  all.  The  holder,  at  most,  must  be  subrogated  to  the  rights  of  the  original 
payee,  in  an  action  against  the  infant  in  the  name  of  the  payee,  on  a  declaration 
founded  on  the  original  consideration.  It  is  evident  that  the  Kentucky  case 
(Beeler  v.  Young,  1  Bibb,  520)  can  only  be  supported  on  this  footing;  and,  con- 
trary to  its  own  syllabus,  it  really  aflBrms  that  the  note  is  valid  as  a  note,  though 
it  is  not  a  negotiable  note." 

82.  Thompson  on  Bills  (Wilson's  ed.). 


§§  227,  228  INFANTS  323 

§  227.  Infant  as  payee  and  indorser. — An  infant  may  undoubt- 
edly be  the  payee  of  a  bill  or  note,  and  may  sue  upon  and  enforce 
it,  since  it  cannot  be  but  for  his  benefit  if  the  consideration  thereof 
does  not  move  from  himself,  but  from  some  third  person,  or  if  it 
be  for  a  debt  justly  due  to  him.*^  But  whether  or  not  an  infant  can 
personally  receive  payment  is  a  different  question.  As  a  general 
rule,  payment  should  be  made  to  his  guardian,  and  if  it  be  made 
to  the  infant  personally,  and  be  thereby  dissipated  and  lost,  the 
payer  would  not  be  discharged.^''  An  infant  may  also  indorse  a  bill 
or  note  made  payable  to  him  or  order,  so  far  at  least  as  to  enable 
the  indorsee  to  recover  against  the  drawer,  acceptor,  or  maker,  who, 
by  undertaking  to  pay  to  him  or  to  his  order,  are  estopped  to  deny 
his  capacity  to  order  payment  to  be  made  to  the  indorsee.^^  And  to 
this  extent  the  infant's  indorsement  would  be  valid,  even  if  made  by 
his  authorized  agent  or  attorney.^  "It  would  be  absurd,"  it  has  been 
said  by  Parker,  C.  J.,  "to  allow  one  who  has  made  a  promise  to  pay 
to  one  who  is  an  infant,  or  his  order,  to  refuse  to  pay  the  money  to 
one  to  whom  the  infant  had  ordered  it  to  be  paid,  in  direct  violation 
of  his  promise."  ^'  And  in  respect  to  the  drawer  of  a  bill  payable  to 
an  infant  or  order.  Lord  Mansfield  said:  "The  drawer  says,  'let  any- 
body trust  the  payee  on  my  credit.'"  ^ 

§  228.  Rights  and  liabilities  of  antecedent  parties. — The  infant 
cannot,  of  course,  be  bound  by  his  intlorsement  to  pay  the  bill  or 
note,  and  Story  says:  "The  infant  may  indeed  avoid  it,  and  inter- 
cept the  payment  to  the  indorsee,  or  by  giving  notice  to  the  ante- 
cedent parties  of  his  avoidance,  furnish  to  them  a  valid  defense 

83.  Warwick  v.  Bruce,  2  Maule  &  S.  205;  HoUaday  v.  Atkinson,  5  B.  &  C. 
5U1;  Teed  v.  Elworth,  14  Eaat,  210;  Story  on  Notes,  §  79;  Story  on  Bills,  §  85; 
Byles  on  Bills  (Sharswood's  ed.)  [*60],  150;  Chitty  on  Bills  [*20],  28;  Ca.stor  v. 
Peterson,  2  Wash.  204,  26  Pac.  223,  26  Am.  St,  Rep.  854,  citing  text.  See  ante, 
§93. 

84.  Phillips  V.  Paget,  2  .Ark.  80. 

85.  Xightingale  v.  Withington,  15  Mass.  272;  Fraaier  v.  Massey,  14  Ind.  352; 
Hardy  v.  Waters,  38  Me.  450;  Grey  v.  Coopers,  3  Doug.  65  (1782);  Taylor  v. 
Croker,  4  Esp.  187  (1803);  Jones  v.  Darch,  4  Price,  300  (1817);  Drayton  v.  Dale, 
2  B.  &  C.  293,  2  Dowl.  &  R.  534  (1823);  Chitty  on  Bills  1*20],  26-29;  Story  on 
Notes,  §  80.  Story  on  Bills,  §  85;  Thompson  on  Bills,  134,  135;  Byles  (Sharswood's 
ed.)  [*60],  149;  Edwards,  246;  Castor  v.  Peterson,  2  Wash.  204,  26  Pac.  223,  26 
Am.  St.  Rep.  854,  citing  text. 

86.  Hardy  v.  Waters,  38  Me.  450. 

87.  Nightingale  v.  Withington,  15  Mass.  272. 

88.  Grey  v.  Coop>ers,  3  Doug.  65. 


324   PERSONS   PARTIALLY   OR   WHOLLY    DISQUALIFIED    §§  229,  230 

against  the  chiim  of  the  indorsee.  But  until  he  does  so  avoid  it, 
the  indorsement  is  to  be  deemed,  in  respect  to  such  antecedent  par- 
ties, as  a  good  and  valid  transfer."  ^  But  whatever  might  be  the 
infant's  rifj;ht  to  rescind  his  contract  as  against  those  deriving  title 
through  him,  it  is  clear  that  when  they  have  parted  with  value  for 
the  instrument,  prior  parties  who,  by  making  it  payable  to  the  infant, 
have  warranted  his  capacity  to  indorse  it,  cannot  escape  responsibil- 
ity for  such  warranty.  And  they  may  consequently  be  compelled 
to  pay  the  bill  or  note  twice.*  The  case  would  be  different  in  respect 
to  an  indorsement  by  an  infant  himself  an  indorsee  and  not  the 
payee.^^ 

§  229.  Infant's  indorsement  voidable  only. — An  infant's  indorse- 
ment is  voidaljle,  not  absolutely  void.'-'-  And  it  has  been  thought 
that  where  he  receives  a  full  consideration  for  the  transfer  of  property, 
such  as  a  negotiable  bill  or  note,  and  makes  a  manual  delivery  of  it, 
his  right  to  rescind  or  avoid  the  contract  is  suspended  until  he  becomes 
of  age.'-*^  And  then  he  is  not  allowed  to  disaffirm  the  contract  unless 
he  returns  the  consideration  paid  to  him.*"*  We  should  say  that  he 
might  disaffirm  the  contract  and  return  the  considoration  at  any 
time,  provided  it  was  not  unroa.sonably  delayed  after  he  became  of 
age,^^  unless  in  case  of  emancipation,  or  engagement  in  independent 
business  to  on  extent  which  would  afford  the  party  dealing  with  him 
good  reason  to  l)elieve  him  legally  capable  of  contracting.^^ 

§  230.  Ratification  by  adult  of  bills  and  notes  executed  when  an 

89.  Story  on  Notes,  §  SO. 

90.  Smith  v.  iMarsack,  6  C.  B.  488,  18  L.  J.  C.  P.  65  (1848).  See  post,  §  242, 
and  ante,  §  90;  Taylor  v.  Croker,  4  Esp.  187. 

91.  See  Story  on  Bills  (Bennett's  ed.),  §  85,  p.  98,  note  2. 

92.  Goodsell  v.  Myers,  3  Wend.  479;  Edwards  on  Bills,  245.  Contra,  see  10 
Johns.  33. 

93.  Roof  V.  Stafford,  7  Cow.  179,  9  Cow.  626.  On  the  last  hearing  of  this 
case  it  was  held  that  the  infant  might  avoid  a  sale  of  chattels  while  an  infant,  but 
not  a  sale  of  land. 

94.  Medbury  v.  Watrous,  7  Hill,  110.  The  same  general  rule  as  to  the  necessity 
of  restoring  the  consideration  and  placing  the  opposite  party  in  statu  quo  applies 
to  the  disability  of  insanity,  if  the  party  so  dealing  with  such  insane  person  did 
not  know  of  the  insanity  and  acted  in  a  bona  fide  way.  See  Voria  v.  Harshbarger, 
22  Ind.  App.  555. 

95.  See  Bool  v.  Mix,  17  Wend.  119;  2  Kent  Com.  [*237],  notes;  Schouler  on 
Domestic  Relations,  546,  as  to  personal  property. 

96.  Seeley  v.  Seeley-Howe-Le  Van  Co.,  128  Iowa,  294,  103  N.  W.  961. 


§  231  INFANTS  325 

infant. — The  bill  of  exchange  or  promissory  note  of  an  infant  is 
not  absolutely  void,  but  voidable  only  at  his  election.^^  And  if,  after 
reaching  full  age,  the  then  adult  ratify  and  confirm  his  bill  or  note 
executed  while  he  was  an  infant,  whether  it  were  framed  so  as  to  be 
negotiable  or  not,  he  will  be  bound  to  pay  the  instrument  according 
to  its  terms.  For  by  ratification  the  adult  validates  the  instrument 
in  all  respects,  and  it  becomes  the  same  as  if  it  had  been  executed  by 
an  adult.^^  The  effect  of  the  ratification,  as  stated  ])y  Shaw,  C.  J., 
is  "to  ratify  and  confirm  the  contract,  and  give  it  the  same  legal 
effect  as  if  the  promisor  had  been  of  legal  capacity  to  make  the  note 
when  it  was  made."  ^  And  consequently  the  bill  or  note  may  be 
sued  upon,  without  any  allegation  of  ratification — that  being  neces- 
sary to  appear  only  in  rebuttal  of  the  plea  of  infancy,  when  pleaded.^ 
It  was  held  in  England  at  on(»  time,  and  also  in  the  United  States, 
that  if  an  action  be  brought  on  a  contract  made  by  an  infant,  a  ratifi- 
cation proved  to  have  been  made  after  action  brought  would  not 
suffice;  ■^  but  this  view  has  been  sharply  criticised,  and  is  not  tenable.^ 
The  ratification  inures  to  the  benefit  of  every  subsequent  holder."* 

§  231.  What  amounts  to  ratification. — Unless  a  written  ratifica- 


97.  Cole  V.  Pennell,  2  Rand.  174;  Warasley  v.  Lindenberger,  2  Rand.  479; 
Williams  v.  Mooro,  11  M.  &  \V.  2G6,  Parke,  B.,  saying:  "The  promiso  of  an 
infant  is  not  void  in  any  ca-sc,  unless  the  infant  chooses  to  j)lead  his  infancy." 
liyles  (^Sharswood's  ed.)  [*5.Sl,  14.5;  Edwards  on  Hills,  tw,  ()(3. 

98.  Ibid.;  Hunt  v.  Ma.s.sey,  Fj  H.  &  Ad.  902.  In  this  oa.se  the  drawer  sued 
the  acceptor  of  a  bill.  It  appeared  that  the  acceptor  was  an  infant  when  he 
accepted,  but  had  ratified  the  bill  after  he  reached  full  age.  Taunton,  J.,  said: 
"Where  a  voidable  contract  is  made  by  a  party  under  age,  and  ratified  after 
he  has  attained  full  age,  is  it  not  usual  to  declare  on  the  original  promi.se?  The 
first  promi.se  here  was  voidable  only.  As  soon  a.s  it  was  ratified,  it  became  binding 
ab  initio."  West  v.  Penny,  IG  Ala.  ISO;  Edgerly  v.  Shaw,  5  Fost.  .514;  Lawson 
V.  Lovejoy,  8  Greenl.  40.5;  Reed  v.  Batchelder,  1  Mete.  (Mass.)  .5.59;  Che.shire  v. 
Barrett,  4  McCord,  241;  Little  v.  Duncan,  9  Rich.  55;  Good.sell  v.  Myers,  .3  Wend. 
479;  King  v.  Jamison,  66  Mo.  498.  Within  the  meaning  of  section  3423,  Rev. 
St.  1899,  to  ratify  the  nonenforceable  contract  of  an  infant  by  a  payment  after 
he  becomes  of  age,  the  payment  must  be  a  voluntary  one,  made  on  a  debt  which 
the  payor  at  th(?  time  recognizes  and  acknowlcflges  as  a  subsisting  debt  against 
him.    Snyder  v.  Gerieke,  101  Mo.  App.  G47,  74  S.  W.  377. 

99.  Reed  v.  Batchelder,  1  Mete.  (Mass.)  559. 

1.  See  preceding  notes,  this  section. 

2.  Thornton  v.  lUingAvorth,  2  B.  &  C.  824;  Byles  (Sharswood's  ed.). 

3.  1  Parsons  on  Notes  and  Bills,  72;  Byles  (Sharswood's  ed.)  [♦58],  145, 
note  1. 

4.  Reed  v.  Batchelder,  1  Mete.  (Mass.)  559. 


326  PERSONS   PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  232 

tion  be  required  by  statute,  a  verbal  ratification  will  be  efTectual.^ 
As  to  what  words  will  amount  to  a  ratification,  a  mere  recognition 
that  the  debt  existed,  or  contract  was  made,  is  not  sufficient.®  No 
peculiar  form  of  words  is  requisite,  but  there  must  be  a  direct  and 
explicit  recognition  of  the  contract,  and  words  expressing  or  neces- 
sarily implying  a  promise  to  fulfill  it.  Thus,  if  the  adult  says,  "I 
have  not  the  money  now,  but  when  I  return  from  my  voyage  I  will 
settle  with  you,"  or,  "I  owe  you,  and  will  pay  you  when  I  return," 
it  is  sufficient.^  So  if  he  promises  to  "  remit  in  a  short  time,"  •*  or  says, 
"all  that  is  justly  your  due  shall  be  paid,"  ^  or  declares  his  intention 
to  pay  the  note,  and  authorizes  an  agent  to  pay  it,  though  nothing 
is  done.'°  And  the  words,  "  I  will  pay  the  note  as  soon  as  I  can  make 
it,  but  not  this  year,  I  understand  the  holder  is  about  to  sue  it,  but 
she  had  better  not,"  have  been  held  enough.'' 

§  232.  Effect  of  admissions  by  adult.— An  admission  by  the  adult, 
and  the  declaration  that  the  party  would  get  his  pay,  but  accom- 
panied by  a  refusal  to  give  a  note,  would  not  amount  to  a  ratifica- 
tion.'^  Nor  would  an  admission,  accompanied  by  a  promise  to  en- 
deavor "to  get  my  brother  bound  with  me."  '^  Nor  would  the 
language,  "I  consider  your  claim  worthy  my  attention,  but  not  my 
first  attention,"  '■*  "I  will  have  to  pay,  I  suppose,  but  I  shall  do  so  at 
my  convenience."  '^  Nor  would  a  direction  in  the  adult's  will,  that 
his  just  debts  be  paid,  apply  to  debts  contracted  in  infancy.'® 

5.  Martin  v.  Mayo,  10  Mans.  137;  West  v.  Penny,  16  Ala.  186;  Reed  v.  Bo- 
shears,  4  Sneed,  118. 

6.  Thrupp  V.  Fielder,  2  Esp.  628;  Robbins  v.  Eaton,  10  N.  H.  561;  Benhara 
V.  Bishop,  9  Conn.  330;  Whitney  v.  Dutch,  14  Mass.  460;  Hale  v.  Gerrish,  8 
N.  H.  374;  Chitty  on  Bills  [*20],  27;  Bresee  v.  Stanly,  119  N.  C.  278,  25  S.  E. 
870.  The  defendant  in  this  case  testified  that  "I  said  it  was  a  just  debt  and 
I  would  pay  it,  if  I  ever  got  so  that  I  could  without  inconvenience  to  myself. 
Mr.  Perry,  plaintiflF's  agent,  then  asked  me  if  I  could  not  fi.\  some  time  at  which 
I  would  pay  the  note.  I  repUed  that  I  would  not  promise  to  pay  the  note  in  one 
year,  nor  in  ten  years,  nor  at  any  time." 

7.  Whitney  v.  Dutch,  14  Mass.  460. 

8.  Hartley  v.  Wharton,  11  Ad.  &  El.  934. 

9.  Wright  V.  Steele,  2  N.  H.  51. 

10.  Orvis  V.  Kimball,  3  N.  H.  314. 

11.  Bobo  V.  Hansel,  2  Bailey,  114,  but  query;  1  Parsons  on  Notes  and  Bills,  74. 

12.  Hale  V.  Gerrish,  8  N.  H.  374. 

13.  Ford  V.  Phillips,  1  Pick.  202. 

14.  Wilcox  V.  Roath,  12  Conn.  550. 

15    Dunlap  v.  Hale,  2  Jones  (N.  C),  381. 
16.  Smith  V.  Mayo,  9  Mass.  62. 


§§  233,  234  INFANTS  327 

§  233.  Promise  must  be  direct,  and  not  to  third  party. — The 

promise  of  the  adult  must  be  made  to  the  party  with  whom  he  con- 
tracted, or  his  authorized  agent,  in  order  to  amount  to  ratification; 
and  if  made  to  a  third  party,  it  will  be  insufficient.^^  "  It  results  from 
the  fact  of  the  original  contract  not  being  binding  on  the  infant,  that 
the  new  promise  must  possess  all  the  ingredients  of  a  complete  agree- 
ment, to  enable  the  plaintiff  to  recover  against  the  infant.  Hence, 
as  no  agreement  is  complete  until  the  minds  of  the  contracting  parties 
meet,  the  new  promise,  to  be  binding  on  the  infant,  must  be  made 
to  the  creditor  in  person,  or  to  his  agent.  The  new  promise  creates  a 
new  contract;  and  the  old  debt  supplies  the  consideration."  ^^  And  if 
it  be  coupled  with  a  condition,  as  to  pay  "when  able,"  the  plaintiff 
must  show  the  happening  of  the  contingency,  but  need  not  show 
that  payment  may  be  made  without  inconvenience.*^  If  the  promise 
be  shown  to  have  depended  on  any  other  condition,  its  fulfilment 
must  be  proven.^ 

§  234.  Effect  of  part  payment. — Mere  part  payment  does  not 
amount  to  ratification  by  the  adult.-'  Nor  does  a  submission  to 
arbitration,  unless  it  proceed  to  a  decision  that  the  adult  must  pay.^^ 
But  expressions  of  intention  to  abide  by  a  former  award,  or  accepting 
its  benefits,  would  suffice.-^  And  the  infant's  conduct  may  be  such  as 
to  amount  to  ratification.  Mere  silence  and  failure  to  disaffirm  will 
not  in  general  be  sufficient  alone;  ^*  but  connected  with  circumstances 
may  become  so.  Thus,  if  the  adult  keep  property  purchased  in  in- 
fancy, after  being  requested  to  return  it  if  ho  did  not  intend  to  keep 
it,  it  was  held  to  be  a  ratification.'^^  And  where  an  infant  bought  a 
yoke  of  oxen,  for  which  he  gave  his  note,  and  after  his  majority  sold 

17.  Goodsell  v.  Myers,  3  Wend.  479;  Bigelow  v.  Grannis,  2  Hill,  150;  Hoit  v. 
Undrrhill,  9  N.  H.  439;  Roed  v.  Boshears,  4  Sneed,  118. 

18.  Hodges  V.  Hunt,  22  Barb.  150,  Paige,  J. 

19.  Thompson  v.  Lay,  4  Pick.  48;  Cole  v.  Saxby,  3  Esp.  159;  Everson  v.  Car- 
penter, 17  Wend.  419. 

20.  Ibid.;  Procto  v.  Sears,  4  Allen,  95;  Chandler  v.  Glover,  32  Pa.  St. 
509. 

21.  Smith  V.  Mayo,  9  Maas.  62;  Robbina  v.  Eaton,  10  N.  H.  561;  Hinely  v. 
Margaritz,  3  Barr.  428. 

22.  Benham  v.  Bishop,  9  Conn.  330;  1  Parsons  on  Notes  and  Bills,  75,  76. 

23.  Bamaby  v.  Barnaby,  1  Pick.  221;  Jones  v.  Phoenix  Bank,  8  N.  Y.  228. 

24.  Green  v.  Green,  69  N.  Y.  553,  where  there  was  failure  to  disaflfirm  for  three 
years.    But  see  Davis  v.  Dudley,  70  Me.  236,  where  nine  years  elapsed. 

26.  .\ldrich  v.  Grimes,  10  N.  H.  194. 


328     PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED  §§  235,  230 

them  and  used  the  money,  the  Uke  decision  was  rendered.-^  And 
there  are  other  decisions  to  like  effect,  where  the  adult  has  retained 
land  purchased  in  infancy,"  or  personal  property,^  or  taken  a  deetl  to 
property.-^  If  the  adult  refuse  to  return  the  consideration  when 
notified  to  do  so,  and  still  has  it  in  his  power,  it  seems  dear  that  he 
should  be  bound;  but  mere  retention  of  the  consideration,  without 
such  notice  to  return,  would  not  alone  suffice,^  and  if  it  had  been 
disposed  of  before  the  infant  reached  his  majority,  the  failure  to  re- 
turn it  would  be  no  ratification.^' 

§  235.  Adult's  knowledge  of  invalidity  of  contract  not  necessary 
to  valid  ratification. — Ignorjuicc  of  the  huv  excuses  no  one,  ;in<l, 
therefore,  it  is  not  necessary  to  a  valid  ratification  of  a  contract 
made  by  an  infant,  that  the  adult  ratifyiuK  should  know  the  fact 
that  his  infancy  renderetl  his  contract  invalid,^-  and  it  matters  not 
that  he  supposed  he  was  already  bound. '^  A  different  view  has  been 
taken  in  some  cases,*'"'  but  the  doctrine  of  the  text  is  sustained  both 
by  decisions  of  courts  and  opinions  of  ilistinguished  juridical  writers.'^^ 
It  will,  at  least,  be  presumed  that  an  adult,  ratifying  a  contract  en- 
tered into  in  infancy  knew  the  fact  that  he  was  not  legally  bound.'^ 

§  236.  Written  ratifications. — In  England  and  some  of  the 
United  States,  ratification  must  be  in  writing.  In  1828,  Parliament 
enacted  the  statute  of  9  George  IV.,  c.  14,  commonly  called  Lord 
Tenterden's  act,  whereby  it  is  provided  that  "no  action  shall  be 
maintained  whereby  to  charge  any  person,  upon  any  promise  made 
after  full  age,  to  pay  any  debt  contracted  during  infancy,  or  upon 
any  ratification  after  full  age,  of  any  promise  or  simple  contract  made 
during  infancy,  unless  such  promise  or  ratification  shall  be  made  by 
some  writing  signed  by  the  party  to  be  charged  therewith."     And 

26.  Lawson  v.  Lovojoy,  8  Greenl.  405. 

27.  Armficld  v.  Tate,  7  Ired.  258. 

28  Cheshire  v.  Barrett,  4  McCord,  241;  Thomasson  v.  Boyd,  13  Ala.  419. 

29.  Montgomery  v.  Whitbeck,  23  Minn.  173. 

30.  Benham  v.  Bishop,  9  Conn.  330. 

31.  Robbins  v.  Eaton,  10  X.  H.  506. 

32.  Morse  v.  Whcclcr,  4  Allen,  570. 

33.  King  V.  Jamison,  66  Mo.  424. 

34.  Harraer  v.  Killing,  5  Esp.  102;  Reed  v.  Boshears,  4  Sneed,  118;  Hinely 
V.  Margaritz,  3  Barr,  428;  Curtin  v.  Patten,  11  Serg.  &  R.  305. 

36.  Schouler  on  Domestic  Relations,  583. 
36.  Taft  V.  Sergeant,  18  Barb.  322. 


§§  237,  238  INFANTS  329 

similar  statutes  have  been  enacted  in  most  of  the  United  States.^'^  In 
England,  the  Court  of  Exchequer  held  that  the  statute  made  a  dis- 
tinction between  new  promises  and  ratification,  and  that  "ratifica- 
tion," as  therein  used,  would  go  so  far  as  to  comprehend  such  a  ratifi- 
cation as  would  make  a  person  liable  as  principal  for  an  act  done  by 
another  in  his  name.^^  But  this  view  has  been  criticised. ^^  And  in 
view  of  Martin,  B.,  m  a  later  case,  in  the  same  court  (in  which,  how- 
ever, the  judges  were  divided  in  opinion),  defining  ratification  to  be 
a  "consent  by  a  person,  after  he  becomes  of  full  age,  to  be  liable  for 
a  debt  contracted  during  infancy,  expressed  to  the  effect  that  he  is 
willing  to  affirm  it  and  treat  it  as  valid,"  "^  seems  to  be  a  clear  and 
correct  conception  of  the  subject. 

§  237.  If  an  infant,  after  he  becomes  of  age,  retire  from  a  firm, 
of  which  he  has  been  a  member,  he  must  give  notice  of  the  fact; 
otherwise  he  will  be  bound  by  its  contracts  made  after  his  majority.'*^ 
But  the  mere  fact  that  he  continues  in  a  firm,  after  his  majority,  is 
no  ratification  of  contracts  made  by  the  firm  while  he  was  an  infant.''- 

§  238.  Note  of  infant  and  adult. — If  an  infant,  together  with 
an  adult,  make  a  joint  promissory  note,  it  has  been  held,  in  England, 
that  the  payee  may  bring  his  action  upon  it  against  the  adult,  without 
making  the  infant  a  party."*^  But  in  some  American  cases  a  different 
view  is  taken,  the  infant's  undertaking  being  voidaiile,  not  absolutely 
void;  *'*  and  this  view  is  specially  appHcable  when  the  note  is  not 
negotiable.  ■'^ 

37.  Code  of  Virginia  (ed.  1873),  chap.  140,  p.  985.  See  Brown  on  Statute  of 
Frauds,  and  Throop  on  Verbal  ARreements. 

38.  1  Parsons  on  Notes  and  Bills,  77;  Schouler  on  Domestic  Relations,  576. 

39.  Harris  v.  Wall,  1  Exch.  122. 

40.  Mawson  v.  Blano,  10  Exch.  206. 

41.  Goode  V.  Harrison,  5  B.  &  Aid.  147. 

42.  Crabtree  v.  May,  1  B.  Mon.  289. 

43.  Burgess  v.  Merrill,  4  Taunt.  468;  Chandler  v.  Parkes,  3  Esp.  76;  JafTray 
V.  Frebain,  5  Esp.  47;  Edwards  on  Bills,  67,  note;  Byles  [*591,  149.  In  Taylor 
V.  Dansby,  42  Mich.  84,  held  that  adult  comaker  with  infant  might  be  treated 
as  sole  maker,  suit  against  the  infant  having  been  discontinued. 

44.  Slocum  V.  Hooker,  12  Barb.  563,  13  Barb.  536. 

46.  Cole  V.  Pennell,  2  Rand.  174;  Wamsley  v.  Lindenberger,  2  Rand.  478, 
Green,  J.,  saying:  "In  England,  a  note  of  hand  given  by  an  infant,  even  for  neces- 
saries, is  perhaps  void,  because,  having  the  effect  of  a  bill  of  exchange  by  statute, 
he  might  be  precluded  from  contesting  the  consideration  against  a  third  person. 
But  no  such  objection  exists  as  to  the  note  of  hand  given  in  this  case." 


330     PERSONS   PARTIALLY    OR   WHOLLY    DISQUALIFIED  §§  239,  240 

SECTION  IV 

MARRIED    WOMEN 

§  239.  By  the  common  law  of  England,  and  of  many  of  the  States 
of  tlie  United  States,  in  wliich  it  has  been  adopted  imd  preserved,  the 
wife  merges  her  personality  by  marriage  in  the  person  of  her  husband. 
They  two  become  in  law  one  person,  in  so  far  as  affects  the  business 
concerns  of  life.  That  person  is  the  husbiind,  imd  the  wife  can  make 
no  contract  binding  upon  herself,  or  upon  her  husband,  without  his 
consent.''^  This  rule  of  the  common  law,  which  grew  out  of  the  feudal 
system,  has  been  modified  or  abolished  Ijy  statute  in  some  of  the 
States,  and  the  tendency  of  legislation  is  to  enlarge  and  enfranchise 
the  capacity  of  married  women,  especially  in  those  States  which  are 
the  seats  of  great  commercial  centers.  Experiments  upon  social 
institutions  are  the  order  of  the  day,  but  innovations  of  the  kind  are, 
to  say  the  least,  of  very  doubtful  policy. 

§  240.  Incapacity  of  married  woman  to  contract  at  common  law. 

— Wherever  the  common  law  i)revails  a  married  womtm  cannot 
bind  herself  as  the  drawer,  acceptor,  maker,  or  indorser  of  a  nego- 
tiable instrument,  and  such  instruments  signed  by  her  (unless  as 
agent  for  another)  are  absolutely  void."*^  And  even  a  promise  made 
by  her  after  her  husband's  death  to  pay  a  bill  or  note  which  she 
executed  during  his  lifetime  will  not  bind  her  unless  upon  a  new  and 
good  consideration.''^ 

46.  1  Bl.  Com.  442;  2  Kent  Com.  129. 

47.  Mason  v.  Morgan,  2  Ad.  &  El.  30;  Howe  v.  Wildes,  34  Me.  566;  Chouteau 
V.  Merry,  3  Mo.  254;  Van  Steenburgh  v.  Hoffman,  15  Barb.  28;  Chitty  on  Bills 
(13th  Am.  ed.)  [♦20],  28;  Waterbury  v.  Andrews,  67  Mich.  282;  Kohn  v.  CoUison, 
1  Marv.  109,  27  Atl.  834;  Petingale  v.  Barker,  21  D.  C.  156;  \A'estervelt,  Re- 
ceiver, V.  Baker,  56  Nebr.  63,  76  N.  W.  440;  Smith  v.  Bond,  56  Xebr.  529,  76 
N.  W.  1062;  Harper  v.  O'Neil,  194  Pa.  St.  141,  44  Atl.  1065.  A  married  woman's 
notes  under  the  Constitution  and  laws  of  Florida,  are  void,  and  afford  no  basis 
for  a  common-law  suit.  (Virginia-CaroUna  Chemical  Co.  v.  Fisher,  58  P'la.  377, 
50  Sou.  504),  unless  the  married  woman  shall  have  been  made  a  free  dealer. 
First  Nat.  Bank  v.  Hvischkwitz,  46  Fla.  588,  35  So.  22. 

48.  Lloyd  v.  Lee,  1  Stra.  94;  Chitty,  Jr.,  242  (1717);  Meyer  v.  Haworth,  8 
Ad.  &  El.  467;  Littlefield  v.  Spec,  2  B.  &  Ad.  811;  Eastwood  v.  Kenyon,  11  Ad. 
&  El.  438;  Vance  v.  Wells,  6  Ala.  737,  8  Ala.  399;  Watkins  v.  Halstead,  2  Sandf. 
311;  Schouler  on  Domestic  Relations,  74;  Byles  on  Bills  (Sharswood's  ed.)  [*63], 
153.    A  void  note  of  a  married  woman  cannot  be  ratified,  and  a  renewal  of  such 


§  241  MARRIED   WOMEN  331 

Under  Negotiable  Instrument  statute. — The  section  of  the  statute 
declarmg  that  every  negotiable  instrument  is  deemed  prima  facie  to 
have  been  issued  for  a  valuable  consideration,  and  every  person 
whose  signature  appears  thereon  to  have  become  a  party  thereto  for 
value,  gives  no  validity  to  the  contract  of  a  married  woman  made  by 
way  of  surety  or  promise  to  pay  the  debt  of  another  person.^^ 

§  241.  Contracts  between  husband  and  wife. — The  wife's  iden- 
tity is  so  completely  merged  in  the  husband's  that  she  can  no  more 
contract  with  him  than  with  a  stranger.^  Therefore  the  drawing  or 
indorsement  of  a  bill  or  note  by  a  husband  to  his  wife  is  void,  and  she 
cannot  sue  upon  it  either  in  his  lifetime,^^  or  against  his  executor  after 
his  decease. ^^  But  the  husband  may  indorse  it  to  her  in  order  that 
she  may  be  the  mere  conduit,  and  indorse  it  over  to  another  party, 
the  whole  transaction  being  regarded  as  the  husband's.^^  So  the  bill 
or  note  of  a  married  woman  payable  to  her  husband  is  void,  but  if  he 

a  note  after  she  has  become  dLscovert,  is  of  no  binding  force.    Gilbert  v.  Brown, 
123  Ky.  703,  97  S.  W.  40,  7  L.  R,  A.  (N.  S.)  10o3.    And  see  post  p.  249. 

49.  Appendix,  sec.  24.  People's  Nat.  Bank  v.  Schepflin,  73  N.  J.  L.  29,  62 
Atl.  333. 

60.  National  Bank  v.  Brewster,  49  N.  J.  L.  231. 

61.  Gay  v.  Kingslcy,  II  Allen,  345;  Ellsworth  v.  Hopkins,  58  Vt.  705;  Sey- 
fert  V.  Edison,  45  N.  J.  L.  393.  Held  otherwise  in  Nebraska  under  statute. 
May  V.  May,  9  Nebr.  16;  Leahy  v.  Leahy,  97  Ky.  59.  Contra,  Dimond  v. 
Sanderson,  103  Cal.  97,  37  Pac.  189.  The  doctrine  of  the  text  was  applied  in 
Caldwell  V.  Nash,  100  Mass.  507,  77  N.  E.  515,  in  a  case  in  which  the  notes  were 
made  payable  by  a  hu.sband  to  his  son  and  by  the  son  indorse<l  to  the  wife.  But 
where  a  note  was  given  by  a  man  to  a  woman  for  money  loaned,  the  subsequent 
marriage  of  the  maker  and  payee  did  not  extinguish  it  or  render  it  void.  Mc- 
Keown  v.  Lacey,  200  Mass.  437,  86  N.  E.  799,  21  L.  R.  A.  (N.  S.)  683.  It  waa 
also  so  held  in  Spencer  v.  Stockwell,  76  Vt.  176,  56  Atl.  661,  under  a  statute  which 
has  abrogated  the  doctrine  of  the  common  law  by  which  all  the  personal  property 
of  the  wife  became  the  husband's  upon  marriage.  Where  a  husband  became  the 
owner  of  a  note  without  being  a  partj-  to  it,  and  delivered  the  note  to  his  wife  aa 
security  for  a  debt  owing  by  him  to  her  for  more  than  the  amount  of  the  note, 
and  the  debt  has  not  been  paid,  the  wife  is  the  lawful  holder  of  the  note  and  may 
recover  thereon.    Buck  v.  Troy  Aqueduct  Co.,  76  Vt.  75,  56  Atl.  285. 

52.  Jackson  v.  Parks,  10  Cush.  550;  Sweat  v.  Hall,  8  Vt.  187.  But  held  in 
Tennessee  that  in  equity  the  wife,  then  widowed,  might  enforce  a  note  of  her 
late  husband  when  given  during  coverture  for  her  moneys  collected  by  him. 
McCampbell  v.  McCampbell,  2  I^a,  661.  And  also  held  in  the  same  State,  that 
a  note  from  husband  to  wife,  executed  upon  a  valid  consideration,  will  be  enforced 
in  equity  against  the  husband,  or  his  estate,  as  a  declaration  of  trust  in  favor  of 
the  wife.    Templeton  v.  Brown,  86  Tenn.  51. 

63.  Slawson  v.  Loring,  5  Allen,  340. 


332  PERSONS   PARTIALLY    OR   WHOLLY   DISQUALIFIED        §  241 

indorse  it  he  is  liable  upon  his  indorsement,^'*  as  is,  also,  the  wife  upon 
her  indorsement  of  the  husband's  note,  upon  the  ground  that  an 
indorser  warrants  the  capacity  of  all  prior  parties  to  contract,  and 
cannot  deny  the  same  for  the  purpose  of  escaping  his  or  her  liability." 
And  if  a  note  be  given  by  a  husband  to  his  wife  for  money  advanced 
by  her  out  of  her  separate  estate,  it  constitutes  a  declaration  of  trust 
in  favor  of  the  wife.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statutory  pro- 
visions as  to  the  effect  of  negotiating  or  indorsing  a  note,  it  hits  been 
held  that  a  wife,  who  indorsed  a  note  made  by  a  partnership  of  which 
her  husband  was  the  manager  and  which  he  had  indorsed,  became  an 
accommodation  indorser  of  the  note,  and,  by  the  above  statute, 
warranted  to  the  indorsee,  as  a  holder  in  due  course,  that  the  instru- 
ment was  genuine." 


54.  Haly  v.  Lane,  2  Atk.  181;  Kenworthy  v.  Sawyer,  125  Mass.  29;  Wyman 
V.  Whitehouse,  80  Me.  257;  Herron  v.  Frost,  9  Mont.  308,  23  Pac.  4G9;  Kohn 
V.  Collison,  1  Marv.  109,  27  All.  831.  A  married  woman  is  not  liable  on  a  note 
given  by  her  in  consideration  of  a  previou.s  debt  due  to  the  payee  from  the  hu.sband 
of  the  maker.  Burnham-IIanna-MunKer  Dry  Goods  Co.  v.  Carter,  52  Tex.  Civ. 
Ai)p.  294,  1 13  S.  \y.  782.  The  fact  that  a  negotiable  note  of  the  wife  is  made  pay- 
able to  the  husband  does  not  of  it.self  import  invalidity,  becau.se  apparently  made 
without  the  approval  of  the  superior  court  of  the  wife's  domicile.  Where  such 
note  does  not  involve  a  sale  of  the  separate  estate  of  the  wife  to  the  husband,  it  is 
valid  without  such  approval.  Farmers'  &  Traders'  Bank  v.  Eubanks,  2  Ga.  App. 
839,  59  S.  E.  193.  A  married  woman  may  voluntarily,  upon  her  own  re- 
sponsibility, and  in  good  faith  borrow  money  for  the  pur|)ose  of  paying  a  debt 
of  her  husband  and  give  her  notes  therefor,  and  such  a  contract  will  be  binding 
ui)on  her  although  th(>  lender  may  know,  at  the  time  it  is  made,  that  she  is  bor- 
rowing it  for  this  purpose,  if  he  is  not  the  husband's  creditor  who  is  to  be  thus  paid, 
and  is  no  party  to  any  arrangement  or  scheme  between  the  hu.sband  and  wife  of 
which  the  borrowing  of  the  money  by  her  for  such  purpose  is  the  outcome.  Rood 
V.  Wright,  124  Ga.  849,  53  S.  E.  390. 

56.  National  Bank  of  the  Republic  v.  Delano,  185  Mass.  424,  70  N.  E.  444; 
Kenworthy  v.  Sawyer,  125  Mass.  29;  Binney  v.  Globe  Nat.  Bank  (Mass.),  6 
Law.  Rop.  Annot.  381;  Sherrod  v.  Di.xon,  120  N.  C.  60,  26  S.  E.  770.  Held,  that 
the  liability  of  a  married  woman,  who  signs  a  note  with  her  husband  and  mortgages 
her  land  to  secure  it,  is  not  personal,  but  is  limited  to  the  value  of  the  land  so 
mortgaged.    Witkowski  v.  Maxwell  &  Peal,  69  Miss.  56,  10  So.  453,  text  cited. 

56.  Murray  v.  Glasse,  23  L.  J.  Ch.  126. 

57.  Appendix,  sees.  65,  66.  Middleborough  Nat.  Bank  v.  Cole,  191  Mass. 
168,  77  N.  E.  781,  wherein  the  court  said  that  before  the  enactment  of  the  statute 
she  would  have  been  bound  in  the  same  way;  that  a  promissory  note  made  by  a 
husband  to  his  wife  is  void,  and  cannot  be  enforced  against  the  husband  by  any 
subsequent  holder  of  it,  but  if  the  wife  indorses  it  to  a  holder  in  due  course,  she 
is  bound  by  her  contract  of  indorsement,  and  may  be  compelled  to  pay  it. 


§  242  MARRIED   WOMEN  333 

§  242.  Married  woman  as  payee  and  indorser. — If  a  bill  or  note 
be  made  payable  to  a  single  woman,  and  she  afterwards  marries,  it 
becomes  the  property  of  her  husband;  and  if  made  to  her  after 
marriage,  it  is  the  property  of  her  husband.  For  two  reasons,  there- 
fore, a  married  woman,  who  is  the  payee  of  a  negotiable  instrument, 
cannot  transfer  a  perfect  legal  title  to  it,  or  bind  herself  by  indorsing 
it;  first,  because  she  has  no  capacity  to  contract;  and,  second,  because 
the  instrument  is  her  husband's.^  But  still,  although  the  husband 
might  recover  the  instrument  which  has  been  transferred  by  his  wife, 
in  an  action  of  trover  against  the  holder,  the  drawer,  and  acceptor  of 
a  bill  and  the  maker  of  a  note,  who  have  bound  themselves  to  pay  to 
the  payee  or  order,  are  estopped,  when  that  order  is  made,  to  deny 
its  sufficiency.  It  does  not  lie  in  their  mouths  to  declare  the  effect 
of  their  ovm  engagement  to  be  different  from  its  terms;  and  the 
holder,  under  the  indorsement  of  a  payee,  who  is  a  married  woman, 
may  recover  against  them,^*    And  if  there  be  an  indorser,  after  the 

58.  Cotes  V.  Davis,  1  Campb.  485  (1808);  Barlow  v.  Bishop,  3  Esp.  266,  1 
East,  432  (1801);  Connor  v.  Martin,  1  Stra.  .516;  Rawlinson  v.  Stone,  5  Wilson, 
5;  Evans  v.  Secrest,  3  Ind.  545;  Savage  v.  King,  17  Me.  301;  Shuttleworth  v. 
Noyes,  8  Mass.  229.  Under  constitutional  and  statutory  provisions,  a  married 
woman  can  make  a  valid  transfer  to  another  of  a  note  belonging  to  her  without 
the  written  consent  of  her  husband.  Vann  v.  Edwards,  135  N.  C.  661,  47  S.  E.  784, 
67  L.  R.  A.  461.  Where  a  husband  causes  a  note  or  deed  of  trust  to  be  executed 
in  her  favor,  it  becomes  her  separate  property,  and  cannot  be  reduced  to  possession 
by  the  husband,  or  the  title  thereto  passed  to  a  third  person  by  the  husband, 
except  by  her  written  consent,  as  provided  for  by  statute.  Case  v.  Espenschied, 
169  Mo.  215,  69  S.  W.  276,  92  Am.  St.  Rep.  633. 

59.  In  Smith  v.  Marsack,  6  C.  B.  486,  Wilde,  C.  J.,  said:  "In  support  of 
a  contrary  doctrine  the  cases  of  Connor  v.  Martin,  1  Stra.  516;  Barlow  v.  Bishop, 
1  East,  432,  and  Prince  v.  Brunatte,  1  Bing.  X.  C.  435,  1  Scott,  342,  were  cited, 
on  the  argument,  by  the  counsel  for  the  defendant.  In  Connor  v.  Martin  as 
reported  in  Strange,  the  plaintiff  declared  on  a  note  made  to  a  feme  covert,  and 
indorsed  by  her  to  him;  and,  on  argument,  judgment  was  given  for  the  defendant — 
the  right  being  in  point  of  law  in  the  husband,  and  the  wife  having  no  power  to 
dispose  of  it.  But  this  case  was  cited  by  Dennison,  J.,  in  Rawlinson  v.  Stone,  3 
Wile.  1,  5,  from  a  note  taken  by  himself  in  court;  and  it  appears  from  that  learned 
judge's  statement,  that  the  promissorj'  note  in  question  had  been  given  to  the 
wife  before  marriage.  Barlow  v.  Bishop  is  certainly  a  direct  authority  for  the 
position,  that  if  a  note  is  drawn  payable  to  a  woman  or  order,  and  her  indorsee 
sues  the  maker,  he  may  set  up  as  a  defense  that  she  was  a  married  woman,  though 
he  knew  her  to  be  such  at  the  time  he  made  the  note.  But  it  was  observed  by 
Lord  Abinger,  in  Pitt  v.  Chappelow,  8  M.  &  W.  616,  that  in  Barlow  v.  Bishop,  the 
plaintiff  must  be  taken  to  have  known  the  fact  of  the  husband's  property  in  the 
bill,  and,  therefore,  could  not  take  an  assignment  of  it  from  the  wife.  Indeed,  it 
appears  from  the  report  of  the  case  at  nisi  prius,  in  Espinasse,  3  Esp.  266,  that  the 


334  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  243 

married  woman,  he  cannot  dispute  her  capacity,  as  his  indorsement 
warrants  it.^  But  other  parties  to  the  instrument,  not  being  estopped 
by  their  relation  to  it,  may  show  that  one — not  the  payee — who  has 
indorsed  it,  is  a  married  woman.  These  views  clearly  apply  where 
the  paper  has  been  executed  to  the  woman  after  her  marriage;  but  if 
made  to  her  before,  disability  subsequently  created  might  be  pleaded 
by  any  party .^^ 

§  243.  Effect  of  wife's  living  separate  from  husband. — The 
mere  fact  that  the  wife  is  living  separate  and  apart  from  her  hus- 
band,^^  or  that  she  has  eloped  from  her  husband  and  is  living  in 


wife  had  given  a  previous  note  for  the  money  in  her  own  name,  and  that  the  note 
in  question  was  given  in  consequence  of  such  former  note  not  being  negotiable, 
whicli  appears  to  favor  I^)rd  Abinger's  supposition,  that  the  plaintiff  must  hav(» 
known  of  her  coverture  before  the  note  was  indorsed  to  him.  In  Prince  v.  Hrunatte, 
it  was  certainly  assumed  by  the  court,  as  well  as  by  the  counsel  on  both  sides, 
that  such  a  plea  as  the  present  would  be  a  good  answer  to  the  action;  and  the  same 
observation  arises  with  respect  to  the  case  of  Cotes  v.  Davies,  1  Campb.  485, 
and  that  of  Prestwick  v.  Marshall,  7  Hing.  565,  5  Moore  &  P.  513.  But  in  none  of 
these  cases  does  it  appear  that  the  point  now  under  consideration  was  ever  made, 
viz.,  that  the  ca.se  falls  witiiin  the  gem>ral  principle — which  is  stated  by  Hayley, 
J.,  in  his  judgment,  in  Drayton  v.  Dale,  2  H.  &  C.  293,  as  applicable  to  all  nego- 
tiable securities — that  a  person  shall  not  dispute  the  power  of  another  to  in- 
dorse an  instrument  when  he  asserts,  by  the  instrument,  that  the  other  has  such 
power.  And  we  can  discover  no  reason  why  this  principle  should  not  be  applicable; 
and  if  it  is,  it  appears  to  us  to  govern  the  present  cast>,  and  to  prove  that  the  plea  in 
question  is  bad.  It  need  scarcely  be  added  that,  in  so  deciding,  we  do  not  mean 
at  all  to  impugn  the  proposition  that,  if  a  bill  or  note  is  made  payable  to  the  order 
of  a  married  woman,  the  property  in  it  will  pass  by  the  indorsement  of  the  hus- 
band, or  he  may  sue  on  it,  either  joining  his  wife  as  a  party  to  the  action,  or  in 
his  own  name,  at  his  option.  And,  consequently,  it  cannot  be  denied  that  the 
defendant  may  possibly  be  compelled  to  pay  the  bill  in  question  twice.  But 
this  is  a  consequence  which  follows  from  his  own  act  of  accrediting  the  capacity 
of  a  woman  to  indorse,  by  accepting  a  bill  payable  to  her  order,  who  in  truth  was 
incapable."  Castor  v.  Peterson,  2  Wash.  204,  26  Pac.  223,  26  Am.  St.  Rep. 
854,  citing  text;  Shirk  v.  North,  138  Ind.  210,  37  N.  E.  590.  When  a  husband 
executed  to  his  wife  a  note  for  money  received  by  her  as  an  heir  at  law,  he  made 
the  note  her  separate  property,  and  thereby  deprived  himself  of  any  right  to,  or 
interest  in,  either  the  money  or  note,  and  at  the  same  time  conferred  upon  her  the 
power  to  dispose  of  the  note  in  any  manner  she  might  deem  proper,  and  this  is  so, 
although  he  might  have  appropriated  the  money  as  part  of  his  wife's  general 
estate.    Bennett  v.  Bennett,  134  Ky.  444,  120  S.  W.  372. 

60.  Prescott  Bank  v.  Caverly,  7  Gray,  217. 

61.  See  Smith  v.  Marsack,  6  C.  B.  486. 

62.  Marshall  v.  Rutton,  8  T.  R.  545;  Hatchett  v.  Baddeley,  2  W.  Bl.  1079; 


§§  244,  245  MARRIED   WOMEN  335 

adultery  with  another  person,^'  or  that  she  has  a  separate  maintenance 
secured  to  her,^*  or  that  she  has  been  divorced  from  her  husband's 
bed  and  board  (a  mensa  et  thoro),^^  will  not  at  common  law  restore  to 
the  married  woman  her  right  to  contract.  In  Massachusetts,  a 
different  rule  prevails  when  there  has  been  a  divorce  from  bed  and 
board,  and  the  married  woman  may  then  contract.^®  And  now  in 
that  State,  as  in  many  others,  she  may  make  contracts,  and  sue  and 
be  sued,  as  if  she  were  a  feme  sole.^^  Everywhere  a  divorce  from  the 
bonds  of  matrimony  (a  vinculo  matrimonii)  restores  the  woman  to 
full  competency.^  The  fact  that  a  married  woman  represents  herself 
to  be  unmarried  does  not  alter  her  disability.®^ 

§  244.  When  married  woman  is  bound  by  her  contracts. — There 
are  certain  exceptional  circumstances  under  which  the  contracts 
of  a  married  woman  may  be  binding  upon  her,  or  upon  her  husband, 
and  we  shall  consider  them  under  tl>ese  heads:  (1)  When  husband  is 
an  alien  or  civilly  dead;  (2)  When  wife  has  separate  estate;  (3)  When 
wife  is  sole  trader  by  special  custom  or  statute;  (4)  When  wife  pur- 
chases necessaries;  (5)  When  husband  adopts  her  name  as  binding 
him;  (6)  When  wife  is  agent  of  husband. 

§  245.  And  in  the  first  place,  when  the  husband  is  an  alien  enemy, 
the  wife  may  contract,  for  it  may  be  necessary  to  her  support  and 
maintenance  that  she  may  sue  and  be  sued,  and  her  husband  is 
legally  barred  from  coming  to  or  communicating  with  her.™  So  if  a 
married  woman  be  a  resident  in  any  country,  and  her  husband  is  an 
alien  who  has  never  been  in  that  country,  it  has  been  held  that  she 

Lean  v.  Schultz,  2  W.  Bl.  1195;  Hyde  v.  Price,  3  Vee.  Jr.  443;  Story  on  Bills,  §  90; 
Chitty  on  Bills  (13th  Am.  ed.)  l»21],  2& 

63.  Ibid. 

64.  Ibid. 

65.  Fairthome  v.  Blaquire,  6  Maule  &  S.  73;  Lewis  v.  Lee,  3  B.  &  C.  291; 
Chitty  on  Bills  (13th  Am.  ed.)  [•21],  28;  Byles  (Sharswood's  ed.)  (*62],  152. 
In  Scotland  it  is  otherwise.  Thompson  on  Bills,  138;  and  in  England  as  it  seems 
now  by  statute,  24  &  25  Vict.,  chap.  86,  §  6. 

66.  Dean  V.  Richmond,  5  Pick.  461.    See  also  2  Kent  Com.  136. 

67.  Kenworthy  v.  Sawyer,  125  Mass.  28,  in  which  case  wife  was  held  bound 
as  accommodation  indorser  of  a  firm  in  which  her  husband  was  a  partner. 

68.  Chamberlaine  v.  Hewson,  5  Mod.  71;  Chitty  on  Bills  [*21],  28;  Story  on 
Bills,  §  90;  1  Parsons  on  Notes  and  Bills,  78. 

69.  Cannam  v.  Farmer,  3  Exch.  698;  Lowell  v.  Daniels,  2  Gray,  161. 

70.  Dorry  v.  Duchess  of  Mazarine,  1  Ld.  Raym.  147;  M' Arthur  v.  Bloom,  2 
Duer,  151. 


33G  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED         §  246 

may  then  contract  like  a  feme  sole?^  This  would  clearly  be  the  case 
if  by  the  laws  of  the  country  of  which  the  husband  was  a  citizen  he 
could  not  leave  without  the  sovereign's  permission,  for  then  there 
would  be  a  legal  barrier  between  thern^'  But  in  the  case  of  an  alien 
who  has  once  resided  in  a  country,  the  animus  revertendi  is  to  be  pre- 
sumed, and  it  has  been  held  in  England  that  a  woman  by  birth  an 
alien,  and  the  wife  of  an  alien,  cannot  be  sued  as  a  feme  sole  if  her 
husband  has  lived  in  that  country,  although  he  has  left  it  and  entered 
the  service  of  a  foreign  State7'^ 

§  246.  Nonresidence  of  husband  not  equivalent  to  alienage. — 
In  Massachusetts  it  has  been  held  that  the  residence  of  the  husband 
in  another  of  the  United  States  is  the  same  as  if  he  were  in  a 
State  entirely  foreign,  he  being  then  beyond  the  jurisdiction  of  the 
State  courts;  ''*  and  that  whenever  the  husband  has  never  been  in  the 
commonwealth,  or  has  gone  beyond  its  limits,  deserted  his  wife,  and 
renounced  his  marital  rights,  her  ability  to  contract  and  sue  is  re- 
stored/' But  this  view,  though  perhaps  salutarj',  is  tlenied  else- 
where,"*^ and  seems  an  innovation  on  the  strict  rules  of  the  common 
law. 

If  the  husband  luus  abjured  the  realm,  or  if  he  is  "civilly  dead," 
as  he  is  termed,  when  by  judicial  sentence  he  has  been  banished  or 
transported;  or  if  he  has  by  a  religious  profession  renounced  civil  life, 
the  disability  of  the  wife  is  suspended  during  that  period,  and  her 

71.  Kay  v.  Durhos.se  do  Peinne,  3  Campb.  123;  Grogon-  v.  Paul,  15  Mass. 
31;  Story  on  Bills,  §  91;  Chitty  (13th  Am.  ed.)  [♦22],  29;  1  Parsons  on  Notes  and 
Bills,  84. 

72.  M'.Ajlhur  v.  Bloom,  2  Duor,  151. 

73.  Kay  v.  Duchesse  do  Peinne,  3  Campb.  123. 

74.  Abbott  V.  Bailey,  6  Pick.  89. 

75.  Gregory  v.  Paul,  15  Mass.  31. 

76.  Chouteau  v.  Merry,  3  Mo.  254.  In  this  case  the  husband  abandoned  his 
wife  in  Missouri,  and  removed  to  Arkansas  Territory  in  1821,  and  it  was  held 
that  she  was  not  bound  on  a  note  given  by  her  in  1831  in  Mi.s.souri.  The  court 
said:  "Coverture  operates  a  legal  disability  to  contract,  and  all  contracts  of 
a.  feme  covert  are  absolutely  void.  The  facts  in  this  case  do  not  bring  it  within  any 
of  the  exceptions.  The  cases  cited  from  the  English  books  are  where  the  husbands 
abjured  the  realm,  or  were  foreigners  residing  abroad.  The  principles  settled  in 
these  cases  do  not  apply.  If  by  a  removal  from  one  State  to  another,  or  a  separate 
residence  in  different  States,  the  indissoluble  connection  by  which  the  wife  is 
placed  under  the  power  and  protection  of  her  husband  could  be  canceled,  and  the 
parties  thereby  relieved  of  their  respective  liabilities  and  disabilities,  there  would 
be  little  need  of  troubling  the  legislature  or  the  courts  on  the  subject  of  divorces." 


§  247  MARRIED   WOMEN  337 

ability  to  contract  restored.^^  So,  if  he  is  imprisoned  by  judicial 
sentence^^  And  if  the  husband  has  been  abroad  and  unheard  of  for 
seven  years,  he  is  presumed  to  be  dead,  and  the  wife's  ability  to  con- 
tract revives^* 

§  247.  Second :  When  the  wife  has  a  separate  estate,  it  is  held  in 
England  liable  in  equity  for  all  of  her  debts  contracted  on  the  faith 
of  it.^  There,  where  a  married  woman  borrowed  money,  promising 
to  repay  it  out  of  her  separate  property,  the  rents  and  profits  thereof 
were  appropriated  to  its  payment.^^  So,  where  a  married  woman  gave 
a  note  jointly  with  her  husband,  and  as  a  security  for  his  debt;^^ 
where  a  married  woman  accepted  a  bill  dra\vn  and  indorsed  by 
lier   daughter;  *^   and    where   a   married   woman   living  separately 

77.  Hatchett  v.  Baddeley,  2  W.  Bl.  1079;  Story  on  Bills,  §  91. 

78.  Ex  parte  Franks,  7  Ding.  762;  Byles  on  Bills  (Sharswood's  ed.)  [♦63],  154; 
2  Kent  Com.  136. 

79.  Ix)ring  v.  Steineman,  1  Mete.  (Mass.)  204;  Byles  (Sharswood's  ed.)  [*63], 
l.->4;  Chitty  [*22],  29. 

80.  Byles  on  HilLs  (Sharswood's  ed.)  [♦62],  153;  Edwards  on  Bills,  68,  69; 
Chitty  on  Bill.s  [•211,  28,  29. 

81.  Hulfin  V.  Chirkc,  17  Vos.  366. 

82.  Hulme  v.  Tenant,  1  Bro.  C.  C.  16.  Contra,  Wright  v.  Parvis  &  Williams 
Co.,  1  Marv.  325,  40  Atl.  1123;  Frederick  Institute  v.  Michael,  81  Md.  487, 
32  Atl.  189,  340.  In  this  case  it  was  held  that  "A  married  woman  may  become 
surety  on  a  ncjft;  executed  by  her  jointly  with  her  hu.sband,  and  in  such  case  it  is 
not  nece.s.sur>',  in  onltT  to  hold  her  liable,  that  the  conHiderution  of  the  contract 
.should  inure  to  her  beneht."  In  Indiana,  held,  that  the  mere  fact  that  the  wife 
joins  with  the  hu.sband  in  a  note  does  not  negativ*'  the  idea  that  she  was  a  principal 
with  her  husband.  See  Young  v.  McFadden,  125  Ind.  254;  Laster  v.  Stewart,  89 
Ga.  181.  But  see  Newman  v.  Newman,  152  Mo.  398.  Compare  Sawtelle  v. 
Muncy,  116  Cal.  435,  48  Pac.  387.  See  also  post,  under  §  249.  While  a  wife  cannot 
legally  make  a  contract  of  suretyship  or  a-ssume  the  debt  of  her  hu.sband,  yet  where 
she  has  given  a  negotiable  note  payable  to  her  hu.sband's  order  and  intended  to  be 
used  as  surety  for  or  in  payment  of  hi.s  debt,  and  it  has  been  tran.sf erred  to  a 
bona  fide  purchaser  for  value,  before  maturity,  and  without  notice,  it  is  valid,  and 
binds  her.  Farmers'  &  Traders'  Bank  v.  Eubanks,  2  Ga.  App.  8.39,  59  S.  E.  193. 
Where  a  note  was  signed  first  by  a  married  woman  and  then  by  her  husband  as 
surety,  the  payee  knowing  that  a  married  woman  could  not  bind  her  separate 
estate  as  surety,  the  woman  is  primarily  liable  though  she  may  have  allowed  the 
hu.sband  to  use  the  money  borrowed  in  his  own  business.  Swearingen  v.  Tyler, 
132  Ky.  459,  116  S.  W.  331.  Where  a  note  was  given  by  a  wife  and  her  husband 
upon  representations  by  the  wife  that  the  money  was  for  herself  individually  and 
for  her  separate  estate,  she  is  liable  on  the  note.  National  Lumberman's  Bank  v. 
Miller,  131  Mich.  564,  91  N.  W.  1024,  100  Am.  St.  Rep.  623. 

83.  Bingham  v.  Noyes,  Chitty  on  Bills  [*21|,  28. 

22 


33S  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  248 

from  her  husband  accepted  a  bill,   her  separate  property  was  held 
hable.*^ 

§  248.  Different  State  doctrines. — In  the  United  States  the  au- 
thorities on  this  subject  differ.  In  New  York  it  has  been  held  upon 
full  considenition  that  it  is  essential  in  order  to  charge  the  wife's 
separate  property,  either  (1)  That  the  intention  to  do  so  should  bo  de- 
clared in  the  very  contract  which  is  the  foundation  of  the  charge,  or 
(2)  That  the  consideration  should  be  obtained  for  the  direct  benefit  of 
the  estate  itself,**^  though  it  is  not  necessary  that  the  bill,  note,  or 
other  contract  should  specify  the  particular  property  to  be  charged.^ 
The  general  rule  in  this  country,  however,  still  seems  to  be,  that  the 
wife's  separate  property  is  liable  in  equity  for  all  debts  which  she,  by 
implication,  or  expressly  by  writing  or  parol,  charges  thereon,  because 
it  is  right  that  her  debts  should  be  paid,^    And  as  the  doctrine  arises 

84.  Stewart  v.  Lord  Kirkwall,  3  Mad.  Ch.  387. 

85.  Yale  v.  Dedcror,  22  N.  Y.  4.50,  IS  N.  Y.  265  (overruling  same  case  in  21 
Barb.  286);  followed  in  White  v.  McNett,  33  N.  Y.  371;  Ix>dlie  v.  Vroomun, 
41  Btirb.  109;  White  v.  Story,  43  Barb.  124;  Bamott  v.  Lichtenstein,  39  Barb. 
194;  Corn  Exchange  Ins.  Co.  v.  Babcock,  42  N.  Y.  613.  In  New  York  it  is  held 
that  if  the  married  woman  borrows  money  for  the  express  purpose  of  benefitinK  her 
separate  estate,  her  note  for  the  amount  is  good,  though  the  money  be  u.st>(l  for 
another  purpose.  McVey  v.  Cantrell,  70  N.  Y.  295;  Scott  v.  Otis,  25  Hun,  33. 
Contra,  Heugh  v.  Jones,  32  Pa.  St.  432;  Sonnemann  v.  Loeb,  11  App.  D.  C.  143; 
Thacker  v.  Thacker,  125  Ind.  489,  25  N.  E.  595;  Bciridge  v.  Banks,  125  Ind.  561, 
25  N.  E.  805;  State  Nat.  Bank  v.  Smith,  55  Nebr.  54,  75  N.  W.  51. 

86.  Corn  Exchange  Ins.  Co.  v.  Babcock,  42  N.  Y.  613. 

87.  Vandeventer  v.  Davis,  92  Ark.  t)04,  123  S.  W.  766;  Crenshaw  v.  Collier, 
70  Ark.  5,  65  S.  W.  709;  Lanier  v.  Olliff,  117  Ga.  397,  43  S.  E.  711;  Wyatt  v. 
Walton  Guano  Co.,  114  Ga.  375,  40  S.  E.  237;  Thorton  v.  Lemon,  114  Ga.  155, 
39  S.  E.  943;  Taylor  v.  American  Freehold  Co.,  106  Ga.  238,  32  S.  E.  153;  Major 
v.  Symmes,  19  Ind.  117;  Grapengether  v.  Fejervary,  9  Iowa,  163;  Rogers  v. 
Ward,  8  Allen,  387;  Frank  v.  Lilienfeld,  33  Gratt.  394,  and  cases  cited  in  notes, 
§  249;  Todd  v.  Lee,  15  Wis.  365;  Pentz  v.  Simeon,  2  Bea.sley,  232;  2  Story's  Eq. 
Jur.,  §§  1398,  1401;  2  Kent  Com.  164;  Edwards  on  Bills,  70.  And  accordingly  it 
has  been  held  in  South  Carolina  that  where  a  married  woman  gives  her  note  in 
payment  of  lumber  used  in  construction  of  a  house  on  her  land,  she  cannot  avoid 
the  payment  of  the  note  by  a  plea  that  she,  as  a  married  woman,  had  no  power 
to  make  such  contract.  See  Ferguson  v.  Harris,  39  S.  C.  323,  17  S.  E.  782,  39 
Am.  St.  Rep.  731,  note.  The  signing  of  a  promissory'  note  by  a  married  woman 
does  not  raise  the  presumption  that  she  intended  thereby  to  render  her  separate 
estate  liable  for  its  payment,  nor  that  it  was  given  with  reference  to  her  separate 
property,  trade,  or  business,  or  upon  the  faith  and  credit  thereof;  and  to  an  action 
upon  such  note  coverture  is  a  complete  defense,  unless  the  plaintiff  shall  establish 
by  a  preponderance  of  the  evidence,  that  the  note  was  made  with  reference  to,  or 


§  248  MARRIED   WOMEN  339 

entirely  out  of  equity,  it  seems  to  us  correct,  as  it  is  the  existence  of 
the  intention  to  charge  the  separate  estate,  and  not  the  pecuhar 
mode  of  expressing  it,  which  creates  the  equity.^  At  the  present  day, 
in  New  York,  contracts  of  a  married  woman  in  relation  to  her  separate 
estate  can  be  enforced  at  law  or  in  equity,  as  the  case  may  be,^^  and 
the  executory  contracts  of  married  women  are  'prima  facie  valid  .^ 
The  intent  to  charge  the  separate  estate  may  be  inferred  from  cir- 
cumstances, and  a  specific  agreement  is  not  necessary .^^    But  as  to 

upon  the  faith  and  credit  of,  the  wife's  separate  estate  or  business,  or  with  an 
intention  on  her  part  to  charge  her  separate  estate  with  its  payment.  Northwall 
Co.  V.  Osgood,  80  Xebr.  764,  115  N.  W.  308.  Where  a  husband,  in  the  presence 
of  the  wife,  and  with  her  express  consent,  signs  her  name  to  a  promissory  note 
which  she  knows  is  to  be  deUvered  to  the  payee  in  settlement  of  an  existing  in- 
debtedness for  which  she  herself  is  individually  liable,  and  such  note  is  deUvered 
in  cancellation  of  the  indebtedness,  the  mere  fact  that  she  remarked  to  her  hus- 
band, at  the  time  of  authorizing  him  to  sign  the  paper,  "You  may  sign  my  name 
to  the  note,  but  I  will  have  nothing  to  do  with  it,"  the  same  not  being  heard  by  or 
communicated  to  the  payee,  does  not  relieve  her  from  liabiUty  on  the  note. 
Wyatt  V.  Walton  Guano  Co.,  114  Ga.  375,  40  S.  E.  237. 

88.  Owens  v.  Dickenson,  1  Craig  &  Ph.  48;  Lord  Chancellor  Cottenham  say- 
ing: "The  separate  property  of  a  married  woman  being  a  creature  of  equity, 
it  follows  that  if  she  has  a  power  to  deal  with  it,  she  has  the  other  powers  incident 
to  property  in  general — namely:  the  power  of  contracting  debts  to  be  paid  out 
of  it;  and  injismuch  as  her  creditors  have  not  the  means  at  law  of  compelling  pay- 
ment of  those  debts,  a  court  of  equity  takes  upon  itself  to  give  effect  to  them,  not 
as  personal  liabilities,  but  by  laying  hold  of  the  separate  property,  as  the  only 
means  by  which  they  can  be  satisfied."  Eckman  v.  Scott  et  al.,  34  Nebr.  817,  52 
N.  W.  822. 

89.  Hier  v.  Staples,  51  N.  Y.  136;  Corn  Exchange  Ins.  Co.  v.  Babcock,  42 
N.  Y.  613. 

90.  Willsey  v.  Hutchins,  10  Hun,  502.  And  where  representations  were  made 
by  a  married  woman  in  a  promissory  note  secured  by  a  mortgage,  that  the  in- 
struments were  given  for  the  benefit  of  her  separate  estate,  she  would  be  es- 
topped from  denying  the  truthfulness  of  said  representation,  in  the  absence  of 
notice  to  the  holder  of  the  note  that  said  representation  was  untrue.  See  White 
V.  Goldsberg,  49  S.  C.  530,  27  S.  E.  517;  Union  Stock  Yards  Nat.  Bank  v.  Coffman, 
101  Iowa,  594,  70  N.  W.  693. 

91.  Conlin  v.  Cantrell,  64  N.  Y.  219.  See  Frank  v.  LiUenfeld,  33  Gratt.  395. 
Where  a  married  woman  leases  a  farm  in  her  own  name,  acquiring  the  right  to 
its  possession  and  the  rents  and  profits  thereof,  for  which  she  executes  her  notes, 
she  is  bound  by  such  contract,  and  the  fact  that  she  permitted  her  son-in-law  to 
occupy  the  premises  who  did  not,  in  fact,  pay  her  rent,  does  not  affect  her  hability. 
See  Crisman  v.  Leonard,  126  Ind.  202,  25  N.  E.  1101.  And  if  a  married  woman 
executes  a  promissorj'  note  and  mortgage,  where  she  declares  the  same  to  be  for 
the  benefit  of  her  separate  estate,  and  the  maker  transfers  the  same  without  notice 
to  the  contrar>'  and  for  value  before  maturity,  she  is  estopped  from  denying  that 
they  were  executed  for  the  benefit  of  her  separate  estate.    See  White  v.  Golds- 


340  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  2VJ 

note  of  ni;irri('(l  wc^num  ijuyiihlc  to  and  indorsed  by  her  liu.sbanil,  it 
has  been  held  in  New  York  prima  facie  a  nullity,  and  that  evidence 
aliunde  was  necessary  to  charge  her  by  showing  that  it  was  in  her 
separate  business  or  for  the  benefit  of  her  separate  estate.'^ 

§  249.  In  Virginia,  where  a  married  woman  had  separate  estate 

biTR,  49  S.  C.  530,  27  S.  E.  517;  Schmidt  v.  Sponccr,  K7  Mich,  121,  49  N.  \V.  479; 
Webb  V.  Feathcra'  I-jjtate,  119  Mich.  47.'},  7.S  N.  W.  550;  VoMburg  v.  Hrown,  119 
Mich.  097,  78  N.  W.  886.  It  huH  b««n  held  that  it  is  immat<>riiil  that  the  wife 
intendetl  to  ^ive  the  money  to  the  hu.sband  when  «he  had  obtained  the  same  on 
account  of  th(!  loan.    Todd  v.  Bailey,  5S  N.  J.  L.  10,  32  .\tl.  090. 

92.  Second  Nat.  Bank  v.  Miller,  (iO  N.  Y.  039;  Saratoga  County  Bank  v. 
Pruyn,  90  N.  Y.  254.  But  when  a  rnarrifHJ  woman  e.\tM:ut«'H  a  i)romi.s»«)r>'  note 
and  inortKaKC  wherein  she  declares  the  same  is  for  the  benefit  of  her  wparate 
estate,  and  the  mortKagec  transfers  th«'  same  without  notice  to  the  contniry,  and 
for  value  before  maturity,  she  is  estopiMMj  from  denying  that  they  were  e.\ecutetl 
for  the  benefit  of  her  s«'ptirate  estate  in  foreclosure  by  the  transferee.  See  White 
V.  Goldsherg,  49  S.  C.  530,  27  S.  K.  517;  Brafton  v.  Ix)wr>-,  39  S.  C.  383,  17  S.  K. 
832.  And  where  a  .statute  declares  that  "all  conveyances,  mortgaRes,  and  like 
formal  instruments  affecting  her  separate  estate,  exin-uted  by  a  marrie<l  woman, 
shall  be  effectual  to  convey  or  charge  her  wparate  estate,  wljenever  the  intention 
so  to  convey  or  charge  such  separate  testate,  is  declared  in  such  conveyances, 
mortgages,  or  other  instruments  of  writing  "  does  not  include  in  its  tfrms  promis- 
sory notes,  with  no  such  intention  specifically  d«>clared  therein.  S<'e  Martin  v. 
Suber,  39  S.  C.  525,  IS  S.  E.  125.  The  plea  that  the  defendant  is  a  married  woman 
is  a  personal  one  and  cannot  l)o  availeti  of  by  a  comaker  of  th<!  note.  C!Ui<'r  v. 
DicLson,  39  S.  C.  433,  17  S.  E.  996.  Following  the  principle  announced  in  the 
text  it  hius  been  held  that  where  a  married  woman  made  her  promi.ssory  note  in 
terms  that  show  it  was  made  with  reference  to  her  separate  estate,  an  innocent 
indorsee  for  value  before  maturity  has  a  right  to  rely  upon  the  statements  in  the 
note  and  the  maker  is  estopped  from  denying  them  against  such  indorsee,  unless 
she  proves  that  he  knew  them  to  be  untrue.  Knowle<Jge  by  the  payee  will  not 
affect  the  indorsee.  See  Nott  v.  Thom.son,  35  S.  C.  461,  14  S.  E.  23.  But  if  a 
married  woman  who  signs  a  negotiable  promissory  note  apparently  has  a  coprinci- 
jial,  though  in  fact  she  is  a  surety  only,  she  becomes  liable  to  a  bona  fide  purchaser 
for  value  who  gives  the  note  before  its  maturity  and  without  notice  of  the  surety- 
ship. Veneable  v.  Lippold,  102  Ga.  208,  29  S.  E.  181.  And  accordingly  it  has 
been  held  in  Georgia,  that  if  a  husband  and  wife  execute  a  joint  promissory  note 
as  the  basis  of  credit  for  goods  to  be  furnished  the  husband,  in  conducting  his 
business,  and  the  husband  "traded  out"  the  note,  the  husband  is  liable  but  the 
wife  is  not.  Smith  v.  Hardman,  99  Ga.  381,  27  S.  E.  731.  But  one  who  takes  such 
a  note  is  chargeable  with  notice  of  such  facts  concerning  the  real  consideration 
of  the  paper,  and  of  the  wife's  true  relation  thereto  as  are  known  to  another  who, 
in  behalf  of  the  payee  and  at  his  instance  and  request,  denies  the  negotiations 
leading  to  the  execution  and  delivery  of  the  note  to  the  latter.  See  Strickland  v. 
Vance,  99  Ga.  531,  27  S.  E.  152,  59  Am.  St.  Rep.  241;  Grand  Island  Banking  Co. 
V.  Wright,  53  Nebr.  574,  74  N.  W.  82. 


§  24d  MARRIED    WOMEN  341 

settled  upon  her  with  ample  powers  over  it,  it  was  held  to  be  liable 
for  payment  of  her  accommodation  indorsement  for  her  husband.^^ 
A  married  woman  is  held  liable  where  she  joins  her  husband  in 
a  note  for  the  payment  of  his  debt  and  gives  a  mortgage  upon  her 
separate  estate  to  secure  the  same.^^  And  the  doctrine  obtains  in 
numerous  decisions  that  the  mere  act  of  becoming  a  party  to  a  bill 
or  note  implies  the  intent  to  make  it  a  charge  upon  her  separate 
estate.^^    In  Massachusetts,  where  the  statute  confers  upon  mar- 

93.  Frank  v.  Lilienfeld,  33  Grutt.  394,  Burks,  J.:  "It  is  necessary  that  it 
(the  contract  of  the  married  woman)  be  entered  into  with  reference  to,  and  in 
the  credit  of,  the  separate  estate.  There  must  be  an  intention  to  make  the  separate 
estate  hable.  It  need  not,  however,  be  express;  it  may  be  impUed.  It  is  impUed 
when  the  wife  executes  a  bond,  note,  or  other  instrument  for  the  payment  of 
money,  either  as  principal  or  as  surety  for  another,  even  for  her  husband,  no 
undue  influence  being  used."  See  also  Burnett  v.  Hawpe,  25  Gratt.  481 ;  Darnull  v. 
Smith,  26  Gratt.  878;  Garland  v.  Pamplin,  32  Gratt.  303.  In  Missouri  it  is  held 
that  a  married  woman,  being  like  af^me  .sole  as  to  her  separate  estate,  may  bind 
it  by  a  note  executed  in  blank.  Morrison  v.  Thistle,  67  Mo.  596.  The  Court  of 
Appeals  of  Maryland  con-struing  the  statute  of  that  State  holds  that  a  mjirried 
woman  is  liable  to  be  sued  at  law  only  upon  such  contra<;ts  or  agreements  as  she 
is  eniixjwere<l  by  statute  to  make,  her  common-law  di.sability  still  (continuing  i\a 
to  all  other  undertakings.  And  specially  construing  the  Code,  art.  45,  §  2,  which 
providt^  that  a  married  woman  may  be  sued  at  law  jointly  with  her  husband 
upon  any  note,  contract,  etc.,  which  she  may  have  executed  jointly  with  him — 
in  an  action  a|?ainst  husband  and  wife  one  count  of  the  de<'laration  set  forth  a 
promissory  note  made  by  the  wife  alone,  payable  to  the  husband  and  by  him 
indorsed  in  blank.  Held,  that  since  the  liability  of  the  maker  of  a  note  is  absolute 
and  primary,  and  that  of  an  indors<*r  contingent  and  conditional,  the  note  sued 
on  was  not  evidence  of  a  contract  executed  by  the  wiU'  jointly  with  her  hu.sband, 
wad  not  within  the  statute;  and  consecjuently  evidence  is  not  admi.ssible  to  show 
that  a  note  which  on  its  face  is  her  note  alone,  was  in  reality  the  joint  note  of  the 
two,  since  it  would  make  her  liability  depend  in  part  upon  parol  testimony,  while 
the  statute  prescribes  a  writing.  See  lijirvard  Pub.  Co.  v.  Benjamin,  84  Md. 
333,  35  Atl.  930,  57  Am.  St.  Kep.  402;  Laster  v.  Stewart,  89  Ga.  181,  15  S.  E. 
42.  Same  as  held  in  Nebra.ska.  Watts  v.  Gantt  et  a/.,  42  Nibr.  869,  61  N.  W.  104. 
It  is  and  was  held  in  Nebraska.  McKinney  v.  Hopwood,  46  Nebr.  871,  65  N.  W. 
1055. 

94.  Buffalo  Nat.  Bank  v.  Sharpe,  40  Nebr.  123,  58  N.  W.  730;  Smith  v.  Spauld- 
ing,  40  Nebr.  339,  58  N.  W.  952.  Where  a  husband  and  wife  executed  notes  and 
wcured  the  same  by  a  mortgage  on  the  wife's  real  estate,  the  wife  is  liable  and  there 
can  be  a  foreclosure  of  the  mortgage  only  for  the  amount  received  for  her  own 
use  and  benefit  and  not  for  the  amount  loaned  to  her  husband.  Equitable  Trust 
Co.  V.  Toqjhy,  37  Ind.  App.  220,  76  N.  E.  639.    S<'e  also  ante,  under  §  247. 

95.  Bell  V.  Kellar,  13  B.  Mon.  381;  Wicks  v.  Mitchell,  9  Kan.  80;  Metropolitan 
Bank  v.  Taylor,  62  Mo.  338;  Williams  v.  Urmston,  35  Ohio  St.  296  (overruling 
Levi  V.  Earl,  30  Ohio  St.  147).  Contra,  Kenton  Ins.  Co.  v.  McClelland,  43  Mich. 
664;  Union  Stock  Yards  Nat.  Bank  v.  Coffman,  101  Iowa,  594;  Schmidt  v. 


342  PERSONS    PARTIALLY    OR   WHOLLY    DISQUALIFIED        §  250 

ric'd  women  the  capacity  to  sell  ixnd  convey  their  separate  property, 
enter  into  contracts,  and  carry  on  trade,^  it  has  been  hekl  that  the 
note  of  a  married  woman  given  in  payment  for  land  conveyed  to  her 
sole  and  separate  use,"  or  for  money  borrowed  to  enable  her  to  pay 
for  farming  land  of  which  she  holds  a  title  i)ond  to  her  sole  mid  sep- 
arate use,  is  valid.^*  And  in  North  Carolina  it  is  held  that  a  note 
signed  by  the  husband  ;md  wife,  binding  her  separate  estate  for  the 
payment  of  the  debt,  the  amount  therein  having  been  adviinced  for 
the  benefit  of  her  separate  estate,  is  sufficient  to  bind  her  separate 
personal  estate.^ 

When  a  married  woman  charges  her  separate  estate  with  a  debt, 
all  her  estate  held  at  the  time  of  trial  and  jutlgment  is  liable,  as  well 
as  that  held  when  the  contract  was  entered  into.^ 

A  promise  made  by  a  widow  to  i)ay  a  debt  contracted  during  cover- 
ture would  be  void,-  unless  she  had  a  separate  estate,  in  which  case 
it  would  be  valid,^ 

§  250.  Third :  When  the  wife  is  a  sole  trader,  by  the  custom  of 

London  siie  is  liable  on  her  contracts  in  the  city  courts,  and  though 
tiie  husbanil  must  l)e  joined  in  the  action  for  conformity,  executi(m 
will  1)0  against  the  wife  alone.*  Statutes  empowering  married  women 
to  l)e  sole  traders  have  been  passed  in  some  of  the  States  of  the  United 
States,  and  when  so  empowered  they  make  bills  or  notes;  ^  but,  unless 

Spencer,  87  Mich.  121,  49  N.  W.  479.  In  Gilbert  v.  Brown,  123  Ky.  703,  97  S.  W. 
40,  7  L.  R.  A.  (N.  S.)  1053,  it  wiia  hold  that  a  note  of  a  married  woman  is  void, 
unless  it  comes  within  the  statutory  exception  allowing  a  wife  to  bind  her  separate 
estate  only  for  necessaries,  and  that  one  seeking  to  recover  a  married  woman's 
note  must  show  affirmatively  that  it  comes  within  the  exception. 

96.  The  general  statutes,  chap.  108,  §3,  provide  that  "a  married  woman 
may  bargain,  soil,  and  convey  her  separate  real  and  personal  property,  enter  into 
any  contracts  in  reference  to  the  same,  carr>'  on  any  trade  or  business,  and  per- 
form any  labor  or  service  on  her  sole  and  separate  account,  and  sue  and  be  sued 
in  all  matters  having  relation  to  her  separate  property,  business,  trade,  services, 
labor,  and  earnings,  in  the  same  manner  as  if  she  were  sole." 

97.  Stewart  v.  Jenkins,  6  Allen,  300. 

98.  Chapman  v.  Foster,  6  Allen,  130. 

99.  Harvey  Blair  &  Co.  v.  Johnson,  133  N.  C.  352,  45  S.  E.  644. 

1.  Todd  V.  Ames,  60  Barb.  462. 

2.  Lloyd  V.  Lee,  1  Stra.  94;  Littlefield  v.  Shee,  2  B.  &  Ad.  84. 

3.  Leer  v.  Muggridge,  5  Taunt.  36.     And  see  ante,  p.  240. 

4.  Beard  v.  Webb,  2  Bros.  &  P.  93;  Byles  on  Bills  (Sharswood's  ed.)  [*62],  152, 
153. 

5.  Camden  v.  Mulen,  29  Cal.  566;  First  Nat.  Bank  v.  Hirschkowitz,  46  Fla. 
588,  35  So.  22. 


§§  251,  252  Married  women  343 

so  empowered,  a  married  woman  cannot,  without  her  husband's  eon- 
sent,  bind  herself  in  trade,  except  under  the  circumstances  which  are 
here  enumerated.  But,  with  the  husband's  consent,  she  may  carry 
on  trade  separately  as  a  regular  merchant,  and  bind  herself  as  a  party 
to  a  negotiable  instrument.^ 

§  251.  Fourth:  As  to  necessaries. — Every  husband  is  bound  to 
provide  for  his  wife,  and  the  common  law  enforces  this  obligation, 
lest  the  wife  may  become  a  burden  to  the  community.''  And  if  the 
husband  fail  to  furnish  her  with  the  necessaries  of  life,  such  as  food, 
raiment,  lodging,  and  medical  attendance,  the  law  presumes  an 
authority  in  her  to  procure  them  on  his  credit,  and  he  will  not  be 
permitted  to  deny  that  authority  was  given.* 

§  252.  Fifth:  When  husband  adopts  wife's  name. — A  person 
may  adopt  whatever  name  he  pleiLses  in  his  business  dealings,  and 
then  when  he  uses  such  adopted  niune  he  will  be  bound  by  it.*  There- 
fore, if  a  husband  sign  his  wife's  name  to  a  bill  or  note,  he  will  be 
considered  as  having  adopted  it  pro  hac  vice,  and  will  be  bound  accord- 
ingly."* So,  if  the  wife  executes  a  note  for  her  husband,  in  his  pres- 
ence, and  signs  her  own  name  merely,  with  his  knowledge  and 
consent,  it  will  bind  him.'^  And  in  any  case  where  the  husband  clearly 
authorizes  his  wife  to  draw  or  indorse  bills  or  notes  on  his  account 
and  sign  her  name,  and  she  does  so,  he  will  be  regarded  as  intending 
thereby  to  bind  himself,  and  will  be  so  held.*-  And  if,  after  the  wife 
has  signed  her  name,  the  husband  promises  to  pay  the  bill  or  note,  or 
otherwise  ratifies  the  wife's  act,  it  will  be  presumed  that  she  had 


6.  Todd  V.  Lee,  16  Wis.  480;  Partridge  v.  Stocker,  36  Va.  108;  Richardson  v. 
Merrill,  32  Vt.  27;  Wioman  v.  Anderson,  42  Pa.  St.  311;  James  v.  Taylor,  43  Barb. 
530;  Schouler  on  Domestic  Relations,  245,  246. 

7.  Schouler  on  Domestic  Relations,  76-79,  85;  Mudge  v.  Bullock,  83  111.  22. 

8.  Schouler  on  Domestic  Relations,  76-79,  85;  Mudge  v.  Bullock,  83  111.  22. 

9.  See  §§  304,  393,  399;  Salomon  v.  Hopkins,  61  Conn.  47, .23  Atl.  716,  citing 
and  approving  text. 

10.  Prestwick  v.  Marshall,  7  Bing.  565. 

11.  Prestwick  v.  Marshall,  7  Bing.  565;  Menkins  v.  Heringhi,  17  Mo.  297. 

12.  Cotes  V.  Davis,  1  Campb.  485;  Hancock  Bank  v.  Joy,  41  Me.  568.  See 
Miller  v.  Delamater,  12  Wend.  433.  Where  a  married  woman  signed  a  note  for 
the  purchase  of  goods  in  a  business  carried  on  by  her  sons,  her  husband  is  not 
liable  on  the  note  when  he  did  not  know  of  the  purchase  and  the  giving  of  the  note, 
and  though  he  subsequently  became  aware  of  the  transaction  and  did  not  enter 
a  protest.    Richburg  v.  Sherwood,  101  Tex.  10,  102  S.  W.  905. 


344  PERSONS    PARTIALLY   OR   WHOLLY    DISQUALIFIED        §  253 

autliority  from  him,  and  he  will  he  estopped  to  deny  it.'^*  Thus,  where 
a  bill  was  addressed  to  "William  Bradwell,"  and  was  accepted  by 
"Mary  Bradwell,"  his  wife,  who  wrote  her  name  across  it,  aiul 
William  Bradwell,  after  its  dishonor,  promised  to  pay  it  very  shortly, 
it  was  held  that  it  was  William  Bradwell's  acceptance,  jind  Maule,  J., 
said :  "  He,  in  effect,  says  that  his  wife  was  authorized  by  him  to  accept 
this  particular  bill  in  the  way  she  did."  ^* 

And  where  the  husband  carries  on  business  generally  in  liis 
wife's  name,  that  is  conclusive  that  he  adopts  it  and  is  bound 
by  it.  15 

§  253.  Sixth:  When  the  wife  is  agent  of  her  husband.— Marriage 
does  not  incapacitate  a  married  woman  from  being  the  agent  of  her 
husband.  The  power  to  act  as  his  attorney  inifjlies  no  separation 
from,  but  is  rather  a  representation  of,  her  lord.'"  Therefore,  the 
husband  will  be  bound,  whenever  she  uses  his  name  by  his  express  or 
implied  autliority.  Unless  the  husband  has  adopted  her  name  as 
binding  on  him,  by  authorizing  its  use,  the  wife  must  sign  the  hus- 
band's name.i^  The  form  may  be:  "A.  (husband)  by  B.  (wife);"  or 
"B.  (wife)  for  C.  (husband)."  But  the  mere  signature  of  the  hus- 
band's name,  if  by  his  authority,  would  tloubtless  suffice.'* 

The  wife's  authority  must  be  clearly  proved.'^  If  she  be  the  hus- 
band's amanuensis  in  his  business,  because  he  cannot  write,  a  note 
signed  by  her  must  be  proved  to  have  been  given  on  account  of  his 
business  concems.^^  If  the  husband  allow  the  wife  to  purchase  goods, 
and  to  give  a  note,  he  may  make  any  defense  that  would  have  been 
available  had  he  made  the  note  himself;  but  against  a  bona  fide 
holder  for  value  he  would  be  defenseless.^'    The  wife  cannot  delegate 

13.  Cotes  V.  Davis,  1  Campb.  485;  Lindus  v.  Hradwell,  5  C.  B.  5SS;  Shaw  v. 
Emery,  38  Me.  484;  Mudge  v.  Bullock,  83  111.  23;  Pavey  v.  Stauffer,  45  La.  Ann' 
353,  12  So.  512,  citing  text. 

14.  Lindus  v.  Bradwell,  5  C.  B.  583. 

15.  Abbott  V.  McKinley,  2  Miles,  220, 

16.  1  Bl.  Com.  442.  The  converse  of  the  proposition  is  equally  true,  \'iz: 
a  married  woman  may  employ  her  husband  as  her  agent,  and  if  he  acts  within 
the  scope  of  his  authority  she  is  bound  by  it.    Wright  v.  Parvis  &  Williams  Co 

1  Marv.  325,  40  Atl.  1123.  ' 

17.  Minard  v.  Mead,  7  Wend.  68;  Abbott  v.  McKinley,  2  Miles,  220. 

18.  1  Parsons  on  Notes  and  Bills,  80.     But  see  Wood  v.  Goodridge   6  Cush 
117. 

19.  Coldstone  v.  Tovey,  6  Bing.  N.  C.  98. 

20.  Smith  v.  Pedley,  Chitty,  Jr.,  on  Bills,  1241. 

21.  Reakert  v.  Sanford,  5  Watts  &  S.  164. 


§  254 


MARRIED   WOMEN  345 


authority  granted  her;  but  another  person,  in  her  presence,  may 
write  her  husband's  name  for  her.-^ 

§  254.  Husband's  rights  to  wife's  choses  in  action.— Bills  and 
notes  possessed  by  a  single  woman  before  her  marriage  are  her  choses 
in  action,  and  by  marriage  the  husband  becomes  entitled  to  reduce 
them  into  his  possession,  and  to  make  them  his  ovmr^  And  so 
if  a  bill  or  note  is  made  payable  to  a  married  woman,  or  be- 
comes her  property  after  marriage,  the  right  thereto  vests  in  her 
husband,  and  he  alone  is  competent  to  indorse  it,^*  or  to  receive 

payment.^^ 

And  the  husband  may,  at  his  election,  indorse  or  negotiate  the 
instrument,  or  sue  upon  it  alone  in  his  own  name; ''  or  he  may  sue 
upon  it  in  the  joint  names  of  himself  and  his  wife;  ^  or  he  may  allow 
her  to  indorse  it  or  negotiate  it  in  her  o^nti  name.^-«  In  this  last  case 
it  may  be  declared  on,  either  as  indorsed  by  the  husband,  or  m  the 
wife's  name  by  his  consent;  and  a  good  title  may  be  thus  acquired 
against  the  husband,  as  well  as  other  parties.^'^    It  was  once  held  that  a 


22.  Ix^rd  V.  Hall,  8  C.  B.  627. 

23  Richards  v.  Richards,  2  B.  &  Ad.  447;  Garforth  v.  Bradley,  2  Ves.  675, 
Howard  v.  Oakes,  3  Wels.,  H.  &  G.  136;  Dean  v.  Richmond,  5  Pick.  461;  Legg 
V  Legg  9  Mass.  99;  Chitty  1*22),  30;  Story  on  Bills,  §  93.  A  contrary  rule  pre- 
vails in  Texas,  where  the  common  law  is  changed  by  statute.    Kempner  v.  Comer, 

^^Irim.';   Philliskirk   V.    Pluckwell,    2    Maule   &  S.    399;  Chitty   [*22,  23], 

'^^^25  BylesreS],  157;  1  Parsons  on  Notes  and  Bills,  89.  And  if  a  wife  deposits 
in  bank  in  her  o^vn  name  money  which  was  her  general  estate,  and  the  bank  be- 
comes insolvent,  and  the  husband  is  indebted  to  the  bank,  he  haa  the  nght^to  set 
off  the  wife's  deposit  against  his  indebtedness.  See  Hall  v.  New  Farmers  Bank  s 
Tr..98Ky.  144,32S.W.400.  ,„  j.    ,   r    «;.«. 

26.  Mason  v.  Morgan,  2  Ad.  &  El.  30;  Burrough  v.  Moss,  10  B.  &  C  558, 
McNeilage  v.  Holloway,  1  B.  &  Aid.  218;  Gaters  v.  Madeley  6  M  &  W  423, 
Arnold  V.  Revonet,  4  J.  B.  Moore,  70;  Sutton  v.  Warren,  10  Mete.  (Mass.)  451. 

27.  Richards  v.  Richards,  2  B.  &  Ad.  447.  .     «  ,,     on^   t>  i     ^ 

28.  Stevens  v.  Beals,  10  Cush.  291;  Menkins  v.  Heringhi,  17  Mo.  297;  Roland 
V  Logan  18  Ala.  307.  Under  a  statute  recognizing  a  note  made  to  a  wife  to  be 
her  separate  property,  which  cannot  be  reduced  to  possession  by  the  husband, 
or  the  Uttle  thereto  passed  to  a  third  person  by  the  husband,  except  by  her  written 
consent,  the  mere  indorsement  in  blank  of  a  promissory  note  payable  to  her  by 
the  wife  is  not  such  written  consent  as  is  required  by  the  statute  to  clothe  the 
husband  with  apparent  ownership.  Case  v.  Espenschied,  169  Mo.  215,  69  S.  W. 
276,  92  Am.  St.  Rep.  633. 

29.  Stor}'  on  Bills,  §  92. 


346      PERSONS   PARTIALLY  OR   WHOLLY    DISQUALIFIED   §§  255,  256 

negotiable  instrument  was  a  personal  chattel  in  possession ;  ^  but  it 
is  well  settled  that  it  is  a  chose  in  action.^^ 

§  255.  If  a  husband,  loaning  money,  takes  therefor  a  note  pay- 
able to  himself  and  wife,  it  imports  a  gift  to  his  wife  in  the  event  she 
survives  him.^-  And  if,  after  marriage,  a  bill  or  note  be  executed  to 
the  husband  and  wife  as  joint  payees,  tlie  legal  interest,  in  the  absence 
of  statute  to  the  contrary,  survives  to  the  survivor.^^ 

§  256.  Reduction  into  possession. — It  is  necessary,  to  the  perfec- 
tion of  the  husband's  right  of  property  in  the  bills,  notes,  and  other 
choses  in  action  of  his  wife,  that  he  should  reduce  them  into  his  o\\'n 
possession  during  the  marital  relation.  And  if  he  dies  without  having 
done  so,  and  the  wife  survives  him,  the  right  to  their  sole  possession 
revives  to  her,  and  does  not  pass  to  his  personal  representative,  and 
she  may  then  sue  upon  or  indorse  them.^''  If  the  wife  dies,  the  hus- 
band surviving,  her  i)ersonal  representative  will  be  entitled  to  sue  for 
them,  but  the  husbimd  will  be  entitled  to  the  proceeds,  when  recovered 
in  right  of  his  survivorship.^^  And  the  husband  is  entitled  to  be  her 
personal  representative.^^  It  has  been  held  that  if  the  husband  gets 
actual  possession  of  her  unreduced  choses  in  action  after  her  death, 
although  not  her  j)ersonal  representative,  they  become  his  property." 
If  he  dies  without  having  taken  out  letters  of  atlministration  on  his 


30.  McNeihvge  v.  Holloway,  1  B.  &  Aid.  218. 

31.  Scarpollini  v.  Atchcson,  7  Ad.  &  El.  (N.  S.)  Q.  B.  840;  Rirhards  v.  Ifich- 
arda,  2  B.  <fc  Ail.  447;  Caters  v.  .Madcley,  6  M.  &  W.  423;  Hart  v.  Stephens, 
6  Q.  B.  937;  Noodles  v.  Needles,  7  Ohio  St.  432;  Tritt  v.  Colwell,  31  Pa.  St.  228; 
Edwards  on  Bills,  72. 

32.  Sandford  v.  Sandford,  45  N.  Y.  723;  Wells  v.  Moore,  68  Mo.  App. 
499. 

33.  Richardson  v.  Daggett,  4  Vt.  336;  Draper  v.  Jackson,  16  Mass.  480;  Byles 
on  Bills  (Sharswood's  ed.)  (*64],  156.  See  Re  Gadbury,  32  L.  J.  ;3S0;  Allen  v. 
Tate,  58  Miss.  588;  Borst  v.  Spelman,  4  N.  Y.  284;  Sandford  v.  Sandford,  45 
N.  Y.  723;  Wells  v.  Moore,  68  Mo.  App.  499. 

34.  Vance  v.  McLaughlin,  8  Gratt.  289;  May  v.  Boisseau,  12  Leigh,  521; 
Draper  v.  Jackson,  16  Mass.  480;  Hayward  v.  Hayward,  20  Pick.  517;  Gaters 
V.  Madeley,  6  M.  &  W.  423;  Richards  v.  Richards,  2  B.  &  Ad.  447;  Philliskirk  v. 
Pluckwell,  2  Maule  &  S.  393;  Byles  [*64],  155. 

35.  Betts  V.  Kimpton,  2  B.  &  Ad.  273;  Story  on  Bills,  §  93;  1  Parsons  on  Notes 
and  Bills,  85. 

36.  Ibid. 

37.  Whitaker  v.  Whitaker,  6  Johns.  112;  Lee  v.  Wheeler,  4  Ga.  541;  Revel  v. 
Revel,  2  Dev.  &  Bat.  272. 


§§  257,  258  MARRIED   WOMEN  347 

wife's  unsettled  estate,  the  right  to  do  so  passes  to  his  next  of  kin, 
and  not  to  hers.^^ 

§  257.  What  operates  as  a  reduction  into  possession. — Any  act 

of  the  husband  during  marriage  manifesting  a  distinct  purpose  to 
make  his  wife's  choses  in  action  his  own,  operates  as  a  reduction  into 
possession,  and  bars  her  right  of  survivorship;  ^^  but  mere  intention, 
unaccompanied  by  act,  will  not  suffice.^  If  the  husband  elects  to 
bring  suit  upon  the  instrument  in  his  own  name,  in  cases  in  which  he 
may  join  his  wife  or  not,  as  he  pleases,'*^  or  collects  the  proceeds  and 
applies  them  to  his  o\vn  use,"*-  it  is  a  reduction  into  possession.  So, 
if  the  husband  assumes  owTiership  of  the  instrument,  places  it  among 
his  own  effects,  and  indicates  no  intention  to  hold  it  in  trust  for  his 
wife,  it  would  seem  that  it  is  sufficient.''^  But  the  mere  fact  that  he 
takes  it  in  custody  w^ould  not  be  alone  sufficient  per  se,  as  it  might  be 
in  trust  for  his  wife.'*'*  Indorsing  or  transferring  the  instrument  is  a 
reduction  into  possession;  ^^  but  collecting  interest  or  part  payment 
is  only  a  reduction  pro  tanto.^^  And  even  collecting  the  whole  amount, 
if  it  were  promptly  reinvested  for  the  wife  in  other  choses  in  action, 
would  not  defeat  the  wife's  rights/^ 

Nor  would  mere  authority  to  an  agent  to  collect,  not  being  a  power 
coupled  with  an  interest."**  The  bankruptcy  of  the  husband  does  not 
operate  a  reduction  into  possession. ''^  But,  in  the  United  States,  it 
luis  been  held  tliat  an  a.^signment  under  an  insolvent  law  defeats  the 
wife's  right  of  survivorship.^ 

§  258.  Marriage  of  single  woman  who  is  party  to  bill  or  note. — 

38.  Schouler  on  Domestic  Relations,  162. 

39.  1  Parsons  on  Notes  and  Bills,  86. 

40.  Blount  V.  Bestland,  5  Ves.  Jr.  515. 

41.  Oglander  v.  Baston,  1  Vera.  396;  2  Ves.  Sr.  677.  See  Schouler  on  Domestic 
Relations,  127. 

42.  1  Parsons  on  Notes  and  Bills,  86.    See  Schouler,  119. 

43.  See  Schouler  on  Domestic  Relations,  119. 

44.  Holmes  v.  Holmes,  28  Vt.  765. 

46.  Scarpellini  v.  Atcheson,  7  Q.  B.  864  (53  Eng.  C.  L.);  Tuttle  v.  Fowler, 
22  Conn.  58;  Byles  (Sharswood's  ed.)  [*65],  156;  1  Parsons  on  Notes  and  Bills,  86. 

46.  Nash  v.  Nash,  2  Mad.  133;  Hart  v.  Stevens,  6  Q.  B.  937. 

47.  Stanwood  v.  Stanwood,  17  Mass.  57. 

48.  1  Parsons  on  Notes  and  Bills,  87. 

49.  Sharrington  v.  Yates,  12  M.  &  W.  855  (overruling  s.  c,  11  M.  &  W.  42); 
Byles  (Sharswood's  ed.)  [*65],  156. 

60.  Glasgow  V.  Sands,  3  Gill  &  J.  96;  Richwine  v.  Helm.  1  Pa.  St.  373. 


348   PERSONS    PARTIALLY   OR   WHOLLY    DISQUALIFIED    §§  259,  260 

If  a  single  woman,  who  is  a  party  to  a  bill,  note,  or  other  contract, 
marries,  her  husband  becomes  responsible  for  by  marriage  he  adopts 
her  fortunes  "for  better  for  worse."  ^^  And  it  matters  not  that  he 
did  not  know,  and  that  his  wife  had  concealed  from  him  the  existence 
of  such  obligations.^-  Husbimd  and  wife  must  be  sued  jointly  on  such 
obligations.^^  But  this  liability  ceases  with  the  marital  relation.  If 
the  husband  dies,  the  wife  alone  is  lial)le,  £md  not  his  personal  rep- 
resentative.^' If  the  wife  dies,  only  her  personal  representative  is 
liable. ^^  But  the  wife's  choses  in  action  unreduced  to  possession  by 
the  husbimd  at  the  time  of  her  death  may  be  followed  in  the  hands  of 
the  husband,  when  he  is  her  administrator,  l)y  her  creditors,  and  sub- 
jected to  payment  of  her  debts  contracted  when  -dfeme  sole.'"^ 


SECTION   V 

PERSONS    UNDER   GUARDIANSHIP    AND    IN    BANKRUPTCY 

§  259.  Persons  under  guardianship,  whether  for  infancy,  imbe- 
cility, improvidence,  or  otherwise,  cannot  contract,  imd,  therefore, 
cannot  be  parties  to  negotiable  instruments."  Therefore,  if  a  spend- 
thrift under  guardianship  indorse  a  note,  he  does  not  pass  title,  and 
is  not  bound  by  the  indorsement.    It  is  simply  void.^ 

§  260.  Incapacities  of  bankrupt.— All  rights  of  property  belong- 
ing to  a  bankrupt  pass  by  his  bankruptcy  to  his  assignee.  He  has, 
therefore,  no  power  of  disposition  over  it,  and  cannot  sue  upon  his 
choses  in  action,  or  transfer  or  indorse  them  to  another. ^^  But  if 
after  bankruptcy,  a  note  be  made  payable  to  the  bankrupt  or  order, 
and  by  him  transferred,  the  maker  is  estopped  to  deny  his  right  to 

51.  1  Bl.  Com.  443;  2  Kent  Com.  143-146. 

52.  Schouler  on  Domestic  Relations,  69. 
63.  Mitchinson  v.  Hewson,  7  T.  R.  348. 

54.  Woodman  v.  Chapman,  1  Campb.  189;  Curtton  v.  Moore,  2  Jones  Eq. 
204;  Bylcs  (Sharswood's  ed.)  [*65],  157. 

55.  2  Kent  Com.  144;  Byles  [*65],  157. 

56.  Heard  v.  Stamford,  3  P.  Wms.  409;  Morrow  v.  Whitsides,  10  B.  Mon.  411; 
1  Parsons  on  Notes  and  Bills,  86. 

57.  Manson  v.  Felton,  13  Pick.  206;  Chew  v.  Bank  of  Baltimore,  14  Md. 
299;  1  Parsons  on  Notes  and  Bills,  89. 

58.  Lynch  v.  Dodge,  130  Mass.  458. 

59.  1  Parsons  on  Notes  and  Bills,  153;  Story  on  Notes,  §  102. 


§  260  PERSONS   UNDER  GUARDIANSHIP  349 

transfer  by  having  made  it  payable  to  him  on  order.^"  If  the  property 
in  the  instrument  had  passed  from  the  bankrupt  before  his  bankruptcy, 
and  the  indorsement,  which  was  intended,  omitted,  he  or  his  assignee 
may  be  compelled  to  indorse  it  afterward.^^  A  note  given  by  a  bank- 
rupt after  his  discharge  for  a  debt  existing  prior  to  the  adjudication, 
upon  condition  that  the  payee  would  dismiss  a  proceeding  to  set  aside 
the  discharge,  is  void;  and  a  subsequent  promise  to  pay  such  a  note 
would  be  also  void.^-  If  a  bankrupt,  who  is  the  payee  of  a  bill  or  note, 
sells  the  same  without  indorsement  before,  and  indorses  it  after 
bankruptcy,  such  indorsement  will  enable  the  holder  to  bring  action 
in  his  own  name,  for  the  property  in  the  note  passed  by  the  sale,  and 
the  indorsement  is  a  mere  form.^^ 

60.  Drayton  V.  Dale,  2  B.  &  C.  293.    See  ante,  §93. 

61.  Smith  V.  Pickering,  Peake,  50;  Ex  -parte  Mowbray,  1  Jac.  &  W.  428;  Wat- 
kins  V.  Maule,  2  Jac.  &  W.  237;  Hughes  v.  Nelson,  29  N.  J.  Eq.  549.  The  Uability 
of  a  bankrupt  indorscr  of  commercial  paper  which  did  not  become  absolute  till 
after  the  filing  of  the  petition  is  a  debt  provable  in  bankruptcy.  In  re  Philip 
Semmer  Glass  Co.,  135  Fed.  77,  appeal  dismissed  203  U.  S.  141,  27  S.  Ct.  50,  51 
L.  Ed.  128.    See  also  Whitwell  v.  Wright,  120  N.  Y.  S.  1065,  136  App.  Div.  246. 

62.  Fell  V.  Cook,  44  Iowa,  485. 

63.  Hersey  v.  Elliot,  67  Me.  527;  Pavey  v.  Stau£fer,  45  La.  Ann.  353,  12  So. 
612,  citing  text. 


CHAPTER  IX 

FIDUCIARIES  AS  PARTIES  TO  BILLS  AND  NOTES 

§  261.  (1)  As  to  personal  representatives. — When  a  person  dies, 
the  administration  of  affairs  of  his  personal  estate,  and  its  distribution 
among  those  to  whom  it  descends,  or  its  appropriation  to  the  pay- 
ment of  debts,  devolves  upon  his  personal  representative.  When 
such  representative  is  appointed  by  the  will  of  the  deceased,  he  is 
termed  his  executor.  When  none  is  named  in  his  will,  or  the  one 
named  declines  to  act,  the  appointment  devolves  upon  the  courts, 
and  the  appointee  is  termed  administrator.  The  executor's  powers 
accrue  at  the  date  of  the  testator's  death,  for  it  is  then  that  his  will 
takes  effect.  But  the  administrator's  powers  accrue  only  from  the 
time  of  his  appointment;  ^  but  they  relate  back  to  the  date  of  the 
decedent's  death.^  If  the  will  be  admitted  to  probate,  a  payment  to 
the  executor  nominated  will  be  valid,  although  it  afterward  transpire 
that  the  will  was  forged.^ 

§  262.  Whether  estate  bound  by  negotiable  instruments. — When 
given  authority  by  the  wnll,  an  executor  may  bind  the  estate  by  a 
note,"*  and  it  has  been  held  that  where  an  administrator,  not  mterested 
in  the  real  estate  of  his  intestate,  obtains  an  order  of  court  authorizing 
him  to  execute  notes  to  raise  assets  with  which  to  pay  debts,  and  to 
mortgage  real  property  to  secure  the  same,  and  the  notes  recite  his 
authority,  he  is  liable  as  administrator  without  assummg  any  personal 
liability;  and  purchasers  of  the  notes  take  with  notice  that  they  w^ere 
made  in  a  representative  capacity.^    Otherwise,  however,  an  adminis- 

1.  Wooley  V.  Clark,  5  B.  &  Aid.  744;  Rand  v.  Hubbard,  4  Mete.  (Mass.) 
256;  Allen  v.  Dundas,  3  T.  R.  125;  1  Parsons  on  Notes  and  Bills,  161. 

2.  Jewett  V.  Smith,  12  Mass.  309;  Lawerence  v.  Wright,  23  Pick.  128;  Miller 
V.  Reigne,  2  Hill  (S.  C),  592;  McVaughters  v.  Elder,  2  Brev.  307. 

3.  Allen  v.  Dundas,  3  T.  R.  125;  Byles  on  Bills  (Sharswood's  ed.)  [*54],  139; 
Thompson  on  Bills,  242;  1  Parsons  on  Notes  and  Bills,  161. 

4.  Harris  v.  Woodward,  133  Ga.  104,  65  S.  E.  250;  Prieto  v.  Leonards,  32  Tex. 
Civ.App.205,74S.W.41. 

5.  Wisconsin  Trust  Co.  v.  Chapman,  121  Wis.  479,  99  N.  W.  341,  105  Am.  St. 

350 


§  262  FIDUCIARIES   AS    PARTIES  351 

trator  or  executor  cannot  bind  the  decedent's  estate  by  any  negotiable 
instrument;  he  can  only  bind  himself.  If  he  make,  accept,  or  indorse 
a  negotiable  instrument  he  will  bind  himself  personally,  even  if  he 
adds  to  his  own  name  the  designation  of  his  office  as  personal  rep- 
resentative. Thus,  if  he  signs  himself  "A.  B.,  executor  (or  adminis- 
trator) of  C.  D.,"  or  "A.  B.,  as  executor  of  C.  D.,"  the  representative 
terms  will  be  rejected  as  surplusage.^    And  an  accommodation  in- 

Rep.  1032.  Where  an  executor  made  a  note  and  borrowed  money  for  the  benefit 
of  the  estate,  and  the  money  was  used  in  the  interest  of  the  estate,  he  is  liable  on 
the  note  as  executor  though  the  note  does  not  disclose  the  fact  on  its  face.  Ellis  v. 
Littlefield,  41  Tex.  Civ.  App.  318,  93  S.  W.  171. 

6.  Edwards  on  Bills,  79,  248;  Story  on  Notes,  §  63;  Story  on  Bills,  §  74;  Thomp- 
son on  Bills,  145,  146;  Childs  v.  Monins,  5  Moore,  282,  2  Brod.  &  B.  460,  6  Eng. 
C.  L.  201;  Aspinall  v.  Wake,  10  Bing.  55;  Christian  v.  Morris,  50  Ala.  586;  Mc- 
Calley  v.  Wilbum,  77  Ala.  552;  Kirman  v.  Benham,  28  Ala.  501;  McEldery  v. 
Chapman,  2  Port.  33;  Higgins  v.  Briggs,  21  Fla.  112,  citing  the  text;  Harris  v. 
Woodard,  133  Ga.  104,  65  S.  E.  205;  Hughes  v.  Treadway,  116  Ga.  663,  42  S.  E. 
1035;  Harrison  v.  McClelland,  57  Ga.  531 ;  Wisdom  v.  Becker,  52  111.  346;  Comth- 
waite  V.  First  Nat.  Bank,  57  Ind.  269;  Tryon  v.  Oxley,  3  Iowa,  289;  Davis  v. 
French,  20  Me.  21;  Walker  v.  Patterson,  36  Me.  273;  White  v.  Thompson,  79  Me. 
207;  Sims  v.  Stillwell,  3  How.  (Miss.)  176;  Carter  v.  Saunders,  2  How.  (Miss.)  851; 
Robertson  v.  Banks,  1  Smedes  &  M.  666;  First  Nat.  Bank  v.  Collins,  17  Mont. 
433,  43  Pac.  499,  52  Am.  St.  Rep.  695;  Casco  Nat.  Bank  v.  Clark,  139  N.  Y.  307, 
34  N.  E.  908,  36  Am.  St.  Rep.  705;  Jenkins  v.  Phillips,  41  App.  Div.  389,  58  N.  Y. 
Supp.  788;  Packard  v.  Dunfee,  104  N.  Y.  S.  140,  119  App.  Div.  599;  Sutherland 
V.  St.  Lawrence  County,  85  N.  Y.  S.  696,  42  Misc.  Rep.  38,  reversed  on  other 
grounds  91  N.  Y.  S.  962,  101  App.  Div.  299;  Morehead  Banking  Co.  v.  Morehead, 
124  N.  C.  622,  32  S.  E.  317,  122  N.  C.  318,  30  S.  E.  331;  McKinney  v.  Peters, 
Dallam's  Decisions,  545;  Williams  National  Bank  v.  Groton  Mfg.  Co.,  16  R.  I. 
597,  17  Atl.  170,  27,  Am.  St.  Rep.  767;  Erwin  v.  Carroll,  1  Yerg.  145;  Warren 
v.  Harrold,  92  Tex.  417,  49  S.  W.  364;  Gregory  v.  Leigh,  .33  Tex.  813;  Arm.strong 
v.  Cache  Valley  Land  Co.,  14  Utah,  450,  48  Pac.  640;  Whitten  v.  Bank  of  Fin- 
castle,  100  Va.  546,  42  S.  E.  309;  Snead  v.  Coleman,  7  Gratt.  305.  King  v.  Thorn, 
1  T.  R.  487,  BuUer,  J.:  "It  is  immaterial  whether  they  (the  executors)  indorse 
it  (the  bill  of  exchange)  as  executors  or  not.  If  they  indorse  it  at  all  they  are 
liable  personally,  and  not  as  executors,  for  their  indorsement  would  not  give 
an  action  against  the  effects  of  the  testator."  The  bill  had  been  indorsed  to 
the  executors  after  the  decedent's  death.  Where  two  executors  gave  a  creditor 
of  the  testator  a  note  whereby  they  "as  executors  severally  and  jointly  promised 
to  pay  the  demand,  with  interest,"  they  were  held  personally  responsible.  Bur- 
rough,  J.,  said:  "They  could  only  charge  his  estate  with  the  original  debt,  and 
although  the  giving  the  note  in  question  might  not  have  amounted  to  the  ad- 
mission of  assets  in  their  hands  at  the  time,  still,  by  the  promise  of  the  payment 
of  interest  thereon,  they  made  the  debt  their  own,  as  it  clearly  showed  it  was 
to  be  paid  on  a  future  day,  and  amounted  in  effect  to  a  request  to  the  plaintiff 
to  forbear  to  sue  them  on  the  original  demand."  To  the  same  effect  see  Hadlock 
V.  Brooks,  178  Mass.  425,  59  N.  E.  1009,  distinguishing  Bank  v.  Wing,  172  Mass. 


352  FIDUCIARIES   AS    PARTIES  §  263 

dorser,  or  acceptor,  who  pays  the  amount  of  the  instrument,  has  no 
claim  against  the  decedent's  estate.^  But  if  the  bill  or  note  of  tlie 
personal  representative  be  taken  for  a  debt  of  the  decedent,  the  estate 
is  discharged  from  liability,  and  the  representative  alone  is  bound.* 

§  263.  Personal  representative's  own  note  for  debt  of  decedent.^ 
— A  personal  representative  may,  however,  execute  a  bill  or  note  for 
the  debt  of  his  testator,  and  he  will  be  personally  bound  to  pay  it 
even  in  the  hands  of  the  original  holder;  for  assets  in  the  hands  of  the 
personal  representative  constitute  a  sufficient  consideration  for  a 
promise  by  him  to  pay  the  testator's  debt,  and  the  promise  being  in 
writing,  no  proof  of  consideration  is  necessary,  even  if  the  instrument 
be  nonnegotiable.'°  But  as  between  the  original  parties  the  personal 
representative  may  rebut  the  prima  facie  evidence  of  assets,  and  show 
total  or  partial  deficiency;  and  he  will  then  be  exonerated  from  liabil- 
ity, unless  there  was  some  other  consideration  moving  to  him  per- 
sonally."   And  he  may,  if  he  desires,  exclude  all  personal  liability 

513,  in  which  the  executor  purported  to  bind  the  estate  by  the  form  of  hia  endorse- 
ment, and  claimed  to  have  the  right  to  bind  it,  and  so  was  held  not  to  have  bound 
himself  personally.  And  while  a  note  given  by  one  as  executor  is  a  personal 
obligation,  it  will  not  prevent  the  enforcement  of  a  mortgage  given  to  secure  said 
note  by  the  executor  upon  the  property  of  the  estate,  where  it  appears  that  such 
obligation  was  made  and  the  money  obtainctl  thereunder  wius  used  by  the  execu- 
tor for  the  benefit  of  the  estate.  See  Iowa  Loan  &  Trust  Co.  v.  Holderbaum,  86 
Iowa,  1,  52  N.  W.  550.  Notes  signed  by  an  e.\ecutor  in  renewal  of  outstanding 
notes  of  the  testator  do  not  create  any  new  liability  against  the  estate.  Bank  of 
Montreal  v.  Buchanan,  32  Wash.  480,  73  Pac.  482. 

7.  Kirkman  v.  Benham,  28  Ala.  501. 

8.  Erwin  v.  Carroll,  1  Yerg.  145;  Wisdom  v.  Becker,  52  Ind.  346;  Comth- 
waite  v.  First  Nat.  Bank,  57  Ind.  269;  Carter  v.  Thomas,  3  Ind.  213.  When 
persons  interested  in  an  estate  assented  to  the  making  of  a  note  for  the  estate  by 
the  executor,  they  are  not  in  a  position  to  complain  that  presentment  for  payment 
was  not  made  in  a  reasonable  time.  State  of  New  York  Nat.  Bank  v.  Kennedy, 
13  O.  N.  Y.  S.  412, 145  App.  Div.  669. 

9.  Post,  §  270. 

10.  Snead  v.  Coleman,  7  Gratt.  300;  Boyd  v.  Johnson  (Tenn.),  14  S.  W.  804, 
citing  the  text. 

11.  Bank  of  Troy  v.  Topping,  13  Wend.  273;  Rucker  v.  Wadlington,  5  J.  J. 
Marsh.  238;  Steele  v.  McDowell,  9  Smedes  &  M.  193;  Byrd  v.  Holloway,  6  Smedes 
&  M.  199;  Edwards  on  Bills,  78.  In  Missouri,  in  an  action  on  a  note,  signed 
"P.  A.,  Executor,"  it  was  held:  1.  That  the  style  executor,  etc.,  should  be  treated 
as  mere  descriptio  personce,  especially  as  the  note  was  on  time  and  carried  interest; 
2.  That  it  prima  facie  imported  consideration,  but  it  was  competent  for  the  maker 
to  show  that  as  an  individual  contract  it  was  without  consideration;  3.  That  in 
such  case  where  consideration  of  the  note  accrued  after  testator's  death,  the 


§§  264,  265  FIDUCIARIES   AS   PARTIES  353 

by  restricting  his  promise  to  pay  "out  of  the  assets  of  C.  D.,"  or  "out 
of  the  assets  of  C.  D,  and  not  otherwise,"  by  such  expression  or  its 
equivalent.  ^^  But  the  instrument  in  that  case,  being  payable  out  of  a 
particular  fund,  would  not  be  negotiable.  ^^  The  surrender  of  promis- 
sory notes  made  by  the  decedent  is  a  sufficient  consideration  for  a 
note  made  individually  by  his  personal  representative.^^ 

§  264.  As  to  his  powers  over  negotiable  instruments  of  the  de- 
ceased.— The  executor  or  administrator  (and  not  the  heir)  has  a 
right  to  the  possession  of  the  bills  and  notes  of  the  deceased;  and  it 
is  his  duty  to  present  and  demand  payment  of  them,  to  give  notice 
in  case  of  their  dishonor,  and  make  protest — in  short,  to  do  respecting 
them  what  would  have  been  the  duty  of  the  decedent  to  do  were  he 
alive. ^^  And  if  a  bill  or  note  be  indorsed  or  assigned  to  a  dead  man, 
whose  death  is  not  known,  it  becomes  the  property  of  his  personal 
representative,  in  like  manner  as  if  he  had  died  after  the  transfer;  ^^ 
so,  likewise,  if  the  transfer  were  made  in  good  faith  with  knowledge 
of  his  death,  as  it  could  be  made  with  no  other  intention  than  to 
place  the  instrument  among  his  assets. ^^  A  personal  representative 
cannot  purchase  in  his  own  right  a  note  indorsed  by  his  decedent. 
He  can  only  pay  it,  as  the  law  forbids  his  speculating  on  the  subject 
of  his  trust.  ^^ 

§  265.  Power  of  personal  representative  to  transfer  by  indorse- 
ment or  assignment. — If  a  bill  or  note  held  by  the  decedent  be  ne- 
gotiable, the  personal  representative  may  transfer  it  by  indorse- 

administrator  would  in  the  first  place  be  liable  de  bonis  propriis,  but  would  be 
entitled  to  reimbursement  out  of  the  assets  of  the  estate.  Rittenhouse  v.  Ammer- 
man,  64  Mo.  197. 

12.  Childs  V.  Monins,  6  Eng.  C.  L.  201;  Snead  v.  Coleman,  7  Gratt.  303;  Car- 
ter V.  Saunders,  2  How.  (Miss.)  851;  Kirkman  v.  Benham,  28  Ala.  501;  Bank  of 
Troy  V.  Topping,  9  Wend.  273;  Story  on  Notes,  §  63;  Story  on  Bills,  §  74;  1  Par- 
sons on  Notes  and  Bills,  161 ;  Edwards  on  Bills,  79.  Or  by  adding  the  words  "but 
not  personally."    Banking  Co.  v.  Morehead,  116  N.  C  413,  21  S.  E.  190. 

13.  Ibid.;  Edwards  on  Bills,  78;  see,  ante,  §  50. 

14.  Harrison  v.  McClelland,  57  Ga.  .531. 

15.  King  V.  Thorn,  1  T.  R.  487;  Thompson  on  Bills,  145;  Byles  (Sharswood's 
ed.)  [*.53],  139;  Jacobs  v.  Maloney,  64  Mo.  App.  270;  Powell  v.  Hurt,  108  Mo. 
507,  17  S.  W.  985;  Bamum  v.  Reed,  136  111.  388,  26  N.  E.  572. 

16.  Murray  v.  East  India  Co.,  5  B.  &  Aid.  204  (Eng.  C.  L.);  Morse  v.  Clayton, 
13  Smedes  &  M.  373. 

17.  1  Parsons  on  Notes  and  Bills,  154. 

18.  Burton  v.  Slaughter,  26  Gratt.  919. 

23 


354  FIDUCIARIES   AS    PARTIES  §  266 

ment;  and  if  nonnegotiable,  by  assignment,'^  unless  the  power  is 
restricted  by  statute.'"  But  the  representative  would  be  liable  in 
the  event  of  dishonor,  unless  he  distinctly  exempted  himself  by  the 
terms  of  the  indorsement.^^  If,  however,  such  transfer  be  for  the 
private  debt  of  the  personal  representative,  it  is  a  fraud  on  the  estate, 
and  is  void  as  to  all  parties  with  notice  or  knowledge  of  it,  even  if 
they  paid  full  value.^^ 

It  is  considered,  however,  that  if  a  check  be  payable  to  and  indorsed 
by  an  administrator  to  a  bank,  the  amount  may  be  properly  placed 
to  his  own  individual  account  and  then  checked  on  by  him  in  his 
personal  character.  ^^ 

§  266.  Transfer  by  one  of  several  personal  representatives. — It 
seems  to  be  now  settled  that  if  there  be  several  executors  or  adminis- 
trators the  bills  or  notes  executed  to  the  deceased  in  his  lifetime  may 
be  indorsed  by  either  one  of  them;  -^  and  an  assignment  of  a  note  of 
the  testator  by  one  of  several  executors  as  collateral  security  for  a 
judgment  against  the  estate  has  been  held  vaUd.^^  It  has  been  held 
otherwise  where  the  note  was  made  payable  to  several  executors  for 
a  debt  due  the  estate;  ~^  but  the  better  opinion  seems  to  recognize 

19.  Rowlinson  v.  Stone,  3  Wils.  1;  Crj'st  v.  Cryst,  1  Smith  (Ind.),  370;  Fisher 
Machine  Works  Co.  v.  Leavenworth  Nat.  Bank,  77  Kan.  26S,  9-1  Pac.  124;  Ca- 
houn  V.  Moore,  11  Vt.  604;  Morse  v.  Clayton,  13  Smedcs  &  M.  373;  Graw  v. 
Hannah,  6  Jones's  Law,  94;  Story  on  Notes,  §  123.  And  such  transfer  will  en- 
able the  indorsee  to  sue  in  a  State  other  than  that  of  the  administrator's  domicile. 
Mackay  v.  St.  Mary's  Church,  15  R.  I.  121;  Munaon  v.  Bank,  19  Wash.  125, 
52  Pac.  1011. 

20.  Jones  v.  Wheeler,  23  Okl.  771,  101  Pac.  1112.  But  in  such  a  case,  when 
the  will  makes  the  executor  a  trustee,  or  gives  him  the  powers  of  a  trustee,  to  hold 
a  note  in  trust  for  the  purpose  contemplated  by  the  testator,  he  has  power  to  sell 
the  note.    Marshall  v.  Myres,  96  Mo.  App.  643,  70  S.  W.  927. 

21.  Foster  v.  Fuller,  6  Mass.  58;  Edwards  on  Bills,  248. 

22.  Miller  v.  Williamson,  5  Md.  219;  Scott  v.  Searles,  7  Smedes  &  M.  498; 
Miller  v.  Helm,  2  Smedes  &  M.  687;  Makepeace  v.  Moore,  5  Gilm.  474.  (This 
rule  was  held  not  to  apply  where  an  administrator  transferred  notes  belonging 
to  the  estate,  to  his  sureties  on  his  official  bond,  as  security  against  their  Uability. 
Rogers  v.  Squires,  98  N.  Y.  49.)  Nugent  v.  Laduke,  87  Ind.  432;  Mathis  v. 
Barnes,  1  Ind.  App.  164,  27  N.  E.  308. 

23.  Safe  Deposit  &  Tr.  Co.  v.  Bank,  194  Pa.  St.  234,  44  Atl.  1064. 

24.  Moseley  v.  Graydon,  4  Strobh.  7;  Dwight  v.  Newell,  15  111.  333;  Sanders 
V.  Blaine,  6  J.  J.  Marsh.  446;  Hertell  v.  Bogert,  9  Paige,  52,  4  Hill,  492;  Edwards 
on  Bills,  79,  80,  248. 

25.  WTieeler  v.  Wheeler,  9  Cow.  34. 

26.  Smith  v.  Whiting,  9  Mass.  334. 


SS  267,  268  FIDUCIAKIES  AS  PARTIES  OOO 

no  such  distinction,  and  regarding  the  note  in  either  case  as  assets 
the  Lorsement  by  one  representative  is  considered  as  effectual  as 
that  of  all." 

S  267.  Incomplete  transfer  by  decedent.-If  the  paper  be  trans- 
ferable by  indorsement  (which  includes  delivery),  the  mere  writmg 
by  the  deceased  in  his  lifetime  of  his  name  upon  it  w^l  be  nugatory 
and  the  personal  representative  cannot  complete  the  transfer  by 
delivery     He  must  himself  in  its  full  legal  sense  mdorse  the  paper, 
that  s,  write  the  transfer  on  it  and  deliver  it.»    In  such  a  case  .t  has 
be  n  said  respecting  the  holder,  to  whom  the  -eeutor  del.ver^^^^^^^ 
note  with  his  testator's  indorsement  upon  it,  but  without  his  own 
"He  Med  to  show  any  legal  title  to  the  note  because  of  "nn 
in  which  it  was  transferred.    He  also  failed  to^how  any  equitable 
title  to  it  because  of  the  manner  in  which  it  -- t™"*";^^'^^/^^^ 
if  the  paper  were  transferable  by  indorsement,  and  the  deceased  ae 
vered  tt  n  his  lifetime,  for  value,  without  indorsement   he  passed 
the^u  table  title  to  it;  and  it  would  be  the  duty  of  the  personal 
repr^ntative  (which  equity,  if  appealed  to,  would  compd  hm.  to 
perform)  to  complete  the  formal  transfer  by  his  indorsement,     but 
he  w3d  be  entitled  t«  add  words  protecting  himself  from  personal 
liability." 

S  268.  Note  payable  to  executor.-It  is  settled  '""^  ^^t^b"' 
or  note  payable  to  "A.,  as  executor."  is  assets  m  "-  1;-^^-^'^^^^^*: 
at  his  election; ''  and  if  he  declares  upMijtaspayable  to  him  as  ex 

27  Bosert  v.  Hertell,  4  Hill,  492;  1  Parsons  on  Notes  and  Bills,  155,  159; 
^,acUy  V.St.  ^l^'^fZ^-^X^'^^Z^tconn.  5.1;  Bromage  v. 
,  ,''•,  ?;  h  ^°'  Mfchtln  li"v  Leavenworth,  30  Vt.  11;  Thomp»,n  on 
S  WiWs  ^  ;.  «;'  O-  V.  Benton,  .3  App.  D.  C.  246,  citin,  te.. 

29    Tavlor  V.  Surget,  U  Hun,  116  (187S),  Brady,  J-  ^    „^-. 

Rankin,  there  cited. 

31.  Thompson  on  Bills,  146;  Story  on  Notes  §  12a 

oi..   jLiiuiui^  HemDhill  v.  Hamilton,  6  Eng.  Kep.  4^o, 

?=n^t?e:n.^^22l.^£el       .^^^ 

to  a  person  by  name,  he  ™«  ^fj^.'"""  "^  *"J,^^^^^       „f  the  person,  not  tending 

Z  r^rirrtr^-Xr^^iThe'r  the  note  as  serving  to  identify 


356  FIDUCIARIES   AS    PARTIES  §  269 

ecutor,  and  charges  it  to  have  been  made  to  him  in  his  representative 
capacity,  he  may  join  counts  upon  promises  to  his  testator  in  his 
lifetime.^^  In  an  EngHsh  case  involving  this  subject,  Graham,  B., 
said:  "Whenever  the  money,  when  recovered,  will  be  assets,  counts 
in  each  character  may  be  joined;  and  that  is  a  fair  and  sound  criterion, 
and  one  which  is  sufficient  to  prevent  all  ambiguity  and  doubt;  it 
ought,  therefore,  to  be  adopted  as  a  never-failing  rule."  ^*  If  a  note 
be  payable  to  a  party  as  executor,  and  be  indorsed  by  him  in  his 
representative  capacity,  it  has  been  held  to  be  notice  that  it  was 
assets  in  his  hands.^^ 

A  note  executed  by  an  executor  in  favor  of  himself  and  his  co- 
executor  for  his  liability  to  the  testator's  estate,  is  not  void  for  want 
of  consideration.  Upon  such  a  note,  where  the  obligation  was  joint 
and  several,  it  was  held  that  an  action  might  be  maintained  by  the 
two  executors  against  an  indorser,  although  one  of  the  plaintiffs  be 
both  obligor  and  obligee,  but  that  it  would  be  otherwise  if  the  obliga- 
tion were  joint  only.^^ 

§  269.  It  was  a  general  rule  of  the  common  law  that  if  a  creditor 
appointed  his  debtor  executor,  it  discharged  his  liability;  and  it  was 
applied  where  the  holder  appointed  the  maker  of  a  note  or  the  ac- 
ceptor of  a  bill  liis  executor."  But  this  rule  was  subject  to  exception 
where  the  assets,  without  such  bill  or  note,  were  insufficient.^^  It 
would  be  going  beyond  the  purview  of  this  work  to  discuss  this  rule 
here,  as  it  has  been  generally  reversed  in  the  United  States  by  statute. 
It  did  not  extend  to  administrators. 

him  as  an  individual,  although,  in  connection  with  other  circumstances,  it  may 
indicate  an  intention  to  Hmit  the  maker's  HabiUty  to  him  in  a  representative  ca- 
pacity. Kitchen  v.  Holmes,  42  Oreg.  252,  70  Pac.  830.  Both  the  legal  and  equit- 
able title  to  a  promissory  obligation  payable  to  R.,  "executor  of"  a  named  estate, 
are  prima  facie  in  R.  individually;  but  parol  evidence  is  admissible  to  show  that 
the  real  interest  is  in  the  estate  represented  by  him,  whenever  it  is  competent, 
under  the  form  of  action  before  the  court,  to  assert  an  equitable  title.  Kennedy 
v.  Gelders,  7  Ga.  App.  241,  66  S.  E.  620. 

33.  Bogert  v.  Hertell,  4  Hill,  503;  Sheets  v.  Peabody,  6  Blackf.  120;  Fry  v. 
Evans,  8  Wend.  530;  King  v.  Thom,  1  T.  R.  487;  Byles  (Sharswood's  ed.),  142. 
But  see  TurnbuU  v.  Ferret,  17  Mart.  703;  1  Parsons  on  Notes  and  Bills,  155,  156, 
note  n. 

34.  Partridge  v.  Court,  5  Price,  412. 

35.  Payne  v.  Flournoy,  29  Ark.  500. 

36.  Faulkner  v.  Faulkner,  73  Mo.  328. 

37.  Byles  on  Bills  (Sharswood's  ed.),  140;  Story  on  Notes,  444.  See  chapter 
XXVIII,  vol.  II,  on  Payment. 

38.  1  Parsons  on  Notes  and  Bills,  162. 


§§  270,  271  FIDUCIARIES   AS   PARTIES  357 

§  270.  Negotiable  note  of  personal  representative  for  decedent's 
debt. — In  Edwards  on  Bills  it  is  said:  ^^  "In  this  State  (New  York) 
the  giving  of  a  note  is  not  payment,  and  consequently,  as  between 
the  original  parties,  the  consideration  may  be  inquired  into,  and  where 
that  fails,  no  recovery  can  be  had  on  a  note  executed  by  a  trustee  or 
administrator;  the  effect  of  his  giving  a  promissory  note  in  his  rep- 
resentative character  which  is  not  negotiable  or  not  transferred,  is  to 
cast  upon  him  the  burden  of  showing  that  he  had  no  funds  out  of 
which  to  pay.^°  If  such  a  note  shows  on  its  face  that  it  is  made  for 
value  received  by  the  heirs  of  the  intestate,  it  does  not  raise  even  a 
presumption  against  the  administrator.^^  But  where  the  note  is  nego- 
tiable, and  contains  an  unqualified  promise  to  pay,  though  signed  with 
the  addition  of  the  words,  'as  administrator,'  the  note  will  be  valid 
in  the  hands  of  a  bona  fide  holder.  Such  words  are  merely  descriptive 
of  the  person,  and  do  not  limit  the  maker's  liability  on  the  note."  ^^ 

§  271.  (2  and  3)  As  to  guardians  and  trustees. — Guardians  can- 
not bind  their  wards'  estates,  nor  trustees  the  estates  of  their  cestuis 
que  trustent  by  bills  or  notes;  and  hence,  though  they  sign  themselves 
as  guardians  or  trustees,  they  are  personally  bound,  because  otherwise 
the  instrument  would  be  invalid.''^    It  is  true  that  they  may  contract 

39.  Page  79. 

40.  Bank  of  Troy  v.  Topping,  9  Wend.  273. 

41.  Ten  Eyck  v.  Vanderpoel,  8  Johns.  121. 

42.  King  V.  Thorn,  1  T.  R.  478.    Ante,  §  263. 

43.  Taylor  v.  DavLs,  110  U.  S.  330,  4  Supp.  Ct.  Rep.  147;  Wright  v.  Byrne,  129 
Cal.  614,  62  Pac.  176;  Conner  v.  Clark,  12  Cal.  168;  Willet  v.  Young,  8  Iowa,  291, 
47  N.  W.  990;  Shepard  v.  Abbott,  179  Mass.  300,  60  N.  E.  782;  Foster  v.  Fuller, 
6  Mass.  58;  Thacher  v.  Dinsmore,  5  Mass.  299;  Robertson  v.  Banks,  1  Smedes& 
M.  666;  Payne  v.  First  Nat.  Bank,  43  Mo.  App.  377;  Webster  v.  Switzer,  15  Mo. 
App.  351;  Farrell  v.  Reed,  46  Nebr.  2.59,  64  N.  W.  959;  Hills  v.  Banister,  8  Cow. 
31;  Ogden  Ry.  Co.  v.  Wright,  31  Oreg.  150,  49  Pac.  975;  Bank  v.  Looney,  99 
Tenn.  278,  42  S.  W.  149,  63  Am.  St.  Rep.  830;  Warren  v.  Harrold,  92  Tex.  417,  49 
S.  W.  364;  Story  on  Notes,  §63;  Story  on  Bills,  §§74,  75;  1  Parsons  on  Notes 
and  Bills,  89,  90.  In  Roger  Williams  Nat.  Bank  v.  Manufatituring  Co.,  16 
R.  I.  504,  17  Atl.  170,  an  indorsement,  "  Trustees  estate  of  A,"  under  a 
power  in  a  will  authorizing  indorsements  by  the  trustees,  was  held  to  create 
a  personal  liability  on  the  part  of  the  trustees,  as  being  merely  descriptio 
personoe.  The  fact  that  a  manager  of  a  business  concern,  who  was  trustee,  has 
made  himself  personally  liable  by  signing  a  note  as  manager,  with  the  addition  of 
the  name  of  the  business  concern,  does  not  affect  the  liability  of  such  concern 
where  it  has  received  the  benefit  of  the  proceeds  of  such  note.  Froelich  v.  Trading 
Co.,  120  N.  C.  39,  26  S.  E.  647.  Where  no  duty  has  been  imposed  on  a  trustee 
which  would  render  it  necessary  for  him  to  borrow  money  and  execute  his  note 


358  FIDUCIARIES   AS    PARTIES  §  271 

to  pay  out  of  an  estate;  but  then  the  payment  would  be  conditional 
on  the  sufficiency  of  the  estate,  and  the  instrument,  therefore,  not 
negotiable.''^  If  a  guardian  take  a  note  payable  to  his  order  as  guard- 
ian for  the  property  of  his  ward,  and  indorse  it  to  a  bona  fide  party  for 
value,  it  has  been  held  that  it  is  a  good  transfer,  the  words,  "as 
guardian,"  etc.,  being  mere  descriptio  personcp^^  But  the  better 
opinion  seems  to  be  that  while  if  the  fiduciary,  indicated  as  payee, 
may  transfer  a  good  title,  provided  he  makes  the  transfer  within  the 
authority  of  and  for  the  benefit  of  his  trust,  yet  that  such  words  as 
trustee,  etc.,  suffixed  to  a  payee's  name  put  his  indorsee  upon  inquiry 
as  to  the  title,  and  if  the  transfer  be  in  fraud  of  the  trust,  the  indorsee 
must  suffer  the  consequence.''^ 

therefor,  a  note  executed  by  him  in  an  attempt  to  bind  the  trust  estate  is  in  viola- 
tion of  his  duty  and  is  nothing  more  than  his  individual  obligation,  and  could  not 
be  enforced  against  the  trust  estate  except  to  the  extent  its  proceeds  have  been 
used  for  the  benefit  of  the  estate.  Farmers'  &  Traders'  Bank  v.  Fidelity  it  Dcj)osit 
Co.,  108  Ky.  384,  56  S.  W.  071.  Where  a  trust  estate  authorizes  the  trustee  to 
mortgage  the  tru.st  property,  but  not  to  enter  into  any  obligation  binding  the 
trustor  or  beneficiaries  personally,  he  is  individually  liable  on  a  note  signed  by 
himself  "trustee,"  when  a  mortgage  on  trust  property  was  given  by  him  to  secure 
the  note.  Hall  v.  Jiuneson,  151  Cal.  GCKJ,  91  Pac.  518,  12  L.  R.  A.  (N.  S.),  1190, 
121  Am.  St.  Rep.  137  ( 1907) .  A  trustee  of  two  different  trust  estates  may  transfer 
a  note  from  one  estate  to  the  other  where  full  value  was  receivtHi  from  one  estate 
and  paid  by  the  other,  and  such  a  transfer  will  be  regarded  in  equity  as  a  com- 
pleted and  executed  transfer  though  there  may  not  have  been  a  formal  indorse- 
ment of  the  note.  French  v.  Hall,  198  Mass.  147,  84  N.  E.  438,  16  L.  R.  A. 
(N.  S.)  205. 

44.  1  Parsons  on  Notes  and  Bills,  90;  Story  on  Bills,  §§  74,  75.  In  a  suit  upon 
a  note  signed  by  a  guardian,  containing  a  provision  that  the  amount  therein 
promised  is  to  be  paid  out  of  the  ward's  estate,  in  the  hands  of  the  guardian,  when 
available,  the  plaintiff  must  allege  and  prove  that  the  time  fixed  for  the  payment 
of  the  note  has  arrived,  and  that  the  condition  can  be  complied  with.  While  the 
note  will  be  construed  on  an  individual  undertaking  of  the  maker,  regardless  of 
his  representative  capacity,  still  the  contract  is  only  a  conditional  promise  to  pay. 
Teasley  v.  Brenan  Assn.,  4  Ga.  App.  243,  61  S.  E.  141  (1908). 

45.  Zellner  v.  Cleveland,  69  Ga.  633.  In  Thornton  v.  Rankin,  19  Mo.  193, 
one  Engleman  bought  land  from  the  guardian  of  a  minor,  and  gave  him  a  note 
describing  him  as  "guardian."  The  latter  indorsed  it  to  plaintiff,  using  simply 
his  name,  and  it  was  held  that  it  carried  no  notice  of  a  trust,  the  words  being 
descriptive  merely.  Westmoreland  v.  Foster,  60  Ala.  448  (semble),  and  Fountain 
V.  Anderson,  33  Ga.  372  (semble),  accord.  See  Field  v.  Schieffelin,  7  Johns.  Ch. 
150;  Jenkins  v.  Sherman,  77  Miss.  884,  28  So.  726;  Farrell  v.  Reed,  46  Nebr.  259, 
64  N.  W.  959. 

46.  Third  Nat.  Bank  v.  Lange,  51  Md.  138,  note  payable  to  "A.  B.,  Trustee." 
See  also  Sturtevant  v.  Jaques,  14  Allen,  523  (bond  and  mortgage);  Shaw  v. 
Spencer,  100  Mass.  382  (certificate  of  stock).     See  post,  §  789;  Dorr  v.  Davis, 


§  271  FIDUCIARIES   AS    PARTIES  359 

Under  Negotiable  Instrument  statute. — The  statute  provides  that 
where  the  instrument  contains  or  a  person  adds  to  his  signature  words 
indicating  that  he  signs  for  or  on  behalf  of  a  principal,  or  in  a  repre- 
sentative capacity,  he  is  not  liable  on  the  instrument  if  he  was  duly 
authorized;  but  the  mere  addition  of  words  describing  him  as  an 
agent,  or  as  filling  a  representative  character,  without  disclosing  his 
principal,  does  not  exempt  him  from  personal  liability.'*^  Under  such 
statute  it  has  been  held  that  where  by  will  a  trustee  was  not  clothed 
with  authority  to  pledge  any  part  of  the  fund  as  security  for  the  pay- 
ment of  a  promissory  note  made  by  him  as  trustee,  although  the 
money  thus  received  went  into  the  trust  funds  and  was  expended 
for  purposes  for  which  income  could  have  been  lawfully  appropriated, 
such  a  promissory  note  was  his  personal  obligation  and  enforcible 
against  him  alone  while  living,  and  after  his  death,  against  his  es- 
tate/^ Where  a  note  was  signed  by  several  persons  "  as  trustees, "  and 
when  the  note  was  given  the  payee  was  informed  substantially  that 
the  defendants  would  not  incur  personal  liability,  and  would  not 
give  their  individual  notes  or  indorsements,  because  they  were  acting 
as  trustees  only,  they  could  not  be  held  individually  liable.''^  So 
far  as  innocent  purchasers  for  value  are  concerned,  however,  the 
representative  character  of  the  party  must  be  disclosed  upon  the 
face  of  the  note.^ 

76  Me.  311,  case  of  guardian;  Strong  v.  Straus,  40  Ohio  St.  87.  As  between  the 
trustee  and  the  beneficiary,  if  the  transaction  is  otherwise  unobjectionable,  the 
former  will  not  lose  his  recourse  against  the  latter  merely  because  the  descriptio 
personce  is  omitted  in  the  note.  Bu.shong  v.  Taylor,  82  Mo.  660;  Hanover  Nat. 
Bank  v.  American  Dock  &  Trust  Co.,  75  Hun,  55,  20  N.  Y.  Supp.  1055.  But  the 
use  of  the  word  "trustee"  is  not  of  itself  sufficient  to  put  the  receiver  of  the  check 
on  notice  that  the  funds  belong  to  a  trust  of  such  a  character  that  the  trustee  is 
limited  in  the  investment  thereof  to  solely  what  are  called  "legal  investments," 
so  as  to  render  the  receiver  of  the  check  liable  for  a  spoliation  of  the  trust  estate 
if  he  loans  the  proceeds  of  the  check  to  stock  procurers  on  stock  collaterals.  See 
Isham  v.  Post,  71  Hun,  184,  23  N.  Y.  Supp.  211,  1168;  Freeman  v.  Bailey,  50 
S.  C.  241,  27  S.  E.  686;  Galloway  v.  Gleason,  61  Mo.  App.  21 ;  McLeod  v.  Despain, 
49  or  536,  90  Pac.  492,  92  Pac.  1088,  19  L.  R.  A.  (N.  S.)  276,  124  Am.  St.  Rep. 
1066,  citing  text;  Hazeltine  v.  Keenan,  54  W.  Va.  600,  46  S.  E.  609,  102  Am. 
St.  Rep.  953,  as  to  a  note  payable  one  as  "attorney,"  and  quoting  text;  Dollar 
Savings  &  Trust  Co.  v.  Crawford,  69  W.  Va.  109,  70  S.  E.  1089.  See  also,  post, 
§  301,  795a. 

47.  Appendix,  sec.  20. 

48.  Tuttle  v.  First  Nat.  Bank,  187  Mass.  533,  73  N.  E.  560,  105  Am.  St.  Rep. 
420. 

49.  Kerby  v.  Ruegamer,  95  N.  Y.  S.  408,  107  App.  Div.  491. 

50.  Megowan  v.  Peterson,  173  N.  Y.  1,  65  N.  E.  738,  as  to  a  note  signed  "Trus- 


360  FIDUCIARIES    AS  PARTIES  §§  271a,  271b 

§  271a.  Clerks,  commissioners  of  court  and  receivers. — In  Ten- 
nessee it  has  been  held  that  although  u  clerk  or  commissioner  of  court 
has  no  power,  unless  conferred  by  the  court,  to  sell  or  otherwise  dis- 
pose of  negotiable  securities  taken  for  i)roperty  sold  under  decree  of 
the  court,  and  although  no  person  can  acquire  a  good  title  to  such 
securities  if  the  trust  character  appear  upon  their  face,  yet  the  in- 
dorsement by  such  fiduciary  would  be  not  absolutely  void,  but  void- 
able only.^'  And  it  has  been  held  that  where  a  receiver,  authorized 
to  continue  and  carry  on  the  business  of  a  corporation,  and  to  purchase 
supplies  and  materials  for  that  purpose,  accepted  a  draft  in  consid- 
eration for  supplies  furnished,  signed  by  his  name  "Receiver,"  he 
was  not  personally  liable. ^^ 

§  271b.  Tax  collectors. — Where  funds  were  held  by  an  officer  as 
tax  collector,  the  State  may  recover  money  paid  to  such  person  on  a 
personal  indebtedness  by  such  officer  on  a  check  signed  by  him  with 
the  letters  "T.  C."  following  his  signature." 

tee,"  the  court  saying:  "We  do  not  undcrHtand  that  the  statute  to  which  wo  have 
alludod  W!us  dosigncd  to  chariKr  the  common-law  rule  in  fhi.s  n-Ranl,  which  is  to 
the  effect  that,  tus  hotween  ihc  oriKinal  parties  and  thos<'  having  notice  of  the  facts 
relied  ui)on  as  constitutinR  a  defense,  the  consideration  and  the  conditions  under 
which  tlie  note  was  delivered  may  be  shown." 

61.  Harrison  v.  Black,  10  Lea,  117. 

62.  Olpherts  v.  Smith,  66  N.  Y.  S.  976,  54  App.  Div.  514. 

63.  State  v.  Jahrans,  117  La.  286,  41  So.  575,  116  Am.  St.  Rep.  208. 


CHAPTER  X 

AGENTS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS 

SECTION  I 

COMPETENCY    AND    AUTHORITY    OF    THE    AGENT — EXPRESS    AUTHORITY 
AND    GENERAL   PRINCIPLES    OF   LIABILITY 

§  272.  Every  person  who  becomes  a  party  to  a  negotiable  instru- 
ment does  not  always  do  so  by  his  own  manual  act.  Such  are  the 
needs  and  conveniences  of  business,  that  bills,  notes,  checks,  and  all 
other  instruments  of  indebtment,  are  frequently  signed  by  some 
one  authorized,  or  professing  to  be  authorized,  to  sign  for  another; 
and  the  principles  by  which  the  authority  of  the  agent,  the  liability 
of  principal  and  agent,  and  the  interpretation  of  such  instruments,  are 
governed,  are  of  prime  importance  to  the  commercial  world.  We  have 
seen  already  what  persons  are  competent  to  become  parties  to  nego- 
tiable instruments.  All  such  persons  may  empower  agents  to  act 
for  them,  and  bind  them  to  all  intents  and  purposes  as  effectually  as 
they  could  bind  themselves.  But  it  is  to  be  observed  that  it  is  not 
necessary  that  the  agent  should  be  himself  competent  to  make  a 
contract.  He  is  the  mere  instrument  of  the  contracting  capacity  and 
will,  and  Mr.  Chitty  says:  "As  this  agency,  is  a  mere  ministerial  office, 
infants,  feme  coverts,  persons  attainted,  outlawed,  excommunicated, 
aliens  and  others,  though  incapal)le  of  contracting  on  their  own  ac- 
count, so  as  to  bind  themselves,  may  be  agents  for  these  purposes."  ^ 

During  the  existence  of  slavery  in  the  United  States  it  was  held 
that  a  slave  might  be  an  agent.-  But  imbeciles,  lunatics,  and  children 
of  tender  years,  who  actuallj^  lack  capacity  to  be  intelligent  instru- 
ments, and  have  not  the  power  or  discretion  to  consent,  could  hardly 
be  regarded  as  competent  to  be  even  the  agents  of  another.^ 

1.  Chitty  on  Bills  (13th  Am.  ed.)  [*28],  36.  See  Edwards,  95;  Coke's  Littleton, 
62a. 

2.  The  Governor  v.  Daily,  14  Ala.  469. 

3.  Thompson  on  Bills,  147. 

361 


362  AGENTS   AS   PARTIES  §§  273,  274 

§  273.  As  to  the  authority  of  the  agent  to  bind  the  principal. — 
The  first  question  whicli  propounds  itself  to  a  party  treating  with 
another  who  represents  himself  to  be  an  agent  and  offers  to  execute 
or  indorse  a  negotiable  instrument,  in  the  name  of  an  alleged  prin- 
cipal, is  this:  Has  this  person  authority  to  bind  his  alleged  principal 
in  this  manner?  The  inquiry  is  vital.  For  if  there  be  no  such  au- 
thority, express  or  implied,  the  alleged  principal  is  not  bound;  and 
the  only  remedy  is  against  the  person  falsely  assuming  to  be  agent. ^ 
It  is  to  be  observed,  too,  that  one  may  be  agent  for  another  in  certain 
matters,  but  not  in  other  matters.  It  is  important,  therefore,  to  see 
if  the  transaction  proposed  comes  within  the  scope  of  the  agent's 
authority.  But  again,  the  agent  may  have  authority  to  bind  the 
principal  in  a  certain  way,  and  yet  not  to  execute  or  indorse  a  nego- 
tiable instrument.  It  is  important,  therefore,  to  see  if  he  has  author- 
ity to  act  in  the  particular  way  which  he  proposes.  And  we  shall 
pursue  these  inquiries  by  considering  the  evidences  of  agency  uniler 
the  several  heads  of,  (1)  Express  Authority,  (2)  Implied  Authority, 
and  hereafter  we  shall  consiiler  Ratification. 

Under  Negotiable  Instrument  statute. — Under  the  statute,^  it  has 
been  held  that  the  authority  of  an  agent  to  indorse  notes  for  the  payee 
may  be  proved  as  agency  is  proved  in  other  cases,  and  by  a  writing 
conferring  the  authority.^ 

§  274.  In  the  first  place,  as  to  the  express  authority  of  an  agent, 

it  is  not  necessary  that  it  should  be  granted  in  any  particular  form, 
unless  it  be  authority  to  execute  an  instrument  under  seal,  in  which 
case  it  also  must  be  under  seal.  Otherwise  the  authority  may  be 
written,  or  oral;  and  the  agent,  to  execute  or  indorse  a  negotiable 
instrument,  needs  nothing  more  than  verbal  authority  so  to  do,' 

4.  The  Floyd  Acceptances,  7  Wall.  676;  Mechanics'  Bank  v.  N.  Y,  &  N.  H. 
R.  Co.,  13  N.  Y.  631;  Andover  Bank  v.  Grafton,  7  N.  H.  289;  Lederer  v.  Union 
Sav.  Bank,  52  Nebr.  133,  71  N.  W.  954.  See  Brown  v.  Rouse,  93  Cal.  237,  28 
Pac.  1044;  Frankland  v.  Johnson,  147  111.  520,  35  N.  E.  480,  37  Am.  St.  Rep.  234. 

6.  Appendix,  sec.  19. 

6.  Scotland  County  Nat.  Bank  v.  Hohn,  146  Mo.  App.  699,  125  S.  W.  539. 

7.  Chitty  (13th  Am.  ed.)  [28],  36,  §§  74,  299;  Curtin  v.  Salmon  River  Hydraulic 
Gold  Min.,  etc.,  Co.,  141  Cal.  308,  74  Pac.  851,  99  Am.  St.  Rep.  75;  Phihps  v. 
Sanger  Lumber  Co.,  130  Cal.  431,  62  Pac.  749;  Foster  v.  Cochran,  89  Ga.  466, 
15  S.  E.  551;  Connor  v.  Hodges,  7  Ga.  App.  153,  66  S.  E.  546  (as  to  authority 
to  indorse);  Fountain  v.  Bookstaver,  141  111.  461,  31  N.  E.  17;  Bettis  v.  Bristol, 
56  Iowa,  41;  A  declaration  of  a  wife  that  her  husband  is  authorized  to  execute 
promissory  notes  in  her  name,  is  not  within  the  statute  of  frauds.  Arnold  v. 
Hopper,  77  Kan.  819,  91  Pac.  76. 


§§  275,  276    agent's  competency  and  authority  363 

though  it  was  once  thought  that  a  formal  power  of  attorney  was 
necessary.^  It  is  obvious,  however,  that  it  is  safer  for  one,  dealing 
with  an  alleged  agent,  to  require  production  of  written  authority; 
or  otherwise  unmistakable  oral  proof  that  authority  had  been  given. 
If  the  authority  is  in  writing,  it  cannot  be  disputed  by  parol  proof  of 
contrary  verbal  instructions  to  the  agent,  or  otherwise;^  besides,  it 
proves  itself  whenever  produced,  and  its  genuineness  is  established. 

§  275.  As  to  joint  agencies. — If  two  or  more  persons  are  au- 
thorized to  bind  tlieir  principal  by  conjoint  action,  all  must  unite, 
as  it  is  their  aggregate,  and  not  their  separate,  action  which  the 
principal  engages  shall  make  him  liable, ^°  Thus,  where  A.  addresses 
a  letter  to  B.,  say,  "  I  hereby  authorize  you  and  C.  to  use  my  name  as 
indorser,"  and  B.,  without  being  joined  bj'  C,  alone  signed  A.'s  name 
as  indorser,  it  was  held  that  A.  was  not  bound.  ^^  And  where  a  num- 
ber of  persons  unite  in  a  power  of  attorney,  authorizing  the  attorney, 
"for  us,  and  in  our  names  and  our  behalf,  to  sign  our  names  as  in- 
dorsers,"  upon  bills  and  notes  offered  by  A.  B.  for  discount,  it  imports 
authority  to  sign  their  names  as  joint  indorsers  only,  and  not  as  sev- 
eral and  successive  indorsers.  ^^ 

If  four  directors  of  a  company  are  essential  to  act  for  it,  and  three 
only  authorize  an  agent  to  draw  bills  in  its  name,  they  will  not  be 
binding.  ^^ 

§  276.  Authority  to  bind  principal  separately,  strictly  construed. 
— Authority  to  bind  the  principal  as  a  party  to  a  negotiable  instru- 
ment is  authority  to  bind  him  separately,  and  does  not  authorize 

8.  Mann  v.  King,  6  Munf.  428. 

9.  Thompson  on  Bills,  147,  148;  Marius,  104;  Beawes,  No.  86. 

10.  Hartford  Fire  Ins.  Co.  v.  Wilcox,  57  III.  180. 

11.  Union  Bank  v.  Bcirne,  1  Gratt.  226. 

12.  Bank  of  United  States  v.  Beirne,  1  Gratt.  234,  539.  In  the  last  case  (Bank 
of  United  States  v.  Beirne,  1  Gratt.  539),  nine  persons  had  united  in  a  power 
authorizing  their  attorney  to  indorse  their  names  jointly  on  all  bills,  notes,  or 
drafts  drawn  by  J.  B.  S.,  to  be  discounted  at  certain  specified  banks  for  the  ac- 
commodation of  J.  B.  S.,  and  the  latter  drew  a  bill  payable  to  the  order  of  one  of 
the  principals  in  the  power,  upon  which  the  attorney  indorsed  the  names  of  all 
his  principals;  and  then  the  note  was  discounted  at  one  of  the  specified  banks  for 
the  accommodation  of  J.  B.  S.  The  bill  being  protested  for  nonpayment,  and 
action  being  brought  against  the  indorsers,  it  was  held  that  the  bill  being  made 
payable  to  one  of  the  principals  in  the  power,  the  indorsement  by  the  attorney 
was  not  such  a  joint  indorsement  as  the  power  authorized. 

13.  Du  Carry  v.  Gill,  4  Car.  &  P.  121 ;  Chitty  on  Bills  [*28],  37. 


364  AGENTS   AS    PARTIES  §§  277,  278 

the  agent  to  bind  him  conjointly  or  as  copartner  with  another.'* 
Authority  "for  him  and  in  his  behalf  to  accept  bills  drawn  on  him  by 
his  agents  and  correspondents,"  has  been  held  to  apply  only  to  the 
principal's  individual,  and  not  to  his  partnership,  affairs;  and  also 
only  to  authorize  acceptance  of  bills  drawn  by  an  agent  in  that 
capacity,  and  not  to  extend  to  a  bill  drawn  by  a  copartner.'^ 

§  277.  Agent  cannot  delegate  authority  involving  judgment  or 
discretion. — As  the  autliority  of  an  agent  is  not  coupled  with  any 
interest,  but  he  is  a  mere  selected  instrument  to  do  certain  things 
for  another,  he  cannot  delegate  his  powers  to  another  unless  au- 
thorized to  do  so.'^  But  if  he  has  power  to  delegate  his  authority, 
he  may  exercise  it.'^  And  merely  emjjloying  another  as  amanuensis 
to  write  the  name,  he  himself  having  determined  upon  the  propriety 
of  doing  so,  would  be  unobjectionable.'**  This  principle  was  recently 
illustrated  in  Arkimsas,  where  A.  authorizetl  B.  to  borrow  money  for 
him  from  C,  and  to  execute  his  note  therefor.  B.  borrowed  the 
money,  and  in  his  presence,  and  by  his  request,  D.  signed  the  note, 
"A.  by  D.;"  and  the  instrument  was  held  to  l)e  the  valid  note  of  A., 
English,  C.  J.,  saying:  "An  agent  cannot  delegate  any  portion  of  his 
power  requiring  the  exercise  of  judgment  and  discretion;  otherwise, 
however,  as  to  powers  or  duties  merely  mechanical  in  their  nature."  '^ 

§  278.  General  and  special  agents. — There  are  some  positions  of 
agency  in  which,  in  the  usual  course  of  business,  the  agent  draws, 
indorses,  or  accepts  negotiable  instruments;  and  in  all  such  cases 
the  principal  will  be  bound  by  the  agent's  acts,  although  positively 
against  his  instructions.  For  between  general  and  special  agents 
there  is  a  vital  distinction.  Where  the  agency  is  specially  given  to 
do  a  particular  thing,  the  agent  is  circumscribed  within  the  limits 
of  actual  authority;  -°  but  where  the  agency  is  general — as  that  of  a 
bank  cashier,  for  instance — all  acts  within  the  scope  of  that  general 

14.  Stainback  v.  Reed,  11  Gratt.  281;  Bryan  v.  Berry,  6  Cal.  394. 

15.  Attwood  V.  Munnings,  7  B.  &  C.  278,  1  Man.  &  R.  66. 

16.  Brewster  v.  Hobart,  15  Pick.  302;  Emerson  v.  Providence  Hat  Mfg.  Co., 
12  Mass.  237;  Shankland  v.  Corporation  of  Washington,  5  Pet.  395. 

17.  Coles  V.  Trecothick,  9  Ves.  274. 

18.  Lord  V.  Hall,  8  C.  B.  627;  Commercial  Bank  v.  Norton,  1  Hill,  501;  Edwards 
on  Bills,  88. 

19.  Weaver  v.  Camall,  35  Ark.  198.    See  also  Ellis  v.  Francis,  9  Ga.  327. 

20.  King  V.  Sparks,  77  Ga.  288;  Story  on  Agency,  §  17.  See  Evans,  etc.,  Co. 
v.  Holder,  16  Tex.  Civ.  App.  300,  41  S.  W.  404. 


§  279  agent's  competency  and  authority  365 

authority  are  binding  on  the  principal.  And  if  he  seeks  to  avoid 
liability,  he  must  show  not  only  a  limitation  of  the  general  authority, 
but  also  that  the  party  dealing  with  the  agent  had  notice.^^  It  is  also 
to  be  observed  that  when  the  authority  of  the  agent  depends  upon 
some  fact  outside  the  terms  of  his  power,  and  which  from  its  nature 
rests  peculiarly  within  the  agent's  knowledge,  the  principal  is  bound 
by  the  representations  of  the  agent,  although  false  as  to  the  existence 
of  such  fact.--  Accordingly  it  has  been  held  that  where  an  agent  was 
authorized  to  make  drafts  on  his  principal,  as  might  be  necessary  in 
a  certain  business,  it  was  an  unconditional  engagement  to  pay  such 
drafts  as  the  agent  might  deem  necessary.^^ 

§  279.  Express  limitation  of  agent's  authority ;  bona  fide  holder. — 

If  the  holder  of  a  hill  place  it  in  tlie  liands  of  an  agent  to  be  sold  in  the 
market,  and  expressly  directs  him  not  to  indorse  it,  and  the  agent 
disobeys  orders,  and  indorses  his  principal's  name,  the  principal  will 
not  be  bound,  even  to  a  bona  fide  holder.^^  But  general  authority  to 
the  agent  to  get  the  bill  discounted,  without  restriction  as  to  the 
mode,  would  imply  authority  to  indorse  it  in  the  principal's  name.-^ 
And  a  subsequent  promise  of  the  principal  to  pay  the  bill  where  he 
had  not  authorized  the  agent  to  indorse,  would  be  nudum  ■pactum}^ 

21.  See  Fenn  v.  Harrison,  3  T.  R.  757;  Edwards  on  Bills,  85,  87.  Following 
the  doctrine  stated  in  the  te.xt,  it  has  been  held  in  New  York,  that  if  the  cashier 
of  a  savings  bank  receives  for  deposit  a  sum  of  money,  and  the  ciushier  places  the 
fund  so  received  in  a  vault  in  the  bank,  and  thereafterward  embezzles  the  fund, 
the  bank  is  liable,  on  the  ground  that  the  cashier  is  a  general  agent,  and  was  in 
the  actual  discharge  of  his  duties  as  such  oflBcer  when  the  deposit  was  received  and 
the  pass-book  issued.  See  Daniels  v.  Empire  State  Sav.  Bank,  92  Hun,  450,  38 
N.  Y.  Supp.  580.  See  authorities  cited  in  notes  to  §  284,  po.s<.  Following  the 
principle  stated  in  the  text,  it  has  been  hold  that  the  principal  is  concluded  by  the 
representation  of  the  agent  as  to  any  extrinsic  fact,  which  rests  peculiarly  within 
his  knowledge,  although  false,  and  which  is  not  ascertainable  by  reference  to  the 
power  in  relation  to  the  act  so  done  by  the  agent.  See  Van  Wagenen  v.  Genesse 
Falls  Sav.  Assn.,  88  Hun,  43,  34  N.  Y.  Supp.  491;  First  Nat.  Bank  of  Indianapolis 
v.  New,  146  Ind.  411,  45  N.  E.  597. 

22.  New  York  &  New  Haven  R.  Co.  v.  Schuyler,  34  N.  Y.  61;  Diddle  on  Stock- 
brokers, 399. 

23.  Merchants'  Bank  v.  Griswold,  72  N.  Y.  472. 

24.  Fenn  v.  Harrison,  3  T.  R.  757.  See  Brown  v.  Rouse,  93  Cal.  237,  28  Pac. 
1044. 

26.  See  German-American  Bank  v.  Carondelet  Real  Estate  Co.,  150  Mo.  570, 
51  S.  W.  691. 

26.  See  German-American  Bank  v.  Carondelet  Real  Estate  Co.,  150  Mo. 
570,  5  IS.  W.  691. 


366  AGENTS   AS   PARTIES  §§  280,  281 

§  280.  Authority  under  written  instruments,  and  signatures  "  by 
procuration."  The  general  principle  that  a  principal  is  bound  by 
act  of  an  agent  acting  within  the  general  scope  of  his  authority, 
notwithstanding  it  is  not  in  conformity  to  it,  is  subject  to  this  limita- 
tion: that  whenever  an  authority  purports  to  be  derived  from  a 
written  instrument,  or  the  agent  signs  the  paper  with  the  words 
"by  procuration,"  in  such  a  case  the  party  dealing  with  him  is  bound 
to  take  notice  that  there  is  a  written  instrument  of  procuration, 
and  he  ought  to  call  for  and  examine  the  instrument  itself  to  see 
whether  it  justifies  the  act  of  the  agent.  Under  such  circumstimces, 
he  is  chargeable  with  inquiry  as  to  the  extent  of  the  agent's  authority; 
and  if,  without  examining  into  it  when  he  knows  of  its  existence — and 
especially  if  he  has  it  in  his  possession — he  ventures  to  deal  with  the 
agent,  he  acts  at  his  peril,  and  must  bear  the  loss  if  the  agent  tran- 
scended his  authority.-^  But  no  such  duty  exists  to  make  inquiry 
respecting  private  instructions  to  the  agent  from  his  principal, 
whether  written  or  oral,  for  they  may  well  be  presumed  to  be  of  a 
secret  and  confidential  nature.^ 

§  281.  Limitations  of  general  authority. — If  authority  be  vested 
in  the  agent  in  very  general  terms,  but  the  instrument  enumerates 
certain  special  objects  and  acts,  this  specification  will  be  regarded 
as  a  limitation  upon  the  general  words;  and  the  authority  will  be 
confined  to  action  within  the  scope  of  the  enumerated  objects,  un- 
less there  be  some  phraseology  in  the  instrument,  or  some  peculiar 
circumstance  which  impresses  a  different  intention  upon  the  instru- 
ment. Thus  it  was  held,  in  New  York,  that  a  power  of  attorney 
to  collect  debts,  to  execute  deeds  of  lands,  to  accomplish  a  complete 
adjustment  of  all  concerns  of  the  principal  in  a  particular  place,  and 
to  do  all  other  acts  which  the  principal  could  do  in  person,  conferred 
no  authority  on  the  agent  to  sign  a  note  in  his  principal's  name,  the 


27.  Stainback  v.  Bank  of  Virginia,  11  Gratt.  259;  Stainback  v.  Read,  11  Gratt. 
281;  North  River  Bank  v.  Aymar,  3  Hill,  262;  Alexander  v.  Mackenzie,  6  C.  B. 
766;  Attwood  v.  Mannings,  7  B.  &  C.  278.  Action  on  acceptance  purporting  to  be 
by  procuration.  Holroyd,  J.,  said:  "The  word  'procuration'  gave  due  notice  to 
the  plaintiffs,  and  they  were  bound  to  ascertain,  before  they  took  the  bill,  that 
the  acceptance  was  agreeable  to  the  authority  given."  Edwards  on  Bills,  85; 
Story  on  Agency,  §  72;  Mount  Morris  v.  Gorham,  169  Mass.  519,  48  N.  E.  341; 
Bryant  et  al.  v.  La  Banque,  L.  R.,  App.  Gas.  170  (1893);  Westinghouse  v.  German 
Nat.  Bank,  188  Pa.  St.  630,  44  Atl.  734. 

28.  North  River  Bank  v.  Aymar,  3  Hill,  262;  Story  on  Agency,  §  73. 


§  282  agent's  competency  and  authority  367 

general  words  being  limited  by  the  matters  specially  mentioned.^ 
And  so  in  England,  where  the  agent  was  authorized  to  manage  certain 
real  estate,  with  general  words  extending  his  powers  to  all  property 
of  the  principal  of  every  description,  and  authorizing  him  "to  do  all 
lawful  acts  concerning  all  the  principal's  business  and  affairs  of  what 
nature  or  kind  soever,"  it  was  held  that  the  agent  could  not  indorse 
bills  in  his  principal's  name.^° 

§  282.  Good  faith  in  agencies. — Perfect  good  faith  is  the  essence 
of  agency;  and  an  agent  has  no  right  to  execute  negotiable  paper  in 
his  principal's  name,  or  use  negotiable  paper  belonging  to  his  principal, 
for  his  individual  purposes;  and  if  the  party  dealing  with  the  agent 
have  notice  that  he  is  thus  acting  in  fraud  of  his  principal's  rights,  he 
cannot  hold  the  principal  Uable.^^  On  the  contrary  the  principal  may 
recover  paper  belonging  to  him  so  transferred  by  the  agent  from  the 
transferee.^-  A  power  of  attorney  to  draw,  indorse,  or  accept  bills 
negotiable  at  a  particular  bank  in  the  principal's  name,  would  be 
construed  as  giving  authority  to  act  only  in  the  separate  individual 
business  of  the  principal;  and  would  carry  no  authority  to  draw  and 
indorse  a  bill  in  his  own  name,  or  in  the  joint  name  of  himself  and  his 
principal. ^^  If  an  agent  acting  under  such  authority  drew  a  bill  in 
his  own  name,  and  indorsed  it  in  his  principal's,  and  caused  it  to  be 
discounted,  and  the  proceeds  passed  to  his  individual  credit,  that 
circumstance  would  show  that  he  was  acting  for  his  o^\^l  benefit,  and 
the  party  so  discounting  the  bill  could  not  recover  against  the  princi- 
pal.^^ Agents  cannot  make  contracts  with  themselves  so  as  to  bind 
their  principals.  The  law  will  not  permit  one  who  acts  in  a  fiduciary 
capacity  to  deal  with  himself  in  his  individual  capacity,^*  nor  can  a 

29.  Rossiter  v.  Rossiter,  8  Wend.  494;  Golinsky  v.  Allison,  114  Cal.  458,  46 
Pac.  295. 

30.  Esdaile  v.  La  Nauze,  1  Younge  &  C.  347.  But  see  Lafourche  Transporta- 
tion Co.  et  al.  V.  Pugh,  52  La.  Ann.  1517,  27  So.  958. 

31.  Stainback  v.  Bank  of  Virginia,  11  Gratt.  269;  Treuttell  v.  Barnadon,  8 
Taunt.  100;  Haynes  v.  Foster,  2  Car.  &  M.  237;  Gerard  v.  McCormick,  130  N.  Y. 
261,  29  N.  E.  115;  Walsh  v.  Hunt,  120  Cal.  46,  52  Pac.  115. 

32.  Treuttell  v.  Barnadon,  8  Taunt.  100. 

33.  Stainback  v.  Bank  of  Virginia,  11  Gratt.  281;  Mechanics'  Bank  v.  Schaum- 
burg,  38  Mo.  228;  First  Nat.  Bank  v.  Gay,  63  Mo.  33. 

34.  Stainback  v.  Bank  of  Virginia,  11  Gratt.  269;  Englehart  v.  Peoria  Plow 
Co.,  21  Nebr.  41. 

35.  San  Diego  v.  San  Diego,  etc.,  R.  Co.,  44  Cal.  112.  See  also  vol.  2, 
§  1611. 


368  AGENTS   AS    PARTIES  §  283 

person  act  as  agent  for  both  parties  unless  the  faft  is  disclosed.^ 
Therefore  a  note  made  by  a  corporation  to  its  trustees  is  against 
public  policy  and  void.^^  Courts  which  do  not  hold  such  a  transaction 
absolutely  void,  regard  it  with  great  suspicion.^ 

§  283.  Illustrations. — So,  where  the  plaintiff  indorsed  bills  to 
A.  B.  specially  as  follows,  "Pay  A.  B.  or  order,  on  account  of  plain- 
tiff," and  A.  B.  pledged  the  bills  with  defendant  for  his  private  debt, 
it  was  held  that  the  form  of  indorsement  was  sufficient  notice  that  the 
agent  had  no  such  power.^^  Nor  will  a  power  of  attorney  to  draw, 
indorse,  or  accept  bills  authorize  the  agent  to  draw  a  bill  in  the 
principal's  name  upon  any  one  not  having  fund  of  the  principal; ''° 
nor  to  draw,  accept,  or  indorse  a  bill  for  the  accommodation  of  a  third 
party,  its  true  construction  limiting  the  agent's  authority  to  act  for 
the  principal,  and  in  his  name  to  draw,  accept,  and  indorse  bills  in 
the  usual  course  of  the  principal's  business. ""^  But  the  principal  would 
be  bound  on  such  accommodation  paper  to  a  bona  fide  holder  without 
notice.^^  And  the  fact  that  a  party  was  general  agent  of  a  firm,  and 
had  been  in  the  habit  of  drawing  drafts,  and  making  notes  and  in- 
dorsements for  them,  may  go  to  the  jury  to  show  by  inference  that  he 
had  authority  to  bind  his  principal  by  an  accommodation  accept- 
ance.''^  So  may  evidence  that  a  dork  had  previously  given  notes  in 
similar  transactions  for  his  principal. ^^ 

36.  Shelton  Implement  Co.  v.  Schieck,  81  Nebr.  826,  116  N.  W.  951,  holding 
that  when  an  agent  for  the  sale  of  machinery  took  a  note  from  a  purchaser  repre- 
senting a  commission  or  bonus  on  the  sale,  the  amount  of  which  he  added  to  the 
purchase  price,  and  also  received  from  his  principal  "commission  certificates" 
showing  the  amount  of  commission  due  from  his  principal  and  payable  when 
the  notes  given  by  the  purchaser  of  the  machinery  were  paid,  the  commission  or 
bonus  note  exacted  by  the  agent  from  the  purchaser  was  voidable  at  the  option  of 
the  maker. 

37.  WUbur  v.  Lynde,  49  Cal.  290. 

38.  Chouteau  v.  Allen,  70  Mo.  338. 

39.  TreuttcU  v.  Barnadon,  8  Taunt.  100;  Byles  (Sharswood's  ed.)  [*34],  112; 
Gerard  v.  McCormick,  130  N.  Y.  261,  29  N.  E.  115. 

40.  Stainback  v.  Bank  of  Virginia,  11  Gratt.  269. 

41.  Wallace  v.  Branch  Bank,  1  Ala.  565;  North  River  Bank  v.  Aymar,  3  Hill, 
262;  Nichols  v.  State  Bank,  3  Yerg.  107;  Myers  v.  Walker  Bros.  &  Co.,  104  Ga. 
316,  30  S.  E. 842. 

42.  Edwards  v.  Thomas,  66  Mo.  469. 

43.  Commercial  Bank  v.  Norton,  1  Hill  (N.  Y.),  501. 

44.  Valentine  v.  Packer,  5  Pa.  St.  333;  Garrison  v.  O'Donald,  73  Mo.  App. 
621;  Bank  of  Ukiah  v.  Mohr,  130  Cal.  268,  62  Pac.  511. 


§  284  agent's  competency  and  authority  369 

§  284.  Notice  of  agent's  mala  fides. — If,  however,  an  agent  au- 
thorized generally  to  "sell,  indorse,  and  assign  notes"  by  his  prin- 
cipal, through  a  power  of  attorney,  borrow  money,  and  offer  his 
principal's  notes  as  security,  indorsed  by  himself,  it  has  been  held 
that  the  principal  would  be  bound,  although  the  money  was  borrowed 
in  the  agent's  name,  and  used  by  him  in  his  private  business,  unless 
the  party  dealing  with  the  agent  knew  of  the  intended  misappropria- 
tion of  the  funds.  And  Lord  Brougham  said:  "It  is  said  that  the 
indorsement  was  only  to  be  made  for  the  benefit  of  the  principal,  and 
not  for  the  purposes  of  the  agent.  We  do  not  see  how  this  very 
materially  affects  the  case,  for  it  only  refers  to  the  use  to  be  made  of 
the  funds  obtained  from  the  indorsement,  not  to  the  power;  it  relates 
to  the  purposes  of  the  execution,  not  to  the  power  itself;  and  though 
the  indorsee's  title  must  depend  upon  the  authority  of  the  indorser, 
it  cannot  be  made  to  depend  upon  the  purposes  for  which  the  indorser 
performs  his  act  under  the  power."  ^^  So,  the  principal  will  be  bound 
in  all  cases  where  there  is  a  misappropriation  of  funds  obtained  under 
a  power  exercised  by  the  agent  in  conformity  with  his  authority, 
unless  the  holder  had  notice.'*®  And,  however  much  an  agent  may 
betray  his  trust,  a  bona  fide  holder  of  the  bill  or  note,  without  notice, 
may  hold  the  principal  liable.'*^  The  principal  would,  therefore,  be 
bound  on  an  accommodation  indorsement  made  by  the  agent  in 
his  name,  in  the  general  scope  of  agency,  to  a  bona  fide  holder  with- 
out notice.^ 

An  agent  may  be  called  as  witness  to  prove  his  agency,  but  his 


45.  Bank  of  Bengal  v.  McLeod,  7  Moore  P.  C.  35;  Bank  of  Bengal  v.  Fagan, 
7  Moore  P.  C.  61. 

46.  North  River  Bank  v.  Aymar,  3  Hill,  262;  Mars  v.  Mars,  27  S.  C.  135; 
Lederer  v.  Union  Sav.  Bank,  52  Nebr.  133,  71  N.  W.  954;  City  Nat.  Bank  v. 
Thomas,  46  Nebr.  862,  65  N.  W.  895. 

47.  Exchange  Bank  v.  Monteith,  17  Barb.  171.  And  it  has  been  held  that 
knowledge  cannot  be  imputed  to  a  bank  of  its  cashier's  intention  to  embezzle 
the  proceeds  of  a  promissory  note  when  it  should  be  discounted  by  him  at  the 
bank,  and  the  fact  that  he  did  embezzle  such  proceeds  is  not  a  defense  to  an  ac- 
tion on  the  note  by  the  bank  against  the  maker,  who  is  an  accommodation  party — 
if  an  agent,  while  acting  for  his  principal,  is  at  same  time  committing  an  inde- 
pendent, fraudulent  act  upon  his  own  account  neither  his  fraud  nor  his  knowledge 
of  it  is  to  be  imputed  to  the  principal.  Indian  Head  Nat.  Bank  v.  Clark,  166  Mass. 
27,  43  N.  E.  912.  See  also  First  Nat.  Bank  of  Grafton  v.  Babbidge,  160  Mass.  563, 
36  N.  E.  462;  Chase  Nat.  Bank  v.  Faurot,  149  N.  Y.  532,  44  N.  E.  164.  Com- 
pare Walsh  V.  Hunt,  120  Cal.  46,  52  Pac.  115. 

48.  Edwards  v.  Thomas,  66  Mo.  467. 

24 


370  AGENTS   AS    PARTIES  §§  285-286a 

declarations  are  not  admissible  evidence  against  the  alleged  principal 
until  the  fact  of  agency  is  established.''^ 

The  principle  that  the  transferrer  of  a  negotiable  instrument 
warrants  its  genuineness  extends  to  transfers  by  an  agent,  unless 
he  discloses  his  agency,  and  also  the  name  of  the  principal.  Other- 
wise, if  the  bill  or  note  which  he  transfers  be  forged,  in  which  case  he 
will  be  bound. ^ 

§  285.  Infirmity  of  principal's  title  afifects  agent. — If  a  man  hold 
a  bill  or  note  as  agent  of  another,  and  the  circumstances  be  such 
that  the  principal  cannot  recover,  the  infirmity  of  the  principal's 
titles  infects  his  also,  and  he  cannot  recover.^^  Thus  M.  &  Co.  re- 
mitted to  the  plaintiff  in  London  a  Bank  of  England  note  for  £500, 
stating  that  they  would  at  a  future  day  draw  for  the  amount.  The 
plaintiff  presented  it  for  payment,  but  the  bank  detained  it,  on  the 
ground  that  it  had  been  obtained  by  means  of  a  forged  draft  from  a 
previous  holder.  In  a  suit  by  the  plaintiff  against  the  bank,  it  was 
held  that  the  plaintiff  was  identified  with  his  principals,  and  there 
being  no  evidence  that  they  had  given  full  value,  he  could  not  re- 
cover. ^^ 

§  286.  For  what  acts  principal  not  bound. — A  principal  is  not 
bound  for  the  criminal  acts  of  his  agent,  unless  he  participates  in 
them,  or  has  been  guilty  of  gross  negligence.  Thus,  where  a  bank 
clerk,  or  cashier,  embezzles  a  special  deposit  in  the  bank,  the  bank 
is  not  liable,  as  this  is  not  its  act,  unless  it  had  complicity  in  the 
wrong,  or  was  grossly  negligent. ^^ 

§  286a.  Liability  for  special  deposits. — Whether  or  not  a  bank 

49.  National  Mechanics'  Bank  v.  National  Bank,  36  Md.  5;  Streeter  v.  Poor, 
4  Kan.  412;  Poore  v.  Magruder,  24  Gratt.  200;  1  Phillips  on  Evidence  [*515], 
note,  144;  Murphy  v.  Gumaer,  12  Colo.  App.  472,  55  Pac.  951.  And  the  declara- 
tions of  the  agent  are  not  admissible  unless  in  respect  to  a  transaction  in  which 
he  is  authorized  to  appear  for  his  principal.  See  Merchants'  Nat.  Bank  v.  Clark, 
139  N.  Y.  315,  36  Am.  St.  Rep.  710,  34  N.  E.  910;  Holland  v.  Van  Beil,  89  Ga. 
223,  15  S.  E.  302;  Bank  of  New  York  v.  American  Dock  &  Trust  Co.,  143  N.  Y. 
559,  38  N.  E.  713. 

50.  Lyons  v.  Miller,  6  Gratt.  440;  Merriam  v.  Walcott,  3  Allen,  258.  See 
§  740a. 

51.  Lee  v.  Zagury,  8  Taunt.  1144;  Byles  [♦391]. 

52.  Solomons  v.  Bank  of  England,  13  East.  235,  1  Rose,  99. 

63.  Sturges  v.  Keith,  57  111.  454;  Exchange  Nat.  Bank  v.  Bank  of  Little  Rock, 
7  C.  C.  A.  Ill,  58  Fed.  140. 


§  287  agent's  competency  and  authority  371 

receiving  bonds  or  other  securities  for  keeping  on  special  deposit  is 
liable  in  trover  to  the  owner  in  the  event  of  their  being  stolen  while 
in  its  possession,  is  a  much  debated  question.  Like  other  bailees,  if 
the  bailment  be  gratuitous,  the  bank  will  not  be  liable  unless  the  loss 
be  occasioned  by  its  gross  negligence.  This  is  conceded.^"*  But 
whether  it  is  liable  at  all  is  a  matter  about  which  the  decisions  are  in 
conflict.  By  some  the  view  is  taken  that  the  receipt  of  securities,  or 
valuables  of  any  kind,  on  special  deposit,  is  ultra  vires  of  the  ordinary 
business  of  banking,  and  that  the  bank  will  not  be  bound.  ^^  By 
others,  that  such  transactions  have  become  by  usage  part  of  the  duty 
or  business  of  a  bank,  and  belongs  to  the  very  nature  of  such  an  insti- 
tution. °^  In  New  York  the  latter  view  obtains,  and  has  been  re- 
cently applied  to  hold  a  national  bank  liable,  it  being  considered  that 
such  a  bank  has  the  incidental  power  to  receive  special  deposits 
gratuitously  or  otherwise,  though  it  is  not  within  the  enumerated 
powers  conferred  by  statute."  And  as  said  by  the  United  States 
Supreme  Court,  it  may  now  be  considered  as  settled  that  if  a  bank  be 
accustomed  to  take  such  deposits,  and  the  fact  is  kno^vn  and  ac- 
quiesced in  by  the  directors,  there  is  the  same  liability  upon  it  for  loss 
of  the  deposit  occasioned  by  its  gross  negligence  as  if  the  deposit  had 
])een  authorized  by  the  terms  of  its  charter.^* 

§  287.  Agent  not  liable  for  losses. — Losses  occasioned  by  fraud 
or  failure  of  third  parties,  to  whom  an  agent  has  given  credit,  pur- 

64.  Scott  V.  National  Bank,  72  Pa.  St.  471;  Foster  v.  Essex  Bank,  17  Mass. 
479;  Pattison  v.  Syracuse  Nat.  Bank,  80  N.  Y.  83;  Chattahoochee  Nat.  Bank  v. 
Schley,  58  Ga.  369. 

55.  Wiley  v.  lirst  Nat.  Bank,  47  Vt.  546;  Whitney  v.  First  Nat.  Bank,  50  Vt. 
389;  Third  Nat.  Bank  v.  Boyd,  44  Mo.  47;  First  Nat.  Bank  v.  Ocean  Nat.  Bank, 
60  N.  Y.  278.  This  view  was  taken  in  a  former  edition  of  this  work,  but  the 
decision  of  the  United  States  Supreme  Court  cited  below  and  concurring  authori- 
ties have  induced  a  change  of  the  text. 

56.  Foster  v.  Essex  Bank,  17  Mass.  479;  Pattison  v.  Syracuse  Nat.  Bank,  80 
N.  Y.  82;  Chattahoochee  Nat.  Bank  v.  Schley,  58  Ga.  369,  where  it  is  said:  "By 
habitually  receiving  through  its  cashier  special  deposits  to  be  kept  gratuitously 
for  mere  accommodation,  a  national  bank  will  incur  liability  for  gross  negligence 
in  respect  to  any  such  deposits  received  in  the  usual  way."  Turner  v.  First  Nat. 
Bank,  26  Iowa,  562;  Smith  v.  First  Nat.  Bank,  99  Mass.  605;  Lancaster  County 
Nat.  Bank  v.  Smith,  62  Pa.  St.  47,  distinguished  from  Scott  v.  National  Bank,  72 
Pa.  St.  471,  where  no  negligence  was  shown;  First  Nat.  Bank  v.  Graham,  79  Pa. 
St.  106,  no  negligence  shown. 

67.  Pattison  v.  Syracuse  Nat.  Bank,  80  N.  Y.  83.    See  other  cases  supra. 
58.  National  Bank  v.  Graham,  100  U.  S.  (10  Otto)  702. 


372  AGENTS   AS   PARTIES  §§  288,  288a 

suant  to  the  regular  and  accustomed  practice  of  trade,  are  not  cliarfz;e- 
able  upon  him."*  And,  therefore,  where  the  receiver  of  Lord  Plym- 
outh's estate  took  bills  in  the  country  of  persons  who  at  the  time 
were  reputed  to  be  of  credit  and  substance,  in  order  to  return  the 
rents  in  London,  and  the  bills  were  dishonored  and  the  money  lost, 
the  receiver  was  excused.^"  And  where  remittance  is  made  by  post, 
according  to  instructions,^^  in  the  usual  way  of  business,  the  party 
making  it  is  not  liable  for  any  resulting  loss.*'- 

A  signature  by  an  agent  with  authority  satisfies  the  allegation  of 
signature  by  the  party's  own  hand.*^ 

§  288.  Presumed  continuance  of  general  authority. — A  general 
authority  to  an  agent  is  presumed  to  continue  until  its  revocation 
is  generally  known.  Therefore  (to  use  the  language  of  Chitty),  after 
the  discharge  of  a  clerk  or  agent  usually  employed  to  draw,  accept, 
or  indorse  bills  or  notes,  the  employer  will  be  bound  by  his  signature, 
made  after  the  determination  of  his  authority,  until  the  discliarge 
be  generally  kno\vn.«^  And  if  A.  permit  B.  to  draw  bills  in  his  name, 
he  will  be  liable  as  drawer  to  ignorant  indorsees,  although  he  had  no 
interest,  nor  knew  of  the  particular  bills  drawn  in  fraud  of  him  l)y  B., 
though  he  will  not  be  liable  to  a  payee,  who  had  knowledge  of  the 
impropriety  of  the  transaction.^^ 

§  288a.  Revocation  of  authority  and  limitation.— When,  there- 
fore, the  authority  of  such  an  agent  has  been  determined,  or  he  has 
been  discharged  by  his  employer,  and  there  is  reason  to  apprehend 
that  he  will  circulate  bills  in  his  employer's  name,  it  is  advisable  for 
the  latter  to  give  notice  of  the  determination  of  the  agent's  authority 
through  the  public  press,  and  also  to  all  his  correspondents  individu- 
ally—notice in  the  public  press  not  being  in  general  sufficient  to 
affect  a  former  customer,  unless  he  has  had  express  notice  thereof.^ 

69.  Chitty  on  Bills  [*36],  49. 

60.  Knight  v.  Lord  Plymouth,  2  Atk.  480. 

61.  National  Bank  of  Bellefonte  v.  McManigle,  69  Pa.  St.  156. 

62.  Warwick  v.  Noakes,  Peake  N.  P.  68. 

63.  Porter  v.  Cumings,  7  Wend.  172;  Pease  v.  Morgan,  7  Johns.  468;  Booth 
V.  Grove,  Moody  &  M.  182,  3  Car.  &  P.  335;  Helmsley  v.  Loader,  2  Campb. 
450;  Jones  v.  Mars,  2  Campb.  306  (overruling  Levy  v.  Wilson,  5  Esp.  180). 

64.  Chitty  on  Bills  (13th  Am.  ed.)  [*32],  42;  Story  on  Agency,  §§  470,  473; 
Anon.  v.  Harrison,  12  Mod.  346. 

65.  Smith  v.  Stranger,  Peake  Add.  116;  Chitty  [*32],  42. 

66.  Chitty  [*32],  42. 


289 


IMPLIED    AUTHORITY    OF   AGENT  373 


A  different  rule  applies  as  to  special  and  limited  agencies.  When 
their  authority  terminates  by  its  own  limitation  the  agents  can  no 
longer  bind  their  principals.  Thus,  where  plaintiff,  being  about  to 
leave  home,  deposited  a  power  of  attorney  with  his  bank,  authorizing 
his  clerk  to  draw  checks  on  his  account  for  fifteen  days,  and  after 
that  time  the  clerk  continued  to  draw  checks,  and  used  the  money 
for  his  own  purposes,  it  was  held  that  the  loss  should  fall  on  the  bank, 
and  that  the  principal  was  not  bound  after  the  fifteen  days,  as  to 
checks  so  drawn.  The  fact  that  the  checks  had  been  returned  in  the 
principal's  bank-book  did  not  bind  him  by  acquiescence,  or  estoppel, 
because  the  check  drawer  was  his  cashier,  and  the  fact  that  he  had 
drawn  the  checks  after  expiration  of  his  authority  was  not  discovered 
by  the  principal.^^ 

Death  operates  as  revocation  of  all  agencies  not  coupled  with  an 
interest  vested  in  the  agent  ;^^  but  war  between  the  countries  of  the 
principal  and  the  agent  does  not.^ 

SECTION  II 

IMPLIED   AUTHORITY   OF   AGENT 

§  289.  In  the  second  place,  as  to  the  implied  authority  of  an  agent 
to  bind  his  principal:  such  authority  may  frequently  be  inferred 
from  the  circumstances  of  the  case.  Thus  if  the  principal  stand  by 
and  tacitly  concur  in  the  act  of  the  agent  signing  his  name,  he  would 
be  as  strictly  bound  as  if  he  had  expressly  authorized  the  agent  so  to 
do.  So  authority  may  be  implied  from  the  course  of  business,  and 
employment,  or  from  repeated  recognitions  by  the  principal  of  the 
agent's  authority .^°    The  circumstances  which  give  rise  to  the  im- 

67.  Manufacturers'  Nat.  Bank  v.  Barnes.  65  lU.  69.    See  Weiser  v.  Denison, 

10  N.  Y.  68.  ,    J     ,. 

68.  1  Parsons  on  Contracts,  71.  It  has  been  held  that  agency  is  revoked  where 
principal  is  in  articulo  mortis.  Matter  of  James,  146  N.  Y.  78,  40  N.  E.  876,  48 
Am.  St.  Rep.  774. 

69.  See  ante,  chapter  VIII,  section  II,  §  222. 

70.  Lake  Shore  Nat.  Bank  v.  Colliery  Co.,  51  Hun,  63;  Kansas  City,  etc.,  R. 
Co.  V.  Ivy  Leaf  Coal  Co.,  97  Ala.  705,  12  So.  395;  May  v.  Jarvis-Conklin  Mort- 
gage &  Trust  Co.,  138  Mo.  275,  39  S.  W.  792;  Garrison  v.  O'Donald,  73  Mo.  App. 
621 ;  Gilden,  etc.,  Co.  v.  National  Bank,  16  C  C  A.  534,  69  Fed.  912.  And  where 
an  entire  business  is  placed  under  the  management  of  an  agent,  the  authority  of 
the  agent  is  presumed  to  be  commensurate  with  the  necessities  of  the  situation. 
Whitten  v.  Bank  of  Fincastle,  100  Va.  546,  42  S.  E.  309. 


374  AGENTS   AS    PARTIES  §  290 

plication  of  authority  are  for  the  jury  to  consider;  and  the  jur>'  will  be 
warranted  in  holding  the  principal  liable  if  they  produce  a  strong  and 
reasonable  belief  that  the  authority  existed.  And  where  a  principal, 
after  full  knowledge  of  all  circumstances  of  the  drawing  of  checks  by 
his  agent  upon  his  bank  account  retained  the  fruits  of  the  transactions 
sought  to  be  evaded  as  unauthorized,  he  cannot  be  heard  to  exclude 
from  the  plenary  power  he  conferred  the  conduct  of  the  agent  in 
drawing  unpaid  checks  in  the  hands  of  an  innocent  holder  for  value/ ^ 

§  290.  Construction  of  authority  to  bind  principal  in  a  certain 
character.— The  authority  to  bind  the  principal  in  a  certain  char- 
acter on  a  negotiable  instrument  cannot  be  construed  as  an  authority 
to  make  the  principal  a  party  in  any  other  character.  Thus  authority 
to  draw  a  bill  is  not  of  itself  authority  to  indorse  one;  '^  nor  to  accept 
one;"  nor  does  authority  to  indorse  imply  authority  to  accept  a 
bill;  "^^  nor  to  make  a  several  or  joint  note.'^  So  it  has  been  considered 
that  authority  to  draw  a  bill  upon  the  principal  docs  not  imply  au- 
thority to  the  agent  to  draw  in  his  own  name;  anil  that  the  principal 
would  not  be  estopped  from  refusing  payment  by  having  paid  pre- 
viously a  bill  so  drawn  .^* 

But  under  certain  circumstances  authority  to  bind  the  principal 
in  one  form  might  be  evidence  throwing  light  on  the  question  of 
authority  to  bind  him  in  another.  "It  may  be  admitted,"  said 
Tindal,  C.  J.,  in  a  case  quoted  elsewhere  in  the  text,  "that  an  author- 
ity to  draw  does  not  import  in  itself  an  authority  to  indorse  bills;  but 
still  the  evidence  of  such  authority  to  draw  is  not  to  be  withheld  from 
the  jury,  where  they  are  to  determine  upon  the  whole  of  the  evidence 
whether  an  authority  to  indorse  existed  or  not."  "    Authority  to  sell 

71.  Stotts  City  Bank  v.  T.  A.  Miller  Lumber  Co.,  102  Mo.  App.  75,  74  S.  W. 
472. 

72.  Robinson  v.  Yarrow,  7  Taunt.  455;  Murray  v.  East  India  Co.,  5  B.  &  Aid. 
204.  Power  to  school  directors  to  issue  bonds  does  not  authorize  issue  of  notes. 
School  District  v.  Sippy,  54  III.  287;  Bank  of  Deer  Lodge  v.  Hope  Mining  Co.,  3 
Mont.  146;  Dobson  v.  More,  164  111.  110,  45  N.  E.  243;  State  v.  Hodges,  144 
Mo.  50,  45  S.  W.  1093. 

73.  Attwood  V.  Munnings,  7  B.  &  C.  278;  Sewanee  Mining  Co.  v.  McCall,  3 
Head,  621;  Bank  of  Deer  Lodge  v.  Hope  Mining  Co.,  3  Mont.  146. 

74.  Attwood  V.  Munnings,  7  B.  &  C.  278. 

75.  Cuyler  v.  Merrifield,  5  Hun,  559. 

76.  Bank  of  Deer  Lodge  v.  Hope  Mining  Co.,  3  Mont.  146. 

77.  Prcscott  V.  Flinn,  9  Bing.  19.  See  also  Commercial  Bank  v.  Norton,  1 
Hill  (N.  Y.),  502. 


291 


IMPLIED   AUTHORITY   OF   AGENT  375 


a  note  would  not  authorize  the  agent  to  bind  his  principal  by  a  guar- 
antee of  payment;  ^^  nor  would  authority  to  collect  a  bill  imply  au- 
thority to  sell  it."^  And  a  party  may  be  agent  to  transfer  a  bill  or  note, 
and  yet  not  to  bind  his  principal  by  an  indorsement.^ 

§  291.  So  authority  to  execute  certain  notes  will  not  extend  to 
authorize  an  agent  to  renew  them;  ^^  and  if  the  authority  be  to  sign 
and  indorse  paper  payable  at  a  particular  bank,  the  agent  cannot 
under  it  sign  or  indorse  paper  payable  at  any  other  bank;  ^^  nor  will  au- 
thority to  sign  a  note  or  bill  for  a  particular  purpose  be  valid  in  re- 
spect to  any  other  purpose.^^  And  if  the  authority  specify  the  time  at 
which  the  paper  is  to  be  made  payable — as,  for  instance,  in  six  months 
—it  will  not  be  binding  on  the  principal  if  made  payable  at  a  dif- 
ferent time— as,  for  hastance,  in  sixty  days.**"  But  where  a  party  gave 
verbal  authority  to  agent  to  sign  a  twenty-days '  note,  but  did  not 
intend  to  limit  his  authority  to  that  time,  and  the  note  was  made  pay- 
able at  thirty  days,  it  was  held  that  the  jury  should  consider  all  the 
circumstances,  and  if  they  regarded  the  difference  in  time  as  im- 
material, the  principal  should  be  held  liable.^^  And  authority  to 
renew  a  note  at  sixty  or  ninety  days  has  been  held  to  authorize  its 
renewal  at  eighty  days,  there  being  no  violation  of  the  object  and 
intention  of  the  parties.^ 


78.  Graul  v.  Strutzel,  53  Iowa,  712. 

79.  Smith  v.  Johnson,  71  Mo.  382;  Goodfellow  v.  Landis,  36  Mo.  168;  Ryhiner 
V.  Feickert,  92  111.  305;  Feiner  v.  Puetz,  77  Mo.  App.  405. 

80.  Brown  v.  Donnell,  49  Me.  421;  Security  Bank  v.  Kingsland,  5  N.  Dak. 
263,  65  N.  W.  697. 

81.  Ward  v.  Bank  of  Kentucky,  7  Mon.  93. 

82.  Morrison  v.  Taylor,  6  Mon.  82;  Craighead  v.  Peterson,  72  N.  Y.  279. 

83.  Nixon  v.  Palmer,  8  N.  Y.  389;  Hortons  v.  Townes,  6  Leigh,  59,  Tucker,  P., 
saying:  "The  authority  was  to  execute  a  note  for  the  purpose  of  raising  money; 
the  note  executed  was  not  of  purpose  to  raise  money  for  the  agent,  James  Townes, 
but  to  pay  a  debt  contracted  at  that  time  with  the  plaintiffs  for  groceries,  with 
an  agreement  that  if  it  could  not  be  discounted,  the  plaintiffs  were  to  hold  the 
note  as  their  own  property,  and  as  a  note  binding  on  the  defendants,  according  to 
the  usual  effect  of  such  notes.  Thus,  the  defendants,  who  had  only  authorized 
themselves  to  be  made  debtors  to  one  of  the  banks,  are  made  debtors  to  an  in- 
dividual. Here,  it  must  be  confessed,  is  a  clear  and  obvious  difference  in  form, 
between  the  authority  given  and  the  contract  made.  Is  there  no  difference  in 
substance?    Very  great,  I  apprehend." 

84.  Batley  v.  Carswell,  2  Johns.  48;  Edwards  on  Bills,  84. 

85.  Adams  v.  Flannagan,  35  Vt.  410. 

86.  Bank  of  South  Carolina  v.  M'Willie,  4  McCord,  438. 


376  AGENTS   AS    PARTIES  §  292 

§  292.  Authority  implied  by  agency  to  do  certain  acts. — When 
the  authority  to  execute  or  indorse  a  negotialde  instrument  is  sought 
to  be  deduced  from  an  agency  to  do  certain  other  acts  it  must  be 
made  to  appear  affirmatively  that  the  signing  or  indorsement  of  such 
an  instrument  was  within  tlie  general  objects  and  purposes  of  the  au- 
thority which  was  actually  conferred.  And  in  interpreting  the  au- 
thority of  the  agent,  it  is  to  l)e  strictly  construed."  Thus  a  general 
authority  to  transact  business  for  the  principal,  will  not  autliorize 
the  agent  to  bind  him  as  a  party  to  negotiable  paper,  according  to 
many  authorities,  and  the  general  principles  of  the  law  of  agency.^ 
It  has  been  held  that  authority  to  triuisact  all  business  for  the  prin- 
cipal, would  empower  the  agent  to  transfer  a  negotiable  instru- 
ment in  his  principal's  name;*^  but  there  is  authority  to  the  con- 

87.  Byloson  Hills  (Sharswood's  ed.)  [•32],  lOS;  Sewano<»  MininR  Co.  v.  McCiiII, 
3  Uviul,  019;  Conncl  v.  McLoiiRhlin,  28  Oreg.  230,  42  Pac.  218,  citing  and  ap- 
proving text;  Holcna  Nat.  Bank  v.  Rocky  Mountain  Tcli'gra|)h  Co.,  20  Mont. 
379,  51  Pac.  829,  03  Am.  St.  Rep.  028;  State  v.  Hoilges,  144  Mo.  50,  45  S.  VV.  1093; 
Jackson  Paper  Mfg.  Co.  v.  Commercial  Nat.  Bank,  199  111.  151,  65  N.  E.  136,  59 
L.  R.  A.  657,  93  Am.  St.  Rep.  113,  quoting  text,  and  holding  that  a  superintendent 
of  a  manufacturing  corporation  hius  no  authority  to  indorse  check.  See  also 
Bank  of  Commerce  v.  Baird  Min.  Co.,  13  N.  Mex.  424,  85  Pac.  970,  holding  that 
the  managing  agent  of  a  mining  corporation  ha«  no  implieti  authority  to  draw 
and  cash  bills  of  exchange.  That  an  agent  is  authorized  to  indorse  check  with  a 
stamp  reading  "Pay  to  the  order  of  the  Third  National  Bank  for  deposit.    James 

T.  Prince,  Manager,  by Cashier,"  and  fill  the  blank  therein  with  his 

own  name,  does  not  empower  such  cashier  to  indorse  checks  and  drafts  in  blank, 
so  as  to  collect  the  money  thereon.  Exchange  Bank  v.  Thrower,  118  Ga.  433,  45 
S.  E.  316. 

88.  Sewanee  Mining  Co.  v.  McCall,  3  Head,  619.  Held,  that  authority  to 
general  agent  to  transact  business,  and  to  draw  on  president  of  company,  did  not 
authorize  him  to  accept  a  bill,  even  to  avoid  suspension  of  work  of  great  im- 
portance to  principal.  Byles  [*32],  108;  Chitty  on  Bills  [*29,  30],  39.  Text  cited 
and  approved,  Boord  v.  M.  Ferst's  Sons  &  Co.,  39  Fla.  381;  Fairly  v.  Nash,  70 
Miss.  193,  12  So.  149. 

89.  Bailey  v.  Rawley,  1  Swan,  205.  To  same  effect,  see  Frost  v.  Wood,  2 
Conn.  23.  Where  a  person  signed  a  note  as  surety  and  subsequently  executed 
renewal  notes,  a  further  renewal  note  made  by  his  agent,  for  his  benefit  and  in 
the  course  of  his  business,  was  chargeable  against  his  estate,  when  the  agent  was 
authorized  by  a  power  of  attorney  to  execute  and  deliver  any  and  all  papers 
for  him  and  in  his  name  that  he  himself  could  execute  relating  to  his  personal 
business.  McClure  v.  Corj-don  Deposit  Bank  (Ky.),  106  S.  W.  1177.  Where  an 
agent  is  put  in  charge  of  the  business  of  a  principal,  wnth  power  to  sell  its  goods, 
collect  for  the  same,  and  make  purchases  of  other  dealers  when  it  is  necessary  to 
fill  orders  calling  for  goods  that  may  not  be  in  the  stock  of  which  he  has  charge,  it 
cannot  be  said,  as  a  matter  of  law,  that  the  agent  did  not  have  apparent  authority 
to  pay  for  the  goods  so  purchased  even  by  indorsing  the  checks  of  his  principal 


§  293  IMPLIED   AUTHORITY   OP  AGENT  377 

trary.^"  Authority  to  conduct  in  one's  place  and  stead,  his  com- 
mercial business,  and  sign  the  principal's  name  whenever  requisite 
or  expedient  in  the  attorney's  good  discretion,  would,  however,  be 
broad  enough  to  cover  cases  of  drawing  bills  of  exchange,^^  and  so 
likewise  authority  to  act  "as  lawful  cashier  and  financial  agent."  ^^ 

§  293.  Illustrations. — Authority  to  collect  debts  and  give  dis- 
charges carries  no  implication  of  authority  to  indorse  a  negotiable 
bill,  note  or  check.^^  According  to  these  principles,  full  authority  to 
an  attorney  to  ask,  demand,  and  receive  all  money  that  may  become 
due  the  principal,  and  to  "transact  all  business,"  will  not  authorize 
the  attorney  to  indorse  bills  received  in  payment .^^    So  authority  to 

for  that  purpose.  Graton  &  Knight  Mfg.  Co.  v.  Redelsheimer,  28  Wash.  370, 
08  Pac.  879.  A  power  of  attorney  to  take  control  of  the  donor's  affairs,  business 
and  property,  and  to  do  everything  which  the  nature  of  the  business  shall  require, 
including  the  execution,  indorsing,  and  paying  of  promissory  notes,  the  power 
to  execute,  indorse  and  pay  promiasory  notes  is  restricted  to  the  scope  of  the  gen- 
eral power  conferred  to  do  all  acts  required  for  the  control  and  management  of 
the  donor's  affairs,  business  and  property.  First  Nat.  Bank  v.  Winnebago  County 
Aggr.  &c.  Assoc,  141  Wis.  476,  124  N.  W.  656,  135  Am.  St.  Rep.  50.  A  principal 
who  permits  his  agent  to  do  business  apparently  independently  under  a  firm  name 
and  holds  him  out  to  the  world  as  such  firm,  cannot  question  the  validity  of  his 
acts  in  indorsing  notes  payable  to  such  firm  as  if  he  were  the  one  to  whom  they 
arc  payable.    Gardner  v.  Wiley,  46  Or.  90,  79  Pac.  341. 

90.  Kilgour  v.  Finlyson,  1  H.  Bl.  155;  Hogg  v.  Snaith,  1  Taunt.  347;  Hay  v. 
Goldsmidt,  2  J.  P.  Smith,  79;  Esdaile  v.  La  Nauze,  1  Youngc  &  C.  394;  Lafourche 
Transportation  Co.  et  al.  v.  Pugh,  52  La.  Ann.  1517,  27  So.  958;  Helena  Nat.  Bank 
V.  Rocky  Mountain  Telegraph  Co.,  20  Mont.  379,  51  Pac.  829,  63  Am.  St.  Rep. 
628. 

91.  Dollfus  V.  Frosch,  1  Den.  368;  Wimberly  et  al.  v.  Windham,  104  Ala.  409, 
10  So.  23,  53  Am.  St.  Rep.  70. 

92.  Edwards  v.  Thomas,  66  Mo.  482.  Indorsement  under  such  authority  held 
valid.    Bank  v.  Hughlett,  84  Mo.  App.  268. 

93.  Jackson  Paper  Mfg.  Co.  v.  Commercial  Nat.  Bank,  199  111.  151,  65  N.  E. 
136,  59  L.  R.  A.  657,  93  Am.  St.  Rep.  113;  Goodell  v.  T.  M.  Sinclair  &  Co.,  112 
111.  App.  594;  Hamilton  Nat.  Bank  v.  Nye,  37  Ind.  App.  464,  77  N.  E.  295,  117 
Am.  St.  Rep.  333;  Lonier  v.  Ann  Arbor  Savings  Bank,  162  Mich.  541,  127  N.  W. 
685;  Dispatch  Printing  Co.  v.  National  Bank  of  Commerce,  107  Minn.  440,  124 
N.  W.  236.  Where  a  contract  of  agency  stipulated  that  the  principal  agreed  to 
take  notes  for  goods  sold  when  the  makers  were  quoted  good  by  a  local  bank,  this 
implied  that  the  agent  was  to  transmit  the  notes  taken  to  his  principal,  and  no 
power  was  thereby  conferred  on  the  agent  to  bind  his  principal  by  the  indorsements 
of  notes  taken  by  him  for  goods  sold.  National  Fence  Mach.  Co.  v.  Highleyman, 
71  Kan.  347,  80  Pac.  568. 

94.  Hogg  v.  Snaith,  1  Taunt.  347.  See  also  Robinson  v.  Chemical  Nat.  Bank, 
86  N.  Y.  407;  Thomson  v.  Bank  of  Briti.sh  North  America,  82  N.  Y.  1;  Jacoby 


378  AGENTS    AS    PARTIES  {  294 

ileiiuiiul  unci  receive  all  luom-ys  due  on  ;uiy  iircouiit,  to  use  uU  ineuiiH 
for  their  recovery,  to  appoint  attorneys  to  bring  actions,  and  "/o  do 
all  other  business,"  would  not  authorize  the  u^ent  to  indorse  a  i)ill, 
for  the  words  italicised  would  he  construeti  with  reference  to  the  for- 
mer, as  meaning  all  business  p<'rtiuning  thereto.'^ 

§  294.  Further  illustrations. — An  agent  who  is  authorized  to 
udvaiue  a  sum  of  money  to  a  person  would  exceed  his  authority  by 
giving  a  note  for  the  amount  in  his  principal's  name.**  And  an  agent 
to  make  purchases  of  goods  or  su[)plies,  and  |)ay  for  them,*^  or  to  buy 
aiul  sell  g(j<jds  for  a  trading  compmiy,'^"*  is  not  therein'  authorized 
to  give  a  note  or  accept  a  bill  for  the  amount;  nor  could  an  agent,  to 
make  sales,  indorse  his  principal's  name  on  the  purchiuser's  i»ill  to  be 
discounted  to  rjiisc  funds  for  i)ayment ;  **  nor  could  authority  to  accept 
i)ills,  which  would  be  a  pledge  of  the  princii)ars  credit,  be  inferred 
from  payuK'nt  l)y  the  agent  of  unaccepted  drafts  on  former  occ:u^ions.' 
The  j)osition  of  an  ordinary  merchant's  clerk  is  not  one  which  implies 
authority  to  i>ind  the  employer  by  signing  a  bill  or  note  in  his  name; ' 
nor  has  a  conunerci;il  traveler  implied  authority  to  draw  drafts  up<m 
his  princii)al  for  traveling  expense;^  nor  is  an  employee  of  a  state 
insurimce  agent,  who  is  given  the  title  "cashier,"  thereby  impliedly 
authorized  to  indorse  and  discount  drafts  in  the  name  of  the  princi- 

&  Co.  V.  Pnyson,  91  Hun,  480,  3t\  N.  Y.  Supp.  240;  Schmidt  v.  Cuirfiold  Nat.  Bank, 
64  Hun,  298,  19  N.  Y.  Supp.  2.52;  Hitrhings  v.  St.  l»uis,  etc.,  Co.,  68  Hun,  33, 
22  N.  Y.  Supp.  719.  But  it  has  lMH?n  held  that  authority  to  rolloct  implies  author- 
ity to  hring  suit  for  the  puriJosc  of  collection.  Watkins  v.  I'lummrr,  93  Mich. 
21.").  53  N.  W.  165. 

95.  Hay  v.  GoKKsmidt.  2  .1.  V.  Smith,  79;  Heath  v.  Paul,  81  Wis.  532,  51  N.  \V. 
876;  Helena  Nat.  Bank  v.  Rocky  Mountain  Telegraph  Co.,  20  Mont.  379,  51 
Piic.  829,  63  \m.  St.  Rep.  628. 

96.  Webber  v.  Williams  College,  23  Pick.  302;  Lippmun  v.  First  Nat.  Bank 
i)f  Anniston,  120  Ala.  123,  24  So.  581,  74  Am.  St.  Rep.  28. 

97.  Brown  v.  Parker,  7  Allen,  339;  Taber  v.  Cannon,  8  Mete.  (Mass.)  456; 
Webber  v.  Williams  College,  23  Pick.  302;  Gould  v.  Norfolk  Lead  Co.,  9  Cush. 
338. 

98.  Emerson  v.  Proviilence  Hat  Mfg.  Co.,  12  Mass.  237. 

99.  Bank  of  Hamburg  v.  Johnson,  3  Rich.  42.  Nor  can  agent  ple<Jge  paper 
placed  in  his  hands  for  purpose  of  sale  and  raising  funds.  Shaw,  Trustee,  v. 
Saranac  Horse  Nail  Co.,  144  N.  Y.  221,  39  N.  E.  73. 

1.  Gould  V.  Norfolk  Lead  Co.,  9  Cush.  338. 

2.  Terrj'  v.  Fargo,  10  Johns.  114;  Miller  v.  House,  67  Iowa,  737. 

3.  Seattle  Shoe  Co.  v.  Packard,  43  Wash.  527,  86  Pac.  845,  117  Am.  St.  Rep. 
1064. 


§§  295,  296  IMPLIED   AUTHORITY  OF   AGENT  379 

pal;  *  nor  does  the  position  of  agent  to  attend  and  manage  a  grocery 
and  provision  store, ^  nor  that  of  an  agent  employed  in  the  manufac- 
ture of  carriages;^  nor  does  that  of  an  attomey-at-law,  to  whom  a 
note  is  sent  for  collection,  authorize  him  to  transfer  it  to  a  third  per- 
son;^ nor  does  that  of  a  collecting  agent,  who  takes  checks  in  pay- 
ment, authorize  him  to  indorse  them  to  the  bank  on  which  they  are 
drawn;  *  nor  has  an  agent,  who  is  authorized  to  make  a  deposit  in  a 
bank,  implied  authority  to  draw  it  out;^  nor  that  of  manager  of  a 
farm  through  whose  hands  all  paj'ments  and  receipts  pass,  authorize 
him  to  sign  a  negotiable  instrument  in  his  principal's  name.^° 

§  295.  Masters  of  ships, ^^  and  steamboats,'^  and  supercargoes,'^ 
cannot  bind  their  principals  by  drawing  a  bill  upon  them  and  accept- 
ing it  in  their  name,  without  special  authority  to  do  so. 

§  296.  Implications  from  customary  acts. — If  a  person  has  upon 
a  former  occasion,  in  the  principal's  absence,  usually  accepted  bills 
for  him,  and  the  latter,  on  his  return,  approved  thereof,  he  would  be 
bound  in  a  similar  situation  on  a  second  absence  from  home,'^  and 
where  it  was  proved  that  the  defendant  had  been  accustomed  to 
assume  the  liability  as  indorser  on  notes  on  which  his  name  had  been 

4.  Exchange  Bank  v.  Thrower,  118  Ga.  433,  45  S.  E.  316. 
6.  Smith  V.  Gibson,  6  Hlackf.  309. 

6.  Paige  v.  Stone,  10  Mete.  (Mrnw.)  100. 

7.  Ru.Msell  V.  Drummond,  tJ  Ind.  216. 

8.  Graham  v.  United  States  Sav.  Inst.,  46  Mo.  187;  Jackson  v.  Bank,  92 
Tenn.  154,  20  S.  W.  802,  36  Am.  St.  Rep.  81,  citing  and  approving.  But  it  has 
been  held  in  New  York,  that  where  a  person  makes  settlement,  and  pa>Tnent8 
to  the  authorized  agent  of  another,  of  all  claims  existing  in  favor  of  the  principal 
against  him,  the  giving  of  a  chwk  to  such  agent,  and  the  subsequent  indorse- 
ment by  the  agent  of  the  principal's  name  thereon,  constitutes  a  payment  by 
the  debtor,  is  binding  on  the  principal,  and  di.scharges  him  from  liability  to  the 
principal.  See  Sage  v.  Burton,  84  Hun,  267,  32  N.  Y.  Supp.  1122.  Nor  will 
authority  to  receive  and  make  deposits  authorize  the  issuance  of  checks  thereon. 
See  Schmidt  v.  Garfield  Nat.  Bank,  64  Ilun,  298,  19  N.  Y.  Supp.  252. 

9.  Second  Nat.  Bank  v.  Gibboney,  43  Ind.  App.  492,  87  N.  E.  1064;  Heath  v. 
New  Bedford  Safe  Dei)osit  &c.  Co.,  184  Mass.  481,  09  N.  E.  215;  Walker  v.  The 
State  Trust  Co.,  57  N.  Y.  S.  .525,  40  App.  Div.  .55. 

10.  Davidson  v.  Stanley,  2  M.  &  G.  721;  Lafourche  Tranaportation  Co.  el  al. 
v.  Pugh,  52  La.  Ann.  1517,  27  So.  958. 

11.  Bowen  v.  Stoddard,  10  Mete.  (Mass.)  375. 

12.  May  v.  Kelly,  27  Ala.  497. 

13.  Scott  V.  M'l^llan.  2  Greenl.  199. 

14.  Beawes'  Pleading,  86;  Chitty  on  Bills  (13th  Am.  ed.)  [♦311,  41. 


380  A.GENTS    AS    PARTIES  §  296 

indorsed  by  his  son,  and  that  he  did  not  deny  the  particular  indorse- 
ment until  his  son  had  absconded,  but  impliedly  admitted  his  liability, 
it  was  held  that  these  acts,  unexplained,  established  his  liability  as 
indorser.^^  So,  the  acceptimce  by  a  principal  of  three  drafts  drawn 
on  him  by  his  agent,  though  drawn  without  authority,  is  a  holding 
out  of  the  agent  as  having  authority  to  draw  a  fourth  draft,  for  if  the 
principal,  after  having  accepted  and  paid  the  third  draft,  did  not 
want  to  be  bound  by  a  fourth,  he  should  have  given  the  payee  notice 
to  that  effect.'^  Although  an  authority  to  draw  does  not  import  in 
itself  an  authority  to  indorse,  it  has  been  held  that  a  jury  was  war- 
ranted in  inferring  a  general  authority  of  a  clerk  to  indorse  his  em- 
ployers' names  upon  evidence  that  he  had  been  accustomed  to  draw 
checks  for  them — in  one  instance  had  been  authorized  to  indorse — 
and  in  two  instances  that  they  had  received  the  money  obtained  upon 
his  indorsements  of  their  names. '"  So,  where  a  drawee  had  previously 
paid  several  bills  accepted  in  his  name  by  a  third  person,  with  whom 
he  had  connections  in  trade,  he  would  be  liable  to  an  indorsee,  al- 
though the  bill  accepted  in  like  manner  had  been  so  accepted  without 
his  authority.^^    And  it  has  been  held  that  if  a  person  usually  sub- 


16.  Abeel  v.  Seymour,  6  Hun,  656. 

16.  Valiquette  v.  Clark  Bros.  Coal  Mining  Co.,  83  Vt.  538,  77  Ail.  869,  138 
Am.  St.  Rep.  1104.  The  fact  that  an  agent  had  indorsed  the  name  of  hia  principal 
on  and  had  collected  checks  previously  does  not  show  authority  to  indorse  and 
collect  checks  in  suit,  when  it  does  not  appear  thac  the  principal  knew  of  the 
agent's  course  of  conduct.    Sinclair  &  Co.  v.  Goodell,  93  111.  Apj).  592. 

17.  Prescott  v.  Fhnn,  2  Moore  &  S.  18,  9  Bing.  19. 

18.  Barber  v.  Gingell,  3  Esp.  61.  See  Stroh  v.  Hinchman,  37  Mich.  490, 
where  the  cases  are  reviewed  by  Cooley,  J. ;  Gambrill  v.  Brown  Hotel  Co.,  1 1  Colo. 
App.  529,  54  Pac.  1025.  In  this  case  held:  "Where  an  agent,  a  short  time  before 
drawing  the  draft  in  question,  telegraphed  his  principals,  that  he  had  drawn  on 
them,  giving  amount  of  draft  and  they  answered  that  they  would  pay  the  draft, 
but  in  the  future  they  must  be  less,  it  was  a  recognition  of  the  agent's  authority 
to  draw  in  the  future  as  well  as  the  past,  the  only  condition  being  that  in  future 
the  amount  must  be  less."  But  person  thus  sought  to  be  charged  "must  actually 
have  known  of  the  acts  of  the  agent  conveying  to  the  pubhc  the  impression  that 
his  authority  was  greater  than  it  was  in  fact,  before  drawee's  silence  could  be  held 
to  sanction  the  agent's  course  and  to  give  him  ostensible  authority  to  continue  it." 
Mount  Morris  Bank  v.  Gorham,  169  Mass.  519,  48  N.  E.  341.  Under  the  prin- 
ciple that  of  two  innocent  persons  the  one  whose  negligence  caused  the  loss  must 
suffer,  it  was  held  in  Bartlett  v.  First  Nat.  Bank,  247  111.  490,  93  N.  E.  337,  that 
where  a  purchasing  agent  has  been  drawing  drafts  on  his  principal  to  the  order 
of  the  sellers  and  has  been  forging  their  indorsements,  the  principal  is  liable  on  such 
drafts,  notwithstanding  he  had  instructed  the  agent  not  to  do  so,  when  he  had  not 
notified  the  bank  to  stop  paying  drafts  indorsed  by  such  agent. 


§  297  IMPLIED    AUTHORITY   OF  AGENT  381 

scribes  a  negotiable  instrument  with  the  name  of  another,  proof  of 
his  having  done  so  in  many  instances  is  sufficient  to  charge  the  party 
whose  name  is  subscribed,  without  producing  any  power  of  attorney, 
or  other  proof  of  agency.  ^^  But  the  authority  of  a  collecting  agent 
to  indorse  his  principal's  name  upon  a  check  and  collect  cash  upon 
it  cannot  be  inferred  from  the  fact  that  the  agent  had  frequently  in- 
dorsed such  checks  and  obtained  the  cash  when  the  principal  had  no 
knowledge  of  such  facts.  ^ 

§  297.  Bill  or  note  must  have  been  taken  upon  the  faith  of  prior 
customary  acts. — But  when  it  is  sought  to  bind  the  principal  on 
the  ground  of  prior  similar  transactions,  or  recognition  of  such  acts 
by  the  principal,  it  must  be  shown  that  the  bill  or  note  was  taken 
upon  the  faith  of  them;  ^^  and,  therefore,  the  holder  of  a  bill  purport- 
ing to  be,  but  not  in  fact  accepted  by,  the  person  to  whom  it  is  ad- 
dressed, cannot  recover  against  the  apparent  acceptor  by  proving 
a  fact  subsequently  discovered,  that  on  a  former  occasion  the  defend- 
ant had  given  a  general  authority  to  the  person  who  accepted  in  his 
name  to  accept  bills  for  them.  Unless  it  can  be  shown  that  the  pre- 
vious authority  had  never  been  revoked,  or  that  the  bill  was  taken 
on  the  faith  of  such  authority,  the  holder  cannot  hold  the  principal 
liable.22 

19.  Neal  v.  Irving,  1  Esp.  61;  Haughton  v.  Ewbank,  4  Campb.  188.  Where  an 
agent  wa.s  employed  for  the  express  purpose  of  collecting  accounts  and  selling 
goods,  and  in  practice  he  indorsed  checks  payable  to  the  order  of  his  principal  and 
purchased  goods  for  the  house,  it  was  held  that  the  evidence  as  to  such  course  of 
selling  was  sufficient  to  sustain  the  conclusion  that  the  agent  waa  authorized  to 
indorse  the  check  upon  which  the  action  was  founded.  Best  v.  Krey,  83  Minn. 
81,  85  N.  W.  822.  An  agent  who  had  authority  to  obtain  money  by  issuing  drafts, 
for  the  purchase  of  grain  for  his  principal,  had  authority  to  draw  drafts  in  pay- 
ment for  money  received  as  agent  in  another  business  and  which  money  was  used 
in  the  purchase  of  grain.  Great  Western  Elevator  Co.  v.  White,  118  Fed.  Rep. 
406.  When  an  agent  was  authorized  to  receive,  count,  and  mark  ties  which  he 
bought,  and  then  to  give  a  draft  for  the  ties  which  were  thus  delivered  to  him,  it 
cannot  be  inferred  that  he  had  authority  to  make  drafts  for  ties  which  he  had  not 
received,  and  which  were  in  fact  not  in  existence.  Gray  Tie  &  Lumber  Co.  v. 
Farmers'  Bank  (Ky.),  78  S.  W.  207,  74  S.  W.  174. 

20.  Goodell  v.  T.  M.  Sinclair  &  Co.,  112  111.  App.  594. 

21.  St.  John  V.  Redmond,  9  Port.  428;  Edwards  on  Bills,  89;  Thompson  on 
Bills,  148;  Sanders  v.  Chartrand,  158  Mo.  352,  59  S.  W.  95. 

22.  Cash  V.  Taylor,  8  L.  J.  262,  K.  B.  E.  T.,  cited  in  Chitty  on  Bills  (13th  Am. 
ed.)  [*32],  41;  Byles  on  Bills  (Sharswood's  ed.)  [*33],  110;  1  Parsons  on  Notes 
and  Bills,  92,  101 ;  Lloyd  &  W.  Merc.  Caa.  178;  Helena  Nat.  Bank  v.  Rocky  Moun- 
tam  Telegraph  Co.,  20  Mont.  379,  51  Pac.  829,  63  Am.  St.  Rep.  628. 


382  AGENTS   AS    PARTIES  §  298 


SECTION  III 

HOW    AGENT   SHOULD    SIGN)    AND    HOW    INSTRUMENT    CONSTRUED    AND 
parties'    LIABILITIES    DETERMINED 

§  298.  Proper  method  of  signature  by  agent. — The  best  mode  for 
an  agent  to  sign  or  iiulorse  ;i  hill  or  note  for  his  principal,  so  that  it 
may  clearly  appear  that  he  is  "the  mere  scribe"  who  applies  the 
executive  hand  as  the  instrument  of  another,  is  as  follows:  "A.  B., 
by  his  attorney  or  agent,  C.  D."  This  style  is  uneciuivocal,  being 
clearly  intended  to  bind  the  principal  only.  "A.  B.  by  C.  D."  is 
equally  so — and  in  one  way  or  the  other  the  instrument  should  be 
always  executed.-'  Very  frequently  the  form  is  adopted:  "C.  D.  for 
A.  B.,"  or  "C.  D.,  agent  for  A.  B.,"  and  this  form  is  now  generally 
regarded  as  sufficient  to  indicate  that  the  agent  acts  ministerially 
only  and  without  intent  to  bind  himself.-^    And  this  is,  we  think,  the 

23.  Bradlco  v.  Boston  Glass  Co.,  46  Pick.  347;  Weaver  v.  Camall,  35  Ark.  198; 
Edwards  on  Jiills,  83.  See  on  this  subject  chapter  on  Private  Corporations,  and 
§  .'WS;  KxchanKe  Bank  v.  County  of  Lewi.s,  28  W.  Va.  292,  citing  the  text. 

24.  Si'c  .Vniorican  Loading  Cases,  vol.  I,  pp.  (32o,  034;  Story  on  .\Kency,  §§  274, 
278;  1  Parsons  on  Notes  and  Hills,  91 ;  Story  on  Notes,  §  08;  K<l\vards,  83;  Bank  of 
Genesee  v.  Patchin  Bank,  19  N.  Y.  315;  Long  v.  Colburn,  11  Mass.  97;  Tiller  v. 
Spradley,  39  Ga.  35;  Raney  v.  Winter,  37  Ala.  277;  Dubois  v.  Delaware,  etc.. 
Canal  Co.,  4  Wend.  285.  In  Early  v.  Wilkinson  &  Hunt,  9  Gratt.  68,  the  promis- 
sory note  sued  on  was  signed  "Robert  II.  Early  [per  Sam'l  H.  Early]."  "The 
note  in  this  case,"  said  Moncure,  J.,  "is  in  the  perfect  form  of  a  negotiable  promis- 
sory note  of  Robert  II.  Early,  except  that  under  his  signature  are  the  words  '[per 
Samuel  H.  Early],'  in  brackets.  Without  the  addition  of  these  words,  it  is  cer- 
tain that  R.  H.  Early  would  alone  have  been  bound  on  the  note,  even  though  he 
has  given  it  as  the  known  agent  of  Samuel  H.  Early.  On  the  other  hand,  it  may 
be  said,  that  if  these  words  had  been  added  without  being  inclosed  in  brackets, 
and  R.  H.  Early  had  authority  to  sign  the  note  for  Samuel  H.  Early,  the  latter 
would  alone  have  been  bound  by  the  note,  though  the  mode  of  executing  the  note 
by  procuration  would  not,  in  that  case,  have  been  strictly  formal.  The  question, 
then,  depends  alone  upon  the  import  of  the  brackets;  and  though  it  may  seem 
strange  that  we  should  give  so  much  import  to  a  circumstance  apparently  so  light, 
yet  we  are  of  opinion  that  it  is  sufficient  to  turn  the  scale,  and  indicate  an  intention 
on  the  part  of  Robert  H.  Early  not  to  do  a  mere  ministerial  act  in  giving  effect  and 
authenticity  to  the  promise  of  another;  but  to  indicate  the  capacity  or  trust  in 
which  he  acted,  or  the  person  for  whose  account  the  promise  was  made.  *  ♦  * 
If  Robert  H.  Early  had  intended  to  bind  Samuel  H.  Early,  and  not  himself,  he 
would  have  given  more  prominence  to  the  name  of  the  latter,  which  then  would 
have  been  the  important  name.  He  would  not  have  inclosed  it  in  brackets,  so 
that  it  might  be  taken  from  the  note  without  injuring  the  sense  of  the  balance. 


§  299  Sow   AGENT   SHOULD    SIGN  383 

correct  view,  whether  the  phrase  be  used  in  the  body  of  the  instru- 
ment, or  so  signed  at  its  foot;  though  the  cases  are  by  no  means  har- 
monious, and  "C.  D.  for  A.  B.,"  or  the  like  words,  are  regarded  by 
some  as  indicating  that  C.  D.  was  the  promisor  at  the  request  of,  or 
for  the  benefit  of,  A.  B,^^  And  there  are  cases  which  hold  that  if  used 
in  the  body  of  the  instrument,  the  words  will  be  construed  as  binding 
the  agent;  while  if  at  the  foot,  the  principal. ^^  This  distinction  is 
very  refined. 

§  299.  Extraneous  evidence  of  agent's  authority  to  sign  princi- 
pal's name. — It  is  competent  and  proper  also  for  the  agent  to  sign 
simply  the  principal's  name,  and  to  show  his  authority  to  do  so  by 
extraneous  evidence;  ^^  for,  as  said  by  the  United  States  Supreme 
Court,  per  Johnson,  J. :  "  It  is  by  no  means  true  that  the  acts  of  agents 
derive  their  validity  from  professing  on  the  face  of  them  to  have  been 
done  in  the  exercise  of  their  agency."  ^  But  this  style  is  not  favored, 
as  it  increases  the  difficulties  of  proof,  and  at  one  time  was  ques- 
tioned.^ 

In  England,  it  is  not  unusual  for  an  agent  to  sign  "C.  D.,  by  pro- 
curation of  A.  B.,"  A.  B.  being  the  principal;  but  this  is  ambiguous, 
as  it  might  import  that  A.  B.  was  the  agent  signing  by  procuration 
for  C.  D.,  and  it  is  advisable  not  to  adopt  this  style.^° 

The  words  "per  procuration"  are  an  express  intimation  of  a  special 

He  would  rather  have  inclosed  his  own  name  in  brackets,  as  the  name  of  the  mere 
agent  by  whom  it  was  signed.  They  were  worse  than  useless  on  the  supposition 
that  S.  H.  Early  was  intended  to  be  bound."  Devendorf  v.  West  Virginia,  O.  & 
O.  L.  Co.,  17  W.  Va.  152;  Hunt  v.  Listenberger,  14  Ind.  App.  320,  42  N.  E.  240, 
9G4;  Citizens'  Nat.  Bank  of  Los  Angeles,  Cal.  v.  Ariss  (Wash.),  123  Pac.  593. 

25.  1  Parsons  on  Notes  and  Bills,  91;  Tannant  v.  Rocky  Mountain  Nat.  Bank, 
1  Colo.  278. 

26.  Barlow  v.  Congregational  Society,  8  Allen,  463;  Bradlee  v.  Boston  Glass 
Co.,  16  Pick.  347;  Tanner  v.  Christian,  4  El.  &  Bl.  591;  Penkwil  v.  Connell,  5 
Exch.  381. 

27.  §§  74,  274;  First  Nat.  Bank  v.  Gay,  63  Mo.  33;  Cravens  v.  Gillilan,  63  Mo. 
28;  Morse  v.  Green,  13  N.  H.  32;  Haven  v.  Hobbs,  1  Vt.  238;  Brigham  v.  Peters, 
1  Gray,  139;  Woodbury  v.  Moulton,  47  N.  H.  11;  Davndson  v.  Stanley,  2  M.  &  G. 
721;  Llewellj-n  v.  Winckworth,  13  M.  &  W.  598;  Neal  v.  Irving,  1  Esp.  61;  Barber 
V.  Gingell,  3  Esp.  60;  Odd  Fellows  v.  First  Nat.  Bank,  42  Mich.  463;  Scotland 
County  Nat.  Bank  v.  Hohn,  146  Mo.  App.  699,  125  S.  W.  539;  Chitty  on  Bills 
(13th  Am.  ed.)  [*33],  44. 

28.  Mechanics'  Bank  v.  Bank  of  Columbia,  5  Wheat.  326;  First  Nat.  Bank  v. 
Loyhed,  28  Minn.  398,  citing  the  text. 

29.  1  Parsons  on  Notes  and  Bills,  91,  92. 

30.  1  Parsons  on  Notes  and  Bills,  91,  92. 


384  AGENTS   AS    PARTIES  §  300 

and  limited  authority.  And  a  person  who  takes  a  bill  or  note  so 
drawn,  accepted,  or  indorsed  is  bound  to  inquire  into  the  extent  of 
the  authority.^^ 

§  300.  General  principles  of  construction  of  the  instrument,  and 
of  liability  of  the  parties. — It  is  a  general  principle  of  commercial 
law  that  a  negotiable  instrument  must  wear  no  mask,  but  must  reveal 
its  character  upon  its  face.  And  it  extends  to  the  liability  of  parties 
thereto,  who  must  appear  as  distinctly  as  the  terms  of  the  instrument 
itself,  in  order  to  be  bound  by  those  terms.  The  following  rules  are 
deductions  from  this  general  principle:  First.  That  when  the  names 
of  both  principal  and  agent  appear  upon  the  instrument,  it  is  to  be 
taken  to  be  the  bill  or  note  of  the  signer,  unless  there  are  distinct 
indications  that  he  signed  in  a  mere  ministerial  character,  intending 
to  bind  another.  The  actual  signer  will  be  bound,  ''unless,"  as  said 
by  Lord  EUenborough,  "he  states  upon  the  face  of  the  bill  that  he 
subscribes  it  for  another;  unless  he  says  plainly,  'I  am  the  mere 
scribe.'"  ^^  It  is  true  that  it  is  a  question  as  to  the  intention  of  the 
party  signing  the  instrument;  but  that  intention  must,  as  a  general 
rule,  be  collected  from  the  instrument  itself.  Chief  Justice  Shaw,  in 
a  well-lmown  case,  has  said:  '^  "As  the  forms  of  words  in  which  con- 
tracts may  be  made  and  executed  are  almost  infinitely  various,  the 
test  question  is,  whether  the  person  signing  professes  and  intends  to 
bind  himself,  and  adds  the  name  of  another  to  indicate  the  capacity 
in  which  he  acts,  or  the  person  for  whose  account  the  promise  is  made; 
or  whether  the  words  referring  to  a  principal  are  intended  to  indicate 
that  he  does  a  mere  ministerial  act  in  giving  effect  and  authenticity 
to  the  act  and  contract  of  another.    Does  the  person  signing  apply 

31.  Alexander  v.  McKenzie,  6  C.  B.  766  (60  Eng.  C.  L.);  Attwood  v.  Mun- 
nings,  7  B.  &  C.  278  (14  Eng.  C.  L.);  Byles  (Sharewood's  ed.)  [*33],  110;  Thomp- 
son on  Bills,  152. 

32.  Leadbetter  v.  Farrow,  5  Maule  &  S.  345;  Sowerby  v.  Butcher,  2  Car.  & 
M.  368.  This  is  the  general  principle.  Hunt  v.  Listenberger,  14  Ind.  App.  320, 
42  N.  E.  240,  964;  Richmond  Locomotive  &  Machine  Works  v.  Moragne,  119 
Ala.  80,  24  So.  834. 

33.  Bradlee  v.  Boston  Glass  Co.,  16  Pick.  347.  See  also  Early  v.  Wilkinson, 
9  Gratt.  68;  Commercial  Bank  v.  Waters,  45  App.  Div.  441,  60  N.  Y.  Supp.  981. 
"This  court  is  fully  committed  to  the  doctrine  that  in  order  to  exempt  an  agent 
from  liability  upon  a  negotiable  note  executed  by  him  within  the  scope  of  his 
agency,  he  must  not  only  name  his  principal,  but  he  must  express  by  some  form 
of  words  that  the  writing  is  the  act  of  the  principal,  though  done  by  the  hand  of 
the  agent."  Western  Wheeled  Scraper  Co.  v.  McMillen,  71  Nebr.  686,  99  N.  W. 
512. 


§§  301,  302  HOW   AGENT   SHOULD   SIGN  385 

the  executive  hand  as  the  instrument  of  another,  or  the  promising 
and  engaging  mind  of  a  contracting  party?" 

In  Rhode  Island  the  signature  "D.  T.  L."  with  the  added  words 
"correspondent  for  E.  J,  K.  &  Co.,"  was  held  to  bind  the  signer,  the 
additional  words  being  regarded  as  mere  descriptio  personce.^* 

§  301.  As  to  indorsements  by  agents. — If  a  bill  be  payable  to 
A.  B.,  describing  him  as  "agent,"  it  is  generally  considered  mere 
descri'ptio  personce;  ^^  and  if  he  should  indorse  it  in  like  manner,  we 
should  say  he  was  personally  liable.  And  we  can  see  no  difference 
between  such  a  case  and  those  in  which  it  is  held  that  where  the 
maker  of  a  negotiable  note  adds  the  word  "agent,"  he,  and  he  alone, 
is  bound,  the  term  being  regarded  as  descriptive  merely.^®  If  the 
indorsement  restricted  the  negotiability  of  the  instrument,  it  might 
be  different,  for  it  might  then  be  considered  as  standing  on  the  footing 
of  a  nonnegotiable  instrument  in  respect  to  him."  In  Georgia,  where 
a  bill  payable  to  "S.  C,  agent,"  was  similarly  indorsed,  and  then  dis- 
counted at  the  indorser's  instance  for  the  benefit  of  his  principal, 
parol  evidence  was  admitted  to  charge  him;  ^*  but  this  is  a  departure 
from  the  general  principle  of  the  law  merchant. 

§  302.  Illustration. — A  peculiar  case  was  decided  in  New  York. 
The  note  was  payable  to  "Israel  Horsefield  or  order"  simply.  It 
was  indorsed  "  Israel  Horsefield,  agent,"  and  by  him  delivered  for  a 
debt  due  by  a  company  of  which  he  was  agent.  It  was  held  that  the 
form  of  the  indorsement,  under  the  circumstances  (which  might  be 
shown),  indicated  to  the  plaintiff  that  it  was  merely  intended  by  the 
payee  to  transfer  title  to  the  paper,  without  recourse,  though  as  to  a 
third  party  it  might  be  different. ^^    Chief  Justice  Savage  dissented.^'* 

34.  Phillips  V.  Knight  &  Co.,  20  R.  I.  624,  40  Atl.  762. 

35.  Toledo  Agricultural  Works  v.  Heisser,  51  Mo.  128.  In  Bishop  v.  Rowe, 
71  Me.  263,  the  note  was  payable  to  order  of  "C.  B.  M.,  agent,"  and  was  in- 
dorsed "C.  B.  M.,  Agent  Granite  Agricultural  Works."  Held  to  be  individual 
indorsement  of  C.  B.  M. 

36.  See  post,  §  305;  Robinson  v.  Kanawha  Valley  Bank,  44  Ohio  St.  441;  Cort- 
land Wagon  Co.  v.  Lynch,  82  Hun,  173,  31  N.  Y.  Supp.  325;  Bank  of  Stratton  v. 
Dixon,  105  Iowa,  148,  74  N.  W.  919,  citing  text. 

37.  See  post,  §  303. 

38.  Merchants'  Bank  v.  Central  Bank,  1  Kelly,  429,  Nisbet,  J.:  "A  party  can- 
not be  discharged  who  is  apparently  liable  on  the  contract,  but  a  new  party  may 
be  introduced  by  parol." 

39.  Mott  V.  Hicks,  1  Cow.  533,  Woodworth,  J. 

40.  Mott  V.  Hicks,  1  Cow.  540.    "Horsefield,  it  is  true,"  he  said,  "signed  the 

25 


386  AGENTS   AS    PARTIES  §  303 

The  case  has  been  quoted  as  holding  that  such  an  indorsement  is 
equivalent  to  an  indorsement  without  recourse,  and  it  has  been  so 
construed  by  the  courts;  *^  but  we  think  that  it  only  determines  that 
under  the  peculiar  circumstances  it  had  that  effect.  In  the  absence  of 
evidence  as  to  the  circumstances  of  the  transaction,  it  has  been  held 
in  New  York  that  a  draft  dra^vn  on  "D.,  Agt.  C.  B.  Co.,"  and  ac- 
cepted in  like  manner,  would  not  bind  the  company.  '- 

§  303.  Second:  That  no  party  can  be  charged  as  principal  upon 
a  negotiable  instrument  unless  his  name  is  thereon  disclosed. — The 
reason  of  this  rule  is  that  each  party  who  takes  a  negotiable  instru- 
ment makes  his  contracts  with  the  parties  who  appear  on  its  face  to 
be  bound  for  its  payment;  it  is  "a  courier  without  luggage,"  whose 
countenance  is  its  passport;  and  in  suits  upon  negotiable  instruments, 
no  evidence  is  admissible  to  charge  any  person  as  a  principal  party 
thereto,  unless  his  name  in  some  way  is  disclosed  upon  tlie  instrument 
itself;  ^^  although  upon  other  written  contracts,  not  negotiable,  it  is 

indorsement  'Israel  Horsefield,  agent.'  But  why  agent?  Agent  for  whom?  He 
is  the  payee  of  the  note  individually,  and  it  does  not  appear,  except  from  his  own 
testimony,  that  he  was  agent  for  the  company.  They  cannot  bo  sued  upon  this 
indorsement;  and  no  judgment  could  be  rendered  against  Horsefield  which  would 
bind  their  property.  He  is,  therefore,  liable  personally,  or  there  is  no  liabililj- 
attached  to  this  indorsement." 

41.  Hicks  V.  Hinde,  9  Barb.  531;  Babcock  v.  Bcman,  11  N.  Y.  200;  1  Parsons 
on  Notes  and  Bills,  96.    See  Hager  v.  Rice,  4  Colo.  90. 

42.  Haight  v.  Naylor,  5  Daly,  219. 

43.  Cragin  v.  Lovell,  109  U.  8.  194;  Heaton  v.  Myers,  4  Colo.  62;  Pease  v. 
Pease,  35  Conn.  131;  Burkhalter  v.  Perry  &  Brown,  127  Ga.  438,  56  S.  E.  631, 
119  Am.  St.  Rep.  343,  ching  text;  Kenyon  v.  Williams,  19  Ind.  45;  Thurston  v. 
Munn,  1  Greene  (Iowa),  231;  Brown  v.  Baker,  7  Allen,  339;  Slawson  v.  Loring,  5 
Allen,  340;  Arnold  v.  Stackpole,  11  Mass.  27;  Bass  v.  O'Brien,  12  Gray,  477; 
Williams  v.  Robbins,  16  Gray,  77;  Duncan  v.  Kirtley,  24  Mo.  App.  655,  citing 
text;  Keck  v.  Sedalia  Brewing  Co.,  22  Mo.  App.  188,  citing  the  text;  Lewis  v. 
First  Nat.  Bank  of  Cambridge,  1  Nebr.  (Unof.)  177,  95  N.  W.  355;  Webster  v. 
Wray,  19  Nebr.  558;  Pentz  v.  Stanton,  10  Wend.  271;  Hyde  v.  Page,  9  Barb. 
150;  Manufacturers  &  Traders'  Bank  v.  Love,  13  App.  Div.  561,  43  N.  Y.  Supp. 
812;  Cortland  Wagon  Co.  v.  Lynch,  82  Hun,  173,  31  N.  Y.  Supp.  325,  citing  the 
text;  Texas  Land  Co.  v.  Carroll,  63  Tex.  51,  citing  the  text;  Arnold  v.  Sprague, 
34  Vt.  409;  Byles  (Sharswood's  ed.)  [*37],  116;  Story  on  Bills,  §  76.  In  May  v. 
Hewitt,  33  Ala.  161,  where  a  bill  signed  C.  D.,  clerk,  was  drawn  by  the  owners  of 
steamboat  Messenger,  and  waij  accepted  by  "B.  Bell,  captain,"  parol  evidence 
was  admitted  to  show  who  was  bound  by  the  acceptance.  A  person  whose  name 
does  not  appear  upon  a  promissory  note  cannot  be  charged  as  an  indorser  thereof 
by  parol  proof  that  the  nominal  payee  in  accepting  and  indorsing  it  was  acting  as 
his  authorized  agent,  where  nothing  upon  the  face  of  the  note  suggests  the  exist- 


§  303  HOW   AGENT  SHOULD   SIGN  387 

often  competent  to  show  that,  although  signed  in  the  name  of  the 
agent  only,  they  were  executed  in  the  business  of  the  principal,  and 
with  the  intent  that  he  should  be  bound.  And  in  such  cases  he  is 
bound  upon  them  accordingly.''^  The  rule  excluding  parol  evidence 
to  charge  an  unnamed  principal  as  a  party  to  negotiable  paper  is 
derived  from  the  nature  of  such  paper,  which  being  made  for  the 
purpose  of  being  transferred  from  hand  to  hand,  and  of  giving  to 
every  successive  holder  as  strong  a  claim  upon  the  original  party  as 
the  payee  himself  has,  must  indicate  on  its  face  who  is  bound  for  its 
payment ;  for  an}-^  additional  liability  not  expressed  in  the  paper  would 
not  be  negotiable.''^  But  this  exception  in  favor  of  negotiable  instru- 
ments itself  contains  an  exception;  and  that  is,  as  between  the  im- 
mediate parties  to  a  bill  or  note,  it  may  be  Rho\\Ti  by  parol  that  the 
instrument  was,  to  the  knowledge  of  the  parties,  intended  to  be  the 
obligation  of  the  principal,  and  not  of  the  agent,  and  that  it  was 
given  and  accepted  as  such.^®  The  rule  as  to  public  agents  is  herein- 
jifter  considered.'*'^ 

ence  of  an  agency.  New  York  Life  Ins.  Co.  v.  Martindalo,  75  Kan.  142,  88  Pac. 
559,  121  Am.  St.  Rep.  362.  This  view  does  not  obtain  now  in  New  York.  In 
Green  v.  Skeel,  2  Hun,  480,  the  indorsee  sued  iudorser  of  a  note  made  by  William 
Skeel.  The  word  "aRent"  had  been  added  to  his  name.  The  court  said,  per 
MuIHn,  P.  J.:  "It  i.s  diHicult  to  roeoncile  the  ca.ses  so  a.s  to  ascertain  with  cer- 
tainty when  a  principal  is  bound  by  a  writing  executed  by  a  person  who  signs  the 
same  as  agent.  But  it  seems  to  be  pretty  well  settled  that  when  the  person  signing 
his  name  with  the  word  'agent'  added,  is,  in  fact,  the  agent  of  the  principal,  and 
the  writing  is  executed  in  the  course  of  the  business  of  such  agency,  the  principal 
is  bound  by  a  contract  signed  with  the  agent's  name  with  the  word  'agent' 
added.  This  case  is  at  war  with  the  ruling  in  DeWitt  v.  Walton,  9  N.  Y.  571;  but 
that  case  has  not  been  followed,  if  it  is  to  be  understood  as  deciding  that  the 
principal  is  not  bound  in  any  case  by  WTiting  signed  by  the  agent  in  his  own  name 
with  the  word  'agent'  added."    See  post  §  305,  notes. 

44.  Lemed  v.  Johns,  9  Allen,  419.  In  this  case  the  contract  was  signed  B. 
by  C,  and  parol  evidence  was  admitted  to  show  that  B.  was  only  agent  of  A., 
although  there  was  no  intimation  of  it  on  the  contract.  Hoar,  J.,  saying:  "The 
doctrine  is  well  settled  in  England,  that  when  a  WTitten  contract,  not  under  seal, 
is  made  by  or  with  an  agent,  the  principal,  although  undisclosed,  may  sue  or  be 
sued  upon  it,  except  in  the  case  of  commercial  paper."  Kenworth  v.  Schofield, 
2  B.  &  C.  945;  Higgins  v.  Senior,  8  M.  &  W.  834.  See  also  Williams  v.  Bacon, 
2  Gray,  387;  Dykers  v.  Townsend,  25  N.  Y.  57;  Leavens  v.  Thompson,  48  Hun, 
391 ;  Porter  v.  Woods,  138  Mo.  539,  39  S.  W.  794. 

45.  See  article  in  Alb.  L.  J.,  vol.  XIII,  No.  19,  May  6,  1870,  p.  323;  Webster  v. 
Wray,  19  Nebr.  558,  citing  the  text;  Heaton  v.  Myers,  4  Colo.  02,  citing  the  text. 

46.  Burkhalter  v.  Perry  &  Brown,  127  Ga.  438,  56  S.  E.  031,  119  Am.  St.  Rep. 
343. 

47.  §  443  et  seq.;  Salomon  v.  Hopkins,  61  Conn.  49,  23  Atl.  716. 


388  AGENTS   AS    PARTIES  §§  304,  305 

Under  Negotiable  Instrument  statute. — And  under  the  statute,  the 
maker  of  a  note  cannot  be  allowed  to  plead  that  he  signed  the  note  as 
agent  for  a  third  person,  and  have  such  person  brought  in  as  defend- 
ant.^s 

§  304.  Third:  It  is  not  absolutely  necessary  that  the  principal's 
peculiar  name  should  be  used ;  but  he  may,  by  adoption,  use  that  of 
his  agent ;  or  his  agent,  by  his  authority,  may  use  his  own  name  for 
his  principal's. — Individuals,  as  well  as  corporations,  may  some- 
times be  held  liable  upon  negotiable  and  other  contracts,  executed 
and  entered  into  under  a  name  or  style  different  from  that  which 
usually  belongs  to  and  is  used  by  them,  and  in  which  their  own 
proper  names  or  signatures  do  not  appear  at  all.  But  such  liability 
exists  only  where  it  is  affirmatively  and  satisfactorily  proved  that 
the  name  or  signature  thus  used  is  one  which  has  been  assumed  and 
sanctioned  a"i  indicative  of  their  contrjicts,  and  has  been,  with  their 
knowledge  and  consent,  adopted  as  a  substitute  for  their  own  names 
and  signatures  in  signing  bills  and  notes,  or  executing  other  written 
contracts.  In  such  cases  the  adopted  name  is  in  law  equivalent  to 
the  actual  name  of  the  party."*^ 

§  305.  Fourth:  If  the  agent  sign  a  note  with  his  own  name,  and 
discloses  no  principal,  he  is  personally  bound. — The  party  so  sign- 
ing must  have  intended  to  bind  somebody  upon  the  instrument,  and 
no  promisor  but  himself  thereon  appearing,  it  must  be  construed  as 
his  note  or  as  a  nullity.^"  And  though  he  term  himself  "agent,"  such 
suffix  to  his  name  will  be  regarded  as  a  mere  descriptio  personce, 


48.  Appendix,  sec.  18.    Kohrs  v.  Smith,  45  Mont.  467,  124  Pac.  275. 

49.  Brown  v.  Parker,  7  Allen,  337.  See  also  Bank  of  Rochester  v.  Mintent, 
1  Den.  405;  Bartlett  v.  Tucker,  104  Mass.  338.  And  see  especially  Minor  v. 
Mechanics'  Bank  of  Alexandria,  1  Pet.  46,  and  chapter  XIII,  on  Corporations, 
section  III,  §  399  et  seq.,  363;  Manufacturers  &  Traders'  Bank  v.  Love,  13  App. 
Div.  561,  43  N.  Y.  Supp.  812,  quoting  with  approval  the  text;  Conroe  v.  Case, 
79  Wis.  338,  48  N.  W.  480,  citing  the  text;  Salomon  v.  Hopkins,  61  Conn.  49,  23 
Atl.  716. 

60.  Arnold  v.  Stackpole,  11  Mass.  27;  Sharpe  v.  Bellis,  61  Pa.  St.  71;  Bed- 
ford, Conn.,  Ins.  Co.  v.  Covell,  8  Mete.  (Mass.)  442;  1  Parsons  on  Notes  and 
Bills,  93;  Story  on  Notes,  §  68.  See  Lyons  v.  Miller,  6  Gratt.  440;  Poole  v.  Rice, 
9  W.  Va.  73;  Bedell  v.  Scarlett,  76  Ga.  59;  Brent  v.  Miller,  81  Ala.  317;  Wood  v. 
Brewer,  73  Ala.  259;  Wharton  on  Agency,  §§  490,  496,  497;  Finan  v.  Babcock, 
58  Mich.  305;  Phelps  v.  Borland,  30  Hun,  364;  Stinson  v.  Lee  (Miss.),  8  So.  272, 
citing  the  text. 


§  306  HOW   AGENT   SHOULD   SIGN  389 

or  as  an  earmark  of  the  transaction,  and  may  be  rejected  as  sur- 
plusage.^^ 

And  this  principle  has  been  generally  held  to  apply  although  it 
could  be  proved  that  the  payee  knew  of  the  agency  when  the  note 
was  made,  and  it  was  understood  that  the  principal,  and  not  the  agent, 
should  be  bound,  for  such  evidence  would  vary  the  terms  of  the  writ- 
ten note,^'  though  it  has  been  held  that,  as  between  the  parties,  parol 
evidence  may  be  received  to  show  the  real  transaction,^^  But  under 
such  circumstances,  if  the  note  were  not  paid,  the  principal  might  be 
sued  upon  the  original  consideration.^'*  However,  if  the  payee,  with 
full  knowledge  of  the  agency  and  of  the  principal's  liability,  and  rely- 
ing solely  on  the  agent's  credit,  took  his  individual  note,  the  principal 
ornnot  be  resorted  to  at  all.^^    In  a  late  case  in  New  York  the  note 

51.  Richmond  Locomotive  Machine  Works  v.  Moragne,  119  Ala.  80,  24  So. 
834;  Hall  v.  Bradbury,  40  Conn.  32;  Burkhaltcr  v.  Perry  &  Brown,  127  Ga.  43S, 
50  S.  E.  031,  119  Am.  St.  Rep.  343;  Graham  v.  Campbell,  50  Ga.  258;  Kenyon  v. 
Williams,  19  Ind.  45;  Dayries  v.  Luidsly  (La.),  54  So.  791;  Williams  v.  Robbins, 
10  Gray,  77;  Stinson  &  Co.  v.  Lee,  08  Miss.  113,  8  So.  272,  24  Am.  St.  Rep.  257; 
Toledo  Iron  Works  v.  Heisser,  51  Mo.  128;  Cortland  ^^'agon  Co.  v.  Lynch,  82 
Hun,  173,  31  N.  Y.  Supp.  325,  citing  the  text;  Bry.son  v.  Lucas,  84  N.  C.  080; 
Collins  V.  Buckeye  State  Ins.  Co.,  17  Ohio  St.  215;  Anderson  v.  Shoup,  1  Ohio 
(N.  S.),  125;  Arnold  v.  Sprague,  34  Vt.  409.  Text  cited  with  approval  in  Anderson 
V.  Pearce,  30  Ark.  293  in  which  case  the  note  was  expressed  on  its  face  to  be  for 
"balance  due  P.  &  S.  for  work  done  on  Hazel  School  House,"  and  was  signed 
"O.  I.  A.  and  S.  J.  H.,  committee."  See  post,  §§398,  419;  Contra,  Keidan  v. 
Winegar,  r5  Mich.  430,  54  X.  W.  901. 

62.  1  Parsons  on  Notes  and  Bills,  93;  Stor>'  on  Notes,  §  08;  Rawlings  v.  Robson, 
70  Ga.  590;  Robinson  v.  Kanawha  Bank,  44  Ohio  St.  447,  citing  the  text;  Bank  v. 
Cook,  38  Ohio  St.  444;  McClellan  v.  Robe,  93  Ind.  29S.  The  words,  "Trustees 
Estate  of  A.,"  where  such  trustees  indorsed  a  note  under  a  power  given  by  the 
will,  were  held  to  be  merely  descriptio  personcc,  and  that  the  trustees  were  per- 
sonally liable.  Roger  Williams  Bank  v.  Groton  Mfg.  Co.  (R.  I.),  17  Atl.  170; 
Pugh  v.  Moore,  Hyams  &  Co.,  44  La.  Ann.  209,  10  So.  710;  Penn  Mutual  Life 
Ins.  Co.  V.  Conoughy,  54  Nebr,  124,  74  N.  W.  422;  Insurance  Co.  v.  Burkett, 
72Mo.App.  1. 

53.  Keidan  v.  Winegar,  95  Mich.  430.  In  Crandall  v.  Rollins,  82  N.  Y.  S.  317, 
83  App.  Div.  OlS,  it  was  held  that  where  a  note  was  signed  "  Agt.,"  and  the  payees 
were  informed  before  the  note  was  given  that  th(;  person  signing  was  acting  as 
agent  for  another,  with  authority  from  his  principal  to  so  act,  and  such  fact  was 
well  understood  by  the  payees  when  they  accepted  the  note,  the  person  who 
signed  the  note  cannot  be  held  individually  liable. 

54.  Pentz  v.  Stanton,  10  Wend.  271,  the  court  saying:  "It  was  a  question  for 
the  jury  to  decide  whether  the  goods  were  sold  exclusively  upon  the  credit  of 
West  (the  agent)  and  of  the  bill,  or  not."  Query,  see  Paige  v.  Stone,  10  Mete 
(Mass.)  109;  Fairly  v.  Nash,  70  Mass.  193,  14  So.  149. 

66.  Hyde  v.  Page,  9  Barb.  151  (1850);  Paige  v.  Stone,  10  Mete.  (Mass.)  IHO. 


390  AGENTS   AS    PARTIES  §  306 

was  signed  simply,  "J.  S.  M.,  agent."  It  was  alleged  to  have  been 
given  for  goods  sold  by  the  defendant,  a  lady,  probably  the  agent's 
wife,  and  recovery  against  the  alleged  principal  was  sustained.^ 
This  decision  is  in  conflict  with  the  general  current  of  authority.^' 
The  true  principle  has  been  thus  stated  by  the  United  States  Supreme 
Court:  "Parol  evidence  can  never  be  admitted  to  exonerate  an  agent 
who  has  entered  into  a  written  contract  in  which  he  appears  as  prin- 
cipal, even  though  he  should  propose  to  show,  if  allowed,  that  he  dis- 
closed his  agency,  and  mentioned  the  name  of  his  principal  at  tlie 
time  the  contract  was  executed."  ^ 

Under  Negotiable  Instrument  statute. — Under  the  statute,  a  note 
signed  by  the  secretary  of  a  corporation  is  signed  without  disclosing 
a  principal,  though  it  is  made  on  a  blank  form  of  receipt  with  the 
name  of  the  corporation  lithographed  at  the  top,  and  what  purports 
to  be  the  seal  is  impressed  upon  the  paper  but  no  reference  is  made  to 
it  in  the  note.^^ 

§  306.  Fifth:  If  the  agent  exceed  his  authority  in  signing  his 
principal's  name,  or  signs  his  own  professedly  as  binding  his  prin- 
cipal, who  is  named,  he  is  not  bound  as  a  party  to  the  paper  itself, 
but  only  in  an  action  of  tort  for  falsely  assuming  authority  to  bind 
another. — Upon  this  proposition  the  authorities  are  not  uniform, 
l)ut  the  weight  of  reason,  if  not  of  authority,  is,  we  think,  clearly  in  its 
favor,  both  in  England  and  in  the  United  States.  Where  simply  the 
principal's  name  is  signed,  without  any  profession  of  agency,  it  is 
patent  that  there  is  nothing  in  the  instrument  which  could  possibly 
import  a  liability  upon  the  agent;  ^°  but  where  both  the  agent's  and 

66.  Moore  v.  McClure,  8  Hun,  558,  Talcott,  J.:  "The  fact  that  the  name 
of  the  principal  does  not  appear  on  the  face  of  the  note  is  not,  under  the  modern 
decisions  in  this  State,  at  all  conclusive.  If  it  was  intended  to  be  given  in  the 
business  of  the  principal,  was  in  fact  so  given,  and  with  due  authority,  it  is  binding 
on  the  principal,  and  all  this  is  matter  of  evidence,  all  covered  by  the  averment 
that  it  is  the  note  of  the  principal."    See  ante,  §  303,  note. 

67.  See  ante,  §  303. 

68.  Nash  v.  Towne,  5  Wall.  689.  See  also  Magee  v.  Atkinson,  2  M.  &  W.  440; 
Hypes  V.  Griffin,  89  111.  134.  But  see  Metcalf  v.  WiUiams,  104  U.  S.  93;  Junge  v. 
Bowman,  72  Iowa,  648.  Parol  evidence  is  admitted  to  charge  principal  in  Minne- 
sota. Derring  v.  Thorn,  29  Minn.  120;  Pratt  v.  Beaupre,  13  Minn.  187;  Bingham 
V.  Stewart,  14  Minn.  214;  Peterson  v.  Homan,  46  N.  W.  303;  Brunswick  v.  Bou- 
telle,  47N,  W.  261. 

69.  Appendix,  sec.  20.    Daniel  v.  Glidden,  38  Wash.  556,  80  Pac.  811. 

60.  Wilson  v.  Barthrop,  2  M.  &  W.  863;  Grafton  Nat.  Bank  v.  Wing,  172 
Mass.  515,  52  N.  E.  1067,  citing  text.    In  this  case  indorsement  was  as  follows: 


§  307  HOW   AGENT   SHOULD    SIGN  391 

the  principal's  names  appear,  there  is  more  room  for  division  of 
opinion  By  some  authorities  it  is  contended  that  as  both  names  are 
on  the  paper,  and  the  principal's  is  not  rightfully  there,  the  agent 
should  be  bound.^' 

§  307  But  on  the  other  hand,  it  is  answered,  that  while  the  agent's 
name  is  on  the  paper,  it  is  there  in  a  form  which  expressly  negatives 
any  obligation  upon  him,  and  professes  to  assert  the  obhgation  ot 
another  And  it  is  only  for  such  wrongful  profession  that  an  action 
may  be  maintained.  This  is  the  philosophical  and  correct  view,  as 
we  think.  The  agent  cannot  be  estopped  to  deny  personal  obligation 
as  a  party  to  the  instrument,  since  he  never  held  himself  out  as  such,  j 

^Estate  of  Jona  DrWhooler,  Henry  F.  Wing,  Executor."    Court  held  that  these 
words  meant  "estate  of  Wheeler  by  Wing"  and  that  wa.  not  bound  individualb. 
61.  Edwards  on  Bills,  80,  90;  Chitty  1*35],  47;  Pitman  v^  Kmtner   5  Blfickf 
251;  McClure  v.  Bennett.  1  Blaokf.  189;  Byars  v-^^ Doore,  20  Mo  284^    See  a  .o 
not;  to  Thon>a.s  v.  llewes,  2  Car.  &  M.  530.    In  Ormsby  v.  Kendal  ,  2  Ark  338 
the  note  began,   -Steamer  Teeum.seh  and  owners  promise,     and  was  signed 
''  F  C   Ken.lall  "     Hehl,  he  was  bound  unless  he  had  authority  to  bind  owners. 
In  Dusenbury  v.  Ellis,  3  Johns.  Cas.  70,  the  note  began,  "I  promise,"  and  was 
Biened  "For  P.  S.-G.  D.,  attorney."    Held,  G.  D.  was  bound,  the  court  saying. 
•'If  a  person,  under  pretense  of  authority  front  another,  executes  a  note  in  h.^ 
name  he  is  bound;  and  the  name  of  the  person  for  whom  he  assumed  to  act  will 
be  re  ected  as  surplusage."     In  Rossiter  v.  Rossiter,  8  Wend.  494,  where  the 
agent   exceeding  his  authority,  signed  a  note  "H.  R.  P.,  by  h>B  attorney   ^\^  S. 
Rossher,"  he  wa.  held  bound.     To  same  effect  is  Palmer  v.  ff^^J^^ 
480.    "These  cases,"  it  is  .said  in  American  Leading  Cases,  vol.  1  I  037)      may 
fairly  be  considered  as  overruling  Ballou  v.  Talbot,  10  Ma.ss    4r.L       But  that 
case  seems  to  stand  quite  firm  as  a  preoed.-n,,  notwithstandmg;  Frankland  v. 
Johnson,  147  111.  520,  35  N.  E.  480,  37  Am.  St.  Rep.  234. 

62.  West  London  Commercial  Bank  v.  Kitson.  12  Q.  B.  Div^  15/,  37  Eng^ 
Rep  616;  post,  §  412;  Simpson  v.  Garland,  76  Me.  203;  Bean  v^  Pioneer  Mming 
Co!' 66  6aL  451;  Bartlett  v.  Tucker,  104  Mass.  338  (1870);  Draper  v.  Massa- 
chusetts Steam,  etc.,  Co.,  5  Allen,  338;  Abbey  v.  ChaBe,  6  C-h- f4  Je^  v. 
York  10  Cush.  392;  Ballou  v.  Talbot,  16  Mass.  461;  Sheffield  v.  Larue  16  Mmn. 
SSstHall  V  Cranddl,  29  Cal.  572;  Duncan  v.  Nells,  32  111.  542;  McHenry  v^ 
Duffield,  17  Blackf.  41;  Johnson  v.  Smith,  21  Conn.  627;  Taylor  v.  Sh^^ton  ^o 
Conn.  122  (agent  can  only  be  bound  on  instrument  f -^^i^^^jf^",^^^^^^^^^^^ 
express  his  Uability);  Hopkins  v.  Nehafy,  11  Serg.  &  R.  129,  P^^^^"  ^-  ™^^^^ 
3  B  &  Ad.  114,  special  action  sustained;  Jenkins  v.  Hutchmson  18  L.  J.  Q.  «• 
276 "(1849),  Lork  Denman,  C.  J.,  said:  "In  the  absence  of  any  direct  authority 
we  think  that  a  party  who  executes  an  instrument  in  the  name  of  another  whos 
name  he  puts  to  the  instrument,  and  adds  his  own  name  only  as  a^ent  or  tha 
other,  cannot  be  treated  as  a  party  to  that  instrument,  and  be  sued  ^^^  unless 
it  be  shown  that  he  was  the  real  principal."  1  Parsons  on  Notes  and  BiUs  21 
122-  Chitty  on  Bills  (13th  Am.  ed.)  [•35],  47;  Thompson  on  Bills,  155.    The  con 


392  AGENTS   AS    PARTIES  §  308 

So,  if  a  party  sign  a  fictitious  name,  and  it  is  not  one  which  he  adopts 
as  his,  he  is  only  liable  in  a  special  action  on  the  case.*^'  It  results 
from  these  principles,  that  if  the  agent  had  no  authority  to  bind  the 
principal,  and  there  are  no  apt  words  to  charge  him  personally,  the 
instrument  is  void,  as  neither  he  personally,  nor  the  assumed  prin- 
cipal, is  a  party  to  it.^* 

§308.  Still,  there  are  some  cases  in  which  the  authority  of  the 
agent  to  bind  the  principal  may  enter  into  the  inquiry  as  to  the 
agent's  liability;  for  if  there  be  an  ambiguity  in  the  phraseology  of 
the  note,  so  that  it  cannot  be  definitely  determined  from  its  face 
whether  it  be  that  of  principal  or  agent,  in  that  case,  as  the  principal 
could  not  be  bound,  an  intention  of  the  agent  to  bind  himself  might 
be  inferred.  If  the  principal  ratify  the  agent's  act,  an  action  against 
the  agent  in  tort  cannot  be  maintained,  his  previous  want  of  authority 

trary  doctrine  that  once  prevailed  in  New  York  (see  note,  ante)  is  now  doubted. 
See  White  v.  Madison,  26  N.  Y.  116;  Walker  v.  Bank,  9  N.  Y.  582.  One  who 
signs  a  promissory  note  in  the  name  of  another,  by  himself  as  attorney  in  fact, 
but  who,  to  the  knowledge  of  the  payee  and  a  subsequent  indorsee,  had  no  author- 
ity to  use  the  other's  name,  and  who  refuses  their  solicitation  to  sign  his  own 
name  and  bind  himself  ])crsonally,  is  not  liable  upon  the  note  as  his  contract, 
notwithstanding  the  fact  that  it  was  given  in  a  transaction  of  his  own,  and  that 
he  was  generally  using  the  name  signed  to  the  note  as  a  trade-name.  Kansas 
Nat.  Bank  v.  Bay,  G2  Kan.  692,  64  Pac.  596,  54  L.  R.  A.  408,  84  Am.  St.  Rep.  417. 

63.  Bartlett  v.  Tucker,  104  Mass.  339,  Gray,  J.:  "In  Long  v.  Colburn,  11  Mass. 
97,  it  was  held  that  upon  a  promissory  note  beginning,  'For  value  received,  I 
promise  to  pay,'  and  signed  'Pro  William  Gill,  J.  S.  Colburn,'  no  action  would  lie 
against  Colburn;  and  the  court  said:  'The  plaintiff's  remedy  is  against  Gill,  if 
Colburn  had  authority  to  malce  the  promise  for  him;  and  if  he  had  not,  a  special 
action  on  the  case  might  make  Colburn  answerable.'  In  Ballou  v.  Talbot,  16 
Mass.  461,  the  same  point  was  adjudged;  and  it  was  held  that  upon  a  note  signed 
'Joseph  Talbot,  2d,  agent  for  David  Perry,'  no  action  would  lie  against  Talbot, 
although  the  jury  found  that  he  was  not  authorized  to  sign  the  note  as  agent  for 
Perry.  So  where  a  note,  purporting  on  its  face  to  be  the  note  of  the  pastor  and 
deacons  of  the  First  Freewill  Baptist  Church  in  Lowell,  was  signed  'S.  D.  York, 
agent  for  the  First  Freewill  Baptist  Church  in  Lowell,'  it  was  held  that  no  action 
could  be  maintained  on  the  note  against  York.  Jefts  v.  York,  4  Cush.  371." 
Miller  v.  Reynolds,  92  Hun,  400,  36  N.  Y.  Supp.  660— in  this  case  held,  that  a 
person  making  a  promissory  note  in  the  name  of  a  corporation,  impliedly  war- 
rants that  he  has  authority  to  do  so,  and  if  he  does  not  have  such  authority,  he 
is  liable  upon  the  implied  warranty  for  damages  which  have  resulted  from 
the  breach. 

64.  See  McClure  v.  Bennett,  1  Blackf.  190;  Taft  v.  Brewster,  9  Johns.  334; 
Delins  v.  Cawthorne,  2  Dev.  90;  Bryson  v.  Lucas,  84  N.  C  680.  Frankland  v. 
Johnson,  147  111.  520,  35  N.  E.  480,  27  Am.  St.  Rep.  234,  contra. 


§§  308a-310  LIABILITY   OF   AGENT  393 

being  thereby  entirely  cured.^^    The  doctrines  applicable  to  public 
agents  are  elsewhere  considered.^® 

§  308a.  Liability  of  undisclosed  principal. — An  undisclosed  prin- 
cipal, as  we  have  seen,  cannot  be  held  as  a  party  to  a  bill  or  note.  But 
there  is  a  principle  of  the  law  of  principal  and  agent  important  to  be 
remembered  in  this  connection:  that  when  an  agent  acts  without  dis- 
closing that  he  is  an  agent,  or  when  acting  as  a  known  agent  does  not 
disclose  the  name  of  his  principal,  then,  although  credit  is  given  to 
the  agent,  it  is  not  an  exclusive  credit.  And  when  the  principal  is 
discovered,  he  may  be  held  for  the  debt,  provided  that  nothing  has  in 
the  meantime  passed  between  the  principal  and  agent  to  alter  the 
state  of  their  accounts  or  otherwise  to  operate  injuriously  to  the 
principal  if  he  has  acted  in  the  confidence  that  exclusive  credit  was 
given  to  the  agent;  and  provided  also  that  there  was  no  laches  on  the 
part  of  the  creditor.®^ 

SECTION   IV 

LIABILITY  OF  AGENT  WHO  DRAWS  ON  ACCOUNT  OF  HIS  PRINCIPAL,   OR 

INDORSES    TO    HIM 

§  309.  In  respect  to  bills  of  exchange  drawTi  or  indorsed  by  a 
party  as  agent,  there  are  three  cases  in  which  an  interesting  question 
as  to  the  drawer's  or  indorser's  liability  arises.  First.  When  the 
drawer,  who  is  knowTi  to  be  agent  of  the  drawee,  draws  in  favor  of 
the  drawee's  creditor — whether  or  not  he  is  liable  to  such  creditor. 
Second.  When  an  agent,  selling  goods  for  the  owner,  draws  on  the 
buyer  for  the  amount — whether  or  not  he  is  liable  to  the  owner.  And 
Third.  Whether  or  not  an  agent,  to  whom  a  bill  or  note  is  made  pay- 
able, is  liable  on  an  indorsement  thereof  to  his  principal. 

§  310.  Drawer  on  principal. — As  to  the  first  question,  it  is  said 
by  Story,  in  his  treatise  on  Agency,  "If  an  agent  should,  in  his  own 

65.  ShefField  v.  Larue,  16  Minn.  388.  But  see  contra,  Rossiter  v.  Rossiter,  8 
Wend.  494. 

66.  §§  443,  445. 

67.  See  on  this  subject,  Storj-  on  Agency  (9th  ed.),  §§291,  292,  and  notes; 
Abbott's  Trial  Evidence,  300;  WTiarton  on  Evidence,  §§  950,  951;  Smith  on  Mer- 
cantile Law,  65,  66,  78;  2  Kent.  Com.,  Lect.  41,  p.  630  (4th  ed.);  Lovell  v.  Wil- 
liams, 125  Mass.  439;  Hypes  v.  Griffin,  89  111.  134;  Thomas  v.  Davenport,  9  B.  & 
C  78;  Harper  v.  Nat.  Bank,  54  Ohio  St.  425,  44  N.  E.  97. 


394  AGENTS   AS    PARTIES  §  -ill 

name,  draw  a  bill  of  exchange  on  his  principal  for  the  debt  of  the 
latter,  he  would  be  personally  responsible  as  drawer  in  case  of  the 
dishonor  of  the  bill,  although  upon  the  face  of  it  the  bill  was  drawn 
on  account  of  his  principal.^ 

And  it  is  stated  in  the  American  Leading  Cases  to  be  the  general 
rule,  that  "whenever  an  agent  puts  his  name  to  a  negotiable  instru- 
ment as  a  party  to  it,  he  is  legally  liable  to  the  promisee  and  to  in- 
dorsees upon  it."  '^'•* 

§  311.  The  English  cases  clearly  bear  out  these  views.^'^  But  the 
weight  of  authority  in  the  United  States  is  otherwise,^^  though  the 

68.  Story  on  Agency,  §  269. 

69.  Vol.  I  [♦635]. 

70.  Leadbetter  v.  Farrow,  5  Maule  &  S.  345  (1816).  Agent  of  a  country  bank 
to  whom  plaintiff  sent  a  sum  of  money  in  order  to  procure  a  bill  on  London,  drew 
in  his  own  name  upon  the  London  firm.  Held,  defendant  was  liable  a.s  drawer, 
though  plaintiff  knew  he  was  agent.  Perhaps  this  case  is  distinguishable  from  the 
American  cases  in  this,  that  the  plaintiff  wanted  a  bill  drawn  on  London.  That 
waa  the  very  object  of  his  negotiation.  But  no  such  distinction  seems  to  have 
been  taken. 

71.  Krumbaar  v.  Ludeling,  3  Mart.  (O.  S.)  [*640],  700.  The  agent  drew  on 
his  principal  for  a  debt  due  the  payee,  without  describing  himself  as  agent.  The 
court  said,  per  Mathews,  J.:  "The  attempt  of  Ludeling  to  show  that  he  acted 
merely  as  agent  for  the  Amelungs,  in  drawing  the  bill  on  which  this  suit  is  com- 
menced, can  be  considered  properly  in  no  other  light  than  an  offer  of  evidence  to 
show  a  want  of  consideration  in  the  written  agreement,  and  that,  for  this  reason, 
he  is  not  bound  to  fulfil  any  obligation  which  might  otherwise  have  resulted  from 
it.  There  is  no  doubt  of  the  personal  liability  of  the  drawer  of  a  bill  of  exchange, 
who  signs  it  without  expressing  his  agency,  when  it  pa.sses  into  the  hands  of  third 
persons  having  no  knowledge  of  the  circumstances  under  which  it  was  drawn,  and 
between  whom  and  the  drawer  the  law  will  not  allow  the  consideration  to  be  in- 
quired into.  The  appellee  having  signed,  without  expressing  for  whom  he  signed, 
is  clearly  liable  on  the  face  of  it;  but  he  is  at  liberty  to  show  a  want  of  considera- 
tion, and  any  circumstances  of  fraud  or  violation  of  good  faith  on  the  part  of  the 
appellant,  which  may  be  sufficient  to  exonerate  him  from  this  apparent  liability, 
the  suit  against  him  being  brought  by  a  person  'with  whom  he  was  immediately 
concerned  in  the  negotiation  of  the  instrument.' "  Wolfe  v.  Jewett,  10  La.  (O.  S.) 
614  (1835);  Lincoln  v.  Smith,  11  La.  (O.  S.)  11  (1837).  In  these  cases  there  was 
no  intimation  of  agency  on  the  face  of  the  bill.  Hicks  v.  Hinde,  9  Barb.  528  (1850). 
In  this  case  the  drawer  signed  the  bill  "John  Hinde,  agent."  Held  not  bound, 
Paige,  J.,  saying:  "This  case  may  be  distinguished  from  the  case  of  Pentz  v. 
Stanton.  In  that  case  the  name  of  the  principal  was  not  disclosed  to  the  vendor 
by  the  agent  at  the  time  of  the  purchase  of  the  goods  and  giving  of  the  draft  for 
the  price  of  the  goods.  The  nondisclosure  of  the  principal  made  the  agent  liable 
for  the  goods.  And  being  so  liable,  it  was  proper  he  should  be  held  personally 
liable  on  the  draft." 


§  811  LIABILITY   OF   AGENT  395 

cases  are  not  uniform."  If  the  drawer  signs  himself  "A.  B,,  agent," 
and  the  payee  takes  the  bill  so  drawn  on  his  principal  debtor,  to  whom 
he  has  given  credit,  and  to  whom  he  looks  for  payment,  it  has  been 
said  there  is  really  no  valuable  consideration  for  his  liability/^  But 
the  debt  of  another  is  a  valuable  consideration,  and  if  the  agent  in- 
tended to  be  bound  upon  the  draft,  no  other  consideration  would  be 
necessary.  Bills  are  constantly  drawn  for  accommodation,  and  the 
transaction  might  be  construed  as  intended  to  be  of  this  character. 
We  think,  however,  that  a  bill  drawn  by  "A.  B.,  agent,"  might  well 
be  distinguished  from  a  note  so  signed;  for  the  language  is  not  in- 
consistent with  the  idea  that  the  drawer  signs  as  agent  of  the  drawee 
whose  name  is  disclosed  upon  the  face  of  the  instrument;  ^-  while  in  a 
note  none  but  the  maker's  name  is  disclosed,  therefore  parol  evidence 
might  well  be  admitted  to  show  the  real  circumstances  of  the  case, 
from  which  might  l)e  inferred  the  understanding  of  the  parties.  When 
there  is  no  intimation  of  agency  accompanying  the  drawer's  name,  the 
case  presented  is  more  difficult.  This  view,  however,  may  be  pre- 
sented when  the  buyer  has  parted  with  his  goods  upon  faith  of  the 
principal's  credit;  but  dealing  with  his  agent,  he  then  has  funds  in  the 
principal's  hands;  and  it  is  his  draft  that  the  principal  would  honor, 
provided  he  knew  the  fact  that  he  was  indebted  to  the  drawer. 

The  agent's  draft  serves  as  a  voucher  of  that  fact.  And  although 
if  there  be  no  evidence  to  contradict  the  presumption  that  the  agent 
intended  to  go  security  for  his  principal  in  the  form  pursued,  he  might 
well  be  held  liable  as  drawer,  there  may  be  circumstances  which 
would  render  it  unjust  so  to  hold  him.  Thus,  suppose  he  was  re- 
quested by  the  creditor  to  draw  on  his  principal  for  the  amount  which, 
according  to  the  agreement,  only  the  principal  owed;  in  that  case,  it 


72.  Mayhew  v.  Prince,  11  xMass.  55  (1814),  Parker,  J.:  "The  agency  under 
which  he  acted  is  a  matter  between  him  and  his  employer,  but  cannot  protect 
him  from  the  claim  of  the  payees  of  the  bill,  who  have  a  right  to  consider  him  as 
an  independent  drawer,  notwithstanding  they  may  have  known,  either  from  the 
terms  of  the  bills  themselves,  or  from  extraneous  evidence,  that  the  defendant 
was  acting  as  servant  to  one  of  the  house  on  which  the  bill  was  drawn."  To  same 
effect,  see  Newhall  v.  Dunlop,  14  Me.  180  (1837);  Conant  v.  Alvord,  166  Mass. 
311,  44  N.  E.  250.  In  this  case,  "A.  represented  that  he  was  the  duly  authorized 
agent  of  B.  to  accept  a  draft,  and  C.  relying  on  such  representation,  which  was 
untrue,  gave  up  a  prior  security  against  the  drawer  and  received  in  its  place,  a 
draft  on  B.,  accepted  by  A.  Held,  that  A.  was  Uable  irrespective  of  the  question 
of  fraud." 

73.  See  1  Parsons  on  Notes  and  Bills,  04. 

74.  Hicks  V.  Hinde.  9  Barb.  .52P 


396  AGENTS   AS   PARTIES  §  312 

seems  to  us,  he  would  be  a  drawer  for  the  accommodation  of  the 
creditor;  and  if  this  be  what  is  meant  by  the  authority  which  calls 
him  a  drawer  "without  consideration,"  it  would  seem  clearly  correct, 
though  not  so  in  any  other  light.  We  conclude,  therefore,  that  pre- 
sumptively the  agent  drawing  on  his  principal  is  bound  to  the  creditor; 
but  if  there  were  an  express  understanding  that  he  was  not  to  be 
bound,  or  circumstances  from  which  it  might  be  inferred  that  such 
was  the  understanding,  he  would  be  regarded  as  having  drawn  for 
the  creditor's  accommodation— not,  indeed,  to  enable  him  to  raise 
money,  necessarily,  but  to  enable  him,  in  the  most  succinct  form,  to 
vouch  to  his  debtor  the  amount  and  authenticity  of  the  debt,  and  call 
for  payment  at  the  same  time. 

§  312.  Drawer  on  purchaser  in  favor  of  principal. — As  to  the 
second  question,  whether  or  not  the  drawer  of  a  bill  on  a  purchaser  of 
goods  from  him  as  agent,  in  favor  of  his  principal,  is  liable  to  him  (the 
principal)  upon  the  bill,  the  authorities  are  divided.  In  England  his 
liability  is  afhrmed,^^  but  not  without  meeting  with  dissent  and  criti- 
cism from  high  authority.^®  In  the  United  States  the  contrary  doc- 
trine has  found  favor  with  the  courts,"  though  in  turn  receiving 
criticism  from  discriminating  authors.'^^ 


75.  Le  Fevre  v.  Lloyd,  5  Taunt.  749  (1813).  A  broker  being  employed  to  sell 
goods,  sold  them  for  a  bill  at  two  months,  in  accordance  with  instructions,  and 
himself  drew  a  bill  on  the  buyer  for  the  amount,  and  was  held  liable.  The  court 
said:  "The  broker,  by  giving  this  bill,  put  an  end  to  all  doubt." 

76.  1  Parsons  on  Notes  and  Bills,  104;  Chitty  on  Bills  (9th  ed.),  34,  citing  Ex 
parte  Robinson,  1  Buck,  113;  Kedson  v.  Dilworth,  5  Price,  564.  Chitty  says 
"These  decisions,  subjecting  an  agent  to  personal  liability  as  regards  third  persons 
ignorant  of  the  circumstances  under  which  the  agent  became  a  party,  are  consis- 
tent with  the  other  principles  of  law  applicable  to  these  instruments.  But  it  seems 
questionable  whether  even  at  law  it  is  correct  to  allow  an  employer  to  recover 
from  his  agent  under  such  circumstances,  because,  in  general,  between  original 
parties  it  may  be  shown,  as  a  good  defense  at  law,  that  the  bill  was  drawn,  ac- 
cepted, or  indorsed  for  the  plantiff's  accommodation,  or  for  a  purpose  or  consid- 
eration which  has  failed  or  been  satisfied;  and  to  allow  such  a  principal  to  recover 
at  law  against  his  agent,  is  only  to  compel  the  latter  to  resort  to  a  court  of 
equity  for  relief,  which  might  just  as  well  be  afforded  at  law,  and  a  court  of 
equity  will  certainly  afford  relief." 

77.  Jones  v.  Lathrop,  44  Ga.  398  (1871),  the  court  saying  the  bills  were  not 
drawn  "in  favor  of  the  plaintiff  for  any  valuable  consideration  received  by  the 
drawers  from  him  therefor."  Roberts  v.  Austin,  5  Whart.  313  (1839) ;  Mechanics' 
Bank  v.  Earp,  4  Rawle,  390  (1834). 

78.  1  American  Leading  Cases  [*635l,  where  it  is  said:  "The  case  of  Roberta  v. 


5§  313,  314  LIABILITY   OF   AGENT  397 

§  313.  The  whole  question  seems  to  us  to  turn  on  the  inquiry 
whether  or  not  the  agent,  by  customary  course  of  dealing,  or  express 
authority,  was  authorized  by  the  principal  to  draw  bills  on  the  pur- 
chaser in  his  favor.  If  so,  he  should  be  considered  as  really  using  his 
own  name  as  the  principal's,  and  the  latter  could  not  hold  him  liable, 
as  there  would  be  no  consideration,  but,  instead,  a  trust  reposed.  If, 
on  the  other  hand,  there  was  no  such  express  or  implied  authority, 
the  agent  should  be  regarded  as  assuming  in  the  form  of  drawer  to 
assure  the  debt. 

§  314.  Indorsement  of  agent  to  principal — Commission  del 
credere. — As  to  the  third  question,  whether  or  not  an  agent  taking 
a  bill  payable  to  his  own  order,  and  indorsing  it  to  his  principal,  is 
liable  thereon,  is  the  su]:)ject  of  opposing  opinions.  In  England  it 
has  been  held  that  an  agent,  purchasing  bills  for  his  principal  and 
indorsing  them  to  his  principal,  is  liable  on  his  indorsement,  unless  it 
be  qualified  by  appropriate  words,  however  small  the  commission  he 
gets  upon  the  purchase,  the  Court  of  Common  Pleas  saying  he  might 
have  specially  indorsed  the  bills  sans  recours,  but  did  not  do  it.''^ 
Clearly,  if  the  agent  indorsed  for  the  principal's  accommodation,^"^ 
or  merely  indorsed  according  to  the  principal's  instructions,  in  order 
to  remit  him  money  which  he  has  collected,  he  is  not  bound.^^  In  the 
case  of  a  factor  who  sells  goods  on  account  of  his  principal  under  a  del 
credere  commission — by  which  is  meant  an  agreement  to  guarantee 
in  consideration  of  a  premium — it  has  been  held  in  Pennsylvania  that 
the  agent,  under  such  a  commission,  guarantees  only  the  solvency  of 
the  debtor,  and  is  not  bound  as  a  party  to  the  bill  which  he  indorses 
to  his  principal  })y  way  of  remitting  the  money .^^  But  this  view  of 
the  liability  of  a  factor  under  a  del  credere  commission  is  agamst  the 
view  which  has  obtained  in  England  and  in  the  United  States,  which 
is  to  the  effect  that  such  a  factor  is  liable  to  his  principal  for  the 
amount  of  the  debt  immediately  on  its  falling  due,^^  and  is,  there- 
Austin,  5  Whart.  313,  is  believed  to  have  been  an  oversight  on  the  part  of  the 
learned  court  in  which  it  was  decided.  " 

79.  Goupy  V.  Harden,  7  Taunt.  159  (1816). 

80.  See  Chitty  [•34],  46;  Ex  parte  Robinson,  Buck  Cases,  113  (1817). 

81.  Warwick  v.  Noakes,  Peake  N.  P.  68  (1781);  Lewis  v.  Brehme,  33  Md.  431 
(1870);  Kimball  v.  Bittner,  62  Pa.  St.  205. 

82.  Sharp  v.  Emmett,  5  Whart.  290  (1839);  followed  in  Byers  v.  Harris,  9 
Heisk.  652. 

83.  McKenzie  v.  Scott,  9  Bro.  P.  C  280  (1796);  Morris  v.  Cleasley,  4  Maule 
&  S.  566  (1816),  takes  a  different  view  as  to  the  factor's  Uability,  and  so  also  do 


398  AGENTS    AS    PARTIES  §§  315,  316 

fore,  bound  on  his  indorsement  of  a  bill  which  he  remits  in  discharge 

thereof.'*-' 

§  315.  When  there  is  no  del  credere  commission  under  which  the 
agent  sells  goods,  the  question  whether  he,  ipso  facto,  binds  himself 
by  indorsing  a  bill  or  note  taken  payable  to  himself  in  payment,  is 
more  difficult.  High  authority  has  considered  him  bound.*"^  If  ho 
takes  the  bill  without  authority  to  do  so,  he  acts  at  his  peril.  But  if 
he  is  authorized  to  give  credit,  and  takes  a  bill  or  note  payable  at  its 
termination  to  his  own  order,  and  acts  without  negligence  in  the 
matter,  it  seems  unreasonable  to  hold  him;  for  his  own  name  as  the 
payee  might  well  be  regarded  as  being  used  simply  in  the  place  of, 
and  as  his  principal's.  To  exonerate  himself  from  liability,  however, 
the  circumstances  from  which  an  intention  not  to  be  bound  might 
be  inferred,  should  be  shown.  There  is  really  no  consideration  for 
his  liability  when  he  has  made  the  indorsement  without  commission 
or  compensation,  and  without  departing  from  express  or  implied 
instructions;  and  in  such  cases  no  intention  to  bind  himself  could  be 
inferred.^® 


SECTION   V 

RATIFICATION    BY    PRINCIPAL   OF    UNAUTHORIZED    ACTS 

§  316.  When  the  party  ostensibly  the  principal,  and  who  is  com- 
petent to  make  the  contract,  with  a  full  knowledge  of  all  the  circum- 
stances, deliberately  ratifies  the  lawful  acts,  doings,  or  omissions  of 
another  assuming  to  act  as  his  agent,  he  will  be  bound  thereby  to  all 
intents  and  purposes,  to  the  full  extent  of  such  acts,  doings,  or  omis- 

the  cases  of  Thompson  v.  Perkins,  3  Mason  C.  C.  232  (1823),  before  Story,  J.; 
Peele  v.  Northcote,  7  Taunt.  48.  But  the  weight  of  authority  is  in  accordance 
with  McKenzie  v.  Scott;  and  sustaining  the  text  are  the  cases  of  Wolf  v.  Koppel, 
5  Hill,  558,  2  Den.  368;  Sherwood  v.  Stone,  14  N.  Y.  267  (1856) ;  Swan  v.  Nesmith, 
7  Pick.  220;  Lewis  v.  Brehme,  33  Md.  412  (1870);  Wickham  v.  Wickham,  2  Kay  & 
Johns.  475;  Centourier  v.  Hastie,  8  Exch.  39. 

84.  Lewis  V.  Brehme,  33  Md.  412  (1870);  McKenzie  v.  Scott,  6  Bro.  P.  C.  280 
(1769);  Chitty  on  Bills  (13th  Am.  ed.)  [*34],  46. 

85.  Story  on  Agency,  §  157. 

86.  Lewis  v.  Brehme,  33  Md.  432,  Alvey,  J.:  "For,  in  such  a  case,  although  he 
is  a  known  agent,  the  making,  or  accepting,  or  indorsing  of  the  instrument,  is 
treated  as  an  admission  that  it  is  his  personal  act,  not  only  in  respect  to  third 
persons,  but  also  in  respect  to  his  principal." 


§§  317,  318       RATIFICATION    OF   UNAUTHORIZED   ACTS  399 

sions,  as  if  they  had  been  originally  done  by  his  authority .'^  But 
this  very  statement  of  the  rule  implies  its  limitations:  (1)  The  party 
must  have  capacity  to  make  the  contract.  (2)  He  must  ratify  it  with 
a  full  knowledge  of  the  facts  attending  it.  (3)  The  contract  must  have 
been  originally  lawful.  The  true  rule  is,  that  he  who  may  authorize 
in  the  beginning  may  ratify  in  the  end.^ 

§  317.  A  corporation,  as  well  as  an  individual,  may  ratify  its 
agent's  acts;  ^^  and  the  ratification  may  l)e  by  express  consent,  or  by 
acts  and  conduct  of  the  principal  inconsistent  with  any  other  hypoth- 
esis than  that  he  approved  and  intended  to  adopt  what  had  been 
done  in  his  name.^  Intelligent  acquiescence  amounts  to  a  binding 
ratification.^^ 

§  318.  Firstly:  The  party  must  have  capacity  to  have  made  the 

87.  Trustees  of  Schools  v.  McCormick,  41  111.  323;  Craighead  v.  Peterson,  72 
N.  Y.  279.  The  act  must  have  been  done  in  the  principal's  name,  or  as  his  act. 
Ellison  V.  Jackson  Water  Co.,  12  Cal.  550;  Coykendall  v.  Constable,  9  N.  Y.  313; 
Higgan  v.  Crain,  86  Ky.  252;  Crowder  v.  Reed,  80  Ind.  1,  where  it  was  held  that 
the  act  must  be  that  of  a  jM'rson  professedly  acting  as  the  agent  of  the  party  sought 
to  be  charged  a*?  principal,  and  not  "the  oflieious  act  of  a  friend.  Matter  of  Petrie, 
82  Hun,  62,  31  N.  Y.  Supp.  65;  Brown  v.  WiLson,  45  S.  C  519,  23  S.  E.  630,  55 
Am.  St.  Rep.  779;  Sanders  v.  Chartrand,  158  Mo.  352;  Central  Nat.  Bank  v. 
Copp,  184  Mass.  328,  68  N.  E.  334;  Wickersham  Banking  Co.  v.  Nicholas,  2  Cal. 
App.  18,  82  Pac.  1 124.  Where  an  agent  had  possession  of  money  for  the  purpose 
of  loaning  it  on  real  estate  security,  but  loaned  it  on  notes  without  such  security 
without  authorit}",  a  demand  for  the  posse.s.sion  of  securities  for  the  money  was 
not  a  ratification.    Morris  v.  Butler,  138  Mo.  App.  378,  122  S.  W.  377. 

88.  First  Nat.  Bank  v.  Gay,  63  Mo.  33;  Chouteau  v.  Allen,  70  Mo.  335;  Good- 
win V.  East  HaHford,  70  Conn.  18,  38  Atl.  876. 

89.  Hoyt  V.  l^ompson,  19  N.  Y.  218;  Supervisors  v.  Schenck,  5  Wall.  782; 
Peterson  v.  Mayor  of  N.  Y.,  17  N.  Y.  453;  John.son  v.  Stark  County,  24  111.  90; 
Keithsbury  v.  Frick,  34  111.  421 ;  Knox  County  v.  Aspinwall,  21  How.  544;  Trundy 
V.  Farrar,  32  Me.  225.  The  fact  that  an  agent  took  a  draft  in  the  name  of  the 
company  for  part  of  the  money  due  on  a  note,  and  that  the  company  collected 
the  draft,  does  not  necessarily  imply  that  the  company  had  full  knowledge  of  the 
transaction.  Wickersham  Banking  Co.  v.  Nicholas,  2  Cal.  App.  18,  82  Pac. 
1124,  the  court  saying  that  the  rule  of  the  text  cannot  be  applied  when  the  cor- 
poration did  not  know  until  presentation  of  the  note  for  payment  of  the  action 
o.*  its  agent  in  indorsing  the  not«  in  its  name. 

90.  Supervisors  v.  Schenck,  5  Wall.  782;  Knox  County  v.  Aspinwall,  21  How. 
544;  Bissel  v.  Jefferson ville,  24  How.  290;  Moran  v.  Miami  County,  2  Blackf. 
725;  Warder  v.  Pattoe,  57  Iowa,  516;  Sanders  v.  Chartrand,  158  Mo.  352. 

91.  Creswell  v.  Lanahan,  101  U.  S.  (11  Otto)  347;  McNeely  v.  Fort,  103  Iowa, 
508,  72  N.  W.  672,  64  Am.  St.  Rep.  195. 


400  AGENTS   AS    PARTIES  §  319 

contract  in  the  particular  mode  adopted. — If  a  contract  can  only  be 
made  in  a  prescribed  mode,  it  cannot  be  ratified  in  disregard  of  that 
mode  by  any  subsequent  action  of  the  impelled  principal.  Ratifica- 
tion is  equivalent  to  a  previous  authority;  it  operates  upon  the  con- 
tract in  the  same  manner  as  though  the  authority  to  make  the 
contract  had  originally  existed.^^  The  power  to  ratify,  therefore,  nec- 
essarily supposes  the  power  to  make  the  contract  in  the  first  instance; 
and  the  power  to  ratify  in  a  given  mode  supposes  the  power  to  con- 
tract in  the  same  way.'-*''  Therefore,  where  the  charter  of  a  city 
authorizes  a  sale  of  city  property  only  at  public  auction,  a  sale  not 
thus  made  is  from  its  very  nature  incapable  of  ratification,  because 
it  could  not  have  been  otherwise  made  originally.  So,  where  the 
charter  authorizes  a  contract  for  work  to  be  given  only  to  the  lowest 
bidder,  after  notice  of  the  contemplated  work  in  the  public  journals, 
a  contract  made  in  any  other  way— that  is,  given  to  tmy  other  person 
than  such  lowest  bidder — cannot  be  subsequently  affirmed.  Were 
this  not  so,  the  corporate  authorities  would  be  able  to  do  retroactively 
what  they  are  prohibited  from  doing  originally .^^ 

§  319.  Secondly :  The  principal  will  not  be  bound  unless  he  knew 
the  facts  attending  the  transaction.^^ — Thus,  ordinarily,  payment 
or  part  payment  of  a  bill  or  note  is  a  ratification  of  its  terms;  but 
where  a  note  has  been  altered  without  knowledge  of  the  surety,  and 
he  being  ignorant  of  the  alteration,  made  a  payment  upon  it,  it  was 
held  not  a  ratification;^^  and  where  an  agent,  without  authority, 
executed  a  note,  the  principal  does  not  ratify  such  note  by  making 
payments  on  a  collateral  note  without  any  knowledge  of  the  original 

92.  Paul  V.  Berry,  78  111.  158;  Eadie  v.  Ashbaugh,  44  Iowa,  521;  Darst  v. 
Gale,  83  111.  137. 

93.  Ainsworth  v.  Creke,  L.  R.,  4  C.  P.  483;  Bird  v.  Brown,  4  Exch.  786. 

94.  Zollman  v.  San  Francisco,  20  Cal.  102;  Field,  J.,  McCracken  v.  San  Fran- 
cisco, 16  Cal.  591;  Brady  v.  The  Mayor,  16  How.  Pr.  432. 

95.  School  District  v.  Thompson,  5  Minn.  280;  First  Nat.  Bank  v.  Parsons, 
19  Minn.  183;  Nixon  v.  Palmer,  8  N.  Y.  398;  Fletcher  v.  Dysart,  9  B.  Mon.  413; 
Miller  v.  Board  of  Education,  44  Cal.  166;  Supervisors  v.  Schenck,  5  Wall.  782; 
Claflin  V.  Wilson,  51  Iowa,  15;  Meyer  v.  Wegoner,  114  la.  74,  86  N.  W.  49. 
Where  an  agent  authorized  to  accept  the  unconditional  deUvery  of  notes  receives 
the  same  upon  conditions  that  he  was  not  authorized  to  make,  the  principal  does 
not  ratify  such  conditions  by  accepting  the  notes  without  any  knowledge  of  the 
fact  that  they  were  received  by  the  agent  upon  condition.  Watt  v.  Davison, 
82  Nebr.  712,  118  N.  W.  562. 

96.  Benedict  v.  Miner,  58  111.  19;  Goodwin  v.  East  Hartford,  70  Conn.  18, 
38  Atl.  876;  Colvin  v.  Peck,  62  Conn.  155,  25  Atl.  355. 


§§  320-322       RATIFICATION    OF   UNAUTHORIZED   ACTS  401 

obligation.^^  If  the  principal  ratifies  in  ignorance  of  material  facts, 
and,  on  learning  them,  desires  to  disavow  the  contract,  he  can  only 
do  so  by  relinquishing  the  proceeds,  and  restoring  the  party  who 
dealt  with  his  supposed  agent  to  as  good  a  situation  as  he  was  before.^* 

§  320.  Thirdly:  The  contract  must  have  been  originally  lawful. 

— This  principle  is  plain,  for  ratification  being  equivalent  to  an 
original  authority,  and  possessing  no  greater  or  other  virtue,  can  only 
apply  retrospectively  to  validate  those  things  which  original  authority 
would  have  validated. 

§  321.  Ratification  cannot  be  partial. — But  a  party  cannot  ratify 
a  contract  so  far  as  it  is  to  liis  interest,  and  repudiate  it  as  to  the  rest. 
Ratification  is  an  integral  act.  And,  therefore,  where  an  attorney 
compromised  a  debt  for  his  principal,  who,  with  full  knowledge,  re- 
tained the  amount  paid  on  such  compromise,  the  principal  was  held 
bound  by  all  the  terras  of  the  compromised^  Where  one  assumes 
without  authority  to  act  for  another,  if  that  other  wishes  to  avail 
himself  of  the  acts  of  the  agent,  he  must  adopt  the  whole  or  none.^ 

§  322.  Illustrations. — Delivery  of  a  note  by  the  apparent  maker 
as  his  note  is  an  adoption  of  the  signature,  by  whomsoever  made.^ 
Retaining  proceeds  of  a  note  is  ratification  of  the  means  by  which 
they  were  obtained;  ^  and  when  a  wife  signed  her  husband's  name 
without  authority,  but  he  took  the  money  raised,  he  was  held  bound.^ 
So,  if  a  principal  receives  from  his  agent  the  notes  of  third  parties  for 
property  sold,  he  waives  the  right  to  hold  the  creditor  of  the  agent 
liable  for  the  value  of  the  property.^    If  alleged  principal  accepts  and 

97.  First  Nat.  Bank  v.  Winnebago  County  Agricultural,  etc.,  Assoc,  141  Wis. 
476,  124  N.  W.  656,  135  Am.  St.  Rep.  50. 

98.  Culver  v.  Ashley,  19  Pick.  300;  Eadie  v.  AshbauRh,  44  Iowa,  521;  Mc- 
Cormick  Harvesting  Co.  v.  Taylor,  5  N.  Dak.  53,  63  N.  W.  890,  57  Am.  St.  Rep. 
538. 

99.  Henderson  v.  Cummings,  44  Cal.  325.    See  1  Parsons  on  Contracts,  52. 

1.  Eadie  v.  Ashbaugh,  44  Iowa,  521;  Davenport  Sav.  Fund  Assn.  v.  North 
America  Fire  Ins.  Co.,  16  Iowa,  74;  Benedict  v.  Smith,  10  Paige,  127. 

2.  Harris  v.  Tinder,  109  Mo.  App.  563,  83  S.  W.  94. 

3.  Coykendall  v.  Constable,  99  N.  Y.  313;  National  Improvement  &  Con- 
struction Co.  V.  Maiken,  103  Iowa,  118,  72  N.  W.  431;  Reid  v.  Rigby  &  Co., 
2Q.B.  40(1894). 

4.  National  Bank  v.  Fassett,  42  Vt.  432. 

5.  Trustees  of  Schools  v.  McCormack,  41  111.  323;  Hunt  v.  Listenberger,  14 
Ind.  App.  320,  42  N.  E.  240,  964. 

26 


402  AGENTS   AS   PARTIES  §  322 

attempts  to  enforce  notes  taken  in  his  name  by  an  assumed  agent, 
he  cannot  deny  the  agency  as  to  the  transaction.^  Mere  silence  by 
one  whose  name  is  purported  to  be  signed  to  a  note,  but  who  has  in 
fact  never  signed  the  same,  after  receiving  notice  of  protest  thereof, 
will  not  amount  to  ratification,'  and  mere  silence  when  informed  that 
another  has  used  one's  name,  and  an  attempt  to  get  indemnity 
against  loss,  has  been  held,  under  the  circumstances,  not  to  amount 
to  ratification.^  Long  silence,  however,  coupled  with  circumstances, 
may  frequently  operate  as  ratification.^  Where  an  agent  fraudulently 
sells  property,  and  embezzles  the  proceeds,  the  principal  by  accepting 
compensation  from  the  agent  ratifies  the  sale,  and  estops  himself 
from  recourse  against  the  purchaser.  ^°  A  subsequent  unconditional 
promise  to  pay  has  been  held  not  to  be  a  ratification  of  an  unauthor- 
ized signature,  but  evidence  from  which  a  ratification  might  be  in- 
ferred. ^^ 

6.  Farrar  v.  Peterson,  52  Iowa,  420. 

7.  Ritchie  County  Bank  v.  Bee,  60  W.  Va.  386,  59  S.  E.  181.  In  Corner  Stone 
Bank  v.  Rhodes,  5  Ind.  T.  256,  82  S.  W.  739,  69  L.  R.  A.  812,  it  was  held  that 
where  the  principal  maker  of  a  note  signed  the  names  of  two  of  his  relatives  thereto 
without  authority,  who  did  not  repudiate  the  same  until  after  the  note  had 
matured,  though  notified  by  the  payee  immediately  after  the  note  had  been 
signed,  and  the  principal  maker  died  hopelessly  insolvent,  such  facts  were  sufficient 
to  constitute  a  ratification  of  such  signatures. 

8.  Hortons  v.  Townes,  6  Leigh,  47,  Brockenburgh,  J.,  saying:  "There  was  no 
evidence  of  any  assent  given,  or  any  actual  ratification  of  the  attorney  by  the 
principals,  but  the  ratification  is  inferred  from  their  silence.  That  is  too  equivocal 
a  circumstance  from  which  to  form  such  a  conclusion;  and  the  subsequent  con- 
duct of  the  defendants  in  standing  a  suit  shows  that  they  did  not  understand 
their  failure  to  object  as  an  actual  ratification." 

9.  Wardrop  v.  Dunlop,  1  Hun,  325;  State  Bank  of  Tabor  v.  Kelly,  109  Iowa, 
544. 

10.  Ogden  v.  Marchand,  29  La.  61.  Executing  mortgage  to  secure  notes  given 
by  unauthorized  agent  constitutes  ratification.  Bell  v.  Waudby,  4  Wash.  743, 
31  Pac.  18. 

11.  Bank  of  Commerce  v.  Bemero,  17  Mo.  App.  316,  denying  the  authority 
of  Story  on  Agency  (9th  ed.),  §  254. 


CHAPTER  XI 

BANKS  AND  OTHER  AGENTS  FOR  NEGOTIATION  OR  COLLECTION 

§  323.  With  regard  to  the  duties  of  agents  in  respect  to  bills 
and  notes,  it  is  said  by  Chitty,  upon  the  authority  of  Beawes,  that  an 
agent  employed  in  negotiating  bills  of  exchange  is  bound:  First,  To 
endeavor  to  procure  acceptance;  secondly,  On  refusal,  to  protest  for 
nonacceptance;  thirdly,  To  advise  the  remitter  of  the  receipt,  accept- 
ance, or  protesting;  and,  fourthly.  To  advise  any  third  person  that  is 
concerned,  and  all  this  without  delay. ^  This  seems  to  be  a  concise  and 
accurate  statement  of  the  general  principle,  and  we  shall  endeavor  to 
follow  into  its  various  ramifications. 

SECTION   I 

BANKS  AS  COLLECTING  AGENTS — WHAT  CONSTITUTES  AGENCY,  AND  OF 
WHOM    THEY   ARE   AGENTS 

§  324.  The  business  of  collecting  commercial  paper  is  a  part  of  the 
regular  business  of  banking;  and  it  is  not  necessary  that  the  charter 
of  the  bank  should  specifically  confer  the  power  to  engage  in  it  upon 
the  bank,  as  it  is  plainly  within  the  powers  implied  by  the  creation 
of  such  an  institution,^  Nor  is  it  necessary  for  the  bank  to  enter  into 
any  special  contract  with  a  person  who  deposits  paper  in  it  for  collec- 
tion, in  order  to  invest  it  with  all  the  rights,  duties,  and  liabilities  of  a 
collecting  agent.  Frequently  the  banks  charge  a  commission  for 
collections  to  be  made  in  distant  places.  But  the  advantages  arising 
from  business  association,  and  the  possil)le  or  probable  temporary 
use  of  the  money,  are  a  sufficient  consideration  for  the  undertaking 
to  collect  it.^    And  although  the  party  bound  to  make  payment  re- 

1.  Chitty  on  Bills  [*36],  48;  Beawes  Lex  Mercatoria,  41;  West  Branch  Bank 
V.  Fuhner,  3  Barr,  399. 

2.  Tyson  v.  State  Bank,  6  Blackf.  225;  First  Nat.  Bank  of  Birmingham  v. 
First  Nat.  Bank  of  New-port,  116  Ala.  520,  22  So.  976;  Keyes  v.  Bank,  52  Mo. 
App.  323. 

3.  Halls  V.  Bank  of  the  State,  3  Rich.  366;  Bank  of  Utica  v.  M'Kinster,  11 

403 


404  AGENTS   FOR   NEGOTIATION    OR   COLLECTION     §§  325,  326 

sides  in  a  distant  place,  or  the  paper  is  payable  at  a  bank  in  a  distant 
place,  no  special  directions  or  contract  for  its  transmission  are  nec- 
essary, it  being  assumed  that  there  is  a  tacit  understanding,  arising 
from  the  obvious  circumstances,  that  such  transmission  is  expected 
by  the  depositor,  and  undertaken  by  the  bank.^ 

§  325.  Effect  of  making  paper  payable  at  a  bank.— A  bank  at 
which  negotiable  paper  is  made  payable,  and  at  which  it  is  deposited 
for  collection,  becomes,  by  receiving  it  from  the  holder,  his  agent  to 
collect  the  amount  at  maturity  of  the  paper;  and  demand  of  payment 
and  notice  of  dishonor  by  its  cashier,  he  being  a  notary,  will  bind  the 
indorser;  ^  and  though  payment  be  not  made  at  maturity,  the  bank 
has  implied  authority  to  receive  the  money  at  any  time  thereafter, 
and  while  the  paper  remains  at  the  bank.^  Payment  may,  therefore, 
be  safely  made  to  the  bank  by  the  debtor,  unless  he  receives  actual 
notice  not  to  do  so/  The  designation  of  the  bank  as  place  of  pay- 
ment, imports  a  stipulation  that  the  holder  will  have  the  paper  at 
the  bank  at  maturity  to  surrender  up,  and  that  the  maker  or  acceptor 
will  then  pay  it;  and  if  it  be  not  then  lodged  there,  and  the  payor  him- 
self or  his  agent  is  there,  with  necessary  funds  to  meet  it,  he  so  far 
satisfies  the  contract  that  he  cannot  be  made  responsible  for  any 
future  damages,  either  as  costs  of  suit  or  interest,  for  delay .^ 

§  326.  When  bank  is  agent  for  payee.— But  the  mere  fact  that 
a  bill  or  note  is  made  payable  at  a  bank  does  not  of  itself  confer  any 
agency  upon  the  bank,  on  the  part  of  the  payee,  to  receive  the  amount. 
In  order  to  make  the  bank  the  payee's  agent  to  receive  the  money, 
the  paper  must  be  indorsed  to,  or  lodged  with,  it,  for  collection,  or  it 

Wend.  475;  Bank  of  Utica  v.  Smedes,  3  Cow.  662;  Keyes  v.  Bank,  52  Mo  Add 
323.  ■     ^^' 

4.  Fabens  v.  Mercantile  Bank,  23  Pick.  330;  Bank  of  Washington  v.  Trip- 
lett,  1  Pet.  25;  Farmers'  Bank  &  Trust  Co.  v.  Newland,  97  Ky.  464,  31  S.  W. 
38;  First  Nat.  Bank  v.  Sprague,  34  Nebr.  318,  51  N.  W.  846,  33  Am.  St.'  Rep.  644* 
citing  text. 

5.  Blakeslee  v.  Hewett,  76  Wis.  341,  44  N.  W.  1105;  Foster,  Rec,  v.  Rincker, 
4  Wyo.  484,  35  Pac.  470;  Moreland's  Assignee  v.  Citizens'  Sav.  Bank,  97  Ky! 
211,  30  S.  W.  637;  Second  Bank  of  Baltimore  v.  Bank  of  Alama  (Ark.)  138  S  W 
472.  ' 

6.  Alley  v.  Rogers,  19  Gratt.  383;  Marine  Bank  v.  Fulton  Bank,  2  Wall.  253; 
Ward  V.  Smith,  7  Wall.  447;  Morse  on  Banking,  323. 

7.  Ibid. 

8.  Ward  v.  Smith,  7  Wall.  447;  Greeley  v.  Whitehead,  35  Fla.  523,  17  So 
643,  48  Am.  St.  Rep.  258. 


§  326a  BANKS   AS   COLLECTING   AGENTS  405 

must  have  received  authority  from  the  payee  to  collect  the  amount 
due ;  ^  payment  of  a  note  made  at  the  place  designated  does  not  dis- 
charge the  maker,  unless  the  note  is  there  to  be  surrendered  to  the 
payor/°  and  without  such  circumstances  or  such  authority  any 
amount  which  the  bank  receives  to  apply  in  payment,  it  will  be 
deemed  to  have  taken  as  the  agent  of  the  payor. ^^ 

§  326a.  Whether  the  bank  at  which  the  paper  is  payable  may 
apply  funds  of  the  principal  payor  to  pay  it,  is  a  question  upon  which 
the  authorities  differ.  In  England  it  is  well  settled  that  if  the  acceptor 
makes  his  acceptance  payable  at  a  particular  bank  or  banker's,  it  is 
tantamount  to  an  order  on  the  part  of  the  acceptor,  to  the  bank  or 
banker,  to  pay  the  bill  to  the  person  who,  according  to  the  law  mer- 
chant, is  capable  of  giving  a  good  discharge  to  the  bill — that  is,  to  any 
holder  by  genuine  indorsement;  or  by  dehvery,  when  the  paper  is 
payable  to  bearer. ^^    And  this  may  be  regarded  as  well-established 

9.  Cheney  v.  Libby,  134  U.  S.  68,  10  Sup.  Ct.  49S,  33  L.  ed.  818;  Glatt  v. 
Fortman,  120  Ind.  385;  Bank  of  Montreal  v.  Ingerson,  105  Iowa,  349,  75  N.  W. 
351,  citing  text;  Caldwell  v.  Evans,  5  Bush,  380;  Balme  v.  Wambaugh,  16  Minn. 
120;  Powers  v.  Woolfolk,  132  Mo.  App.  354,  111  S.  W.  1187;  Cumings  v.  Hurd, 
49  Mo.  App.  139;  Griffin  v.  Chase  et  al.,  36  Xcbr.  328,  54  X.  W.  572;  Chapman  v. 
Wagner,  1  Nebr.  (Unof.)  492,  96  N.  W.  412;  xVdams  v.  Hackensack  Commission, 
44  N.  J.  L.  638;  Kelsay  v.  Taylor,  56  Or.  13,  107  Pac.  609. 

10.  Chapman  v.  Wagner,  1  Nebr.  (Unof.)  492,  96  N.  W.  412. 

11.  Ward  V.  Smith,  7  Wall.  447;  State  Nat.  Bank  v.  J.  J.  Hyatt  &  Co.,  75 
Ark.  170,  86  S.  W.  1002,  112  Am.  St.  Rep.  50,  citing  te.xt;  DiUingham  v.  Parks, 

30  Ind.  App.  61,  65  N.  E.  300;  Midland  Nat.  Bank  v.  Brightwell,  Assignee,  148 
Mo.  358,  49  S.  W.  994,  71  Am.  St.  Rop.  608;  Jones  v.  Kilbreth,  49  Ohio  St.  401, 

31  N.  E.  346.  In  Pea.se  v.  Warren,  29  Mich.  9  (1874),  Cooley,  J.,  said:  "It  cannot 
be  pretended  that  making  a  note  payable  at  a  bank  can  make  the  bank  the  agent 
of  the  payee  to  receive  pajTnent,  unless  the  officers  are  disposed  to  accept  the 
agency;  and  in  this  case  the  refusal  was  distinct  and  emphatic." 

12.  Robarts  v.  Tucker,  16  Ad.  &  El.  (N.  S.)  578,  72  Eng.  C.  L.  (1851),  Parke, 
B.;  Forster  v.  Clements,  2  Campb.  17  (1809),  Lord  EUenborough;  Keymer  v. 
Laurie,  18  L.  J.  Q.  B.  218  (1849),  Patterson,  J.:  "The  plaintiff,  by  making  the 
acceptance  payable  at  the  defendant's  (banking-house),  clearly  authorized  them 
to  pay  it."  Thompson  on  Bills,  120;  Chitty  on  Bills  (13th  Am.  ed.),  716,  *639, 
note;  1  Parsons  on  Notes  and  Bills,  357,  note.  In  Byles  on  Bills  [*19],  91,  it  is 
said:  "If  the  funds  in  the  banker's  hands  have  been  appUed  to  the  payment  of 
the  customer's  acceptance,  made  payable  at  the  banker's,  though  without  any 
further  authority,  that  is  a  defense  (to  the  banker)  to  an  action  (brought  by  the 
customer)  for  dishonoring  the  (customer's)  check."  See  also,  to  same  effect, 
Byles  [*1881,  319;  Edwards  on  Bills,  166,  where  it  is  said  that  if  a  note  is  made 
negotiable  at  a  bank,  "  the  maker  authorizes  the  bank  to  pay  it  out  of  his  funds 
on  deposit,  or  by  advancing  the  amount  to  his  credit." 


406  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  326a 

law.  When  a  note  is  made  payable  at  a  particular  bank  or  banker's; 
it  has  been  held  in  Illinois,  that  although  the  maker  may  have  funds 
there  on  deposit  sufficient  to  pay  it,  the  bank  or  banker  has  no  au- 
thority'- to  apply  these  funds  to  pay  the  note  at  maturity  without  being 
so  ordered  by  the  maker,  verbally,  or  by  check,  or  draft,  or  other 
writing. ^^  And  this  view  was  taken  by  the  author  in  the  former 
editions  of  this  work.  But  this  view  the  author  is  now  convinced  was 
erroneous,  and  upon  principle  and  authority  we  should  say  that  a 
bank  or  banker  at  whose  house  negotiable  paper  is  made  payal^le, 
may  apply  to  its  payment  funds  of  the  maker  or  acceptor  held  on 
deposit  at  its  maturity,  the  relations  of  banker  and  customer,  and  the 
tenor  of  the  instrument,  justifying  the  inference  that  the  customer  in- 
tended this  to  be  done.  In  New  York,  in  a  recent  case,  it  was  said 
by  Rapallo,  J.:  "A  note  payable  at  a  bank  where  the  maker  keeps 
his  account,  is  equivalent  to  a  check  drawn  by  him  upon  that  bank, 
except  that  in  the  case  of  a  note  the  failure  to  present  for  payment 
does  not  discharge  the  maker."  ^'^  And  other  well-considered  cases 
sustain  this  view.^'' 

13.  Wood  V.  Merchants'  Savings,  etc.,  Co.,  41  111.  247.  In  this  case  the  note 
was  payable  "at  the  banking-house  of  J.  G.  Conrad,  Chicago."  It  was  there 
presented  at  maturity,  and  marked  "Good.  C.  W.  Dunlop,  Teller."  At  the  time 
the  maker  had  funds  on  deposit,  but  had  given  no  authority  to  or  order  on  the 
banker  to  pay  the  note.  The  next  day  Conrad  failed,  and  made  an  assignment 
for  the  benefit  of  creditors.  The  court  held  that  the  maker  was  still  bound;  and 
Breese,  J.,  concluding  his  opinion,  said:  "To  sum  up  all  on  this  point  in  a  few 
words,  the  fact  that  the  note  was  made  payable  at  Conrad's  bank,  did  not  author- 
ize that  bank  to  pay  the  note  without  being  so  ordered  by  the  maker,  verbally, 
or  by  check  or  draft  or  other  writing.  The  holder  of  the  note  could  not,  therefore, 
draw  the  funds  except  on  the  order  of  the  maker,  and  the  money  in  the  bank 
belonging  to  him  remained  at  his  risk.  It  would  be  going  too  far  to  hold  that  the 
mere  certification  of  a  note  by  the  bank  at  which  it  was  payable,  that  it  was  'good,' 
should  operate  to  release  the  maker,  and  be  held  equivalent  to  an  actual  payment 
of  the  money.  We  think  the  better  rule  is  to  consider  nothing  as  an  actual  pay- 
ment which  is  not  really  such,  unless  there  be  an  express  agreement  that  something 
short  of  a  payment  shall  be  taken  in  lieu  of  it."  See  on  this  subject  the  Albany 
Law  Journal,  June  29,  1878,  p.  500.  See  also  Grissom  v.  Commercial  Bank,  87 
Tenn.  351,  10  S.  W.  775,  Folkes,  J.,  delivering  the  opinion  of  the  court,  and  deny- 
ing the  right  of  the  bank  to  make  such  an  application  of  the  depositor's  funds. 

14.  Indig  V.  National  City  Bank,  80  N.  Y.  106  (1880);  Wyman  v.  National 
Bank,  181  111.  279,  54  N.  E.  946,  72  Am.  St.  Rep.  259;  People  v.  St.  Nicholas 
Bank,  76  Hun,  522,  28  N.  Y.  Supp.  114;  Central  Bank  v.  Thein,  76  Hun,  571, 
28  N.  Y.  Supp.  232;  Riley  v.  Cheesman,  75  Hun,  387,  27  N.  Y.  Supp.  453;  Bedford 
Bank  v.  Acoam,  125  Ind.  584,  25  N.  E.  713,  21  Am.  St.  Rep.  258,  citing  text; 
First  Nat.  Bank  v.  Hall,  119  Ala.  64,  24  So.  347. 

15.  Lazier  v.  Horan,  55  Iowa,  75,  23  Alb.  L.  J.  150;  Thatcher  v.  Bank  of  the 


§  326b  BANKS   AS   COLLECTING   AGENTS  407 

§  326b.  Whether  the  bank  must  pay  the  note  or  acceptance  of  a 
depositor  made  payable  there,  is  another  question;  but  one  which 

State  of  New  York,  5  Sandf.  130  (1851),  Sandford,  J.,  saying:  "The  bank  pays 
for  its  dealers  who  have  funds  to  their  credit  such  bills,  notes,  accepted  or  drawn 
by  them,  as  are  payable  at  the  bank.  The  latter  circumstance  is  deemed  an  order 
by  the  depositor  for  the  payment  of  tne  bill  or  note  out  of  its  funds  deposited. 
But  it  is  only  in  respect  of  its  dealers,  persons  keeping  an  account  with  the  bank, 
that  this  course  of  business  exists  or  can  exist.  A  person  may,  no  doubt,  become  a 
dealer  by  a  deposit  made  on  the  day  his  draft  or  note  falls  due,  though  never  be- 
fore in  the  bank;  but  his  deposit  must  be  made  with  the  proper  officer  of  the  in- 
stitution, and  with  the  requisite  assent  to  his  becoming  a  dealer."  ^tna  Nat. 
Bank  v.  Fourth  Nat.  Bank,  46  N.  Y.  88  (1871),  Allen,  J.:  "Before  this  note  ma- 
tured, or  was  presented  for  payment,  the  defendant  (bank)  paid  upon  another 
note  of  the  same  maker,  payable  at  the  bank  of  the  defendant,  and  which,  by 
commercial  usage,  takes  the  place  of,  and  is  equivalent  to,  a  check,  and  charged 
the  same  to  the  account  of  the  maker,  leaving  an  amount  to  the  credit  of  the 
account,  insufficient  to  pay  the  plaintiff.  This  payment  was  valid  as  against  the 
customer  of  the  defendant,  the  maker  of  the  note,  and  that  corporation  had  no 
cause  of  action  against  the  defendant  either  for  the  money  or  for  not  paying  the 
plaintiff's  note  when  presented.  The  defendant  has  performed  its  contract 
with  Florence  Mills,  and  discharged  its  obligations  to  it,  by  honoring  its  draft 
and  was  without  funds  for  the  payment  of  the  plaintiff's  note  when  presented. 
If  the  defendant  is  charged  with  the  amount  of  the  note  at  the  suit  of  the  plain- 
tiff, the  anomaly  will  be  presented,  of  a  Hability,  existing  in  favor  of  a  stranger  to 
a  contract  after  it  has  been  fully  performed,  and  its  obligations  fulfilled,  in  favor  of 
and  by  transactions  with,  the  party  with  whom  it  was  made."  In  Home  Nat. 
Bank  v.  Newton,  a  woU-considered  case,  decided  in  the  First  District  Appellate 
Court,  Chicago,  111.,  and  reported  in  the  Bankers'  Magazine  for  July,  1881,  p.  58, 
similar  views  were  taken.  Wilson,  J.,  said:  "As  it  is  the  duty  of  the  bank  to 
pay  its  customer's  checks,  when  in  funds,  so,  at  least,  it  has  authority,  if  it  is  not 
under  actual  obligation,  to  pay  his  notes  and  acceptances  made  payable  at  the 
bank.  It  is  a  presumption  of  law  that  if  a  customer  does  so  make  payable  or  ne- 
gotiable at  a  bank  any  of  hLs  paper,  it  is  his  intent  to  have  the  same  discharged 
from  his  deposit.  The  neglect  of  the  bank  to  make  such  appropriation  would  dis- 
charge the  indorsers  and  sureties.  The  act  of  thus  making  his  paper  payable  at  a 
bank  is  considered  as  much  his  order  to  pay  as  would  be  his  check,  and  if  the 
bank  pay  without  express  orders  to  the  contrary,  it  is  a  defense  to  a  suit  by  the 
depositor  for  money  so  paid.  And  the  rule  seems  to  be  settled  that  if  a  bank  ad- 
vances the  money  to  pay  a  bill  or  note  of  its  customer,  made  payable  at  the  bank, 
it  may  recover  from  the  depositor  as  for  money  loaned,  the  paper  so  made  pay- 
able being  equivalent  to  a  request  to  pay.  He  makes  the  bank  his  agent,  with 
imphed  authority  to  protect  his  credit  by  appropriating  his  deposits  to  the 
payment  of  his  maturing  obligations  made  payable  at  the  bank."  Pennsyl- 
vania Bank  v.  Farmers'  Nat.  Bank,  130  Pa.  St.  209,  123  Pa.  St.  283;  Lancaster 
County  Nat.  Bank  v.  Huver,  114  Pa.  St.  218,  where  the  bank  charged  up  the 
proceeds  of  a  discounted  note,  before  it  became  payable  against  the  maker, 
who  had  made  an  assignment  for  the  benefit  of  creditors.  Dougherty  v.  The 
Bank,  93  Pa.  St.  227;  post,  §  326c;  Adams  v.  Hackensack  Commission,  44  N.  J.  L. 


408  AGENTS   FOR   NEGOTIATION   OR   COLLECTION  §  326b 

we  think  should  be  affirmatively  decided  in  the  interest  of  the  bank, 
and  of  the  depositor,  and  of  the  noteholder  alike,  and  according  to  the 
general  usages  and  interests  of  trade.  It  is  quite  clear  that  if  the  bank 
make  a  special  agreement  to  apply  the  deposit  of  its  dealer  to  pay- 
ment of  checks,  or  in  any  other  way;  ^^  or  if  instructed  to  make  a 
particular  application  of  it;  ^^  then  it  must  abide  the  agreement  or 
instruction,  and  cannot  apply  the  deposit  otherwise — even  to  a  debt 
due  itself.  ^^  It  is  also  clear  and  well  settled  that  when  a  bank  is  itself 
the  holder  of  a  bill  or  note  there  payable,  it  may  at  maturity  apply 
funds  of  the  principal  payor  on  deposit  to  meet  it.^^  Now,  as  between 
the  bank  and  the  noteholder,  whose  agent  for  collection  it  is,  it  is 
bound  to  act  for  his  interest,  and  it  would  be  negligence,  as  to  him, 
to  fail  to  make  the  application,  it  being  conceded  that  the  application 
is  authorized  by  the  debtor,  by  the  very  fact  that  his  paper  is  made 
there  payable;  -°  and  as  between  the  bank  and  the  maker  of  the  note, 

638,  citing  the  text;  Knapp  v.  Cowell,  77  Iowa,  528;  Johnson  v.  Bank,  56  Mo. 
App.  257;  Bank  v.  Schneidermeyer,  62  Mo.  App.  179.  See  Union  Nat.  Bank  v. 
McKey,  42  C.  C.  A.  583,  102  Fed.  662. 

16.  Wilson  V.  Dawson,  52  Ind.  513. 

17.  Egerton  v.  Fulton  Nat.  Bank,  43  How.  Pr.  216;  Bank  U.  S.  v.  Macal- 
ester,  5  Pa.  St.  475;  Johnson  v.  Parker  Sav.  Bank,  101  Pa.  St.  599;  National 
Bank  v.  Johnson,  6  N.  Dak.  180,  69  N.  W.  49;  North  Star  Boot  &  Shoe  Co.  v. 
Stebbins,  2  S.  Dak.  74,  48  N.  W.  833. 

18.  Egerton  v.  Fulton  Nat.  Bank,  43  How.  Pr.  216;  Merchants'  Nat.  Bank  v. 
Robinson  &  Co.,  97  Ky.  552. 

19.  Dawson  v.  Real  Estate  Bank,  5  Pike,  284.  Held  in  this  case,  that  if  it 
fails  to  do  so,  it  releases  a  surety;  but  the  case  must  be  one  in  which  offset  would 
be  pleadable.  This  right,  or  duty,  is  denied  in  Louisiana  (Gordon  v.  Gomila, 
34  La.  Ann.  605);  and  in  Tennessee  (Grissom  v.  Bank,  87  Tenn.  351).  An  analo- 
gous decision  in  Tennessee  is  to  the  effect  that  money  of  the  payor  coming  into  the 
hands  of  the  payee,  will  not  be  presumed,  in  the  absence  of  the  debtor's  assent,  to 
have  been  applied  to  the  payment  of  the  note.  McGill  v.  McGill,  10  Lea,  147. 
In  Eyrich  v.  Capital  State  Bank  (Miss.),  6  So.  615,  the  doctrine  of  the  text  was 
carried  to  such  an  extent  as  to  permit  the  bank  to  apply  its  depositor's  funds  to  a 
firm  debt.  But  in  Raymond  v.  Palmer,  41  La.  Ann.  425,  6  So.  692,  the  contrary 
was  decided.  Smith  v.  Eighth  Ward  Bank,  31  App.  Div.  6,  52  N.  Y.  Supp.  290. 
In  this  case  it  was  held,  that  a  bank  which  has  received  from  a  depositor  for  collec- 
tion a  promissory  note,  has  a  general  hen  thereon  and  on  the  proceeds  thereof  to 
the  extent  of  obligations  of  the  depositor  then  due  the  bank,  and  where  such 
depositor  subsequently  becomes  insolvent  and  a  receiver  of  its  property  is  ap- 
pointed, the  proceeds  of  the  note  so  deposited  for  collection  may  be  appUed  to  the 
payment  of  notes  of  the  depositor  held  by  the  bank  which  matured  before,  but 
not  to  such  as  matured  after,  the  appointment  of  a  receiver.  But  see  Gardner, 
Admr.,  v.  First  Nat.  Bank  of  Billings,  10  Mont.  149,  25  Pac.  29. 

20.  See  ante,  §  326a;  and  post,  §  330. 


§  326b  BANKS   AS   COLLECTING   AGENTS  409 

or  acceptor  of  the  bill,  there  payable,  it  is  to  the  interest  of  the  maker 
or  acceptor  that  his  commercial  paper  be  protected;  and  as  he  has 
impliedly  authorized  and  made  the  bank  his  agent  to  pay  it,  by 
making  it  there  payable,  and  depositing  funds  sufficient  to  meet  it, 
it  would  be  the  duty  of  the  bank  to  subserve  that  interest  and  make 
the  application  accordingly.-^  And  it  is  certainly  to  the  interest  of 
the  bank,  and  of  banks  generally,  that  this  be  the  recognized  duty  of 
such  institutions,  as  it  induces  to  the  certainty,  and  assurance,  that 
is  so  much  to  be  desired  in  all  commercial  transactions,  and  is  to  be 
taken  as  the  fair  understanding  and  contemplation  of  all  parties; 
When  a  general  deposit  is  made  in  bank  by  the  payor  after  maturity 
of  the  paper,  it  has  been  held  that  the  presumption  of  authority  to 
apply  it  in  payment  does  not  arise.^^  Nor  can  it  so  apply  the  deposits 
of  a  guarantor,  whose  liability  is  postponed  until  all  remedies  against 
other  parties  have  been  exhausted.-^  Nor  can  it  apply  the  depositor's 
funds,  without  his  consent,  to  the  payment  of  a  note  upon  which  he 
is  merely  surety.^'* 

21.  See  McDowell  v.  Bank  of  Wilmington,  1  Harr.  369.  Held,  that  if  maker  of 
note  held  by  bank  has  funds  on  deposit,  bank  must  apply  them  to  note;  or  if  not, 
it  releases  an  indorser.  State  Bank  of  St.  Johns  v.  McCabe,  135  Mich.  479,  98 
N.  W.  20. 

22.  National  Bank  v.  Smith,  66  N.  Y.  271;  People's  Bank  v.  Legrand,  103 
Pa.  St.  309;  Voss  v.  German-American  Bank,  83  111.  599.  Deposits  made  prior  to 
maturity  cannot  be  held  to  meet  the  note  when  it  matures,  and  deposits  made 
after  maturity  do  not  affect  the  Uability  of  the  indorser.  State  Bank  of  St.  Johns 
V.  McCabe,  135  Mich.  479,  98  N.  W.  20.  In  an  action  by  a  bank  against  the 
indorser  of  a  note,  the  fact  that  the  maker  had,  some  time  subsequent  to  the 
maturity  of  the  note,  a  sufficient  deposit  in  the  bank  to  pay  it  which  the  bank 
failed  to  appropriate  for  that  purpose,  constitutes  no  defense;  in  the  absence  of 
any  direction  or  agreement  to  that  effect,  it  was  optional  with  the  bank  whether 
it  would  apply  the  money  or  not  upon  the  note  in  suit.  Far  Rockaway  Bank  v. 
Norton,  186  N.  Y.  484,  79  N.  E.  709. 

23.  Bank  of  Shreiner,  110  Pa.  St.  188. 

24.  Lamb  v.  Morris,  118  Ind.  179.  In  Hodgin  v.  Bank,  125  N.  C.  503,  34  S.  E. 
709,  712,  held,  that  upon  dissolution  of  partnership  by  death  of  one  of  its  mem- 
bers the  surviving  partner  is  the  legal  owner  of  its  ?^sets  which  he  holds  in  trust, 
first  to  pay  the  debts  of  the  firm  and  then  for  the  benefit  of  the  estate  of  the  de- 
ceased partner.  When  the  bank  knew  that  plaintiff  was  the  only  surviving  partner 
of  firm  and  that  he  was  making  deposits  as  such,  it  had  no  right  to  apply  them  to 
the  payment  of  a  debt  created  by  the  partnership  before  its  dissolution  without 
consent  of  depositor,  court  saying:  "It  is  only  where  the  depositor  stands  in  the 
same  relation  to  the  bank  as  the  debtor  and  held  by  him  in  the  same  right  as 
the  debtor,  that  the  bank  has  the  right  to  approximate  and  apply  the  deposits  to 
the  pa>Tnent  of  a  debt  due  it.  There  must  be  mutuality  between  the  debtor  and 
the  creditor,  and  between  the  debt  and  the  fund  deposited.     If  the  fund  is  a 


410  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  326c 

If  when  the  note  becomes  due  and  payable  the  bank  has  not  suffi- 
cient funds  of  the  maker  to  satisfy  the  debt,  it  is  not  required  to  ap- 
propriate the  deposit  to  the  payment  of  the  note,  neither  is  it  required 
to  appropriate  subsequent  deposits  m  such  case  to  its  payment.^^ 

§  326c.  Where  an  agent  deposits  in  bank  the  proceeds  of  property 
sold  by  him  for  his  principal,  under  instructions  thus  to  keep  it,  a 
trust  is  impressed  upon  the  deposit  in  favor  of  the  principal,  and  his 
right  thereto  is  not  affected  by  the  fact  that  the  agent  at  the  same 
time  deposited  other  moneys  of  his  own;  nor  is  it  affected  by  the  fact 
that  the  agent,  instead  of  depositing  the  identical  moneys  received 
by  him  on  account  of  his  principal,  substitutes  other  moneys  there- 
for.-^ If  the  bank  be  the  owner  of  a  bill  or  note  thus  payable,  and 
have  funds  of  the  payor  on  deposit,  it  may  claim  the  bill  or  note  as 
offset  in  a  suit  for  the  deposit;  "  and  such  plea  may  be  available  in 
equity  imder  some  circumstances,  the  insolvency  of  the  payor  for 
instance,  before  the  maturity  of  the  bill  or  note.^ 

trust  fund,  it  cannot  be  applied  by  the  bank  to  the  payment  of  an  individual 
debt."    See  also  Adams  v.  First  Nat.  Bank  of  Winston,  1 13  N.  C.  332, 18  S.  E.  513. 

25.  Bacon  v.  Bacon,  94  Va.  693,  20  S.  E.  576,  citing  National  Bank  v.  Smith, 
66  N.  Y.  271,  23  Am.  Rep.  48;  Martin  v.  Bank,  6  Harr.  &  Johns.  235;  Corn  Nat. 
Bank  v.  Hennings,  105  Pa.  St.  496. 

26.  Van  Alen  v.  American  Nat.  Bank,  52  N.  Y.  4.  See  the  Overseers  of  Poor  v. 
Bank  of  Virginia,  2  Gratt.  547.  This  doctrme  has  been  appHed  to  a  case  in  which 
a  bank,  after  collecting  a  draft,  deposited  with  it  "for  collection,"  made  a  general 
assignment  for  the  benefit  of  creditors;  it  being  considered  that  the  proceeds  of 
the  draft,  in  its  hands,  were  impressed  with  a  trust  in  favor  of  the  depositor. 
Ryan  v.  Paine,  66  Miss.  678.  Compare  the  case  of  Ewart  v.  Bank  of  Monroe,  70 
Hun,  91,  23  N.  Y.  Supp.  1124.  In  this  case  it  was  held  that  if  a  commission  mer- 
chant deposits  to  his  credit  in  his  own  general  bank  account  his  principal's  share 
of  the  proceeds  of  goods  sold,  which  the  principal  is  entitled  to  have  immediately 
remitted  by  the  agent,  and  dies,  leaving  the  deposit  so  credited,  the  principal 
may  recover  the  same  from  the  bank  in  which  it  is  deposited,  in  an  action  at  law; 
and  the  bank  cannot  resist  payment  thereof  on  the  ground  that  it  has  a  lien  on  the 
deposit  from  the  mere  fact  that  it  holds  an  impaid  note  of  the  depositor  which  it 
has  discounted  for  him,  but  which  was  not  due  at  the  date  of  the  deposit,  or  on 
the  ground  that  the  depositor's  estate  is  insolvent;  nor  is  it  a  defense  to  such  ac- 
tion that  the  plaintiff  had  not  obtained  or  presented  a  check  for  his  money  drawn 
by  the  depositor  or  by  his  representatives.  State  of  Nebraska  v.  State  Bank  of 
Wahoo,  42  Nebr.  897,  61  N.  W.  252.  But  see  Cady  v.  National  Bank,  46  Nebr. 
756,  65  N.  W.  906. 

27.  Ford  v.  Thornton,  3  Leigh,  695.  Contra,  Cady  v.  National  Bank,  46  Nebr. 
756,  65  N.  W.  906. 

28.  Ford  v.  Thornton,  3  Leigh,  695;  Lancaster  County  Nat.  Bank  v.  Huver, 
114  Pa.  St.  218. 


§§  327,  328      RIGHTS   AND   DUTIES   OF   COLLECTING   AGENTS       411 

SECTION    II 
RIGHTS   AND    DUTIES   OF   BANKS   OR   OTHER   COLLECTING   AGENTS 

§  327.  Presentment  for  acceptance,  and  for  payment. — It  is  the 
duty  of  the  bank,  as  soon  as  the  bill,  note,  or  check  is  placed  in  its 
hands  for  collection,  to  take  the  appropriate  steps  necessary  to  its 
prompt  payment  or  prompt  acceptance,  by  making  presentment  for 
acceptance  without  delay,  and  presentment  for  payment  at  maturity. 
And  if  the  instrument  be  not  duly  accepted  or  paid,  the  bank  must 
take  all  necessary  steps  to  fix  the  liability  of  the  drawer,  if  it  be  a 
foreign  bill,  by  placing  it  in  the  hands  of  a  notary  for  protest,  and  by 
giving  due  notice  of  its  dishonor  to  the  partj^  who  indorsed  the  instru- 
ment to  it  for  collection,  whether  it  be  a  bill  or  note,  inland  or  foreign. 
If  the  bank  fail  in  any  of  these  duties,  it  becomes  immediately  liable 
in  damages  to  the  holder. ^^  And  it  will  be  no  defense  that  it  was  un- 
accustomed to  undertake  collections,  and  that  its  error  arose  from 
want  of  familiarity  with  the  ordinary  course  of  proceedings.^"  Nor 
that  it  acted  in  accordance  with  its  own  best  views  of  the  require- 
ments of  law,  as  where  it  presented  a  bill  without  allowing  grace,  con- 
ceiving it  to  be  a  check.^^ 

§  328.  Implied  undertaking  to  make  demand  and  protest. — The 

theory  of  this  rule  is,  that  the  receipt  by  the  bank  of  negotiable  paper, 
deposited  for  collection,  forms  an  implied  undertaking  to  make  the 
demands  and  protests,  and  give  the  notices  required  by  law  or  mer- 

29.  West  Branch  Bank  v.  Fulmer,  3  Barr,  399,  Gibson,  C.  J.;  Merchants' 
Nat.  Bank  v.  Stafford  Nat.  Bank,  44  Conn.  567;  McKinster  v.  Bank  of  Utica, 
9  Wend.  46;  Allen  v.  Merchants'  Bank,  22  Wend.  215;  Smedes  v.  Bank  of  Utica, 
20  Johns.  372,  3  Cow.  663;  Blanc  v.  Mutual  Nat.  Bank,  28  La.  Ann.  921;  Indig  v. 
National  Com.  Bank,  17  Hun,  200;  Armington  v.  Gas  Light  Co.,  15  La.  Ann.  515; 
Beawes  Lex  Mercatoria,  41.  See  Bird  v.  Louisiana  State  Bank,  93  U.  S.  97.  But 
it  has  been  held  that  if  the  bank  acted  in  the  best  of  faith  and  no  damage  results 
to  the  customer,  no  hability  exists.  Citizens'  Bank  of  Paris  v.  Houston,  98  Ky. 
139,  32  S.  W.  397;  Trumpbour  v.  Trumpbour,  70  Hun,  571,  24  N.  Y.  Supp.  212; 
Bank  v.  Bank,  49  Ohio  St.  351,  30  N.  E.  958;  Citizens'  Nat.  Bank,  etc.,  v.  Third 
Nat.  Bank,  etc.,  19  Ind.  App.  69,  49  N.  E.  171,  citing  text;  First  Nat.  Bank  of 
Bhrningham  v.  First  Nat.  Bank  of  Newport,  116  Ala.  520,  22  So.  976;  Wood  River 
Bank  v.  First  Nat.  Bank,  36  Nebr.  744,  55  N.  W.  239;  Dern  v.  Kellogg,  54  Nebr. 
560,  74  N.  W.  844;  Kavanaugh  v.  Bank,  59  Mo.  App.  540. 

30.  Ivory  v.  Bank  of  State,  36  Mo.  475. 

31.  Georgia  Nat.  Bank  v.  Henderson,  46  Ga.  493  (1870). 


412  AGENTS   FOR   NEGOTIATION    OR   COLLECTION     §§  328a,  329 

cantile  usage,  for  the  perfect  protection  of  the  holder's  rights  against 
all  previous  parties,  for  which  undertaking  the  use  of  the  funds  thus 
temporarily  obtained,  or  of  the  average  balances  thereof,  for  the  pur- 
poses of  discount  or  exchange,  forms  a  valuable  consideration.^^  And 
so  valuable  frequently  is  this  consideration,  that  collections  constitute 
a  most  lucrative  branch  of  the  business  of  banking,  and  are  often  so 
desirable  as  a  means  of  acquiring  exchange  which  is  above  par,  that 
the  allowance  of  a  small  premium  by  the  collecting  bank  for  the 
privilege  of  making  such  collections  is  not  unusual. ^^ 

§  328a.  Duty  of  collecting  bank  to  employ  a  subagent  to  present 
transmitted  paper. — For  the  purposes  of  collection,  the  collecting 
bank  must  employ  a  suitable  subagent.  It  must  not  transmit  its 
checks  or  bills  directly  to  the  bank  or  party  by  whom  payment  is 
to  be  made,  with  the  request  that  remittances  be  made  therefor. 
It  is  considered  that  no  firm,  bank,  corporation,  or  individual  can 
be  deemed  a  suitable  agent,  in  contemplation  of  law,  to  enforce,  in 
behalf  of  another,  a  claim  against  itself.^"*  Therefore,  where  a  bank, 
receiving  a  check  for  collection,  forwarded  it  to  the  bank  upon  which 
it  was  drawn,  requesting  payment  thereof,  which  bank,  upon  receiving 
the  check,  charged  it  to  the  drawer's  accoimt,  canceled  and  marked  it 
paid,  and  remitted  to  the  collecting  bank  in  payment,  a  draft  which 
proved  to  be  worthless,  it  was  held  that  the  collecting  bank  was  liable 
to  the  depositor,  in  that  it  had  failed  to  employ  a  subagent  for  the 
collection  of  the  check,  who  would  have  received  the  cash  therefor, 
or,  in  default  thereof,  have  protested  the  check  and  returned  it  to  the 
depositor,  as  his  evidence  of  a  right  of  action  against  the  drawer.^^ 

§  329.  The  measure  of  damages  which  the  holder  is  entitled  to  re- 
cover of  the  bank,  or  other  collecting  agent,  who  has  been  guilty  of 
negligence  or  default  in  respect  to  it,  is  the  actual  loss  which  has  been 

32.  Allen  v.  Merchants'  Bank,  22  Wend.  215,  Verplanck,  Senator. 

33.  Reeves  v.  State  Bank  of  Ohio,  8  Ohio  St.  480;  ante,  §  324;  First  Nat.  Bank 
of  Birmingham  v.  First  Nat.  Bank  of  Newport,  116  Ala.  520,  22  So.  976. 

34.  Herron  &  Co.  v.  Mawby,  5  Cal.  App.  39,  89  Pac.  872,  quoting  text;  Bailie 
V.  Augusta  Sav.  Bank,  95  Ga.  277,  21  S.  E.  717,  51  Am.  St.  Rep.  71;  Anderson  v. 
Rodgers,  53  Kan.  542,  36  Pac.  1067,  citing  text;  Carson,  Pirie,  Scott  &  Co.  v. 
Fincher,  129  Mich.  687,  89  N.  W.  570,  95  Am.  St.  Rep.  449;  Ivory  v.  Bank  of  State, 
36  Mo.  475;  Western  Wheeled  Scraper  Co.  v.  Sadilek,  50  Nebr.  105,  69  N.  W.  765, 
61  Am.  St.  Rep.  550,  citing  text;  First  Nat.  Bank  v.  City  Bank,  12  Tex.  Civ.  App. 
318,  34  S.  W.  458. 

35.  American  Exchange  Bank  v.  Bank,  71  Mo.  App.  451,  citing  text. 


§  330  EIGHTS   AND   DUTIES   OF   COLLECTING   AGENTS  413 

suffered.^^  That  loss  is  'prima  facie  the  amount  of  the  bill  or  note 
placed  in  its  or  his  hands;  but  evidence  is  admissible  to  reduce  it  to 
a  nominal  sum.^^  "The  defendant  may  mitigate  damages  by  showing 
either  the  solvency  of  the  maker,  the  insolvency  of  the  indorser,  or 
that  the  paper  was  partially  or  wholly  secured,  or  any  other  fact 
that  will  lessen  the  actual  loss  to  the  plaintiff;  the  real  loss  occasioned 
by  the  improper  conduct  of  the  defendant  being  the  fact  for  the  jury 
to  arrive  at  in  measuring  the  plaintiff's  damages."  ^^ 

§  330.  Duty  of  collecting  bank  to  present  for  acceptance. — Else- 
where in  this  volume,  it  will  be  seen  that  bills  payable  upon  a  certain 
day — say,  for  instance,  thirty  days  after  date — need  not  be  presented 
for  acceptance,  but  only  for  payment  at  maturity.  If  such  a  bill, 
however,  be  placed  in  the  hands  of  a  bank  or  other  agent  for  collection, 
the  principle  which  exonerates  the  holder  as  between  him  and  the 
drawer  and  indorsers  from  making  presentment  for  acceptance,  does 
not  apply  as  between  the  collecting  agent  and  himself.  While  the 
holder  is  not  himself  bound  to  make  such  presentment,  it  is  his  in- 
terest that  it  shall  be  done;  and  as  has  been  well  said  respecting  a  bill 
placed  in  an  agent's  hands:  "It  is  the  duty  of  a  faithful  agent  to  do 
for  his  principal  whatever  the  principal  himself  would  probably  have 
done  if  he  was  a  discreet  and  prudent  man.  Even  where  the  principal 
is  habitually  negligent  in  attending  to  his  own  interests,  it  forms  no 
excuse  for  similar  negligence  on  the  part  of  his  agent."  ^^    Therefore 

36.  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Tyson  v.  State  Bank,  6  Blackf. 
225;  Merchants'  Bank  v.  Stafford  Bank,  44  Conn.  567;  First  Nat.  Bank  of  Birm- 
ingham V.  First  Nat.  Bank  of  Newport,  116  Ala.  520,  22  So.  976;  Dern  v.  Kellogg, 
54  Nebr.  560,  74  N.  W.  844;  Selz  v.  ColUns,  55  Mo.  App.  55. 

37.  Van  Wart  v.  WooUey,  5  Dowl.  &  R.  374;  Allen  v.  Suydam,  20  Wend. 
321;  Borup  v.  Nininger,  5  Minn.  523;  Livaudaise  v.  Denis,  4  La.  Ann.  300; 
Blanc  V.  Mutual  Nat.  Bank,  28  La.  Ajm.  921;  First  Nat.  Bank  v.  Fourth  Nat. 
Bank,  77  N.  Y.  320,  wherein  the  text  is  approved:  Citizens'  Nat.  Bank,  etc.  v. 
Third  Nat.  Bank,  etc.,  19  Ind.  App.  69,  49  N.  E.  171,  citing  text. 

38.  Borup  V.  Nininger,  5  Minn.  523;  First  Nat.  Bank  v.  Fourth  Nat.  Bank, 
77  N.  Y.  320. 

39.  Allen  v.  Suydam,  20  Wend.  321;  First  Nat.  Bank  of  Meadville  v.  Fourth 
Nat.  Bank,  77  N.  Y.  320.  See  chapter  XVII,  on  Presentment  for  Acceptance 
and  authorities  quoted,  §§  476,  477.  Allen  v.  Suydam,  20  Wend.  321  (1838), 
confirming  17  Wend.  268,  Verplanck,  Senator,  said:  "The  principle  is  familiar 
that  an  agent  for  pay  is  boimd  to  use  such  means,  care,  skill,  and  precaution  as 
are  adequate  to  the  due  execution  of  his  trust.  He  must  use  the  ordinary  dili- 
gence of  a  skilful  and  prudent  man  in  such  affairs.  Now  an  early  presentment  for 
acceptance  is  an  obvious  precaution,  which  a  prudent  man  of  business  would 


414  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  330 

it  has  been  considered  that  an  agent  would  be  liable  to  the  owner  for 
any  damages  resulting  from  the  nonpresentment  of  such  a  bill.     In 

take  to  insure  collection  of  a  questionable  draft.  By  this  neglect  or  delay,  the 
payees  were  prevented  from  making  those  demands  and  taking  such  immediate 
measures  as  to  the  drawer,  on  receipt  of  notice  of  nonacceptance,  as  might  possibly 
have  secured  the  payees  in  some  way  or  other.  At  the  late  period  at  which  they 
did  receive  such  notice,  they  preferred  looking  to  the  responsibility  of  their  agents. 
These  must  be  held  responsible  for  the  consequences  of  their  negligence  to  the 
amount  of  the  damage  so  caused.  Nor  is  it  a  sufficient  defense  of  the  agents  that 
the  bill  would  not  have  been  accepted  if  immediately  presented,  because  the  drawer 
had  directed  that  it  should  not  be,  nor  that  it  was  uncertain  whether  the  funds 
in  the  hands  of  the  drawees  were  sufficient  or  not  to  meet  the  draft  at  the  day  fixed 
for  payment.  At  and  after  the  time  when  the  draft  should  have  been  presented, 
the  drawer  was  in  business  at  New  York,  struggling  for  and  obtaining  credit, 
and  having  the  command  of  funds  which  he  apphed  to  pay  other  drafts  presented 
subsequently  to  the  date,  when  with  due  diligence  notice  of  the  nonacceptance  of 
this  bill  would  have  been  received.  Whatever  might  have  been  his  first  inten- 
tion, it  was  not  for  a  court  and  jury  to  assume  the  broad  presumption  that  an 
immediate  demand,  upon  retm-n  of  the  draft,  with  such  other  legal  measures 
as  the  state  of  business  between  the  parties  or  other  circumstances  might  render 
advisable,  would  not  have  led  to  the  ultimate  payment.  As  a  mere  conjectural 
inference  from  the  character  and  course  of  business  of  Eastabrook,  as  incidentally 
presented  in  the  evidence,  I  should  think  the  probability  rather  the  other  way, 
and  that  immediate  and  urgent  measures  might,  perhaps,  have  prevented  loss. 
His  death  and  the  consequent  insolvency  of  his  estate  have  left  all  this  mere  matter 
of  conjecture;  but  it  is  quite  immaterial  as  to  the  question  of  the  agent's  duty  and 
the  right  of  action  against  him,  though  were  it  distinctly  in  evidence  either  way, 
it  might  affect  the  measure  of  damages.  Thus  far,  then,  I  think  the  law  quite 
clear  as  to  the  rights  of  holders  of  bills  and  the  duties  of  collecting  agents,  but  I 
have  had  more  hesitation  as  to  the  rule  of  damages.  Is  the  plaintiff  in  similar 
cases  to  be  obliged  to  make  out  in  evidence  the  precise  amount  of  the  damage  he 
sustained,  and  thus  give  to  the  party  in  fault  all  the  numerous  and  great  ad- 
vantages of  doubt,  uncertainty,  and  difficulty  in  the  proof?  Or  are  we  to  apply 
to  these  cases  the  doctrine  of  laches  in  commercial  paper,  as  between  the  holder 
and  other  parties,  and  consider  the  agent  as  having  made  the  paper  his  own  by  his 
neglect?  Contradictory  as  these  rules  are,  they  have  yet  each  their  share  of  au- 
thority, and  are  just  and  wise  when  applied  to  other  questions;  but  I  am  not 
satisfied  with  the  equity  in  the  commercial  policy  of  either,  when  applied  to  a 
collecting  agency,  and  I  have  sought  in  the  decisions  for  some  safer  and  more 
equitable  doctrine  on  that  head.  Considering  the  subject  in  regard  to  commercial 
policy,  there  is,  on  one  side,  the  vast  amount  of  paper  daily  collected  through  our 
banks,  the  great  pubhc  necessity  for  giving  every  facility  and  inducement  to 
such  collections,  the  serious  drawback  on  those  facilities  and  inducements  that 
would  be  occasioned,  and  the  opportunity  of  fraud  afforded,  if  worthless  paper  de- 
posited for  collection  can,  whenever  parties  are  discharged  by  the  blunder  of  a 
clerk,  be  saddled  irrevocably  on  responsible  agents  and  'made  their  own'  abso- 
lutely and  without  allowing  any  defense  or  mitigation  of  damages.  On  the  other 
hand,  the  policy  of  holding  such  agents  to  strict  accountability  is  equally  clear. 


§  331  RIGHTS   AND   DUTIES   OF   COLLECTING   AGENTS  415 

a  New  York  case  the  principles  of  the  text  were  illustrated  and 
applied.^ 

§  331.  How  collecting  bank  should  give  notice  of  dishonor. — 

Sometimes  a  bank  holding  indorsed  paper  for  collection  sends  notice, 
in  the  event  of  its  dishonor,  to  the  indorser  from  whom  it  was  received. 
Sometimes  it  sends  notices  not  only  to  him,  but  also  to  the  drawer 
and  to  all  the  indorsers,  addressed  to  their  post-offices,  or  delivered 
at  their  places  of  business,  respectively.  Sometimes  it  incloses  notices 
for  all  the  parties  entitled  thereto  under  one  envelope  in  company 
with  notice  to  the  last  indorser,  that  he  may  thus  be  conveniently 
supplied  with  the  means  of  transmitting  notice  to  the  successive  in- 
dorsers, and  to  the  drawer  antecedent  to  him,  if  such  there  be.  But 
how  far  the  duty  of  the  bank  extends  in  this  regard,  and  what  it  must 
do  to  discharge  itself  of  liability,  is  a  question  upon  which  opinion  has 
divided.  The  weight  of  authority,  however,  is  strongly  to  the  effect, 
and  the  law  may  be  assumed  to  be,  that  it  is  only  necessary  for  the 
bank  to  notify  its  immediate  predecessor,  that  is,  the  party  from 
whom  it  received  the  paper,  no  matter  what  may  be  the  nature  of  the 

Our  whole  system  of  negotiable  paper  and  its  reponsibilities,  formed,  as  it  is,  by 
long  experience,  and  admirably  adjusted  to  the  varied  uses  of  commerce,  rests 
upon  the  single  principle  of  strict  punctuality  in  demands,  presentments,  and  no- 
tices, as  well  as  in  payments.  Now,  the  policy  and  necessity  of  that  punctuality  ap- 
ply with  the  same  force  to  the  agent  of  such  paper  that  they  do  to  the  principal. 
I  can,  therefore,  find  no  sounder  rules  of  damages,  nor  one  better  protecting  and 
reconcUing  all  these  claims  of  pohcy  and  justice,  than  that  pointed  out  by  the 
decisions  in  a  large  class  of  cases  of  agency,  and  by  the  analogy  of  the  measure 
of  damages  in  trover.  In  those  cases  the  presumption  is,  in  the  first  instance,  to 
the  full  nominal  amount  of  the  loss,  as  it  appears  on  the  face  of  the  transaction, 
against  the  agent  wanting  in  diUgence,  or  the  party  guilty  of  the  tortious  conver- 
sion. Thus,  where  an  agent  or  factor  neglects  to  insure  for  his  principal,  according 
to  order,  he  is  held  responsible  for  the  default  -privia  facie,  to  the  total  amount 
which  he  ought  to  have  covered  by  insurance.  But,  at  the  same  time,  he  is 
allowed  to  put  himself  in  the  place  of  the  underwriter,  and  to  prove  fraud,  devia- 
tion, or  any  other  defense  which  would  have  been  good  had  the  insurance  been 
made,  or  which  would  go  to  show  that  nothing  at  all,  or  how  much,  was  actually 
lost  by  the  neglect.  Delancy  v.  Stoddart,  1  T.  R.  22;  Wallace  v.  TeUfair,  2  T.  R. 
188;  Webster  v.  De  Tastat,  7  T.  R.  757.  In  the  courts  of  this  State,  Rundle  v. 
Moore,  3  Johns.  Cas.  36.  And  in  the  courts  of  the  United  States,  Morris  v. 
Summeril,  2  Wash.  203.  See  also  1  PhiUips  on  Insurance,  521.  and  the  cases  there 
cited."    Selz  v.  ColHns,  55  Mo.  App.  55. 

40.  First  Nat.  Bank  v.  Fourth  Nat.  Bank,  77  N.  Y.  320,  89  N.  Y.  412;  Edmon- 
Bton  v.  Gilbert,  3  Mackey,  351;  Grouse  v.  First  Nat.  Bank,  137  N.  Y.  383,  33 
N.  E.  301. 


416  AGENTS   FOR   NEGOTIATION    OR   COLLECTION      §§  332,  333 

title  or  interest  of  that  party  to  or  in  it."*^  But  special  circumstances 
may  vary  this  general  principle.  Thus  an  agreement  between  the 
bank  and  its  principal  may  vary  it.''-  So  also  may  a  usage  of  the 
collecting  banlC*^  And  a  local  usage,  as  in  the  city  of  New  York,  for 
the  collecting  bank  to  notify  all  parties  entitled  to  notice,  would  un- 
doubtedly be  respected  and  enforced.'''* 

§  332.  In  respect  to  a  check  put  in  bank  for  collection  from  an- 
other bank  located  in  the  same  place,  the  collecting  bank  may  pre- 
sent it  for  payment  at  any  time  before  the  close  of  banking  hours 
on  the  business  day  next  following  that  on  which  it  comes  into  pos- 
session of  the  check.''^  The  holder  of  the  check,  whether  he  be  the 
payee,  or  an  indorsee,  is  obliged  to  present  it  within  a  like  time  from 
the  day  of  its  date,  in  order  to  escape  all  contingency  of  loss;  and  if 
on  the  day  after  it  is  drawTi  he  places  it  in  another  bank  for  collection, 
instead  of  presenting  it  at  the  counter  of  the  drawee  bank  for  payment, 
he  takes  the  peril  of  loss  upon  himself  without  recourse  against  the 
drawer,  should  the  drawee  bank  fail  in  the  meantime;  and  without 
recourse  against  the  collecting  bank  by  reason  of  its  not  presenting 
the  check  until  a  day  later. ^^ 

§  333.  When  collecting  bank  bound  to  pay  amount. — The  col- 
lecting bank  is  not  bound  to  pay  the  amount  of  a  bill,  note,  or  check 
placed  in  its  hands  for  collection  to  the  holder,  until  such  amount 
is  received,  or  would  be  received  but  for  the  default  of  itself  or  some 

41.  Phipps  V.  MUlBury  Bank,  8  Mete.  (Mass.)  79;  Bank  U.  S.  v.  Goddard,  5 
Mason,  366;  State  Bank  v.  Bank  of  the  Capitol,  41  Barb.  343;  Spencer  v. 
Ballou,  18  N.  Y.  327;  Mead  v.  Engs,  5  Cow.  303;  Howard  v.  Ives,  1  Hill,  263; 
Farmers'  Bank  v.  Vail,  21  N.  Y.  485;  Bank  of  Mobile  v.  Huggins,  3  Ala.  (N.  S.) 
206;  Branch  Bank  v.  Knox,  3  Ala.  (N.  S.)  206;  Lynn  Nat.  Bank  v.  Smith,  132 
Mass.  227;  Auten  v.  Manistee  Nat.  Bank,  67  Ark.  243,  54  S.  W.  337;  Big  Sandy 
Nat.  Bank  v.  Chilton,  40  W.  Va.  491,  21  S.  E.  774;  Fielding  &  Co.  v.  Corry  1 
Q.  B.  268. 

42.  State  Bank  v.  Bank  of  the  Capitol,  41  Barb.  343,  where  notification  to 
a  part  only  of  the  indorsers  was  held  evidence  going  to  show  an  agreement  to 
notify  all. 

43.  Morse  on  Banking,  340. 

44.  Smedes  v.  Bank  of  Utica,  20  Johns.  372,  3  Cow.  662. 

45.  Boddington  v.  Schlencker,  4  B.  &  Ad.  752,  1  Nev.  &  M.  540;  Alexander 
V.  Burchfield,  1  Car.  &  M.  75,  3.Scott  N.  R.  555,  7  M.  &  G.  1061;  Moule  v.  Brown, 
4  Bing.  N.  C.  266,  5  Scott,  694;  Hare  v.  Henty,  10  C.  B.  (N.  S.)  65;  Rickford  v.' 
Ridge,  2  Campb.  537.    See  vol.  2,  chapter  XLIX,  on  Checks. 

46.  Morse  on  Banking,  324;  Moule  v.  Brown,  4  Bing.  N.  C.  266  (33  Eng.  C.  L.). 


§  334  RIGHTS   AND    DUTIES   OF   COLLECTING   AGENTS  417 

agent  for  whose  act  it  is  responsible.'*''  It  is  frequently  the  case  that 
for  the  accommodation  of  customers  they  are  permitted  to  draw  be- 
fore, and  in  anticipation  of,  the  reception  of  such  amounts.  But  this 
habit  is  mere  favor,  and,  though  long  continued,  gives  the  customer 
no  right  to  demand  that  it  be  done  in  any  particular  case,^  And 
although  a  bank,  according  to  its  custom,  put  to  its  customer's  credit 
the  amount  of  a  bill  deposited  for  collection,  deducting  the  proper 
discount,  and  he  was  thereafter  entitled  to  draw  upon  it,  it  has  been 
held  in  England  that  upon  a  subsequent  failure  of  the  bank  before 
collection,  the  customer  could  recover  the  bills  specifically,  no  title 
to  the  ])ank  having  passed;  or  that  he  could  recover  the  amount  from 
the  assignees  if  the  collection  had  been  made.^^  But  in  New  York,  by 
statute,  checks  dra^vn  on  banks  in  other  places,  deposited  for  collec- 
tion, and  by  agreement  passed  to  the  depositor's  account  with  liberty 
to  check  against  them,  become  thereby  the  property  of  the  bank, 
with  the  right  of  charging  them  back  to  the  depositor's  account  if  re- 
turned unpaid.^ 

§  334.  Relation  of  bank  to  depositor  for  collection. — As  soon  as 

the  bank  collects  the  money,  it  becomes  the  debtor  of  the  depositor 
of  the  instrument  for  collection — especially  if  it  places  the  amount 
with  its  other  funds,  and  uses  it  as  its  own,  although  it  be  credited  on 
the  account  of  such  depositor,^^  and  although  instructed  to  hold  it 

47.  When  the  collecting  bank  employs  another  bank  as  subagent  under  an 
arrangement  by  which  all  collections  made  by  it  for  its  principal  are  credited 
to  the  latter  in  a  collection  account  regularly  settled  at  short  periods,  the  ac- 
ceptance by  the  collecting  bank  of  the  responsibility  of  the  subagent  upon  the 
collection  account  will  be  regarded  as  payment  to  the  collecting  bank,  and  for 
which  it  will  be  liable.  Briggs  v.  Cent.  Nat.  Bank,  89  N.  Y.  184;  Gilbert  v. 
Walker,  64  Conn.  391,  30  Atl.  132. 

48.  Scott  V.  Ocean  Bank,  23  N.  Y.  289;  Morse  on  Banking,  365;  Midland  Nat. 
Bank  v.  Brightwell,  Assignee,  148  Mo.  3.58,  49  S.  W.  8.52,  71  Am.  St.  Rep.  608. 

49.  Giles  v.  Perkins,  9  East,  13.  But  see  Ayrcs  v.  Farmers'  Bank,  79  Mo. 
421;  First  Nat.  Bank  of  Omaha  v.  First  Nat.  Bank,  55  Nebr.  303,  75  N.  W. 
843;  German  Fire  Ins.  Co.  Bank  ".  Kimble,  66  Mo.  App.  370;  Gadden  v.  Savings 
Bank,  L.  R.,  App.  Cas.  281  (1899). 

50.  Brooks  v.  Bigelow,  142  Mass.  7;  Rev.  Stat.  N.  Y.  (6th  ed.),  chap.  18, 
art.  9,  §§368,  cl.  7,  389,  397,  399;  Corn  Exch.  Bank  v.  Farmers'  Nat.  Bank, 
118  N.  Y.  443.  See  also  Flannerj^  v.  Coates,  80  ]Mo.  444;  Ayres  v.  Farmers' 
Bank,  79  Mo.  421. 

61.  Marine  Bank  v.  Fuhon  Bank,  2  Wall.  253;  Bank  of  United  States  v. 
Bank  of  Georgia,  10  Wheat.  333;  Wallace  v.  McConnell,  13  Pet.  136;  Levy  v. 
Bank  of  United  States,  4  Dall.  234;  Thompson  v.  Riggs,  5  Wall.  663;  Bank  v. 
Millard,  10  Wall.  152;  Oulton  v.  Savings  Inst.,  17  Wall.  109;  Scammon  v.  Kimball, 

27 


418  AGENTS    FOR   NEGOTIATION    OR   COLLECTION  §  334a 

subject  to  his  order,  wliich  the  very  deposit  itself  would  imply, ''^ 
And  if  it  receive,  by  the  tiepositor's  instructions,  the  amount  of  the 
instrument  in  specific  l)ank  bills,  which  are  at  the  time  depreciated, 
any  subsequent  depreciation  will  be  at  the  risk  of  the  bank  if  it  uses 
them  as  its  own,  instead  of  holding  them  as  a  bailment. ^^  But  the 
depreciation  of  the  currency  of  payment  at  the  time  of  payment  would 
be  the  depositor's  loss/'  If  it  receives  a  cashier's  check  instead  of  cash, 
its  liability  to  the  depositor  becomes  fixed,  iis  much  so  as  if  it  had  re- 
ceived the  cash.^^ 

§  334a.  To  whom  collecting  bank  should  make  payment. — The 
recognized  practice  and  usage  of  collecting  banks  in  the  United  States 
is,  where  the  indorsee  collecting  bank  collects  paper  which  has  passed 
through  the  hands  of  a  series  of  collecting  banks,  to  remit,  or  credit 
the  proceeds  to  the  last  forwarder  or  indorser  for  collection,  without 
regard  to  the  actual  ownership  of  the  paper.'*  In  a  ca.se,  however, 
where  the  last  of  a  series  of  indorsee  collecting  banks  collected  paper 
and  accounted  with  its  immediate  correspondent  therefor,  by  direct- 
ing its  New  York  agent  to  credit  such  correspondent  with  the  proceeds, 
and  then  received  notice  of  the  failure  of  its  correspondent,  without 
countermanding  such  direction  of  credit,  which  it  could  have  done 
before  the  New  York  agent  had  l)ound  itself  by  action  thereon,  it 
was  held  liable  to  the  real  owner  of  the  paper,  for  the  resulting 
loss." 

92  U.  S.  362;  Newcomb  v.  Wood,  97  U.  S.  581;  People  v.  City  Bank,  93  N.  Y. 
584;  Phenix  Bank  v.  Risley,  111  U.  S.  127;  Sayles  v.  Cox,  95  Tenn,  579,  32  S.  W. 
626,  49  Am.  St.  Rep.  940;  Akin  v.  Jones,  93  Tenn.  353,  27  S.  W.  GG9,  42  Am.  St. 
Rep.  921;  Hallam  v.  Tillinghast,  19  Wash.  20,  52  Pac.  329;  Bowman  v.  First 
Nat.  Bank,  9  Wash.  614,  38  Pac.  211,  43  Am.  St.  Rep.  870;  First  Nat.  Bank  of 
Omaha  v.  First  Nat.  Bank,  55  Nebr.  303,  75  N.  W.  843;  Midland  Nat.  Bank  v. 
Brightwcll,  Assignee,  148  Mo.  358,  49  S.  W.  994,  71  Am.  St.  Rep.  628;  Clarkson 
V.  London,  etc.,  Co.,  1  Q.  B.  552  (1897). 

52.  Marine  Bank  v.  Fulton  Bank,  2  Wall.  253;  Naser  v.  First  Nat.  Bank, 
37  Hun,  343;  Union  Nat.  Bank  v.  Citizens'  Nat.  Bank,  153  Ind.  45,  54  N.  E.  97. 

53.  Ibid. 

64.  Marine  Bank  v.  Fulton  Bank,  suyra;  Morse  on  Banking,  369. 

55.  Fifth  Nat.  Bank  v.  Ashworth,  123  Pa.  St.  212;  ^ost,  §  1625;  Merchants' 
Bank  v.  Goodman,  109  Pa.  St.  424;  Wyman  v.  Colorado  Nat.  Bank,  5  Colo.  30. 

56.  Banking  Law  Journal,  vol.  4,  p.  1;  Dappelt  v.  National  Bank,  175  111. 
432,  51  N.  E.  753. 

57.  Commercial  Nat.  Bank  v.  Hamilton  Nat.  Bank,  42  Fed.  880.  This  de- 
cision has  been  reviewed  and  criticised  in  an  article  entitled  "The  Gresham 
Decision,"  contained  in  the  Banking  Law  Journal,  vol.  4,  p.  1. 


§§  334b,  335     RIGHTS   AND    DUTIES   OF   COLLECTING   AGENTS     419 

§  334b.  Banker's  lien. — A  bank  advancing  money  to  a  party 
dealing  with  it,  has  a  lien  on  all  of  the  securities  of  the  latter  which 
are  in  its  hands  for  the  amount  of  his  general  balance,  unless  such 
securities  are  impressed  with  a  particular  trust,  or  some  particular 
agreement  affects  them.^^  This  lien  rests  upon  the  presumption  of 
credit  extended  in  faith  of  securities  in  possession,  or  in  expectancy, 
but  does  not  arise  in  reference  to  securities  of  a  bank  under  circum- 
stances, or  where  there  is  a  particular  mode  of  dealing,  inconsistent 
with  such  lien.''^  "  Nor  where  they  have  been  pledged  for  a  particular 
loan  or  debt."  ^  Nor  will  the  bank  be  entitled  to  a  lien  upon  the  funds 
of  the  depositor  merely  to  provide  against  a  possible  loss  on  his  un- 
matured paper  which  it  has  discounted.^^ 

§  335.  Currency  to  be  collected. — Without  special  authority,  a 
bank  or  otiiLT  agent  for  collection  Ciin  only  receive  payment  of  the 
debt  due  the  principal  in  the  legal  currency  of  the  country,  or  in  bills 
which  pass  as  money  at  their  par  value  by  the  common  consent  of  the 
community;  and  such  bank  or  agent  will  not  be  authorized,  by  the 

68.  Bank  of  Metropolis  v.  New  England  Bank,  1  How.  234;  Sweeney  v.  Eas- 
ter, 1  Wall.  166;  Wootl  v.  BoyLston  Nat.  Bank,  129  Mass.  358;  Ford  v.  Thorn- 
ton, 3  I^'igh,  60');  Coinmerical  Bank  v.  Huj;hfs,  17  Wond.  94;  Bank  of  United 
States  V.  Macalester,  9  Barr,  47'»;  Morse  on  Banking,  34.  See  §337  et  seq.; 
National  Bank  v.  Insurance  Co.,  104  U.  S.  .54;  Continental  Nat.  Bank  v.  Weems, 
69  Te.\.  489;  Ma.sonie  Sav.  Bank  v.  Bangs,  84  Ky.  135;  London  Bank  of  Au-stralia 
V.  White,  33  Eng.  Rep.  312;  WyckofT  v.  Anthony,  90  N.  Y.  44S  (but  in  Pennsyl- 
vania this  lien  is  not  recognized.  Liggett  Spring  &  Axle  Co.'s  Appeal,  111  Pa.  St. 
29S;  Hackett  v.  Reynolds,  114  Pa.  St.  3.32);  Carroll  v.  Bank,  30  W.  Va.  520. 
In  Kentucky  it  is  held,  when  securities  are  pledged  to  a  banker  for  payment  of  a 
particular  loan  or  debt,  he  has  no  lien  on  a  .surplus  existing  after  paying  such 
debt,  for  a  gt>neral  balance,  or  other  claims.  Ma.sonic  Sav.  Bank  v.  Bangs,  84 
Ky.  137.  Unless  specially  indorsed  "for  collection,"  where  there  are  mutual 
dealings  between  a  forwarding  and  a  collecting  bank,  it  ha.s  been  held  in  Missouri, 
that  the  latter  will  have  a  lien  on  the  proceeds  of  the  paper  as  against  the  owner, 
for  any  balance  due  it  by  the  fonvarding  bank,  unless  the  special  circumstances 
of  the  case  are  inconsistent  therewith.  Bury  v.  Woods,  17  Mo.  App.  252;  Munch 
V.  Valley  Nat.  Bank,  11  Mo.  App.  144;  Armstrong  v.  Chemical  Nat.  Bank,  41 
Fed.  239. 

69.  Re>-nes  v.  Dumont,  130  U.  S.  391;  Brandas  v.Bamett  (C.  P.),  1  M.  &  G. 
90S;  Bock  v.  Gorri.sseau,  2  De  G.,  F.  &  J  4.34. 

60.  Bacon  v.  Bacon,  94  Va.  694,  27  S.  E.  576;  Lloyd  v.  National  Bank,  86 
Va.  690,  11  S.  E.  104;  Wyckoff  v.  .\nthony,  90  N.  Y.  442;  Reynes  v.  Dumont, 
130  U.  S.  354,  9  Sup.  Ct.  Rep.  486. 

61.  State  Sav.  .\.ssn.  v.  Boatman's  Sav.  Bank,  11  ]\Io.  App.  292;  Niblack  v. 
Park  Nat.  Bank,  169  111.  517,  48  N.  E.  438,  61  Am.  St.  Rep.  203. 


420  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  335 

circumstance  that  they  were  the  principal  currency  in  which  the 
ordinary  transactions  of  business  were  conducted,  to  receive  depre- 
ciated bank  bills  or  other  depreciated  bills  issued  as  a  circulating 
medium.^^  Clearly  an  agent  for  collection  would  have  no  implied 
authority  to  receive  payment  in  goods ;  and  the  party  bound  for  pay- 
ment is  chargeable  with  notice  of  the  agent's  authority .^^  The  collect- 
ing agent  has  no  right  to  accept  certification  of  a  check,  instead  of 
payment.  By  doing  so  he  assumes  the  risk  of  pajrment,  and  becomes 
liable  to  the  owner  for  the  amount  of  the  check,  with  interest  from 
the  day  of  certification.  The  law  presumes  damages  to  the  owner  of 
the  check  in  such  case,  and  it  is  unnecessary  to  prove  them.^^ 

62.  See  post,  §  1245;  Ward  v.  Smith,  7  Wall.  447;  Alley  v.  Rogers,  19  Gratt. 
366  (1869),  in  which  case  Moncure,  J.,  said:  "In  regard  to  notes  deposited  in 
a  bank  for  collection  during  the  war,  when  Confederate  money  was  the  only  cur- 
rency, they  might  properly  have  been  paid  in  such  money,  at  least  without 
notice  that  other  money  was  demanded.  To  have  made  such  a  deposit  without 
such  a  notice  could  have  been  for  no  other  purpose  and  with  no  other  expectation 
than  to  get  Confederate  money.  In  regard  to  notes  payable  at  bank  before  the 
war,  deposited  for  collection  and  protested  for  nonpayment,  but  neglected  to  be 
withdrawn  from  bank  by  the  owner  residing  in  this  State,  it  might  be  very  ques- 
tionable whether,  after  the  lapse  of  two  or  three  years,  the  bank  would  have  au- 
thority to  receive  payment  of  such  notes  in  a  currency  which  came  into  existence 
after  the  protest  of  the  note,  and  which,  at  the  time  of  such  payment,  had  de- 
preciated in  value  as  twelve  to  one  compared  with  specie,  in  which  payment 
might  legally  be  demanded;  or  whether  the  debtor,  having  notice  of  the  facts, 
could  make  a  valid  payment  of  the  notes  in  such  a  currency  and  under  such 
circumstances."  But  in  this  case  the  notes  were  payable  to  a  resident  of  the  State 
of  Kentucky,  who  had  deposited  them  at  the  bank  before  the  war,  and  it  was 
held  that  to  receive  payment  in  Confederate  currency  under  these  circumstances 
was  not  authorized  in  the  bank,  and  did  not  release  the  debtor.  But  if  the  sub- 
agent  of  the  collecting  bank  collects  the  note  or  draft  and  places  proceeds  to  the 
credit  of  last-named  bank  and  same  is  taken  into  account  in  settlement,  between 
them,  held  to  be  payment  though  no  money  actually  passed.  Howard  &  Co.  v. 
Walker,  92  Tenn.  452,  21  S.  W.  897;  Midland  Nat.  Bank  v.  BrightweU,  Assignee, 
148  Mo.  358,  49  S.  W.  994,  71  Am.  St.  Rep.  608. 

63.  Mudgett  v.  Day,  12  Cal.  139;  Moore  v.  Pollock,  50  Nebr.  900,  70  N.  W. 
541;  Rush  v.  Rush,  170  111.  624,  48  N.  W.  990. 

64.  Essex  County  Nat.  Bank  v.  Bank  of  Montreal,  7  Bise.  193.  See  post,  §§  1625, 
1626;  National  Bank  v.  Bank,  151  Mo.  320,  52  S.  W.  265,  74  Am.  St.  Rep.  527, 
citing  text.  But  it  has  been  held  that  if  it  be  the  custom  of  a  bank  to  accept 
check  in  payment  of  claims  thus  held  for  collection,  the  customer  will  be  bound 
thereby,  with  or  without  knowledge  of  the  existence  of  such  custom.  See  Farmers' 
Bank  &  Trust  Co.  v.  Newland,  97  Ky.  464,  31  S.  W.  38. 


§  336  PLACING   COMMERCIAL   PAPER   IN   BANK  421 


SECTION    III 

THE  MANNER  OF  PLACING  COMMERCIAL  PAPER  IN  BANK  FOR  COLLEC- 
TION) THE  RIGHTS  OF  THE  COLLECTING  BANK;  AND  THE  RIGHTS 
OF   THE   DEPOSITOR 

§  336.  As  to  the  manner  of  placing  a  bill,  note,  or  check  in  bank 
for  collection,  it  is  always  better  to  indorse  it  specially  to  the  bank, 
with  the  restrictive  words,  "for  collection,"  superadded.  Those 
words  are  a  clear  indication  that  the  indorser  does  not  intend  to  bind 
himself  by  his  indorsement,  or  to  part  with  his  legal  title  to  the  pro- 
ceeds of  collection.  They  prevent  the  danger  which  would  arise  from 
the  loss  or  misappropriation  of  the  paper  if  it  were  indorsed  in  blank. 
And  by  showing  that  the  indorser  only  constitutes  the  bank  his  agent 
for  collection,  it  forestalls  any  difficulty  in  accounting  between  sub- 
sequent banks.^^ 

65.  Sweeney  v.  Easter,  1  Wall.  173  (1863);  Cecil  Bank  v.  Farmers'  Bank,  22 
Md.  148;  §§  G98,  698a,  6986.  In  Evansville  Bank  v.  American  Bank,  155  U.  S. 
556,  15  Sup.  Ct.  Rep.  221,  where  the  German-American  Bank  of  Peoria,  111.,  sent 
a  bill  of  exchange  to  the  Fidehty  Bank  of  Cincinnati,  Ohio,  for  collection,  indorsing 
it  "Pay  Fidehty  Nat.  Bk.  of  Cincinnati,  Ohio,  or  order.  Supreme  Court  held  that 
this  was  "notice  to  it  and  every  subsequent  holder  that  it  was  forwarded  simply 
for  collection"  and  that  after  insolvency  of  the  Fidelity  National  Bank  and  the 
taking  possession  thereof  by  a  bank  examiner,  no  other  bank  acting  as  its  first 
agent  for  collection  could  make  any  settlement  with  it  by  entry  upon  its  books  to 
the  prejudice  of  the  right  of  the  German-American  National  Bank  to  the  money 
derived  by  the  collection  of  the  bill  by  such  subagent.  Kavanaugh  v.  Bank,  59 
Mo.  App.  540;  Bank  of  Clarke  County  v.  Oilman,  81  Hun,  486,  30  N.  Y.  Supp. 
1111.  The  various  decisions  affecting  the  rights  of  depositors  or  forwarders  of 
commercial  paper  for  collection,  and  the  rights  of  intermediary  agents,  and  sub- 
agents  actually  making  the  collection,  may  be  classified  as  follows,  viz.: 

(1.)  Where  the  indorsement  was  in  blank,  as  between  depositor  and 

BANK,   former  HELD  NOT  TO  HAVTl  PARTED  WITH  TITLE  TO  THE  PAPER. — Giles  V. 

Perkins,  9  East,  1114;  Balbach  v.  Frelinghuysen,  15  Fed.  675;  St.  Louis  Ry.  Co.  v. 
Johnson,  10  Sup.  Ct.  Rep.  390;  Bank  of  Meridian  v.  Strauss,  66  Miss.  479;  Dod  v. 
Fourth  Nat.  Bank,  59  Barb.  265;  Van  Amee  v.  Bank  of  Troy,  8  Barb.  12;  Lin- 
dauer  v.  Fourth  Nat.  Bank,  55  Barb.  75.  As  between  depositor  and  subagent 
claiming  a  lien  against,  or  as  purchaser  from,  intermediary  agent,  former  held  to  have 
parted  vsith  title:  Bank  of  the  Ivletropolis  v.  New  England  Bank,  1  How.  237; 
Dickerson  v.  Wason,  47  N.  Y.  439;  Metropolitan  Nat.  Bank  v.  Loyd,  90  N.  Y. 
530;  Hoffman  v.  First  Nat.  Bank  of  Jersey  City,  46  N.  J.  L.  604;  CaiToll  v.  Bank, 
30  W.  Va.  518,  a  case  in  which  the  paper,  instead  of  being  indorsed  in  blank,  was 
drawn  payable  to  the  order  of  the  collecting  bank,  and  by  it  forwarded  to  its  cor- 
respondent; Cody  V.  City  Nat.  Bank,  55  Mich.  379;  Vickery  v.  State  Sav.  Assn., 


422  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  337 

§  337.  Rights  between  banks. — The  importance  of  this  precau- 
tion is  often  exhibited  where  one  bank  claims  a  hen  upon  securities, 
really  or  ostensibly  another's,  for  balances  or  advancements.  As  a 
general  rule,  a  bank  has  a  general  lien  on  all  securities  in  its  hands 

21  Fed.  773;  Wood  v.  Boylston  Nat.  Bank,  129  Mass.  358;  German  Nat.  Bank  v. 
Coors  (Colo.),  7  Law.  Rep.  Annot.  845;  Foster,  Receiver,  v.  Rincker,  4  Wyo,  484, 
38  Pac.  470. 

(2.)  Where  the  restrictive  indorsement  "for  collection"  was  em- 
ployed.— As  against  receiver  or  other  representative  of  insolvent  collecting  bank; 
proceeds  of  paper  collected  before  insolvency  recovered;  relation  of  principal  and  agent 
established;  trust  impressed:  Continental  Nat.  Bank  v.  Wcems,  69  Tex.  493;  Arnot 
V.  Bingham,  55  Hun,  553;  People  v.  Bank  of  Dansville,  39  Hun,  187;  trust  im- 
pressed upon  general  estate  of  insolvent  xoithout  identifying  jrrocceds  of  trust  subject: 
Peak  V.  Ellicott,  30  Kan.  15G;  McLeod  v.  Evans,  66  Wis.  401;  Stoller  v.  Boates, 
88  Mo.  514;  Harrison  v.  Smith,  83  Mo.  210;  Brocchus  v.  Morgan,  5  Cent.  L.  J. 
53;  collection  after  insolvency,  itself  an  identification  of  the  trust  subject:  Commercial 
Nat.  Bank  v.  Armstrong,  39  Fed.  684,  as  to  part  of  fund;  National  Butchers  &  D. 
Bank  v.  Hubbell,  117  N.  Y.  384;  Fifth  Nat.  Bank  v.  Armstrong,  40  Fed.  46;  First 
Nat.  Bank  of  Wellston  v.  Armstrong,  42  Fed.  193,  as  to  part  of  fund;  In  re  Arm- 
strong, 33  Fed.  405;  First  Nat.  Bank  of  Montgomery  v,  Armstrong,  36  Fed.  59; 
Manufacturers'  Bank  v.  Continental  Bank,  148  Mass.  553.  Debtor  and  creditor 
relation  established;  right  to  impress  proceeds  with  trust  denied:  Philadelphia  Nat. 
Bank  v.  Dowd,  38  Fed.  172;  Commercial  Nat.  Bank  v.  Armstrong,  39  Fed.  684,  as 
to  part  of  fund;  First  Nat.  Bank  of  Elkhart  v.  Armstrong,  39  Fed.  231;  First  Nat. 
Bank  of  Wellston  v.  Armstrong,  42  Fed.  193,  as  to  part  of  fund;  Edson  v.  Angcll, 
58  Mich.  336;  Union  Nat.  Bank  v.  Citizens'  Bank,  153  Ind.  45,  54  N.  E.  97; 
Pearce  v.  Dill,  149  Ind.  136;  Importers,  etc.,  Bank  v.  Peters,  123  N.  Y.  272,  25 
N.  E.  319;  Lafort  v.  Carpenter,  91  Hun,  76,  36  N.  Y.  Supp.  168;  Daniel  v.  St. 
Louis  Nat.  Bank,  67  Ark.  223,  54  S.  W.  214;  People  v.  Merchants'  Bank,  92 
Hun,  159,  36  N.  Y.  Supp.  989. 

(3.)  Where  the  restrictive  indorsement  "for  collection"  was  em- 
ployed; lien  of  subagent  held  not  to  have  attached. — Sweeney  v.  Easter, 
1  Wall.  173;  Blaine  v.  Bourne,  11  R.  I.  119,  23  Am.  Rep.  429;  First  Nat.  Bank  v. 
Reno  County  Bank,  3  Fed.  257;  Cecil  Bank  v.  Farmers'  Bank,  22  Md.  148;  Central 
R.  Co.  V.  First  Nat.  Bank  of  Lynchburg,  73  Ga.  384;  City  Bank  of  Sherman  v. 
Weiss,  67  Tex.  332;  Bank  of  Metropolis  v.  First  Nat.  Bank  of  Jersey  City,  19  Fed. 
301;  Tyson  &  Ralls  v.  Western  Nat.  Bank,  77  Md.  412,  26  Atl.  520. 

(4.)  The  folloioing  authorities  are  cited  in  favor  of  the  proposition  that  a  trust 
may  be  impressed  upon  any  subject  in  which  the  trustee  (or  agent)  has  incorporated 
the  trust  money:  Taylor  v.  Plumer,  3  Maule  &  S.  562;  Pennell  v.  Deffell,  4  De  G., 
M.  &  G.  372;  Knatchbull  v.  Hallett,  L.  R.,  13  Ch.  Div.  696;  Ex  parte  Dale,  11 
Ch.  Div.  772;  Overseers  of  the  Poor  v.  Bank,  2  Gratt.  544;  Kip  v.  Bank,  10  Johns. 
63;  Whitely  v.  Foy,  6  Jones  Eq.  34;  Thompson  v.  Perkins,  3  Mason,  232;  Bank  v. 
King,  57  Pa.  St.  202;  Cook  v.  TuUis,  18  Wall.  332;  National  Bank  v.  Insurance 
Co.,  104  U.  S.  54;  Van  Alen  v.  American  Nat.  Bank,  52  N.  Y.  1;  Schuler  v.  Bank, 
27  Fed.  424;  Winters  v.  Armstrong,  37  Fed.  508;  Montgomery  Nat.  Bank  v. 
Armstrong,  36  Fed.  59;  Continental  Nat.  Bank  v.  Weems,  69  Tex.  493;  Commer- 
cial Nat.  Bank  v.  Armstrong,  39  Fed.  684. 


§§  338,  339        PLACING    COMMERCIAL   PAPER   IN   BANK  423 

belonging  to  a  customer  for  the  general  balance  due  from  the  latter;  ^^ 
and  if  the  bank  A,,  which  receives  a  note  indorsed  in  blank  by  the 
holder  H.  for  collection,  transmits  it  to  bank  B.,  which  has  a  general 
balance  against  bank  A.,  the  question  arises  whether  or  not  it  may 
apply  the  proceeds  of  the  note  to  the  discharge  of  such  balance  as 
against  H.,  its  actual  holder  and  owner.  Clearly,  if  the  bank  B. 
knew  the  fact  that  the  bank  A.  was  not  the  real  owner  of  the  note,  it 
could  not  do  so;  ^^  and  we  think  that  the  question  simply  resolves  it- 
self into  the  inquiry  whether  or  not  the  bank  B.  can  be  regarded  as  a 
bona  fide  holder  of  the  note  without  notice  of  any  defect  of  title — or 
at  least  is  to  be  decided  by  exactly  the  same  principles  that  apply 
to  the  rights  of  such  a  holder. 

§  338.  The  United  States  Supreme  Court  has  stated  the  doctrine 
with  admirable  clearness,  that  if  the  B.  bank,  actually  in  possession 
of  the  proceeds  of  collection,  had  regarded  and  treated  the  A.  bank 
as  the  owner  of  the  paper  transmitted,  it  would  be  entitled  to  retain 
such  proceeds  as  against  the  real  owners,  provided  that  upon  the 
credit  of  such  remittances,  made  or  anticipated  in  the  usual  course  of 
dealing  between  them,  balances  had  been  suffered  to  remain  in  the 
hands  of  the  A.  bank  to  be  met  by  the  proceeds  of  such  paper.^^  In 
other  words,  that  the  B.  bank  could  retain  the  funds  whenever  they 
could  be  regarded  applied  by  agreement  to  the  payment  of  the  pre- 
existing debt;  and  that  the  paper  being  received  under  a  blank  in- 
dorsement would  be  evidence  of  title  in  the  A.  bank,  and  its  trans- 
mission to  the  B.  bank  as  evidence  of  application  to  such  debt,  when 
the  course  of  dealing  between  the  two  authorized  such  inference. 

§  339.  Opposite  doctrine  followed. — In  New  York,  the  opposite 
doctrine  is  followed,  but  mainly  upon  the  ground  peculiar  to  the  de- 

66.  Davis  v.  Bowsher,  5  T.  R.  488;  Bank  of  Metropolis  v.  New  England  Bank, 
1  How.  239;  Van  Amee  v.  Bank  of  Troy,  8  Barb.  3L5;  ante,  §  334a.  See  also  part 
3,  p.  340.  People  v.  St.  Nicholas  Bank,  44  App.  Div.  314,  60  N.  Y.  Supp.  719, 
holds  with  the  text,  and  further  says  that  this  lien  is  superior  to  that  of  a  warrant 
of  attachment  issued  against  the  property  of  the  customer,  although  the  bank  has 
not  actually  appropriated  the  deposit  to  the  payment  of  its  claim  at  the  time  the 
warrant  was  attempted  to  be  levied  on  the  deposit. 

67.  Van  Amee  v.  Bank  of  Troy,  8  Barb.  315  (1850);  Bank  of  Metropolis  v. 
New  England  Bank,  6  How.  227  (1848);  People's  Bank  v.  The  Jeflferson  County 
Savings  Bank,  lOG  Ala.  524,  17  So.  728,  54  Am.  St.  Rep.  59. 

68.  Bank  of  Metropolis  v.  New  England  Bank,  6  How.  227  (1848),  Taney, 
C.  J.,  explaining  and  confirming  same  case  in  1  How.  234  (1843);  First  Nat. 
Bank  v.  Reno  Ckjunty  Bank,  3  Fed.  260. 


424  AGENTS    FOR    NECiOTJATlUN    OK    COLLECTION  §  3-10 

cisions  of  that  State,  that  rcceivinK  ncKotiablo  paper  in  payment  of, 
or  as  security  for,  an  antecedent  debt,  is  not  sucii  a  valuable  coiu^ider- 
ation  as  to  constitute  the  holder  for  value;  and  that  the  case  is  not 
altered  by  a  long  course  of  ilealings  between  the  parties,  by  which  the 
bank  claiming  to  retain  the  proceeds  has  been  in  the  habit  of  re- 
ceiving payment  of  balances  due  in  notes,  or  has  omitted  to  collect 
a  balance  by  reason  of  an  expectation  or  promise  of  payment  of  it  in 
notes,  or  in  consequence  of  the  omission  to  collect  it  after  taking  such 
a  note  in  payment.*^^  And  it  is  there  held  that  it  is  only  where,  by 
express  contracts  or  well-established  course  of  dealing,  the  correspond- 
ent becomes  responsible  for  the  collection,  and  cannot  seek  reim- 
bursement for  advances,  in  case  of  nonpayment  of  the  paper,  that  he 
can  retain  it  or  the  proceeds  of  collection,  iis  against  the  real  owner, 
the  mere  giving  credit  for  the  amount  not  being  sufTicient.""  And  in 
Connecticut,  it  has  been  denied  altogether  that  the  custom  of  trans- 
mitting bills  for  collection  from  one  bank  to  another,  and  creiliting 
in  account  the  avails  to  ovcrbahmces  due,  can  affect  the  claims  of  the 
actual  owner,  on  the  ground  that  a  usage  between  the  banks  could 
not  deprive  a  third  person  of  his  rights/^  The  same  is  held  in  Ne- 
braska.'^ 

§  340.  But  the  views  of  the  United  States  Supreme  Court  seem 
to  us  to  embody  the  true  logic  of  the  (juestion.  The  bank  transmit- 
ting the  paper  indorsed  in  blank  is  ostensibly  its  owner.  It  has 
agreed,  by  implied  contract  arising  from  usage,  that  the  avails  shall 
be  applied  to  balances  against  it.  With  this  understanding,  its 
correspondent  undertakes  the  collection  and  applies  the  avails.  And 
then,  when  this  contract  has  been  executed,  it  would  seem  to  be  in 
contravention  of  the  universally  recognized  principles  which  control 
the  negotiation  of  commercial  paper,  to  permit  a  third  party,  who  had 

69.  McBride  v.  Farmers'  Bank,  2G  X.  Y.  454  (1863),  Balcom,  J.;  Van  Amee 
V.  Bank  of  Troy,  8  Barb.  322  (1850),  Hand,  J.;  Commercial  Bank  of  Clyde  v. 
Marine  Bank,  1  Abb.  Ct.  App.  Dec.  405  (1867);  Lindauer  v.  Fourth  Nat.  Bank, 
55  Barb.  75  (1869);  Dod  v.  Fourth  Nat.  Bank,  59  Barb.  265  (1871);  Castle  v. 
Corn  Exchange  Bank,  75  Hun,  89,  26  N.  Y.  Supp.  1035;  Benjamin  v.  Rogers, 
126  N.  Y.  60,  26  N.  E.  970;  United  States  Nat.  Bank  v.  Ewdng,  131  N.  Y.  506, 
30  N.  E.  501,  27  Am.  St.  Rep.  015. 

70.  Dickerson  v.  Wason,  47  N.  Y.  439  (1872),  revg.  54  Barb.  230  (1869); 
Dod  V.  Fourth  Nat.  Bank,  59  Barb.  275  (1871). 

71.  Lawrence  v.  Stonington  Bank,  6  Conn.  529  (1827),  Hosmer,  C.  J.,  dis- 
tinguished in  Wood  V.  Boylston  Nat.  Bank,  129  Mass.  358. 

72.  Branch  v.  National  Bank,  50  Nebr.  470,  70  N.  W.  34. 


§§  340a,  340b      PLACING    COMMERCIAL   PAPER    IN   BANK  425 

declared  Ijy  his  form  of  indorsement  that  he  had  parted  with  title,  to 
come  in  and  assert  it.  If  he  chooses  not  to  adopt  the  well-known 
form  of  indorsement — "for  collection" — he  should  not  be  permitted 
to  deny,  against  the  bank  which  has  collected  the  paper,  the  legal 
effect  of  that  form  of  indorsement  which  he  chose  to  adopt^^ 

§  340a.  Controversies  as  to  the  ownership  of  paper  placed  in  bank 
to  be  collected. — A  variety  of  circumstances  give  rise  to  contro- 
versies as  to  the  right  to  claim  paper,  or  the  proceeds  of  paper,  which 
was  put  in  bank  to  he  collected. 

When  the  holder  places  his  paper  in  bank,  he  usually  does  so  in 
one  of  three  ways:  First.  As  a  principal  emplojdng  the  bank  as  a  mere 
agent  for  collection,  in  which  case  the  restrictive  indorsement  "for 
collection"  is,  or  should  always  be,  used,  so  that  all  subsequent  holders 
may  be  advised  of  the  bank's  want  of  title.  This  is  the  form  of  in- 
dorsement generally  used  when  the  holder  is  not  a  customer  of  the 
bimk.  Second.  \s  an  avowed  seller  to  the  bank,  in  which  case  the 
indorsement  is  in  blank  and  the  transaction  a  plain  one.  Third.  As  a 
customer  having  account  with  the  bank,  in  which  case  the  restrictive 
indorsement  is  or  is  not  employed,  according  to  the  relations  estab- 
lished l)y  agreement  between  the  parties.  If  the  bank  treats  the  paper 
as  a  c:ish  deposit,  and  allows  the  customer  to  draw  against  it  in  antici- 
pation of  the  collection,  the  indorsement  is  generally  in  blank. 

§  340b.  Rights  as  between  holder  and  collecting  agent  under  a 
blank  indorsement. — As  l)et\veen  the  holder  (whether  a  bank  or  an 
individual)  and  the  collecting  bank  with  which  the  holder  has  an 
account,  it  may  be  stated  as  a  rule,  where  the  rights  of  no  third  party 
are  concerned,  that  an  indorsement  of  a  bill,  note  or  check  in  blank 
to  the  latter  for  collection,  does  not  carry  with  it  title  to  the  paper 
before  actually  collected  unless  the  paper  is  deposited  to  make  good 

73.  In  Bank  of  Wa-shington  v.  Triplctt,  1  Pet.  30  (1828),  Marshall,  C.  J., 
used  language  which  militates  against  this  view.  But  the  cases  referred  to  supra 
are  subsequent,  and  may  be  regarded  as  overruling  the  above  case  pro  tanto. 
He  said:  "The  custom  to  indorse  a  bill  put  in  bank  for  collection  is  universal; 
and  the  Bank  of  Washington  had  no  more  reason  to  suppose  that  Triplett  & 
Nealcs  (the  payees  and  indorsers)  had  ceased  to  be  the  real  holders  from  their 
indorsement,  than  for  supposing  that  the  cashier  of  the  Bank  of  Washington  had 
become  the  real  holder  by  the  indorsement  to  him."  The  view  that  the  indorse- 
ment in  blank  puts  the  bank  on  inquiry  is  also  taken  in  Van  Amee  v.  Bank  of 
Troy,  8  Barb.  322;  Ditch  v.  Weston  Nat.  Bank,  79  Md.  192,  29  Atl.  72,  138,  47 
Am.  St.  Rep.  375,  note,  dissenting  opinion  citing  and  approving  text. 


426  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  340b 

the  account  of  the  depositor,  or  is  immediately  drawn  against;  nor 
to  the  proceeds  of  the  paper  after  collection,  unless  balances  had  been 
suffered  to  remain  in  the  hands  of  the  transmitting  bank  to  be  met  by 
the  proceeds  of  such  paper.    But  there  may  be  an  express  contract 
between  the  parties  that  it  shall  be  so  treated,  or  an  implied  contract 
to  that  effect  arising  from  an  established  course  of  dealing/^    The 
rule  is  stated  by  Lord  EUenborough,  thus:  "Every  man  who  pays 
bills  not  due  into  the  hands  of  his  banker,  places  them  there  as  in  the 
hands  of  his  agent,  to  obtain  payment  of  them  when  due.     If  the 
banker  discount  the  bill,  or  advance  money  upon  the  credit  of  it,  that 
alters  the  case.    He  then  acquires  the  entire  property  in  it,  or  has  a 
lien  on  it,  pro  tanto,  for  his  advances."  "^   If  the  transaction  be  between 
the  bank  and  a  stranger  employing  the  services  of  the  bank  for  the 
first  time,  the  acquisition  of  the  paper  by  the  bank,  indorsed  in  blank, 
could  not  as  against  the  owner  be  regarded  as  a  purchase.    The  deci- 
sion of  the  Court  of  Appeals  of  New  York  in  the  case  of  Metropohtan 
Nat.  Bank  v.  Loyd  ^^  is  sometimes  cited  as  authority  for  the  proposi- 
tion that  the  deposit  of  a  check  with  a  bank  for  collection,  indorsed 
in  blank  by  its  regular  customer,  carries  with  it  title  to  the  paper.    But 
this  decision  appears  to  have  been  made,  and  justly,  in  the  interest  of 
a  subsequent  purchaser  of  the  check,  who  had  advanced  money  upon 
it  to  the  agent,  though  that  fact  is  not  stated,  and  does  not  appear, 
to  have  been  the  reason  of  the  decision,  and  the  case  seems  to  be 
properly  cited  as  authority  for  the  proposition  that  the  mere  deposit 
of  a  check  with  a  bank,  indorsed  in  blank  by  its  customer  for  collec- 
tion, without  more,  makes  the  bank  a  purchaser  of  the  paper,  without 
regard  to  the  rights  or  dealings  of  any  subsequent  party  with  reference 

74.  St.  Louis  Ey.  Co.  v.  Johnston,  10  Sup.  Ct.  Rep.  390;  Balbach  v.  Fre- 
linghuysen,  15  Fed.  675;  ante,  p.  342;  Morse  on  Banking,  p.  247;  Riverside  Bank 
V.  Land  Co.,  34  App.  Div.  359,  54  N.  Y.  Supp.  266.  "An  indorsement  of  a  check 
in  blank  for  collection,  when  passed  to  the  credit  of  the  drawee  and  drawn  against 
by  him,  amounts  to  a  transfer  of  the  legal  title  to  the  fund  against  which  the  check 
is  drawn."  Vaughn  v.  Farmers'  &c.  Nat.  Bank  (Tex.  Civ.  App.),  126  S.  W.  690, 
citing  text. 

75.  Giles  v.  Perkins,  9  East.  1114;  Armour  Packing  Co.  v.  Davis,  Receiver, 
118  N.  C.  548,  24  S.  E.  360,  holding  that  the  fact  that  a  bank  has  given  depositor 
credit  for  the  amount  of  negotiable  instrument  is  not  conclusive  evidence  that 
the  bank  had  purchased  the  paper.  See  also  Boykin  v.  Bank,  118  N.  C.  567 
24  S.  E.  357;  Stevenson  v.  Bank,  113  N.  C.  485,  18  S.  E.  695;  Tyson  &  Ralls  v! 
Western  Nat.  Bank,  77  Md.  412,  26  Atl.  520;  Fourth  Nat.  Bank  v.  Mayer  89  Ga 
108, 14  S.  E.  891.  ' 

76.  Metropolitan  Nat.  Bank  v.  Loyd,  90  N.  Y.  530.  See  also  Hutchinson  v. 
Manhattan  Co.,  150  N.  Y.  250,  44  N.  E.  775. 


§  340c  PLACING    COMMERCIAL    PAPER   IN   BANK  427 

thereto.  The  collection  of  checks,  which  are  drawn  upon  a  deposit 
of  funds,  and  of  sight  drafts,  which  are  usually  expected  and  provided 
for  by  the  drawee,  are  so  much  matters  of  course,  and  comparatively 
so  seldom  attended  with  obstruction  or  delay,  that  the  readiness  of 
banks  to  treat  them  as  cash  deposits  and  to  allow  their  customers  to 
draw  against  them  in  anticipation  of  the  collection,  is  easily  under- 
stood, especially  when  the  bank  reserves  the  right  to  charge  back 
the  paper  to  the  customer's  account  if  it  is  returned  unpaid.  Out 
of  this  practice  has  grown  the  erroneous  idea  that  the  bank,  without 
more,  becomes  the  owner  of  the  deposited  paper  before  collection, 
exemplified  in  the  case  of  Metropolitan  Nat.  Bank  v.  Loyd,  above. 
Later  cases  hold,  and  correctly  as  we  conceive,  that  checks  deposited 
in  bank  by  its  customers  do  not  at  once  become  the  property  of  the 
bank,  but  that  it  continues  to  be  the  agent  of  the  customer  until 
actual  collection,  the  check  in  the  meantime  remaining  the  property 
of  the  depositor.'^^ 

Where  the  owner  is  itself  a  bank  there  seems  to  be  no  reason  why 
it  should  stand  upon  other  or  different  ground  than  does  an  individual 
depositor  for  collection.  If  it  is  indebted  to  its  correspondent,  holding 
a  balance  in  its  favor,  or  if  it  actually  draws  against  the  transmitted 
paper,  the  lien  of  the  latter  will  then  attach,  or  rather  the  paper 
thereby  becomes  the  property  of  the  correspondent,  the  transaction 
between  them  amounting  to  nothing  more  nor  less  than  a  purchase.''^ 

§  340c.  Circumstances  from  which  a  purchase  is  implied. — As 

to  the  facts  or  course  of  dealing  from  which  a  purchase  will  be  implied, 
they  should  be  such  as  show  that  the  agent  has  become  absolutely 
responsible  for  the  collection  of  the  paper.'^^  The  idea  of  a  purchase 
will  be  repelled  by  the  fact  that  the  paper  was  credited  to  the  customer 
without  discount;  that  the  agent  exercises  the  right  to  charge  back 

77.  Balbach  v.  Frelinghuysen,  15  Fed.  675;  St.  Louis  Ry.  Co.  v.  Johnston, 
10  Sup.  Ct.  Rep.  390;  Ditch  v.  Western  Nat.  Bank,  79  Md.  192,  29  Atl.  72,  138, 
dissenting  opinion  citing  and  approving  text.  But  see  McLean  v.  Lowe,  126 
Ind.  449,  26  N.  E.  398;  Richardson  v.  New  Orleans  Coffee  Co.,  43  C.  C.  A.  583, 
102  Fed.  785. 

78.  Scott  V.  Ocean  Bank,  23  N.  Y.  289;  Balbach  v.  FreHnghuysen,  15  Fed.  682. 

79.  Dickerson  v.  Wason,  47  N.  Y.  439;  Fulton  Nat.  Bank  v.  Goshne,  168  Mass. 
86,  46  N.  E.  406;  Shawmut  Nat.  Bank  v.  Manson  et  ah,  168  Mass.  425,  47  N.  E. 
196;  Taft  v.  Quinsigamond  Nat.  Bank,  172  Mass.  363,  52  N.  E.  387;  Wheatland 
V.  Pryor,  133  N.  Y.  97,  30  N.  E.  652;  Ditch  v.  Western  Nat.  Bank,  79  Md.  192, 
29  Atl.  72,  138,  47  Am.  St.  Rep.  375,  note,  dissenting  opinion  citing  and  approving 
text. 


428  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  340d 

the  paper  to  the  customer's  account  if  returned  unpaid;  that  it  accepts 
no  risk  on  the  paper;  and  often,  by  the  terms  and  conditions  upon 
which  the  relations  between  the  parties  have  been  estabhshed,  show- 
ing that  only  an  agency  was  intended.  The  presumption  is  that  the 
depositor  does  not  intend  to  part  with  the  title  to  his  paper,  subject 
to  be  rebutted  only  by  evidence  of  an  express  contract  to  the  contrary, 
or  of  facts  from  which  such  a  contract  must  be  inferred. 

§  340d.  Agreements  affecting  title  to  the  proceeds  of  the  paper 
when  indorsed  "  for  collection." — When  a  bank  transmits  paper  to 
its  correspondent  indorsed  with  the  restrictive  words,  ^'for  collection," 
the  presumption  is  that  an  immediate  collection  and  return  of  the 
proceeds  is  contemplated.  If  it  has  no  interest  in  the  paper  other 
than  that  of  a  mere  collector,  this  presumption  will  be  absolute.  But 
if  it  owns  the  paper,  or  is  entitled  to  a  lien  on  the  proceeds,  the  pre- 
sumption may  be  rebutted  by  evidence  that  it  has  entered  into  an 
agreement  with  its  correspondent  by  which  the  latter  is  permitted 
to  treat  such  proceeds  as  its  own,  as  by  a  direction  to  credit  the  pro- 
ceeds, in  consideration  of  a  privilege  allowed  the  principal  of  drawing 
against  the  paper  before  actually  collected.^°  The  effect  of  such  agree- 
ment is  to  make  the  indorsee  bank  the  debtor  of  its  principal  for  the 
amount  of  money  in  its  hands,  instead  of  a  trustee  thereof.  The  change 
is  immaterial  so  long  as  the  agent  remains  solvent,  but  may  affect  the 
distribution  of  its  assets  in  case  of  insolvency.  Such  agreement  may 
be  verbal  or  written,  but  in  the  selection  of  a  correspondent  the  trans- 
mitting bank  usually  makes  or  accepts  proposals  in  writing,  submitted 
for  that  purpose,  an  example  of  which  may  be  seen  below .^^    The 


80.  First  Nat.  Bank  of  Elkhart  v.  Armstrong,  39  Fed.  231. 

81.  Commercial  Nat.  Bank  v.  Armstrong,  39  Fed.  684.  The  Fidelity  National 
Bank  of  Cincinnati,  acting  as  correspondent  of  the  Commercial  National  Bank  of 
Philadelphia,  received  from  it  a  large  amount  of  paper  indorsed  "for  collection," 
but  pending  the  collection  became  insolvent.  This  paper  being  afterward  col- 
lected by  the  insolvent's  receiver,  the  question  arose  whether  such  proceeds  should 
enter  into  the  general  fund  in  the  receiver's  hands  subject  to  ratable  distribution 
among  the  insolvent's  creditors,  or  whether  the  relation  of  principal  and  agent 
being  estabhshed  between  the  two  banks,  a  preference  should  be  made  in  favor  of 
the  principal,  and  a  trust  impressed  upon  such  of  the  proceeds  of  the  paper  as 
were  collected  by  the  receiver  after  the  insolvency.  The  following  propositions 
were  submitted  by  the  Fidelity  to  the  Commercial  National  Bank,  as  to  which 
the  court  said  that  the  first  contemplated  a  debtor  and  creditor  relation,  but  the 
Becond,  third,  and  fourth,  that  of  principal  and  agent: 

"Coml.  Nat.  Bnk.,  Philadelphia,  Pa. — Gentlemen:  Inclosed  herewith  we  hand 


§  340d  PLACING    COMMERCIAL    PAPER    IN    BANK  429 

proposals  are  most  frequently  in  the  alternative,  some  contemplating 
a  debtor  and  creditor  relation  between  the  parties;  others  that  of 
principal  and  agent.  In  these  communications  are  sometimes  found 
a  solution  of  the  question  of  title  to  the  proceeds  of  the  paper.  In 
other  cases  the  transmitting  bank,  apprehensive  of  danger,  or  de- 
siring to  exempt  a  particular  transaction  from  the  consequences  of  a 
settled  course  of  dealing,  add  to  the  restrictive  indorsement  the 
further  direction,  "and  immediate  return  of  proceeds,'^  or  other  words 
clearly  indicating  that  a  debtor  and  creditor  relation  is  not  intended.^^ 
What  course  of  dealing  between  the  parties  will  justify  the  pre- 
sumption of  a  debtor  and  creditor  relation,  is  a  question  more  of  fact 
than  of  law;  each  case  depending  upon  its  own  particular  circum- 
stances.^^ If  the  transaction  be  of  the  first  instance  between  the 
parties,  without  more,  it  imports  the  relation  of  principal  and  agent. 
But  if  the  transmitting  bank  were  accustomed  to  permit  balances  to 
accumulate  in  the  agent's  hands  and  remain  there  longer  than  nec- 
essary for  convenient  remission,  or  if  the  parties  acted  each  as  collect- 
ing agent  for  the  other,  striking  balances  and  remitting  the  same  at 
regular  intervals,  the  opposite  presumption  would  arise.^^  But  the 
mere  method  of  keeping  its  accounts  which  the  agent  adopts  cannot 

you  our  last  statement.  *  *  *  w^e  should  be  pleased  to  serve  you,  and  trust 
you  will  find  it  to  your  advantage  to  accept  one  of  the  following  propositions. 

"No.  1.  We  will  collect  all  items  at  par,  and  allow  2H  per  cent,  interest  on 
daily  balances,  calculated  monthly.  We  will  remit  any  balance  you  have  above 
$2,000  in  New  York  draft,  as  you  direct,  or  ship  currency  at  your  cost  for  ex- 
pressage. 

"No.  2.  Will  collect  at  par  all  points  west  of  Pennsylvania,  and  remit  the 
1st,  11th,  and  21st  of  each  month. 

"No.  3.  We  wnll  collect  at  par  Ohio,  Indiana,  and  Kentucky  items,  and  re- 
mit balances  every  Monday  by  draft  on  New  York.  We  do  not  charge  for  ex- 
change on  propositions  Nos.  1,  2,  and  3. 

"  No.  4.  Will  collect  Cincinnati  items,  and  remit  daily  at  40  cents  per  thousand, 
or  20  cents  for  SoOO  or  less.  National  banks  not  in  a  reserve  city  can  count  all 
they  have  with  us  as  reserve.    Your  early  reply  will  oblige." 

It  has  been  held  in  North  Carolina,  that  if  one  deposits  in  bank  "for  collec- 
tion," a  draft  and  the  bank  sent  it  with  like  indorsement  ("for  collection")  that 
such  restrictive  indorsement  was  notice  to  the  subcollecting  bank  that  the  plaintiff 
was  the  owner  of  draft  and  that  first  bank  was  only  an  agent  for  collection.  Boy- 
kin  V.  Bank,  118  N.  C.  556,  24  S.  E.  307.  See  also  Bank  v.  Bank,  119  N.  C.  307, 
25  S.  E.  971. 

82.  Continental  Nat.  Bank  v.  Weems,  69  Tex.  493. 

83.  St.  Louis  Ry.  Co.  v.  Johnston,  10  Sup.  Ct.  Rep.  390. 

84.  First  Nat.  Bank  of  Elkhart  v.  Armstrong,  39  Fed.  231;  National  Butchers' 
&  D.  Bank  v.  HubbeU,  117  N.  Y.  384;  Edson  v.  Angell,  58  Wis.  336. 


430  AGENTS   FOR  NEGOTIATION    OR   COLLECTION  §  340e 

change  its  agency  relation  to  that  of  debtor  to  its  principal,  unless  the 
concurrence  of  the  principal  be  show-n,  either  by  express  assent,  or 
by  acquiescence  in  the  practice.^^ 

§340e.  Amount  of  recovery  against  insolvent  collecting  bank. — 

It  is  sometimes  very  important  to  determine  whether  the  liability 
of  a  bank  undertaking  the  collection  of  paper  is  that  of  an  agent 
or  that  of  a  debtor.  When  the  funds  collected  have  been,  with  the 
depositor's  assent,  put  to  his  credit,  the  bank  is  simply  his  debtor. 
And  in  the  event  of  its  insolvency  he  must  share  ratably  with  other 
creditors  in  its  assets.  But  if  its  liability  remains  that  of  an  agent 
bound  to  pay  to  the  party  who  has  deposited  paper  "for  collection" 
in  its  hands,  and  it  has  without  his  assent  mingled  the  amount  col- 
lected with  its  general  funds,  there  are  numerous  decisions  which 
hold  that  in  the  event  of  insolvency,  the  principals  may  trace  their 
funds  in  their  substituted  form,  and  recover  the  full  amount.^^  This 
right  of  the  principal  only  ceases  when  the  means  of  ascertainment 
fail,  or  where  his  property  or  funds  have  reached  a  bona  fide  holder  for 
value,  and  without  notice  of  the  trust.^^ 

85.  Commercial  Nat.  Bank  v.  Armstrong,  39  Fed.  691. 

86.  See  authorities  cited  ante,  §  336,  parts  (2)  and  (4)  of  note,  79;  Union  Nat. 
Bank  v.  Citizens'  Bank,  153  Ind.  45,  44  N.  E.  97 — in  this  case  the  general  proposi- 
tion of  the  text  is  announced  and  approved,  but  under  the  facts  of  the  case  held 
that  the  relation  of  trustee  and  cestui  que  trust  was  not  created  between  the  banks, 
but  simply  that  of  debtor  and  creditor,  and  that  plaintiff  was  not  entitled  to  be 
preferred  in  its  claim  over  the  general  creditors  of  the  insolvent  bank.  Foster, 
Receiver,  v.  Rincker,  4  Wyo.  484,  35  Pac.  470;  Guignon  v.  National  Bank,  22 
Mont.  140,  55  Pac.  1051,  1097;  Beal  v.  National  Bank,  5  C.  C.  A.  304,  55  Fed. 
894;  Richardson  v.  New  Orleans  Coffee  Co.,  43  C.  C.  A.  583,  102  Fed.  785;  Rich- 
ardson V.  Denegre,  35  C.  C.  A,  452,  93  Fed.  572;  First  Nat.  Bank  of  Lapeer  v. 
Sanford,  62  Mo.  App.  394. 

87.  Commercial  Nat.  Bank  v.  Armstrong,  39  Fed.  684;  Burnham  v.  Bart-h, 
89  Wis.  362,  62  N.  W.  96;  Thuemmler  v.  Barth,  89  Wis.  381,  62  N.  W.  94.  In 
the  case  of  Nonotuck  Silk  Co.  v.  Flanders,  87  Wis.  237,  58  N.  W.  383,  it  was 
decided,  that  one  for  whom  a  banker  had  collected  a  draft  before  making  a  volun- 
tary assignment  is  not  entitled  to  a  preference  over  the  other  creditors,  if  the  pro- 
ceeds of  such  collection  were  disposed  of  by  the  banker  prior  to  the  assignment, 
so  that  no  part  thereof  came  in  any  form  to  the  hands  of  the  assignee.  Chief 
Justice  Norton  dissents.  This  case  overrules  three  well-considered  cases  in  Wis- 
consin, namely:  McLeod  v.  Evans,  66  Wis.  401,  28  N.  W.  173,  214,  57  Am.  Rep. 
287;  Francis  v.  Evans,  69  Wis.  115,  33  N.  W.  93;  Bowers  v.  Evans,  71  Wis.  133, 
36  N.  W.  629.  See  also  Henry  v.  Martin,  88  Wis.  366,  60  N.  W.  263;  Thuemmler 
V.  Barth,  89  Wis.  381,  62  N.  W.  94.  See  authority  cited  in  notes  to  §  1612a;  Bank 
V.  Bank,  115  N.  C.  226,  20  S.  E.  370;  First  Nat.  Bank  v.  Davis,  114  N.  C.  344,  19 
S.  E.  280,  41  Am.  St.  Rep.  795. 


§  341  HOW    FAR    BANK    LIABLE    FOR   DEFAULT  431 


SECTION   IV 

HOW  FAR  BANK  LIABLE  FOR  DEFAULT  OF  NOTARY,  SUBAGENT,  OR 
CORRESPONDENT  BANK 

§  341.  What  is  the  extent  of  the  duty  and  responsibility  of  the 
collecting  bank  in  taking  the  steps  necessary  to  collection,  or  jfixing 
the  parties'  liabilities,  is  a  question  of  difficulty.  How  far  is  it  liable 
for  the  neglect  or  default  of  the  notary  which  it  employs  to  perform 
notarial  functions?  or  of  the  subagent  or  corresponding  bank  to  which 
it  may  confide  the  paper?  Thus,  suppose  A.,  residing  m  Richmond, 
Virginia,  holds  a  note  payable  in  New  York,  and  deposits  in  "The 
State  Bank"  at  Richmond  for  collection,  the  bank  in  Richmond  for- 
wards it  to  the  "First  National  Bank"  in  New  York  city,  which  is  its 
correspondent,  and  the  latter  places  it  in  the  hands  of  a  notary  public, 
to  make  demand  and  protest,  and  to  forward  notice  to  the  indorsers. 
The  question  arises,  then,  whether  the  "State  Bank"  of  Richmond  has 
fully  discharged  its  duty,  and  absolved  itself  from  all  further  liability 
by  the  due  transmission  of  the  note  in  its  course  for  collection. 

There  are  several  classes  of  cases  in  which  the  courts  have  pro- 
nounced different  views  of  this  question. 

The  first  class  maintains  the  absolute  liability  of  the  bank  for 
any  negligence  or  default  of  the  notary,  agent,  or  correspondent,  as 
well  as  of  its  own  immediate  servants,  regarding  it,  by  the  act  of 
undertaking  the  collection,  as  obligating  itself  to  see  that  every  proper 
measure  is  taken,  and  not  inquiring  whether  it  has  itself  been  guilty  of 
any  negligence  or  not,  or  whether  the  parties  reside  at  the  place  of  its  lo- 
cation or  not.  This  doctrine  has  become  firmly  established  in  the  jur- 
isprudence of  New  York,  the  leading  case  of  Allen  v.  Merchants'  Bank, 
decided  by  the  Court  of  Errors,  having  been  followed  by  numerous 
others,  and  the  question  being  considered  there  as  res  ad  judicata}^ 

88.  Allen  v.  Merchants'  Bank,  22  Wend.  215  (overruling  15  Wend.  482);  Walker 
V.  Bank  of  New  York,  9  N.  Y.  482;  Ayrault  v.  Pacific  Bank,  47  N.  Y.  573,  Allen,  J., 
saying:  "A  bank  receiving  a  bill  or  promissory  note  for  collection,  whether  payable 
at  its  counter  or  elsewhere,  is  Uable  for  any  neglect  of  duty  occurring  in  its  col- 
lection by  which  any  of  the  parties  are  discharged,  whether  of  the  officers  and 
immediate  servants,  or  other  agents  of  the  bank,  or  its  correspondents,  or  agents 
employed  by  such  correspondents.  If  the  bank  employ  a  notary  to  present  a 
promissory  note  for  payment,  and  give  the  proper  notices  to  charge  the  parties, 
the  notary  is  the  agent  of  the  bank,  and  not  of  the  depositor  or  owner  of  the  paper. 
A  notary  is  not  necessarily  employed,  as  the  service  can  be  performed  by  any 


432  AGENTS    FOR    NECiOTIATION    Oil    COLLKrTION  5  .Ml 

And  it  has  been  sustained  hy  the  Supreme  Court  ot  ilie  Lniled 
States.^® 

clerk  or  other  servant  of  the  bank.  This  general  liability  may  be  varied  by  ex- 
press contract  or  by  implication  arising  from  general  usage."  Montgomery 
County  Bank  v.  Albany  City  Bank,  7  N.  Y.  4r)9  (1852);  Commercial  Bank  ui 
Penn.sylvania  v.  Union  Bank,  11  N.  Y.  211  (18.'>4);  Donner  v.  Madison  County 
Bank,  G  Hill,  (548;  Reeves  v.  State  Bank,  S  Ohio  St.  Uu);  Hyde  v.  First  Nat.  Bank, 
7  Biss.  IfjO;  Davey  v.  Jones,  13  Vroom,  28;  Titus  v.  Mcchanies'  Bank,  ti  Vroom, 
688;  Nascr  v.  First  Nat.  Bank,  UG  N.  Y.  498;  Simpson  v.  VValdby,  G:J  Mich.  447; 
Corn  Exch.  Bank  v.  Farmers'  Nat.  Bank,  118  N.  Y.  44.3;  Davis  v.  King,  GG  Conn. 
465,  50  Am.  St.  Rep.  104,  note,  34  Atl.  107;  St.  Nicholas  Bank  v.  State  Nat.  Bank, 
128  N.  Y.  2G,  27  N.  E.  849 — among  other  things  held,  that  the  insolvency  of  the 
subagent  docs  not  shield  the  colle<ting  agent  from  liability  for  the  loss.  Bank  of 
Clarke  County  v.  Oilman,  81  Ilun,  48G,  IH)  N.  Y.  Supp.  1111;  State  Nat.  Bank 
v.  State  Nat.  Bank,  128  N.  Y.  27,  27  N.  E.  849;  Kirkham  v.  Bank  of  America, 
26  App.  Div.  110,  49  N.  Y.  Supp.  767;  Bailie  v.  Augusta  Sav.  Bank,  95  Ga.  277, 
21  S.  E.  717,  51  Am.  St.  Rep.  74. 

89.  Exchange  Nat.  Bank  v.  Third  Nat.  Bank,  112  U.  S.  276,  Blatchford,  J., 
saying:  "It  is  contended  by  the  defendant  that  its  liability,  in  taking  at  New 
York  for  collection  these  drafts  on  a  drawee  at  Newark,  extended  merely  to  the 
exercise  of  due  care  in  tlie  selection  of  a  competent  agent  at  Newark,  and  to  the 
transmission  of  the  drafts  to  such  agent,  with  proper  instructions;  and  that  the 
Newark  bank  was  not  its  agent,  but  the  agent  of  the  plaintiff,  so  that  the  defend- 
ant is  not  liable  for  the  default  of  the  Newark  bank,  due  care  having  Ijwn  used 
in  selecting  that  bank.  *  ♦  *  The  contrary  doctrine  that  a  bank  receiving 
a  draft  or  bill  of  exchange  in  one  State  for  collection  in  another  State  from  a  drawee 
residing  there,  is  liable  for  neglect  of  duty  occurring  in  its  collection,  whether  aris- 
ing from  the  default  of  its  own  officers,  or  from  that  of  its  correspondent  in  the 
other  State,  or  an  agent  employed  by  such  correspondent,  in  the  absence  of  any 
express  or  implied  contract  varying  such  liability,  is  established  by  decisions  in 
New  York,  Allen  v.  Merchants'  Bank,  22  \^'end.  215;  Bank  of  Orleans  v.  Smith, 
3  Hill,  560;  Montgomery  County  Bank  v.  Albany  City  Bank,  7  N.  Y.  4.59;  Com- 
mercial Bank  v.  Union  Bank,  11  N.  Y.  203,  212;  Ayrault  v.  Pacific  Bank,  47  N.  Y. 
570;  in  New  Jersey,  Titus  v.  Mechanics'  Nat.  Bank,  6  Vroom,  588;  in  Pennsyl- 
vania, Wingate  v.  Mechanics'  Bank,  10  Pa.  St.  104;  in  Ohio,  Reeves  v.  State 
Bank,  8  Ohio  St.  465;  and  in  Indiana,  Tyson  v.  State  Bank,  6  Blackf.  225.  It 
has  been  so  held  in  the  Second  Circuit,  in  Kent  v.  Dawson  Bank,  13  Blatchf.  237; 
and  the  same  view  is  supported  by  Taber  v.  Perrott,  2  Gall.  565,  and  by  the  Eng- 
lish cases  of  Van  Wart  v.  Woolcy,  3  B.  &  C.  439,  5  Dowl.  &  R.  374;  and  Mackersy 
v.  Ramsays,  9  Clark  &  F.  818.  *  *  *  We  regard  as  the  proper  rule  of  law 
applicable  to  this  case,  that  declared  in  Van  Wart  v.  Wooley,  3  B.  &  C.  439,  where 
the  defendants,  at  Birmingham,  received  from  the  plaintiff  a  bill  in  London,  to 
procure  its  acceptance.  They  forwarded  it  to  their  London  banker,  and  accept- 
ance was  refused,  but  he  did  not  protest  it  for  nonacceptance  or  give  notice  of 
the  refusal  to  accept.  Chief  Justice  Abbott  said:  'Upon  this  state  of  facts  it  is 
evident  that  the  defendants  (who  cannot  be  distinguished  from,  but  are  answer- 
able for,  their  London  correspondent)  have  been  guilty  of  a  neglect  of  the  duty 
which  they  owed  to  the  plaintiff,  then-  employer,  and  from  whom  they  received  a 


§  341  HOW    FAR   BANK   LIABLE    FOR   DEFAULT  433 

The  second  class  of  cases  requires  the  bank  to  prove  that  it  exer- 
cised due  care  and  diligence  in  selecting  a  competent  and  trust- 
worthy notary,  agent,  or  correspondent.  This  much  is  perfectly 
agreed;  but  these  cases  hold  it  sufficient,  and  exonerate  the  bank  from 
all  liability  beyond  making  such  a  selection. 

There  is  implied  authority,  in  the  deposit  for  collection,  to  employ 
a  subagent,  as  they  hold,  and  such  subagent  is  really  the  agent  of  the 
holder,  and  not  of  the  bank,  which  is  only  bound  to  act  judiciously  in 
selecting  him.^ 

pecuniary  reward  for  their  services.  The  plaintiff  is,  therefore,  entitled  to  main- 
tain his  action  apainst  them,  to  the  extent  of  any  damage  he  may  have  sustained 
by  their  neglect.*  In  that  case  there  was  a  special  pecuniary  reward  for  the  serv- 
ice. But,  upon  the  princii)les  we  have  stated,  we  are  of  opinion  that,  by  the  re- 
ceipt by  the  defendant  of  the  drafts  in  the  present  case  for  collection,  it  became, 
upon  general  princijjles  of  law,  and  indeix-ndently  of  any  evidence  of  usage,  or  of 
any  express  agreement  to  that  effect,  liable  for  a  neglect  of  duty  occurring  in  that 
collection,  from  the  default  of  its  correspondent  in  Newark.  The  case  of  Britten 
V.  Xicholls,  101  U.  S.  7.57,  is  cited  to  show  that  the  defendant  is  not  liable.  In 
that  case,  the  defendants,  bankers  in  Natchez,  Missi.><sippi,  received  from  the 
plaintiff,  a  resident  of  Illinois,  fcjr  collection,  two  promLs.sory  notes,  dated  at 
Natchez,  but  not  stating  any  j)lar(>  of  payment.  They  were  sent  to  the  defend- 
ants, through  a  banking-house  of  Bloomington,  Illinois,  with  instructions  to  col- 
lect them,  if  paid,  and  if  not,  to  protest  them  and  give  notice  to  the  indorsers. 
The  defendants  placed  the  notes  in  the  hands  of  a  reputable  notary  in  Natchez,  to 
make  demand  of  j>ayment  and  give  noticx^  to  the  indorsers.  It  was  held  that  the 
defendants  were  not  liable  for  negligence  on  the  part  of  the  notary,  whereby  the 
liability  of  a  responsible  indorser  was  relea.sed.  The  negligence  consisted  in  not 
presenting  the  notes  to  the  maker  at  maturity  and  demanding  payment."  *  ♦  * 
"But"  (the  court  proceeded,  after  referring  to  certain  authorities  cited  by  the 
court  in  Britton  v.  NichoUs,  supra),  "as  there  was  a  statute  of  Missi-ssippi,  passed 
in  1833,  authorizing  notaries  to  protest  promi.ssor>'  notes,  and  requiring  them  to 
keep  a  record  of  their  notarial  acts  in  such  cases,  and  making  the  record  admissible 
in  evidence  in  the  courts,  as  if  the  notary  were  a  witness,  and,  as  the  courts  of 
that  State  had  held  (Tieman  v.  Commercial  Bank,  7  How.  [Miss.]  648;  Agricul- 
tural Bank  v.  Commercial  Bank,  7  Sme<les  &  M.  502;  Bowling  v.  Arthur,  34  Miss. 
41)  under  that  statute,  that  it  was  a  part  of  the  duty  of  the  notary,  when  pro- 
testing paper,  to  give  all  notices  of  dishonor  required  to  charge  the  parties  to  it, 
and  that  a  bank  receiving  commercial  paper  as  an  agent  for  collection,  properly 
discharged  its  duty,  in  case  of  nonpayment,  by  placing  the  paper  in  the  hands  of 
such  notar\',  to  be  proceedtxl  with  in  such  manner  as  to  charge  the  parties  to  it, 
and  that  the  bank  was  not  liable  in  such  cases,  for  the  failure  of  the  notary  to  per- 
form his  duty,  the  court  says,  that  'judged  by  the  law  of  Mississippi'  the  defend- 
ants 'discharged  their  duty  to  the  plaintiff  when  they  deUvered  the  notes  received 
by  them  for  collection  to  the  notary  public.'"  Bailie  v.  Augusta  Sav.  Bank,  95 
Ga.  277,  51  Am.  St.  Rep.  74,  21  S.  E.  717;  Wood  River  Bank  v.  First  Nat.  Bank, 
36  Nebr.  744,  55  N.  W.  239. 

90.  Stacy  v.  Dane  County  Bank,  12  Wis.  629;  Bellemire  v.  Bank  of  the  United 

28 


434  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  342 

A  third  class  of  cases  holds  that  where  a  bank  receives  a  bill  or 
note  for  collection  against  a  drawer  or  maker,  resident  at  the  place 
of  the  bank,  or  where  the  bank  undertakes  for  its  collection  by  their 
own  officers,  there  can  be  no  doubt  that  it  would  be  liable  for  any 
loss  that  might  result  from  neglect.  But  they  consider  that  where 
such  an  instrument  is  received  for  collection  at  a  point  distant  from 
the  location  of  the  bank,  the  bank  discharges  its  duty  by  sending  it 
in  due  season  to  a  competent,  reUable  agent,  with  proper  instruc- 
tions.^^ 

§  342.  Bank  absolutely  liable  for  negligence. — The  cases  which 
hold  the  bank  absolutely  liable  for  any  laches  or  negligence,  whereby 
the  holder  of  the  paper  suffers  loss,  commend  themselves  to  our  ap- 
probation. Any  other  rule  opens  the  door  to  carelessness  in  the  con- 
States,  4  Whart.  105;  Baldwin  v.  Bank  of  Louisiana,  1  La.  Ann.  13;  Hyde  v. 
Planters'  Bank,  17  La.  Ann.  566;  Frazier  v.  Gas  Bank,  2  Rob.  296;  Warren  Bank 
V.  Suffolk  Bank,  10  Cush.  582.  See  also  Jackson  v.  Union  Bank,  6  Harr.  &  J. 
146,  which  is  an  interesting  case;  1  Parsons  on  Notes  and  Bills,  480.  This  view 
has  been  recently  taken  by  the  Supreme  Court  of  the  United  States.  Britton  v. 
Nicholls,  104  U.  S.  757,  the  court  applying  the  law  as  settled  by  the  decisions  of  the 
courts  of  Mississippi  in  a  case  from  that  State.  Third  Nat.  Bank  v.  Vicksburg 
Bank,  61  Miss.  112,  38  Am.  Rep.  78;  GueUch  v.  National  State  Bank,  56  Iowa,  434; 
Bank  of  Lindsborg  v.  Ober,  31  Kan.  603;  First  Nat.  Bank  v.  German  Bank,  107 
Iowa,  543,  70  Am.  St.  Rep.  216,  78  N.  W.  195;  First  Nat.  Bank  v.  Craig,  3  Kan. 
App.  166,  42  Pac.  830;  Beach  v.  Moser,  4  Kan.  App.  66,  46  Pac.  202;  First  Nat. 
Bank  v.  Sprague,  34  Nebr.  318,  33  Am.  St.  Rep.  644,  51  N.  W.  846.  See,  however, 
Sherman  et  al.  v.  Port  Huron  Engine  &  Thresher  Co.,  8  S.  Dak.  343,  66  N.  W. 
1079;  Farmers'  Bank  &  Trust  Co.  v.  Newland,  97  Ky.  464,  31  S.  W.  38;  Schu- 
macher V.  Trent,  8  Tex.  Civ.  App.  17;  Bank  v.  Bank,  71  Mo.  App.  451;  Davis  v. 
First  Nat.  Bank,  118  Cal.  600,  50  Pac.  666;  Wilson  v.  Bank,  187  lU.  222,  58 
N.  E.  250. 

91.  Dorchester,  etc..  Bank  v.  New  England  Bank,  1  Cush.  186;  Fabens  v. 
Mercantile  Bank,  23  Pick.  330,  the  court  saying:  "It  is  well  settled  that  when  a 
note  is  deposited  with  a  bank  for  collection,  which  is  payable  at  another  place, 
the  whole  duty  of  the  bank  so  receiving  the  note,  in  the  first  instance,  is  seasonably 
to  transmit  the  same  to  a  suitable  bank  or  other  agent  at  the  place  of  payment. 
And  as  part  of  the  same  doctrine,  it  is  well  settled  that  if  the  acceptor  of  a  bill 
or  promisor  of  a  note  has  his  residence  in  another  place,  it  shall  be  presumed  to 
have  been  intended  and  understood  between  the  depositor  for  collection  and  the 
bank  that  it  was  to  be  transmitted  to  the  place  of  residence  of  the  promisor." 
East  Haddam  Bank  v.  Scovill,  12  Conn.  303;  Etna  Ins.  Co.  v.  Alton  City  Bank, 
12  Conn.  303;  Daly  v.  Butchers  &  Drovers'  Bank,  56  Mo.  94;  Bank  of  Louisville 
V.  First  Nat.  Bank,  8  Baxt.  101;  Irwin  v.  Reeves  Pulley  Co.,  20  Ind.  App.  101, 
48  N.  E.  601,  50  N.  E.  317;  First  Nat.  Bank  v.  City  Bank,  12  Tex.  Civ.  App.  318, 
34S.W.458. 


§  343  HOW   FAR   BANK   LIABLE    FOR   DEFAULT  435 

duct  of  banking  business,  which  should  be  conducted  with  every 
safeguard  to  the  customer  who  intrusts  his  interests  to  the  keeping  of 
such  agents.  If  they  are  averse  to  dealing  with  distant  and  unknown 
parties,  they  should  decline  undertaking  the  collection  or  handhng  of 
the  paper;  and  if  they  assume  it,  they  should  so  do  for  sufficient  com- 
pensation, and  be  held  responsible.  If  unwilling  to  take  charge  of  the 
collection  under  this  implied  understanding,  they  should  insist  on  a 
special  contract,  or  refuse  it.  General  usage  might  vary  this  liability, 
but  the  mere  practice  of  banks  for  their  own  convenience  would  raise 
no  implication  of  such  usage.^^ 

§  343.  Defaults  of  notary. — In  a  number  of  cases  where  a  notary 
public  was  employed  to  make  demand  and  protest,  or  give  notice, 
stress  has  been  laid  upon  the  circumstance  that  such  an  officer  is  an 
agent  provided  by  law,  and  holding  a  governmental  commission  to 
perform  these  functions,  and  that  the  bank  has  a  right  prima  facie 
to  repose  a  confidence  in  his  official  character,  which  it  could  not,  save 
upon  its  own  responsibility,  repose  in  an  unofficial  employee.^^  Pro- 
fessor Parsons,  taking  this  view,  compares  the  notary  to  the  "mail 

92.  Power  v.  First  Nat.  Bank,  6  Mont.  Ter.  251,  approving  the  text;  Ay- 
rault  V.  Pacific  Bank,  47  N.  Y.  570;  Savings  Bank  v.  National  Bank,  89  Tenn. 
337,  39  S.  W.  338;  Howard  &  Co.  v.  Walker,  92  Tenn.  452,  21  S.  W.  897.  In 
the  case  of  Sahlien  v.  Bank,  90  Tenn.  221,  16  S.  W.  373,  held,  banks  are  liable 
in  their  character  of  collecting  agents  for  a  failure  to  exercise  ordinary  care  and 
diligence  in  the  discharge  of  their  duties,  but  are  not  responsible  for  mere  error  of 
judgment,  especially  when  they  have  been  left  to  act  without  instructions.  In 
such  case  burden  of  proof  is  on  the  plaintiff,  and  not  only  must  negligence  of  the 
collecting  bank  be  shown,  but  that  the  claim  could  have  been  collected  by  due 
diligence.  Query:  Is  common  usage  of  banks  in  that  particular  locahty,  though 
unknown  to  customer,  absolutely  binding  on  him  as  an  implied  element  in  the 
contract  of  agency?  Court,  while  not  deciding  the  question,  intimates  an  affirma- 
tive answer.  Sahlien  v.  Bank,  supra;  KLrkeys  &  Sons  v.  Crandall,  90  Tenn.  532, 
18  S.  W.  246.  Usages  are  presumed  to  be  reasonable,  and  the  burden  of  showing 
their  unreasonableness  is  on  the  person  attacking  them.  Kershaw  v.  Ladd,  34 
Oreg.  375,  56  Pac.  402;  BaiUe  v.  Augusta  Sav.  Bank,  95  Ga.  277,  21  S.  E.  717,  51 
Am.  St.  Rep.  74.  And  the  usage  of  the  bank  to  accept  checks  in  payment  of 
claims  it  holds  for  the  collection,  is  binding  upon  a  customer,  whether  he  has 
knowledge  of  the  usage  or  not,  in  the  absence  of  any  direction  by  him  as  to  the 
mode  of  payment.  See  Farmers'  Bank  &  Trust  Co.  v.  Newland,  97  Ky.  464,  31 
S.  W.  38;  First  Nat.  Bank  v.  Sprague,  34  Nebr.  318,  33  Am.  St.  Rep.  644,  51 
N.  W.  846;  Waterloo  MilUng  Co.  v.  Kuenster,  158  111.  259;  41  N.  E.  906,  49  Am. 
St.  Rep.  156. 

93.  Baldwin  v.  Bank  of  Louisiana,  1  La.  Ann.  13;  Bellmire  v.  Bank  of  the 
United  States,  4  Whart.  105;  Bank  of  Mobile  v.  Huggins,  3  Ala.  206;  Tiernan 


436  AGENTS   FOR   NEGOTIATION    OR   COLLECTION  §  344 

service."  ^^  Thus,  in  Mississippi,  it  has  been  held  that  a  notary  was 
to  be  regarded  prima  fade  as  a  competent  and  suitable  person  to  in- 
trust with  such  duties;  but  if  the  plaintiff  proved  that  he  was  not  a 
competent  and  faithful  person,  by  reason  of  his  intemperate  habits 
when  the  note  was  delivered  to  him,  the  bank  which  committed  it  to 
him  was  liable  for  any  negligence  or  default  on  his  part  from  which 
damage  resulted.^^  But,  in  a  subsequent  case,  it  was  held,  in  the  same 
State,  that  it  was  not  sufficient  proof  of  a  notary's  unfitness  to  show 
that  he  was  a  man  of  habitually  dissipated  character,  but  that  it  must 
be  shown  "that  he  was  drunk  at  the  time  he  took  the  note."  ^® 

But  if  the  notary  is  so  employed  by  the  bank  as  to  become  its  own 
officer,  like  its  cashier  or  teller,  the  bank  is  liable  for  all  his  defaults, 
because  he  is  placed  on  the  same  footing  as  its  regular  bank  officials, 
and  acts  in  discharge  of  certain  allotted  functions.  Thus,  in  Missouri, 
where  any  private  individual  is  allowed  to  perform  all  notarial  duties, 
and  a  bank  appointed  a  person  to  be  its  notary  for  one  year,  and 
required  a  bond  from  him,  it  was  held  that  he  was  an  officer  of  the 
bank,  for  whose  defaults  in  the  line  of  his  employment  the  bank  was 
liable.97 

SECTION   V 

REMEDY  OF  THE  HOLDER  AGAINST  COLLECTING  AGENT 

§  344.  The  authorities  differ  greatly  as  to  the  remedy  of  the  holder 
and  owner  of  a  bill  or  note,  when  one  of  a  series  of  banks  through 
which  it  passes  in  the  course  of  collection,  or  the  notary  employed  to 
make  presentment  or  protest,  has  committed  a  default  whereby  loss 
has  ensued.  One  class  of  cases  holds  that  only  the  first  bank  which 
received  the  paper  for  collection  is  liable  to  the  holder,  the  contract 
for  collection  being  between  him  and  it,  and  it  alone  being  his  agent.®^ 

V.  Commercial  Bank,  7  How.  (Miss.)  618;  Argicultural  Bank  v.  Commercial 
Bank,  7  Smedes  &  M.  592;  Stacy  v.  Dime  County  Bank,  12  Wis.  629;  Bank  v. 
Butler,  41  Ohio  St.  519;  First  Nat.  Bank  v.  German  Bank,  107  Iowa,  543,  78 
N.  W.  195,  70  Am.  St.  Rep.  216. 

94.  1  Parsons  on  Notes  and  Bills,  480. 

95.  Agricultural  Bank  v.  Commercial  Bank,  7  How.  (Miss.)  648. 

96.  Bowling  V.  Arthur,  34  Miss.  41. 

97.  Gerhardt  v.  Boatman's  Savings  Inst.,  38  Mo.  60. 

98.  Montgomery  County  Bank  v.  Albany  City  Bank,  7  N.  Y.  459  (1852), 
case  in  point;  Commercial  Bank  v.  Union  Bank,  11  N.  Y.  212  (1854).  (These 
cases  overrule  Bank  of  Orleans  v.  Smith,  3  Hill,  560  (1842).]    See  McBride  v. 


§  345  REMEDY   OF   THE    HOLDER  437 

Another  class  of  cases  holds  that  the  holder  can  sue  only  the  bank 
or  the  notary  which  committed  the  default,  such  bank  or  notary 
being  agent  of  the  owner,  selected  for  him  by  the  bank  which  re- 
ceived the  paper  for  collection,  under  implied  authority  from  the 
holder  to  do  so.^^  And  still  another  doctrine  has  been  declared  that 
the  holder  has  an  election  as  to  the  remedy,  and  may  resort  to  either 
party — the  first  bank  employed  to  collect  the  paper,  or  the  one  to 
whom  it  was  transmitted,  and  which  actually  does  the  act  of  default 
complained  of.^ 

§  345.  Distinction  between  terms  of  collection. — A  distinction 
has  been  taken  which,  though  fine,  seems  reasonable,  between  cases 
in  which  the  paper  is  put  in  bank  "for  collection,"  and  those  in  which 
it  is  there  placed  to  be  "transmitted  for  collection."  And  it  has  been 
held  that,  in  the  latter  case,  the  first  bank  performs  its  whole  duty, 
and  discharges  itself  from  further  liability,  by  transmitting  the  paper 
duly  in  course  of  collection;  "  while,  in  the  former,  it  undertakes  to 


Farmers'  Bank,  26  N.  Y.  450;  Hyde  v.  First  Nat.  Bank,  7  Biss.  156,  Hopkins, 
J.,  saying:  "It  follows  that  the  owner  is  to  look  to  his  immediate  contractor, 
and  has  no  remedy  against  the  under-contractor  or  agent  employed  by  the  bank; 
that  such  agents  or  contractors  have  no  privity  of  contract  with  the  owner,  and 
are  not  hablc  to  him,  but  are  only  liable  to  the  party  immediately  employing  them; 
in  short,  that  the  subagent  employed  by  the  bank  owes  no  duty  to  the  party  who 
deposited  the  paper  for  collection  with  his  principal,  and  hence  is  not  responsible 
to  him  for  any  damages.  This,  I  understand  to  be  the  effect  and  meaning  of  the 
late  decision  of  the  Supreme  Court  of  the  United  States  in  the  case  of  Hoover, 
Assignee  v.  Wise,  8  Chic.  Leg.  N.  193,  91  U.  S.  (1  Otto)  308."  See  also  Reeves  v. 
State  Bank,  8  Ohio  St.  465;  Mackay  v.  Ramsay,  9  Clark  &  F.  818;  Castle  v.  Com 
Exch.  Bank,  148  N.  Y.  122,  42  N.  E.  578;  Sherman  et  al.  v.  Port  Huron  Engine  & 
Thresher  Co.,  8  S.  Dak.  343,  66  N.  W.  1007. 

99.  Farmers'  Bank  of  Virginia  v.  Owen,  5  Cranch  C.  C  504  (1838).  See 
Mechanics'  Bank  v.  Earp,  4  Rawle,  386;  Bank  of  Washington  v.  Triplett,  1  Pet. 
25.  In  Wilson  v.  Smith,  3  How.  769,  the  United  States  Supreme  Court,  per 
Taney,  C.  J.,  held  that  the  subagont  for  collection  might  be  sued  by  the  ovner. 
Taney,  C.  J.,  said:  "We  think  the  rule  very  clearly  estabhshed,  that  whenever,  by 
express  agreement  between  the  parties,  a  subagent  is  to  be  employed  by  the  agent 
to  receive  money  for  the  principal,  or  where  an  authority  to  do  so  may  be  fairly 
implied  from  the  usual  course  of  trade,  the  principal  may  treat  the  subagent  as  his 
agent;  and  where  he  has  received  the  money,  may  recover  it  in  an  action  for 
money  had  and  received."    First  Nat.  Bank  v.  Reno  Coimty  Bank,  3  Fed.  260. 

1.  Bank  of  Orleans  v.  Smith,  3  Hill  (N.  Y.),  563,  Nelson,  C.  J. 

2.  Bank  of  Washington  v.  Triplett,  1  Pet.  28,  30.  The  payees  of  a  bill  indorsed 
it  in  blank  and  delivered  it  to  the  cashier  of  the  Mechanics'  Bank  of  Alexandria, 
"For  the  purpose  of  being  transmitted  through  the  said  bank  to  a  bank  in  Wash- 


438  AGENTS   FOR   NEGOTIATION    OR   COLLECTION      §§  346,  347 

collect  the  paper,  and  is  absolutely  bound,  if  it  be  not  properly  at- 
tended to,  whatever  agency  it  may  employ.^  Where  nothing  is  said 
upon  the  subject,  and  the  contract  is  to  be  implied  from  the  mere  act 
of  placing  the  paper  in  the  bank,  we  should  say  that,  by  accepting 
it,  it  undertook  absolutely  its  collection. 

§  346.  If  the  paper  change  ownership  after  being  left  at  a  bank  for 
collection,  it  seems  that  an  action  will  lie  against  the  bank  for  negli- 
gence, by  any  person  who  becomes  beneficially  interested.^ 

§  347.  Instructions  to  the  collecting  bank  or  other  agent,  given 

by  the  holder  in  respect  to  the  method  to  be  pursued  in  collecting 
or  protesting  the  paper,  or  notifying  any  of  the  parties,  must  be  duly 
transmitted;  and  if  the  bank  fail  to  do  so,  it  is  bound  for  any  resulting 
damages.^  Thus,  where  bankers  at  St.  Paul,  Minnesota,  received 
paper  for  collection  payable  at  St.  Anthony,  were  informed  that 
there  were  two  persons  of  the  same  name  as  the  indorser,  the  one  re- 
siding at  St.  Paul,  and  the  other  at  Nininger,  and  that  the  latter  was 
the  indorser  (which  the  note  did  not  state),  they  should  have  trans- 

ington,  for  collection."  The  cashier  indorsed  it  to  the  order  of  the  Bank  of  Wash- 
ington, and  transmitted  it  to  it  for  collection;  and  suit  was  brought  by  the  holder 
against  the  Bank  of  Washington  for  damages,  on  the  ground  of  negligence  in 
failing  to  give  proper  notice  of  nonacceptance.  Marshall,  C  J.,  said:  "The  bill 
was  not  delivered  to  the  Mechanics'  Bank  of  Alexandria  for  collection,  but  for 
transmission  to  some  bank  in  Washington  to  be  collected.  That  bank  would,  of 
course,  become  the  agent  of  the  holder.  By  transmitting  the  bill  as  directed,  the 
Mechanics'  Bank  performed  its  duty,  and  the  whole  responsibiUty  of  collection 
devolved  on  the  bank  which  received  the  bill  for  that  purpose;  the  Mechanics' 
Bank  was  the  mere  channel  through  which  Triplett  and  Neale  (the  payees)  trans- 
mitted the  bill  to  the  Bank  of  Washington."  See  also  Mechanics'  Bank  v.  Earp, 
4  Rawle,  386;  Allen  v.  Merchants'  Bank,  22  Wend.  235. 

3.  Montgomery  County  Bank  v.  Albany  City  Bank,  7  N.  Y.  462,  Jewett,  J.; 
Sherman  et  al.  v.  Port  Huron  Engine  &  Thresher  Co.,  8  S.  Dak.  343,  66  N.  W. 
1077;  First  Nat.  Bank  v.  Fourth  Nat.  Bank,  6  C.  C.  A.  183,  56  Fed.  967. 

4.  Bank  of  Utica  v.  M'Kinster,  11  Wend.  475. 

5.  Borup  V.  Nininger,  5  Minn.  523;  Merchants'  Bank  v.  Stafford  Bank,  44 
Conn.  567.  "If  a  sight  draft,  attached  to  a  sealed  package  addressed  to  the 
drawee  of  the  draft,  is  sent  by  mail  to  a  bank  for  collection  with  the  instruction, 
'papers  to  be  delivered  only  on  payment  of  draft,'  and  the  cashier  of  the  bank 
hands  the  draft  and  package  to  the  drawee  at  his  request,  to  allow  him  to  open  the 
package  and  examine  its  contents,  after  which  he  returns  the  draft  and  package 
to  the  cashier  and  declines  to  pay  the  draft,  there  is  no  delivery  of  the  papers, 
within  the  meaning  of  the  prohibition  in  the  instruction."  People's  Nat.  Bank  v. 
Freemans'  Nat.  Bank,  169  Mass.  129,  47  N.  E.  588,  61  Am.  St.  Rep.  279. 


§§  348-349a  REMEDY   OF   THE    HOLDER  439 

mitted  such  information  to  their  agents  at  St.  Anthony,  and  failing 
therein,  were  liable  in  damages  to  the  holder  of  the  paper.^ 

§  348.  Collections  by  express  companies. — Collections  are  some- 
times undertaken  by  express  companies,  and  they  come  then  within 
the  rule  laid  do^\^l.  Thus,  where  an  express  company  received  a 
draft  for  collection,  with  instructions  to  return  it  at  once  if  not  paid, 
and  on  demand  of  the  drawee  he  refused  to  pay  until  certain  explana- 
tions were  received  from  the  drawer,  whereupon  the  company  con- 
sented to  wait  until  the  drawee  could  communicate  w4th  the  drawer: 
and  he  receiving  satisfactory  explanations,  was  ready  to  pay,  and  so 
remained  two  days  without  renewed  demand  from  the  company,  but 
on  the  fourth  day  (the  third  l^eing  Sunday)  became  insolvent,  the 
company  was  held  liable  to  the  drawee  for  the  loss.^ 

§  349.  When  the  owTier  of  a  bill  or  note  sends  it  to  a  notary  or 
correspondent  for  collection,  he  has  a  right  to  anticipate  that  the 
maker  or  acceptor  will  honor  his  paper,  and  it  is  not  incumbent  on 
him  to  inform  the  holder  for  collection  where  notices  shall  be  sent, 
in  the  event  of  dishonor,  to  the  drawer  or  indorsers.  The  "due  dili- 
gence" required  by  law  it  is  incumbent  on  the  holder  for  collection 
to  exercise  by  making  proper  inquiries ;  and  if  he  is  not  in  default,  the 
owner  may  recover.^  It  might  be  otherwise  where  the  collector  is  a 
mere  servant  of  the  owner,  acting  under  his  supervision.^ 

§  349a.  Liability  of  the  collecting  agent  for  money  paid  upon 
forged  or  altered  instruments,  or  under  mistake  of  fact. — While 
it  is  a  general  principle  of  law  that  money  paid  on  forged  or  altered 
instruments  may  be  recovered  back  as  having  been  paid  under  a  mis- 
take of  fact,^°  yet  where  such  payment  is  made  to  an  agent  holding 
the  paper  under  the  restrictive  indorsement  "for  collection,"  acting 
in  good  faith,  and  asserting  no  claim  to  the  proceeds  other  than  that 
of  a  mere  agent  for  collection,  its  indorsement  thereof  is  no  warranty 
of  the  genuineness  or  validity  of  the  paper,  and  it  will  not  be  liable 

6.  Borup  V.  Nininger,  supra;  Bank  of  Scotland  v.  Dominion  Bank,  L.  R., 
App.  Cas.  592  (1891). 

7.  WTiitney  v.  Merchants'  Union  Express  Co.,  104  Mass.  152. 

8.  Bartlett  v.  Isbell,  31  Conn.  297. 

9.  Bartlett  v.  Isbell,  supra. 

10.  Post,  §  1369;  Onondaga  County  Sav.  Bank  v.  United  States,  12  C.  C.  A. 
407,  64  Fed.  703. 


440  AGENTS   FOR   NEGOTIATION    OR    COLLECTION  §  349a 

thereon,  it  having,  before  discovery  of  the  mistake  or  fraud,  paid  over 
the  proceeds  in  good  faith  to  its  principal. ^^ 

11.  National  City  Bank  v.  Westcott,  118  N.  Y.  468,  Bradley,  J.,  saying:  "The 
payment  was  made  by  the  plaintiff  upon  a  mistake  of  fact  as  to  the  character  of 
the  check;  and  money  paid  under  such  circumstances  may  be  recovered  back 
from  the  party  to  whom  payment  is  made.  If  the  Westcott  Express  Company 
had  been  or  had  assumed  to  be  the  apparent  owner  of  the  check  when  it  was  pre- 
sented to  and  paid  by  the  plaintiff,  the  defendant  would  have  been  liable  to  reim- 
burse the  plaintiff.  Canal  Bank  v.  Bank  of  Albany,  1  Hill,  287;  Bank  of  Com- 
merce V.  Union  Bank,  3  N.  Y.  230;  Corn  Exch.  Bank  v.  Nassau  Bank,  91  N.  Y. 
74.  But  in  the  present  case  the  check  was  in  fact  sent  to  the  defendant  company 
for  collection,  of  which  the  plaintiff  was  advised  by  the  indorsement  upon  it  to 
that  effect,  made  by  the  N.  Y.  &  B.  D.  Express  Co.  The  defendant,  therefore, 
apparently  and  in  fact  represented  that  company,  and  in  the  relation  of  such 
agency  received  the  money  from  the  plaintiff.  Montgomery  County  Bank  v. 
Albany  City  Bank,  7  N.  Y.  459.  And  prior  to  the  time  of  the  discovery  of  the 
fraudulent  character  of  the  check,  having  handed  the  money  over  to  the  com- 
pany from  which  it  was  so  received  for  collection,  the  defendant  was  not  liable  to 
the  plaintiff  as  for  money  paid  by  mistake.  National  Park  Bank  v.  Seaboard 
Bank,  114  N.  Y.  28."  See  also  National  Bank  of  Commerce  v.  National  Mech. 
Banking  Association,  55  N.  Y.  211;  White  v.  Continental  Nat.  Bank,  64  N.  Y. 
316. 


CHAPTER  XII 

PARTNERS  AS  PARTIES  TO  NEGOTIABLE  INSTRUMENTS 
SECTION  I 

NATURE   AND   VARIETIES   OF   COPARTNERSHIP 

8  350.  A  partnership  exists  whenever  two  »' ™^«  P^^^;  ""f" 
,k  11  labor  or  property  in  an  undertaking,  and  participate  in  ts 
tofit  Ile^  such  partieipation  in  the  profits  be  by  way  of  serv  ces 
n  tn  eiyee  without  interest  in,  or  control  of,  the  subject  matter 
:  :^icr  se  «ie  participant  is  not  a  partner.'  P-tners  -e  f  -vera 
linds.  I.  Actual  and  ostensible.  II.  Secret  or  ,':lo™f '^^^ ^.°^^ 
inal  or  ostensible.    IV.  General.    V.  Special  or  limited.    VI.  Retired. 

I  350a.  LiabUity  of  partners.-In  the  first  ^ase,  where Jhe  part- 
ne  is  both  actual  and  ostensible,  there  can  be  no  ^'^  f  ^  "  fi"';^^ 
his  liability,  which  is  palpable,  although  his  name  may  not  be  ex 

is  necessary,  the  secrecy  of  their  connection  with  'y™*'""S 
superauous^^    And  the  dormant  partner  who  retires  will  not  there 
fore  be  bound  on  a  note  made  in  the  firm  name  after  dissolution. 

5  351   EngUsh  cases.-In  an  English  case,  it  was  said  by  Bay- 
ley   B.    '^We  are  of  the  opinion  that  where  a  partnership  name 

1    ,    .1    fl,e  mrtnershin    of  whomsoever  it  may  consist,  whether 
ttler:arT:lm::itthefirmornotandw 

or  sLetpartners^wUTbe^^ 

misnil,  7  J.  J.  Marsh.  416;  1  Parsons  on  Contracts,  14d. 

3.  Vacarro  v.  Toof,  9  Heisk.  194.  ^^ 


442  PARTNERS   AS    PARTIES  §§  352-353 

son  who  seeks  to  charge  them  can  be  impeached."  ■*  Where  a  bill  of 
exchange  has  been  drawn,  accepted,  or  indorsed  in  the  name  of  a  firm, 
as,  for  instance,  "Brown,  Robinson  &  Co.,"  without  stating  the 
names  of  each  of  the  partners,  the  holder  may  sue  only  those  known 
to  him  to  be  partners  at  the  time  he  received  the  bill;  and  though  he 
may,  if  he  pleases,  sue  all  whom  he  discovers  afterward  to  be  partners, 
he  is  not  obhged  to  do  so.^ 

§  352.  A  mere  nominal  or  ostensible  partner  is  as  much  bound  by 
the  negotiable  paper,  or  other  engagements  of  the  firm,  as  if  actual; 
for  if  he  suffer  himself  to  be  held  out  to  the  world  as  a  member,  he 
authorizes  third  persons  to  regard  him  as  a  contracting  party.  If 
such  partner  desires  to  avoid  Uability,  he  must  give  due  notice  that 
he  is  not  an  actual  partner.^ 

§  362a.  General  and  special  partners. — A  general  partnership  is 
such  as  exists  by  operation  of  law  when  two  or  more  persons  combine 
in  an  undertaking  and  share  the  profits,  and  in  which  all  are  jointly 
and  severally  bound  for  all  the  partnership  debts.  A  special  or  limited 
partnership  is  one  in  which  the  special  partner  contributes  to  the 
common  stock  a  specific  sum  in  actual  cash,  and  is  liable  only  to  that 
extent  for  the  debts  of  the  partnership.  This  privilege  is  granted  by 
statute  in  most  of  the  States,  being  unknown  to  the  common  law,  and 
is  accompanied  by  stringent  conditions.^ 

§  353.  Retiring  partner. — When  a  copartner,  who  has  not  been 
secret  or  dormant,  retires  from  a  firm,  he  should  take  immediate  steps 
to  acquaint  all  having  business  connections  with  the  firm  of  his 
retirement,  in  order  that  they  may  be  apprised  that  he  no  longer  de- 
signs to  be  held  responsible  for  its  transactions.^ 

Personal  notice  to  those  indebted  to,  or  doing  business  with,  the 
firm,  by  circular  letters  addressed  to  them  or  otherwise,  and  adver- 
tisement in  a  public  journal,  is  the  proper  and  business-like  way  to 
proceed.    And  when  these  steps  are  taken,  they  are  sufiicient  notice 

4.  Wintle  v.  Crowther,  1  Tyrw.  215,  1  Cromp.  &  J.  310.  See  Ex  parte  Hamper, 
17  Ves.  403. 

5.  De  Mantort  v.  Saunders,  1  B.  &  Ad.  398;  Bailey  Loan  Co.  v.  Hall,  110  Cal. 
490,  42  Pac.  962. 

6.  1  Parsons  on  Notes  and  Bills,  143,  142;  Davis  v.  Allen,  3  N.  Y.  172. 

7.  Edwards  on  Bills,  106,  107. 

8.  See  post,  §  369a  et  seq. 


§  354  NATURE   AND    VARIETIES   OF   COPARTNERSHIP  443 

for  the  purpose  of  exonerating  the  retiring  partner  from  further 
liabihty.^  But  unless  notice  is  brought  home  to  those  who  have 
regularly  dealt  with  the  firm,  it  is  insufficient.  ^° 

§  354.  Rights  and  liabilities  as  between  partners. — A  partner  can- 
not sue  the  firm  of  which  he  is  a  member  on  a  note  payable  to  himself; 
and  if  a  person  is  a  partner  in  two  firms,  the  one  firm  cannot  sue  the 
other  at  law,  as  the  names  of  all  the  members,  whether  appearing  in 
the  firm's  name  or  not,  must  be  set  forth  in  the  declaration,  and  the 
same  party  cannot  be  both  a  plaintiff  and  a  defendant. ^^  The  remedy 
would  be  in  equity.  In  some  States,  however,  as  in  Pennsylvania, 
the  common  law  has  been  changed  by  statute,  so  that  an  action  will 
lie. 

But  this  difficulty  ceases  when  the  instrument  passes  to  a  third 
party,  and  if  the  payee  and  indorsee  be  a  member  of  the  firm  making 
the  note,  or  the  firm  making  the  note  have  a  member  in  the  firm  which 
is  payee  and  indorser,  the  holder  may  sue  all  parties. ^^    When  there 

9.  See  §  369a  et  seq.  In  Davis  v.  AUen,  3  N.  Y.  172,  Jewett,  C.  J.,  says:  "The 
general  principle  is,  that  where  a  person  has  done  business  with  another,  as  a 
member  of  a  firm,  or  has  so  publicly  appeared  as  a  partner  as  to  satisfy  a  jury 
that  the  plaintiff  must  have  believed  him  to  be  such,  and  he  suffers  the  plaintiff 
to  continue  in  and  act  upon  that  behcf,  by  omitting  to  give  notice  of  his  having 
ceased  to  be  a  partner,  after  he  really  had  ceased,  he  will  be  responsible  for  the 
consequences  of  his  original  representation,  uncontradicted  bj'  a  subsequent 
notice.  An  omission  to  give  such  person  notice,  under  such  circumstances,  of 
his  retirement,  is  held  to  be  equivalent  to  a  continual  representation  that  he  still 
remains  a  member  of  the  firm.  But  in  order  to  render  him  liable  on  this  ground, 
it  is  necessary  that  he  should  have  been  known  as  a  member  of  the  firm  to  the 
plaintiff,  either  by  direct  transactions  or  pubUc  notoriety."  See  Edwards  on 
Bills,  115,  116. 

10.  Parkin  v.  Carruthers,  3  Esp.  248;  Vernon  v.  Manhattan  Co.,  17  Wend.  524. 

11.  Pitcher  v.  Barrows,  17  Pick.  361;  Babcock  v.  Stone,  3  McLean,  172;  Main- 
waring  V.  Newman,  2  Bos.  &  P.  120;  Neale  v.  Turton,  4  Bing.  149;  Moffat  v.  Van 
Milligan,  2  Bos.  &  P.  124;  Thompson  on  Bills,  163;  Chitty  on  Bills  [*60],  75. 

12.  Pitcher  in  Barrows,  17  Pick.  361;  Walker  v.  Wait,  50  Vt.  668;  Davis  v. 
Briggs,  39  Me.  304.  In  Young  v.  Chew,  9  Mo.  App.  387,  indorsee  after  maturity, 
sued  a  firm  on  a  note  to  one  of  its  members  as  paj'ee,  and  as  such  payee,  being  a 
copartner,  could  not  sue  the  firm  at  law,  it  was  contended  that  indorsee  could 
not  recover.  But  the  court  held  otherwise,  Lewis,  P.  J.,  saying:  "A  mere  per- 
sonal disability  in  the  payee  to  sue  cannot  negative  the  maker's  duty  to  pay;  and, 
therefore,  such  a  disabihty  is  not  to  be  reckoned  among  the  possible  equities  of 
which  the  indorsee  must  assume  the  risk.  *  *  *  According  to  the  findings 
of  the  referee  from  the  testimony  before  him,  a  settlement  between  the  partners 
would  bring  the  defendant  in  debt  to  plaintiff's  assignor,  even  after  payment  of 
the  note  sued  on."    Livermore  v.  Truesdell,  9  Colo.  App.  332,  48  Pac.  276;  Kraus 


444  iPARTNERS   AS   PARTIES  §  355 

is  a  good  defense  against  one  of  several  partners,  it  applies  equally 
to  all,  although  the  others  may  have  been  entirely  innocent  of  com- 
plicity in  the  fraud  of  the  one,  or  have  been  themselves  its  victims.  ^^ 

One  member  of  a  firm  may  advance  money  to  another  to  relieve 
him  from  liability  for  debts  of  the  firm,  and  take  his  note  therefor; 
and  the  transaction  will  be  regarded  as  a  private  one  between  the 
two  members.  The  other  members,  in  such  case,  are  not  liable  to 
pay  the  note,  and  have  nothing  to  do  with  it.^^  A  note  of  a  firm  pay- 
able to  one  of  its  members  is  valid  in  the  hands  of  an  indorsee,  who 
may  sue  upon  it  in  his  own  name.^^  And  such  is  the  rule  as  to  the  note 
of  a  member  to  the  firm  who  may  be  held  as  indorsers  to  their  in- 
dorsees^ On  dissolution,  the  partnership  ceases,  and  then  one  ex- 
partner  may  sue  another  on  a  note  given  for  balance  struck  between 
them.s^ 

One  partner  cannot  become  a  purchaser  of  the  firm's  note.  If  he 
buys  its  paper,  it  is  a  payment  and  not  a  purchase,  and  only  entitles 
him  to  a  charge  against  the  partnership  for  the  amount  paid.^^ 


SECTION   II 

THE   AUTHORITY   OF  A   COPARTNER  TO   BIND  THE  FIRM 

§  355.  General  authority  of  partner  to  bind  firm.— The  general 
authority  of  a  partner  to  bind  the  firm  springs  from  the  mutual 

V.  Givens,  110  Mo.  58,  19  S.  W.  535,  citing  text;  Willis  v.  Barron,  143  Mo.  450, 
45  S.  W.  289,  65  Am.  St.  Rep.  673,  citing  test;  O'Day  v.  Sanford,  138  Mo.  App. 
343,  122  S.  W.  3. 

13.  Richmond  v.  Heapy,  1  Stark.  204;  Brandon  v.  Scott,  7  El.  &  Bl.  234  (90 
Eng.  C.  L.);  Aistley  v.  Johnson,  5  H.  &  N.  137. 

14.  Chamberlain  v.  Walker,  10  Allen,  429. 

15.  Hapgood  V.  Watson,  65  Me.  510;  Thompson  v.  Lowe,  111  Ind.  272. 

16.  Coon  V.  Pruden,  25  Minn.  105. 

17.  Rockwell  v.  Wilder,  4  Mete.  (Mass.)  562. 

18.  Easton  v.  Strother,  57  Iowa,  506;  Houk  v.  Walker,  131  Ind.  231,  30  N.  E. 
1080;  Deavenport  v.  Green  River  Deposit  Bank  (Ky.),  128  S.  W.  88,  holding 
that  when  a  firm  note  comes  into  the  hands  of  an  individual  member  of  the  firm 
by  assignment,  this  operates  as  an  extinguishment  of  the  note,  and  his  assignee 
will  take  nothing  by  such  assignment;  he  cannot  sue  upon  the  note  and  he  can 
pass  no  such  right  to  another,  but  his  remedy  is  to  be  credited  upon  the  partner- 
ship books  with  the  amount  so  paid.  When  a  bank  sold  and  assigned  to  a  partner 
a  half  interest  in  a  partnership  note,  the  partner  and  his  comakers  were  still  liable 
to  the  bank  for  the  other  half  of  the  note.  Deavenport  v.  Green  River  Deposit 
Bank  (Ky.),  128  S.  W.  88. 


§  356  AUTHORITY   OF   A   COPARTNER  445 

a-ency  of  the  copartners  for  each  other;  and  from  the  course  and 
usage  of  the  business  m  which  they  are  engaged.    It  follows,  there- 
fore, that  a  person  contemplating  partnership  with  another  cannot 
without  a  special  authority,  bind  him  by  a  contract  for  the  proposed 
partnership  benefit-for  example,  for  the  purpose  of  raismg  capital- 
his  agency  not  commencing  until  the  connection  is  consummated. 
The  copartnership  being  formed,  the  copartner  can  bmd  his  asso- 
ciates only  in  such  transactions  as  pertain  to  their  partnership  busi- 
ness- and  the  copartnership  business  must  be  of  such  a  character 
that' the  giving  of  negotiable  paper  would  be  the  convement  and 
proper  mode  of  conducting  it,  in   order  to  create  the  presump- 
tion of  agency  in  a  copartner  to  give  a  bill  or  note  m  the  firms 
name. 

S  356.  ImpUed  authority  of  partner  to  bind  the  firm.-It  results 
from  the  very  nature  of  partnership-from  the  very  fact  that 
the  copartners  are  mutual  general  agents  for  each  other  m  their 
copartnership  affairs-that  the  express  assent  of  one  to  the  act  ol 
another  ^^Hthin  the  scope  of  their  business  is  mmecessary  The 
authority  to  each  partner  is  implied  to  bind  the  firm  withm  the 
legitimate  scope  of  its  business  by  the  very  fact  that  it  is  a  firm, 
and  it  has  been  said  by  Lord  Ellenborough,  C.  J.:  "It  would  be  a 
strange  and  novel  doctrine  to  hold  it  necessary  for  a  person  re- 
ceiving a  bill  of  exchange  indorsed  by  one  of  several  partners  to 
know  whether  the  others  assented  to  such  mdorsement  or  that  it 
should  be  void."  21 

19.  Greensdale  v.  Dower,  7  B.  &  C.  635,  6  L.  J.  (K.  B.  O  S.)  125;  Bank  of  Fort 
Madison  v.  Alden,  129  U.  S.  373;  Childs  v.  Pcllett,  102  Mich.  558,  61  N.  W.  54, 
Kirbv  V  McDonald,  17  C.  C.  A.  26,  70  Fed.  139. 

20  Evidence  that  one  partner  told  another  to  arrange  matters  with  a  dissati^ 
fied  partner  as  best  he  could  was  sufficient  to  authorize  a  finding  of  authority  n 
the  pSne,  who  waB  directed  to  arrange  matters,  to  bind  the  firm  by  a  note 
^ven^e  dissatisfied  partner  on  his  retirement.    Taylor  v.  Herron,  72  Kan.  652. 

^\f  S™t  Steele  7  East.  210;  Hutchinson  &  Wilson  v.  Powell,  92  Ala.  619, 
9  So  no  Ricky  Mt  Nat.  Bank  ;.  McCaskill,  16  Colo.  413,  26  Pac.  82  ,  citing 
etJ^sLinr' Throne,  101  Ga.  126,  28  S.  E.  611;  Davis  &  ^^^^^^^^^^ g^^^^ 
Co.,  101  Ga.  128,  28  S.  E.  612;  First  Nat.  Bank  v.  Grignon,  7  ^'^-^J'^^^ll^^ 
365  Fulton  v.  Loughlin,  118  Ind.  286;  Sondheim  v.  Gi  bert  UJ  Ind.  71  Moffit 
V.  Roche,  92  Ind.  96;  Thomas  v.  Hardsocg&  Burton  137  Iowa,  597  115  N.W 
210;  Fidelity  Loan  &  Trust  Co.  v.  Hogan,  94  Iowa,  303,  62  N.  ^V  ^40 '  ^^^^^er 
V.  Van  Horn,  54  Kan.  33,  63  Pac.  1070;  Wilson  -Richards,  28  Mmn^  393 
National  BaA  v.  Burott,  23  Te..  Civ.  App.  663,  59  Am.  Rep.  783.     In  Fox 


446  PARTNERS   AS    PARTIES  §  3')? 

§  357.  Trading  partnerships. — The  borrowing  of  money  and  ne- 
gotiation of  bills  and  notes  being  incidental  to,  und  usual  in,  the 
business  of  copartnerships  formed  for  the  purpose  of  trade,  it  fol- 
lows that  when  a  copartner  borrows  money  professedly  for  the  firm, 
and  executes  therefor  a  negotiable  instrument  in  the  copartnership 
name,  it  will  bind  all  the  partners,  whether  the  borrowing  were  really 
for  the  firm  or  not,  and  whether  he  diverts  and  misapplies  the  funds 
or  not,  provided  the  lender  is  not  himself  cognizant  of  the  intendetl 
fraud.  And  the  burden  will  not  be  throwTi  on  him  to  show  that  he 
was  not  cognizant  of  such  fraud,  or  to  prove  value  given  for  the 

V.  Clifton,  6  Bing.  795,  Tindal,  C.  J.,  said:  "By  the  general  rule  of  law  relating  to 
partnerships  in  trade,  each  member  of  it  is  liable  to  the  debts  and  engagements  of 
the  whole  company  contracted  in  the  course  of  the  trade.  This  is  a  consequence 
not  confined  to  the  law  of  this  country,  but  exteniling  generally  throughout 
Europe;  and  it  is  founded,  partly  on  the  desire  to  favor  commerce,  that  merchants 
in  partnership  may  obtain  more  credit  in  the  world;  and  mt)re  espe<"ially  on  the 
principle  that  the  members  of  trading  partnerships  are  constituted  agents,  the  one 
for  the  other,  for  entering  into  contracts  connected  with  the  business  and  concerns 
of  the  partnership,  eo  that  by  the  contracts  of  the  agent  all  his  principals  are 
bound.  But  to  subject  a  person  to  responsibility,  as  a  partner,  for  the  acts  of  an- 
other done  without  his  express  concurrence,  he  must  stand  in  one  or  other  of  these 
two  situations;  first,  he  must  at  the  time  of  making  the  contract,  whether  bill,  note, 
or  other  instrument,  have  been  actually  a  partner  in  the  joint  concern;  or  secondly, 
admitting  that  he  was  not,  he  must  have  represrnteil  or  permitted  himself  to  be 
represented  as  such,  before  or  at  the  time  of  making  the  contract,  either  generally 
or  to  all  the  world,  or  to  several  individuals,  or  to  the  plaintiff  in  particular,  or  to 
some  person  through  whom  he  claims."  The  execution  and  delivery  of  a  promis- 
sory' note  as  a  renewal  of  a  firm  obligation  already  outstanding  and  due  upon  which 
liabiUty  is  admitted  is  a  transaction  within  the  scope  of  the  business  of  the  partner- 
ship. Chapek  v.  Oak  Creek  Valley  Bank,  19  Okl.  SO,  91  Pac.  1129.  When  a  check, 
indorsed  for  a  partnership  by  part  of  the  partners,  has  been  dishonored  and  duly 
protested,  the  firm  is  liable  upon  such  indorsement.  Sulhvan  v.  Sullivan,  122  Wis. 
326,  99  N.  W.  1022.  Checks  of  a  partnership  dra\\Ti  by  the  bookkeeper  under  in- 
structions of  one  of  the  partners,  and  by  which  the  partnership  fund  was  over- 
drawn, became  a  valid  claim  against  the  partnership  and  each  member  thereof  not- 
withstanding previous  instructions  from  a  copartner  to  the  bookkeeper  not  to  draw 
checks  for  the  firm;  as  between  the  firm  and  third  persons,  one  partner  had  as 
much  authority  to  direct  the  bookkeeper  as  his  copartner.  Morris  v.  First  Nat. 
Bank,  162  Ala.  301,  50  So.  137.  If  a  partner,  having  authority  to  bind  the  partner- 
ship only  for  liabilities  not  exceeding  a  certain  sum,  do  nevertheless  borrow  money 
in  excess  of  that  sum  in  behalf  of  the  firm  and  give  note  for  it,  the  note  is  binding  on 
the  partnership  and  the  members  thereof  to  the  extent  of  the  authority  the  partner 
had.  Taylor  v.  Felder,  3  Ga.  App.  287,  59  S.  E.  844.  Where  a  note  was  signed 
by  a  number  of  persons  as  trustees  and  treasurer  of  an  unincorporated  association, 
all  of  the  associated  persons  were  liable:  McKenney  v.  Bowie,  94  Me.  397,  47  Atl. 
918,  the  court  saying:  "Those  sued  being  associates,  and  not  interposing  the 


§  357  AUTHORITY   OF   A    COPARTNER  447 

paper.22    g^eh  authority  is  only  an  inference  or  presumption  arising 

rom  the  relationship  of  the  parties,  and  is  not  conclusive,  ^  and  one 

dealing  with  a  partnership  is  chargeable  with  notice  of  the  character 

obiection  that  others  bound  were  not  sued,  cannot  escape  liability  on  the  note 
:Ser  it  is  regarded  as  the  note  of  the  -ociation  or  of  the  -dm^u^^^^^^^^^^^^^ 
22.  Union  Nat.  Bank  v.  Neill,  149  Fed.  711,  10  L  R.  A.  (N.  SO  4  6    United 

m  Iowa  6S8,  60  N.  W.  177;  Sherwood  v.  Snow,  46  Iowa  485;  L,ndh  v_  Crowlejs 
M  Kan  756-  Dcitz  v.  Rognicr,  27  Kan.  94;  Calvert  Bank  v.  J.  Ivat^  &  Co  102 
M  Tr.  A,  A,l  Til  Ashlcv  V  Dowlins,  203  Mass.  311,  89  N.  E.  434,  133  Am. 
Tut  00,^   laywird  V  rJnch,  12  Grky,  453;  Hayes  v.  Blacker,  138  Mo^A,,p. 

Sllu':  II  :^!?:.t;;'otnda"conn,y  Bank  v.  De  Pny,  17  Wena^47,  WM. 
taker  v.  Brown,  .6  I'^^^^J^;!^'^,:- ^;;:'^^^',^l^^:!!^^ 
n"r:;.f23"Tfx"civ'^1.6°63  5;^A^  Repass;  Ihm.e„  v.  Ne.ley,  1  Ca.ey, 
W7  Shards  on  Bilk,  10^;  and  it  ha.  been  held  to  be  within  the  Bcope  of  the 
WiUmac  business  of  a  mereanlile  partnership  to  raise  money  by  mak.ng  and 
nSoUaU  g  pTmissory  notes,  and  a  memb..  thereof  has  *c  Power  to  exehan,  a 
nr^mLrv  note  of  the  partnership  for  the  promLs,,ory  note  of  another  of  hke 
=X?he:r„ee«ls  of  lieh  '^^^^J^;^^^^''^^^::^ 

'^roost™n*w:a:;hX^;:Le^^^^ 

ZnTv  to  use  in  their  busine.ss,  and  issue  in  payment  (ho  promissory  note  o  the 

;rt:^rlhl":ithoutkno*d.eofl,,s^a..^^^^^ 

^rr  r;n?rr  rn"  tin  r„d  in  r  p^n^";  h^  principal  i.  in  law  the  a. 
^f  h,s  nHnc  pal  and  if  at  the  instance  and  in  the  presence  of  a  member  of  a  part- 
nerl     th?name  of  t'he  partnership  .  signed  by  -other  pc^on  U,  a  prom^ory 

-kitr„e-SLi:,rrontrx^r9  r^^^^^ 

partner  had  not  that  authority.    Dodson  v.  Baakin,  88  Ark.  41o,  114  b.  W 
(1908). 


448  PARTNER   AS    PARTIES  §  358 

of  the  partnership  business  as  conducted;  and  if  a  person  take  from 
one  of  the  partners  a  note  si^ed  l^y  him  in  the  firm  name  as  payment 
for  goods  supphed  such  partner,  the  payee  is  l)ound  to  know  whether 
the  transaction  is  within  the  apparent  scope  of  such  business.''*  A 
committee  appointed  })y  partners  to  make  sales  for  the  firm,  has 
authority  to  indorse  and  negotiate  a  check  for  the  firm.-''  Besides 
firms  engaged  in  the  classes  of  business  well  recognized  as  carrying 
on  trade  and  commerce,  it  has  been  held  that  a  partnership  whose 
business  is  the  taking  and  execution  of  plumbing  contracts,'-^  engaged 
in  buying  and  selling  logs,-^  in  buying  and  slaughtering  cattle,^  or 
which  buys  and  sells  real  estate  on  its  o^v'n  accoimt,^  is  a  commercial 
or  trading  partnership.  And  it  has  been  held  that  parties  rumiing  a 
vessel  as  partners  under  the  firm  name  of  "Propeller  Ira  Chaffee," 
were  a  trading  partnership,  and  paper  execnited  by  one  of  them  in 
the  regular  course  of  their  business,  held  bintling  on  the  firm.^ 

§  358.  Rule  as  to  joint  owners. — If  there  be  mere  joint  owner- 
ship, as  in  the  case  of  a  ship,  or  only  a  particular  agreement  to  share 
in  a  single  transaction,  or  a  copartnership  in  a  matter  of  business  not 
requiring  the  execution  of  negotiable  paper  as  the  proper,  usual, 
and  convenient  mode  of  conducting  it,  the  copartners  will  not  be 
impliedly  bound  by  the  act  of  one,  but  must  give  him  express  au- 
thority.^^ Thus,  where  a  bill  was  addressed  to  two  owners  of  a  ship, 
as  for  necessaries  furnished  the  same,  and  one  accepted  in  the  name 

24.  Standard  Wagon  Co.  v.  D.  P.  Few  &  Co.,  119  Ga.  293,  46  S.  E.  109. 

25.  Sullivan  v.  Sullivan,  122  Wis.  326,  99  N.  W.  1022. 

26.  Marsh,  IVIcrwin  &  Lcinmon  v.  WTiecler,  77  Conn.  449,  59  All.  410,  107 
Am.  St.  Rep.  40,  wherein  the  contract  said:  "These  are  those  whose  conduct 
so  involves  buying  and  selling,  whether  incidentally  or  otherwise,  that  it  naturally 
comprehends  the  employment  of  capital,  credit,  and  the  usual  instrumentalities 
of  trade,  and  frequent  contact  with  the  commercial  world  in  deaUngs  which,  in 
the  character  and  incidents,  are  like  those  of  traders  generally." 

27.  Bank  of  Monroe  v.  E.  C  Drew  Inv.  Co.,  126  La.  1028,  53  So.  129. 

28.  Wagner  v.  Simmons,  61  Ala.  143. 

29.  Adams  v.  Long,  114  111.  App.  277.  Neither  banking  nor  buying  and  selling 
real  estate  on  commission  comes  strictly  within  the  definition  of  a  trading  partner- 
ship, and  yet  either  may  be  so  conducted  as  to  clothe  the  partners  with  all  the 
implied  powers  of  members  of  a  trading  partnership.  Masterson  v.  Mansfield, 
25  Tex.  Civ.  App.  262,  61  S.  W.  505.  In  Bank  of  Monroe  v.  E.  C.  Drew  Inv.  Co., 
126  La.  1028,  53  So.  129,  it  was  held  that  those  who  deal  in  lands,  and  buy  and 
sell  standing  timber,  are  not  commercial  partners. 

30.  First  Nat.  Bank  v.  Freeman,  47  Mich.  408. 

31.  Chitty  on  Bills  (13th  Am.  ed.)  [*45],  58. 


§  35Sa  AUTHORITY   OF   A    COPARTNER  449 

of  both,  it  was  decided  that  the  other  was  not  bound  to  a  bona  fide 
holder,  the  bill  having  been  drawn  for  the  separate  use  of  the  ac- 
ceptor.^2 

§  368a.  Nontrading  partnerships. — In  a  nontrading  partnership, 
one  partner  cannot  bind  the  other  by  the  execution  of  negotiable 
paper,  unless  authority  is  expressly  given  or  recognized  by  all  the 
partners,  or  implied  from  their  general  business  habits. ^^  So,  where 
there  is  no  partnership  in  trade,  but  an  agreement  as  to  a  particular 
transaction  between  farmers,  the  acceptance  by  one  of  bills,  without 
the  other's  concurrence,  will  not  bind  him,^'*  The  principle  seems  to 
be  well  stated  by  Mr.  Chitty,  who  says:  "The  partnership  must  be 
in  a  trade  or  concern  to  which  the  issuing  or  transfer  of  bills  is  neces- 
sary or  usual."  ^^  The  United  States  Supreme  Court  has  held  that 
a  bill  drawn  by  a  partner  in  the  name  of  a  firm  engaged  in  farming, 
working  a  steam  sawmill,  and  in  trading,  was  binding,  because  trad- 
ing and  running  the  mill  required  capital  and  the  use  of  credit;  but 
if  the  firm  had  been  engaged  in  farming  alone,  no  one  partner  could 
have  bound  it  by  a  bill  or  note.^®  A  firm  of  insurance  and  loan 
brokers,^^  one  engaged  in  the  business  of  contracting  with  the  govern- 
ment for  transportation  of  mail  over  certain  mail  routes,^^  or  in 
manufacturing  lumber  from  logs,  has  been  considered  noncommercial, 
and  that  one  of  the  partners  could  not  bind  the  other  on  commercial 
paper.^    So,  also,  one  engaged  in  the  real  estate  and  collecting  busi- 

32.  Williams  v.  Thomas,  6  Esp.  18;  Edwards  on  Bills,  111. 

33.  Teed  v.  Parsons,  202  111.  45.5,  66  N.  E.  1044;  Masterson  v.  Mansfield,  25 
Tex.  Civ.  App.  202,  61  S.  W.  505.  To  make  such  paper  binding,  the  party  seek- 
ing to  hold  other  members  must  show,  either  previous  authorization,  or  subse- 
quent ratification.     First  Nat.  Bank  v.  Fults,  115  Mo.  App.  42,  90  S.  W.  755. 

34.  Groenslade  v.  Dower,  7  B.  &  C  635,  1  Man.  &  Ry.  640. 

35.  Chitty  on  Bills  (1.3th  Am.  ed.)  [*45],  58.  See  Thompson  on  Bills,  158; 
Shellenbeck  et  al.  v.  Studebacker,  13  Ind.  App.  437,  55  Am.  St.  Rep.  240.  Held 
in  this  case  that  a  partnership  to  conduct  a  dairy  business  is  a  nontrading  partner- 
ship within  the  rules  a.s  to  implied  authority  in  one  partner  to  execute  firm  paper. 
Stavnow  v.  Kenofick.  79  Mo.  App.  41. 

36.  Kimbro  v.  Bullit,  22  How.  256.  See  Greenslade  v.  Dower,  supra;  Worster 
V.  Forbush,  171  Mass.  423,  50  N.  E.  936;  Benton  v.  Roberts,  4  La.  Ann.  216; 
Deardorff  v.  Thacher,  78  Mo.  128,  47  Am.  Rep.  95;  Bays  v.  Connor,  105  Ind. 
415,  5  N.  E.  18;  Smith  v.  Sloan,  37  Wis.  285,  19  Am.  Rep.  757;  Hymes  v.  Weld, 
91  Ga.  743,  17  S.  E.  1001,  contra. 

37.  Scheie  v.  Wagner,  163  Ind.  20,  71  N.  E.  127. 

38.  Third  Nat.  Bank  v.  Fults,  115  Mo.  App.  42,  90  S.  W.  755. 

39.  Nat.  State  Cap.  Bank  v.  Noyes,  62  N.  H.  44.     But  in  New  York  it  is 

29 


450  PARTNEUS    AS    PARTIES  §  .i'jSa 

ness;  '•°  and  also,  one  dealing  as  coIYec-hrokers,  in  the  absence  of 
custom  or  usage  to  the  contrary.^'  It  has  also  been  held  that  partners 
in  mining  ''^  and  gaslight  '^  companies  have  no  implied  authority  to 
bind  the  firm  as  parties  to  negotiable  instruments. 

Upon  these  principles  one  of  a  law  firm  cannot  bind  it  by  a  promis- 
sory note  without  consent  of  all  the  members;  **  nor  can  one  of  a 
firm  practicing  medicine  bind  it  in  a  like  manner  except  for  medicine 
and  other  necessaries  of  his  profession;  *^  nor  can  one  of  a  firm  keep- 
ing a  tavern  itind  his  copartners  except  strictly  within  the  business.^" 
It  is  said,  however,  that  if  the  concerns  were  of  such  vast  magnitude 
as  to  require  large  capital  and  credit,  the  rule  would  be  of  doubtful 
application,  and  that  it  would  depend  Ncry  much  upon  the  usage  of 
the  particular  firm  and  others  similarly  engaged.''^  The  general 
authority  of  a  partner  to  bind  the  firm  exists  only  by  implication, 
and  may  be  rebutted  by  evidence  that  the  party  who  took  the  secur- 
ity had  previous  notice  that  no  such  authority  existed.""* 

held  that  a  partnership  for  the  manufactiirinK  and  .sellinR  of  himhor,  bark,  otc, 
upon  a  tract  of  land  specified  and  "also  u|K)n  any  other  tract,  which  shall  be 
purchased  by  said  copartners,"  is  such  a  trading  copartnership  Jis  clothes  the 
monibers  thereof  with  authority  to  bind  the  partnership,  especially  if  the  partner- 
ship obligation  be  given  for  the  purchase  of  lanil  to  be  used  in  connccti(Mi  with 
the  business  of  the  firm.    .See  Rumsey  v.  Briggs,  139  N.  Y.  323,  34  N.  E.  O'J!). 

40.  Deardroff  v.  Thatcher,  78  Mo.  12S,  47  Am.  Rep.  95;  Presbrey  v.  Thomas, 
1  App.  D.  C.  171;  Lee  v.  First  Nat.  Bank,  45  Kan.  8,  25  Pac.  196. 

41.  Third  Nat.  Bank  v.  Snyder,  10  Mo.  App.  211. 

42.  Dickinson  v.  Valpy,  10  B.  &  C.  128. 

43.  Brumah  v.  Roberts,  3  Bing.  N.  C.  96. 

44.  Levy  v.  Pyne,  Car.  &  M.  453;  Hedley  v.  Bainbridge,  3  Q.  B.  316  (42  Eng. 
C.  L.),  Lord  Denman,  C.  J.,  saying:  "There  is  no  custom  or  u.sage  that  attorneys 
should  be  parties  to  negotiable  instruments,  nor  is  it  necessary  for  the  purposes 
of  their  business."  Marsh  v.  Gold,  2  Pick.  285;  Thompson  on  Bills,  .58;  Garland 
V.  Jacomb,  L.  R.,  8  Exch.  218,  6  Moak's  Eng.  Rep.  289;  Smith  v.  Sloan,  37  Wis. 
285;  Friend  v.  Duryee,  17  Fla.  Ill;  Nat.  State  Cap.  Bank  v.  Noyes,  62  N.  H. 
44;  Presbrey  v.  Thomas,  1  App.  D.  C.  171. 

45.  Crosthwait  v.  Ross,  1  Humphr.  23;  Edwards  on  Bills,  102. 

46.  Cooke  v.  Branch  Bank,  3  Ala.  175.  Nor  can  a  partnership  organized  for 
the  purpose  of  transacting  a  general  contracting  and  building  business.  Snively 
v.  Matheson,  12  Wash.  88,  40  Pac.  628,  50  Am.  St.  Rep.  877. 

47.  1  Parsons  on  Notes  and  Bills,  139;  National  State  Cap.  Bank  v.  Noyes, 
62  N.  H.  44.  It  has  also  been  held  that  one  member  of  a  nontrading  firm  may 
bind  it  by  an  obUgation  in  the  firm's  name  for  necessaries.  Deardorflf  v.  Thacher, 
78  Mo.  128. 

48.  Gallway  v.  Matthews,  10  East.  264;  King  v.  Faber,  22  Pa.  St.  21;  Randall 
V.  Lee  &  Randall,  68  Mo.  App.  561 ;  Stevens  v.  McLachlan,  120  Mich.  284,  79 
N.  W.  627;  Savings  Bank  v.  Webster,  121  Mich.  153,  quotmg  text. 


§§  359,  360     FORMAL   SIGNATURE    OF   THE    FIRm's   NAME  451 

&  359.  Ratification  of  paper  by  partnership.-The  act  of  a  partner 
in  executing  or  indorsing  negotiable  paper  in  the  name  of  the  firm, 
which  was  unauthorized,  may  be  ratified  by  his  copartner.  If  the 
firm  receive  and  hold  the  proceeds  of  negotiable  paper,  executed  by 
one  of  their  number  in  a  transaction  not  in  their  busmess  the  firm 
will  be  considered  as  ratifying  the  act  and  will  be  bound;  and  this 
is  the  rule  whether  the  paper  be  signed  by  the  partner  in  his  own  name 
or  the  firm's- ''  and  likewise  if  they  delay  so  long  after  havmg  knowl- 
edge of  the  transaction  as  to  raise  a  presumption  that  they  ratify  and 
adopt  it  But  if  as  soon  as  the  other  partners  hear  of  the  transaction 
they  repudiate  it,  they  will  not  be  bomid.^^  And  when  a  note  has 
been  given  for  a  firm  by  one  partner,  without  authority,  all  the  other 
partners  must  ratify  it  to  make  it  a  binding  obligation  of  the  firm. 

SECTION  III 

FORMAL   SIGNATURE    OF   THE   FIRM's    NAME 

S  360.  As  to  the  form  of  signature  of  the  firm.-The  signature 
of  "the  firm  should  be  written  by  the  copartner  in  the  very  terms  of 
the  style  of  the  firm.  Or  the  copartner  should  express  that  he  signs 
his  own  name  for  himself  and  his  copartners,  or  should  write  out  the 
names  of  the  firm.  The  best  way  is  to  write  simply  the  firm  s  name, 
Lunieple.^^ 

49.  Moran  Bros.  Co.  v.  Watson,  44  Wash.  392  87  Pac.  508. 

50.  Richardson  v.  French,  4  Mete.  (Mass.)  577;  Clay  ^  Cottrell  18  Pa.  St^ 
408-  Whitaker  v.  Bro^-n,  10  Wend.  505;  Deitz  v.  Regn.er,  27  Kan.  94,  Buettner 
rstehibr^her  &  Hertzier,  91  Iowa,  588,  60  N.  W.  177;  Eggleston  v.  Mason  & 

'''^^\^n^^\^i'M^^^^o..,  28  Pa.  St.  440;  Carter  v.  Mitchell, 

''^Y^^^^'L^s,  2  Pa.  St.  160;  Richards  v.  Jefferson,  20  Wash.  166 
54  L  1  23  In  this  c^e,  one  copartner,  without  authority,  executed  sundry 
nromlLr^^^notes  in  the  name  of  the  firm.    Subsequent  thereto   a  -emora-dum 

liability,  was  sufficient  to  authorize  a  findmg  of  '■^t^^^"""  ^^  ^4 

former's  act  in  executing  the  note.    Taylor  v^^--' '^.f  ,°,f ''  ''  "^^^  ''"'■ 
53.  Blake  v.  Third  Nat.  Bank,  219  Mo.  644.  118  S.  W .  641. 


452  PARTNERS   AS   PARTIES  §  361 

of  the  signing  member.  Certainly,  it  should  distinctly  appear  that 
the  signature  is  intended  to  bind  the  firm,  and  (except  in  the  case  of 
an  acceptance  by  one  partner  in  his  o\vn  name  of  a  bill  drawn  on  the 
firm,  which  case  will  presently  be  considered)  such  will  not  be  the 
manifest  intention  unless  the  instrument  be  signed  in  the  manner 
above  indicated, ^^ 

And  in  general,  when  the  name  of  one  partner  only  appears  on  the 
bill  or  note,  his  copartners  would  not  be  chargeable,  although  the 
instrument  were  used  for  partnership  purposes,  unless,  indeed,  the 
firm  transacted  business  in  his  name.^^  Therefore,  where  the  plaintiff 
declared,  on  a  note  made  by  T.  W.,  in  his  own  name,  as  on  a  note 
made  to  T.  W.  and  R.,  and  offered  to  show  that  they  were  jointly 
indebted,  and  that  they  gave  the  note  for  that  debt,  he  was  nonsuited, 
on  the  ground  that  this  was  a  separate  security  for  a  joint  debt.^^  The 
same  rule  applies  to  acceptance.^^  So  the  indorsement  of  one  partner 
does  not  bind  the  firm  on  the  bill,  though  the  money  were  applied  to 
the  firm's  purposes,  and  they  might  be  sued  for  money  lent.''^  When, 
however,  notes  were  signed,  not  in  the  firm  name  but  by  the  individual 
members  of  the  firm,  oral  evidence  may  be  received  to  show  that 
the  consideration  of  the  notes  was  a  firm  obligation,  that  the  form 
was  accidental,  and  that  it  was  intended  to  be  a  partnership  liability. ^^ 

Where  two  partners  are  accustomed  to  obtain  money  for  their 
partnership  purposes  signed  by  one  member  of  the  firm,  made  pay- 
able to  and  indorsed  by  the  other,  it  is  a  partnership  paper  in  every- 
thing but  form,  and  the  holder  would  be  entitled  to  participate  in 
partnership  assets. 

The  principle  is  simply  this:  that  when  it  can  be  collected  from 
the  face  of  the  paper  that  the  signing  partner  intended  to  bind  the 
firm,  it  will  be  bound;  otherwise  not. 

§  361.  Illustrations. — In  accordance  with  the  principle  of  the 

54.  Chitty  on  Bills  [*57],  72;  Thompson  on  Bills,  164. 

55.  See  post,  §§  363,  399;  Rumsey  v.  Briggs,  139  N.  Y.  323,  34  N.  E.  929. 
58.  Siffkin  v.  Walker,  2  Campb.  307. 

57.  Cunningham  v.  Smithson,  12  Leigh,  43;  Colwell  v.  Weybosset  Nat.  Bank, 
16  R.  I.  290,  15  Atl.  80,  17  Atl.  913. 

58.  Emly  v.  Lye,  15  East.  7;  Kilgour  v.  Finlayson,  1  H.  Bl.  156;  Ex  'parte 
Emly,  1  Rose,  61;  Cunningham  v.  Smithson,  12  Leigh,  43.  But  see  the  case  of 
Denton  v.  Rodie,  3  Campb.  493,  and  Chitty  on  Bills  [*59],  74,  note/;  Meir  &  Co. 
V.  Bank,  55  Ohio  St.  446,  45  N.  E.  907. 

59.  In  re  Stoddard  Bros.  Lumber  Co.,  169  Fed.  190;  Markham  v.  Cover,  99 
Mo.  App.  83,  72  S.  W.  474;  Davis  v.  Turner,  120  N.  C.  605. 


§361 


FORMAL   SIGNATURE    OF   THE    FIRM'S   NAME  453 


text,  it  has  been  held  that  a  note  beginning  "I  promise,"  and  signed 
by  one  of  the  firm  for  the  rest,  as  ''A.  B.  for  A.  B.  C.  D.  &  Co.,"  will 
bind  the  whole  firm,^°  and  not  the  signing  partner  singly .^^  So  if  it 
begins  "I  promise,"  and  is  signed  in  the  firm's  name.^^  where  the 
note  is  signed  by  two  individuals,  it  will  be  presumed,  in  the  absence 
of  evidence,  to  be  as  joint  makers,  and  not  as  partners.^^  And  if  a 
partner  draws  a  bill  or  note  in  a  fictitious  name,  and  indorses  it  in  the 
partnership  name,  the  firm  will  be  bound  by  the  indorsement.^'* 

If  the  partner,  intending  to  use  the  firm's  name,  make  a  slight 
and  immaterial  variation  from  it,  the  firm  is  still  bound;  ^^  but  if  the 
variation  is  material,  it  will  not  be.^^  If  A.,  B.,  and  C.  are  partners, 
a  note  given  by  one  of  them,  signed  "A.  &  Co.,"  will  be  presumed 
to  be  in  the  partnership  name;  ^^  and  if  the  names  of  all  the  partners 
are  written  on  the  paper,  instead  of  the  firm's  name,  and  it  is  given 
in  the  firm's  business,  the  firm  will  be  bound.^^  If  the  firm  adopt  any 
name  as  their  copartnership  designation,  they  will  be  bound  by  that 
name,  although  different  from  the  one  ordinarily  used  by  them.^^ 

One  partner  cannot,  without  special  authority,  execute  a  joint  and 

60.  Gallway  v.  Matthews,  10  East.  264,  1  Campb.  403;  Staats  v.  Hewlett, 
4  Den.  559;  Thompson  on  Bills,  156;  Colwell  v.  Weybosset  Nat.  Bank,  16  R.  I. 
290,  15  Atl.  80,  17  Atl.  913.  See  also  City  Bank's  Appeal,  54  Conn.  269,  7  Atl. 
548;  Ex  -parte  First  Nat.  Bank,  70  Me.  369;  Smith  v.  Felton,  43  N.  Y.  419. 

61.  In  re  Clarke,  14  M.  &  W.  469,  overruling  Hall  v.  Smith,  1  B.  &  C.  407. 

62.  Doty  V.  Bates,  11  Johns.  544. 

63.  Ellinger's  Appeal,  114  Pa.  St.  505;  Salomon  v.  Hopkins,  61  Conn.  47, 
23  Atl.  716,  where  J.  M.  Hopkins  signed  a  note  "A.  J.  and  J.  H.  Hopkins,"  it 
was  held  that  he  was  liable  if  he  adopted  the  signature  as  his  own  or  as  a  firm 
member,  or  mdueed  the  payee  to  part  with  the  goods  under  the  belief  that  he 
intended  to  be  bound  by  it. 

64.  Thicknesse  v.  Bromilowe,  2  Cromp.  &  J.  425;  Taylor  v.  Reger,  18  Ind.  App. 
466,  48  N.  E.  202,  63  Am.  St.  Rep.  352. 

65.  Wilhamson  v.  Johnson,  1  B.  &  C.  146;  Faith  v.  Richmond,  11  Ad.  &  El. 
339;  Forbes  v.  Marshall,  11  Exch.  166. 

66.  Kirk  v.  Blurton,  9  M.  &  W.  284;  Maclae  v.  Sutherland,  3  El.  &  Bl.  31. 
Where  the  style  of  the  firm  was  simply  "John  Blurton,"  it  was  held  that  a  bill 
signed  "John  Blurton  &  Co."  did  not  bind  them.  Kirk  v.  Blurton,  12  L.  J.  Exch. 
117;  Thompson  on  Bills,  164. 

67.  Drake  v.  Elwyn,  1  Caine,  184.  But  where  a  note  bears  the  several  signa- 
tures of  parties  as  indorsers  on  promissory'  notes  which  are  negotiable,  the  pre- 
sumption is  that  the  obhgation  created  thereby  is  several  and  not  joint.  See 
Palmer  v.  Field,  76  Hun,  229,  27  N.  Y.  Supp.  736. 

68.  Norton  v.  Seymour,  3  C.  B.  792;  Maynard  v.  Fellows,  43  N.  H.  258;  Meu- 
&  Co.  V.  Bank,  55  Ohio  St.  446,  45  N.  E.  907;  Dreyfus  v.  The  Union  Nat.  Bank, 
164  111.  83,  45  N.  E.  408. 

69.  Moffat  v.  McKissick,  8  Baxt.  517;  §§  363,  399 


454  PARTNERS   AS   PARTIES  §§  3Gla,  3G2 

separate  note  in  the  partnership  name;  ^^  but  it  has  been  held — and 
justly,  as  we  think — that  such  a  note  would  be  void  only  as  a  several 
note,  and  good  as  a  joint  note.^^ 

§  361a.  Where  persons  organized  as  a  club  authorized  their  presi- 
dent to  execute  a  note  in  the  name  of  the  club,  for  purchases  made  for 
its  use,  it  was  held  that  they  were  to  be  regarded  as  partners  and 
principal  makers  of  the  note  executed  accordingly;  and  likewise  as 
to  a  renewal  thereof/^ 

§  362.  Acceptances. — The  doctrine  is  generally  recognized  that 
if  a  bill  be  drawn  upon  a  firm,  the  acceptance  by  one  partner,  whether 
in  his  owTi  name  or  the  name  of  the  firm,  will  bind  the  firm,  it  being 
only  necessary  for  it  to  appear  that  he  acted  for  it."^  In  an  English 
case  a  bill  was  drawn  on  "Rumsey  &  Co."  It  was  presented  to  "T. 
Rumsey,  Jr.,"  who  wrote  across  it  "accepted,  T.  Rumsey,  Sen."  It 
was  contended  that  the  firm  was  not  bound.  But  Lord  EUenborough 
said:  "This  acceptance  does  not  prove  the  partnership;  but  if  the 
defendants  were  partners,  they  are  both  bound  by  it.  For  this  pur- 
pose it  would  have  been  enough  if  the  word  'accepted'  had  been 
written  on  the  bill,  and  the  effect  cannot  be  altered  by  adding  'T. 
Rumsey,  Sen.'  If  a  bill  of  exchange  is  drawn  upon  a  firm,  and  ac- 
cepted by  one  of  the  partners,  he  must  be  understood  to  exercise  his 
power  to  bind  his  copartners,  and  to  accept  the  bill  according  to  the 
terms  in  which  it  was  drawn."  ^''  This  seems  the  true  rationale  of  the 
question,  and  should  be  sustained  on  the  familiar  maxim,  "  lit  res 
magis  valeat  quam  pereat."  But  it  has  been  held  that,  in  such  a  case 
as  that  quoted,  the  firm  would  not  be  bound,  because  its  name  is  not 

70.  Perring  v.  Hone,  2  Car.  &  P.  401,  4  Bing.  28  (77  Eng.  C.  L.). 

71.  Maclae  v.  Sutherland,  3  El.  &  Bl.  36  (77  Eng.  C.  L.). 

72.  Ferris  v.  Shaw,  5  Mo.  App.  279.  Members  of  a  voluntary  association  are 
liable  for  an  obligation  of  the  association  evidenced  by  a  promissory  note  signed 
by  the  members,  the  signature  being  followed  by  certain  abbreviations  indicating 
the  offices  which  they  held  in  the  association,  and  they  are  liable  without  regard 
to  what  was  intended  by  the  members  in  regard  to  liability,  and  despite  the  fact 
that  they  mistook  the  law.    Evans  v.  M.  C.  Lilly  &  Co.,  95  Miss.  58,  48  So.  612. 

73.  1  Parsons  on  Notes  and  Bills,  123;  Collyer  on  Partnership,  §  410;  Byles  on 
Bills,  144;  Gooding  v.  Underwood,  89  Mich.  187,  50  N.  W.  818. 

74.  Mason  v.  Rumsey,  1  Campb.  384  (1808).  To  same  effect  see  Wells  v. 
Masterman,  2  Esp.  731;  Dolman  v.  Orchard,  2  Car.  &  P.  104  (semble);  Tolman  v. 
Hanrahan,  44  Wis.  133.  In  Thompson  on  Bills,  164,  note  i,  it  is  said,  "It  may  be 
doubted  whether  this  doctrine  would  be  adopted  in  Scotland."    See  post,  §  488. 


§  362  FORMAL   SIGNATURE    OF   THE    FIRM's   NAME  455 

signed  as  acceptor,  and  that  the  single  partner,  whose  name  is  not  on 
the  bill,  could  not  be  charged  as  acceptor,  because  not  the  drawee  of 
the  bill.'^    In  Connecticut,  this  view  of  the  text  seems  to  be  taken; 

76.  Heenan  v.  Nash,  8  Minn.  409  (1863).  In  this  case  it  was  said,  in  sustain- 
ing this  doctrine,  by  Flandrau,  J.:  "In  the  case  of  Mason  v.  Rumsey,  1  Campb. 
384,  it  was  held  that  an  acceptance  by  one  member  of  a  firm  in  his  own  name 
would  bind  the  firm  when  the  bill  was  drawn  on  the  firm."  The  same  was  again 
held  in  Wells  v.  Masterman,  2  Esp.  731.  This  doctrine  seems  to  have  been  adopted 
in  Collyer  on  Partnership,  §  410,  and  in  Byles  on  Bills,  144,  on  the  authority  of 
these  cases  and  some  others  there  collected.  In  the  case  of  Dougal  v.  Cowles,  5 
Day,  511,  the  same  is  again  laid  down  on  the  authority  of  the  case  of  Mason  v. 
Rumsey.  There  are  other  cases  that  hold  an  acceptance  by  a  member  of  a  firm 
in  a  name  other  than  the  firm  name,  to  raise  a  question  of  fact  to  be  left  to  the 
jury,  whether  the  name  used  substantially  describes  the  firm,  or  whether  it  so  far 
varies  that  the  acceptor  must  be  taken  to  have  made  it  on  his  own  account.  See 
Faith  v.  Richmond,  11  Ad.  &  El.  338,  339,  Eng.  C.  L.  113;  Drake  v.  Elwyn,  1 
Caine,  184.  Acceptances  could  formerly  be  made  by  parol,  which  was  the  law  in 
Connecticut  at  the  time  of  the  decision  cited  from  5  Day,  and  that  point  is  ex- 
pressly made  by  the  court  in  deciding  the  case.  The  same  may  be  said  of  the  case 
of  Mason  v.  Rumsey,  which  was  decided  before  the  statute  of  1  &  2  George  IV, 
chap.  78,  §  2,  which  provided  that  acceptances  to  be  valid  must  be  in  writing. 
Even  after  this  statute  the  English  courts  have  held  that  the  word  'accepted,' 
written  on  the  bill  by  one  having  authority,  is  sufficient  to  bind  the  drawees.  The 
only  principle  upon  which  the  courts  have  held  that  an  acceptance  by  one  partner 
in  his  own  name  will  bind  the  firm,  is  the  implied  authority  which  each  member 
has  to  act  for  the  whole,  and  when  the  bill  is  drawn  upon  the  firm  and  accepted 
by  one,  they  hold  that  he  intended  to  accept  as  drawn.  I  find  one  English  case, 
decided  in  the  Court  of  E.xchequer  in  1841,  which  holds  a  doctrine  much  more 
in  accordance  with  our  views  of  the  principles  which  should  govern  the  question. 
In  Kirk  v.  Blurton,  9  M.  &  W.  283,  the  defendants  were  partners  under  the  name 
of  'John  Blurton.'  One  of  the  firm  drew  a  bill  in  the  name  of  'John  Blurton  &  Co.' 
The  firm  was  sued  upon  it,  and  the  partner  who  did  not  draw  the  bill  defended. 
Faith  V.  Richmond,  Mason  v.  Rumsej',  and  other  cases  were  cited.  Alderson,  B., 
in  delivering  the  opinion,  says:  'The  court  do  not  entertain  any  doubt  as  to  the 
principles  of  law  applicable  to  this  case.  One  partner  can  bind  his  copartner  only 
to  the  extent  of  the  authority  which  is  given  to  partners  generally,  to  enable  them 
to  carrj'  on  the  partnership  business,'  which  authority,  he  says,  in  another  part  of 
the  opinion,  is  'to  bind  the  firm  in  the  name  of  the  partnership,  and  in  that  only.' 
Since  the  passage  of  our  statute  on  the  subject  of  acceptances,  no  inferences  can 
be  indulged  in.  To  make  an  acceptance  valid  it  must  be  in  writing,  signed  by 
the  acceptor  or  his  lawful  agent.  Mr.  Nash,  as  a  partner  of  the  firm  of  Nash  & 
McGrorty,  had  a  right  to  accept  the  bill  for  the  firm  by  virtue  of  his  general  powers 
as  a  partner,  but  this  power  of  a  partner  is  to  bind  the  firm  by  the  use  of  the  firm 
name,  and  in  no  other  way.  This  he  did  not  do,  and  we  are  clear  that  the  ac- 
ceptance cannot  be  held  to  bind  the  firm.  We  are  next  to  consider  whether  the 
defendant  can  be  held  as  acceptor  individually.  It  is  a  well-settled  rule  of  com- 
mercial civil  law  that  no  one  can  accept  a  bill  but  the  person  upon  whom  it  is 
drawn,  except  for  honor.    Polhill  v.  Walter,  3  B.  &  Ad.  114;  Davis  v.  Clark,  1 


456  PARTNERS   AS   PARTIES  §  362a 

and  it  is  there  held  that  the  drawing  of  a  bill  by  one  partner  in  his 
own  name  on  the  firm  of  which  he  is  a  member,  is,  in  contemplation 
of  law,  an  acceptance  of  the  bill  by  the  drawer  in  behalf  of  the  firmJ^ 
And  in  England,  where  a  bill  was  drawn  on  "E.  M.  and  others, 
trustees,  etc.,"  and  there  was  written  across  it,  "accepted,  E.  M." — 
it  appearing  that  E.  M.  had  authority  to  accept  for  the  trustees — they 
were  held  liable  as  acceptors,  Pollock,  C.  B.,  saying:  "His  acceptance 
did  not  import  that  he  accepted  merely  as  an  individual,  but  that  he 
was  the  party  whose  hand  performed  that  duty  by  direction  of  the 
rest:  and  the  mere  fact  that  he  needlessly  added  his  name  to  the 
acceptance  made  no  difference."  " 

§  362a.  Where  the  firm  consists  of  one  person  transacting  busi- 
ness with  the  addition  of  the  words  "  Co.,"  or  "  &  Co." — In  such 
case,  an  acceptance,  or  otlier  assurance  signed  with  the  individual 
name  of  such  person,  either  by  himself  or  by  an  authorized  agent,  is 
as  valid  and  binding  as  the  formal  signature  of  the  firm  nameJ^ 

Car.  &  K.  117;  May  v.  Kelly  &  Frazier,  27  Ala.  497,  If  a  bill  is  drawn  upon  A., 
and  B.  accepts  it,  the  act  is  merely  voluntary,  without  any  consideration,  and 
creates  no  liability  whatever  in  the  law.  It  is  allowed  for  the  convenience  of  com- 
merce, that  a  person,  other  than  the  drawee,  may,  after  presentation,  refusal,  and 
protest,  accept  for  the  honor  of  the  drawer  or  any  of  the  indorsers,  or  of  all  the 
parties,  as  he  may  see  fit;  but  this  is  a  well-understood  transaction,  and  is  done 
supra  protest,  and  under  certain  well-settled  forms  and  ceremonies.  There  is  no 
pretense  that  Mr.  Nash  was  such  an  acceptor  of  the  bill  in  question.  Where  a 
bill  is  drawn  upon  several  individuals  an  acceptance  by  any  one  of  them  is  bind- 
ing upon  him,  although  the  bill  may  be  treated,  and  should  be,  as  dishonored,  if 
not  accepted  by  all  the  drawees,  because  the  holder  is  entitled  to  the  acceptance 
of  them  all;  but  in  such  a  case  a  liability  accrues  against  the  party  accepting,  be- 
cause he  is  a  drawee,  as  much  as  if  the  bill  had  been  drawn  upon  him  alone. 
Where,  however,  the  bill  is  drawTi  upon  a  firm,  any  member  of  the  partnership, 
in  his  indivadual  capacity,  is  quite  as  much  a  stranger  to  the  same  as  a  third 
person.  He  is  only  connected  with  the  bill  through  his  membership  of  the  firm, 
which  is  drawee,  and  in  virtue  of  such  membership  he  has  power  to  use  the  firm 
name  in  accepting  it.  If  he  accepts  it  in  his  individual  name,  he  does  not  bind 
the  firm,  and  there  is  no  consideration  for  his  act.  It  is  the  case  of  a  bill  drawn 
on  one  party,  and  accepted  by  another." 

76.  Dougal  V.  Cowles,  5  Day,  511;  McKinney  v.  Bradbury,  Supreme  Court 
of  Texas,  Dallam's  Decisions,  445  (1841).  The  court  saying:  "If  a  bill  or  note 
be  drawn  by  one  partner  in  his  own  name  only,  and  upon  the  firm,  of  which  he 
is  a  partner,  the  act  of  drawing  has  been  held  to  amount  in  judgment  of  law  to  an 
acceptance  of  the  bill  by  the  drawer  on  behalf  of  the  firm,  and  to  bind  the  firm 
as  an  accepted  bill." 

77.  Jenkins  v.  Morris,  16  M.  &  W.  877. 

78.  Odell  v.  Cormack,  19  L.  R.  (Q.  B.)  223. 


§  363  FORMAL   SIGNATURE   OF   THE    FIRM'S   NAME  457 

§  363.  Where  firm  transacts  business  in  one  partner's  name. — 

Sometimes  the  firm  transacts  business  in  the  name  of  a  single  partner, 
and  questions  often  arise  whether  or  not  paper  executed  in  the  name 
of  a  single  partner  was  intended  as  his  only,  or  as  that  of  the  firm. 
Prima  facie,  it  is  to  be  presumed  to  be  the  paper  of  the  individual 
partner  whose  name  is  signed  to  it,  and  the  burden  of  proof  is  upon 
the  holder  to  show  affirmatively  that  the  signature  was  intended  for 
the  signature  of  the  firm.^^  If  the  individual  carried  on  no  business 
apart  from  the  firm,  an  implication  would  arise  that  the  paper  signed 
by  him  was  that  of  the  firm.^°  Judge  Story  has  said  on  this  subject: 
"Where  the  business  is  carried  on  in  the  name  of  one  of  the  partners, 
and  his  name  alone  is  the  name  of  the  firm,  it  is  necessary  not  only 
to  prove  the  signature,  but  that  it  was  used  as  a  signature  of  the  firm, 
by  a  party  authorized  to  use  it  on  that  occasion,  and  for  that  purpose. 
In  other  words,  it  must  be  shown  to  be  used  for  partnership  objects 
and  as  a  partnership  act.  The  proof  of  the  signature  is  not  enough. 
The  burden  of  proof  is  upon  the  plaintiffs  to  establish  that  it  is  a  con- 
tract of  the  firm,  and  ought  to  bind  them."  *^  But  when  it  is  showTi 
to  have  been  executed  in  the  business  of  the  firm,  and  that  the  firm 
was  intended  to  be  bound,  there  is  no  doubt  that  it  will  be.^^    One 

79.  Dockery  v.  Faulkner  (Tex.  Civ.  App.),  101  S.  W.  501,  citing  text;  Cunning- 
ham V.  Smithson,  12  Leigh,  43;  Macklin  v.  Crutcher,  6  Bush,  401;  Boyle  v. 
Skinner,  19  Mo.  82;  Mercantile  Bank  v.  Cox,  38  Me.  500;  Buckner  v.  Lee,  8  Ga. 
285;  Bank  of  Rochester  v.  Monteath,  1  Den.  402;  Manufacturers,  etc..  Bank  v. 
Winship,  5  Pick.  11.  Putnam,  J.  "If  it  had  been  proved  that  the  note  had  been 
given  for  the  use  of  the  firm  at  the  manufactory,  the  partners  in  that  concern 
would  be  Uable.  The  burden  of  proof  was  on  the  plaintiffs."  Isaac  and  Peter 
Blackburn  carried  on  business  near  Plymouth  in  the  name  of  Isaac  Blackburn 
only.  Peter  carried  on  business  separately  in  London.  In  respect  to  bills  drawn 
by  Isaac  in  his  owti  name,  Lord  Eldon  said,  in  Ex  parte  Bolitho,  1  Buck,  100:  "Un- 
less you  can  show  that  when  Isaac  drew  the  bills  he  drew  them  not  as  Isaac,  but 
AS  Isaac  and  Peter,  there  can  be  no  legal  contract  upon  the  bills  against  the  two; 
there  may  be  a  right  of  action,  if  you  can  bring  it  to  this,  that  the  money  was 
raised  by  them  for  partnership  purposes."  Chitty  on  Bills  [*42,  43],  56.  See 
§§  304,  360,  399. 

80.  Yorkshire  Banking  Co.  v.  Beatson,  42  L.  T.  R.  455. 

81.  United  States  Bank  v.  Binney,  5  Mason,  176;  National  Exchange  Bank 
of  Lexington  v.  Wilgus'  Exrs.,  95  Ky.  309,  25  S.  W.  2. 

82.  South  Carohna  Bank  v.  Case,  8  B.  &  C.  427;  Moore  v.  Williams,  26  Tex. 
Civ.  App.  142,  62  S.  W.  977.  Where  a  partner  purchased  goods  for  a  partnership 
and  gave  a  note  signed  by  himself  individually,  this  does  not  preclude  a  recovery 
against  the  partnership  on  showing  that  he  was  authorized  to  act  for  the  firm  and 
that  the  firm  had  the  benefit  of  the  transaction.  Beckwith  v.  Mace,  140  Mich. 
157, 103  N.  W.  559  (the  action  was  not  alone  on  the  note). 


458  PARTNERS  AS   PARTIES  §§  364,  365 

partner  has  no  implied  authority  from  his  relation  to  others,  to  bind 
them  individually  as  parties  to  negotiable  instruments.^^ 

§  364.  In  New  York  it  has  been  held,  that  where  the  bank  account 
of  a  firm  was  kept  in  the  name  of  one  of  its  members,  and  all  checks 
were  drawn  in  his  name,  with  the  knowledge  and  assent  of  the  others, 
the  firm  was  liable  upon  such  a  check  drawn  in  the  firm  business ;  and 
that  the  holder  of  such  a  check  might  show  that  the  money  was  not 
advanced  by  him  upon  the  individual  security  of  the  single  partner.^'* 

In  accordance  with  the  principles  stated,  if  the  partnership  is  carried 
on  in  the  name  of  one  individual  only,  and  he  issues  a  bill  or  note  in 
his  o^vn  name  for  his  separate  use,  his  copartners  would  not  be  liable 
in  case  of  misapplication,  because  the  firm  is  not  pledged ,^^  though 
if  really  for  the  benefit  of  the  firm  it  would  be.^® 


SECTION   IV 

ACCOMMODATION,    PRIVATE,    AND    PROHIBITED   TRANSACTIONS 

§  365.  (I.)  As  to  accommodation  transactions  of  copartner. — No 

one  member  of  a  firm  can  bind  it,  without  the  consent  of  all  of  its 
members,  by  signing  the  copartnership  name  as  drawer,  maker, 
acceptor,  or  indorser  of  a  negotiable  paper  for  his  private  accommoda- 
tion or  for  the  accommodation  of  a  third  party,  for  the  obvious  reason 
that  such  a  transaction  is  not  within  the  scope  of  copartnership  busi- 
ness, unless  expressly  or  impliedly  made  so,  and  would  ordinarily  be 
without  authority,  and  in  fraud  of  the  firm.  And  every  holder  of  such 
paper,  chargeable  with  notice  of  its  character,  would  be  disqualified 
to  recover  upon  it;^^  and  if  the  plaintiff  be  payee,  he  would  be 

83.  McAuley  v.  Gordon,  64  Ga.  221. 

84.  Crocker  v.  Colwell,  46  N.  Y.  212;  Mohawk  Nat.  Bank  v.  Van  Slyck,  29 
Hun,  191. 

85.  Ex  parte  Bolitho,  1  Buck,  100.  Explained  in  Wintle  v.  Crowther,  1  Tyrw. 
214. 

86.  South  Carolina  Bank  v.  Case,  8  B.  &  C.  433,  2  Moody  &  R.  459. 

87.  Union  Nat.  Bank  v.  Neill,  149  Fed.  711,  10  L.  R.  A.  (N.  S.)  426;  Cheno- 
with  V.  Chamberlain,  6  B.  Mon.  60;  Bank  of  Rochester  v.  Bowen,  7  Wend.  158; 
Tompkins  v.  Woodward,  5  W.  Va.  229;  1  Parsons  on  Notes  and  Bills,  129;  Bloom 
V.  Helm,  53  Miss.  21;  Heffron  v.  Hanaford,  40  Mich.  405;  Atlantic  St.  Bank  v. 
Savery,  83  N.  Y.  294;  National  Bank  v.  Law,  127  Mass.  72;  Burke  v.  Wilbur, 
42  Mich.  329;  Bank  of  Fort  Madison  v.  Alden,  129  U.  S.  372;  Federal  Bank  v. 


§  365  PEIVATE   AND    PROHIBITED   TRANSACTIONS  459 

required  to  prove  the  assent  of  the  copartners  before  he  could 
do  so.^^ 

If  it  appears  on  the  face  of  the  bill  or  note  that  it  was  signed  by 
a  partner,  in  the  name  of  the  firm,  as  surety,  this  will  be  notice  to  the 
world  that  it  was  not  given  in  due  course  of  the  partnership  business; 
and  the  burden  would  be  thrown  upon  the  holder  not  only  to  show 
that  he  gave  value  for  the  instrument,  but  also  that  all  the  parties 
assented  to  its  execution  in  their  name.^^  If  the  word  "surety"  be 
attached  to  the  partnership  name,  that  would  impress  upon  the  paper 
notice  of  its  character.^''  Where  a  bill  or  note  is  carried  by  the  drawer 
or  maker  to  a  bank  to  get  it  discounted  on  his  own  account,  or  transfer 
it  to  another  party,  and  it  bears  the  name  of  a  firm  which  is  payee  and 
indorsed  thereon,  the  transaction  shows  on  its  face  that  it  is  accom- 
modation paper,  and  the  bank  or  other  holder  must  prove  the  co- 
partners' assent  in  order  to  bind  them.^^  And  if  there  be  anything 
in  the  appearance  of  the  note  itself  to  indicate  that  the  partnership 
name  is  signed  for  accommodation,  the  holder  cannot  recover  without 
showing  the  assent  of  all  the  partners.^^     But  a  bank  discounting 

North  wood,  7  Ont.  395,  citing  the  text;  Central  Nat.  Bank  v.  Frye,  20  N.  E.  325; 
Clark  V.  Wallace,  1  N.  Dak.  404,  48  N.  W.  339,  26  Am.  St.  Rep.  636;  Second  Nat.' 
Bank  v.  Weston,  31  App.  Div.  403,  45  N.  Y.  Supp.  315;  Van  Voorhis  v.  Brown, 
29  App.  Div.  119,  51  N.  Y.  Supp.  440;  Presbrey  v.  Thomas,  1  App.  D.  C.  171; 
McCord  V.  Callaway  &  Co.,  109  Ga.  796,  35  S.  E.  171;  Talmage  &  Co.  v.  Millikin 
&  Meigs,  119  Ala.  40,  24  So.  843;  National  Bank  v.  Berrott,  23  Tex.  Civ.  App. 
663,  59  Am.  Rep.  783. 

88.  Hayes  v.  Blaker,  138  Mo.  App.  24,  119  S.  W.  1004;  Tompkins  v.  Wood- 
ward, 5  W.  Va.  230;  Sternenberg  &  Co.  v.  Morgan,  8  Tex.  Civ.  App.  654;  Lyon, 
Potter  &  Co.  V.  First  Nat.  Bank,  29  C.  C.  A.  45,  85  Fed.  120,  text  cited. 

89.  1  Parsons  on  Notes  and  Bills,  140;  National  Bank  v.  Law,  127  Mass.  72; 
National  Park  Bank  v.  Security  Co.,  22  N,  E.  567,  citing  the  text;  Tyree  v. 
Lyon,  67  Ala.  1;  Smith  v.  Weston,  159  N.  Y.  194,  54  N.  E.  38. 

90.  Austin  v.  Vandemark,  4  Hill,  259;  Foot  v.  Sabin,  19  Johns.  154;  Boyd 
V.  Plumb,  7  Wend.  309;  Edwards  on  Bills,  103,  104. 

91.  Bank  of  Vergennes  v.  Cameron,  7  Barb.  143.  See  Bloom  v.  Helm,  53 
Miss.  21;  First  Nat.  Bank  v.  Weston,  25  App.  Div.  414,  49  N.  Y.  Supp.  542. 

92.  National  Security  Bank  v.  McDonald,  127  Mass.  82.  In  National  Bank 
V.  Law,  127  Mass.  72,  L.  was  a  member  of  the  firms  of  C.  F.  P.  &  Co.  and  J.  S.'a 
Sons.  He  made  a  note  payable  to  C.  F.  P.  &  Co.,  or  order,  signed  it  in  his  own 
name,  and  indorsed  it  "J.  S.'s  Sons,"  and  then  "C.  F.  P.  &  Co."  Held,  apparent 
in  the  hght  of  the  Massachusetts  statute,  which  treats  "J.  S.'s  Sons"  as  indorsers, 
that  their  signature  was  prima  facie  for  accommodation  of  payees,  and  that  pur- 
chaser was  chargeable  with  notice.  In  Atlas  Nat.  Bank  v.  Savery,  127  Mass, 
75,  it  was  held  that  upon  a  note  similar  to  the  above,  except  that  the  payees' 
name  as  indorsers  was  above  that  of  J.  S.'s  Sons,  and,  therefore,  in  regular  order, 


460  PAETNERS   AS    PARTIES  §  366 

partnership  paper  for  one  partner,  and  placing  the  amount  to  his 
credit,  would  not  by  that  circumstance  alone  (as  held  in  England) 
be  chargeable  with  notice  that  he  was  acting  in  fraud  of  the  firm,  or 
be  required  to  prove  assent  of  his  copartners.^^  If  the  partnership 
engagement  as  surety  or  indorser  is  really  for  the  partnership  benefit 
in  their  legitimate  business,  it  has  been  held  that  the  paper  will  be 
valid.^^  Where  A.,  B.  &  C,  copartners,  indorsed  a  note  for  accommo- 
dation, and  A.  dying  before  its  maturity,  B.  &  C.  renewed  the  indorse- 
ment in  the  partnership  name,  it  was  held  that  A.'s  estate  was  dis- 
charged, on  the  old  note  by  want  of  notice,  and  on  the  new  one  by 
want  of  authority;  ^^  but  that  if  A.,  B.  &  C.  had  been  makers  of  the 
note  that  was  renewed,  it  would  be  different.®^ 

§  366.  (II.)  As  to  private  debts  of  a  member  of  the  firm. — No 

one  member  of  a  firm  can,  without  the  consent  of  all  of  his  copartners, 
bind  them  by  making,  drawing,  accepting,  or  indorsing  a  bill,  note,  or 
check  for  his  private  debt,  in  the  partnership  name;  and  the  creditor 
who  receives  such  an  instrument,  or  the  indorsee  who  takes  it  with 
notice  of  the  consideration,  cannot  recover  upon  it."     In  order  to 

plaintiff  was  not  chargeable  with  notice  of  its  accommodation  character,  and 
could  recover.    See  Stimson  v.  Whitney,  130  Mass.  591. 

93.  Ex  parte  Bonbonus,  8  Ves.  542.  This  is  very  questionable  according  to 
weight  of  authority  in  America. 

94.  Langan  v.  Hewitt,  13  Smedes  &  M.  122;  Steuben  County  Bank  v.  Al- 
berger,  101  N.  Y.  202. 

95.  Central  Sav.  Bank  v.  Mead,  52  Mo.  546. 

96.  Boatman's  Sav.  Inst.  v.  Mead,  52  Mo.  543. 

97.  King  V.  Mecklenburg,  17  Colo.  App.  312,  68  Pac.  984;  Adams  v.  Long,  114 
111.  App.  277;  Campbell  v.  Huffines,  151  N.  C.  262,  65  S.  E.  1000, 134  Am.  St.  Rep. 
987.  And  one  who  has  obtained  the  note  after  it  was  past  due,  took  it  subject  to 
the  same  defect  and  infirmity  that  was  available  against  his  indorser,  and  cannot 
recover  as  against  the  firm  or  the  nonsigning  partners.  King  v.  Mecklenburg, 
43  Colo.  316,  95  Pac.  951.  Where  a  member  of  a  partnership  draws  a  check  in 
payment  of  his  personal  obligations  or  for  a  debt  without  and  beyond  the  scope  of 
the  partnership  and  the  payee  named  in  such  check  cashes  the  same  without 
knowledge,  either  actual  or  constructive,  that  the  check  was  drawn  without 
authority,  in  an  action  by  the  payee  to  recover  the  debt  evidenced  by  such  check, 
the  partnership  cannot  defend  upon  the  ground  that  the  member  drawing  such 
check  had  no  authority  to  draw  the  same.  Camas  Prairie  State  Bank  v.  Newman, 
15  Idaho,  719,  99  Pac.  833,  21  L.  R.  A.  (N.  S.)  703,  128  Am.  St.  Rep.  81.  A 
partnership  is  not  liable  on  a  note  given  by  one  of  the  partners  for  the  purchase  of 
goods  bought  and  used  for  his  own  private  benefit,  when  such  note  is  still  in  the 
hands  of  the  vendor,  and  the  purchase  of  such  goods  was  not  authorized  or  rati- 
fied by  the  other  partners,  and  was  an  act  neither  actually  nor  apparently  within 


§  366  PRIVATE    AND    PROHIBITED   TRANSACTIONS  461 

recover,  the  party  who  took  the  paper  from  the  partner  for  his  private 
debt,  must  prove  the  assent  of  all  the  copartners  to  his  act.^*  Prof. 
Parsons  seems  to  think  that  the  English  authorities  are  to  the  con- 
trary; ^  and  Mr.  Chitty's  opinion  seems  to  be  that  the  mere  circum- 

the  scope  or  ordinary  course  of  the  partnership  business.  Standard  Wagon  Co. 
V.  D.  P.  Few  &  Co.,  119  Ga.  293,  46  S.  E.  109.  That  a  partnership  may  frequently 
have  drawn  checks  against  its  funds  in  bank  for  the  purpose  of  discharging  the  in- 
dividual debts  of  its  members  would  not  constitute  such  "a  course  of  dealing" 
as  would  justify  the  bank  in  assuming  that  it  was  within  the  scope  of  the  partner- 
ship business  to  pledge  its  credit  and  give  its  promissory  note  in  satisfaction  of  a 
debt  due  by  one  of  the  partners  to  the  bank.  In  no  event  could  such  "a  course 
of  deaUng"  be  set  up  by  the  bank  if  it  did  not,  as  matter  of  fact,  act  upon  the 
faith  thereof.    People's  Sav.  Bank  v.  Smith,  114  Ga.  185,  39  S.  E.  920. 

98.  Atlantic  State  Bank  v.  Saverj-,  83  N.  Y.  294;  Union  Nat.  Bank  v.  Un- 
derbill, 21  Hun,  178;  Foot  v.  Sabin,  19  Johns.  154;  Dob  v.  Halsey,  16  Johns. 
34;  WilUams  v.  Wallbridge,  3  Wend.  415;  Rogers  v.  Batchelor,  12  Pet.  229;  Smith 
v.  Strader,  4  How.  404;  Braid  v.  Cochran,  4  Serg.  &  R.  397;  Noble  v.  McClintock, 
2  Watts  &  S.  152;  Mauldin  v.  Branch  Bank,  2  Ala.  502;  Tyree  v.  Lyon,  67  Ala.  4. 
See  McClellan  v.  Detroit  File  Works,  56  Mich.  579,  applying  the  same  rule  in  a 
case  where  corporate  notes  were  executed  for  individual  debts  of  members  of  the 
company.  Roberts  v.  Pepple,  55  Mich.  367;  Davis  v.  Smith,  27  Minn.  391,  where 
also  held  that  knowledge  by  the  bank  that  partnership  funds  were  used  in  payment 
of  a  draft  drawn  by  the  creditor  on  the  individual  partner,  was  sufficient  to  charge 
such  creditor  with  knowledge  thereof.  The  objection  to  the  vaUdity  of  an  in- 
dorsement of  paper  owned  by  a  firm  in  payment  of  a  partner's  individual  debt, 
cannot  be  raised  by  the  maker,  for  the  reason  that  his  Uability  is  not  thereby  in 
any  way  affected.  Drexler  v.  Smith,  30  Fed.  756;  Sweetser  v.  French,  2  Cush. 
309;  Taylor  v.  Hillyer,  3  Blackf.  433;  Windham  County  Bank  v.  Kendall,  7 
R.  I.  77;  Tompkins  v.  Woodward,  5  W.  Va.  229,  230;  Gale  v.  Miller,  54  N.  Y. 
538;  1  Parsons  on  Notes  and  Bills,  126,  127;  Sherwood  v.  Snow,  46  Iowa,  486; 
Bank  of  Commerce  v.  Selden,  3  Minn.  155.  In  Hairington  v.  Baker,  173  Mass. 
488,  53  N.  E.  903,  member  of  a  firm  sent  by  letter  to  bank  for  discount,  a  note 
signed  by  A.,  payable  to  B.  and  indorsed  by  B.  in  the  name  of  firm  of  which  he  was 
a  member — in  letter  it  was  stated,  "We  have  good  captains  in  our  employ  whom 
we  frequently  assist,  and  the  inclosed  I  offer  you.  I  do  not  hesitate  to  say  is  a 
strong  one  for  the  reason  that  our  concern  B.  &  Co.,  do  not  have  any  notes  of  any 
nature" — the  bank  discounted  note,  sending  check  payable  to  B.'s  order — held, 
that  that  letter  gave  notice  to  the  bank  that  the  indorsement  of  the  firm  name  was 
for  accommodation.  See  Folhner  v.  Frommel,  63  Hun,  370,  18  N.  Y.  Supp.  318; 
Terry  v.  Piatt,  1  Pennnewill,  185,  40  Atl.  243;  Piatt  v.  Koehler,  Dickey  &  Co., 
91  Iowa,  592,  60  N.  W.  178;  Goddard-Peck  Grocery  Co.  v.  McCune,  122  Mo. 
426,  25  S.  W.  904;  Midland  Nat.  Bank  v.  Schoen,  123  Mo.  650,  27  S.  W.  547; 
Kahn  v.  Overstolz,  82  Mo.  App.  235;  Broughton  Bros.  v.  Summer,  80  Mo.  App. 
386;  Huttig,  etc.,  Co.  v.  Gough,  81  Mo.  App.  440. 

99.  1  Parsons  on  Notes  and  Bills,  127.  In  Ridley  v.  Taylor,  13  East.  175, 
Lord  EUenborough,  C.  J.,  said:  "This  bill  had  an  existence,  according  to  its  ap- 
parent date,  eighteen  days  before  the  time  of  its  delivery  to  the  plaintiffs;  it  was 


462  PARTNERS   AS   PARTIES  §  366 

stance  that  an  acceptance  in  the  partnership  name  by  one  partner  is 
given  for  his  private  debt,  does  not  raise  the  presumption  that  it  was 
wrongfully  made.  But  such  a  transaction  is  out  of  the  orderly  and 
usual  course  of  business.  It  does  not  import  fairness  on  its  face,  and 
the  American  authorities  seem  to  us  to  reach  the  correct  conclusion. 
In  a  case  where  a  creditor  drew  on  his  debtor  through  bank  for  an 
individual  debt,  and  the  debtor  gave  the  check  of  the  firm  to  which 
he  belonged  in  payment,  the  creditor  was  held  chargeable  with  notice 
of  the  misappropriation  by  the  very  nature  of  the  transaction,  and 
through  the  bank  as  his  agent.^  We  quote  Mr.  Chitty's  language  as 
showing  the  state  of  the  English  law  on  the  subject.^ 

drawn  for  a  sum  considerably  exceeding  the  debt,  and  was  not  only  drawn  and 
indorsed,  but  accepted  also,  before  it  was  produced  to  them;  and  although  it  is 
stated  in  the  case,  that  in  fact  the  bill  was  drawn  and  indorsed  by  Ewbank  in  the 
partnership  name,  it  does  not  appear  that  the  plaintiffs  knew  that  it  was  drawn 
and  indorsed  by  him.  Under  these  circumstances  it  might  reasonably  be  supposed, 
by  the  party  to  whom  it  was  given,  to  be  a  partnership  security,  of  which  Ewbank, 
the  partner  in  possession  of  it,  had  for  some  valuable  consideration,  or  in  virtue 
of  some  arrangement  with  Ord,  the  other  partner,  become  the  proprietor,  so  as  to 
be  authorized  to  deal  with  it  as  his  own.  At  any  rate,  the  contrary  does  not  either 
actually  or  presumptively  appear."    See  Green  v.  Deakin,  2  Stark.  347. 

1.  Davis  V.  Smith,  27  Minn.  390.  But  in  Nebraska  a  different  conclusion  has 
been  reached.  There,  in  a  similar  case,  it  was  held  that  the  creditor  receiving  the 
check  might  presume  that  it  was  given  on  account  of  the  partner's  interest  in  the 
profits  of  the  business.  Warren  v.  Martin,  24  Nebr.  273.  But  it  is  equally  well 
settled  that  in  payment  of  money  to  a  creditor  who  receives  it  in  discharge  of  an 
existing  debt,  without  knowledge,  that  it  is  the  property  of  another,  than  the  one 
paying,  does  not  create  liability  on  the  part  of  the  recipient  to  the  true  owner. 
Dike  V.  Drexel,  11  App.  Div.  77,  42  N.  Y.  Supp.  979.  In  this  case,  the  court  cites 
in  support  of  the  proposition  above  stated,  the  cases  of  Justh  v.  National  Bank 
of  the  Commonwealth,  56  N.  Y.  478,  11  Am.  Rep.  734;  Stephens  v.  The  Board  of 
Education,  79  N.  Y.  187,  35  Am.  Rep.  511;  Southwick  v.  First  Nat.  Bank,  84 
N.  Y.  434;  Newhall  v.  Wyatt,  139  N.  Y.  452,  34  N.  E.  1045,  36  Am.  St.  Rep.  712; 
Goshen  Nat.  Bank  v.  The  State,  141  N.  Y.  379,  36  N.  E.  316;  Hatch  v.  Fourth 
Nat.  Bank,  147  N.  Y.  184,  41  N.  E.  403. 

2.  Chitty  on  Bills  (13th  Am.  ed.)  [*47],  60,  where  it  is  said:  "It  has  been  con- 
sidered that  the  mere  circumstance  of  a  bill  being  given  for  an  antecedent  debt 
due  from  one  only  of  the  partners  raises  a  presumption  that  the  creditor  knew  the 
bill  was  given  without  the  concurrence  of  the  other  partners,"  and  in  Ex  parte 
Goulding,  2  Gill  &  J.  118,  the  vice-chancellor  said:  "After  an  attentive  con- 
sideration of  the  authorities,  I  am  of  opinion  that  when  one  partner  gives  the 
acceptance  of  the  firm  in  payment  of  his  separate  debt,  without  authority  from 
his  copartner,  such  acceptance  does  not  bind  the  firm."  And  it  has  also  been 
considered  that  the  taking  the  instrument  from  one  of  the  partners  in  his  own 
handwriting  without  consulting  the  others,  raises  a  presumption  that  there  is 
not  any  concurrence  of  the  firm.    Hope  v.  Gust,  1  East,  53.    And  in  an  action  on 


§  367  PRIVATE    AND    PROHIBITED   TRANSACTIONS  463 

§  367.  Proof  of  express  authority. — Distinct  proof,  it  has  been 
held,  must  be  given  of  the  copartners'  assent,  and  that  mere  knowl- 
edge on  their  part  is  not  sufficient.^  But  unless  they  were  prompt  to 
repudiate  the  act  as  not  binding  on  them,  we  should  say  they  were 
bound.^  And  their  assent  may  be  implied  by  circumstances.^  A 
course  of  dealing  by  the  firm  in  recognizing  such  transactions  would 
suffice.^  And  when  such  a  course  of  dealing  is  proved,  evidence 
that  the  copartnership  articles  contauied  an  express  prohibition  of 
such  acts  by  any  copartner  would  be  inadmissible.^  The  admissions 
of  the  partner  executing  partnership  paper  for  his  private  debt,  are 
no  evidence  to  buid  the  fijm.  One  partner  has  no  implied  authority 
to  bind  the  firm  by  a  blank  acceptance,  there  being  no  drawer  to  the 

a  bill  against  three  acceptors  where  it  appeared  that  the  defendants  were  part- 
ners in  a  tea  speculation,  and  the  drawer,  a  wine  merchant,  drew,  in  payment  for 
wine  delivered  to  one  of  the  three,  the  judge  directed  the  jury  that  if  they  found 
that  the  bill  was  so  drawn  without  the  knowledge  and  consent  of  the  other  two 
defendants,  they  were  not  hable;  and  the  jury  found  for  the  defendant.  Wood  v. 
Holbeck,  May  28,  1826.  And  from  the  cases  of  Shirreff  v.  Wilks,  1  East,  48,  and 
Green  v.  Deakin,  2  Stark.  347,  a  conclusion  has  been  reached,  in  an  excellent  work, 
that  if  one  partner  accept  in  the  partnership  name  a  bill  drawn  by  his  own  separate 
creditor  for  his  separate  debt,  or  if  for  such  separate  debt  he  give  a  promissory 
note  in  the  name  of  the  firm,  it  lies  upon  the  creditor  to  show  that  his  debtor  had 
authority  so  to  give  him  the  joint  security  of  the  firm,  and  that  -prima  facie  the 
transaction  is  fraudulent  on  the  part  of  both  debtor  and  creditor.  Bayley  on 
Bills,  59.  But  as  a  partner  may,  in  his  indi\ddual  capacity,  have  a  claim  upon  the 
firm,  in  the  respect  of  which  he  might  draw,  accept,  or  indorse  a  bill  in  the  name 
of  the  firm,  it  has  in  other  cases  been  considered  that  the  mere  circumstance  of 
the  party  to  whom  he  delivers  it  knowing  that  he  was  using  it  for  his  private 
benefit  does  not  of  itself  necessarily  afford  sufficient  presumptive  evidence  of  col- 
lusion to  invalidate  the  transaction,  and  that  the  partner  objecting  to  liability 
must  prove  all  the  facts  sufficient  to  induce  a  jury  to  find  that  the  partner  really 
acted  fraudulently,  and  that  the  holder  had  notice  of  the  fraud.  See  Ex  parte 
Bonbonus,  8  Ves.  542;  Ridley  v.  Taylor,  13  East,  175. 

3.  Elliott  V.  Dudley,  19  Barb.  326;  Presbrey  v.  Thomas,  1  App.  D.  C.  171. 

4.  Foster  v.  Andrews,  2  Pa.  St.  160. 

5.  Gansevoort  v.  Williams,  14  Wend.  133;  Second  Nat.  Bank  v.  Weston,  161 
N.  Y.  520,  55  N.  E.  1080,  76  Am.  St.  Rep.  283;  Bank  of  Monongahela  Valley  v. 
Weston,  159  N.  Y.  201,  54  N.  E.  40.  Even  if  firm  notes  were  accommodation 
paper,  because  they  were  given  outside  the  business  of  the  firm,  a  partner  would 
be  Uable  if  he  authorized  them  to  be  given,  or  if  he  ratified  the  giving  of  them 
with  knowledge  of  the  facts,  or  omitted  to  stop  their  issue  after  knowledge.  Hun- 
ter V.  Bacon,  111  N.  Y.  S.  820,  127  App.  Div.  940. 

6.  Butler  v.  Stockmg,  8  N.  Y.  108;  Bank  of  Monongahela  Valley  v.  Weston, 
159  N.  Y.  201,  54  N.  E.  40;  Midland  Nat.  Bank  v.  Schoen,  123  Mo.  650,  27  S.  W. 
547. 

7.  Michigan  Bank  v.  Eldred,  9  Wall.  544. 


464  PARTNERS   AS   PARTIES  §§  368,  369 

bill;  and  any  person  taking  a  bill,  knowing  that  it  was  issued  in  that 
form,  would  be  chargeable  with  notice,  if  the  partner  making  such 
acceptance  exceeded  his  authority.^ 

§  368.  (III.)  As  to  special  limitations  of  partnership  authority. 

— Copartners  may  enter  into  any  contract  between  themselves  re- 
straining the  firm,  or  any  member  of  it,  from  executing  or  indorsing  a 
negotiable  instrument;  and  it  is  a  fraud  upon  the  firm  for  any  member 
to  violate  it,  for  which  his  injured  copartners  may  maintain  an  action.^ 
But  in  the  hands  of  a  bona  fide  holder,  without  notice,  the  fact  that 
express  partnership  articles  have  been  violated,  or  that  the  name  of 
the  firm  has  been  used  in  a  private  or  accommodation  transaction,  is 
no  objection  to  the  validity  of  the  instrument,  or  his  right  to  recover; 
for  their  association  with  the  wrongdoer  enabled  him  to  commit  the 
fraud.i" 

§  369.  (IV.)  As  to  the  burden  of  proof.— The  order  in  which 
the  burden  of  proof  shifts  from  one  side  to  the  other  may  be  stated 
as  follows:  (1)  When  the  payee  of  a  bill  or  note  sues  upon  it,  and  it 
appears  to  have  been  signed  in  the  firm 's  name,  and  he  exhibits  the 
paper  and  proves  the  signature  of  the  signing  partner  (where  this  is 
necessary),  he  establishes  his  case  prima  facie,  it  being  presumed  that 
the  partner  acted  within  the  scope  of  the  partnership  business." 

8.  Hogarth  v.  Latham,  39  L.  T.  R.  75. 

9.  Byles  on  Bills  (Sharswood's  ed.),  128. 

10.  Michigan  Bank  v.  Eldred,  9  Wall.  544;  Kimbro  v.  Bullit,  22  How.  256; 
Winship  v.  Bank  of  United  States,  5  Pet.  529;  Union  Nat.  Bank  v.  Neill,  149 
Fed.  711,  10  L.  R.  A.  (N.  S.)  426,  citing  text;  Wright  v.  Brosseau,  73  111.  381; 
Miller  v.  Hughes,  1  A.  K.  Marsh.  181;  Redlow  v.  Churchill,  73  Me.  146;  Waldo 
Bank  v.  Lambert,  16  Me.  416;  Stimson  v.  Whitney,  130  Mass.  591;  First  Nat. 
Bank  v.  Stadden,  103  Minn.  403,  115  N.  W.  198;  Hibernian  Bank  v.  Everman, 
52  Miss.  500;  Bascom  v.  Young,  7  Mo.  1;  Lincoln  Nat.  Bank  v.  Schoen,  56  Mo. 
App.  160,  citing  text;  Wells  v.  Evans,  20  Wend.  251;  Catskill  Bank  v.  Stall,  15 
Wend.  364,  18  Wend.  466;  First  Nat.  Bank  v.  Morgan,  6  Hun,  346;  Cotton  v. 
Evans,  1  Dev.  &  Bat.  Eq.  284;  Parker  v.  Burgess,  5  R.  I.  277;  Walker  v.  Kee,  14 
S.  C.  142. 

11.  Michigan  Bank  v.  Eldred,  9  Wall.  548;  Knapp  v.  McBride,  7  Ala.  19; 
Griffin  v.  Colonial  Bank,  7  Ga.  App.  126,  66  S.  E.  382;  First  Nat.  Bank  v.  Car- 
penter, 34  Iowa,  432;  Mitchell  v.  Whaley  (Ky.),  92  S.  W.  556;  Hamilton  v.  Sum- 
mers, 12  B.  Mon.  11;  Manning  v.  Hayes,  6  Md.  5;  Lamwersick  v.  Boehmer,  77 
Mo.  App.  136;  Feurt  v.  Brown,  23  Mo.  App.  332;  Davis  v.  Cook,  14  Nev.  265, 
Leonard,  J.,  rendering  an  able  and  instructive  opinion;  Vallett  v.  Parker,  6  Wend. 
615;  Doty  v.  Bates,  11  Johns.  544;  Foster  v.  Andrews,  2  Pa.  St.  160;  Edwards  on 
BUls,  105. 


369 


PRIVATE    AND    PROHIBITED   TRANSACTIONS  465 


(2)  If  the  firm  resist  payment,  it  will  be  sufficient  to  show  that 
the  copartner  signed  thq  firm's  name  for  a  private  debt  due  the  plain- 
tiff, and  its  defense  is  then  complete,  unless  the  plauitiff  reply  by 
showing  the  assent  of  the  copartners.^^ 

(3)  And  the  burden,  it  has  been  held,  would  also  be  devolved  upon 
the  plaintiff  to  prove  value  given,  if  it  were  shown  that  the  paper  was 
executed  in  violation  of  partnership  articles  of  agreement.^^ 

(4)  When  suit  is  brought  by  a  subsequent  holder,  it  will  also  be 
sufficient  for  him  to  produce  the  instrument  and  prove  the  signmg 
partner's  signature  in  order  to  make  out  a  prima  fade  case." 

(5)  If  when  this  has  been  done  the  firm  shows,  by  way  of  defense, 
that  the  instrument  was  executed  by  the  signing  partner  m  fraud  of 
the  firm,  by  being  given  to  the  payee  for  the  partner's  private  debt, 
or  for  the  payee's  accommodation,  and  thus  perfects  its  defense  as 
against  the  payee,  it  is  held,  by  numerous  cases,  that  the  holder  must 
then  prove  that  he  acquired  it  in  the  usual  course  of  busmess  for  a 
valuable  consideration,  under  circumstances  not  affectuig  him  with 
notice  of  the  fraud. ^^  And  such  seems  to  be  the  accepted  doctrme  on 
the  subject,  16  though  upon  the  plea  of  non  accepit  it  has  been  held  in 
England  insufficient  to  show  that  an  acceptance  was  fraudulent  on 
the  part  of  the  signing  partner,  without  brmging  home  to  the  plaintiff 
knowledge  of  the  fraud. ^^ 

12.  Williams  v.  Walbridge,  3  Wend.  415;  Rogers  v.  Batchelor,  12  Pet.  299; 
T-iylor  V  Hillyer,  3  Blackf .  433;  Gale  v.  Miller,  54  N.  Y.  539;  Follmer  v.  Frommel, 
63  Hun,  370,  18  N.  Y.  Supp.  318;  Piatt  v.  Koehler,  Dickey  &  Co.,  91  Iowa  592, 
quoting  the  text,  60  N.  W.  178;  Goddard-Peck  Grocery  Co.  v.  McCune,  122  Mo. 

426. 

13.  Grant  v.  Hawks,  Chitty  on  Bills  (13th  Am.  ed.)  [*42],  55. 

14.  Michigan  Bank  v.  Eldred,  9  Wall.  548;  Bates  v.  Forcht  (Mo.),  4  West^731. 

15.  Bank  of  St.  Albans  v.  GiUiland,  23  Wend.  311;  Bank  of  Vergennes  v.  Cam- 
eron, 7  Barb.  143;  Mom-oe  v.  Cooper,  5  Pick.  412;  Hart  v.  Potter,  4  Duer  458; 
Hogg  V.  Skene,  34  L.  J.  C  P.  (N.  S.)  153.  In  Camer  v.  Cameron  31  Mich  373 
(1875),  in  an  action  by  a  transferee  of  a  note  signed  in  the  name  of  a  firm  it  was 
held  (1)  That  the  presumption  was  that  it  was  for  the  benefit  of  the  firm;  but  (2) 
the  defendants  might  show  it  was  made  m  fraud  of  the  firm  to  the  knowledge  of 
the  payee;  and  (3)  that,  therefore,  the  presumption  would  be  that  the  transteree 
was  not  a  bona^de  holder  for  value,  and  the  burden  of  proof  was  on  hirn^  National 
Exch.  Bank  v.  White,  30  Fed.  414;  Lincohi  Nat.  Bank  v.  Schoen,  56  Mo.  App. 

^^ie-'Sro^" Bills  (13th  Am.  ed.)  [*42],  55;  Edwards  on  Bills,  105,  106;  Byles 
on  Bills  (Sharswood's  ed.)  [*47],  129.    Judge  Sharswood  says  m  his  note:     Ihe 
doctrine  of  the  text  is  sustained  by  the  whole  current  of  the  American  authorities. 
1  Parsons  on  Notes  and  Bills,  128. 
17.  Musgrave  v.  Drake,  5  Q.  B.  185  (48  Eng.  C.  L.),  Lord  Denman  saymg, 

30 


400  PARTNERS   AS    PARTIES  §  3G9a 

(6)  In  an  English  case,  it  was  said  by  Lord  Ellenborough :  "An 
indorsee  may  recover  on  a  bill  against  partners  in  a  concern,  though 
the  drawing  or  accepting  were  contrary  to  agreement  between  tliem, 
and  by  one  of  the  partners  in  fraud  of  the  rest;  but  then  the  indorsee 
must  show  that  he  gave  value."  ^*  This  is,  we  think,  the  correct  view, 
though  not  entirely  concurred  in.^^  And  it  has  been  held  that  where 
an  indorsement  of  a  firm  name  was  made  by  a  partner  upon  a  note 
which,  on  its  face  was  his  individual  note,  and  it  does  not  appear  that 
he  had  authority  to  bind  the  firm  by  an  indorsement  or  guaranty  of 
his  individual  paper,  the  plaintiff  must  prove  that  the  money  was 
loaned  to  the  firm  and  that  their  contract  was  the  contract  of  makers 
of  the  note.2° 


SECTION   V 

THE   EFFECT   OF   A   DISSOLUTION   OF  THE   FIRM 

§  369a.  Dissolution  and  notice  thereof.— The  dissolution  of  a 
partnership  may  occur  by  agreement  between  the  partners;  by  a 
change  in  the  membership  of  the  firm,  by  the  retirement  of  one  or 
more  of  the  partners;  and  by  operation  of  law.  The  death  or  bank- 
ruptcy of  a  partner  are  the  most  familiar  instances  of  dissolution  by 
operation  of  law,  and  as  a  general  rule  it  is  well  settled  that  in  those 
cases  no  notice  is  necessary  to  exonerate  the  estate  of  the  deceased 
or  bankrupt  partner  from  liability  for  future  acts  done  by  other 

"Where  issue  is  joined  on  the  plea  of  non  accepil,  and  the  proof  offered  of  the 
acceptance  is  the  signature  of  one  partner  competent  to  bind  the  firm,  then, 
though  the  defendants  show  that  this  signature  was  a  fraudulent  act  on  the 
part  of  such  partner,  yet  if  the  proof  does  not  affect  the  plaintiff  with  knowl- 
edge of  the  fraud,  that  does  not  put  the  plaintiff  to  an  answer,  nor  make  it  neces- 
sary for  him  to  give  any  explanation  or  account  of  the  transaction."  To  same 
effect  is  Thompson  on  Bills  (Wilson's  ed.),  761.    But  see  Hogg  v.  Skene,  sujrra. 

18.  Grant  v.  Hawks,  Chitty  on  Bills  (13th  Am.  ed.)  [*42],  55. 

19.  See  Michigan  Bank  v.  Eldred,  9  Wall.  548. 

20.  Lowry  v.  Tivy,  70  N.  J.  457,  57  Atl.  267.  But  compare  Moorehead  v. 
Gilmer,  77  Pa.  St.  118;  MUler  v.  ConsoUdation  Bank,  12  Wright,  514.  WTiere  a 
partner  made  and  issued  a  note  with  the  indorsement  of  the  firm  name,  the  tenor 
of  the  note  and  the  order  of  the  indorsements  raised  no  conclusive  presumption 
that  1  he  indorsement  in  the  name  of  the  firm  was  for  the  accommodation  of  the 
maker,  or  that  upon  negotiation  he  received  the  money  for  his  private  use.  Chris- 
tian Feigenspan  v.  McDonald,  201  Mass.  341,  87  N.  E.  624.  See  also  Reed  v. 
Bacon,  175  Mass.  407,  56  N.  E.  716;  Hayes  v.  Blaker,  138  Mo.  App.  24, 119  S.  W. 
1004. 


§  369b  EFFECT   OF   DISSOLUTION   OF   FIRM  467 

members  in  the  name  of  the  dissolved  firm.^^  Nor  is  notice  necessary 
when  a  dormant  partner  retires,  for  he  has  not  been  held  out  as  a 
member  of  the  firm.-^  But  when  dissolution  occurs  by  agreement  be- 
tween the  partners,  or  by  retirement  of  one  or  more  of  them,  notice  of 
dissolution  is  necessary  to  avoid  liability  for  future  transactions  in  the 
firm  name.  And  the  general  principles  stated  may  be  affected  by 
peculiar  circumstances.  Thus,  if  a  dormant  partner  is  known  to  cer- 
tain individuals  to  have  been  a  partner  he  must  notify  them  of  his 
retirement,  to  avoid  future  liability  for  acts  of  the  firm.^^  And  con- 
tinuing members  will  be  bound  by  the  acts  of  a  bankrupt  partner  in 
the  firm's  name  if  they  hold  themselves  out  as  still  in  partnership 
with  him.^* 

§  369b.  Special  and  general  notice. — Actual  knowledge  of  disso- 
lution in  all  cases  where  notice  is  necessary  to  exonerate  ex-partners 
is  equivalent  to  notice,  the  terms  in  this  connection  meaning  the  same 
thing.^^  Customers  or  dealers  with  the  firm  have  a  right  to  infer  its 
continuance,  and  to  regard  each  member  as  the  agent  of  all.  And 
therefore,  upon  dissolution  of  the  firm  by  agreement  between  the 
partners  or  change  in  membership  (while,  as  between  the  ex-members, 
mutual  authority  to  act  in  the  firm's  name  is  at  an  end),  all  of  the 

21.  Dickinson  v.  Dickinson,  25  Gratt.  321;  Williams  v.  Mathews,  14  La.  Ann, 
11;  Byles  on  Bills  (Sharswood's  ed.)  [*31],  136  Parsons  on  Partnership,  438; 
Lindley  on  Partnership,  *404,  *405;  Ware  on  Notice,  §  496.  See  as  to  exception 
when  surviving  partner  is  executor,  Vulliamy  v.  Noble,  3  Meriv.  592;  Wade 
on  Notice,  §  496.  Querj* — Wlien  provision  is  made  for  continuance  of  firm? 
Parsons  on  Partnership,  438.  Estate  of  deceased  partner  in  such  case  is  bound. 
Blodgett  V.  American  Nat.  Bank,  49  Conn.  9. 

22.  Carter  v.  Whalley,  1  B.  &  Ad.  11;  Heath  v.  Sansom,  4  B.  &  Ad.  172;  Lindley 
on  Partnership,  *406,  *407. 

23.  Farrar  v.  Deflime,  1  Car.  &  K.  580;  Davis  v.  Allen,  3  N.  Y.  168;  Cregler 
V.  Durham,  9  Ind.  375;  Nuso  Vaumer  v.  Becker,  87  111.  281;  Second  Nat.  Bank 
V.  Weston,  161  N.  Y.  520,  55  N.  E.  1080,  76  Am.  St.  Rep.  283;  Knaus  v.  Givens, 
110  Mo.  58,  19  S.  W.  535,  citing  text.  As  to  what  constitutes  a  sufficient  notice 
of  pubUcation,  see  Thayer  v.  Goss,  91  Wis.  90,  64  N.  W.  312. 

24.  Lacy  v.  Woolcot,  2  Dowl.  &  R.  438;  In  re  Fraser,  Ex  parte  Central  Bank, 
2  Q.  B.  633  (1892). 

25.  See  ante,  §  353;  Dickinson  v.  Dickinson,  25  Gratt.  329;  Lovejoy  v.  Spaflford, 
93  U.  S.  (3  Otto)  441;  Davis  v.  Allen,  3  N.  Y.  172;  Ketcham  v.  Clark,  6  Johns. 
144;  National  Bank  v.  Norton,  1  ffiU,  572;  Stimson  v.  WTiitney,  130  Mass.  591; 
Prentiss  v.  Sinclair,  5  Vt.  149;  Davis  v.  Keyes,  38  N.  Y.  94;  Martin  v.  Walton,  1 
McCord,  16;  Parkin  v.  Caruthers,  3  Esp.  248;  Hart  v.  Alexander,  2  M.  &  W.  484; 
Wade  on  Notice,  §§  485,  499;  Parsons  on  Partnership,  412,  413;  Lindley  on  Part- 
nership, *416. 


468  PARTNERS   AS   PARTIES  §  369b 

old  firm  will  be  bound  to  such  customers  and  dealers  upon  contracts 
made  by  any  ex-partner  in  its  name,  unless  they  have  received  express 
and  special  notice  of  the  dissolution,  or  it  is  shown  were  aware  of  the 
fact.^  Persons  who  merely  take,  or  receive  for  discount,  the  paper 
of  a  firm  are  not  deemed  dealers  so  as  to  entitle  them  to  actual  no- 
tice." 

As  to  those  who  are  strangers  to  the  firm,  that  is  to  say,  who  are 
not  its  customers,  and  who  knew  of  its  existence  only  by  general 
reputation  or  notoriety,  a  different  rule  applies:  and  they  are  entitled 
only  to  general  or  constructive  notice  by  public  advertisement  or 
otherwise.^*  Reasonable  notice — such  as  is  calculated  to  warn  the 
general  public — is  all  that  is  necessary  as  to  them.  It  need  not  be  by 
publication  in  a  newspaper,  as  in  England,  where  such  publication 
is  the  customary  method  of  general  notification.^  But  it  must  be  in 
some  public  and  notorious  manner.^*^  And  it  is  best  to  give  notice 
by  advertisement  in  the  press,  by  changing  the  signs  of  the  firm,  and 
circulating  the  information  of  the  dissolution.  An  indorsement  on  a 
note  of  the  firm's  name  with  the  words  "in  liquidation"  is  sufficient 
to  give  notice  of  the  dissolution,  and  no  recovery  can  be  had  on  such 
indorsement  against  the  parties  not  assenting  thereto. ^^ 

The  effect  of  notice  of  dissolution  may  be  done  away  with  as  to  ex- 
partners,  if  by  subsequent  conduct  they  induce  others  to  regard  the 
partnership  as  still  existing.^^    And  how  unsafe  it  is  to  neglect  notice, 

26.  Vernon  v.  Manhattan  Co.,  22  Wend.  183;  Bristol  v.  Sprague,  8  Wend. 
423;  Dickinson  v.  Dickinson,  25  Gratt.  321;  Parsons  on  Partnership,  413;  Lind- 
ley  on  Partnership,  *416;  Am.  Law  Reg.,  Feb.,  1882,  p.  128;  Clement  v.  Clement, 
69  Wis.  602;  National  Shoe  &  Leather  Bank  v.  Herz,  89  N.  Y.  630;  Bank  of  the 
Monongahela  Valley  v.  Weston,  159  N.  Y.  201,  54  N.  E.  40,  76  Am.  St.  Rep. 
283;  Camp  v.  Southern  Banking  Co.,  97  Ga.  582,  25  S.  E.  362;  Dickson  v.  Dryden 
Bros.,  97  Iowa,  122,  66  N.  W.  148. 

27.  City  Bank  v.  McChesney,  20  N.  Y.  240;  City  Bank  v.  Dearborn,  20  N.  Y. 
244.  But  see  as  to  transactions  with  banks,  Bank  v.  Mudgett,  45  Barb.  663; 
Rocky  Mountain  Nat.  Bank  v.  McCaskill,  16  Colo.  413,  26  Pac.  821,  citing  text; 
Mechanics'  Bank  v.  Livingston,  33  Barb.  458.  As  to  who  are  dealers,  see  Am. 
Law  Reg.,  Feb.,  1882,  p.  130. 

28.  Lovejoy  v.  Spafford,  93  U.  S.  (3  Otto)  440;  Dickinson  v.  Dickinson,  25 
Gratt.  321;  Uhl  v.  Harvey,  78  Ind.  26. 

29.  Ketcham  v.  Clark,  7  Johns.  147. 

30.  City  Bank  v.  McChesney,  20  N.  Y.  240.  In  this  case  ex-partner  discounted 
note  in  firm's  name  to  a  bank  which  had  not  known  of  existence  of  the  firm.  No 
pubUcation  of  general  notice  had  been  made,  and  retiring  partner  was  held  liable. 
Lovejoy  v.  Spafford,  93  U.  S.  (3  Otto)  439;  Wardwell  v.  Haight,  2  Barb.  549. 

31.  Woodson  v.  Wood,  84  Va.  478. 

32.  Chitty  on  Bills  (13th  Am.  ed.)  [*53],  68;  Wade  on  Notice,  213,  214. 


§  370  EFFECT   OF   DISSOLUTION   OF   FIRM  469 

special  or  general,  and  compliance  therewith,  is  well  illustrated  in  an 
English  case.  After  dissolution  an  ex-partner  accepted  a  bill  in  the 
firm's  name;  the  payee  had  no  notice  of  dissolution,  but  his  indorsee 
had  notice ;  and  it  was  held  that  the  latter  could  hold  the  firm  respon- 
sible, because  an  indorsee  has  the  right  to  stand  on  his  indorser's 
title.33 

§  370.  Cessation  of  partners*  power  when  dissolution  occurs  by 
retirement  or  agreement. — The  power  of  the  partners  to  bind  each 
other  ceasing  upon  the  dissolution,  no  one  of  them  can  thereafter 
enter  into  any  contract  which  will  bind  the  firm  as  to  those  affected 
with  notice  of  dissolution,  except  such  as  is  necessary  and  appro- 
priate in  settling  the  affairs  of  the  concem.^^  The  dissolution  operates 
as  a  revocation  of  all  authority  for  making  new  contracts.  It  does 
not  revoke  the  authority  to  arrange,  liquidate,  settle,  and  pay  those 
before  created.^^  The  implied  power  of  the  ex-partner  does  not  ex- 
tend to  giving  a  note,  or  to  drawing  or  accepting  a  bill  in  the  firm's 
name.^^  Nor  can  he  bind  the  firm  by  a  check  in  its  name.^^  Renewals 
of  outstanding  bills  or  notes  of  the  firm  stand  on  the  same  footing; 

33.  Booth  V.  Quin,  7  Price,  193.    See  §§  726,  782,  786,  803  et  seq. 

34.  In  re  Stoddard  Bros.  Lumber  Co.,  169  Fed.  190;  Darling  v.  March,  22  Me. 
184;  Knaus  v.  Givens,  110  Mo.  58,  19  S.  W.  535,  citing  text;  Osborn  v.  Wood, 
125  Mo.  App.  250,  102  S.  W.  580. 

35.  In  Davis  v.  Poland,  92  Va.  226,  23  S.  E.  292,  Riely,  J.,  said:  "He  can- 
not (after  dissolution)  as  against  him  (his  copartner)  create  a  new  obligation, 
nor  revive  an  old  one  barred  by  the  statute  of  limitations."  Darling  v.  March, 
22  Me.  184;  Bank  of  Montreal  v.  Page,  98  111.  110;  Parsons  on  Partnership,  390; 
1  Parsons  on  Notes  and  Bills,  144. 

36.  Morrison  v.  Perry,  11  Hun,  33;  Bank  of  Montreal  v.  Page,  98  111.  110; 
Lansing  v.  Gaine,  2  Johns.  300;  Hackley  v.  Patrick,  3  Johns.  537;  Sanford  v. 
Mickles,  4  Johns.  224;  Walden  v.  Sherburne,  15  Johns.  409;  National  Bank 
v.  Norton,  1  Hill,  572;  Mitchell  v.  Ostrom,  2  Hill,  520;  Lusk  v.  Smith,  8  Barb. 
570;  Van  Keuren  v.  Parmelee,  2  N.  Y.  525;  Haddock  v.  Crocheron,  33  Tex. 
276;  Floyd  v.  Miller,  61  Ind.  225;  Curry  v.  White,  51  Cal.  530;  Lockwood  v. 
Comstock,  4  McLean,  383;  Perrin  v.  Keene,  19  Me.  355;  Hamilton  v.  Seaman, 
1  Ind.  185;  Bank  of  Port  Gibson  v.  Baugh,  9  Smedes  &  M.  290;  Tombeckbee 
Bank  v.  Dumell,  5  Mason,  56;  WTiitman  v.  Leonard,  3  Pick.  177;  F.  &  M.  Bank  v. 
Kercheval,  2  Mich.  506;  Smith  v.  Sheldon,  35  Mich.  42;  Kilgour  v.  Finlayson, 
1  H.  Bl.  155;  Wrightson  v.  Pullan,  1  Stark.  375;  Dolman  v.  Orchard,  2  Car.  &  P. 
104;  Lindley  on  Partnership,  *408;  1  Parsons  on  Notes  and  Bills,  145;  Chitty  on 
Bills  (13th  Am.  ed.)  [*51,  52],  65,  66;  Thompson  on  Bills,  170;  Byles  on  Bills 
(Sharswood's  ed.)  [*50],  134;  Edwards  on  Bills,  111,  113;  Bayley  on  Bills  (2d 
Am.  ed.)  58.    Contra,  see  Robinson  v.  Taylor,  4  Barr.  242. 

37.  Gale  v.  Miller,  54  N.  Y.  536;  Dodd  v.  Bishop,  30  La.  Ann.  1180. 


470  PARTNERS   AS    PARTIES  §  370a 

and  as  the  ex-partner  cannot  draw  a  bill  or  note  for  a  firm  debt, 
neither  can  he  renew  a  bill  or  note  of  the  firm  given  for  their  debt.^^ 
In  New  York  it  has  been  held  that  even  where  a  creditor  is  ignorant 
of  the  dissolution,  a  note  given  in  the  firm  name  by  an  ex-partner, 
who  had  purchased  the  other's  interest,  would  not  bind  the  firm,  the 
existing  indebtedness  of  the  firm  still  remaining  good.^^  But  this 
view  is  against  the  accepted  principles  and  precedents  of  the  subject. 

§  370a.  Indorsement  by  ex-partner  when  dissolution  is  not  caused 
by  death. — When  the  dissolution  has  not  been  effected  by  the  death 
of  one  or  more  of  the  partners,  one  ex-partner  has  no  implied  authority 
to  indorse  bills  and  notes  given  to  the  firm  before  dissolution,  in  its 
name.^°  For,  as  said  by  Lord  Kenyon,  "The  moment  the  partner- 
ship ceases,  the  partners  become  distinct  persons;  they  are  tenants 
in  common  of  the  partnership  property  undisposed  of  from  that 
period;  and  if  they  send  any  securities  which  did  not  belong  to  the 
partnership  into  the  world  after  such  dissolution,  all  must  join  in 
doing  so."  ^^  And  "I  even  doubt  much,"  said  he,  in  the  same  case, 
"if  an  indorsement  was  actually  made  on  a  bill  or  note  before  dis- 
solution, but  the  bill  or  note  was  not  sent  into  the  world  until  after- 
ward, that  such  indorsement  would  be  valid."  ^^ 

Power  given  to  one  copartner  by  another  to  sell  a  note  that  was 
payable  to  the  firm  before  dissolution,  would  authorize  him  by  im- 
plication to  mdorse  it  "without  recourse"  in  the  firm  name;  and  the 
ex-partners  can,  if  they  choose,  renew  the  agency  of  each  partner,  or 
satisfy  an  account  due  by  one  for  the  firm  in  its  name.^^ 

38.  Parker  v.  Cousins,  2  Gratt.  373;  Long  v.  Story,  10  Mo.  636;  Stone  v. 
Chamberlain,  20  Ga.  259;  Martin  v.  Kirk,  2  Humphr.  529;  National  Bank  v. 
Norton,  1  Hill,  572;  Palmer  v.  Dodge,  4  Ohio  St.  21;  Wilson  v.  Forder,  20  Ohio 
St.  89;  Moore  v.  Lackman,  52  Mo.  323;  Edwards  on  Bills,  117,  118.  See  post, 
§  373.    Meyron  v.  Abel,  189  Pa.  St.  215,  42  Atl.  122,  69  Am.  St.  Rep.  806,  contra. 

39.  Morrison  v.  Perry,  11  Hun,  33. 

40.  Edwards  on  Bills,  118;  Chitty  on  Bills  (13th  Am.  ed.)  [*52],  66;  Byles 
on  Bills  (Sharswood's  ed.)  [*52],  136. 

41.  Abel  V.  Sutton,  3  Esp.  109  (1800);  Chitty,  Jr.,  619;  Sanford  v.  Mickles, 
4  Johns.  224;  Lumberman's  Bank  v.  Pratt,  51  Me.  563;  Parker  v.  Macomber, 
18  Pick.  505;  Fellows  v.  Wyman,  33  N.  H.  351;  Humphreys  v.  Castain,  5  Ga. 
166;  White  v.  Tudor,  24  Tex.  639;  Bogerau  v.  Gueringer,  14  La.  Ann.  478;  Ed- 
wards on  Bills,  120;  Story  on  Notes  (Thomdike's  ed.),  §  129,  and  note.  The  case 
of  Lewis  V.  Reilley,  1  Q.  B.  349,  has  been  criticised  and  disapproved  but  it  does  not 
necessarily  involve  a  contradiction  of  the  principle  stated  in  the  text. 

42.  See  post,  §§  371,  372;  Abel  v.  Sutton,  3  Esp.  10. 

43.  Murray  v.  Ayer,  16  R.  L  666,  19  Atl.  241. 


§§  370b,  371  EFFECT   OF   DISSOLUTION   OF   FIRM  471 

§  370b.  Indorsement  by  surviving  partner  after  dissolution 
caused  by  death.— But  where  the  dissolution  is  by  the  death  of 
one  of  the  partners  the  survivor  may  indorse  a  note,  payable  to  the 
firm  in  his  own  name.^^  The  reason  of  the  distinction  between  the 
authority  of  a  partner  after  dissolution  while  his  copartner  is  living, 
and  the  authority  of  the  survivor  when  dissolution  has  been  caused  by 
death,  is  that  in  the  former  case  the  implied  authority  for  one  partner 
to  act  is  all  gone;  whereas  in  the  latter  case  the  bill  or  note  vests  ex- 
clusively in  the  survivor,  although  he  must  account  therefor  as  part 
of  the  partnership  assets.-*^  And  for  the  like  reason  the  surviving 
partner  may  draw  a  check  on  partnership  funds  to  pay  a  firm 
debt.46 

§  371.  Notes  issued  after  dissolution  by  ex-partner.— Where  a 

note  is  issued  by  a  partner  after  dissolution,  it  will  not  bind  the  other 
partners,  even  though  given  for  a  debt  due  by  the  firm;  ^^^  and  even 
though  it  is  antedated  so  as  to  appear  of  a  date  anterior  to  the 

44.  Johnson  v.  Berlizheimer,  84  111.  54;  Jones  v.  Thorn,  2  Mart.  (N.  S.)  463. 
A  surviving  partner  has  authority  to  transfer  a  partnership  note;  there  being  no 
debts  and  no  administrator.  Milbank-Scampton  Milling  Co.  v.  Packwood,  154 
Mo.  App.  204,  133  S.  W.  667,  the  court  holding  further  that  the  fact  that  the 
administrator  also  joined  in  the  assignment  although  authorized,  did  not  render 
the  act  of  the  surviving  partner  nugatory. 

45.  Story  on  Notes  (7th  ed.  by  Thorndike),  §  125;  Crawshay  v.  Collms,  15 
Ves.  218,  226.  A  surviving  partner  has  no  right  to  create  or  contract  new  debts 
binding  upon  the  partnership,  except  to  the  extent  of  purchasing  new  material 
and  making  new  debts  so  far  as  may  be  necessary  to  work  up  unfinished  material 
and  sell  the  same.    Howell  v.  Manufacturing  Co.,  116  N.  C.  807,  22  S.  E.  5. 

46.  Commercial  Nat.  Bank  v.  Proctor,  98  111.  558. 

47.  Whitman  v.  Leonard,  3  Pick.  177;  Bank  of  South  Carolina  v.  Humphreys, 
1  McCord,  388;  Haddock  v.  Crocheron,  23  Tex.  276;  Woodson  v.  Wood,  84  Va. 
483,  citing  the  text;  Second  Nat.  Bank  v.  Weston,  31  App.  Div.  403,  52  NY. 
Supp.  315;  Bank  of  Monroe  v.  E.  C.  Drew  Inv.  Co.,  126  La.  1028,  53  So.  129. 
But  see  Chicago  Trust  &  Savings  Bank  v.  Kinnare,  174  111.  358,  51  N.  E  607. 
If  a  creditor  of  a  partnership,  after  a  dissolution  thereof,  with  notice  of  such 
dissolution,  takes  from  one  partner,  without  the  direction  or  consent  of  the  other, 
a  promissory  note  in  renewal  and  extension  of  a  pre-existing  debt  of  the  partner- 
ship, the  partner  not  so  consenting  is  discharged  from  liability  on  the  debt. 
Minis  V.  Brook  &  Co.,  3  Ga.  App.  247,  59  S.  E.  711.  In  Moon  Bros.  Carriage  Co. 
V  Devenish,  42  Wash.  415,  85  Pac.  17,  which  was  an  action  brought  to  recover 
on  account  for  goods  sold  and  deUvered  and  not  upon  the  note  it  was  held  that 
where  a  creditor  of  a  firm,  after  dissolution,  accepts  from  one  of  the  partners  of  a 
note  not  as  a  payment  or  discharge  of  the  original  indebtedness  but  merely  as 
evidence  of  the  indebtedness  and  of  the  agreement  to  extend  the  time  of  its  pay- 
ment, the  other  partners  are  not  discharged  from  UabiUty. 


47^  PARTNERS   AS   PARTIES  §  371a 

dissolution,^*  and  though  it  be  in  the  hands  of  a  bona  fide  holder  with- 
out notice,  unless,  indeed,  he  were  not  chargeable  with  constructive 
notice  of  the  dissolution,  in  which  case  it  would  be  different.''^ 

S  371a.  Instruments  signed  in  firm  name  before  dissolution,  and 


48.  Wrightman  v.  Pullan,  1  Stark.  375;  Bayley  on  Bills  (2d  Am.  ed.),  59.    In 
Lansing  v.  Gaine  &  Ten  Eyck,  2  Johns.  300,  it  appeared  that  L.  and  T.  were 
sued  on  notes  which  T.  dehvered  to  the  payees  for  a  private  debt  after  notice 
of  dissolution  had  been  given  in  the  public  press;  and  had  been  antedated  by 
T.  so  as  to  have  the  appearance  of  having  been  executed  when  the  firm  was 
extant;  and  the  plaintiff  sued  as  indorsee  after  maturity  for  another's  use.    Kent, 
Ch.  J.,  said:  "The  notes  upon  which  this  suit  is  brought  were  delivered  by  Ten 
Eyck  to  the  payees,  some  time  after  notice  had  been  given  in  the  newspapers  of 
the  dissolution  of  the  partnership  of  Gaine  and  Ten  Eyck.    The  date  of  the  notes 
then  becomes  immaterial,  as  they  were  valid  only  from  the  time  of  their  delivery; 
and  unless  the  contrary  be  shown,  the  presumption  will  be  that  they  were  then 
actually  drawn,  and  were  antedated  by  mistake  or  design.     If  they  had  been 
previously  drawn,  they  had  no  force  while  in  the  possession  and  under  the  control 
of  the  maker.    To  all  legal  purposes  the  notes  are  to  be  considered  as  made  or 
drawn  when  they  were  dehvered.    This  was  so  ruled  by  Lord  Kenyon,  in  the  case 
of  Abel  V.  Sutton,  3  Esp.  Cas.  108,  in  which  he  held  that  if  a  fair  bill  existed  at  the 
time  of  the  partnership,  and  was  not  put  into  circulation  until  after  the  dissolu- 
tion, all  the  partners  must  join  in  putting  it  into  circulation,  otherwise  they  were 
not  holden.    Notice  in  the  newspapers  of  the  dissolution  of  a  partnership  is  suffi- 
cient notice  to  all  persons  who  have  had  no  previous  dealings  with  the  firm;  and 
there  is  no  evidence  in  the  present  case  that  the  payees  ever  had  any  such  previous 
deaUngs.    This  rule  has  received  repeated  sanction  in  the  English  courts  (Peake 
N.  P.  42,  154;  1  Esp.  Cas.  371,  3  Esp.  108,  248),  and  is  reasonable  and  just. 
Without  the  protection  of  such  a  rule,  one  partner  never  could  retire  with  safety 
from  the  concerns  of  partnership.    Instead  of  being  the  means  of  enterprise  and 
profit,  a  mercantile  connection  of  this  nature  would  prove  a  source  of  never- 
ceasing  anxiety,  and  become  oppressive  and  ruinous.    The  fact,  then,  that  the 
notes  were  issued  by  Ten  Eyck,  after  the  partnership  was  dissolved,  is  sufficient 
to  exempt  Gaine  from  being  bound  by  the  notes,  even  if  they  had  been  given  for 
a  partnership  concern.    The  power  of  one  partner  to  bind  the  other  ceases  with 
the  existence  of  the  partnership.     This  is  a  proposition  clear  and  undeniable, 
and  it  places  the  defense  set  up  by  Gaine  upon  sure  and  tenable  ground.    It  would 
be  as  imjust  as  it  is  illegal  to  charge  the  defendant,  Gaine;  for  the  notes  were  not 
only  given  subsequent  to  the  dissolution  of  the  partnership,  but  the  evidence 
in  the  case  shows  that  they  were  given  for  the  private  debt  of  Ten  Eyck."  *  *  * 
"If  the  notes  while  m  the  hands  of  the  payees  did  not  bind  Game,  they  are  equally 
inoperative  in  the  hands  of  the  plaintiff.    They  were  negotiated  to  him  after  they 
had  been  dishonored,  and  he  took  them,  subject  to  all  the  equity  that  existed 
against  them  in  the  hands  of  the  original  payees."    Knaus  v.  Givens,  110  Mo. 
58,  19  S.  W.  535,  text  cited. 

49.  Bristol  v.  Sprague,  8  Wend.  423;  Charles  v.  Remick,  156  lU.  327,  40  N.  E. 
970. 


§  372  EFFECT   OF   DISSOLUTION   OF   FIRM  473 

issued  by  ex-partner  afterward. — As  a  note  takes  effect  by  deliv- 
ery, it  has  been  held  that  a  note  signed  in  the  partnership  name 
before  the  dissolution,  and  delivered  to  the  payee  after  the  dissolu- 
tion, without  the  consent  of  other  members  of  the  firm,  would  not 
bind  them.^  And  in  like  manner,  if  the  paper  was  indorsed  before 
dissolution  of  the  firm,  and  not  put  into  circulation  until  afterward 
unless  all  the  partners  unite  in  doing  so,  they  would  not,  according 
to  high  authorities,  be  bound  by  it.^^ 

In  a  New  York  case  it  appeared  that  a  check  was  signed  in  the  firm's 
name  by  a  partner  before  dissolution,  and  issued  by  him  for  his  private 
debt  after  dissolution.  The  acceptance  of  the  check  for  an  individual 
debt  of  the  late  partner  vitiated  the  holder's  title;  but  the  court  said 
their  signing  the  paper  gave  no  vitality  to  it  until  it  was  transferred, 
and  that  "the  inquiry  will  necessarily  be  whether  there  was  authority 
in  the  party  issuing  it,  at  the  time  it  was  actually  issued."  ^^ 

§  372.  English  doctrines. — In  an  English  case,  where  one  part- 
ner drew  a  bill  in  the  partnership  name,  leaving  the  amount  and  date 
blank,  and  then  indorsed  it  in  blank  in  the  partnership  name,  to  be 
afterward  negotiated  by  the  clerk  of  the  firm:  the  partner  who  drew 
the  bill  afterward  died,  and  the  survivors  formed  a  new  firm,  but  the 
clerk  filled  up  the  blanks  in  the  bill  drawn  by  the  deceased  partner  and 
negotiated  it.  And  the  surviving  partners  were  held  bound,  although 
no  part  of  the  value  came  to  their  hands.^^  In  another  case,  A.  and 
B.  were  sued  by  an  indorsee  on  a  bill  drawn  by  them  payable  to  their 
own  order  and  indorsed  by  them.  B.  pleaded  that  A.  had  indorsed 
the  bill  to  the  plaintiff  after  dissolution  of  the  firm,  and  that  defend- 
ant knew  of  the  dissolution  at  the  time  of  the  dissolution.    The  plea 

50.  Woodford  v.  Dorwin,  3  Vt.  82. 

51.  Abel  V.  Sutton,  3  Esp.  108,  Lord  Kenyon,  dubitante;  Glasscock  v.  Smith, 
25  Ala.  474.  See  Collyer  on  Partnership,  §  544;  1  Parsons  on  Notes  and  Bills, 
146;  Iron  Works  v.  Paddock,  37  Kan.  512,  citing  the  text. 

52.  Gale  v.  Miller,  54  N.  Y.  536,  distinguishing  Smith  v.  Lusher,  5  Cow. 
688,  and  Sherwood  v.  Barton,  23  How.  533;  Hayward  v.  Burke,  151  111.  121, 
37  N.  E.  846;  Buchanan  v.  Savings  Institution,  84  Md.  430,  35  Atl.  1099.  It 
was  held  in  this  case  that  "when  a  promissory  note  is  drawn  by  a  partnership 
payable  to  one  of  the  partners  and  is  by  him  indorsed  for  his  own  debt  to  a  third 
person,  who  takes  the  same  bona  fide  before  maturity,  such  indorsee  has  all  the 
rights  of  a  creditor  against  the  firm,  and  upon  its  insolvency  is  entitled  to  share 
equally  with  partnership  creditors  in  the  distribution  of  the  assets." 

53.  Usher  v.  Dauncey,  4  Campb.  97.  Lord  Ellenborough  said  that  this  case 
came  within  the  principle  of  Russell  v.  Langstaff,  2  Doug.  513;  Buchanan  v. 
Savings  Institution,  84  Md.  430,  35  Atl.  1099. 


474  PARTNERS   AS    PARTIES  §  372a 

was  held  bad  for  not  showing  that  plaintiff  had  colluded  with  A.  or 
was  privy  to  the  fraud.  Lord  Denman  said:  "It  is,  perhaps,  doing 
no  violence  to  language,  to  say  that  the  partnership  could  not  be  dis- 
solved as  to  this  bill,  so  as  to  prevent  it  from  being  indorsed  by  either 
defendant  in  the  name  of  the  firm."  ^'^ 

§  372a.  Rights  of  bona  fide  holder  of  note  delivered  after  dis- 
solution.— The  decisions  in  the  particular  cases  above  quoted  seem 
to  rest  on  sound  principles  and  to  be  in  consonance  with  the  doctrines 
of  the  law  merchant  respecting  negotiable  instruments.  But  still 
there  may  be  cases  difficult  to  determine.  Suppose  that  A.  and  B. 
are  partners,  and  while  the  firm  is  extant  A.,  without  the  knowledge 
of  B.,  signs  and  perfects  a  note  in  the  firm  name,  and  after  dissolu- 
tion, and  when  his  authority  has  ceased  to  bind  the  firm,  issues  it  for 
a  private  debt,  and  before  maturity  it  reaches  the  hands  of  a  bona  fide 
holder  for  value.  In  such  case  is  the  firm  bound?  It  would  seem  that 
the  determination  of  the  question  should  depend  upon  the  inquiry, 
would  the  firm  be  bound  if  the  note  had  been  signed  and  perfected 
at  the  time  it  was  issued;  and  if  then  the  bona  fide  transferee  were 
chargeable  with  actual  or  constructive  notice  of  the  dissolution,  his 
title  would  seem  to  us  defective.  The  note  would  stand  upon  the 
same  footing  as  one  that  had  been  antedated,  so  as  to  relate  back  to 
the  time  when  the  signer  had  authority  to  bind  the  firm,  in  which 
event  it  would  clearly  be  invalid  as  a  firm  note.^^  The  mere  fact  that 
it  was  perfected  in  form  while  the  partner  had  authority  to  bind  his  as- 
sociates ought  not,  as  it  seems,  to  render  it  valid  when  that  authority 
remained  unexercised  until  its  expiration,  and  when  the  nonconsenting 
partners  were  ignorant  of  the  existence  of  such  an  instrument  and 
could  not,  therefore,  restrain  its  negotiation.  And  at  the  time  when 
it  acquired  apparent  vitality  by  being  put  in  circulation,  authority 
to  give  it  vitality  had  ceased.  It  may  be  a  hard  case  in  any  event, 
but  this  solution  of  it  seems  to  be  the  most  equitable  and  just,  and 
the  best  calculated  to  prevent  frauds;  and  it  is  not  distinguishable  in 
substance  from  those  in  which  agents  antedate  their  transactions  to 
give  them  a  fictitious  appearance  of  validity.^^ 

In  Massachusetts  it  has  been  held  that  where  the  individual  note 

54.  Lewis  v.  Reilly,  1  Q.  B.  349. 

55.  See  ante,  §  371,  and  Lansing  v.  Gaine,  2  Johns.  300;  Knaus  v.  Givens, 
110  Mo.  58,  19  S.  W.  535,  citing  text. 

56.  See  Chitty  on  Bills  C13th  Am.  ed.)  [*56],  71,  where  a  different  view  is  inti- 
mated. 


§  373  EFFECT   OF   DISSOLUTION   OF   FIRM  475 

of  a  partner,  made  after  dissolution,  was  transferred  by  the  holder  to 
the  firm  by  an  indorsement  in  blank,  in  payment  of  a  debt,  such  note 
being  payable  to  bearer,  might  be  legally  transferred  to  a  third  person 
by  another  partner  who  was  authorized  to  settle  the  partnership  con- 
cerns. ^'^ 

In  the  case  of  a  renewal  note,  increasing  the  rate  of  interest  upon 
the  original,  made  after  dissolution,  it  does  not  discharge  the  partner- 
ship liability  upon  the  original,  and  the  amount  of  the  original,  with 
the  aggregate  of  interest  thereon,  may  be  received  (there  being  noth- 
ing objectionable  as  to  the  shape  of  the  pleadings).^ 

§  373.  When  ex-partner  may  bind  firm. — If  authorized  verbally, 
or  in  writing,  one  ex-partner  may  bind  the  firm  after  dissolution  as 
party  to  a  bill  or  note,  but  authority  to  settle  or  close  up  the  business 
of  the  firm  does  not  imply  authority  to  one  partner  after  dissolution 
to  give  a  note  in  the  name  of  the  firm  for  the  firm  debt,  or  to  renew  one 
given  before  the  dissolution.^^  Nor  will  authority  to  give  or  renew  a 
note  be  implied  by  authority  "to  settle  business  of  the  firm,  and  sign 
its  name  for  that  purpose;"  ^°  "to  use  the  name  of  the  firm  in  hqui- 
dation  only  of  past  business;"  ^^  "to  settle  all  demands  in  favor  of  or 
against  the  firm;"  ^^  "to  wind  up  the  business,"  ^^  or  by  the  use  of  any 
similar  expression;  for  such  things  may  be  done  by  each  partner  with- 
out any  express  contract. 

In  England,  however,  authority  to  use  the  partnership  name  was 
considered  in  one  case  sufficient  to  leave  it  for  a  jury  to  say  whether, 
according  to  usage  and  custom,  it  would  authorize  a  renewal  in  the 
firm's  name.^^  In  Pennsylvania,  it  is  held  that  after  dissolution  of  the 
firm  one  partner  has  free  authority  to  borrow,^^  and  to  execute  or  re- 

57.  Parker   v.    Macomber,    18   Pick.    505. 
68.  Wilson  v.  Forder,  20  Ohio  St.  89. 

59.  TMiite  V.  Tudor,  24  Tex.  641;  Haddock  v.  Crocheron,  32  Tex.  276;  Myatt  v. 
Bell,  41  Ala.  222;  Palmer  v.  Dodge,  4  Ohio  St.  21;  Martin  v.  Walton,  1  McCord, 
16;  Parker  v.  Macomber,  18  Pick.  505;  Long  v.  Story,  10  Mo.  636;  Parker  v. 
Cousins,  2  Gratt.  372;  Kilgour  v.  Finlayson,  1  H.  Bl.  155;  Edwards  on  Bills, 
118;  Woodson  v.  Wood,  84  Va.  482,  citing  the  text.  Meyron  v.  Abel,  189  Pa.  St. 
215,  42  Atl.  122,  69  Am.  St.  Rep.  806,  contra. 

60.  National  Bank  v.  Norton,  1  Hill  (N.  Y.),  572;  Hamilton  v.  Seaman,  1 
Ind.  185. 

61.  Martin  v.  Kirk,  2  Humphr.  529. 

62.  Lockwood  v.  Comstock,  4  McLean,  383. 

63.  Bank  of  Montreal  v.  Page,  98  111.  121. 

64.  Meyers  v.  Huggins,  1  Strobh.  473. 

65.  Davis  v.  Desauque,  5  Whart.  530. 


476  PARTNERS   AS   PARTIES  §§  374,  375 

new  bills  and  notes  in  settlement  of  the  past  business  of  the  firm.®^ 
And  in  that  State  it  was  also  held  in  a  suit  by  the  indorsee  of  a  note, 
executed  by  one  of  two  partners  in  the  firm's  name,  after  dissolution, 
he  could  recover  against  the  firm,  notice  of  the  dissolution  being 
proved  as  against  the  payee,  but  not  as  against  the  indorsee.^^ 

§  374.  Statute  of  limitations. — By  some  authorities  it  is  main- 
tained that  where  the  statute  of  limitations  has  run  against  a  part- 
nership debt,  one  partner's  promise  or  acknowledgment,  though  made 
after  dissolution,  will  revive  it,^^  while  others  take  the  contrary  view.^^ 
This  seems  to  us  correct,  for,  as  said  by  the  United  States  Supreme 
Court,  "when  the  statute  has  once  run  against  a  debt  the  cause  of 
action  against  the  partnership  is  gone.  The  acknowledgment,  if  it 
is  to  operate  at  all,  is  to  create  a  new  cause  of  action."  ^°  Nor  will  a 
part  payment  by  one  partner  made  after  dissolution  revive  the  debt 
to  which  the  statute  has  applied  as  against  others  for  the  same 
reasons^^    But  the  English  doctrine  is  otherwise.^^ 

It  has  been  held  in  Massachusetts  than  an  acknowledgment  signed 
in  the  partnership  name,  made  by  one  partner  after  dissolution,  of  a 
balance  due  in  a  course  of  dealing  proved  by  other  evidence,  is  ad- 
missible against  the  other  party  in  a  suit  against  both,  especially 
where  the  partner  who  made  the  acknowledgment  was  authorized  to 
settle  the  business  of  the  firm.'^^ 

§  375.  Notice  of  dissolution. — Notwithstanding  the  dissolution 

66.  Brown  v.  Clark,  14  Pa.  St.  469;  Robinson  v.  Taylor,  4  Pa.  St.  242;  Siegfried 
V.  Ludwig,  102  Pa.  St.  549. 

67.  Albeitz  v.  Mellon,  37  Pa.  St.  369. 

68.  Mclntire  v.  Oliver,  2  Hawks,  209. 

69.  Van  Keuren  v.  Parmelee,  2  N.  Y.  523;  Levy  v.  Cadet,  17  Serg.  &  R.  126; 
Belote  V.  Wynne,  7  Yerg.  534;  Bender  v.  Blessing,  82  Hun,  320,  31  N.  Y.  Supp. 
481. 

70.  Bell  V.  Morrison,  1  Pet.  351. 

71.  Exeter  Bank  v.  Sullivan,  6  N.  H.  124;  Kerper  v.  Wood,  48  Ohio  St.  613, 
29  N.  E.  501;  Terry  v.  Piatt,  1  Pennewill,  185,  40  Atl.  243.  Nor  will  partial 
payment  of  a  promissory  note  by  the  principal  debtor  suspend  the  statute  of 
limitations  as  to  the  surety.  See  Mozingo  v.  Ross,  150  Ind.  688,  50  N.  E.  867, 
65  Am.  St.  Rep.  387.  And  accordingly,  a  partial  payment  made  by  the  principal, 
without  the  knowledge  of  the  surety,  will  not  operate  to  keep  the  note  alive  as 
to  the  surety.  See  Meitzler  v.  Todd,  12  Ind.  App.  381,  39  N.  E.  1046,  54  Am.  St. 
Rep.  531. 

72.  Whitcomb  v.  Whitmg,  Doug.  652. 

73.  Ide  V.  Ingraham,  5  Gray,  106. 


§  375  EFFECT   OF   DISSOLUTION    OF   FIRM  477 

of  the  firm  by  agreement  between  the  members,  the  use  of  the  firm's 
name  by  one  partner  will  bind  all,  unless  due  notice  of  the  dissolution 
were  given  so  as  to  affect  the  holder  of  the  paper  with  its  infirmities^* 
And  when,  after  the  dissolution  of  a  firm,  new  notes  are  given  by  one 
of  the  partners  in  the  firm  name,  either  in  settlement  of  a  firm  debt 
or  in  renewal  of  a  firm  obligation,  the  evidence  should  be  clear  and 
satisfactory  of  the  notice  of  such  dissolution  to  the  creditor  accepting 
such  note,  to  discharge  the  other  partner,^^  This  question  in  its 
various  bearings  has  been  already  considered/^ 

74.  Lansing  v.  Gaine,  2  Johns.  300;  Bristol  v.  Sprague,  8  Wend.  423;  Cony 
V.  Wheelock,  33  Me.  366;  Whitman  v.  Leonard,  3  Pick.  177;  Booth  v.  Quin,  7 
Price,  193;  Uhich  v.  McCormick,  66  Ind.  246;  Doversy  v.  Kellogg,  44  111.  114; 
Second  Nat.  Bank  v.  Weston,  161  N.  Y.  520,  55  N.  E.  1080,  76  Am.  St.  Rep.  283. 

75.  Burson  v.  Stone  &  Co.,  135  Ga.  115,  68  S.  E.  1038;  Bank  of  Covington  v. 
Cannon,  133  Ga.  779,  67  S.  E.  83. 

76.  §§  369a,  370  e<  seg. 


CHAPTER  XIII 

PRIVATE    CORPORATIONS   AS    PARTIES    TO    NEGOTIABLE 
INSTRUMENTS 

§  376.  The  first  inquiry  to  be  made  in  respect  to  an  instrument 
purporting  to  be  that  of  a  corporation,  is:  "Has  the  corporation  in 
question  a  legal  right  to  bind  itself  in  such  a  form?"  That  question 
being  determined  affirmatively,  the  party  negotiating  for  the  instru- 
ment should  then  ascertain — First.  Whether  or  not  the  officer  or 
agent  who  has  signed  on  behalf  of  the  corporation  is  competent  in 
law  to  bind  it.  Second.  Whether  the  individuals  signing  as  officers  or 
agents  of  the  corporation  are  in  fact  such.  Third.  Whether  or  not 
they  were  authorized,  expressly  or  impliedly,  by  the  corporation  to 
sign  the  instrument  in  its  behalf.  Fourth.  Whether  the  signatures  are 
genuine.  Fifth.  Whether  or  not  the  instrument  is  to  be  interpreted 
as  a  corporate  or  individual  obligation.  These  inquiries  we  shall 
endeavor  to  answer  under  three  general  heads:  I.  Authority  of  the 
corporation  to  execute  the  instrument.  II.  Authority  of  the  agent, 
in  law  and  in  fact,  to  bind  the  corporation.  III.  Interpretation  of 
the  instrument. 


SECTION  I 

AUTHORITY  OF  THE  CORPORATION  TO  EXECUTE  THE  INSTRUMENT 

§  377.  It  is  obvious  that  the  inquiry  as  to  the  power  of  the  corpora- 
tion to  execute  the  instrument  is  of  the  first  importance,  for  if  it  exceed 
its  powers,  its  act  is  as  much  a  nullity  as  the  act  of  a  married  woman 
or  a  lunatic;  and  however  ignorantly  or  innocently  the  party  dealing 
with  it  may  have  been,  he  cannot  enforce  his  contract  made  with  it. 

It  is  considered  as  an  act  '^ ultra  vires,"  that  is,  "beyond  the  powers" 
of  the  corporation,  and,  therefore,  without  legal  sanction  or  vitafity. 
And  being  a  mere  nullity,  circulation  from  hand  to  hand,  and  owner- 
ship by  a  bona  fide  holder,  can  impart  no  vitality  to  it ;  and  as  against 
the  corporation  he  can  stand  on  no  better  footing  than  his  predeces- 
478 


§  378  AUTHORITY   TO    EXECUTE    INSTRUMENT  479 

sors.^  Nor  is  this  rule  so  harsh  as  it  might  seem.  Ignorance  of  the 
law  excuses  no  one,  and  a  corporation  being  a  legal  creation,  all  persons 
dealing  with  it  are  chargeable  with  notice  of  its  legal  character.^ 

§  378.  Definition  of  corporation. — Chief  Justice  Marshall  has 
well  defined  a  corporation  as  "an  artificial  being,  invisible,  intangible, 
and  existing  only  in  contemplation  of  law.  Being  the  mere  creature 
of  the  law,  it  possesses  only  those  properties  which  the  charter  of  its 
creation  confers  upon  it,  either  expressly  or  as  incidental  to  its  very 
existence.  These  are  such  as  are  supposed  to  be  best  calculated  to 
effect  the  object  for  which  it  is  created."  ^  In  endeavoring,  then,  to 
ascertain  whether  or  not  a  corporation  has  authority  to  do  a  certain 
act,  we  should  see,  first,  whether  any  express  power  is  conferred,  and, 
second,  if  none  such  be  found,  whether  such  power  is  implied  as  an 

1.  School  Directors  v.  Fogleman,  76  111.  189;  Pearce  v.  Madison,  etc.,  R.  Co., 
21  How.  441;  Macgregor  v.  Dover,  etc.,  R.  Co.,  18  Q.  B.  618;  Earl  of  Shrewsbiiry 
V.  North  Staffordshire  R.  Co.,  L.  R.,  1  Eq.  593.  And  the  defense  of  ultra  vires  can- 
not be  invoked  in  order  to  justify  a  breach  of  trust.  Anderson  v.  First  Nat.  Bank, 
5  N.  Dak.  451,  67  N.  W.  821.  But  compare  Court  of  Appeals  of  New  York,  in 
the  case  of  Seymour  v.  Cemetery  Assn.,  144  N.  Y.  333,  39  N.  E.  365:  "That  kind 
of  plunder  which  holds  on  to  the  property  but  pleads  the  doctrine  of  uUra  vires 
against  the  obligation  to  pay  for  it,  has  no  recognition  or  support  in  the  law  of 
this  State."  Village  of  Fort  Edward  v.  Fish,  156  N.  Y.  363,  50  N.  E.  973;  Frank- 
Hn  Nat.  Bank  v.  Whitehead,  149  Ind.  560,  49  N.  E.  592,  63  Am.  St.  Rep.  302; 
First  Nat.  Bank  of  Gadsden  v.  Winchester,  119  Ala.  168,  24  So.  351,  72  Am.  St. 
Rep.  904;  Mt.  Vernon  Bank  v.  Porter,  52  Mo.  App.  244. 

2.  In  Broughton  v.  Manchester  &  S.  Water  Works  Co.,  3  B.  &  Aid.  1,  where 
it  appeared  that  an  act  of  Parliament  prohibited  corporations,  other  than  the 
Bank  of  England,  from  accepting  bills  payable  at  a  less  period  than  six  months 
from  date;  and  the  acceptance  in  suit  came  within  the  prohibition,  Holroyd,  J., 
said:  "Here  the  defendants  are  made  a  corporation  by  a  public  act  of  Parliament, 
and  every  person  is  bound  to  take  notice  of  that  act;  and  when  therefore,  a  holder 
of  a  bill,  though  a  bona  fide  indorsee,  takes  the  defendant's  acceptance,  he  must 
know  that  they  are  a  body  corporate;  and  he,  therefore,  receives  it,  knowing  it 
to  be  the  acceptance  of  a  corporation  prohibited  from  owing  money  on  such  a  bill; 
he  is  not,  therefore,  an  innocent  indorsee,  because  he  takes  a  bill  which  he  knows 
is  prohibited  by  statute."  But  it  has  been  held  that  a  note  executed  by  a  munici- 
pal corporation  for  a  bona  fide  debt,  though  without  authority  to  execute  same, 
is  binding  upon  the  corporation,  where  the  claim  covered  by  the  note  has  been 
approved  by  the  city  council.  La  France  Fire  Engine  Co.  v.  Town  of  Mt.  Vernon, 
11  Wash.  203,  39  Pac.  367;  People's  Bank  v.  School  District,  3  N.  Dak.  496, 
57  N.  W.  787;  Erskine  v.  Steele  County,  4  N.  Dak.  339,  60  N.  W.  1050; 
Franklin  Nat.  Bank  v.  Whitehead,  149  Ind.  560,  49  N.  E.  592,  63  Am.  St.  Rep. 
302. 

3.  Dartmouth  College  v.  Woodward,  4  Wheat.  636. 


480  PRIVATE    CORPORATIONS   AS   PARTIES  §§  379,  380 

incident  of  its  nature.    And  in  the  latter  inquiry,  the  character  of  the 
corporation  is  obviously  the  controUing  element  to  be  considered. 

§  379.  Public  and  private  corporations. — Corporations  are  either 
private  or  public — public  when  ''the  whole  interests  and  franchises 
are  the  exclusive  property  and  domain  of  the  government  itself;"  * 
otherwise  private.  Public  corporations  are  established  exclusively 
for  pubhc  purposes,  and  comprise  cities,  towns,  villages,  counties, 
townships,  parishes,  and  all  other  corporations  erected  by  the  govern- 
ment as  governmental  agencies .  Private  corporations  comprise  banks, 
building  associations,  railroad  companies,  and  all  other  associations 
formed  for  manufacturing,  trading,  or  other  objects  of  private  gain, 
emolument,  gratification,  or  benefit.^ 

§  380.  Of  the  authority  of  private  corporations  to  issue  negotiable 
instruments  we  shall  first  speak,  and  then  of  the  authority  of  pub- 
lic corporations.  It  is  quite  easy  to  determine  whether  or  not  there 
is  express  power  in  totidem  verbis  to  issue  the  particular  instrument 
by  consulting  the  terms  of  the  corporate  charter.  If  not  expressed, 
then  the  inquiry  arises,  is  the  power  implied  in  some  power  conferred, 
or  from  the  general  character  of  the  institution?  ^  The  English  de- 
cisions on  this  subject  seem  to  us  more  consistent  with  principle  than 
those  in  the  United  States. 

There  it  has  been  held  that  trading  and  banking  corporations 
might  draw  or  accept  bills  without  express  authority  to  do  so,  because 
such  acts  are  necessary  to  the  very  objects  of  their  existence.  But 
that  a  corporation  chartered  to  supply  a  city  with  water  could  not  do 
so,  for,  as  said  by  Bayley,  J.,  "It  cannot  be  necessary  for  this  purpose 
that  they  should  become  the  makers  of  promissory  notes,  or  the 
acceptors  of  bills  of  exchange."  ^  And  certainly  it  does  not  seem 
"incidental  to  its  very  existence"  (to  quote  Chief  Justice  Marshall's 
definition)  that  a  water  supply  corporation  should  execute  a  negotiable 
instrument,  as  its  corporators  might  be  expected  to  operate  with  a 
cash  capital,  unless  the  power  were  conferred  to  operate  upon  credit. 

4.  Dartmouth  College  v.  Woodward,  4  Wheat.  636. 

5.  See  Dillon  on  Municipal  Corporations  (2d  ed.),  vol.  I,  §  30,  and  cases  cited. 

6.  Broughton  v.  Manchester  &  S.  Water  Works,  3  B.  &  Aid.  1,  Best,  J.,  saying 
that  when  "a  company  Uke  the  Bank  of  England,  or  the  East  India  Company, 
are  incorporated  for  the  purposes  of  trade,  it  seems  to  result  from  the  very  object 
of  their  being  so  incorporated  that  they  should  have  power  to  accept  bills  or  issue 
promissory  notes." 

7.  Broughton  v.  Manchester  &  S.  Water  Works,  3  B.  &  Aid.  1. 


§§  381,  382        AUTHORITY   TO   EXECUTE   INSTRUMENT  481 

Likewise,  it  has  been  held  that  a  railroad  company  cannot,  with- 
out express  authority,  bind  itself  by  accepting  a  bill  of  exchange.* 

§  381.  General  tenor  of  American  decisions  as  to  validity  of  cor- 
porate negotiable  securities. — In  the  United  States  the  cases  go  to 
great  lengths  in  upholding  the  validity  of  corporate  negotiable  in- 
struments.    ''In  this  country  it  may  be  regarded  as  settled,"  says 
Professor   Parsons,^    "that   the  power  of   corporations   to   become 
parties  to  bills  of  exchange,  or  promissory  notes,  is  coextensive  with 
their  power  to  contract  debts.    Whenever  a  corporation  is  authorized 
to  contract  a  debt,  it  may  draw  a  bill  or  give  a  note  in  payment  of  it. 
Every  corporation,  therefore,  may  become  a  party  to  bills  or  notes  for 
some  purposes.    Thus  a  mere  religious  corporation  may  need  fuel  for 
its  rooms,  and  as  an  economical  measure  may  buy  a  cargo  of  coal, 
and  give  its  note  for  it;  and  such  a  note  would  undoubtedly  be  valid 
in  this  country."     And  instancing  how  far  a  corporation  may  go,  he 
adds:  "  If,  for  example,  the  trustees  of  Columbia  College,  in  New  York, 
bought  a  cargo  of  cotton,  and  gave  their  negotiable  note  for  twenty 
thousand  dollars,  the  seller  might  suppose  that  they  had  need  of 
some  means  of  transmitting  a  large  amount  of  money,  and  found  that 
they  could  do  it  to  most  advantage  by  using  this  cotton;  or  that  they 
wanted  it  for  some  other  legitimate  purpose.     Such  a  note  would 
clearly  be  vaUd  in  the  hands  of  a  bona  fide  holder  without  notice;  nor 
do  we  think  that  the  nature  of  the  transaction  merely  would  be  notice 
to  the  original  payee  that  it  was  given  for  an  unauthorized  purpose." 
But  it  might  be  said  with  propriety,  that  so  singular  a  spectacle  as 
the  trustees  of  a  literary  institution  buying  cotton,  would  more  nat- 
urally lead  the  party  dealing  with  them  to  suspect  that  they  were 
speculating  with  their  trust  funds,  and  that  such  party  would,  by  the 
very  nature  of  the  act,  be  apprised  of  their  defective  authority. 

S  382.  Prevailing  doctrines  in  United  States.— In  this  country 


8.  Bateman  v.  Mid-Wales  R.  Co.  L.  R,  1  C.  P.  499.  Compare  Peruvian  R. 
Co.  V.  Thames  &  Mersey  M.  Ins.  Co.,  L.  R.,  2  Ch.  617,  and  Green's  Brice  s  Ultra 
Vires,  255.    But  see  §  383. 

9  1  Parsons  on  Notes  and  Bills,  164,  165.  Approved  in  Cattron  v.  First  Uni- 
versalist  Society,  46  Iowa,  108.  See  also  Field  on  Corporations,  306;  Temple  St 
Cable  Ry.  Co.  v.  Hellman,  103  Cal.  634,  37  Pac.  530;  Grommes  v.  Sullivan,  26 
C  C  A  320  81  Fed.  45,  citing  text.  A  trading  corporation  has  implied  power 
to  purchase  and  indorse  bills  and  notes,  in  the  absence  of  anything  in  its  articles  of 
incorporation  prohibiting  it.  Jamieson  &  McFarland  v.  Heim,  43  Wash.  153, 
86  Pac.  165;  Mapes  v.  German  Bank  of  Tilden,  176  Fed.  89. 

31 


482  PRIVATE    CORPORATIONS   AS   PARTIES  §  382 

three  propositions  respecting  private  corporations  may  be  regarded 
as  settled.  First.  That  it  has  implied  power  to  contract  debts  like  an 
individual  whenever  necessary  or  convenient  in  furtherance  of  its 
legitimate  objects.^"  Second.  That  whenever  it  may  contract  a  debt, 
it  may  borrow  money  to  pay  it.^^  And,  Third.  That  whenever  it 
contracts  a  debt  for  materials,  services,  or  otherwise,  in  the  scope  of 
its  business,  or  borrows  money,  it  may  execute  a  negotiable  bill,  note,^^ 

10.  Fay  V.  Noble,  12  Cush.  1;  McMasters  v.  Reed,  1  Grant's  Cas.  36;  Moss  v. 
Averill,  10  N.  Y.  449;  Barry  v.  Merchants'  Exchange  Co.,  1  Sandf.  Ch.  280; 
Commercial  Bank  v.  Newport,  1  B.  Mon.  13;  National  Bank  of  the  RepubUc  v. 
Young  (N.  J.),  5  Cent.  115,  citing  the  text.  See  also  cases  cited  in  succeeding 
notes.  In  Connecticut  it  has  been  held  that  a  benevolent  association  organized 
to  provide  for  its  members  in  sickness,  etc.,  and  as  such  Uable  to  be  sued,  might 
be  held  upon  a  bill  of  exchange  given  in  compromise  of  a  debt.  Court  Harmony 
V.  Court  Lincoln,  70  Conn.  634. 

11.  Alton  Mfg.  Co.  V.  Garrett  Biblical  Inst.,  243  111.  298,  90  N.  E.  704;  Mead  v. 
Keeler,  24  Barb.  20;  Beers  v.  Phoenix  Glass  Co.,  14  Barb.  358  (1852);  Partridge  v. 
Badger,  25  Barb.  146  (1857);  Fay  v.  Noble,  12  Cush.  1;  Stratton  v.  Allen,  16 
N.  J.  Eq.  229.  A  note  may  be  given  by  a  corporation  in  consideration  of  a  valid, 
subsisting  indebtedness  evidenced  by  a  former  note.  Joseph  Wolf  Co.  v.  Bank  of 
Commerce,  107  111.  App.  58.  A  note  given  by  a  corporation  for  money  loaned  to 
it  by  a  stockholder  with  which  to  settle  an  offer  of  composition  with  its  creditors, 
was  given  for  a  good  consideration  and  is  provable  as  a  claim.  In  re  C.  H.  Ben- 
nett Shoe  Co.,  162  Fed.  691.  Where  a  note  was  given  for  money  advanced  to  the 
corporation  and  disbursed  by  the  company  in  payment  of  its  debts,  the  fact  that 
the  need  of  the  corporation  for  the  money  was  brought  about  by  reason  of  mis- 
management, dishonest  acts,  or  conspiracy,  affords  no  defense  to  the  corporation 
or  to  the  minority  stockholders  in  an  action  on  the  note.  Randall  v.  Fox  (Ariz.), 
108  Pac.  249  (1910). 

12.  Mott  V.  Hicks,  1  Cow.  513;  Safford  v.  Wyckoflf,  4  Hill,  442;  Moss  v.  Oakley, 
2  Hill,  265;  Barry  v.  Merchants'  Exchange  Co.,  1  Sandf.  Ch.  289;  Mead  v.  Keeler, 
24  Barb.  20;  Barber  v.  Mechanics'  Ins.  Co.,  3  Wend.  96;  Barnes  v.  Ontario  Bank, 
19  N.  Y.  152;  Leavitt  v.  Blatchford,  17  N.  Y.  521;  Curtis  v.  Leavitt,  15  N.  Y. 
66;  Partridge  v.  Badger,  25  Barb.  146;  Moss  v.  Averill,  10  N.  Y.  449;  Attorney- 
General  V.  Life  &  Fire  Ins.  Co.,  9  Paige,  470;  Hamilton  v.  Newcastle  R.  Co., 
9  Ind.  359;  Hardy  v.  Merriman,  14  Ind.  203;  McMasters  v.  Reed,  1  Grant's  Cas. 
36;  Smith  v.  Eureka  Flour  Mills,  6  Cal.  1;  Crane  v.  Brigham,  39  Me.  35;  Clark  v. 
School  District,  3  R.  I.  199;  Lucas  v.  Pitney,  3  Dutch.  221;  Commercial  Bank  v. 
Newport  Mfg.  Co.,  1  B.  Mon.  13;  Buckley  v.  Briggs,  30  Mo.  452.  In  a  Massachu- 
setts case  it  was  held,  that  there  is  nothing  in  the  nature  of  the  business  to  be  done 
by  co-operative  banks,  or  in  the  express  provisions  of  the  statutes,  which  indicates 
that  their  treasurers  can  create  UabiUties  on  the  part  of  such  corporations  by  their 
signatures  to  commercial  paper,  or  by  their  indorsement  or  acceptance  of  such 
paper,  the  court  saying:  "Such  banks  are  subject  to  the  supervision  of  the  savings 
bank  commissioners,  and  in  their  organization  and  general  features  are  closely 
allied  to  saving  banks."  Atwood  v.  Dumas,  149  Mass.  167-169,  21  N.  E.  236. 
"They  are  not  authorized  to  do  a  general  banking  business,  and  their  rights  and 


§  382  AUTHORITY   TO    EXECUTE    INSTRUMENT  483 

or  bond/^  and  secure  it  by  mortgage,  to  the  creditor  in  payment. 
The  doctrine  on  this  subject  was  well  stated  in  a  New  York  case, 
where  Vice  Chancellor  Sandford  said:  "A  corporation,  in  order  to 
attain  its  legitimate  objects,  may  deal  precisely  as  an  individual  may 
who  seeks  to  accomplish  the  same  ends.  If  chartered  for  the  purpose 
of  building  a  bridge,  it  may  contract  a  debt  for  labor,  the  materials, 
or  the  land  upon  which  the  bridge  is  abutted.  If  more  advantageous, 
it  may  borrow  money  to  purchase  such  land  or  materials,  or  to  pay 
for  such  labor;  and  as  the  evidence  of  the  indebtedness,  it  may  execute 
to  the  creditors  a  note,  a  bond  or  a  mortgage,  whether  the  debt  be 
for  the  money  borrowed,  or  the  work,  material,  or  lands."  ^^  And 
in  a  more  recent  case  it  was  said  that  "the  right  of  corporations  in 
general  to  give  a  note,  bond,  or  other  engagement  to  pay  a  debt  is  so 
nearly  identical  or  so  inseparably  connected  with  the  right  to  con- 
tract the  debt,  that  no  doubt  upon  the  question  ought  to  be  admitted. 
When  a  corporation  can  lawfully  purchase  property,  or  procure 
money  on  loan  in  the  course  of  its  business,  the  seller  or  the  lender 
may  exact,  and  the  purchaser  or  borrower  must  have,  the  power  to 
give  any  known  assurance  which  does  not  fall  within  the  prohibition, 
express  or  implied,  of  some  statute.  The  particular  restriction  must 
be  sought  for  in  the  charter  of  the  corporation,  or  in  some  other  statute 
binding  upon  it;  but  if  not  found  in  that  examination,  we  may  safely 
affirm  that  it  has  no  existence."  ^^ 

powers  are  strictly  limited  for  the  protection  and  benefit  of  their  members." 
Jewett  V.  West  Somerville  Co-Operative  Bank,  173  Mass.  54,  52  N.  E.  1085,  73 
Am.  St.  Rep.  259.  "WTiere  a  corporation  has  taken  over  an  established  business, 
it  may  be  assumed  that  it  has  assumed  the  debts  of  such  business,  and  may  make 
a  corporate  note  evidencing  such  indebtedness.  Curtis,  Jones  &  Co.  v.  Smelter 
Nat.  Bank,  43  Colo.  391,  96  Pac.  172.  The  president  of  a  corporation  may  loan 
money  to  the  corporation  and  in  good  faith  take  its  note  therefor,  and  at  a  judi- 
cial sale  of  the  company's  property,  may  purchase  it  for  his  own  benefit.  Law  v. 
Fuller,  217  Pa.  St.  439,  66  Atl.  754;  See  also  Gumaer  v.  Cripple  Creek  Tunnel, 
etc.,  Co.,  40  Colo.  1,  90  Pac.  81,  122  Am.  St.  Rep.  1024;  Black  v.  Ray,  110  Ky. 
705,  62  S.  W.  531.  From  the  fact  that  a  corporation  had  no  power  to  conduct  its 
corporate  business  in  another  state,  it  does  not  follow  that  it  had  no  power  to 
make  acceptances  of  drafts  for  business  done  in  such  other  state.  Lake  Charles 
Nat.  Bank  v.  J.  L  Campbell  Co.  (Tex.  Civ.  App.),  122  S.  W.  601. 

13.  Smith  V.  Law,  21  N.  Y.  296;  Curtis  v.  Leavitt,  15  N.  Y.  66;  Barry  v.  Mer- 
chants' Exchange  Co.,  1  Sandf.  Ch.  280;  Commonwealth  v.  Pittsburg,  41  Pa. 
St.  278;  Raikoad  Co.  v.  EvansviUe,  15  Ind.  395;  White  Water  Valley  Canal  Co. 
V.  Vallette  et  al,  21  How.  414;  Hunt  v.  Memphis  Gas  Light  Co.,  95  Tenn.  136, 
31  S.  W.  1006. 

14.  Barry  v.  Merchants'  Exchange  Co.,  1  Sandf.  Ch.  280. 

15.  Comstock,  J.,  in  Curtis  v.  Leavitt,  15  N.  Y.  66;  Savannah  &  Memphis  R. 


484  PRIVATE    CORPORATIONS   AS    PARTIES  §  383 

§  383.  Illustrations. — Applying  these  principles  in  particular 
cases,  the  courts  have  upheld  the  right  to  contract  debts,  and  to 
borrow  money  to  pay  them,  where  the  company  was  chartered  to 
build  a  railroad;  ^^  to  build  a  plankroad;  ^"  to  hold  real  estate,  and 
to  erect  buildings  for  a  public  exchange;  ^^  to  build  and  hold  property 
for  religious  purposes;  ^^  to  operate  a  flouring  mill;  ^°  and  where  a 
railroad  was  empowered  to  contract  with  a  connecting  road  for  its 
use,  it  was  held  that  it  might  accept  bills  drawn  by  the  connecting 
road,  as  a  consideration  for  a  change  of  gauge. ^^  So  where  a  mining 
company  was  authorized  to  borrow  money;  ^^  so  trustees  of  a  society 
to  build  a  monument,  it  has  been  held,  may  make  a  promissory  note;  ^^ 
so  may  corporations  empowered  to  buy  and  sell  lands  or  goods;  ^* 
so  may  one  authorized  to  advance  money  upon  goods,  accept  bills  in 
anticipation  of  consignments;  ^^  so  may  one  engaged  in  the  manu- 
facture of  glass  execute  its  bills  or  notes  for  wood  to  be  used,  or  other 


Co.  V.  Lancaster,  62  Ala.  555.  See  also  Mott  v.  Hicks,  1  Cow.  513;  Bai-ber  v. 
Mechanics'  Ins.  Co.,  3  Wend.  96;  Jackson  v.  Brown,  5  Wend.  596;  Moss  v.  Oakley, 
2  Hill,  265;  Attorney-General  v.  Life  &  Fire  Ins.  Co.,  9  Paige,  470;  Safford  v. 
Wyckoff,  4  Hill,  442;  Barry  v.  Merchants'  Exchange  Co.,  1  Sandf.  Ch.  280; 
Mead  v.  Keeler,  24  Barb.  20;  Hamilton  v.  Newcastle,  etc.,  R.  Co.,  9  Ind.  359; 
Hardy  v.  Merriman,  14  Ind.  203;  Smith  v.  Eureka  Flour  Mills,  6  Cal.  1;  Buckley 
V.  Briggs,  30  Mo.  452;  Commercial  Bank  v.  Newport  Mfg.  Co.,  1  B.  Mon.  13; 
McMasters  v.  Reed,  1  Grant's  Cas.  36;  Came  v.  Brigham,  39  Me.  35. 

16.  Richmond,  etc.,  R.  Co.  v.  Sneed,  19  Gratt.  354;  Railroad  Co.  v.  Howard, 
7  Wall.  412;  Hamilton  v.  Newcastle  R.  Co.,  9  Ind.  349;  Olcott  v.  Tioga  R.  Co., 
40  Barb.  179,  27  N.  Y.  546;  Lucas  v.  Pitney,  3  Dutch.  (27  N.  J.  L.)  221.  As  to 
powers  of  railroads  to  bind  themselves  by  notes  and  bills,  see  Green's  Brice's 
Ultra  Vires,  211,  223,  229,  252,  253.  Unless  restrained  by  statute,  a  railroad  com- 
pany in  the  United  States  "  may  bind  itself  by  promissory  notes,  bills  of  exchange, 
and  negotiable  bonds."  Pierce  on  Railroads,  503,  and  cases  cited;  Morawetz  on 
Private  Corporations,  §  178;  Temple  St.  Cable  Ry.  Co.  v.  HeUman,  103  Cal.  634, 
37  Pac.  530. 

17.  Smith  V.  Law,  21  N.  Y.  296. 

18.  Barry  v.  Merchants'  Exchange  Co.,  1  Sandf.  Ch.  280. 

19.  Davis  V.  Proprietors'  Meeting  House,  8  Mete.  (Mass.)  321. 

20.  Smith  v.  Eureka  Flour  Mills  Co.,  6  Cal.  1. 

21.  Smead  v.  Indianapolis  R.  Co.,  11  Ind.  104. 

22.  Mahoney  Mining  Co.  v.  Banks,  104  U.  S.  192. 

23.  Hayward  v.  Pilgrim  Society,  21  Pick.  270. 

24.  Clark  v.  Farmers'  Woolen  Mfg.  Co.,  15  Wend.  256;  Commercial  Bank  v. 
Newport  Mfg.  Co.,  1  B.  Mon.  13;  Fay  v.  Noble,  12  Cush.  1;  Ketchum  v.  City  of 
Buffalo,  14  N.  Y.  356;  Edward  Knapp  &  Co.  v.  Tidewater  Coal  Co.  (Conn.), 
81  Atl.  1063  (as  to  a  corporation  engaged  in  coal  business). 

25.  Munn  v.  Commission  Co.,  15  Johns.  44. 


§  384  AUTHORITY   TO   EXECUTE    INSTRUMENT  485 

materials;  -  so  may  a  building  and  loan  association  borrow  money 
and  execute  its  notes  in  payment.-  But  it  has  been  held  that  a  hotel 
company  is  not  a  trading  or  manufacturing  corporation,  and  it  is  not 
within  the  apparent  scope  of  the  authority  of  the  secretary  of  such  a 
corporation  to  execute  a  promissory  note  whether  for  accommodation 
or  otherwise.^ 

S  384.  Power  to  take  bills  and  notes  and  loan  funds. -Ordinarily 
a  corporation  has  implied  power  to  take  a  bill  or  note  for  a  debt  due 
it,  and  what  it  may  receive  it  may  transfer  -  But,  as  a  general  rule, 
there  is  no  implied  power  in  a  corporation  to  loan  out  its  funds, 
unless  it  be  a  bank,  or  authorized  to  conduct  banking  business,  or 
make  loans  and  discounts,  as  other  corporations  are  ^^^:'^^^' ^^- 
powered  to  do.  Therefore,  an  insurance  company  prohibited  from 
discounting  paper  could  not  lend  money  on  a  note  and  take  interest 
in  advance.^i  And  prohibition  of  hanking  powers  is  a  prohibition 
from  making  discounts.^^ 

But  it  has  been  held  that  an  msurance  company  empowered  to 
make  insurances  cannot  contract  debts,  or  borrow  money,  and  con- 

Trust  Co.  V.  Crescent  Loan,  etc.,  Co.,  27  IndApp.  4^)1  01  i  , 

T?on   257-  Bohn  v.  Building  &  Loan  Ass'n,  135  Iowa,  140,  112  N.  W.  lyy,  i^* 

Am  St  Rep  263;  Davis  v.  West  Saratoga  B.  Union,  32  Md.  285;  RusseU  v.  Ca^- 

sidv.  122  Mo.  App.  565,  99  S.  W.  781.  kok   in-?  ci   w 

28.  First  Nat.  Bank  v.  Abilene  Hotel  Co.,  46  Tex.  Civ.  App.  595,  103  S.  W. 

''29.  Green's  Brice's  Ultra  Vires  (2d  ed.),  256;  Lucas  v.  Pilney  27  N.  J.  L-  221^; 
Mclntire  v.  Prestori,  10  111.  48;  Hardy  v.  Memweather,  1*  Ind.  203  Frye  v 
Tucker  24  111.  180;  Buckley  v.  Briggs,  30  Mo.  452;  §  385.  It  has  been  held  that 
Jven  where  the  coi^^oration  takes  a  note  before  its  certificate  of  incorporation  is 
ecorded  Lfo:din?to  the  requirements  of  1--  Jj^^.^ -{^-rN^T^n 
has  been  duly  incorporated.    Stofflet  v.  Strome,  101  Mich  197,  59  N.  W.  411. 

30  MadiL    etc  ,  Plank  Road  Co.  v.  Watertown  Plank  Road  Co.,  7  Wis. 
59     Held  tSa  pla'nk  road  company  is  not  authorized  to  l-d  money  .e^^^^^^^^^^ 

Gould,  8  Wash  367,  36  Pac.  277.  ^^^^  ^^^^  ^ 

31  N    Y.  Fireman's  Ins.  Co.  v.  Ely,  ^  ^ow.  dd-±.     it  no^ 
banting'corporation  engaged  in  a  general  banking  ^u-ess  has  th^^^^^^^        buy 
notes  outright.    The  Salmon  Falls  Bank  v^Leyse^;  ^^^  Mo.  51,  22  S.  ^ .  504. 

32.  Philadelphia  Loan  Co.  v.  Towner,  13  Conn.  24y. 


486  PRIVATE    CORPORATIONS   AS   PARTIES  §§  385,  386 

sequently  could  not  draw  or  accept  a  bill,  or  make  a  note;  for  no  such 
implied  power  can  be  deemed  necessary  to  its  business,  which  is  to 
be  conducted  by  subscriptions  of  stock.^^ 

§  385.  Indorsement  by  corporation. — Corporations  having  a 
right  to  receive  bills  or  notes  in  payment  of  debts,  have  the  implied 
right  to  indorse  them,  or  to  dispose  of  them  by  assignment  without 
indorsement,  as  may  suit  their  purposes.^"*  And  if  authorized  to 
borrow  money,  they  may  borrow  a  bill  or  note,  and  indorse  it,  or 
assign  it.^^  Power  to  "sell  and  convey"  its  bills  and  notes  im- 
pliedly authorizes  the  corporation  to  transfer  them  by  indorsement 
or  assignment.^^ 

§  386.  Presumptions  of  regularity;  accommodation  paper;  as 
guarantors  or  sureties. — When  a  corporation  has  a  general  power, 
express  or  implied,  to  be  a  party  to  bills  and  notes,  such  instruments 
will  be  presumed  to  have  been  executed  in  the  legitimate  course  of 
its  business,  and  whether  so  executed  or  not  will  be  valid  in  the 
hands  of  a  bona  fide  holder  without  notice."    Unless  the  corporation 

33.  Bacon  v.  Mississippi  Ina.  Co.,  31  Miss.  116. 

34.  Marvine  v.  Hymers,  12  N.  Y.  223;  Planters'  Bank  v.  Sharp,  6  How.  301; 
Hardy  v.  Merriweather,  14  Ind.  203;  Mclntyre  v.  Preston,  5  Gil.  48;  Bank  of 
Genesee  v.  Patchin  Bank,  13  N.  Y.  309;  Green's  Brice's  Ultra  Vires  (2d  ed.), 
256.  Where  notes  were  payable  to  a  certain  railway  company,  another  company 
took  title  by  articles  of  consolidation  with  the  payee,  and  had  authority  through 
a  proper  officer  to  indorse  the  notes  and  to  transfer  them  to  an  innocent  purchaser 
for  value.    Kendrick  v.  Kyle,  78  Miss.  278,  28  So.  951. 

35.  Lucas  v.  Pitney,  3  Dutch.  221;  Turnisa  v.  Gilchrist,  1  Sandf.  53;  Hol- 
brook  V.  Basset,  5  Bosw.  147.  On  pledge  bonds  issued  by  it,  to  secure  its  debts. 
Hunt  V.  Memphis  Gas  Light  Co.,  95  Tenn.  136,  31  S.  W.  1006. 

36.  Cooper  v.  Curtis,  30  Me.  488;  Savage  v.  Walshe,  26  Ala.  (N.  S.)  619. 

37.  Gold  Glen  Min.,  Mill  &  Tunnelmg  Co.  v.  Dennis  (Colo.  App.),  121  Pac. 
677;  Mitchell  v.  Rome  R.  Co.,  17  Ga.  574;  Supervisors  v.  Schenck,  5  Wall.  784; 
Hart  V.  Missouri,  etc.,  F.  &  M.  Ins.  Co.,  21  Mo.  91;  Barker  v.  Mechanics'  Ins. 
Co.,  3  Wend.  94;  Lafayette  Bank  v.  St.  Louis  Stoneware  Co.,  2  Mo.  App.  294; 
Main  v.  Casserly,  67  Cal.  128;  National  Bank  of  the  Republic  v.  Young  (N.  J.) 
5  Cent.  115,  citing  the  text.  The  general  rule  is  not  altered  by  the  fact  that  the 
same  person  is  president  of  two  corporations  having  transactions  together — the 
presumption  is  in  favor  of  the  legaUty  and  fairness  of  the  transaction.  St.  Joe 
Mineral  &  Mining  Co.  v.  Bank,  10  Colo.  App.  339,  50  Pac.  1055;  Florence  R.  & 
Improvement  Co.  v.  Chase  Nat.  Bank,  106  Ala.  364,  17  So.  720;  Nebraska  Nat. 
Bank  v.  Ferguson,  49  Nebr.  109,  68  N.  W.  370,  59  Am.  St.  Rep.  522.  The  burden 
of  establishing  the  defense  of  ultra  vires  is  on  the  corporation  asserting  it.  Edward 
Knapp  &  Co.  v.  Tidewater  Coal  Co.  (Coim.),  81  Atl.  1063.    Where  an  agent  had 


§  386  AUTHORITY   TO   EXECUTE   INSTRUMENT  487 

be  specially  authorized  to  do  so,  the  execution  or  indorsement  of 
accommodation  paper  for  the  benefit  of  a  third  person  is  an  act  be- 
yond the  scope  of  its  corporate  authority;  ^  but,  accordmg  to  the 
principles  stated,  a  bona  fide  holder  taking  without  notice  of  its 
character  could  enforce  it.^^    Its  endorsement  on  the  paper  is  pre- 

authority  to  8ign  the  corporate  name  to  checks,  the  fact  he  deposited  the  proceeds 

rsuA  checks^  his  own  name,  which  he  was  not  authorized  to  do,  would  not 

debar  the  blnk  on  which  the  checks  were  drawn  from  recovermg  from  the  com- 

nanv   unless  the  company  had  lost  the  proceeds  of  the  checks  on  account  of  the 

Lt  anrthTbank  had'  knowledge  that  the  a^-tw^ unlawfully  con v^^^^^ 

G+^tfa  r\tv  Rnnk  V  T  A.  Miller  Lumber  Co.,  iuz  mo. 
money  to  his  own  use.    btotts  <^ity  nauK  v.  x .  n..  ly^i"^ 

^-sl  Md'on'^cSorations,  306;  Greea'.  Brice's  UUra  Vires  &i  ed.)  262; 
Mapes  V  German  Bank  ot  TUden,  176  Fed.  89;  Steiner  &  Lobman  v.  Sterner 
Land  &  Lumber  Co.,  120  Ala.  128,  26  So  494;  S^-ons  Nat^  Bank  v.  Ddl^ 
TT  r.Ar..r  Or.  ( \t]c  )  130  S  W  162;  El  Dorado  Imp.  Co.  v.  Citizens  Bank,  «5  atk. 
SrfoTs  W  6^;'i"na  Nat.  Bink  v.  Insurance  Co.,  60  Conn.  168;  National 
Park  Bank  v.  German  Security  Co.,  22  N.  E.  607;  Beacon  Trust  Co.  v^ Souther, 
mwL  413  67  N.  E.  345;  Bacon,  Dawson  &  Co.  v.  Farmers'  Bank,  79  Mo. 
App^-  P^ton  ;  Northw^tem  Cereal  Co.,  67  Nebr.  45,  93  N  W.  136;  Owen 
App.  WD,rre«io  „^    ,  ,    ,34  72  Atl.  441 ;  National  Bank  of  Newport  v. 

H  P°-  Soytn^ft  ^:,  M  N.  Y  S  982  107  App.  biv.  95;  Federal  Nat.  Bank  v. 
00^  CrLk  &  Pftsbu  g  Coal  Co.,  220  Pa.  St.  39,  68  Atl.  1018;  Wortl>mgton  v. 
YTT-,  .  n  tor;  p,  St  211  45  Atl  927;  Cook  v.  American  Tubmg, 
f^'t'l^R  .":i^5  A  1  Ml  9'l'r.'a.'(n's.'  .93;  McCampbcU  v.  Fountain 
S  /S''rl  illTpnn  55  77  S  W  1070,  102  Am.  St.  Rep.  731;  Pclton  v.  Spider 
Ssav^ili  etc.  Co  ;  7  W^!  L.  94  N.  W.  293,  98  Am.  St.  Rep.  946.  ^Vhere 
a  partne^P^^^  of  which  owned  a  majority  of  stock  in  a  corporation 

actS^^The  4ancial  and  sales  agent  of  the  corporation,  and  in  the  ^ue  course  o 
the?  business  relations  accepted  drafts  drawn  by  the  corporation,  and  the  draft 
were  accepted  by  the  firm  either  in  pursuance  of  its  obligation  to  provide  funds  for 
The  use  of  the  corporation,  or  aa  a  loan  of  the  credit  of  the  corporation  to  the  firm 
o  enable  the  latt^to  procure  funds  for  any  of  its  -^-takmg^;^^;^ra^  were 
accommodation  paper  of  the  corporation.  Cook  v.  American  Tubing,  etc.,  Co., 
28R.I.41,65Atl.641,9L.R.A.  (N.S.)193. 

39  Stouffer  v.  Smith-Davis  Hardware  Co.,  154  Ala.  301,  45  So  621.  129 
A^'st  Ren  59-  Wolf  Co.  v.  Bank  of  Commerce,  107  111.  App.  58;  Johnson  v. 
^hnst  BrTs.  M^),  80  Atl.  741 ;  Bird  v.  Daggett,  97  Ma.,  ^^^^^^^^^f 
n  r.h  ^  riohP  Works  101  Mass.  57;  Bank  of  Genesee  v.  Patchin  Bank,  Id  JN .  l  • 
309  19  S  y  312  M  rfo^v.  Fai>e«'  Bank,  26  Barb.  668;  Bridgeport  Qty 
Bank  V.  Empire  Stine  Dressing  Co.,  30  Barb.  421 ;  Hall  v.  Auburn  Tuxnpi   O.. 

?hfmls,  46  ?ebr.  802:65  N.  W.'896;  kockviUe  Nat.  Bank  v.  Citizens'  Gas  Ugbt 


488  PRIVATE    CORPORATIONS   AS    PARTIES  §  386 

sumably  valid,  and  it  cannot  be  inferred  in  the  absence  of  proof  that 
it  was  for  accommodation.^  But  it  has  been  held  that  where  the 
rights  of  creditors  are  not  involved,  a  corporation  is  estopped  from 
setting  up  a  plea  of  ultra  vires  when  it  has  executed  an  accommodation 
note  with  the  consent  of  all  the  stockholders.*^  Where  a  railroad 
company  transferred  and  guaranteed  bonds  of  another,  itself  receiv- 
ing the  proceeds,  it  was  held  estopped  to  deny  its  liability  upon  the 
guaranty/^  and  the  fact  that  vendor's  lien  notes  executed  by  a  cor- 
poration were  really  made  for  the  accommodation  of  the  president 
of  the  company  cannot  be  urged  as  an  objection  to  the  notes  when  the 
company  does  not  offer  to  reconvey  the  land  for  which  it  executed 
such  notes.''^ 

Although  the  agent  or  officer  of  the  corporation  making  accom- 
modation paper  exceeded  his  authority,  such  holder  could  not  sue 
him  for  his  tortious  act,  as  the  paper  is  valid  as  to  him,  and  having 
a  remedy  against  the  corporation,  he  suffers  no  damage  thereby. ''^ 
The  same  principle  which  prohibits  corporations  from  becoming 

Co.,  72  Conn.  582,  45  Atl.  361.  The  fact  that  notes  were  issued  by  a  corporation 
for  the  accommodation  of  indorsers  who  were  officers  of  the  company,  is  no  de- 
fense against  one  who  had  no  notice  of  such  fact.  National  Bank  of  Commerce 
in  St.  Louis  v.  Sancho  Packing  Co.,  186  Fed.  257.  Where  a  note  is  taken  from  the 
payee,  in  payment  of  a  debt  due  from  him,  indorsed  by  a  corporation  the  indorse- 
ment is  prima  facie  an  accommodation  indorsement,  and  the  person  who  takes  it  is 
chargeable  with  knowledge  that  the  indorsement  is  an  accommodation  indorse- 
ment. Brill  Co.  V.  Norton,  etc.,  St.  R.  Co.,  189  Mass.  431,  75  N.  E.  1090,  2  L.  R. 
A.  (N.  S.)  525. 

40.  Lafayette  Bank  v.  St.  Louis  Stoneware  Co.,  2  Mo.  App.  299;  Fox  v.  Rural 
Home  Co.,  90  Hun,  365,  35  N.  Y.  Supp.  896. 

41.  Perkins  v.  Trinity  Realty  Co.,  69  N.  J.  Eq.  723,  61  Atl.  167.  In  Brill  Co.  v. 
Norton,  etc.,  St.  R.  Co.,  189  Mass.  431,  75  N.  E.  1090,  2  L.  R.  A.  (N.  S.)  525,  it 
was  held  that  a  corporation  was  not  liable  on  an  accommodation  indorsement  in 
the  hands  of  one  who  took  with  knowledge  of  that  fact,  and  this  though  it  had 
been  authorized  by  all  the  directors  and  the  majority  of  the  stockholders. 

42.  Arnot  v.  Erie  R.  Co.,  5  Hun,  608;  Lyon,  Potter  &  Co.  v.  First  Nat.  Bank, 
29  C.  C.  A.  45,  85  Fed.  120,  text  cited.  The  rule  that  a  corporation  can  neither 
make  nor  indorse  commercial  paper  for  accommodation  is  not  applicable  to  a 
case  where  a  corporation  assumes  an  obligation  of  another  for  the  purpose  of  pro- 
tecting its  own  interests  where  its  property  rights  or  interests  might  be  affected. 
Bacon  v.  Montauk  Brewing  Co.,  115  N.  Y.  S.  617,  130  App.  Div.  737. 

43.  Forty-Acre  Spring  Live  Stock  Co.  v.  West  Texas  Bank  &  Trust  Co.  (Tex. 
Civ.  App.),  Ill  S.  W.  417. 

44.  Bird  v.  Daggett,  97  Mass.  494;  Texarkana  &  Fort  Smith  R.  Co.  v.  Bemis 
Lumber  Co.,  67  Ark.  54,  55  S.  W.  944;  Nebraska  Nat.  Bank  v.  Ferguson,  49 
Nebr.  109,  68  N.  W.  570,  59  Am.  St.  Rep.  522;  Bacon,  Dawson  &  Co.  v.  Farmers' 
Bank,  79  Mo.  App.  406. 


§  386  AUTHORITY   TO    EXECUTE    INSTRUMENT  489 

parties  to  accommodation  paper  would  apply  to  their  becoming 
guarantors,  or  sureties  for  others.^^ 

Hence  it  has  been  held  that  power  conferred  on  a  city  to  acquire 
suitable  works  and  machinery  for  the  generation  of  electricity  did 
not  authorize  it  to  guarantee  the  bonds  of  another  corporation  in 
which  it  had  no  interest,  to  enable  it  to  furnish  electricity.^^ 

Under  Negotiable  Instrument  statute. — The  provisions  of  the  statute 
do  not  affect  the  question  of  the  want  of  power  of  a  corporation  to 
indorse  a  note  for  accommodation/^  and  an  agent  or  officer  of  a 
corporation  has  no  implied  authority  to  bind  the  corporation  by  an 
accommodation  indorsement."^  But  when  a  corporation  has  power 
to  make  bills  and  notes  in  the  course  of  its  business,  the  fact  that  it 
transcended  the  power  conferred  in  its  charter  and  executed  a  nego- 
tiable instrument  for  a  matter  beyond  the  scope  of  its  business  would 
not  render  it  void  in  the  hands  of  an  innocent  purchaser  for  value,  and 
notwithstanding  it  was  executed  in  violation  of  the  public  policy  of 


45.  Madison,  etc.,  Plank  Road  Co.  v.  Watertown,  etc..  Plank  Road  Co.,  7 
Wis.  59;  Madison,  etc.,  R.  Co.  v.  Norwdeh  Sav.  Society,  24  Ind.  457;  Lynchburg, 
etc.,  R.  Co.  V.  Dameron,  95  Va.  548,  28  S.  E.  951.  See  Rogers  v.  Jewel  Belting 
Co.,  184  111.  574,  56  N.  E.  1017. 

46.  Lynchburg,  etc.,  R.  Co.  v.  Dameron,  95  Va.  545,  28  S.  E.  951;  Bowen  v. 
Needles  Nat.  Bank,  36  C.  C.  A.  553,  94  Fed.  925. 

47.  See  appendix,  sees.  22,  23,  29,  56,  64,  66.  Nat  Bank  v.  H.  R.  Snyder  Mfg. 
Co.,  102  N.  Y.  S.  478,  117  App.  Div.  370;  Oppenheim  v.  Simon  Reigal  Cigar  Co., 
90  N.  Y.  S.  355;  Bradley  Engineering,  etc.,  Co.  v.  Heyburn,  56  Wash.  628,  106 
Pac.  170,  134  Am.  St.  Rep.  1127. 

48.  Federal  Nat.  Bank  v.  Cross  Creek  &  Pittsburg  Coal  Co.,  220  Pa.  St.  39, 
68  Atl.  1018.  Where  one  receives  the  check  of  a  corporation  on  its  private  funds 
in  payment  of  the  individual  debt  of  the  officer  of  the  corporation  who  drew  the 
check,  or  in  payment  of  a  debt  for  which  such  officer  is  obligated,  he  is  prima 
facie  chargeable  with  notice  that  such  officer  is  not  authorized  to  use  the  corporate 
funds  for  that  purpose,  and  is  bound  to  inquire  as  to  the  real  situation.  Coleman 
V.  Stocke,  159  Mo.  App.  43,  139  S.  W.  216.  See  also  Lanning  v.  Trust  Co.  of 
America,  122  N.  Y.  S.  485.  'WTiere  the  agent  of  an  Insurance  Company  received 
a  check  of  a  municipal  corporation  in  payment  of  a  premium  individually  due  by 
the  treasurer  of  the  municipal  corporation,  the  payee  is  charged  with  notice  of  a 
possible  want  of  authority  of  the  treasurer,  and  the  knowledge  of  the  agent  is  the 
knowledge  of  the  insurance  company.  Newburyport  v.  Fidelity  Mut.  Life  Ins. 
Co.,  197  Mass.  596,  84  N.  E.  111.  Where  a  salesman  for  a  corporation  had  without 
authority  indorsed  a  check  payable  to  the  corporation,  it  cannot  be  held  as  a 
matter  of  law  that  his  act  had  been  ratified  by  a  delay  for  more  than  two  years 
after  learning  of  the  wrongful  act  before  making  any  claim  upon  the  indorsee, 
when  the  corporation  received  no  benefit  from  the  act  of  its  salesman.  Blum, 
Jr's.  Sons  v.  Whipple,  194  Mass.  253,  80  N.  E.  501,  13  L.  R.  A.  (N.  S.)  211,  120 
Am.  St.  Rep.  553. 


490  PRIVATE    CORPORATIONS   AS   PARTIES       §§  386a,  387 

the  state,  ^^  but  when  a  person  receives  a  note  for  the  debt  of  another, 
which  bears  the  indorsement  of  a  corporation  not  in  the  chain  of 
title,  he  is  charged  with  notice  that  the  indorsement  is  an  accommo- 
dation indorsement."*^ 

§  386a.  Estoppel  in  dealings  with  corporations. — Although  it 
may  be  illegal  for  a  corporation  to  loan  its  funds,  yet  if  it  do  so,  the 
parties  bound  to  it  for  payment  are  generally  estopped  from  setting 
up  the  defense  that  it  acted  ultra  vires.  Having  received  its  money 
they  are  in  equity  and  good  conscience  bound  to  repay  it;  and  to 
allow  them  to  plead  the  illegality  of  the  act,  would  subject  share- 
holders to  penalties  for  the  breaches  of  trust  committed  by  their 
officers,  and  permit  the  parties  who  derived  a  benefit  thereby  to  take 
advantage  of  their  own  wrong  in  borrowing  from  those  who  had  no 
authority  to  lend.^^  Upon  like  principles  a  corporator,^^  qj.  other 
party,  sued  upon  a  note  given  to  a  corporation,  cannot  plead  the 
illegality  of  the  corporation.^^ 


SECTION   II 

AUTHORITY   OF  THE   AGENT  IN   LAW   AND    IN   FACT  TO   BIND   THE 

CORPORATION 

§  387.  (1)  When  it  is  settled  that  the  corporation  has  legal  au- 
thority to  do  the  act,  the  next  question  is,  are  the  parties  pretending 
to  act  for  it  the  legal  agencies  by  which  its  authority  may  be  exercised. 
Not  infrequently  the  charter  of  incorporation  provides  that  the  cor- 
porate instruments  of  debt  shall  be  signed  by  the  president,  or  signed 
by  its  president  and  countersigned  by  the  cashier,  or  prescribe  some 
such  formality  of  their  execution.    In  such  cases,  these  being  the  legal 

49.  Jefferson  Bank  v.  Chapman- White-Lyons  Co.,  122  Tenn.  415,  123  S.  W. 
641.    See  also  Willard  V.  Crook,  21  App.  D.  C.  237. 

60.  Appendix,  sec.  59.  Pelton  v.  Spider  Lake  Sawmill  &  Lumber  Co.,  117 
Wis.  569,  94  N.  W.  293,  98  Am.  St.  Rep.  946. 

61.  Ante,  §  93.  And  the  same  principle  is  apphcable  to  the  liability  of  a  cor- 
poration for  its  ultra  vires  acts.  See  German  Nat.  Bank  v.  Butchers'  Hyde  & 
Tallow  Co.,  97  Ky.  34,  29  S.  W.  882;  Seymour  v.  Cemetery  Assn.,  144  N.  Y.  333; 
Ditty  V.  Dominion  Nat.  Bank,  22  C.  C.  A.  376,  75  Fed.  769. 

52.  See  ante,  §  93;  Farmington  Sav.  Bank  v.  Fall,  71  Me.  49;  National  P.  Bank 
V.  Porter,  125  Mass.  333;  Poock  v.  Lafayette  Banking  Assn.,  71  Ind.  357. 

53.  McCullough  V.  Moss,  5  Den.  575,  Lott,  Senator.    See  ante,  §  93. 


§  38?  AUTHORITY   OF   THE   AGENT 


491 


agencies  provided  by  law  to  bind  the  corporation  by  their  acts  in  a 
particular  way,  mstruments  signed  by  other  officers  or  agents,  pur- 
porting to  bind  the  corporation,  would  bear  upon  their  face  evidence 
of  departure  from  the  legal  mode,  and  be  notice  to  all  of  the  irregular- 
ity.   And  it  would  not  be  competent  for  the  corporation  to  bind  itself 
by  instruments  in  any  other  form,  or  executed  by  other  agents,  than 
those  prescribed  by  law.^^    Thus,  where  a  bank  charter  provided  that 
its  bills,  notes,  and  other  contracts  should  be  binding  if  signed  by 
the  president  and  countersigned  by  the  cashier,  and  that  the  funds  of 
the  corporation  should  not  be  bound  for  any  contract,  unless  it  was  so 
signed  and  countersigned,  it  was  held  that  bank  bills  signed  by  the 
vice-president  and  countersigned  by  the  assistant  cashier  were  not 
binding,  although  the  board  of  directors  had  authorized  the  vice- 
president  and  assistant  cashier  to  sign  them.^^    And  this  is  clearly 
correct,  for  when  a  corporation  is  limited  and  restricted  to  certain 
defined  powers,  and  also  to  certain  prescribed  modes,  the  ends  con- 
templated by  the  charter  would  be  practically  defeated,  as  well  by  a 
departure  from  the  mode  designated  as  by  an  exercise  of  the  powers 
prohibited.^^    So  where  it  was  provided  that  the  business  of  a  lead 
mining  company  should  be  conducted  by  its  directors,  it  was  thought 
that  the  president  and  secretary  could  not  bind  it  by  a  note  unless 
authorized  so  to  do  by  the  directors,  and  such  authority  was  not  to 
be  presumed."    But  any  officer  or  agent,  acting  under  authority  of 
directors  having  power  under  the  charter  to  bind  the  corporation, 
might  bind  the  corporation,  and  his  authority  from  them  might  be 
shown  to  exist  by  implication  from  the  course  of  business,  as  well  as 


54.  McCuUough  v.  Moss,  5  Den.  575,  Lott,  Senator;  Dobbins  v.  Etowah  Mfg. 
Co.,  75  Ga.  243.  But  a  note  executed  by  the  president  to  himself  as  payee  carries 
its  invaUdity  on  its  face,  subject,  however,  to  explanation  that  it  was  executed 
in  pursuance  of  special  authority  from  the  board  of  directors.  Smith  v.  Immi- 
gration Co.,  78  Cal.  289;  Elwell  v.  Puget  Sound  R.  Co.,  7  Wash.  487,  35 
Pac.  376. 

55.  Planters,  etc..  Bank  v.  Erwin,  31  Ga.  377,  Lumpkin,  J.:  "If  it  be  said  that 
these  bills  have  got  into  the  hands  of  innocent  holders,  our  reply  is,  that  they 
could  have  protected  themselves  by  looking  at  the  charter,  which,  in  strong 
phraseologj%  has  exempted  the  corporation  from  liability  for  bills  thus  signed. 
The  want  of  power  to  bind  even  the  corporate  funds  in  this  way  was  patent,  and 
whosoever  would,  might  avoid  imposition." 

66.  Lucas  v.  San  Francisco,  7  Cal.  469. 

57.  McCullough  V.  Moss,  5  Den.  575.  To  same  effect,  see  Cattron  v.  First 
UniversaUst  Society,  46  Iowa,  106;  Monroe  Mercantile  Co.  v.  Arnold,  108  Ga. 
449,  34  S.  E.  176. 


492  PRIVATE    CORPORATIONS   AS   PARTIES  §  388 

by  express  resolution, ^^  and  might  be  given  by  parol.^^  Substantial 
compliance  with  the  statutory  requirements  is  all  that  is  necessary. 
Therefore,  where  the  statute  required  that  a  corporate  bill  should  be 
accepted  by  two  directors,  and  that  they  should  express  that  it  was 
accepted  by  them  on  behalf  of  the  corporation,  and  the  two  accepting 
directors  wrote  "appointed  to  accept  this  bill"  in  their  acceptance,  it 
was  held  sufficient.^^ 

Where  the  directors  of  an  incorporated  company  authorized  its 
agent  to  give  "a  company  note,"  it  was  held  that  the  term  "note" 
was  not  employed  in  its  strict  sense,  but  that  a  due-bill,  memorandum, 
check,  or  other  similar  security  would  fall  fairly  within  the  meaning 
of  it." 

§  388.  (2)  Whether  or  not  the  parties  so  describing  themselves 
are  really  officers  or  agents  of  the  corporation  is  next  to  be  deter- 
mined. The  ordinary  and  most  unexceptionable  form  of  proof  is 
made  by  the  production  of  the  records  or  books  of  the  corporation 
containing  the  entry  or  resolution  of  appointment,  the  records  being 
shown  to  be  those  of  the  corporation,^^  But  it  is  not  necessary  that 
this  mode  of  proof  should  be  adopted.  Nor  is  it  necessary  that  there 
should  be  such  record  evidence  in  existence,  or  that  anj^  particular 
mode  of  appointment  should  have  been  pursued,  unless  required  by 
statute.  It  was  the  ancient  doctrine  of  the  common  law  that  a  cor- 
poration could  not  express  its  assent,  and,  therefore,  could  not  con- 
stitute an  officer  or  agent,  save  by  instrument  under  seal.^^  This 
doctrine  is  now  completely  obsolete  in  the  United  States,  and  here 
there  is  no  doubt  that  such  a  body  may,  by  mere  vote,  or  other 
appropriate  corporate  act  not  under  seal,  appoint  an  officer  or  agent 
whose  acts  and  contracts  within  the  scope  of  his  authority  would  bind 


58.  Preston  v.  Missouri,  etc.,  Lead  Co.,  31  Mo.  45;  First  Nat.  Bank  v.  Mis- 
Bouri  Coal  Co.,  86  Mo.  125;  Thorold  Mfg.  Co.  v.  Imperial  Bank,  13  Ont.  330; 
Russell  V.  Folsom,  72  Me.  436;  Grant  v.  Treadwell  Co.,  82  Hun,  591,  31  N.  Y. 
Supp.  702. 

59.  Odd  Fellows  v.  First  Nat.  Bank,  42  Mich.  463.    See  §§  74,  299. 

60.  Halford  v.  Cameron's  Coalbrook,  etc.,  Co.,  3  Eng.  L.  &  Eq.  309. 

61.  Tripp  V.  Swanzey  Mfg.  Co.,  13  Pick.  293. 

62.  Clark  v.  Benton  Man.  Co.,  15  Wend.  256;  Narragansett  Bank  v.  Atlantic 
Silk  Co.,  3  Mete.  (Mass.)  282;  Thayer  v.  Middlesex  Mut.  Ins.  Co.,  10  Pick.  326; 
Owings  V.  Speed,  5  Wheat.  424. 

63.  Angell  &  Ames  on  Corporations,  chap.  IX,  §  3,  p.  214.  The  fact  that  the 
indorsement  of  a  note  does  not  bear  the  seal  of  the  corporation  is  immaterial. 
Hall  &  Tyson  v.  First  Nat.  Bank  (Tex.  Civ.  App.),  115  S.  W.  293. 


I  389  AUTHORITY  OF  THE  AGENT  493 

the  corporation.^'*  And  if  a  corporation  employ  a  person  to  discharge 
official  duties — such  as  a  bank,  which  places  a  person  behind  its 
counter  to  exercise  the  duties  of  cashier — it  will  be  bound  by  its  acts 
although  the  formalities  of  qualification  have  not  been  complied  with, 
unless  the  statute  creating  the  corporation  provides  that  his  acts 
shall  be  void  until  such  formalities  be  performed.^^  Indeed,  the  doc- 
trine is  well  settled  that  if  officers  of  a  corporation  openly  exercise  a 
power  which  presupposes  a  delegated  authority  for  the  purpose,  and 
other  corporate  acts  show  that  the  corporation  must  have  contem- 
plated the  legal  existence  of  such  authority,  the  acts  of  such  officers 
will  be  deemed  rightful,  and  the  delegated  authority  will  be  presumed. 
If  a  person  acts  notoriously  as  cashier  of  a  bank,  and  is  recognized  by 
the  directors,  or  by  the  corporation,  as  an  existing  officer,  a  regular 
appointment  will  be  presumed,  and  his  acts  as  cashier  will  bind  the 
corporation,  although  no  written  proof  is  or  can  be  adduced  of  his 
appointment.  In  short,  the  acts  of  artificial  persons  afford  the  same 
presumptions  as  the  acts  of  natural  persons.  Each  affords  presump- 
tions, from  acts  done,  of  what  must  have  preceded  them,  as  matters 
of  right  or  matters  of  duty.^^ 

§  389.  (3)  Whether  or  not  the  officer  or  agent  is  authorized  in 
fact  to  do  the  particular  act,  is  the  next  question. — Proof  of  his 
official  character  is  often  sufficient  to  decide  it,  for  if  the  acts  be  done 
within  the  scope  of  his  official  duties,  and  the  party  dealing  with  him 
had  no  notice  that  the  general  authority  implied  by  official  relation 
was  restricted  by  private  instructions,  the  corporation  would  be 
liable.^^    And  here  the  distinction  between  general  and  special  agents 

64.  Bank  of  Columbia  v.  Patterson's  Admr.,  7  Cranch,  305;  Fleckner  v.  United 
States  Bank,  8  Wheat.  387;  Washington  Times  Co.  v.  Wilder,  12  App.  D.  C.  62. 

65.  Bank  of  United  States  v.  Dandridge,  12  Wheat.  83;  Fifth  Nat.  Bank  v. 
F.  S.  S.  &  G.  S.  F.  R.  R.  Co.,  137  N.  Y.  231,  33  N.  E.  378,  33  Am.  St.  Rep.  712. 

66.  Bank  of  the  United  States  v.  Dandridge,  12  Wheat.  64,  Story,  J.  See  also 
Wild  V.  Bank  of  Passamaquoddy,  3  Mason  C.  C.  505;  Union  Bank  v.  Ridgeley, 
1  Harr.  &  G.  392;  Barrington  v.  Bank,  14  Serg.  &  R.  421;  Merchants'  Bank  v. 
State  Bank,  10  Wall.  604;  Creswell  v.  Lanahan,  101  U.  S.  (11  Otto)  352;  Morse  on 
Banking,  139;  East  River  Nat.  Bank  v.  Gove,  57  N.  Y.  601,  distinguishing  and 
questioning  Thatcher  v.  Bank  of  the  State,  5  Sandf.  121;  Merchants'  Nat.  Bank 
V.  Citizens'  Gas  Light  Co.,  159  Mass.  505,  38  Am.  St.  Rep.  453;  First  Nat.  Bank 
of  Birmingham  v.  First  Nat.  Bank  of  Newport,  116  Ala.  520,  22  So.  976;  Commer- 
cial Nat.  Bank  v.  Brill,  37  Nebr.  626,  56  N.  W.  382;  National  Bank  v.  Thomas, 
46  Nebr.  862,  65  N.  W.  895. 

67.  Tanners  &  Merchants'  Bank  v.  Germania  Life  Ins.  Co.,  150  N.  C.  770,  64 
S.  E.  902,  holding  that  the  burden  is  upon  a  bank  as  plaintiff  to  show  that  an 


494  PRIVATE    CORPORATIONS   AS   PARTIES  §  389 

should  be  observed.  If  a  corporation  were  to  employ  a  special  agent 
to  go  to  a  city  and  buy  a  fireproof  safe,  he  could  not  execute  a  bill  or 
note,  or  borrow  money  in  its  name,  such  acts  not  being  within  the 
scope  of  his  special  agency,  and  all  dealing  with  him  would  be  charge- 
able with  notice  of  his  limited  authority .^^  But  it  has  been  held  that 
where  one  acting  as  general  agent  of  a  corporation  in  the  sale  of  lum- 
ber collected  a  check  payable  to  the  order  of  the  company,  and  in- 
dorsed the  check,  this  constituted  a  payment  to  the  company  though 
such  agent  misappropriated  the  money .^^  But  if  a  corporation  elects 
a  board  of  directors,  a  president,  cashier,  teller,  or  treasurer,  it  thereby 
designates  such  persons  as  authorized  to  exercise  all  powers  which 
its  charter  reposes,  or  the  usual  course  of  business  in  like  institutions 
accords  to  such  officers.  They  are  its  general  agents  within  the  sphere 
of  official  duty  and  discretion.  It  can  only  act  by  its  agents.  And 
they  are,  in  fact,  held  out  to  the  public  as  its  representatives  within 
these  spheres,  and  are,  in  fact,  so  far  as  the  public  is  concerned,  pro 
tanto,  the  corporation.  The  corporation  is,  therefore,  bound  by  their 
acts  done  within  the  range  of  their  official  character;  and  the  general 
principle,  as  stated  by  the  United  States  Supreme  Court,  is,  that 
"where  a  party  deals  with  a  corporation  in  good  faith,  the  transaction 
is  not  ultra  vires,  and  he  is  unaware  of  any  defect  of  authority  or  other 
irregularity  on  the  part  of  those  acting  for  the  corporation,  and  there 
is  nothing  to  excite  suspicion  of  such  defect  or  irregularity,  the  cor- 

officer  of  an  insurance  company,  the  defendant,  had  authority  to  draw  a  check  in 
the  name  of  the  company.  In  an  action  against  a  corporation  on  a  note,  a  plea  of 
non  est  factum  filed  by  the  corporation  calls  for  proof  by  the  plaintiff  of  the  author- 
ity of  the  officer  signing  the  note  in  the  name  of  the  corporation  to  sign  such  name, 
and  without  such  proof  the  note  is  not  admissible.  Dreeben  v.  First  Nat.  Bank 
(Tex.),  99  S.  W.  850.  Where  the  officers  of  a  corporation  sign  a  note  in  the 
name  of  the  corporation  without  authority,  they  are  not  individually  liable  on 
the  note,  but  they  are  liable  to  a  claim  for  damages  caused  by  a  breach  of  their 
warranty,  as  they  are  held  impliedly  to  warrant  that  they  had  in  fact  the  authority 
they  assumed  to  exercise.    McDonald  v.  Luckenback,  170  Fed.  434. 

68.  McCuUough  v.  Moss,  5  Den.  567. 

69.  Perry  v.  Sumrall  Lumber  Co.,  95  Miss.  691,  49  So.  263.  If  the  manager  of 
a  corporation  purchased  a  saloon  and  stock  for  the  company  upon  due  authority, 
and  gave  notes  in  the  corporate  name  for  part  of  the  stock,  the  company  would  be 
liable  upon  the  notes.  Manhattan  Liquor  Co.  v.  Joseph  A.  Magnus  &  Co.,  94 
S.  W.  1117,  43  Tex.  Civ.  App.  463.  The  fact  that  instruments  were  negotiable 
notes  does  not  estop  a  corporation  from  denying  the  agency  of  a  person  to  make 
indorsement,  when  such  person  had  no  authority  to  use  the  company's  name  as 
indorser,  and  the  company  was  ignorant  of  the  existence  of  the  notes  and  of  such 
indorsement  of  them  in  its  name  when  the  money  was  paid  to  the  company. 
Wickersham  Banking  Co.  v.  Nicholas,  2  Cal.  App.  18,  82  Pac.  1124. 


§  390  AUTHORITY  OF  THE  AGENT  495 

poration  is  bound  by  the  contract,  although  such  defect  or  irregular- 
ity in  fact  exists.  If  the  contract  can  be  valid  under  any  circum- 
stances, an  innocent  party  in  such  a  case  has  a  right  to  presume  their 
existence,  and  the  corporation  is  estopped  to  deny  them."  And  it 
adds:  "The  principle  has  become  axiomatic  in  the  law  of  corpora- 
tions." 7° 

§  390.  Illustrations. — Applying  this  principle  to  particular  cases, 
the  courts  have  enforced  the  liability  of  the  corporation,  where 
the  president  of  a  railroad  company,  who  was  also  a  director  and 
transfer  agent,  fraudulently  overissued  certificates  of  stock;  ^^  where 

70.  Merchants'  Bank  v.  State  Bank,  10  Wall.  644  (1870),  Swayne,  J.  See  also 
Supervisors  v.  Schenck,  5  Wall.  784;  Thompson  v.  Lee  County,  3  Wall.  327; 
Mercer  County  v.  Hackett,  1  Wall.  93;  Gelpcke  v.  Dubuque,  1  Wall.  203;  Moran 
V.  Commissioners,  2  Black.  722;  Bissell  v.  Jeffersonville,  24  How.  288;  Commis- 
sioners of  Knox  County  v.  Aspinwall,  21  How.  539;  Commonwealth  v.  Pittsburg, 
34  Pa.  St.  497;  Commonwealth  v.  Alleghany  County,  37  Pa.  St.  287;  Stoney  v. 
American  Life  Ins.  Co.,  11  Paige,  635;  Society  for  Savings  v.  New  London,  29 
Conn.  174;  Claflin  v.  Farmers'  Bank,  36  Barb.  540  (overruhng  s.  c,  25  N.  Y.  293); 
Safford  v.  Wyckoff,  4  Hill,  445;  De  Voss  v.  City  of  Richmond,  18  Gratt.  338; 
Credit  Co.  v.  Howe  Machine  Co.,  54  Conn.  357;  Milbank  v.  de  Riesthal,  82  Hun, 
538,  31  N.  Y.  Supp.  522;  BeU  v.  Beller,  40  Nebr.  501,  58  N.  W.  941;  Commercial 
Nat.  Bank  v.  Brill,  37  Nebr.  626,  56  N.  W.  382;  National  Bank  v.  Thomas,  46 
Nebr.  862,  65  N.  W.  895;  Louisville,  etc.,  Ry.  Co.  v.  Louisville  Trust  Co.,  174 
U.  S.  552, 19  Supp.  Ct.  Rep.  817;  Rockville  Nat.  Bank  v.  Citizens'  Gas  Light  Co., 
72  Conn.  576,  45  Atl.  561;  United  States  Nat.  Bank  v.  First  Nat.  Bank,  13  C.  C.  A. 
472,  64  Fed.  985;  Louisville  Ry.  Co.  v.  Louisville  Trust  Co.,  174  U.  S.  552, 
19  Sup.  Ct.  Rep.  817;  Rockville  Nat.  Bank  v.  Citizens'  Gas  Light  Co.,  72  Conn. 
576,  45  Atl.  361.  WTiere  the  only  officers  of  a  corporation  were  two  directors, 
a  note  signed  in  the  corporate  name  by  one  of  the  directors,  the  other  one  being 
present,  and  being  made  in  the  transaction  of  its  ordinary  business,  was  a  binding 
obligation  of  the  company.  Buck  v.  Troy  Aqueduct  Co.,  76  Vt.  75,  56  Atl.  285. 
Where  the  secretary  of  a  corporation  signed  notes  on  behalf  of  the  company  with 
the  authority  of  the  president  and  himself,  and  the  president  and  secretary  were 
the  only  trustees,  the  company  cannot  question  the  authority  of  the  secretary 
to  sign  the  notes  though  there  may  have  been  no  formal  action  of  the  trustees. 
National  Bank  of  Commerce  v.  Puget  Sound  Biscuit  Co.,  61  Wash.  192,  112 
Pac.  265. 

71.  New  York,  etc.,  R.  Co.  v.  Schuyler,  34  N.  Y.  30;  Fifth  Nat.  Bank  v.  F.  S. 
S.  &  G.  R.  R.  Co.,  137  N.  Y.  231,  33  N.  E.  378,  33  Am.  St.  Rep.  712.  In  this  case 
the  doctrine  of  the  text  was  carried  to  the  extent  of  holding  that  the  issuance  of 
a  stock  certificate  by  the  treasurer  of  a  raihoad  company  wherein  the  treasurer 
forged  the  name  of  the  president,  signed  his  own  as  treasurer,  then  countersigned 
it,  and  pressed  thereon  the  corporate  seal  (the  certificate  upon  its  face  being  perfect 
and  regular  in  every  respect),  that  the  defendant  raihoad  company  was  liable  for 
the  representations  of  its  officer  appearing  on  the  face  of  the  certificate  and  acted 


496  PRIVATE    CORPORATIONS   AS   PARTIES  §  39l 

the  cashier  of  a  bank  issued  a  false  certificate  of  deposit;  ^^  where  the 
cashier  of  a  bank  certified  a  check  without  authority;  ^^  where  the 
teller  of  a  bank  fraudulently  certified  a  check  to  be  good ;  "^  where  the 
treasurer  of  a  railroad  company,  whose  duty  it  was  to  issue  certificates 
of  stock,  fraudulently  issued  certificates  regular  in  form,  but  represent- 
ing no  real  stock,  and  pledged  them  as  security  for  a  loan  to  himself;  ^^ 
where  the  president  and  cashier  of  a  bank  indorsed  paper  to  another 
bank  which  discounted  it.^^  But  notes  issued  by  authority  of  a 
majority  of  stockholders  of  a  corporation,  not  for  the  benefit  of  the 
corporation  or  its  creditors  but  to  be  used  by  an  oflScer  to  the  security 
of  his  own  debt,  are  issued  ultra  vires?'' 

§  391.  Equitable  disposition  of  loss. — The  principle  above  is 
based  upon  the  idea  that  where  one  or  two  innocent  parties  must 
suffer,  the  loss  should  fall  upon  the  one  who  created  the  trust  which 
enabled  the  trustee  to  misleadJ^  And  it  applies  as  well  where  the 
controversy  is  between  the  original  parties,  as  in  favor  of  indorsers 


upon  in  good  faith  by  the  plaintiff.    Railway  Co.  v.  Citizens'  Nat.  Bank,  56  Ohio 
St.  351,  47  N.  E.  249. 

72.  Barnes  v.  Ontario  Bank,  19  N.  Y.  156. 

73.  Merchants'  Bank  v.  State  Bank,  10  Wall.  604;  Hitchings  v.  St.  Louis, 
etc.,  Co.,  68  Hun,  33,  22  N.  Y.  Supp.  719. 

74.  Farmers'  Bank  v.  Butchers'  Bank,  14  N.  Y.  624,  16  N.  Y.  133;  Mead  v. 
Merchants'  Bank,  25  N.  Y.  146. 

75.  Tome  v.  Parkersburg  R.  Co.,  39  Md.  36. 

76.  In  Auten  v.  National  Bank,  174  U.  S.  148,  19  Sup.  Ct.  Rep.  628,  McKenna, 
J.,  said:  "Under  section  5136  of  the  Revised  Statutes,  it  was  competent  for  the 
directors  to  empower  the  president  or  cashier  or  both  to  indorse  the  paper  of  the 
bank,  and  under  the  circumstances,  the  New  York  bank  was  justified  in  assuming 
that  the  dealings  with  it  were  authorized,  and  executed  as  authorized."  In 
Virginia,  the  Supreme  Court  in  the  case  of  Davis  v.  Investment  Co.,  89  Va.  293, 
15  S.  E.  547,  by  Lewis,  J.:  "The  authority  to  draw  checks  may  be  said  to  be  in- 
herent in  the  office  of  treasurer,  unless  taken  away  or  restrained,  but  the  power 
to  bind  the  company  by  indorsing  negotiable  notes  is  not."  City  Nat.  Bank  v. 
Thomas,  46  Nebr.  862,  65  N.  W.  895. 

77.  American  Wood  Working  Machinery  Co.  v.  Norment,  157  Fed.  801, 
holding  that  such  a  note  is  not  provable  against  the  estate  of  the  corporation. 

78.  Bank  of  the  United  States  v.  Davis,  2  Hill,  465;  F.  &  M.  Bank  v.  B.  &  D. 
Bank,  16  N.  Y.  133;  Welland  Canal  Co.  v.  Hathaway,  8  Wend.  480;  N.  Y.  & 
N.  H.  R.  Co.  V.  Schuyler,  34  N.  Y.  30;  Hem  v.  Nichols,  1  Salk.  289;  Barnes  v. 
Ontario  Bank,  19  N.  Y.  156;  Farmers  &  M.  Bank  v.  Butchers  &  D.  Bank,  14 
N.  Y.  624,  16  N.  Y.  133;  Mead  v.  Merchants'  Bank,  25  N.  Y.  146;  Merchants' 
Bank  v.  State  Bank,  10  Wall.  604;  Bell  v.  Beller,  40  Nebr.  501,  58  N.  W.  941; 
National  Bank  v.  Thomas,  46  Nebr.  862,  65  N.  W.  895. 


§  392  AUTHORITY    OF   THE    AGENT  497 

and  holders  without  notice  of  the  alleged  defect/^  And  it  is  settled 
law  that  a  negotiable  security  of  a  corporation  which  appears  upon 
its  face  to  have  been  duly  issued  by  such  corporation,  and  in  con- 
formity with  the  provisions  of  its  charter,  is  valid  in  the  hands  of  a 
bona  fide  holder  thereof  without  notice,  although  such  security  was 
in  point  of  fact  issued  for  a  purpose,  and  at  a  place  or  in  a  manner  not 
authorized  by  the  charter  of  the  corporation.^" 

§  392.  What  oflacers  have  implied  powers  to  bind  corporations  as 
parties  to  negotiable  instruments;  power  of  cashier. — The  cashier 
of  a  bank  has  prima  facie  authority  by  virtue  of  his  office  to  transfer 
and  indorse  negotiable  paper  held  by  the  bank  for  its  use,  and  on  its 
behalf;  and  while  it  is  perfectly  competent  for  the  bank  to  depart 
from  the  general  course  of  business,  it  is  incumbent  on  it  to  show,  in 
order  to  escape  liability  on  such  an  indorsement,  that  it  had  restricted 
his  power  in  this  regard,  and  that  such  restriction  was  known  to  the 
holder.^i    Especially  has  the  cashier  authority  to  indorse  negotiable 

79.  Savings  Co.  v.  New  London,  29  Conn.  174;  Tash  v.  Adams,  10  Gush.  252; 
Supervisors  v.  Schenck,  5  Wall.  784. 

80.  Gelpcke  v.  Dubuque,  1  Wall.  203;  Thompson  v.  Lee  County,  3  Wall. 
327;  Goodman  v.  Simonds,  20  How.  365;  Florence  R.  &  Improvement  Co.  v. 
Chase  Nat.  Bank,  106  Ala.  364,  17  So.  720;  Lamson  v.  Beard,  36  C.  C.  A.  56, 
94  Fed.  30;  Kaiser  v.  First  Nat.  Bank,  24  C.  C.  A.  88,  78  Fed.  281. 

81.  Auten  v.  United  States  Nat.  Bank,  174  U.  S.  148,  19  Sup.  Ct.  Rep.  628; 
West  St.  Louis,  etc.,  Bank  v.  Shawnee,  etc.,  Bank,  95  U.  S.  (5  Otto)  558;  Fleckner 
v.  United  States  Bank,  8  Wheat.  357;  Wild  v.  Passamaquoddy  Bank,  3  Mason, 
505;  Robb  v.  Ross  County  Bank,  41  Barb.  586;  Cooper  v.  Curtis,  30  Me.  488; 
City  Bank  v.  Perkins,  29  N.  Y.  554;  Kimball  v.  Cleveland,  4  Mich.  606;  Everett 
V.  United  States,  6  Port.  166;  Harper  v.  Calhoun,  7  How.  (Miss.)  203;  Farrar 
V.  Gilman,  19  Me.  440;  State  Bank  v.  Wheeler,  21  Ind.  90;  Lafayette  Bank  v. 
State  Bank,  4  McLean,  208;  Angell  &  Ames  on  Corporations,  245;  Morse  on  Bank- 
ing, 151,  152,  153;  Farmers'  Sav.  Inst.  v.  Garresche,  12  Mo.  App.  584;  Schit- 
man  v.  Noble,  75  Iowa,  120.  In  Bissell  v.  First  Nat.  Bank,  69  Pa.  St.  415,  it  was 
held  that  the  bank  was  bound  by  indorsement  of  its  cashier,  "A.  B.,  cashier," 
although  not  made  at  the  bank,  but  upon  the  street.  In  a  case  in  West  Virginia, 
where  the  cashier  of  a  failing  bank,  acting  beyond  the  scope  of  his  employment 
and  duties,  attempted  to  transfer  its  securities  to  one  of  its  depositors  in  deroga- 
tion of  the  rights  of  other  creditors,  Snyder,  J.,  said:  "I  think  it  is  the  practice 
for  the  cashier  of  a  bank,  m  pressing  emergencies,  to  rediscount  the  bills  and  notes 
of  the  bank  to  raise  money  to  pay  depositors,  and  meet  other  demands  of  the 
bank.  But  this  is  only  done  on  extraordinary  occasions,  and  when  the  require- 
ments are  such  as  do  not  admit  of  delay.  It  is  customary,  whenever  it  can  be  done, 
to  consult  the  directors  and  obtain  their  consent  to  make  such  rediscounts.  It 
is  a  matter  which  does  not  come  within  the  ordinary  duties  of  the  cashier,  and  it 
is  not  one  of  his  inherent  powers;  but  masmuch  as  it  is  a  power  which  is  e.xercised 

32 


498  PRIVATE    CORPORATIONS   AS   PARTIES  §  392 

paper  for  collection  merely.^-  But  he  has  no  implied  power  to  transfer 
nonnegotiable  paper,  judgments,  or  personal  property;  and  his  au- 
thority must  be  proved  directly  or  by  usage.^^  So,  he  has  implied 
authority  to  draw  bills  or  checks  on  funds  of  the  bank  elsewhere;^* 
to  certify  checks  drawn  upon  the  bank;^"  to  receipt  for  and  issue 
certificates  of  deposit;  ^^  to  borrow  money  and  execute  promissory 

by  him  under  some  circumstances,  a  transfer  of  such  bills  and  notes,  made  by 
him  in  the  usual  course  of  business  of  the  bank,  to  a  person  who  has  no  reason  to 
doubt  the  propriety  of  the  transfer,  or  to  question  its  good  faith,  will  be  prima 
facie  valid,  and  vest  a  good  title  in  the  transferee.  *  *  *  *  The  cashier,  however, 
is  simply  an  officer  or  agent  of  the  bank,  and  he  is  bound  to  act  in  good  faith  in 
the  transaction  of  the  business  of  the  bank;  and  those  who  deal  with  him  are 
affected  by  any  bad  faith  or  want  of  authority  of  which  they  have  knowledge. 
If  the  transaction  itself  is  not  in  the  usual  course  of  business,  or  is  one  which  re- 
quires specific  authority  on  the  part  of  the  cashier  to  perform  it,  the  person 
dealing  with  him  will  be  required  to  show  that  he  in  fact  had  authority  to  do  the 
act;  otherwise  it  will  be  held  to  have  been  done  without  authority.  If  the  cashier 
transfer  the  notes  of  the  bank  to  pay  his  private  debt,  the  transaction  will  be 
invalid.  No  attempted  transfer  by  the  cashier  of  the  bills,  notes,  or  other  se- 
curities of  the  bank  will  be  valid,  when  it  appears,  either  from  the  nature  of  the 
transaction,  or  the  facts  and  circumstances  existing  at  the  time,  and  known  to 
the  transferee,  that  the  transfer  was  made  in  prejudice  of  the  rights  and  interests 
of  the  bank."  Lamb  v.  Cecil,  28  W.  Va.  659,  citing  Hoyt  v.  Thompson,  5  N.  Y. 
320;  Hartford  Bank  v.  Barry,  17  Mass.  97;  Smith  v.  Lawson,  18  W.  Va.  212; 
Everett  v.  United  States,  6  Port.  166;  Barnes  v.  Bank,  19  N.  Y.  152;  Auten  v. 
Manistee  Nat.  Bank,  67  Ark.  243,  54  S.  W.  337;  Simons  v.  Fisher,  5  C  C.  A.  311, 
55  Fed.  905;  Lamson  v.  Beard,  36  C.  C.  A.  56,  94  Fed.  30. 

82.  Potter  v.  Merchants'  Bank,  28  N.  Y.  641;  Elliott  v.  Abbott,  12  N.  H. 
549;  Corser  v.  Paul,  41  N.  H.  24;  Hartford  Bank  v.  Barry,  17  Mass.  94.  For 
the  purpose  of  collecting  by  suit,  he  may  indorse  the  paper  to  himself,  where 
the  legal  title  thereto  is  in  his  bank.     Young  v.  Hudson  (Mo.),  12  S.  W.  632. 

83.  Barrick  v.  Austin,  21  Barb.  241;  Holt  v.  Bacon,  25  Miss.  567. 

84.  Morse  on  Banking,  150.  And  it  has  been  held,  that  where  the  cashier 
of  a  bank  having  the  power  to  bind  it  by  his  checks,  for  the  purpose  of  converting 
its  funds  to  his  own  use,  drew  checks  as  cashier  upon  defendant,  with  whom  his 
bank  has  a  deposit  account,  making  them  payable  to  persons  who  were  dealers 
with  the  bank,  but  without  their  knowledge,  and  then  indorsed  them  in  the  names 
of  the  payees  to  parties  who  collected  them  from  defendant,  held,  that  so  far 
as  defendant  was  concerned,  the  intent  of  the  cashier  was  the  intent  of  his  bank; 
that  the  payees  were  to  be  considered  as  fictitious  persons,  and  that  said  bank 
was  so  far  concluded  by  the  acts  of  its  cashier  as  to  be  estopped  from  denying 
the  validity  of  the  checks.  See  Phillips  v.  Merchants'  Nat.  Bank,  140  N.  Y.  556, 
37  Am.  St.  Rep.  596,  35  N.  E.  982. 

85.  Merchants'  Bank  v.  Bank  of  Columbia,  5  Wheat.  326;  United  States  v. 
City  Bank,  21  How.  356;  Merchants'  Bank  v.  Central  Bank,  1  Kel.  418;  Morse 
on  Banking,  150. 

86.  Merchants'  Bank  v.  State  Bank,  10  Wall.  604;  Morse  on  Banking,  148. 


§  392  AUTHORITY  OF  THE  AGENT  499 

notes  of  the  bank  therefor;  ^^  also,  we  should  say,  to  accept  bills  in  the 
bank's  name,^  although  the  implication  of  this  power  virtute  officii 
has  been  denied.^^  And  to  buy  and  sell  bills  and  notes  for  the  bank, 
indorsing  them  also  when  sold,  is  within  the  ordinary  scope  of  his 
office.^"  So,  too,  in  the  absence  of  restrictions,  if  he  has  procured  a 
bona  fide  rediscount  of  the  paper  of  the  bank,  his  acts  will  be  binding, 
because  of  his  implied  power  to  transact  such  business.^^  But  he  has 
no  power  to  bind  the  bank  as  a  party  to  accommodation  paper; 
and  it  would  be  void  in  the  hands  of  any  one  taking  it  (except  from 
a  holder  without  notice)  with  notice  of  its  character;  ^^  nor  has  he 
power  to  release  a  debt,^^  although  if  he  informs  a  surety  that  the 
debt  of  his  principal  is  paid,  and  the  suret}^  relying  on  his  statement 
change  his  position,  the  bank  would  be  estopped  from  making  claim 
against  him.^^  He  has  no  power  to  bind  the  bank,  except  in  the  dis- 
charge of  his  ordinary  duties,  but,  unless  otherwise  provided  by  the 
charter  of  the  bank,  when  his  conduct  of  its  affairs  has  been  acquiesced 
in  bj'-  the  board  of  directors  for  a  period  of  time  suflEiciently  long  to 
establish  a  settled  course  of  dealing,  it  has  been  held  that  he  may 
represent  and  bind  it  in  matters  outside  of  his  ordinary  duties;  as  in 

87.  State  Bank  v.  Kain,  1  Breese,  45;  Morse  on  Banking,  54,  55;  Coats  v. 
Donnell,  94  N.  Y.  168;  Donnell  v.  Savings  Bank,  80  Mo.  170.  But  cashier's 
authority  to  execute  promissory  notes  is  confined  strictly  to  notes  executed  in 
payment  of  obUgations  contracted  within  the  scope  of  his  emplojinent.  Case 
of  North  Star  Boot  &  Shoe  Co.  v.  Stebbins  et  al.,  2  S.  Dak.  74,  48  X.  W.  833. 

88.  Barnes  v.  Ontario  Bank,  19  N.  Y.  152;  Sturgis  v.  Bank  of  Circleville,  11 
Ohio  St.  153;  Ridgeway  v.  Farmers'  Bank,  12  Serg.  &  R.  256;  Ballaton  Spa  Bank 
V.  Marine  Bank,  16  Wis.  120;  Morse  on  Banking,  148. 

89.  Farmers,  etc..  Bank  v.  Troy  City  Bank,  1  Doug.  457.  Such  is  the  im- 
plication of  this  case.  Morse  on  Banking,  164;  Gray  v.  Farmers'  Bank,  81  Md. 
631,  32  Atl.  518.  In  this  case  it  was  held  that  "A  bank  cashier  has  no  authority 
by  virtue  of  his  oflBce  to  accept  a  new  note  for  an  existing  indebtedness  to  the 
bank  so  as  to  discharge  a  surety  on  the  first  note  or  to  make  a  contract  so  to  do." 

90.  Pendleton  v.  Bank  of  Kentucky,  1  T.  B.  Mon.  179.  Contra,  Lionberger 
V.  Mayer,  12  Mo.  App.  575;  BeU  v.  Beller,  40  Nebr.  501,  58  N.  W.  941;  Bank  of 
Commerce  v.  Bright,  23  C.  C.  A.  586,  77  Fed.  949. 

91.  West  St.  Louis,  etc.,  Bank  v.  Shawnee,  etc..  Bank,  95  U.  S.  (5  Otto)  559 
(1877);  Auten  v.  United  States  Nat.  Bank,  174  U.  S.  125,  19  Sup.  Ct.  Rep.  625. 

92.  West  St.  Louis,  etc.,  Bank  v.  Shawnee,  etc..  Bank,  95  U.  S.  (5  Otto)  558; 
Lafayette  Bank  v.  State  Bank,  4  McLean,  208;  Morse  on  Banking,  164;  Farmers, 
etc..  Bank  v.  Troy  City  Bank,  1  Doug.  457;  Blair  v.  Bank,  2  Fhp.  111.  See  Louis- 
ville R.  Co.  V.  Louisville  Trust  Co.,  174  U.  S.  567,  19  Sup.  Ct.  Rep.  817. 

93.  Cocheco  Nat.  Bank  v.  Haskell,  51  N.  H.  116;  Allen  v.  First  Nat.  Bank, 
127  Pa.  St.  51;  Ecker  v.  First  Nat.  Bank,  59  Md.  303;  The  State  Nat.  Bank 
V.  Newton  Nat.  Bank,  14  C.  C.  A.  61,  66  Fed.  691. 

94.  Ibid. 


500  PRIVATE    CORPORATIONS   AS   PARTIES  §  392a 

the  release  and  cancellation  of  liens  and  securities  for  debts  which 
have  been  satisfied  and  paid.^''  The  assistant  cashier  has  no  implied 
power  to  accept  or  certify  a  check,^^  but,  while  in  control  and  manage- 
ment of  the  bank,  in  the  absence  of  the  cashier,  his  transfer  to  a 
second  bank  of  a  negotiable  draft  in  payment  of  a  balance  due  passes 
title  thereto.^^ . 

§  392a.  Power  of  treasurer,  secretary  and  others. — The  treasurer 
of  a  corporation  authorized  to  pay  and  discharge  a  debt  is  not  thereby 
empowered  to  execute  a  note  for  it,  being  without  funds  in  hand.^^ 
And  the  treasurer  of  a  corporation  is  not  such  an  officer  as  is  vested 
with  implied  power  to  make  negotiable  paper  in  its  name,  though 
particular  circumstances  might  exist  which  would  create  such  an 
implied  power.^^  Where  such  power  is  expressly  conferred  upon  the 
treasurer,  or  other  officer,  persons  dealing  with  the  corporation  must 
take  notice  of  its  extent,  but  are  not  required  to  have  knowledge  of 
the  circumstances  under  which  it  is  exercised.^  But  it  has  been  held 
that,  where  a  treasurer  has  been  in  the  habit  of  executing  notes  for 
the  corporation,  the  company  cannot  disaffirm  a  note  on  the  ground 
of  want  of  authority  when  it  received  the  consideration  for  the  note, 
and  has  recognized  its  liability  by  paying  part  of  the  principal  and 
paying  the  discount  on  renewals.^ 

The  treasurers  of  manufacturing  corporations  are  frequently  if 

95.  Martin  v.  Webb,  110  U.  S.  14;  Rock  Springs  Nat.  Bank  v.  Luman,  5  Wyo. 
159,  38  Pac.  678;  North  Star  Boot  &  Shoe  Co.  v.  Stebbins,  2  S.  Dak.  74,  48  N.  W. 
833;  Savings  Bank  v.  Hughes,  62  Mo.  App.  576.  See  Gale  v.  Chase  Nat.  Bank, 
43  C.  C.  A.  496,  104  Fed.  214. 

96.  Pope  V.  Bank  of  Albion,  57  N.  Y.  126  (1874);  Bank  of  Commerce  v.  Bright, 
23  C.  C.  A.  586,  77  Fed.  949. 

97.  Forbes  v.  First  Nat.  Bank,  21  Okl.  206,  95  Pac.  785. 

98.  Torrey  v.  Dustin  Monument  Assn.,  5  Allen,  327;  Henderson  Mercantile 
Co.  V.  First  Nat.  Bank,  100  Tex.  344,  99  S.  W.  850. 

99.  Partridge  v.  Badger,  25  Barb.  172;  Foster  v.  Reduction  &  Mining  Co., 
17  Fed.  130;  Gafford  v.  American  Mortgage  Co.,  42  N.  W.  550.  If  the  usage  of  the 
corporation  is  to  the  contrary  and  it  receives  the  proceeds  it  will  be  bound.  Pelton 
V.  Spider  Lake  Sawmill  &c.  Co.,  132  Wis.  219,  112  N.  W.  29,  122  Am.  St.  Rep.  963. 

1.  Credit  Co.  v.  Howe  Machine  Co.,  54  Conn.  357;  ante,  §  389.  A  note  signed 
by  the  treasurer  of  a  corporation,  who  had  authority  to  sign  notes  for  the  company, 
was  held  to  be  binding  upon  the  company  though  the  countersignature  of  the 
president  had  been  forged,  when  for  some  time  previously  the  notes  of  the  com- 
pany had  been  countersigned  by  the  president  in  blank  before  they  were  signed 
by  the  treasurer.  EUot  Nat.  Bank  v.  Woonsocket  Electric  &c.  Co.,  31  R  I  57 
76  Atl.  782.  ' 

2.  First  Nat.  Bank  v.  American  Bangor  Slate  Co.,  229  Pa.  St.  27,  77  Atl.  1100. 


§  392a  AUTHORITY   OF   THE    AGENT  501 

not  ordinarily  the  custodians  of  negotiable  instruments  held  by  them, 
and  authorized  to  make  the  indorsement  upon  their  sale,  transfer,  or 
discount.  And  ordinarily  when  such  officer  presents  such  paper  for 
discount  and  represents  that  he  has  authority  to  indorse  and  negotiate 
it,  the  party  dealing  with  him  may  so  assume.  The  authority  to  make 
the  indorsement  follows  as  a  legal  conclusion  unless  other  evidence 
shows  want  of  it.^ 

An  allegation  that  a  corporation  made  a  note  or  accepted  a  bill, 
by  its  treasurer  or  other  officer,  is  a  sufficient  averment  that  such 
officer  had  authority  to  bind  the  corporation.^ 

Nor  has  the  secretary  ^  or  general  manager  ^  of  a  corporation,  by 
virtue  of  his  office,  authority  to  indorse  a  note  in  the  name  of  the 
corporation,  and  on  introducing  the  note,  his  authority  must  be 
shown,^  though  it  has  been  held  that  where  a  corporation  was  in  the 
habit  of  disregarding  a  provision  in  its  charter  requiring  notes  to  be 
signed  by  the  president  and  countersigned  by  the  secretary,  a  note 
of  the  corporation  signed  by  the  secretary  alone  is  valid. ^ 

3.  Standard  Cement  Co.  v.  Bank,  71  Conn.  682,  42  Atl.  1006. 

4.  Credit  Co.  v.  Howe  Machine  Co.,  54  Conn.  357,  8  Atl.  472. 

6.  Blood  V.  Maveuse,  38  Cal.  590  (of  a  mining  company);  Karsch  v.  Pettier 
&c.  Mfg.  &c.  Co.,  81  N.  Y.  S.  782,  82  App.  Div.  230;  First  Nat.  Bank  v.  Hogan, 
47  Mo.  472  (of  an  insurance  company). 

6.  Sanford  Cattle  Co.  v.  Williams,  18  Colo.  App.  378,  71  Pac.  889;  New  York 
Iron  Mine  v.  First  Nat.  Bank,  39  Mich.  644;  Baines  v.  Coos  Bay  &c.  R.  &  Nav. 
Co.,  45  Oreg.  307,  77  Pac.  400;  Miller  v.  Reynolds,  36  N.  Y.  Supp.  61,  92  Hun,  400. 
See  also  Jackson  Paper  Mfg.  Co.  v.  Commercial  Nat.  Bank,  199  111.  151,  65  N.  E. 
136,  59  L.  R.  A.  657,  93  Am.  St.  Rep.  113  (as  to  a  superintendent  of  a  manufactur- 
ing corporation),  and  Bank  of  Commerce  v.  Baird  Min.  Co.,  13  N.  Mex.  424, 
85  Pac.  970  (as  to  a  managing  agent  of  a  mining  corporation). 

7.  Where  the  secretary  and  general  manager  was  held  out  by  the  company  as 
having  absolute  control  of  the  business,  notes  executed  by  such  officer  on  con- 
tracts, of  which  the  company  received  the  benefit,  are  the  obligation  of  the  com- 
pany. Indell  V.  Goldfield  Realty  Co.  (Nev.),  108  Pac.  455.  When  the  charter  of  a 
corporation  authorizes  the  directors  to  appoint  an  executive  committee  to  exercise 
all  the  powers  of  the  board  of  directors,  the  company  is  liable  on  an  indorsement 
of  a  note  by  the  executive  committee  entered  into  in  the  course  of  the  cxirrent 
business.    Tilden  v.  Goldy  Mach.  Co.  (Cal.  App.),  98  Pac.  39. 

8.  Blanc  v.  Germania  Nat.  Bank,  114  La.  739,  38  So.  537.  The  authority  in- 
trusted to  an  assistant  secretary  of  a  building  corporation,  who  had  been  put  in 
charge  of  building  operations  in  another  State  and  had  opened  a  bank  account  for 
the  company  at  the  place  of  the  operations,  was  sufficient  to  bind  the  company 
on  notes  executed  by  him  for  money  passed  to  the  credit  of  the  company  to  settle 
overdrafts  on  the  bank  account.  Hennessy  Bros.  &  Evans  Co.  v.  Memphis  Nat. 
Bank,  129  Fed.  557. 

Under  Negotiable  Instrument  statute. — Under  the  statute  it  has  been  held  that 


502  PRIVATE    CORPORATIONS   AS   PARTIES  §  393 

§  393.  Power  of  president. — The  president  of  a  bank  and  of 
other  incorporated  institutions  has  implied  authority  to  take  charge 
of  their  litigation,  and  to  employ  counsel  to  prosecute  or  defend 
causes.  And  the  corporation  will  be  bound  by  his  action  unless  it 
be  known  to  the  party  employed  that  he  was  acting  against  the  will 
of  the  corporation.^  A  bank  president  has  the  implied  power  to  re- 
ceipt for  deposits.  ^°  But  the  president  of  a  bank  is  not  the  executive 
officer  who  has  charge  of  its  moneyed  operations.  A  recent  author 
says  that  he  has  no  implied  power  to  draw  checks  on  its  behalf,  or 
against  its  funds,  ^^  though  established  usage  may  confer  such  power 
upon  him,  to  be  exercised  in  the  cashier's  absence,  or  otherwise.  ^^ 

And  so,  though  the  president  of  a  business  corporation  has  not  the 
inherent  power  to  execute  negotiable  paper  for  the  corporation  and 
such  authority  must  be  duly  delegated  to  him,^^  the  fact  that  such 
authority  has  been  conferred  upon  him  may  be  implied,^'* 


where  a  certificate  of  deposit  was  issued  by  a  bank  to  and  indorsed  by  a  certain 
person  as  "cashier,"  a  holder  of  such  certificate  may  show  that  such  person  was 
the  cashier  of  the  bank,  and  was  acting  in  that  general  capacity  in  transferring  the 
instrument,  and  as  against  a  bona  fide  holder  without  notice,  it  was  not  competent 
for  the  defendant  bank  to  show  that  as  a  matter  of  fact  he  was  making  use  of  his 
official  title  and  authority  in  his  own  individual  interest.  Appendix,  sec.  42. 
Johnson  v.  Buffalo  Center  State  Bank,  134  Iowa,  731,  112  N.  W.  165. 

9.  Alexandria  Canal  Co.  v.  Swann,  5  How.  83;  American  Ins.  Co.  v.  Oakley, 
9  Paige,  496;  Savings  Bank  v.  Benton,  2  Mete.  (Ky.)  240;  Mumford  v.  Hawkins, 
5  Den.  355;  Hodges'  Exr.  v.  First  Nat.  Bank,  21  Gratt.  59;  Morse  on  Banking, 
128,  129.  But  in  Ashuelot  Mfg.  Co.  v.  Marsh,  1  Cush.  507,  it  was  held  that  a 
president  of  a  manufacturing  corporation  cannot  bind  it  by  bringing  suit  without 
authority.  Citizens'  Nat.  Bank  v.  Berry  &  Co.,  53  Kan.  696,  37  Pac.  131.  See 
State  V.  Hardware  Co.,  147  Mo.  366,  48  S.  W.  927;  United  States  Nat.  Bank  v. 
First  Nat.  Bank,  24  C.  C.  A.  597,  79  Fed.  296;  Milwaukee  Trust  Co.  v.  Van 
Valkenburgh,  132  Wis.  638,  112  N.  W.  1083. 

10.  Sterling  v.  Marietta,  etc.,  Trading  Co.,  11  Serg.  &  R.  179.  While  under 
some  circumstances  the  president  of  a  bank  may  have  authority  to  receive  money 
in  payment  of  obligations  due  at  or  to  the  bank,  the  payments  must  be  made  at 
the  bank  and  in  the  usual  course  of  business.  See  TuUey  v.  Citizens'  State  Bank, 
18  Ind.  App.  240,  47  N.  E.  850,  81  Am.  Dec.  353. 

11.  Morse  on  Banking,  132;  Security  Bank  v.  Kingsland,  5  N.  Dak.  263,  65 
N.  W.  697. 

12.  Neiffer  v.  Bank  of  Knoxville,  1  Head,  162. 

13.  Star  Mills  v.  BaUey,  140  Ky.  194,  130  S.  W.  1077;  McCullough  v.  Moss, 
5  Den.  575. 

14.  Loyd  &  Co.  v.  Matthews  &  Rice,  223  111.  477,  79  N.  E.  172,  7  L.  R.  A.  (N. 
S.)  376,  114  Am.  St.  Rep.  346  (as  to  guaranteeing  a  note  payable  to  the  corpora- 
tion); Houst  V.  Sioux  City  Brass  Works,  134  Iowa,  484,  110  N.  W.  166,  hokling 
that  a  note  signed  in  the  name  of  a  corporation  by  the  president  and  secretary  is 


§  394  AUTHORITY   OF   THE   AGENT  503 

§  394.  Power  of  president  to  indorse. — If  he  has  a  general  au- 
thority from  the  directors,  the  president  of  a  bank  may  indorse  bills 
or  notes  payable  to  it.^^  And  it  would  seem  that  he  has  an  implied 
power  to  indorse  and  transfer  its  negotiable  paper.  ^^ 

In  the  case  of  National  banks,  the  president  is  authorized  by  statute 
to  indorse  the  paper  of  the  bank. 

not  invalid  because  the  person  signing  as  secretary  had  at  the  time  been  suc- 
ceeded in  that  office  by  another,  as  the  signature  of  the  secretary  was  not  neces- 
sary to  give  vaUdity  to  the  note.  A  note  purporting  to  be  signed  by  the  president 
and  the  secretary  of  a  corporation  which  was  not  in  existence  at  the  time,  does  not 
create  any  liability  as  against  the  corporation  as  subsequently  formed,  and  which 
was  not  ratified  by  the  corporation.  Bonanza  Mining  &  Smelter  Co.  v.  Ware, 
78  Ark.  306,  95  S.  W.  765.  The  authority  of  an  officer  of  a  corporation  to  do  a 
particular  act  may  be  inferred  from  proof  of  his  habitual  doing  of  such  acts,  with 
the  acquiescence  of  the  directors  of  the  corporation,  and  where  no  such  acts  are 
proven,  if  any  contract  of  such  officer,  made  without  authority,  is  subsequently 
ratified  by  the  directors  upon  full  knowledge  of  all  the  circumstances  of  the  case, 
the  corporation  will  be  bound  thereby  as  fully  as  if  the  officer  had  been  expressly 
authorized  to  make  the  contract.  Third  Nat.  Bank  v.  Laboringman's  Mercantile 
&c.  Co.,  56  W.  Va.  446,  49  S.  E.  544.  See  also  Tuskaloosa  Oil  Co.  v.  Perry,  85 
Ala.  158.  Where  the  stockholders  and  directors  of  a  corporation  completely 
abandon  to  the  president  the  entire  management  and  control  over  its  affairs, 
the  corporation  is  liable  on  its  promissory  note  given  by  the  president  without 
any  express  authority  from  the  board  of  directors,  or  subsequent  ratification 
where  he  uses  the  proceeds  for  his  own  purposes,  and  the  corporation  derives  no 
benefit  therefrom,  and  where  the  note  is  given  to  one  paying  full  value  without 
any  knowledge  of  a  wrongful  intention  on  the  part  of  such  president.  Chestnut 
St.  Trust  &c.  Fund  Co.  v.  Record  Pub.  Co.,  227  Pa.  St.  235,  75  Atl.  1067, 136  Am. 
St.  Rep.  874. 

15.  Spear  v.  Ladd,  11  Mass.  94;  Northampton  Bank  v.  Pepoon,  11  Mass.  288; 
Simons  v.  Fisher,  5  C.  C.  A.  311,  55  Fed.  905. 

16.  See  Leavitt  v.  Connecticut  Peat  Co.,  6  Blatchf.  139  (1868).  But  the 
president  of  a  bank  corporation  cannot  bind  it  by  the  negotiation  in  its  name 
of  notes  in  which  he  is  payee,  as  his  interest  conflicts  with  that  of  the  bank.  City 
Elec.  St.  Ry.  Co.  v.  First  Nat.  Bank,  65  Ark.  543,  47  S.  W.  855;  United  States 
Nat.  Bank  v.  First  Nat.  Bank,  24  C.  C.  A.  597,  79  Fed.  296;  Fisher  v.  United 
States  Nat.  Bank,  12  C.  C.  A.  413,  64  Fed.  710;  Rev.  Stat.,  §  5136,  and  Auten  v. 
United  States  Nat.  Bank,  174  U.  S.  125,  19  Sup.  Ct.  Rep.  628;  Huie  v.  Allen,  87 
Hun,  516,  34  N.  Y.  Supp.  577;  Rockville  Nat.  Bank  v.  Gas  Light  Co.,  72  Conn. 
576,  45  Atl.  361;  Standard  Cement  Co.  v.  Bank,  71  Conn.  685,  42  Atl.  1006.  The 
fact  that  a  purchaser  knew  that  the  president  of  a  bank,  who  indorsed  the  note  in 
its  behalf  and  procured  its  discount  on  its  account,  was  also  the  payee  of  the  note 
and  indorsed  it  individually,  did  not  put  the  purchaser  upon  notice  of  any  irreg- 
ularity, especially  when  such  purchaser  was  a  correspondent  bank  frequently 
loaning  money  to  such  bank  and  having  settlements  with  its  president  upon 
representations  made  by  him  as  to  the  conditions  which  made  it  desirable  for  such 
bank  to  obtain  loans.    Citizens'  Bank  &  Trust  Co.  v.  Thornton,  174  Fed.  752. 


504  PRIVATE    CORPORATIONS   AS   PARTIES  §  394 

The  president  of  a  business  corporation  has  no  inherent  authority, 
by  virtue  of  his  office,  to  indorse  a  negotiable  note  which  will  bind 
the  corporation;  such  authority  must  be  expressly  or  impliedly  con- 
ferred/^ The  president  of  an  insurance  company  may  indorse  its 
bills  and  notes  so  as  to  bind  it,  when  it  is  shown  that  according  to  the 
usual  practice  of  the  company  its  notes  were  so  negotiated,  or  that 
by  its  course  of  business  he  had  been  held  out  as  a  proper  person  to 
indorse  them,^^  but  not  otherwise,  without  express  authority.  ^^  And, 
in  general,  a  corporation  will  be  bound  by  the  act  of  its  president, 
in  the  indorsement  and  transfer  of  negotiable  paper,  where  it  has 
accepted  the  benefits  thereof,  or  acquiesced  in,  or  ratified  his  assump- 
tion of  authority,  or  so  recognized  a  course  of  dealing  established  by 
him  in  that  respect,  as  to  estop  it  from  denying  its  liability.-'^    But  it 

17.  Union  Iron  Works  Co.  v.  Union  Naval  Stores  Co.,  157  Ala.  645,  47  So.  652; 
Elkhart  Hydraulic  Co.  v.  Turner,  170  Ind.  455,  84  N.  E.  812;  Monongahela  Nat. 
Bank  v.  Harmony  Land  Co.,  226  Pa.  St.  440,  75  Atl.  687;  Third  Nat.  Bank  v. 
Laboringman's  Mercantile  &c.  Co.,  56  W.  Va.  446,  49  S.  E.  544.  The  president  of 
a  corporation  engaged  in  a  business  in  which  it  received  notes  from  its  agents  and 
customers,  may  be  presumed  to  be  authorized  to  discount  and  transfer  the  notes 
of  the  company.  Iowa  Nat.  Bank  v.  Sherman  &  Bratager,  17  S.  D.  396,  97  N.  W, 
12,  106  Am.  St.  Rep.  778.  See  also  Jones  v.  Stoddart,  8  Idaho,  210,  67  Pac.  650. 
In  Gould  v.  W.  J.  Gould  &  Co.,  134  Mich.  515,  96  N.  W.  576,  104  Am.  St.  Rep. 
624,  the  court  said  that  the  authority  may  be  implied  where  the  president  has 
been  held  out  as  having  charge  of  the  business  and  as  authorized  to  perform  such 
an  act,  or  where  the  corporation  is  shown  to  have  received  and  retained  the 
benefits  of  the  transaction,  or  where  the  instrument  is  under  seal  of  the  corpora- 
tion, or  where  the  president  is  managing  the  business  and  the  power  is  requisite 
in  the  conduct  of  the  business  carried  on. 

18.  Elwell  V.  Dodge,  33  Barb.  336.  This  was  the  case  of  an  indorsement  by 
a  president  of  an  insurance  company,  but  the  doctrine  stated  is  inferable  from 
it.  Evansville  Public  Hall  Co.  v.  The  Bank  of  Commerce,  144  Ind.  34,  42  N.  E, 
1097. 

19.  Marine  Bank  v.  Clements,  3  Bosw.  600. 

20.  National  Bank  v.  Navassa  Phosphate  Co.,  56  Hun,  136;  Stainback  v.  Junk 
Bros.,  98  Tenn.  306,  39  S.  W.  530;  Schreyer  v.  Turner  Flouring  Co.,  29  Oreg. 
1,  43  Pac.  719;  Re  Assignment  of  Pendleton  Hardware  Co.,  24  Oreg.  330,  33  Pac. 
544;  Allen  v.  Olympia  Light  &  Power  Co.,  13  Wash.  307,  43  Pac.  55;  People  v. 
American  Steam  Boiler  Ins.  Co.,  3  App.  Div.  504,  38  N.  Y.  Supp.  406;  Milbank 
V.  de  Riesthal,  82  Hun,  538,  31  N.  Y.  Supp.  522;  Grant  v.  Tread  well  Co.,  82  Hun, 
691,  31  N.  Y.  Supp.  702;  National  Spraker  Bank  v.  Treadwell  Co.,  80  Hun,  363, 
30  N.  Y.  Supp.  77;  Grant  v.  Treadwell  Co.,  1  App.  Div.  367,  37  N.  Y.  Supp.  392. 
In  this  connection  it  may  be  instructive  to  refer  to  the  opinion  of  Finch,  J.,  in  the 
case  of  Hoag  v.  Town  of  Greenwich,  33  N.  Y.  152,  88  Am.  Dec.  372,  elsewhere 
more  fully  noted  under  §  1537,  note  7;  Hawkins,  Receiver,  v.  Fourth  Nat.  Bank 
of  New  York,  150  Ind.  117,  49  N.  E.  957;  Washington  Times  Co.  v.  Wilder,  12 
App.  D.  C.  62;  Peatman  v.  Light,  Heat  &  Power  Co.,  100  Iowa,  245,  69  N.  W. 


§  394a  AUTHORITY  OF  THE  AGENT  505 

is  essential  that  it  should  have  knowledge  of  the  assumption  by  the 
officer  of  the  powers  he  has  exercised. ^^  By  virtue  of  his  office  as 
vice  president  of  a  corporation,  a  person  has  no  authority  to  execute 
a  note  for  the  corporation;  ^^  though  such  power  may  be  exercised 
when  conferred.^^ 

§  394a.  Ratification  by  corporation. — It  has  been  suggested  or 
pointed  out  in  various  connections  in  the  foregoing  sections  that  cir- 
cumstances may  fix  a  liability  on  a  corporation  even  for  unauthorized 
acts  of  its  officers,  as  it  is  generally  held  that  a  corporation  may  be 
made  accountable  for  acts  of  its  officers  ultra  vires  when  it  has  sub- 
sequently ratified  them,^^  or  has  received  the  proceeds  or  accepted 
the  benefits  of  the  unauthorized  act.^^ 

541;  Bell  v.  Beller,  40  Nebr.  501,  58  N.  W.  941;  American  Exchange  Nat.  Bank  v. 
First  Nat.  Bank,  27  C.  C.  A.  274,  82  Fed.  961. 

21.  First  Nat.  Bank  v.  Council  Bluflfs  Water  Co.,  56  Hun,  412;  Parsons  v. 
Guarantee  Investment  Co.,  64  Mo.  App.  32;  Worthington  v.  Railroad  Co.,  195 
Pa.  St.  211,  45  Atl.  927. 

22.  Sedalia  Nat.  Bank  v.  Economy  Steam  Heating  &  Elec.  Co.,  145  Mo.  App. 
319,  130  S.  W.  377;  Henderson  Mercantile  Co.  v.  First  Nat.  Bank,  100  Tex.  344, 
99  S.  W.  850. 

23.  Jefferson  Bank  v.  Chapman-White-Lyons  Co.,  122  Tenn.  415,  123  S.  W. 
641,  holding  that  when  the  charter  of  a  corporation  authorizes  it  to  issue  notes, 
and  the  by-laws  authorize  the  president  to  sign  contracts  for  the  company  and 
vest  the  authority  of  the  president  in  the  vice  president  in  the  absence  of  the  presi- 
dent, the  company  is  liable  for  notes  executed  by  the  vice  president  in  the  absence 
of  the  president.     See  also  Ramboy  v.  Stansburg,  13  Cal.  App.  649,  110  Pac.  472. 

24.  Curtin  v.  Salmon  River  Hydraulic  Gold  Mining  &  Ditch  Co.,  141  Cal. 
308,  74  Pac.  851,  99  Am.  St.  Rep.  75;  Star  Mills  v.  Bailey,  140  Ky.  194,  130  S.  W. 
1077,  holding  however  that  not  only  must  it  have  been  the  custom  of  the  company 
to  issue  its  notes  by  its  president  alone,  but  the  company  must  have  ratified  his 
act  by  acquiescence  after  knowledge  of  the  fact,  or  by  confirming  it  without 
question;  custom  cannot  arise  out  of  a  single  transaction;  nor  can  it  be  said  that 
the  corporation  was  in  the  custom  of  issuing  the  notes  by  the  act  of  the  president 
alone,  when  in  each  instance  shown  it  repudiated  his  act  as  soon  as  discovered,  and 
contested  its  liability  on  that  account.  Where  a  president  of  a  corporation,  with- 
out authority,  has  indorsed  a  note  in  the  name  of  the  corporation  and  the  proceeds 
of  the  note  have  been  used  for  its  benefit,  a  subsequent  note  by  the  directors 
authorizing  the  borrowing  of  the  money,  with  knowledge  of  the  facts,  was  equiva- 
lent to  an  authorization  to  indorse  the  note.  Beacon  Trust  Co.  v.  Souther,  183 
Mass.  413,  67  N.  E.  345.  A  nontrading  corporation  cannot  be  said  to  have 
ratified  the  act  of  its  general  manager  in  signing  notes  in  its  corporate  name  when 
it  had  no  knowledge  of  his  fraudulent  conduct.  Sedalia  Nat.  Bank  v.  Economy 
Steam  Heating  &c.  Co.,  145  Mo.  App.  319,  130  S.  W.  377. 

25.  Hireen  v.  R.  W.  English  Lumber  Co.,  46  Colo.  216,  104  Pac.  84;  Marion 
Trust  Co.  v.  Crescent  Loan  &  Investment  Co.,  27  Ind.  App.  451,  61  N.  E.  688, 


506  PRIVATE    CORPORATIONS   AS    PARTIES  §§  395,  396 

§  395.  Officer  cannot  release  debt. — It  is  well  settled  that 
neither  the  president  nor  the  cashier  of  a  bank  has  authority,  vir- 
tute  officii,  to  give  up  or  release  a  debt  or  liability  to  the  bank,  or 
make  any  admission  which  would  release  any  party  to  an  obligation, 
negotiable  or  otherwise,  due  to  the  bank — for  such  purposes  the  board 
of  directors  only  having  the  power  to  act."^ 

§  396.  Officer  must  act  within  the  sphere  of  his  duty. — The 

decisions  upholding  the  doctrine  that  certain  officers  have  implied 
power  to  bind  their  corporations,  rest  upon  the  view  that  such  acts 
fall,  according  to  the  customs  and  usages  of  business,  within  their 
spheres  of  duty.  But  it  is  only  in  such  spheres  of  duty  that  the  im- 
plication arises,^^  or  where  the  power  is  necessarily  implied  from 
powers  actually  or  expressly  conferred. ^^ 


87  Am.  St.  Rep.  257;  Topeka  Capital  Co.  v.  March,  10  Kan.  App.  40,  61  Pac.  876; 
Hunt  V.  Northwestern  Mortg.  &  Trust  Co.,  16  S.  D.  241,  92  N.  W.  23;  Lyndon 
Sav.  Bank  v.  International  Co.,  75  Vt.  224,  54  Atl.  191.  Where  a  note  executed  by 
a  corporation  was  invalid  because  not  duly  authorized,  an  estoppel  is  raised 
when  the  corporation  received  the  benefits  of  the  loan  evidenced  by  the  note,  ac- 
quiesced in  the  contract  with  knowledge  and  long  continued  silence,  and  never 
attempted  or  offered  to  rescind,  and  in  the  answer  has  made  no  offer  to  restore 
the  consideration.  Curtin  v.  Salmon  River  Hydrauhc  Gold  Min.  &c.  Co.,  141  Cal. 
308,  74  Pac.  851,  99  Am.  St.  Rep.  75.  Where  the  president  of  a  trading  corporation 
had  authority  to  execute  notes  for  the  company,  and  in  his  absence  the  secre- 
tary executed  a  note  in  the  company's  name  to  protect  the  credit  of  the  company, 
the  failure  of  the  president,  on  learning  within  a  week  that  the  secretary  had 
signed  the  note  and  the  purpose  for  which  it  was  given,  to  notify  the  payee  that 
the  secretary  had  authority  to  sign,  is  a  ratification  of  the  act.  Wolf  Co.  v.  Bank 
of  Commerce,  107  111.  App.  58.  Though  the  president  of  a  city  railway  corporation 
had  no  authority  to  guarantee  notes  on  behalf  of  the  company,  yet  where  he  guar- 
anteed notes  of  a  third  person  given  in  payment  of  land  conveyed  to  the  com- 
pany, there  was  a  ratification  of  the  action  of  the  president  when  the  company 
paid  interest  on  the  note  and  obtained  an  extension  of  time  in  which  to  pay  the 
principal  and  retained  title  to  the  lots.  Lake  St.  El.  R.  Co.  v.  Carmichael,  184 
III.  348,  56  N.  E.  372. 

26.  Hodges  v.  First  Nat.  Bank,  22  Gratt.  59;  Olney  v.  Chadsey,  7  R.  I.  225; 
Merchants'  Bank  v.  Marine  Bank,  3  Gill,  96;  Bank  of  the  United  States  v.  Dunn, 
6  Pet.  51;  Bank  of  the  Metropolis  v.  Jones,  8  Pet.  12;  Brouwer  v.  Appleby,  1 
Sandf.  158;  Hoyt  v.  Thompson,  5  N.  Y.  320;  Spyker  v.  Spence,  8  Ala.  333;  Mt. 
Sterling  Turnpike  Co.  v.  Looney,  1  Mete.  (Ky.)  550;  Cocheco  Nat.  Bank  v. 
Haskell,  51  N.  H.  116;  Moshannon  Land  Co.  v.  Sloan,  109  Pa.  St.  532;  Gray  v. 
Farmers'  Bank,  81  Md.  631,  32  Atl.  518;  Bank  of  Ravenswood  v.  Wetzel,  58 
W.  Va.  1,  50  S.  E.  886,  70  L.  R.  A.  305,  quoting  text. 

27.  Morse  on  Banking,  66,  76,  86,  89;  Black  v.  First  Nat.  Bank,  96  Md.  399, 
54  Atl.  88,  citing  text. 

28.  Jackson  Paper  Mfg.  Co,  v.  Commercial  Nat.  Bank,  199  111.  151,  65  N.  E. 


i§  397,  398        INTERPRETATION   OF  THE   INSTRUMENT  507 

Where  the  officer  of  a  corporation  executes  its  paper  payable  to 
himself,  the  party  acquiring  it  would  be  put  upon  inquiry,  and  charged 
with  any  equities  or  defenses  available  to  the  corporation  as  against 
the  signer,-^  and  the  act  of  an  officer  of  a  corporation  in  attempting 
to  make  the  corporation  liable  by  substituting  it  as  indorser  in  the 
place  of  his  individual  indorsement,  without  consideration  to  or 
authority  from  the  company,  is  void.^° 

§  397.  Joint   authority   of   officers,   how   exercised. — It  is   not 

uncommon  to  authorize  the  president  and  cashier  to  borrow  money 
or  obtain  discounts,  and  in  such  case  they  must  act  jointly;  and  the 
act  of  the  cashier  alone  would  not  bind  the  bank,  unless  the  party 
dealing  with  him  believed  him  to  be  acting  in  pursuance  of  his  general 
authority.^^  But  if  both  agree  as  to  the  act,  it  may  be  executed  by 
paper  signed  by  one  of  them.^^ 

Where  a  by-law  of  a  corporation  provided  that  the  notes  of  the 
company  should  be  drawn  by  the  auditor  to  the  president,  and 
countersigned  by  the  treasurer,  it  was  held  that  a  note  executed  by 
the  president  in  pursuance  of  authority  from  the  directors,  in  pay- 
ment of  services  rendered  the  company,  was  not  invalidated  by  the 
failure  to  execute  in  the  manner  provided  by  the  by-laws.^^ 


SECTION   III 

INTERPRETATION    OF   THE   INSTRUMENT 

§  398.  Unless  the  name  of  the  corporation  for  which  the  officer 
or  agent  assumes  to  act  is  disclosed  upon  the  face  of  the  instrument, 
or  the  officer's  or  agent's  name  is  adopted  by  the  corporation  and  used 
as  its  own  in  business  transactions,  the  corporation  cannot  be  bound 
upon  the  instrument,  and  the  officer  or  agent  will  himself  be  person- 
ally bound  if  its  terms  of  obligation  can  be  interpreted  as  referable  to 

136.  59  L.  R.  A.  657,  93  Am.  St.  Rep.  113;  Bank  of  Commerce  v.  Baird  Min.  Co., 
13  N.  Mex.  424,  85  Pac.  970. 

29.  Kenyon  Realty  Co.  v.  National  Deposit  Bank,  140  Ky.  133,  130  S.  W.  965. 
Randall  v.  Rhode  Island  Lumber  Co.,  20  R.  I.  626,  40  Atl.  763. 

30.  Triplett  v.  Fanver,  103  Va.  123,  48  S.  E.  875.  See  also  Wheeling  Ice  &  Co. 
V.  Conner,  61  W.  Va.  Ill,  55  S.  E.  982. 

31.  Morse  on  Banking,  150. 

32.  Ridgway  v.  Farmers'  Bank,  12  Serg.  &  R.  256. 

33.  Railroad  Co.  v.  Tiernan,  37  Kan.  625. 


508  PRIVATE    CORPORATIONS   AS   PARTIES  §  399 

him.  The  questions  of  most  difficulty  on  this  subject  arise  when  the 
names  of  both  corporation  and  of  officer  or  agent  appear  on  the  face 
of  the  paper;  and  it  has  often  puzzled  courts  to  determine  whether  or 
not  it  was  in  legal  effect  the  instrument  of  the  corporation,  or  the 
private  contract  of  the  officer  or  agent.  Bills,  notes,  acceptances,  and 
indorsements  are  each,  to  some  extent,  peculiar;  at  least  the  different 
relations  of  the  parties  respectively  to  the  paper  are  circumstances 
which  in  themselves  throw  some  light  on  its  interpretation.  And  we 
shall,  therefore,  consider  separately  the  interpretation  of  the  maker's, 
acceptor's,  drawer's,  and  indorser's  contract.  Certain  general  prin- 
ciples of  the  law  of  agency  apply  to  all.  And  where  it  is  manifest 
from  the  face  of  the  instrument,  that  it  was  executed,  for  a  corporate 
purpose;  where,  to  use  the  language  of  the  United  States  Supreme 
Court,  "the  marks  of  an  official  character  not  only  exist  on  the  face 
but  predominate,"  ^^  it  is,  as  a  general  rule,  to  be  regarded  as  the 
paper  of  the  corporation,  and  not  as  that  of  the  individual  ofiicer  or 
agent.^^ 

§  399.  Various  and  adopted  names  of  corporations. — Corpora- 
tions may  be  known  by  several  names  as  well  as  natural  persons,  and, 
therefore,  the  misnomer  of  a  corporation  in  any  written  contract  does 
not  prevent  its  being  bound,  provided  its  identity  with  that  intended 
by  the  parties  is  averred  in  pleading  and  sustained  by  the  proof.^^ 
It  is  not  infrequently  the  case  that  a  firm  is  incorporated  as  a  com- 
pany, and  uses  sometimes  its  corporate  and  sometimes  its  copartner- 
ship title,  or  sometimes  styles  itself  a  company  instead  of  a  firm. 
And  sometimes  a  corporation  transacts  its  business  in  the  name  of  an 
agent,  adopting  his  name,  in  which  case  it  will  be  bound  as  effectually 
as  if  its  corporate  title  had  been  used.^^  An  action  by  "The  Medway 
Cotton  Manufactory"  was  sustained  in  Massachusetts  on  a  note 
given  to  "Richardson,  Metcalf  &  Co.;"  ^^  and  against  the  "Boston 

34  Mechanics'  Bank  v.  Bank  of  Columbia,  5  Wheat.  356;  Jackson  v.  Claw, 
18  Johns.  348.  The  word  "we"  does  not  necessarily  imply  a  plurality  of  makers; 
it  is  often  used  to  designate  or  describe  a  corporation.  Williams  v.  Harris,  198 
111.  501,  64  N.  E.  988;  Derby  v.  Gustafson,  131  111.  App.  281;  August  v.  Creque, 
72  Ohio  St.  551,  74  N.  E.  1073;  Nunnemacher  v.  Poss,  116  Wis.  444,  92  N.  W. 
375.    See  section  403. 

35.  See  chapter  on  Agents,  §  3. 

36.  Angell  &  Ames  on  Corporations,  169.    See  §  485. 

37.  West  V.  First  Nat.  Bank,  20  Hun,  408;  Devendorf  v.  West  Virginia  Oil, 
etc.,  Co.,  17  W.  Va.  172;  ante,  §§  304-363. 

38.  Medway  Cotton  Manufactory  v.  Adams,  10  Mass.  360.     See  also  Com- 


§§  399a,  400     INTERPRETATION   OF  THE    INSTRUMENT  509 

Iron  Company"  on  notes  signed  "Horace  Gray  &  Co.;"  ^^  and  in 
New  York  one  on  a  bond  by  "The  New  York  African  Society,  etc.," 
given  to  the  standing  committee  of  the  New  York  African  Society;  ■*° 
and  on  an  acceptance  in  the  same  State  in  the  name  of  "H.  G.  &  Co." 
made  by  the  president  of  the  corporation,  that  being  his  copartnership 
style,  and  used  by  the  corporation  as  a  convenient  mode  for  raising 
funds,  the  corporation  was  held  liable.^^ 

§  399a.  In  a  recent  West  Virginia  case  suit  was  brought  against  the 
West  Virginia  Oil  and  Oil  Land  Company,  on  a  draft  signed  "charge 
to  account  of  B.  S.  Compton,  Pres.,"  without  any  indicia  upon  it  that 
it  related  to  corporate  business  other  than  the  mere  suffix  "Pres." 
It  was  held  that  the  company  of  which  Compton  was  president  having 
customarily  conducted  its  business  by  means  of  drafts  so  drawn,  and 
the  drafts  having  been  given  to  the  plaintiff  for  a  consideration  mov- 
ing to  the  company,  the  circumstances  were  admissible  in  evidence, 
and  the  company  was  bound  as  drawer  of  the  draft.  ^^  In  New  York, 
where  certificates  of  deposit  were  customarily  issued  by  a  national 
bank  with  the  simple  individual  signature  of  the  president,  the  bank 
receiving  the  money  was  held  bound  on  the  principle  above  stated.^' 
In  Massachusetts,  where  a  note  was  signed  "Forbes  Woolen  Mills, 
by  G.  E.  Forbes,  Treasurer,"  there  being  no  legally  chartered  corpora- 
tion, and  the  note  being  for  the  benefit  of  Forbes,  he  was  held  per- 
sonally bound  as  its  maker.^^ 

§  400.  In  respect  to  the  maker,  it  is  best  to  sign  the  corporate 
name  after  words  which  import  necessarily,  and  only,  a  corporate 
promise.  But  it  is  by  no  means  essential  that  this  form  be  ob- 
served. And  if  the  officer  or  agent  add  to  his  name  "  for Com- 
pany," it  is  quite  sufficient  to  indicate  that  it  is  the  company's 
promise,  and  not  his.'^^     A  different  view  has  been  taken  in  some 

mercial  Bank  v.  French,  21  Pick.  486;  Minot  v.  Curtis,  7  Mass.  441;  ante, 
§304. 

39.  Melledge  v.  Boston  Iron  Co.,  5  Cush.  158. 

40.  African  Society  v.  Varick,  13  Johns.  38. 

41.  Conro  v.  Port  Henry  Iron  Co.,  12  Barb.  27. 

42.  Devendorf  v.  West  Virginia  O.  &  O.  L.  Co.,  17  W.  Va.  172. 

43.  West  V.  First  Nat.  Bank,  20  Hun,  408. 

44.  Montgomery  v.  Forbes,  148  Mass.  252. 

45.  Emerson  v.  Providence  Hat  Mfg.  Co.,  12  Mass.  237;  Simpson  v.  Garland, 
76  Me.  203.  See  ante,  §  298.  When  the  corporation's  name  is  affixed  to  the  in- 
strument, it  is  preferable  for  the  agent  executing  it,  in  the  name  of  the  principal, 


510  I'RIVATE    CORPORATIONS   AS    PARTIES  §  401 

cases;  ^^  but  this  rule  is  sustained  by  reason  and  by  great  weight  of  au- 
thority. If  the  obHgatory  tenor  of  the  note  indicate  that  the  corpora- 
tion is  to  be  bound,  then  the  official  signature  will  be  deemed  to  be 
affixed  as  for  the  corporation,  and  the  individual  will  not  be  liable.  It 
was  so  held  where  the  note  ran,  "The  Ocean  Mining  Co.  promise  to 
pay,"  and  was  signed  by  ''J.  H.,  Trustee,"  and  by  "S.  N.  S.;"  "^  where 
the  note  commenced,  "The  Newport  Manufacturing  Co.  promise  to 
pay,"  and  was  signed  "J.  W.  T.,  Treasurer;"  ^^  where  the  note  ran, 
"The  Patent  Cloth  Man.  Co.  promise  to  pay,"  and  was  signed  "  W.  S., 
Agent;"  ^^  where  the  note  ran  "We  promise,"  and  was  signed  "Bel- 
fast Foundry  Co.,"  and  under  it  "W.  W.  Castle,  Pres't,"  and  was 
payable  "at  office  of  Belfast  Foundry  Co.,"  it  was  considered  to 
import  the  promise  of  the  company,  and  not  to  bind  the  president 
personally.^^  It  was  held  otherwise,  and  that  the  individual  was 
bound,  where  the  note  ran,  "We  promise,"  and  was  signed  "D.  P.  L., 
Treasurer,  Hallowell  Gas  Light  Company."  ^^ 

§  401.  Illustrations. — Where  the  note  ran,  "I  promise,"  and 
was  signed  "For  the  Providence  Hat  Manufacturing  Company, 
A.  B.  (the  agent),"  it  was  held  the  company's,  and  not  the  agent's 
note,  notwithstanding  the  words  "I  promise,"  it  being  sufficiently 
indicated  that  it  was  done  as  agent.^^  But  where  the  note  com- 
menced, "We,  the  subscribers,  jointly  and  severally  promise,"  and 
was  signed,  "for  the  Boston  Glass  Manufactory,  A.,  B.  &  C,"  the 
joint  and  several  undertaking,  and  the  omission  of  any  designation 

to  add  his  own  name  as  agent,  so  that  the  instrument  may  show  by  what  person 
the  signature  is  written,  but  in  law,  the  writing  of  the  name  of  the  principal, 
alone  is  sufficient.    Youngs  v.  Perry,  42  App.  Div.  247,  59  N.  Y.  Supp.  19. 

46.  Macbean  v.  Morrison,  1  A.  K.  Marsh.  545.  When  the  note  ran  "I  promise 
to  pay,  etc.,  A.  B.,  for  value  received  of  C.  D.,  on  account  of  his  wages  at  the 
Madison  Hemp  and  Flax  Spinning  Company,"  and  was  signed,  "For  the  Madison 
Hemp  and  Flax  Company,  W.  Macbean,  Pres't,"  it  was  held  the  individual  note 
of  Macbean,  on  the  ground,  as  stated  by  Rowan,  J.,  that  "the  law  reduces  the 
liability  from  the  obligatory  tenor  of  the  note." 

47.  Shaver  v.  Ocean  Mining  Co.,  21  Cal.  45.  See  also  Armstrong  v.  Kirk- 
patrick,  79  Ind.  527.    Compare  Vliet  v.  Simanton,  63  N.  J.  L.  458,  43  Atl.  738. 

48.  Commercial  Bank  v.  Newport  Mfg.  Co.,  3  B.  Mon.  13. 

49.  Shotwell  v.  M'Kown,  2  Southard,  828. 

50.  Castle  v.  Belfast  Foundry  Co.,  72  Me.  167;  Draper  v.  Massachusetts 
Steam  Heating  Co.,  5  Allen,  338,  accords.  See  ante,  §  307;  Liebsche  v.  Kraus, 
74  Wis.  387;  Miller  v.  Roach,  22  N.  E.  634;  Latham  v.  Flour  Mills,  68  Tex.  130. 

51.  McClure  v.  Livermore,  78  Me.  391. 

52.  Emerson  v.  Providence  Hat  Mfg.  Co.,  12  Mass.  237. 


§  402  INTERPRETATION   OF   THE    INSTRUMENT  511 

of  office  or  agency  were  considered  together,  as  showing  it  to  be  an 
individual  note.^^  In  a  later  case,  where  the  note  began,  "We  jointly 
and  severally  promise  to  pay,"  and  was  signed  "Patton  &  Johnson, 
for  Ira  Gove,"  the  words  "jointly  and  severally,"  as  indicating  the 
personal  contract  of  Patton  &  Johnson,  were  regarded  as  overbalanced 
by  the  form  of  the  signature,  "for  Ira  Gove,"  which,  it  was  said,  "so 
clearly  manifests  the  purpose  to  be  the  execution  of  a  contract  binding 
solely  upon  the  defendant,  that  if  either  is  to  be  rejected  as  surplusage 
and  of  no  effect,  it  should  be  the  words  'jointly  and  severally.'"  ^^ 

§  402.  Further  illustrations. — Where  the  promissory  terms  of 
the  notes  are,  "The  president  and  directors  of  the  A,  B.  Company 
promise  to  pay,  etc.,"  they  are  sufficient  to  import  distinctly  a  cor- 
porate obligation,  and  the  signature  of  the  president  subscribed  will 
not  bind  him  personally.^^   A  different  view  has  been  taken  in  Maine.  ^^ 

But  in  England,  where  the  directors  of  a  joint-stock  newspaper 
company  gave  a  note  for  a  purchase  for  the  company,  running,  "On 
demand,  we  jointly  and  severally  promise  to  pay,  etc.,  for  and  on 
behalf  of  the  Wesley  an  Newspaper  Association,"  and  signed  their 
names  as  directors,  it  was  held  that  the  words  "jointly  and  severally" 
were  equivalent  to  "jointly  and  personally,"  and  that  they  were 

63.  Bradlee  v.  Boston  Glass  Co.,  16  Pick.  347.  The  plaintiff  had  proved  the 
agency.  Shaw,  C.  J.,  said:  "The  words,  'for  the  Boston  Manufactory,'  if  they 
stood  alone,  would  perhaps  leave  it  doubtful  and  ambiguous  whether  they  meant 
to  bind  themselves  as  promisors  to  pay  the  debt  of  the  company,  or  whether  they 
meant  to  sign  a  contract  for  the  company,  by  which  they  should  be  bound  to  pay 
their  own  debt,  though  the  place  in  which  the  words  are  introduced  would  seem 
to  warrant  the  former  construction.  But  other  considerations  arise  from  other 
views  of  the  whole  tenor  of  the  note.  The  fact  is  of  importance  that  it  is  signed 
by  three  instead  of  one,  and  with  no  designation  or  name  of  office  indicating  any 
agency  or  connection  with  the  company.  No  indication  appears  on  the  note 
itself  that  either  of  them  was  president,  treasurer,  or  director,  or  that  they  were 
a  committee  to  act  for  the  company.  But  the  words  'jointly  and  severally  '  are 
quite  decisive.  The  persons  are,  'we,  the  subscribers,'  and  it  is  signed  Jonathan 
Hunnewell,  Samuel  Gore,  and  Charles  F.  Kupfer.  This  word  'severally'  must  have 
its  effect;  and  its  legal  effect  was  to  bind  each  of  the  signers.  This  fixes  the  un- 
dertaking as  a  personal  one.  It  would  be  a  forced  and  wholly  untenable  con- 
struction to  hold  that  the  company  and  signers  were  all  bound;  this  would  be 
equally  inconsistent  with  the  terms  and  the  obvious  meaning  of  the  contract." 

54.  Rice  v.  Gove,  22  Pick.  158. 

55.  Hamilton  v.  Newcastle  R.  Co.,  9  Md.  19;  Pitman  v.  Kintner,  5  Blackf. 
250. 

56.  Rendell  v.  Harriman,  75  Me.  497.  See  Sturtevant  v.  Hall,  59  Me. 
172. 


512  PRIVATE    CORPORATIONS   AS   PARTIES  §  403 

personally  bound."  In  another  case,  where  the  note  ran,  "We 
jointly  promise  to  pay,  etc.,"  and  was  signed  by  three  of  the  directors 
of  a  joint-stock  company,  and  countersigned  by  the  secretary,  and 
purported  to  be  on  account  of  stock  of  the  company,  it  was  held  the 
note  of  the  company.  ^^ 

§  403.  The  addition  of  official  character  to  the  signature  at  the 

foot  of  the  note  will  not  of  itself  be  sufficient  to  indicate  an  intention 
to  bind  the  corporation,  but  will  be  regarded  merely  as  an  earmark 
or  descriptio  personce.  Thus,  where  a  note  was  signed  ''A.  B.,  Prest. 
Henderson  Loan  Co.,"  it  was  held  the  individual  note  of  Henderson. ^^ 
The  like  decisions  were  rendered  where  a  note  commenced  "I  prom- 
ise," and  was  signed  "J.  S.,  Trustee  of  Sullivan  Railroad;"  ^"  where 
a  note  began  "We  promise,"  and  was  signed  " W.  S.,  Prest.  Blanner- 
hasset  Oil  Company,  and  W.  H.,  Treasurer;"  ^^  and  where  the  note 

67.  Healey  v.  Story,  3  Exch.  3,  18  L.  J.  (N.  S.)  8. 

58.  Lindus  v.  Melrose,  3  H.  &  N.  177.  See  Bottomley  v.  Fisher,  8  Law  Times 
Exch.  (N.  S.)  688;  Price  v.  Taylor,  6  Jurist,  402;  McCormick  v.  Stockton,  etc., 
Co.,  130  Cal.  100,  62  Pac.  267. 

69.  Burbank  v.  Posey,  7  Bush,  373.  To  same  effect,  Heaton  v.  Myers,  4 
Colo.  62;  Chamberlain  v.  Pacific  W.  G.  Co.,  54  Cal.  103;  Davis  v.  England,  141 
Mass.  587.  In  Hobson  v.  Hassett,  76  Cal.  203,  the  official  designation  was  held 
not  to  relieve  the  maker  of  his  individual  liability;  but  in  Farmers'  Bank  v. 
Colby,  64  Cal.  352,  the  company  was  held  liable  in  such  case;  there  being  no 
question  as  to  the  liability  of  the  maker,  he  having  indorsed  the  note  in  his  in- 
dividual capacity.  Taylor  v.  Reger,  18  Ind.  App.  466,  48  N.  E.  262,  63  Am.  St. 
Rep.  343;  Prescott  et  al.  v.  Hixon,  22  Ind.  App.  139,  53  N.  E.  391,  72  Am.  St. 
Rep.  291;  Savmgs  Bank  v.  Central  Market  Co.,  122  Cal.  28,  54  Pac.  273. 

60.  Fiske  v.  Eldridge,  12  Gray,  474,  Dewey,  J.,  saying:  "The  case  of  Mann 
V.  Chandler,  9  Mass.  335,  may  be  thought  to  be  favorable  to  the  defense,  and 
contrary  to  what  seems  the  doctrine  of  the  other  cases  referred  to.  *  *  *  That 
case  differs  from  the  others  in  its  facts  as  to  the  description  annexed  to  the  name. 
It  may  be  that  the  signature  of  the  treasurer  of  a  corporation  may  be  thought  to 
be  the  ordinary  mode  of  executing  such  contracts  on  the  part  of  the  corporation, 
and  that  those  words  in  themselves  import  a  promise  of  the  party  whose  treasurer 
he  is.  We  think  the  present  case  differs  from  it,  and  is  more  analogous  to  the 
other  cases  cited.  In  the  case  of  Seaver  v.  Coburn,  10  Cush.  324,  a  party  signing 
a  contract  as  '  Treasurer  of  the  Eagle  Lodge  '  was  holden  personally  liable.  Such 
a  note  as  the  one  in  suit  we  think  must  be  taken  to  be  the  personal  promise  of 
the  signer,  and  the  word  'trustee,'  placed  after  the  signature,  be  held  to  be  a 
mere  descriptio  personcB,  intended  to  indicate  the  fund  to  be  charged  with  the 
note,  or  the  uses  to  which  the  money  has  been  apphed. 

61.  Scott  V.  Baker,  3  Hag.  285;  Rand  v.  Hale,  3  Hag.  495;  Rendell  v.  Harriman, 
75  Me.  497,  46  Am.  Rep.  421;  McCandler  v.  Canning  Co.,  78  Iowa,  161;  Heffner 
V.  Brownell,  70  Iowa,  591;  Coburn  v.  Omega  Lodge,  71  Iowa,  581.     But  see 


§  403  INTERPRETATION    OF   THE    INSTRUMENT  513 

was  signed  ''B.  &  C,  Trustees  of  Union  Religious  Society;"  ^^  where 
the  note  was  dated  "Commercial  Bank  of  Rodney,  Rodney,  Miss., 
8  March,  1839,"  began  "We  promise,"  and  was  signed  "T.  F.,  Prest.," 
and  countersigned  "J.  L.,  Cashier;"  ^^  where  the  note  began,  "For 
value  received,  on  policy  No.  11,176,  I  promise,"  was  signed  "A.  B., 
Prest.,  Dorchester  Avenue  R.  R.  Co.,"  and  was  proved  to  have  been 
given  in  consideration  of  a  policy  of  insurance  issued  to  that  company 
by  the  payee;  ^^  where  there  was  added  to  the  signatures  "Trustees 
of  School  District  No.  l;"^^  where  the  note  was  signed  "A.  B.  & 
C.  D.,  Receivers ;"  ^^  where  there  was  added  "Secretary  Masonic 
Female  College;"^"  where  there  was  added  "Trustees  of  Baptist 
Society; "  ^  where  there  was  added  "  Treasurer  of  St.  Paul's  Parish ; "  ®^ 
where  the  note  ran,  "We,  the  trustees  of  the  Seventh  Presbyterian 
Church,"  and  was  signed  "A.  B.  C.  &  D.,  Trustees;"  ^°  where  there 
was  added  "As  Trustees  of  the  First  Universalist  Society,"  to  a  note 
of  several  signers  beginning  "I  promise;"  "^  where  the  note  ran  "We," 
and  was  signed  "G.  M.,  Treasurer  of  the  M.  F.  D.  Association;"  ^^ 

Devendorf  v.  West  Virginia  O.  &  O.  L.  Co.,  17  W.  Va.  135,  172;  Marshall  v. 
Murphy,  5  Kan.  App.  718,  46  Pac.  973;  First  Nat.  Bank  v.  Wallis,  150  N.  Y. 
456,  44  N.  E.  1038;  Albany  Furniture  Co.  et  al.  v.  The  Merchants'  Nat.  Bank, 
17  Ind.  App.  531,  47  N.  E.  227,  60  Am.  St.  Rep.  178. 

62.  Hovey  v.  Bannister,  8  Cow.  31. 

63.  Fitch  V.  Lawton,  6  How.  (Miss.)  371. 

64.  Haverhill,  etc.,  Ins.  Co.  v.  Newhale,  I  Allen,  130. 

65.  Fowler  v.  Atkinson,  6  Minn.  579.  To  same  effect,  see  Cahokio  School 
Trustees  v.  Rautenberg,  88  111.  219.  In  a  recent  Indiana  case  where  three  persons 
signed  their  names  and  added  "Trustees  of  Monticello  School,"  they  were  re- 
garded as  public  agents,  the  school  being  a  public  one,  and  not  personally  bound. 
School  Town  of  Monticello  v.  Kendall,  72  Ind.  91.  See  on  this  subject,  §§  443, 
445;  Johnson  School  Township  v.  Citizens'  Bank,  81  Ind.  515. 

66.  Towne  v.  Rice,  122  Mass.  67. 

67.  Drake  v.  Flewellen,  33  Ala.  106. 

68.  Brockway  v.  Allen,  17  Wend.  41.    See  Mears  v.  Graham,  8  Blackf.  144. 

69.  Sturdivant  v.  Hull,  59  Me.  172.    See  Gregory  v.  Leigh,  33  Tex.  813. 

70.  Powers  v.  Briggs,  79  111.  493.  See  to  hke  effect,  Hays  v.  Crutcher,  54 
Ind.  260;  Hayes  v.  Brubaker,  65  Ind.  27.  But  in  the  case  of  New  Market  Sav- 
ings Bank  v.  Gillet,  100  111.  254,  where  the  corporate  name  was  properly  set  out 
in  the  body  of  the  instrument,  and  the  oflBcial  description  opposite  the  name  of 
the  signers  consisted  not  merely  of  the  single  word  "trustees,"  but  "Trustees  of 
the  First  Free-Will  Baptist  Society  of  Chicago,  Illinois,"  which  was  the  corporate 
name,  thus  distinguishing  the  case  from  Powers  v.  Briggs,  supra,  it  was  held  that 
the  obhgation  was  that  of  the  society,  and  not  of  the  trustees  individually.  Frank- 
land  V.  Johnson,  147  111.  520,  35  N.  E.  480,  37  Am.  St.  Rep.  234. 

71.  Burlingame  v.  Brewster,  79  111.  515;  Sturdivant  v.  Hull,  59  Me.  172. 

72.  Mellen  v.  Moore,  68  Me.  390.    A  note  running  "Three  months  after  date 

33 


514  PRIVATE    CORPORATIONS   AS    PARTIES  §  403 

where  the  note  began  "We,"  and  was  signed  "Warrick  Glass  Com- 
pany" and  J.  Price  Warrick,  President  was  undersigned,  it  was  con- 
sidered a  company  note  and  was  so  regarded  by  the  method  of  the 
signature;  ^^  so  as  to  notes  beginning,  "We  promise  to  pay,"  and 
signed,  "The  Sanitary  Milk-Supply  Co.,  T.  A.  Huston,  Trs.,"  ^^ 
"The  Arkon  White  Sand  &  Stone  Co.,  L.  K.  Mihills,  Secy.  &  Treas., 
D.  B.  Aungst,  Pres.;"75  "Double  Use  Mitten  Co.,  S.  0.  Derby, 
Treasurer, "  "6  and  so  as  to  the  notes  signed  "Northeastern  Coal 
Company,  Commodore  P.  Foye,  Secretary;  Goodman  Wallem, 
President,  Northeastern  Coal  Company;"  ^^  "William  C.  Thompson 
Co.,  W.  C.  Thompson,  Pt.;^'^^  "Globe  Loan  &  Trust  Co.,  H.  O. 
Devries,  Presdt.  W.  B.  Taylor,  Secy.;"  ^»  and  so  as  to  notes  signed 
"Omaha  Coffin  Mfg.  Co.,  C.  A.  Claflin,  Pres.,  S.  L.  Andrews,  Secy.;"  ^o 
but  where  the  note  began  "  We  the  trustees  of  Musconetang  Grange, 
No.  114,  known  as  W.  Fleming  &  Company"  and  was  signed  by 
W.  M.  S.  and  I.  W.,  Trustees,  the  addition  of  the  expression  "known 
as  W.  Fleming  &  Company"  was  regarded  as  rendering  it  doubtful 


we  promise  to  pay,  etc.,"  and  signed  "Wm.  T.  Wallis,  Prest.,  and  George  T. 
Smith,  Treas."  On  the  margin  of  the  note:  "WaUis  Iron  Works"  creates  an 
individual  obligation  on  the  part  of  Wallis  and  Smith  and  is  not,  in  any  sense,  a 
corporate  note.  See  First  Nat.  Bank  v.  Wallis,  84  Hun,  377,  32  N.  Y.  Supp 
382. 

73.  Reeve  v.  First  Nat.  Bank,  54  N.  J.  L.  (25  Vroom)  208,  23  Atl.  853,  33  Am. 
St.  Rep.  675,  and  §  410.  A  note  made  upon  a  blank  form,  signed  by  George  M. 
Gibbs,  secretary,  and  George  Bieberbach,  president,  payable  "to  the  order  of 
ourselves,"  and  indorsed,"  Worcester  Brewing  Company,  George  Bieberbach, 
President.  George  M.  Gibbs,  secretary,"  filled  out,  and  the  name  of  the  company 
indorsed  in  the  handwriting  of  Gibbs,  is  the  note  of  the  company.  Produce  E  ;ch. 
Trust  Co.  V.  Bieberbach,  176  Mass.  577,  58  N.  E.  162.  In  a  note  providing  that 
"I  or  we  promise  to  pay,"  and  signed  and  sealed  in  the  corporate  name  "Per  C. 
I.  Williams,  Sec.  George  J.  Williams,  Gen.  Mngr.,"  the  word  "Per"  applies  to 
both  officers,  and  the  note  is  the  obligation  of  the  corporation.  Williams  v.  Harris 
198  111.  501,  64  N.  E.  988. 

74.  Gleason  v.  Sanitary  Milk-Supply  Co.,  93  Me.  544,  45  Atl.  825,  74  Am.  St. 
Rep.  370. 

75.  August  V.  Creque,  72  Ohio  St.  551,  74  N.  E.  1075. 

76  Derby  v.  Gustafson,  131  111.  App.  281,  holding  further  that  the  omission 
of  the  word  "by"  or  "per  "  does  not  change  the  character  of  the  instrument. 

77.  Northeastern  Coal  Co.  v.  Tyrrell,  133  III.  App.  472. 

78.  Thompson  v.  Hasselman,  131  111.  App.  257. 

79.  English  &  Scottish  American  Mortg.  &  Inv.  Co.  v.  Globe  Loan  &  Trust 
Co.,  70  Neb.  435,  97  N.  W.  612. 

80.  American  Nat.  Bank  v.  Omaha  Coffin  Mfg.  Co.,  1  Neb.  (Unof  )  322  95 
N.  W.  672. 


§§  404,  405        INTERPRETATION    OF   THE    INSTRUMENT  515 

whether  the  corporation  or  the  individuals  were  bound.^^  The 
principles  applicable  to  public  agencies  are  elsewhere  considered.^^ 

§  404.  The  weight  of  authority,  both  English  and  American,  un- 
doubtedly bears  out  the  doctrine  of  the  text,  and  it  is  sustained,  as 
we  think,  by  clear,  sound  reasoning.^^  But  Professor  Parsons  takes 
a  different  view  of  the  law  in  his  admirable  work,^"*  and  there  are  un- 
doubtedly a  few  cases  which  sustain  him,  though  by  no  means  so 
many  as  those  cited  by  him,  many  of  them  containing  other  indica- 
tions than  mere  official  designation  that  they  were  executed  in  the 
business  of  the  corporation.^^ 

§  405.  Official  designation  in  body  of  the  instrument. — Where, 
in  the  body  of  the  note,  there  is  the  expression,  "I,  A.  B.,  Treasurer 

of Company,"  or,  "I,  A.  B.,  Cashier  of Company,  or 

Bank,"  or,  "I,  A.  B.,  President  of ,"  and  it  is  signed  in  hke 

manner,  there  are  cases  which  consider  it  sufficiently  indicated  that 
it  is  intended  to  be  the  note  of  the  corporation,  and  especially  when 
the  signature  is  likewise  accompanied  with  the  official  designation ;  and 
high  authority  favors  them.^^    Thus  it  has  been  held  that  a  note  be- 

81.  Simanton  v.  Vliet,  61  N.  J.  L.  (32  Vroom)  595,  40  Atl.  595. 

82.  §§443,  445. 

83.  See  the  excellent  remarks  of  Walton,  J.,  in  Mellen  v.  Moore,  68  Me.  390. 

84.  1  Parsons  on  Notes  and  Bills,  168,  in  which  it  is  said;  "If  a  corporation 
certainly  authorized  to  make,  sign,  accept,  or  indorse  negotiable  paper,  has  an 
officer  authorized  to  use  their  name  in  this  way,  and  this  officer  writes  his  own 
name  as  drawer  of  a  bill  of  exchange,  with  the  express  addition  of  his  office,  it 
seems  that  he  would  be  held  to  do  this  officially,  and  to  bind  the  corporation  and 
not  himself." 

85.  Johnson  v.  Smith,  21  Conn.  627.  The  promisors  signed  themselves  "Ves- 
trymen of  the  Episcopal  Society."  The  society  received  the  money  for  which  the 
notes  were  given.  Church,  C.  J.,  quoted  the  language  of  Swift,  C.  J.,  in  Hovey  v. 
Magill,  2  Conn.  680,  with  approval:  "I  can  see  no  good  reason  for  the  addition 
of  agent  but  to  render  the  note  obligatory  on  the  company,  and  exclude  all  idea  of 
individual  liability."  See  also  Hovey  v.  Magill,  2  Conn.  680,  note  signed  "A.  W. 
Magill,  agent  for  the  Middletown  Manufacturing  Company,"  and  running, 
"I  promise."  Held,  the  company's.  In  Tilden  v.  Barnard,  43  Mich.  377,  the 
signers  of  the  note  added,  "Vestr3Tnen  of  Grace  Church."  Held,  personally 
bound.  In  Proctor  v.  Webber,  1  D.  Chipman,  371,  the  note  ran,  "I,  Christopher 
Webber,  as  Agent  of  the  Green  Mountain  Turnpike  Corporation,"  and  was 
signed  "Christopher  Webber,  Agent  of  the  Green  Mountain  Turnpike  Corpora- 
tion." Held,  the  company's.  McCall  v.  Clayton,  Busbee  L.  R.  422;  Dispatch 
Lme  of  Packets  v.  Bellamy  Mfg.  Co.,  12  N.  H.  205. 

86.  1  Parsons  on  Notes  and  Bills,  169;  Taylor  v.  Reger,  18  Ind.  App.  466, 


516  PRIVATE   CORPORATIONS   AS   PARTIES  §  405 

ginning  "I,  Treasurer  of  Dorchester  Turnpike  Corporation,"  and 
signed  "G.  L.  C,  Treasurer,  etc.,"  was  the  note  of  the  corporation;  ^^ 
but  the  decision  has  been  criticised  and  doubted,^^  and,  we  think, 
should  not  be  followed.  It  is  true  that  bank  bills  are  universally 
signed  in  this,  way,  as  observed  by  Professor  Parsons;  and,  as  to  them, 
the  principle  may  be  well  applied,  as  they  bear  upon  their  face  dis- 
tinct evidences  of  their  character  as  representatives  of  money  issued 
by  a  bank,  and  which  it  would  be  illegal  (in  many  of  the  States  at 
least)  for  an  individual  to  issue.  And  so  other  printed  securities, 
such  as  bonds  and  coupons,  might  be  couched  in  similar  phrase  with- 
out exciting  a  doubt  that  they  were  corporate  obligations.  In  respect 
also  to  bills  drawn  and  notes  signed  by  the  cashier  of  a  bank,  the  men- 
tion of  his  character  as  cashier,  according  to  the  inclination  of  the 
decisions,  stamps  upon  the  instrument  the  obligation  of  the  bank.^^ 
Farther,  we  think,  neither  reason  nor  authority  will  permit  us  to  go. 
In  New  York  it  has  been  held  that  a  note  running,  "  I,  John  Franklin, 
Pres't  of  the  Mechanics'  Fire  Insurance,  promise,  etc.,"  was  Frank- 
hn's  and  not  the  company's.^"  So  in  Maine,  where  the  note  ran, 
"We,  the  Trustees  of  the  Wayne  Scythe  Company,  promise,"  and 
was  signed  by  the  individual  names.^^  So  in  Indiana,  where  the 
note  began,  "We,  the  Trustees  of  the  Methodist  Church  in  Rockport, 
promise,"  and  was  signed  "A.  B.,  C.  D.,  etc.,  Trustees  of  the  M.  E. 
Church,"  ^^    And  similar  decisions  have  been  rendered  in  Illinois.^^ 

48  N.  E.  262,  63  Am.  St.  Rep.  352.  Promissory  notes  stipulating  that  "We,  or 
either  of  us,  the  trustees  of  White  school  district  *  *  *,  promise  to  pay  *  *  *, 
it  being  money  this  day  borrowed  of  said  Temple  to  build  schoolhouse  in  said 
district  number  6.  T.  W.  Warford,  L.  F.  Green,  Trustees,"  were  held  not  to  be  the 
individual  notes  of  the  signers.  Warford  v.  Temple  (Ky.),  73  S.  W.  1023,  the  court 
saying  that  the  notes  sued  on  show  on  their  face  that  the  money  borrowed  was 
to  be  used  to  build  a  schoolhouse  for  the  benefit  of  the  district,  and  it  appears 
from  the  averments  both  of  the  petition  and  answer  that  the  plaintiff  knew  the 
purpose  for  which  the  money  was  borrowed,  and  that  it  had  been  so  applied. 

87.  Mann  v.  Chandler,  9  Mass.  335;  Blanchard  v.  Kaull,  44  Cal.  448,  an- 
nounces same  doctrine. 

88.  Barlow  v.  Congregational  Society,  8  Allen,  460;  Fiske  v.  Eldridge,   12 
Gray,  476. 

89.  See  post,  §  417. 

90.  Barker  v.  Mechanics'  Ins.  Co.,  3  Wend.  94.    See  ante,  authorities  cited 
in  §  262. 

91.  Fogg  V.  Virgin,    19   Me.  353.    But  see  Klostermann  v.   Loos,   58   Mo. 
290. 

92.  Mears  v.  Graham,  8  Blackf.  144;  McClure  v.  Bennett,  1  Blackf.   189. 
This  interpretation  was  given  because  there  was  no  power  to  bind  the  corporation. 

93.  Hypes  v.  Griffin,  89  111.  134;  Powers  v.  Briggs,  79  111.  493. 


§  406  INTERPRETATION   OF   THE    INSTRUMENT  517 

§  406.  Illustrations. — So  in  Massachusetts,  where  a  note  ran, 
"We,  Trustees  of  the  New  Congregational  Meeting  House,  prom- 
ise," ^^  and  another  ran,  ''We,  the  Prudential  Committee  for  and  in 
behalf  of  the  Baptist  Church  in  Lee,  agree  to  pay,  etc.,"  ^^  and  only 
the  individual  names  of  the  parties  were  signed,  without  official 
designation,  the  like  view  was  taken — that  the  signers  were  individ- 
ually bound.  The  latter  case,  we  do  not  think,  can  be  sustained,  as 
the  words  "for  and  in  behalf  of  the  Baptist  Church,  etc.,"  sufficiently 
indicate  that  the  signers  did  not  design  to  bind  themselves  person- 
ally.^c 

But  the  decisions  are  very  conflicting  and  the  tendency  is  to  re- 
strain, rather  than  to  enlarge,  the  constructive  liability  of  corpora- 
tions. In  an  English  case  a  note  running,  "We,  the  Directors  of  the 
Isle  of  Man  Slate  and  Flag  Company,"  in  the  body  was  held  the 
individual  note  of  the  directors,  although  the  corporate  seal  was 
attached.^^  If  the  expression  were,  "We,  as  Directors,"  or  "as 
Trustees,"  the  idea  of  individual  liabifity  would  be  excluded  by  the 
use  of  the  restrictive  word  "as."®^  And  in  Kentucky,  where  the 
note  ran,  "The  President  and  Directors  of  the  H.  &  B.,  etc.,  Co.," 
and  was  signed  by  those  officials,  the  president  adding  "Pres't"  to 
his  name,  it  was  held  clear  that  they  promised  on  behalf  of  the  com- 
pany, and  bound  it  alone.^^  But  in  another  case,  where  the  note  ran, 
"The  President,  by  order  of  the  Board"  of  said  company,  promises  to 

94.  Packard  v.  Nye,  2  Mete.  (Mass.)  47.  But  see  Baker  v.  Chambliss,  4 
Iowa  (G.  Greene),  429,  and  §  443a  and  notes. 

95.  Morell  v.  Codding,  4  Allen,  403,  Dewey,  J.:  "The  present  case  lacks 
one  element  which,  when  it  exists,  is  usually  decisive  of  the  character  of  the 
promise;  that  is,  the  introduction  of  the  name  of  a  principal  as  a  part  of  the 
signature,  as  in  the  case  of  Long  v.  Colburn,  11  Mass.  97,  where  the  form  of 
the  signature  was  'pro  Wilham  Gill — J.  S.  Colburn.'"  In  Vermont,  a  note 
running,  "We,  in  behalf  of  the  First  M.  E.  Society  in  Middlebury,"  and  signed 
by  simple  individual  names,  was  held  at  least  prima  facie  their  individual  note. 
Pomeroy  v.  Slade,  16  Vt.  220. 

96.  HaskeU  v.  Cornish,  13  Cal.  45.  The  note  ran,  "We,  the  undersigned, 
Trustees  of  the  First  African  Methodist  Church,  in  behalf  the  whole  Board  of 
Trustees,"  and  was  signed  simply  with  individual  names  of  H.  C.  C.  and  J.  C.  L. 
Held,  that  it  was  the  note  of  the  church,  though  it  might  be  otherwise  if  the 
defendants  had  no  authority  to  execute  the  note  for  the  church. 

97.  Button  V.  Marsh,  L.  R.,  6  Q.  B.  [*361],  359  (1871). 

98.  Sanborn  v.  Neal,  4  Minn.  137;  Blanchard  v.  Kaull,  44  Cal.  448.  Note 
began,  "We,  as  Trustees"  of  A.  N.  &  Co.,  and  was  signed  A.,  B.  &  C,  Trustees 
of  A.  &  N.  Co.    Held  the  company's  note.    See  also  Yowell  v.  Dodd,  3  Bush,  581. 

99.  Yowell  V.  Dodd,  3  Bush,  581. 


518  PRIVATE    CORPORATIONS   AS   PARTIES  §§  407,  408 

pay,  and  was  signed  by  him  and  the  directors  with  their  simple  names, 
it  was  held  the  note  of  the  President,^  and  a  note,  naming  an  associa- 
tion in  the  body  and  continuing  "and  we  the  undersigned  promise  to 
pay,"  was  held  to  be  the  obligation  of  the  individuals  signing  their 
names,  as  well  as  that  of  the  corporation.^ 

§  407.  Additional  expressions  or  indicia  of  corporate  obligation. — 

But  there  may  be  some  additional  expression  to  the  more  official 
designation,  which,  taken  in  connection  therewith,  shows  an  intention 
to  bind  the  corporation,  and  it  will  then  have  that  effect.  Thus,  "1, 
as  Treasurer  of  the  Congregational  Society,  or  my  successors  in  office, 
promise  to  pay,"  was  held  a  note  of  the  society;  ^  and  a  note  payable 
"to  the  Treasurer  of  the  First  Parish  in  Hopkinton,  or  his  successor," 
was  held  likewise  payable  to  the  parish,^  it  being  indicated  clearly 
that  the  official,  and  not  the  individual,  was  referred  to. 

So  where  the  promise  was  to  pay  "  eighty-five  dollars  for  the  use  of 
N.  E.  P.  Union  Store,  No.  607,"  signed  ''  M.,  Treasurer,"  it  was  held 
to  indicate  an  attempt  to  bind  the  corporation,  not  the  officer;  ^  and 
likewise  where  the  promise  was,  "We,  as  trustees,  but  not  as  individ- 
uals, promise  to  pay,"  and  signed  "A.,  B.  &  C,  Trustees."  ^ 

§  408.  Other  indicia;  corporate  seal. — Sometimes  there  are 
other  indicia  to  which  importance  is  attached,  as  evidencing  a  cor- 
porate or  individual  character.  It  has  been  said  that  the  seal  of  a 
corporation  appearing  upon  an  instrument  is  prima  facie  evidence 


1.  Caphart  v.  Dodd,  3  Bush,  584. 

2.  Nunnemacher  v.  Poss,  116  Wis.  444,  92  N.  W.  375. 

3.  Barlow  v.  Congregational  Society,  8  Allen,  460;  Cox  v.  Sloan,  158  Mo.  411. 

4.  See  Hood  v.  Hallenbeck,  7  Hun,  366,  and  post,  §  419;  Buck  v.  Merrick 
8  Allen,  123. 

5.  Dow  V.  Moore,  47  N.  H.  419.  A  note  signed  "F.  C.  S.,  Sec'y  and  Treas." 
is  sufficient  to  put  a  purchaser  of  a  note  on  inquiry  as  to  whether  the  secretary 
intended  to  personally  bind  himself  thereon.  See  Capital  Sav.  Bank  &  Trust 
Co.  V.  Swan,  100  Iowa,  718,  69  N.  W.  1065.  And  where  the  promise  was  "One 
day  after  date  for  value  received  we,  as  commissioners  of  Racket  River  Reservoir, 
promise  to  pay,  etc.,"  and  signed.  A.,  B.  &  C,  Commissioners  of  Racket  River 
Reservoir,  and  it  appearing  that  the  makers  of  the  note  were  "Commissioners  for 
improvements  on  the  Racket  River,"  instead  of  "Commissioners  of  Racket 
River  Reservoir,"  held,  that  the  makers  were  personally  liable  for  the  payment  of 
the  note.    See  Allen  v.  Sisson,  66  Hun,  140,  20  N.  Y.  Supp.  971. 

6.  Shoe  &  Leather  Nat.  Bank  v.  Doe,  123  Mass.  151,  Ames,  J.:  "We  believe 
no  case  can  be  found  in  which  a  promise  'as  trustees,  etc.,'  accompanied  with 
an  e.xpress  disclaimer  of  personal  liability,  would  fail  to  exempt  him. 


§  409  INTERPRETATION   OF   THE    INSTRUMENT  519 

of  the  assent  of  the  corporation  and  of  authority  to  execute  the 
instrument/  In  Indiana,  where  the  note  commenced  "We  promise," 
and  was  signed  "A.  B.,  Secretary,"  but  the  corporate  seal  was  at- 
tached with  the  impression,  ''Neal  Manufacturing  Co.,  Madison, 
Ind.,"  it  was  held  the  corporate  note.^ 

But  in  England,  where  the  note  ran,  "We,  the  directors  of  the  Isle  of 
Man  Slate  and  Flag  Company,"  and  the  corporate  seal  was  attached, 
it  was  held  differently,  Cockburn,  C.  J.,  saying  that  he  had  some  doubt 
"whether  the  affixing  of  the  seal  might  not  be  taken  as  equivalent  to 
a  declaration  in  terms  on  the  face  of  the  note  that  the  note  was 
signed  by  the  persons  who  put  their  names  to  it  on  behalf  of  the  com- 
pany, and  not  in  behalf  of  themselves;"  but,  on  consideration,  he 
concurred  that  that  effect  could  not  be  given  to  the  placing  of  the  seal 
of  the  company  upon  the  note.  It  might  be  that  that  was  simply  for 
the  purpose  of  earmarking  the  transaction.® 

The  two  cases  are  distinguishable  in  this,  that  the  use  of  the  plural 
expression  "we  promise"  in  the  Indiana  case,  followed  by  a  single 
signature  with  the  corporate  seal,  indicated  a  design  to  bind  the 
company,  who  were  many,  rather  than  the  individual  who,  had  he 
intended  to  bind  himself,  would  doubtless  have  said  "I  promise," 
while  in  the  English  case  the  expression  "we,"  used  in  reference  to  a 
number  of  directors,  was  consistent  with  their  personal  obligation. 

Where  the  note  runs,  "The  President  and  Directors  promise  to 
pay,"  and  is  signed  "A.  B.,  President,"  it  would  be  evident  that  no 
personal  engagement  was  intended,  and  the  corporation  alone  would 
be  bound.  ^° 

§  409.  The  drawer;  statement  of  account. — The  same  general 
principle  applies  to  the  drawer  of  a  bill  as  to  the  maker  of  a  note,  and 

7.  Reed  v.  Fleming,  209  III.  390,  70  N.  E.  557,  holding  that  a  note,  signed 
"William  S.  Reed,  Prest.  Mt.  Carmel  Lgt.  &  Water  Co.,  with  a  seal  as  follows: 
"The  Mt.  Carmel  Light  &  Water  Company,  Mt.  Carmel,  Illinois,  Seal,"  was  not 
the  obligation  of  the  individual  but  of  the  corporation.  But  in  Saul  v.  Southern 
Seating  &  Cabinet  Co.,  65  S.  E.  1065,  6  Ga.  App.  843,  it  was  held  that  notes  under 
seal,  which  do  not  on  their  faces  disclose  any  principal  for  whom  the  signers  could 
be  construed  to  be  acting  as  agents,  are  to  be  taken  as  the  individual  acts  and 
deeds  of  the  persons  signing,  and  the  words  "Pres."  and  "Seey.,"  following  their 
respective  names  will  be  looked  upon  as  mere  descriptio  personce. 

8.  Means  v.  Swormstedt,  32  Ind.  87;  Guthrie  v.  Imbrie,  12  Oreg.  182;  Miller  v. 
Roach,  22  N.  E.  634. 

9.  Button  V.  Marsh,  L.  R.,  6  Q.  B.  363  (1871). 

10.  Mott  V.  Hicks,  1  Cow.  532  (1823);  Pitman  v.  Kentner,  5  Blackf.  251; 
Frankland  v.  Johnson,  147  111.  520,  35  N.  E.  480,  37  Am.  St.  Rep.  234. 


520  PKIVATE    CORPORATIONS   AS   PARTIES  §  410 

although  he  designate  himself  as  president,  or  otherwise,  as  a  corporate 
official,  he  will  nevertheless  be  personally  liable.  And  the  mere  fact 
that  the  officer  or  agent  directs  on  the  bill  that  it  be  placed  to  his 
account  as  such,  will  not  alter  it.  Thus  where  F.  &  Co.  drew  a  bill 
upon  the  insurance  company  of  which  they  were  agents,  with  the 
direction  to  "charge  the  same  to  account  of  F.  &  Co.,  agents  P.  F. 
&  M.  Ins.  Co.,"  they  were  held  as  drawers,  although  the  bill  was 
delivered  by  the  insurance  company  to  the  payee  in  payment  of  a  loss 
on  one  of  its  policies.^^ 

§  410.  Illustrations. — But  the  direction  to  place  to  account  may 
often  indicate,  especially  when  connected  with  other  circumstances, 
that  it  is  the  corporation's  draft.  Thus,  where  the  direction  was, 
"Place  to  account  of  Derby  Fishing  Co.,"  signed  "A.  B.,  Pres't," 
it  was  held  that  the  company  was  the  drawer. ^^  So,  where  a  bill 
which  was  stamped  on  the  margin  "Pompton  Iron  Works,"  with 
the  direction,  "place  to  account  of  Pompton  Iron  Works,  W.  Burtt, 
Agent,"  ^^  the  like  view  was  taken,  the  marginal  stamp,  and  the 
fact  that  Burtt  signed  himself  agent,  connected  with  the  direction, 
iDeing  regarded  as  indicative  that  it  was  the  corporate  bill.  So, 
"Charge  to  account  of  this  company.  I.  R.  Jackson,  Agent,"  was 
held  the  company's  draft,  it  being  a  printed  corporate  draft,  with 
other  marks  of  official  character.^^  But  the  words,  "Charge  to 
account  of  proprietors  Pembroke  Iron  Works,"  signed  simply  "Joseph 
Burrell,"  with  no  mark  of  corporate  liability  or  agency  of  Burrell, 
was  considered  his  personal  bill.^^  So,  "Place  to  the  account  of 
Durham  Bank,  as  advised,"  signed  simply  "Christ'r  Farrow,"  was  held 
to  bind  Farrow  personally,  although  he  was  known  to  be  agent  of 
the  bank,  the  expression  importing,  as  said  by  counsel,  "nothing  more 
than  that  the  drawer  had  a  credit  with  the  Durham  Bank  to  the 
amount,  and  that  the  drawees  were  to  look  to  that  credit."  ^®    So,  a 

11.  Tucker  v.  Fairbanks,  98  Mass.  101.  The  contrary  doctrine  is  maintained 
in  New  York.  In  Conro  v.  Port  Henry  Iron  Co.,  12  Barb.  54,  Willard,  P.  J.,  said: 
"Adding  the  title  'agent'  to  the  signature  of  the  drawer  of  a  bill,  is  notice  that 
the  party  means  not  to  be  personally  liable;  and  when  the  principal  is  indorser  he 
alone  is  responsible." 

12.  Witte  V.  Derby  Fishing  Co.,  2  Conn.  435. 

13.  Fuller  v.  Hooper,  3  Gray,  334. 

14.  Slawson  v.  Loring,  5  Allen,  343.  See  post,  §§  412,  416,  as  to  ac- 
ceptor. 

15.  Bank  of  British  North  America  v.  Hooper,  5  Gray,  567. 

16.  Leadbetter  v.  Farrow,  5  Maule  &  S.  345. 


§  411  INTERPRETATION   OF   THE    INSTRUMENT  521 

bill  signed  "A.  B.,  Pres't,"  with  direction  "to  charge  as  ordered," 
would  be  plainly  the  drawer's  individual  draft.  ^^ 

§  411.  Further  illustrations. — Where  the  bill  was  headed  with 
the  name  of  a  banking  house,  the  direction  was  "Charge  same  to 
account  of  this  office,"  and  was  signed  by  the  drawer  as  agent,  these 
three  circumstances  were  considered  as  definitely  fixing  it  as  the 
banker's  and  not  the  agent's  draft.  ^^  Where  the  bill  contained  a 
direction  "to  charge  the  same  to  account  of  disbursements  of  bark 
Dublin,"  and  was  signed  by  the  master  of  the  vessel  without  addition, 
it  was  held  that  the  owners  were  not  bound,  there  being  no  disclosure 
of  agency.  ^^  And  this  seems  to  us  the  correct  view,  for  the  reasons 
well  stated  by  the  court;  but,  in  Louisiana,  where  the  agent  of  the 
owners  of  a  steamboat  drew  a  bill  in  his  own  name,  and  directed  the 
drawee  to  charge  the  amount  "to  account  of  steamer  Walter  Scott," 
it  was  held  that  the  agency  of  the  drawer  was  apparent  on  the  face 
of  the  bill,  in  consequence  of  this  direction,  which  negatived  the 
idea  of  personal  liabiHty.^"  If  the  bill  were  in  the  name  of  the  cor- 
poration, and  the  direction  to  "charge  this  institution,"  signed,  "A. 
B.,  Cashier,"  it  is  plainly  the  bill  of  the  corporation,^^  If  the  bill 
were  signed  thus:  "For  the  Montgomery  Iron  Works,  A.  B.  Pres't., 
C.  D.,  Sect'y,"  it  would  be  the  bill  of  the  corporation. ^^ 

17.  Kean  v.  Davis,  1  N.  J.  683;  Falk  v.  Moebs,  127  U.  S.  604. 

18.  Sayre  v.  Nichols,  7  Cal.  538;  Hitchcock  v.  Buchanan,  13  Fed.  143. 

19.  Bass  V.  O'Brien,  12  Gray,  477,  Bigelow,  J.,  saying:  "The  owners  of  the 
vessel  were  clearly  not  liable  as  drawers  of  the  draft.  It  does  not  purport  on  its 
face  to  bind  them.  Peterson  did  not  sign  it  as  master  or  as  agent  of  the  owners,  or 
otherwise  indicate  that  he  drew  it  in  a  representative  capacity.  The  direction  to 
charge  the  amount  to  the  disbursements  of  the  bark  Dublin  was  only  a  designa- 
tion of  the  account  to  which  the  payment  was  to  be  debited,  when  the  draft  was 
taken  up  by  the  drawees,  but  did  not  in  any  way  disclose  the  persons  who  were 
ultimately  responsible  for  such  disbursements.  The  rule  is  well  settled  that  when 
an  agent  signs  negotiable  paper  in  his  own  name,  without  disclosing  his  principal, 
the  agent  only  is  liable,  and  evidence  dehors  the  instrument  cannot  be  resorted  to 
for  the  purpose  of  showing  that  it  was  given  for  or  on  account  of  some  other  per- 
son. Whoever  takes  negotiable  paper  enters  into  a  contract  with  the  parties  who 
appear  on  the  face  of  the  instrument,  and  cannot  look  to  other  persons  for  pay- 
ment." Newhall  v.  Dunlap,  14  Me.  182.  The  request  to  charge  to  "account  of 
cargo  of  the  Hope"  was  said  "to  indicate  the  fund  to  which  it  was  to  be  charged, 
not  the  character  in  which  the  drawer  signed."  To  same  effect,  see  Snow  v. 
Goodrich,  14  Me.  235. 

20.  Maher  v.  Overton,  9  La.  115. 

21.  Safford  v.  Wyckofif,  1  Hill,  11,  4  HiU,  442. 

22.  Raney  v.  Winter,  37  Ala.  277. 


522  PKIVATE    CORPOKATIONS   AS    PARTIES  §  412 

§  412.  In  respect  to  the  acceptor  of  a  bill. — There  can  be  but 
one  acceptor  of  a  bill;  and  that  person  must  be  the  drawee,  unless 
he  be  an  acceptor  for  honor.  Therefore,  when  it  is  sought  to  deter- 
mine whether  the  officer  or  agent  of  a  corporation,  or  the  corporation 
itself,  is  the  acceptor  of  a  bill,  the  question  may  generally  be  solved 
by  ascertaining  who  is  the  drawee.  If  the  bill  be  drawn  on  the  drawee 
as  an  individual,  he  cannot,  by  words  of  procuration  or  official  de- 
scription in  his  acceptance,  make  it  the  corporation's.  Thus,  when  the 
bill  was  addressed  "to  Mr.  W.  C,"  and  was  expressed  "for  value  re- 
ceived in  machinery  supplied  the  adventurers  in  H.  Mines,"  and 
W.  C.  wrote  upon  it,"  "Accepted  for  the  company,  W.  C,  Purser," 
it  was  held  W.  C.'s  individual  acceptance.^^  So,  where  the  drawee 
accepted  in  form,  "  Treasurer  Neuvitas  M.  Co.,"  it  was  held  likewise.^" 
And  on  the  other  hand,  if  the  bill  be  drawn  on  the  corporation  by 
name,  and  accepted  by  its  appropriate  officer  or  agent  in  his  individ- 
ual name,  adding  his  official  designation,  the  acceptance  will  bind 
the  company  only,  and  as  taken  in  connection  with  the  address,  the 
agency  for  the  drawee,  who  alone  could  accept,  would  be  disclosed. ^^ 
And  even  if  there  were  no  expression  indicating  office  or  agency  an- 
nexed to  the  acceptor's  name,  the  very  fact  of  acceptance  would,  we 
think,  imply  agency  for  the  drawee.    Where  a  bill  is  accepted  by  the 


23.  Mare  v.  Charles,  5  El.  &  Bl.  978.  Lord  Campbell  and  Wightman  and 
Coleridge,  JJ.,  concurred,  and  Coleridge,  J.,  said:  "The  bill  was  addressed  to  the 
defendant  and  no  one  else  could  accept  it.  He  wrote  upon  it  'Accepted,'  and 
signed  his  name.  He  now  says,  in  effect,  that  it  was  not  accepted  at  all,  and  what 
he  wrote  amounted  to  a  refusal  to  accept;  and  this,  he  says,  is  the  eflfect  of  the 
words  'for  the  company.'  The  question  then  is,  are  we  to  construe  this  ut  res 
magis  pereat,  as  not  an  acceptance?  No;  we  must  construe  it  ut  res  magis  valeat; 
and  as  my  Lord  (Campbell)  has  pointed  out,  it  is  easy  so  to  construe  it." 

24.  Bruce  v.  Lord,  1  Hilt.  247  (N.  Y.  Com.  PL,  1856).  In  Colorado  a  bill 
was  worded  and  signed  as  follows:  "And  charge  the  same  to  account  of  Boulevard 
&  Navigation  Company.  By  Wm.  Anderson,  President,"  and  was  addressed 
to  "F.  D.  Hager,  Treasurer,"  and  was  accepted  by  the  drawee  as  addressed  "F.  D. 
Hager,  Treasurer."  Held  admissible  to  show  by  evidence  that  Hager  was 
treasurer  of  the  drawer  company,  and  that  the  acceptance  was  the  company's. 
Hager  v.  Rice,  4  Colo.  90. 

25.  Merchants'  Bank  v.  State  Bank,  10  Wall.  604;  Alabama  Coal  Mining  Co. 
V.  Brainard,  35  Ala.  479;  A.  J.  Walker,  C.  J.,  saying:  "The  bill  of  exchange  in  this 
case  is  alleged  to  have  been  drawn  upon  the  defendant  by  the  name  and  style 
of  'Steamer  C.  W.  Dorrance  and  owners,'  and  to  have  been  accepted  by  the  de- 
fendant in  and  by  the  name  and  style  of  'St'r  Dorrance,  per  G.  M.  McConico.' 
The  bill  of  exchange  given  in  evidence  corresponds,  in  the  name  and  style  of  the 
address  and  acceptance,  with  the  description  alleged;  and  if  drawn  upon  the  de- 
fendant, and  by  it  accepted,  as  alleged,  was  admissible  in  evidence."    See  §  485. 


§  413  INTERPRETATION   OF   THE    INSTRUMENT  523 

directors  of  a  corporation  having  no  power  to  accept  bills,  the  accept- 
ance will  render  them  personally  liable;  not,  indeed,  as  acceptors 
upon  the  bill,  for  on  its  face  it  will  appear  to  be  that  of  the  corporation, 
but  in  an  action  upon  the  warranty  and  fraudulent  representation 
that  they  had  authority  to  accept.^^ 

§  413.  Official  designation  added  to  drawee's  name. — In  England, 
it  has  been  long  settled  that  even  if  the  drawee's  full  official  character 
be  added  to  his  name  in  the  address  of  the  bill,  his  acceptance  will 
bind  him  personally,  although  there  be  expressions  of  agency  in  it  also. 
Thus,  where  the  address  of  the  bill  was  to  "H.  Bishop,  Cashier  of  the 
York  Buildings  Company,  at  their  house  on  Winchester  street, 
London,"  and  the  direction  was,  "Place  the  same  to  account  of  the 
York  Buildings  Company,  as  per  advice,"  and  was  accepted  thus, 
"Accepted  13th  June,  1732,  per  H.  Bishop,"  it  was  considered  that 
the  addition  to  the  name  was  only  descriptive,  and  as  an  indication 
where  the  drawee  might  be  found,  and  the  order  to  place  to  account 
as  a  direction  how  the  drawee  might  reimburse  himself;  that  the  letter 
of  advice  was  inadmissible  against  the  plaintiff  as  indorsee  and  that 
Bishop  was  personally  bound. ^^  So,  where  the  bill  was  addressed  to 
"J.  D.,  Purser,  West  Downs  Mining  Co.,"  and  was  accepted  as  follows 
"J.  D.,  Purser,  per  proc.  West  Downs  Mining  Co.,"  it  was  held  J.  D.'s 
individual  acceptance.^ 

And  in  the  United  States  the  same  doctrine  has  been  applied,^  but 
not  without  dissent.^"  In  New  York  where  the  bill  was  drawn  on 
"J.  R.  L.,  President  Rosendale  M'ng  Co.,  New  York,"  and  accepted 
in  like  style,  it  was  said,  "The  bill  carmot  be  deemed  the  obligation 

26.  West  London  Commercial  Bank  v.  Kitson,  12  Q.  B.  Div.  157  (37  Eng. 
Rep.  616)  (1883).    See  §  307. 

27.  Thomas  v.  Bishop,  Chitty,  Jr.,  278,  2  Barn.  335,  2  Stra.  955,  7  Mod.  180; 
Cases,  temp.  Hardwicke,  1  (1734);  approved  in  Slawson  v.  Loring,  5  Allen,  345. 

28.  Nicholls  v.  Diamond,  24  Eng.  L.  &  Eq.  403,  9  Exch.  154. 

29.  Moss  V.  Livingston,  4  N.  Y.  208. 

30.  Shelton  v.  Darling,  2  Conn.  435.  In  this  case  the  bill  was  drawn  on  "A.  B., 
Agent  of  the  Commission  Company,"  and  was  accepted  by  "A.  B.,  Agent,  C.  C." 
Held,  no  action  could  lie  against  A.  B.  individually.  Amison  v.  Ewing,  2  Coldw. 
367.  Three  bills  were  drawn  on  John  O.  Ewing,  two  designating  him  "Treasurer 
of  the  N.  &  N.  W.  R.  R.  Co.,"  and  the  other  without  any  official  designation 
whatever.  All  of  them  were  accepted  thus :  "Accepted  payable  on  return  of  March 
estimates,  John  O.  Ewing,  Treas."  And  all  of  them  were  held  binding  on  the 
company,  and  not  upon  the  drawee  personally.  See  also  Louisville  R.  Co.  v. 
Caldwell,  98  Ind.  246. 


524  PRIVATE    CORPORATIONS   AS   PARTIES  §  414 

of  the  company.  It  does  not  purport  to  have  been  drawn  in  their 
behalf,  nor  was  it  addressed  to  them,  or  accepted  in  their  corporate 
name."  ^^ 

§  414.  Address  to  drawee  as  agent. — If  the  drawee  be  addressed 
as  "A.  B.,  Agent,"  and  accept  in  Hke  form,  "A.  B.,  Agent,"  he  will 
undoubtedly  be  personally  bound,  as  there  is  no  disclosure  of  any 
principal  in  the  address  to  which  his  acceptance  could  be  responsive.^^ 

If  the  drawee  be  addressed  personally,  as  H.,  and  he  write  across 
the  bill,  "Accepted;  Empire  Mills,  by  H.,  Treasurer,"  it  has  been 
held  that  it  could  not  be  his  individual  acceptance,  as  there  are  no 
words  which  could  possibly  import  an  obligation  on  his  part;  nor 
could  it  be  the  company's,  as  it  is  not  the  drawee.^^  But  it  has  been 
considered  in  Maryland  in  a  similar  case,  where  a  bill  with  the  direc- 
tion to  charge  to  accouirt  of  the  L.  F.  &  M.  Co.,  was  drawn  by  it,  and 
addressed  to  L.  S.  individually,  and  by  him  accepted,  with  the  addi- 

31.  Moss  V.  Livingston,  supra,  Hurlbut,  J.  In  Exchange  Nat.  Bank  v.  Third 
Nat.  Bank,  4  Fed.  20,  the  bill  was  addressed  to  "W.  M.  Conger,  Secretary  New- 
ark Tea  Tray  Company,"  and  was  accepted  simply  "Payable  at  the  Newark 
National  Banking  Company,"  and  it  was  held  that  the  agent  who  took  such  ac- 
ceptance was  not  guilty  of  negligence,  and  that  in  New  Jersey,  where  the  trans- 
action occurred,  parol  evidence  was  admissible  to  explain  the  purport  of  the  in- 
strument, it  being  there  considered  ambiguous. 

32.  Slawson  v.  Loring,  5  Allen,  341  (1862).  The  bill  was  headed  "Office 
Portage  Lake  Manufacturing  Company,"  was  addressed,  in  capital  letters,  to 
"E.  T.  LORING,  AGENT,"  the  address  being  printed  as  was  the  heading  on 
a  prepared  form  for  company  drafts.  It  was  signed  "Charge  the  same  to  account 
of  this  company,  I.  R.  Jackson,  Agent."  The  court  thought  it  clear  that  Jackson 
was  not  personally  liable  as  drawer,  but  that  Loring,  who  had  accepted  by  writing 
"E.  T.  Loring,  Agent,"  across  the  face  of  the  bill,  was  clearly  liable  as  acceptor. 
After  stating  that  the  disclosure  of  the  principal  on  the  heading  of  the  paper  was 
only  a  disclosure  of  the  drawer's  principal,  Bigelow,  J.,  said:  "What,  then,  is 
left  on  the  face  of  the  paper  to  show  that  the  defendant  is  not  liable  as  acceptor? 
Nothing,  except  the  single  circumstance  that  the  address  to  him  as  drawee  is 
printed  in  large  capital  letters  at  the  top  of  the  instrument,  with  the  addition 
thereto  of  the  word  agent.  This,  certainly,  does  not  necessarily  or  even  prima 
facie  indicate  that  he  is  the  agent  of  the  drawers.  It  is,  to  say  the  least,  equally 
consistent  with  the  idea  that  he  is  the  agent  of  some  third  person  not  named  on 
the  face  of  the  bill.  Nor  can  we  give  any  great  effect  to  the  fact  that  the  defend- 
ant's name  as  drawee  is  printed  as  part  of  the  blank  used  by  the  company.  A 
draft  or  bill  in  like  form  might  be  used,  if  their  course  of  business  was  to  deal  with 
him  as  the  agent  of  some  other  person  or  company."  The  bill  was  sued  on  by 
an  indorsee. 

33.  Walker  v.  Bank  of  State,  9  N.  Y.  582.  But  see  Amison  v.  Ewing,  2  Coldw. 
361. 


§  415  INTERPRETATION    OF   THE    INSTRUMENT  525 

tion  of  the  words  to  his  acceptance,  ''Treasurer  L.  F.  &  M.  Co.," 
that  parol  evidence  was  admissible  as  between  the  payee  and  acceptor, 
to  show  the  true  intention  of  the  parties,^'*  We  regard  this  and 
similar  cases  as  departures  from  the  earlier  and  better  rules  which 
have  already  been  set  forth  in  the  text,  and  which  are  calculated  to 
preserve  certainty  in  commercial  paper. 

§  415.  In  respect  to  the  payee  and  indorser. — As  the  designation 
of  the  drawee  generally  indicates  who  is  bound  as  acceptor,  so  the 
designation  of  the  payee  generally  indicates  in  what  character  the 
first  indorser  signs.  If  a  note  be  payable  to  an  individual,  with  the 
mere  sufl^  of  his  official  character,  such  suffix  will  be  regarded  as  mere 
descriptio  personoB,  and  the  individual  is  the  payee.  This  view  has 
been  taken  of  a  note  payable  to  "J.  G.  M.,  Treasurer  R.  I.,  etc., 
R.  R.  Co.;"  ^^  of  a  note  payable  to  "A.  B.  for  value  received  of  the 
Providence  Hat  Man.  Co.,  as  agent  thereof,"  ^^  and  of  a  note  payable 
to  "D.  A.  Robinson,  G.  M.  U.  B.  F.  &  S.  M.  T.,"  the  evidence  showing 
that  these  letters  stand  for  "  Grand  Master  United  Brothers  of  Friend- 
ship and  Sisters  of  the  Mysterious  Ten."  ^'^ 

In  New  York  a  different  doctrine  prevails.  There,  where  a  note 
was  payable  to,  and  indorsed  by,  "R.  Beman,  Treasurer,"  and  was 
delivered  by  Beman  to  the  plaintiff  on  account  of  a  debt  due  by  the 
manufacturing  company  of  which  he  was  treasurer,  it  was  held  that 
he  was  not  individual!}^  bound. ^^ 

Under  Negotiable  Instrument  statute. — Under  the  provision  declaring 
that  the  mere  addition  of  the  words  describing  the  person  signing 
an  instrument  as  an  agent,  or  as  filling  a  representative  character, 
without  disclosing  his  principal,  does  not  exempt  him  from  personal 
liability, ^^  it  has  been  held  that  where  a  maker  of  a  note  added  to  his 
signature  the  words  "Pastor  of  S.  Church,"  with  nothing  to  show 
that  he  signed  for  and  in  behalf  of  any  one  else  as  principal,  he  was 
personally  liable. "^^ 

34.  Laflin  &  Rand  Powder  Co.  v.  Sinsheimer,  48  Md.  411. 

35.  Chadsey  v.  McCreery,  27  111.  253.  To  same  effect,  see  Vater  v.  Lewis, 
36  Ind.  288;  McNeil  v.  The  Shober,  etc.,  Co.,  144  111.  238,  33  N.  E.  31;  Hately  v. 
Pike,  162  lU.  241,  44  N.  E.  441,  quoting  text,  53  Am.  St.  Rep.  304. 

36.  Buffum  V.  Chadwick,  8  Mass.  103. 

37.  Luster  v.  Robinson,  76  Ark.  255,  88  S.  W.  896. 

38.  Babcock  v.  Beman,  11  N.  Y.  209.  See  Hager  v.  Rice,  4  Colo.  90;  Falk  v. 
Moebs,  127  U.  S.  597. 

39.  Appendix,  sec.  20. 

40.  Schumacher  v.  Dolan,  (Iowa)  134  N.  W.  624. 


526  PEIVATE    CORPORATIONS   AS   PARTIES         §§  416,  417 

§  416.  Indorsement  by  agent  of  note  payable  to  corporation. — 

Where  a  note  is  payable  to  a  corporation  by  its  corporate  name,  and 
is  then  indorsed  by  an  authorized  agent  or  official,  with  the  suffix  of 
his  ministerial  position,  it  will  be  regarded  that  he  acts  for  his  principal 
who  is  disclosed  on  the  paper  as  the  payee,  and  who,  therefore,  is  the 
only  person  who  can  transfer  the  legal  title.^^  It  was  so  held  where  a 
note  payable  to  the  Berkshire  Bank  was  indorsed  "Simon  Lamed, 
Attorney,"  Larned  being  president  of  the  bank,  and  authorized  as  its 
attorney  to  indorse  it.^^  So  Ukewise  where  a  note  was  payable  to  the 
"Globe  Mutual  Insurance  or  order,"  and  was  indorsed  "L.  Gregory, 
President."  ^^  And  the  United  States  Supreme  Court  has  followed 
the  doctrine  of  the  text  and  of  these  cases.^^ 

§  417.  Exception  as  to  bank  cashiers. — An  exception  to  the  gen- 
eral rules  of  interpretation,  which  have  been  stated,  has  been  made 
in  respect  to  the  cashiers  of  banks.  They  are  the  chief  financial 
agents  of  their  institutions,  and  when  a  bill  or  note  is  made  payable 
to  an  individual  with  the  suffix  of  "Gas.,"  "Cash.,"  or  "Cashier,"  to 
his  name,  it  has  been  generally  decided  to  be  really  payable  to  the 
corporation  of  which  such  party  is  the  cashier,  and  so  to  import  upon 
its  face,  the  officer's  name  being  used  as  that  of  his  principal,  which 
may  not  be  disclosed  on  the  face  of  the  paper.  It  has  been  so  held 
where  a  bill  was  drawn  payable  to  the  order  of  "D.  C.  C,  Cashier," 
no  corporation  being  named. ^^  So  where  a  bill  was  drawn  payable 
to  the  order  of  "S.  B,  Stokes,  Gas.,"  and  was  in  like  manner  indorsed, 
the  undisclosed  bank  was  held  bound  by  the  indorsement.^^  So  where 
a  note  was  indorsed  "P.  H.  Folger,  Cashier,"  Wilde,  J.,  saying:  "As 
to  the  objection  that  the  indorsement  is  not  made  in  the  name  of  the 
corporation,  we  think  that  the  indorsement  by  the  cashier  in  his 
official  capacity  sufficiently  shows  that  the  indorsement  was  made  in 

41.  Lay  v.  Austin,  7  So.  142,  citing  the  text;  Anderson  &  Co.  v.  Stapel,  80  Mo. 
App.  115;  Hately  v.  Pike,  162  111.  241,  44  N.  E.  441,  quoting  text,  53  Am.  St. 
Rep.  304. 

42.  Northampton  Bank  v.  Pepoon,  11  Mass.  288. 

43.  Elwell  V.  Dodge,  33  Barb.  336  (1861). 

44.  Falk  V.  Moebs,  127  U.  S.  597. 

45.  Bank  of  New  York  v.  Bank  of  Ohio,  29  N.  Y.  619  (1864);  Fu-st  Nat.  Bank 
V.  Hall,  44  N.  Y.  395  (1871);  Hodge  et  al.  v.  The  Farmers'  Bank  of  Frankfort, 
Ind.  7  Ind.  App.  94,  34  N.  E.  123,  quoting  text;  Maguire  v.  Eichmier,  109  Iowa, 
301,  80  N.  W.  395. 

46.  Bank  of  Genesee  v.  Patchin  Bank,  19  N.  Y.  313  (1859),  13  N.  Y.  309 
(1855). 


§  418  INTERPRETATION   OF   THE    INSTRUMENT  527 

behalf  of  the  bank,  and  if  that  is  not  sufficiently  certain  the  plaintiffs 
have  the  right  now  to  prefix  the  name  of  the  corporation."  ^^  And 
where  a  note  was  indorsed  "Pay  to  E.  0.,  Cashier,  or  order,"  and  was 
signed  "E.  C.  K.,  Cashier,"  it  was  held  a  sufficient  indorsement  by 
one  bank  to  another.^  So  where  a  bill  was  drawn  on  "John  A. 
Welles,  Cashier  Farmers',  etc..  Bank,"  and  the  acceptance  was 
"John  A.  Welles,  Cashier,"  the  bank  alone  was  held  bound.^^ 

§  418.  When  parol  or  other  extraneous  evidence  is  admissible. — 

While  it  is  true,  as  a  general  rule,  that  the  liability  of  the  principal 
or  agent  must  be  gathered  from  an  inspection  of  the  paper  itself,  there 
are  nevertheless  some  cases  in  which  doubtful  expressions  are  used, 
or  the  instrument  is  so  inaptly  put  together,  that  the  precise  meaning 
to  be  collected  from  its  face  is  left  so  ambiguous  or  obscure  as  to 
render  its  interpretation,  per  se,  too  difficult  and  uncertain  for  just 
and  sound  construction.  When  the  instrument  is  of  this  description, 
that  is,  when  its  language  or  terms  are  so  unintelligible  as  to  admit 
of  no  rational  interpretation  of  the  meaning,  or  are  not  sufficiently 
decisive  of  the  intention  of  the  parties,  but,  on  the  contrary,  are 
equivocal  and  uncertain,  extraneous  proof,  parol  or  written,  may  be 
admitted,  as  between  the  original  parties,  to  show  the  true  character 
of  the  instrument,  and  what  party — the  principal,  or  the  agent,  or 
both — is  liable. ^°  Thus  where  a  due-bill  was  expressed  to  be  "in  full 
of  labor  performed  on  cottage  lot  of  the  R.  R.  Co.,"  saying  nothing  of 

47.  Folger  v.  Chase,  18  Pick.  67. 

48.  Watervliet  Bank  v.  White,  1  Den.  609. 

49.  Farmers,  etc.,  Bank  v.  Troy  City  Bank,  1  Doug.  473. 

50.  Ante,  §816;  Schmittler  v.  Simon,  114  N.  Y.  176;  Martin  v.  Smith,  65 
Miss.  2,  citing  the  text;  La  Salle  Nat.  Bank  v.  Tolu  Rock  &  Rye  Co.,  14  111. 
App.  141;  Swarts  v.  Cohens  et  al.,  11  Ind.  App.  20,  38  N.  E.  536;  Merrill  v.  Sypert, 
65  Ark.  51,  44  S.  W.  462;  Richmond  Locomotive  &  Machine  Works  v.  Moragne, 
119  Ala.  80,  24  So.  834;  Simanton  v.  Vliet,  61  N.  J.  L.  (32  Vroom)  595,  40  Atl. 
595;  Thompson  v.  Thorne,  83  Mo.  App.  241;  Knippenberg  v.  Greenwood  Min. 
&  Mill  Co.,  39  Mont.  11,  101  Pac.  159.  Though  the  language  of  a  note  executed 
by  directors  of  a  corporation  imports  a  personal  obligation,  it  may  be  shown  by 
parol  evidence,  on  an  issue  of  reformation,  that  the  intention  of  both  the  makers 
and  the  payee  was  to  execute  an  instrument  binding  the  corporation  only,  and 
that,  though  the  language  was  that  which  they  intended,  it  did  not  express  their 
true  purpose.  Western  Wheeled  Scraper  Co.  v.  McMillen,  71  Nebr.  686,  99  N.  W. 
512.  Where  a  note  appears  upon  its  face  to  have  been  executed  by  the  signer 
as  president  of  a  corporation,  under  the  seal  of  that  corporation  and  it  therefore 
appears  upon  its  face  to  be  the  obligation  of  the  corporation,  the  burden  is  upon 
the  plaintiff  to  allege  and  prove  an  individual  promise  of  the  signer.  Reed  v. 
Fleming,  209  111.  390,  70  N.  E.  667. 


528  PRIVATE    CORPORATIONS   AS    PARTIES  §  418 

what  company,  and  was  signed  by  the  president  with  the  simple 
signature  "Ed.  Robinson,"  parol  evidence  was  held  admissible  to 
show  that  it  was  really  the  company's  obligation;  ^^  and  so  where  a 
promissory  note  read,  "We,  the  President  and  Directors  of  the  De- 
lancey's  Valley  and  Sweet  Air  Turnpike  Company,  promise,  etc.," 
and  was  signed  by  C.  T.  H.,  "President,"  I.  N.  H.  and  J.  G.  D., 
"Directors,"  and  R.  E.  S.,  "Secretary,"  the  same  rule  was  applied 
to  admit  evidence  to  show  that  the  note  was  signed  and  accepted  as 
the  note  of  the  company.^-  So  in  Missouri  where  the  note  ran,  "I 
promise  to  pay  A.  &  B.  $645  for  building  a  school-house  in  School 
District  No.  3,  township  51,  range  21,"  signed  "P.  T.  Reynolds,  Local 
Director."  ^^  So  where  a  bill  drawn  by  a  corporation  with  direction 
to  charge  to  its  account  was  signed  by  "Wm.  Anderson,  President," 
and  addressed  to  and  accepted  by  "F.  D.  Hager,  Treasurer."  ^^  So 
where  a  client  drew  on  his  attorney  who  accepted  as  agent  of  the 
drawer.'^^  So  in  New  York  where  the  note  ran,  "We  promise,"  and 
was  signed  by  five  persons  who  added:  "Trustees  of  St.  John's  Ev 
Lutheran  Church,  Hudson,  N.  Y.,"  and  attached  the  corporate  seal, 
the  court  saying:  "The  case  was  within  the  authorities  admitting  of 
proof  of  the  circumstances  under  which  it  was  given  with  a  view  to 
determine  the  defendant's  liability.  In  addition  to  what  appeared  on 
the  face  of  the  paper,  it  was  proved  that  the  corporation  was  indebted 
to  the  payee,  that  the  latter  made  claim  therefor  to  the  corporation; 
that  it  was  recognized  and  allowed  by  the  trustees,  its  only  officers; 
he  requested  a  note,  and  the  note  in  suit  was  given  him.  *  *  * 
The  plaintiffs  here  stand  in  no  better  position  on  this  question  than 
would  the  payee,  inasmuch  as  the  note  on  its  face  disclosed  the  fact 
that  this  defense  here  interposed  existed,  or  that  the  proof  to  establish 
it  was  admissible."  ^^  In  Wisconsin,  a  note  reading  "We  promise  to 
pay,  etc.,"  and  signed  "San  Pedro  Milling  and  Mining  Company, 
F.  Kraus,  President,"  was  held  to  be  the  note  of  the  company  only, 

51.  Richmond,  Pot  &  Fred.  R.  Co.  v.  Snead,  19  Gratt.  354.  See  Hager  v. 
Rice,  4  Colo.  90;  Hypes  v.  Griffin,  89  111.  134. 

62.  Haile  v.  Peirce,  32  Md.  327;  Neptune,  Admr.  v.  Paxton,  Recr.,  15  Ind. 
App.  284,  43  N.  E.  276;  Swarts  v.  Cohen,  11  Ind.  App.  20,  38  N.  E.  536;  Benham 
V.  Smith,  53  Kan.  495,  36  Pac.  997;  KUne  v.  Bank  of  Tescott,  50  Kan.  91,  31 
Pac.  688,  34  Am.  St.  Rep.  107. 

53.  McClellan  v.  Reynolds,  49  Mo.  314.  See  also  Pratt  v.  Beaupre,  13  Minn. 
190. 

54.  Hager  v.  Rice,  4  Colo.  90. 

55.  Hardy  v.  Pilcher,  57  Miss.  18. 

56.  Hood  V.  Hallenbeck,  7  Hun,  367  (1876). 


§  418  INTERPRETATION    OF   THE    INSTRUMENT  529 

and  parol  evidence  inadmissible  to  show  that  the  president  did  not 
sign  the  name  of  the  company,  but  signed  his  own  name  as  a  johit 

maker.  ^'^ 

Under  Negotiable  Instrument  statute— The  rule  that  where  there  is 
any  ambiguity  or  uncertainty  as  to  whether  the  signature  of  an 
individual  was  made  in  his  personal  capacity  or  in  his  representative 
capacity  as  agent  or  officer  of  a  corporation,  parol  evidence  may 
be  received  to  explain  it,  has  been  recognized  under  several  provisions 
of  the  statute.^8  xhis  has  been  permitted  in  the  case  of  a  note  signed : 
"The  Kansas  City  &  Olathe  Electric  Ry.  Co.,  Wm.  Lackman,  Pres., 
D.  B.  Johnson,  Sect.,"  ^^  and  where  a  paper  was  indorsed  in  an  in- 
dividual name  with  the  quahfying  word  ''cashier."  ^o  And  so  in  the 
case  of  a  note  reading  "Four  months  after  date  the  Northwestern 
Straw  Works  promise  to  pay"  and  signed  "The  Northwestern  Straw 
Works,  E.  R.  Stillman,  Treas.  John  W.  Mariner,"  it  appeared  in  the 
action  that  the  note  was  given  for  a  loan  to  the  corporation  and  that 

57.  Liebscher  v.  Kraus,  74  Wis.  387;  Mathews  &  Co.  v.  Dubuque  Mattress  Co., 
87  Iowa,  246,  54  N.  W.  225.  But  in  Briel  v.  Exchange  Nat.  Bank  (Ala.),  55  So. 
808,  it  was  held  that  where  a  note  is  signed  in  the  name  of  a  corporation,  followed 
by  the  names  of  individuals  with  the  designation  "  Prest. "  and  "  Mgr. "  appended, 
such  note  imposes,  prima  facie  a  personal  Uabihty  upon  the  individuals,  subject  to 
parol  proof,  the  court  saying  that  this  does  not  contradict  the  other  rule  that  the 
use  of  the  words  "president,"  "manager,"  and  the  like,  following  individual 
signatures,  there  being  nothing  to  indicate  of  what  or  of  whom  they  are  officers 
or  agents,  does  not  open  the  way  for  evidence  aliunde,  but  such  words  are  to  be 
understood  as  purely  descriptive  and  in  such  cases  the  individuals  are  unequivo- 
cally responsible.  ^ 

58.  Appendix,  sees.  17,  20,  42,  63.  Where  a  draft  was  made  payable  to  i  rank 
La  Rue,  Pt.,"  who  was  president  of  a  bank,  the  presumption  is  not  that  the  draft 
was  payable  to  the  bank  of  which  he  was  president;  the  abbreviation  of  "Pres." 
for  "president"  is  in  such  common  use  that  the  courts  will  take  judicial  notice 
of  its  meaning,  and  evidence  that  "Pt."  was  so  understood  among  bankers  was 
competent  as  tending  to  explain  what  was  intended.  Griffin  v.  Erskine,  131  Ja. 
144,  109  N.  W.  13. 

59.  Western  Grocer  Co.  v.  Lackman,  75  Kan.  34,  83  Pac.  527. 

60.  First  Nat.  Bank  v.  McCullough,  50  Oreg.  508,  93  Pac.  366,  17  L.  R.  A. 
(N.  S.)  1105,  126  Am.  St.  Rep.  758,  wherein  the  court  said  that  this  statute,  and 
the  decisions  which  have  been  embodied  therein  are  based  upon  the  theory  that 
the  employment  of  the  quahfying  word  "cashier"  or  other  designation  of  a  fiscal 
office,  appended  to  the  name  of  a  payee  or  indorsee  of  commercial  paper,  creates  an 
ambiguity  as  to  the  real  party  intended,  to  explain  which  parol  evidence  is  admis- 
sible to  show  who  is  the  principal  for  whose  benefit  such  agent  received  or  ac- 
cepted the  promise  to  pay.  But  when  no  official  designation  is  added  to  the  name 
of  an  indorsee,  no  uncertainty  is  apparent  from  an  inspection  of  the  mdorsement, 
and  parol  evidence  is  inadmissible  to  control  or  vary  the  terms  of  the  writing. 

34 


530  PRIVATE    CORPORATIONS   AS   PARTIES  §  419 

Mariner  was  Secretary,  and  it  was  held  that  parol  evidence  would 
not  be  admissible  to  show  that  Stillman  was  joint  maker,  but  there 
being  an  ambiguity  as  to  Mariner,  parol  evidence  might  be  introduced 
to  show  that  bis  signature  was  attached  simply  in  his  representative 
capacity  and  as  agent  of  the  corporation.^^ 

§  419.  The  Supreme  Court  of  the  United  States  has  gone  very  far 
in  admitting  parol  evidence  to  ascertain  whether  the  principal  or 
agent  was  intended  to  be  bound,  and  the  course  of  dealing  between 
the  parties,  and  the  particular  circumstances  of  the  case  were  allowed 
to  come  before  the  court.^^ 

61.  Germania  Nat.  Bank  v.  Mariner,  129  Wis.  544,  109  N.  W.  574,  the  court 
saying  that  section  64  has  no  application  to  such  a  note  as  John  W.  Mariner  did 
not  place  his  signature  on  the  note  in  blank. 

62.  Mechanics'  Bank  v.  Bank  of  Columbia,  5  Wheat.  326.  The  check  m  this 
case  was  as  follows: 

"No.  18.  Mechanics'  Bank  of  Alexandria, 

"  Cashier  of  the  Bank  of  Columbia,  June  25, 1817. 

"Pay  to  the  order  of  P.  H.  Minor,  Esq.,  ten  thousand  dollars. 
"$10,000.  WM.  PATON,  jun." 

It  was  proved  that  the  payee,  Minor,  was  the  teller  of  the  Mechanics'  Bank; 
that  the  check  was  an  official  check  cut  out  of  the  check-book  of  the  bank,  and 
noted  on  the  margin;  that  the  money  was  drawn  in  behalf  of  and  applied  to  the 
use  of  the  Mechanics'  Bank;  and  that  other  checks  had  been  drawn  by  the  cashier 
on  behalf  of  the  bank  in  the  like  form,  in  all  respects  save  that  he  usually  added 
"Cas."  or  "Ca."  to  his  name. 

Johnson,  J.,  said:  "It  is  by  no  means  true,  as  was  contended  in  argument, 
that  the  acts  of  agents  derive  their  validity  from  professing,  on  the  face  of  them, 
to  have  been  done  in  the  exercise  of  their  agency.  In  the  more  solemn  exercise  of 
derivative  powers,  as  applied  to  the  execution  of  instruments  known  to  the  com- 
mon law,  rules  of  form  have  been  prescribed.  But  in  the  diversified  exercise  of 
the  duties  of  a  general  agent,  the  hability  of  the  principal  depends  upon  the  facts: 
1,  that  the  act  was  done  in  the  exercise,  and  2,  within  the  limits  of  the  powers 
delegated.  These  facts  are  necessarily  inquirable  into  by  a  court  and  jury;  and 
this  inquiry  is  not  confined  to  written  instruments  (to  which  alone  the  principle 
contended  for  could  apply),  but  to  any  act,  with  or  without  writing,  within  the 
scope  of  the  power  or  confidence  reposed  in  the  agent;  as,  for  instance,  in  the  case 
of  money  credited  in  the  books  of  a  teller,  or  proved  to  have  been  deposited  with 
him,  though  he  omits  to  credit  it."  Kline  v.  Bank  of  Tescott,  50  Kan.  91,  31  Pac. 
688,  31  Am.  St.  Rep.  107;  Richmond  Locomotive  &  Machine  Works  v.  Moragne, 
119  Ala.  80,  24  So.  834. 


CHAPTER  XIV 

MUNICIPAL    CORPORATIONS   AS    PARTIES   TO    NEGOTIABLE 
INSTRUMENTS 

§  420.  As  to  public  or  municipal  corporations. — In  a  subsequent 
portion  of  this  work  the  subject  of  the  power  of  public  corporations 
to  execute  negotiable  instruments  will  be  considered  in  detail,  in 
connection  with  the  matter  of  coupon  bonds,  which  constitute  by  far 
the  most  important  branch  of  public  obligations. 

There  is  no  doubt,  however,  that  pubhc  corporations  may  have 
the  power  conferred  on  them  to  execute  bills,  notes,  checks,  and  indeed 
all  varieties  of  negotiable  instruments.  But  the  better  opinion  is, 
that  such  power  does  not  exist,  unless  expressed  or  clearly  implied.^ 
The  ordinary  orders,  warrants,  certificates  of  indebtedness,  and  obli- 
gations to  pay,  issued  by  municipal  corporations,  if  negotiable  in 
form,  will  in  general  enable  the  holder  to  sue  in  his  own  name.  But 
they  are  not  negotiable  instruments  so  as  to  exclude  inquiry  into  the 
legahty  of  their  issue,  or  preclude  defenses  which  are  available  as 
against  the  original  payees.^  To  invest  such  instruments  with  the 
character  and  incidents  of  commercial  paper,  so  as  to  render  them  in 
the  hands  of  bona  fide  holders  absolute  obligations  to  pay,  however 
irregularly  or  fraudulently  issued,  would  be  an  abuse  of  their  true 
character  and  purpose.^  Powers  conferred  on  municipal  corporations 
which  cannot  be  carried  into  execution  without  borrowing  money, 

1.  Knapp  V.  Mayor  of  Hoboken,  39  N.  J.  L.  394;  City  of  Williamsport  v. 
Commonwealth,  84  Pa.  St.  487;  Dively  v.  Cedar  Falls,  21  Iowa,  566;  Clarke 
V.  Des  Moines,  19  Iowa,  200;  Mayor  of  Wetumpka  v.  Wetumpka  Wharf  Co., 
63  Ala.  611;  Blackman  v.  Lehman,  63  Ala.  519;  Brown  v.  City  of  Newburyport, 
209  Mass.  259,  95  N.  E.  504. 

2.  Knapp  v.  Mayor  of  Hoboken,  39  N.  J.  L.  397;  1  Dillon  on  Municipal  Cor- 
porations, §  406.  See  post,  §§  427,  435;  First  Nat.  Bank  v.  Cook,  Treasurer, 
43  Nebr.  318,  61  N.  W.  693;  Thompson  v.  Searcy  County,  6  C  C  A.  674,  57  Fed. 
1030. 

3.  District  of  Columbia  v.  Cornell,  130  U.  S.  661;  Mayor  v.  Ray,  19  Wall. 
468;  Wall  v.  Monroe  Coimty,  103  U.  S.  74;  Claiborne  County  v.  Brooks,  111 
U.  S.  400;  Pacific  Improvement  Co.  v.  City  of  Clarksdale,  20  C.  C  A.  635,  74 
Fed.  528;  Brown  v.  City  of  Newburyport,  209  Mass.  259,  95  N.  E.  504. 

531 


532  MUNICIPAL   CORPORATIONS   AS    PARTIES  §  420 

and  giving  obligations  payable  in  future,  have  been  considered  suffi- 
cient to  carry  implied  power  to  issue  negotiable  instruments;  but  such 
powers  are  not  implied  from  the  usual  powers  of  administration  con- 
ferred in  specific  matters,  and  the  power  to  levy  taxes  to  defray 
necessary  corporate  expenditures,'*  and  when  a  statute  gives  that 
power  in  certain  cases,  notes  given  to  raise  money  for  general  pur- 
poses are  invalid.^  It  is  thought  in  Pennsylvania,  that  whenever  the 
municipality  has  authority  to  contract  a  debt  by  borrowing  money 
or  otherwise,  so  that  the  legislature  must  have  contemplated  its  giving 
securities  of  some  sort  in  payment,  it  has  then  by  implication  au- 
thority to  evidence  the  same  by  bill,  note,  bond,  or  other  negotiable 
instrument.^  But  we  do  not  perceive  that  mere  authority  to  contract 
a  debt  carries  with  it  necessarily  the  idea  that  money  must  be  bor- 
rowed, or  the  authority  to  execute  negotiable  instruments/    Munic- 

4.  Police  Jury  v.  Britton,  15  Wall.  572;  post,  §  422;  Clemens  on  Corporate 
Securities,  26,  27.  See  also  Mayor  v.  Ray,  19  Wall.  468,  and  post,  §  427.  Where  a 
municipal  corporation  has  authority  by  the  laws  of  the  state  to  issue  negotiable 
notes  for  money  borrowed  in  anticipation  of  taxes,  notes  executed  by  the  mayor 
and  city  treasurer  are  valid  obligations  of  the  city  when  duly  authorized  by  a 
municipal  ordinance.  Citizens'  Sav.  Bank  v.  Newburyport,  169  Fed.  766.  In 
Tyler  v.  L.  L.  Jester  &  Co.,  97  Tex.  344,  78  S.  W.  1058,  it  was  held  that  when  there 
is  no  provision  of  law  which  requires  a  city  to  enact  an  ordinance  to  enable  its 
officers  to  execute  contracts  for  current  charges,  such  authority  may  be  found  in 
the  minutes  of  the  council.  Under  a  constitutional  provision  declaring  that  no 
municipaUty  shall  mcur  any  debt,  except  for  a  temporary  loan  or  loans  to  supply 
casual  deficiencies  of  revenue,  without  the  assent  of  two-thirds  of  the  qualified 
voters  thereof,  at  an  election  for  the  purpose,  to  be  held  as  may  be  prescribed  by 
law,  a  municipal  corporation  cannot  lawfully  purchase  a  fire  engine  and  apparatus 
and  give  negotiable  promissory  notes  therefor,  payable  annually  through  a  series 
of  years;  nor  can  a  resolution  passed  at  a  mass  meeting  of  citizens  authorize  such 
contract.    Wadley  v.  Lancaster,  124  Ga.  354,  52  S.  E.  335. 

5.  McCurdy  v.  Sheawassee  County,  154  Mich.  550,  118  N.  W.  625. 

6.  City  of  WilHamsport  v.  Commonwealth,  84  Pa.  St.  501. 

7.  See  post,  vol.  II,  §  1530;  Bangor  Sav.  Bank  v.  City  of  Stillwater,  46  Fed.  899. 
The  powers  given  by  statute  to  a  municipal  corporation  to  borrow  money  and  to 
secure  the  payment  by  notes  are  distinct  powers,  and  when  the  statute  provides 
that  the  notes  with  all  renewals  thereof  shall  not  run  for  a  longer  period  than  one 
year,  there  is  the  authority  to  issue  commercial  paper  subject  to  the  statutory 
limitation  as  to  time,  and  if  paper  is  issued  in  a  manner  not  a  compUance  with 
the  statute,  it  is  not  effective  as  a  negotiable  note  but  is  none  the  less  effective  as  a 
certificate  of  indebtedness.  Ford  v.  Washington  Tp.,  71  J.  L.  N.  49,  58  Atl.  79. 
The  power  to  contract  debts  for  municipal  purposes  should  be  restricted  to  such 
debts  as  the  council  could  reasonably  expect  to  pay  from  the  ordinary  revenue  of 
the  town  for  the  current  fiscal  year,  and  a  note  given  for  money  borrowed  to 
build  a  town  hall  and  guard-house  is  not  a  vahd  obUgation  of  the  town.  Luther  v. 
Wheeler,  73  S.  C.  83, 52  S.  E.  874, 4  L.  R.  A.  (N.  S.)  746. 


§§  421,  422       MUNICIPAL   CORPORATIONS  AS   PARTIES  533 

ipal  corporations  in  order  to  exercise  municipal  functions,  such  as 
opening  streets,  etc.,  must  come  under  obligation  to  pay  those  who  do 
the  work.  Taxation  is  the  ordinary  method  of  raising  revenue  for  such 
purposes,  and  debts  so  contracted  should  be  paid  out  of  the  municipal 
revenues  raised  by  taxation.  This  subject  is  elsewhere  discussed  in 
this  work,  and  it  is  not  necessary  here  to  elaborate  it.^  The  views  of 
Judge  Dillon,  as  expressed  in  a  recent  essay  on  the  Law  of  Municipal 
Bonds,  seem  to  us  eminently  sound,  and  worthy  of  approbation.^ 

§  421.  Officers  empowered  to  act  for  public  corporations. — The 
common  council  of  a  city  or  town  is  the  legislative  branch  of  the 
municipal  government;  and  when  the  city  or  town  has  the  power 
to  execute  the  instrument,  that  body  would  be  the  proper  agency, 
by  whom,  or  under  whose  directions,  it  should  be  exercised,  and 
would  have  the  implied  authority  to  execute  the  power  of  the  corpo- 
ration. But  the  executive  officers  of  cities  and  towns,  and  the  super- 
visors, trustees,  or  representative  officers  of  a  county,  parish,  or 
other  local  jurisdiction,  invested  with  the  usual  powers  of  adminis- 
tration in  specific  matters,  and  the  power  to  levy  taxes  to  defray  the 
necessary  expenditures  of  the  jurisdiction,  have  no  implied  authority 
to  issue  negotiable  securities  of  such  a  kind  as  to  be  unimpeachable 
in  the  hands  of  bona  fide  holders.^" 

§  422.  Illustrations. — Thus,  it  has  been  held  that  the  mayor  of  a 
city  should  not  execute  the  bond  of  the  city,  although  he  had  re- 
ceived express  authority  from  the  council  to  borrow  money  from 
a  bank,  and  to  execute  a  note  therefor.  ^^  So  it  has  been  held  that 
county  supervisors  had  no  implied  power  to   execute  negotiable 

8.  See  post,  vol.  II,  §  1527  et  seq. 

9.  See  Dillon  on  Municipal  Bonds,  §  6,  pp.  12,  13  et  seq.,  where  it  is  said:  "There 
is  no  resemblance  between  private  and  public  or  municipal  corporations  in  this 
regard.  The  latter  are  not  organized  for  trading,  commercial  or  business  pur- 
poses. They  have  in  general  but  one  mode  of  meeting  their  liabilities,  and  that 
is  by  taxation,  and  it  is  upon  this  resource  that  creditors  must  be  taken  to  rely. 
For  hundreds  of  years  in  England,  such  corporations  have  existed,  without  it 
ever  being  contended  that  they  could,  without  express  authority,  issue  com- 
mercial paper.  *  *  *  We  regard  as  alike  unsound  and  dangerous  the  doctrine 
that  a  pubUc  or  municipal  corporation  possesses  the  implied  power  to  borrow 
money  for  its  ordinary  purposes,  and  as  incidental  to  that,  the  power  to  issue 
commercial  securities.  The  cases  on  this  subject  are  conflicting,  but  the  tendency 
is  toward  the  view  above  indicated." 

10.  Claiborne  County  v.  Brooke,  111  U.  S.  400. 

11.  Little  Rock  v.  State  Bank,  3  Eng  (Ark.)  277. 


534  MUNICIPAL   CORPORATIONS   AS   PARTIES  §  421 

instruments,  Field,  J.,  saying:  "Were  it  otherwise,  it  is  easy  to  see 
that  the  county  would  be  entirely  at  the  mercy  of  the  board."  ^^ 
Nor  have  the  trustees  or  supervisors  of  towns,  villages,  and  town- 
ships; ^^  nor  the  treasurers;  ^*  nor  the  selectmen  of  towns  and 
villages;  ^^   nor   the    auditors   of    cities,   who   are   mere   executive 

12.  People  V.  Supervisors  El  Dorado  County,  11  Cal.  175.  To  same  effect, 
see  Hubbard  v.  Town  of  Lyndon,  28  Wis.  675;  Chemung  Canal  Bank  v.  Super- 
visors, 5  Den.  517;  Scipio  v.  Wright,  101  U.  S.  665;  Wells  v.  Supervisors,  102 
U.  S.  625;  Ohio  County,  Ky.,  v.  Baird,  181  Fed.  49;  McCurdy  v.  Sheawassee 
County,  154  Mich.  550,  118  N.  W.  625.  Where  a  county  was  authorized  by 
statute  to  build  a  court  house  and  to  issue  bonds  or  county  script  not  exceeding  a 
certain  amount,  the  county  was  without  authority  to  issue  notes  for  the  cost  of 
the  court  house  in  excess  of  the  amount  authorized,  and  the  county  commissioners 
are  not  estopped  by  the  fact  that  the  work  contracted  for  has  been  performed  and 
accepted,  and  notes  in  payment  therefor  issued,  to  deny  their  validity.  Burgin  v. 
Smith,  151  N.  C.  561,  66  S.  E.  607.  Lake  v.  Trustees,  4  Den.  520;  Hubbard  v. 
Town  of  Lyndon,  28  Wis.  674. 

13.  Inhabitants  v.  Weir,  9  Ind.  224. 

14.  Lovejoy  v.  Inhabitants  of  Foxcroft,  91  Me.  372,  40  Atl.  141. 

15.  Rich  V.  Errol,  51  N.  H.  350.  In  Smith  v.  Inhabitants  of  Cheshire,  13 
Gray,  318,  it  was  held  that  an  order  or  draft  of  the  selectman  of  Cheshire  on 
the  treasurer  of  the  town,  payable  to  Westcott  or  bearer,  was  not  negotiable; 
and  that  an  action  could  not  be  brought  in  any  name  but  that  of  the  party  to 
whom  it  was  issued.  Bigelow,  J.,  after  saying  that  such  orders  were  common, 
but  the  right  of  the  holder  to  sue  depended  on  the  question  whether  the  select- 
men had  power  by  virtue  of  their  office,  and  without  special  authority  from  the 
town,  to  issue  to  persons  having  claims  on  the  town  negotiable  notes,  bills  of 
exchange,  or  orders,  on  which  a  town  can  be  held  liable  to  indorsers  or  holders 
other  than  those  to  whom  they  were  originally  issued,  continued:  "The  powers 
and  duties  of  selectmen  are  not  very  fully  defined  by  statute.  Many  of  the  acts 
usually  performed  by  them  on  behalf  of  towns,  and  which  are  recognized  as  within 
their  appropriate  sphere,  have  their  origin  and  foundation  in  long-continued  usage. 
The  management  of  the  prudential  affairs  of  towns  necessarily  requires  the  exercise 
of  a  large  discretion,  and  it  would  be  quite  impossible  by  positive  enactment  to 
place  definite  limits  to  the  powers  and  duties  of  selectmen  to  whom  the  direction 
and  control  of  such  affairs  are  intrusted.  Speaking  generally,  it  may  be  said  that 
they  are  agents  to  take  the  general  superintendence  of  the  business  of  the  town, 
to  supervise  the  doings  of  subordinate  agents,  and  the  disbursement  of  money 
appropriated  by  vote  of  the  town  to  take  care  of  its  property  and  perform  other 
similar  duties.  But  they  are  not  general  agents.  They  are  not  clothed  with  the 
general  powers  of  the  corporate  body  for  which  they  act.  They  can  only  exercise 
such  powers  and  perform  such  duties  as  are  necessarily  and  properly  incident  to 
the  special  and  limited  authority  conferred  on  them  by  their  office.  They  are 
special  agents  empowered  to  do  only  such  acts  as  are  required  to  meet  the  ex- 
igencies of  ordinary  town  business.  *  *  *  The  rule  of  law  is  well  settled  that  a 
special  agent  has  no  authority  to  bind  his  principal  by  a  promissory  note,  bill  of 
exchange,  or  other  negotiable  paper.    Such  power  can  be  conferred  only  by  the 


§  421  MUNICIPAL   CORPORATIONS   AS    PARTIES  535 

agents.  ^^  And  it  has  been  held  by  the  United  States  Supreme  Court 
that  there  was  no  implied  power  to  execute  a  negotiable  bond  in  the 
police  jury  of  a  parish,  Bradley,  J.,  saying:  "It  would  be  an  anomaly 
justly  to  be  deprecated,  for  all  our  limited  territorial  boards  charged 
with  certain  objects  of  necessary  local  administration,  to  become  foun- 
tains of  commercial  issues,  capable  of  floating  about  in  the  financial 
whirlpools  of  our  large  cities."  ^^  "It  is  one  thing,"  said  the  same 
judge  in  another  case,  "for  the  county  or  parish  trustees  to  have  the 
power  to  incur  obligations  for  work  actuall}^  done  in  behalf  of  the 
county  or  parish  and  to  give  the  proper  vouchers  therefor,  and  a  totally 
different  thing  to  have  the  power  of  issuing  unimpeachable  paper 
obligations  which  may  be  multiplied  to  an  indefinite  extent."  ^^  This 
is  undoubtedly  the  correct  and  general  view.^^  So  there  is  no  such 
implied  power  in  the  clerks  of  county  courts,  though  such  courts 
constitute  the  auditing  boards  of  the  counties;  ^°  nor  in  the  clerks  of 
boards  of  supervisors  to  issue  a  negotiable  warrant;  -^  nor  in  county 
judges,  who  are  special  limited  agents;  ^^  nor  in  a  special  agent  ap- 
pointed by  the  county  court;  ^^  nor  in  the  mayor  and  recorder  of  a 
city;  ^^  nor  in  the  mayor  alone. "^  Renewal  of  a  note  legally  executed 
by  a  town  treasurer  was  held  void,  a  statute  having  been  enacted,  in 
the  meantime,  depriving  such  official  of  authority.^^ 

direct  authority  of  the  party  to  be  bound."  Taft  v.  Pittsford,  28  Vt.  289  (which 
seems  to  overrule  Dalrymple  v.  Whittingham,  26  Vt.  245).  But  see  Andover  v. 
Grafton,  7  N.  H.  302,  and  Great  Falls  Bank  v.  Farmington,  41  N.  H.  33. 

16.  Dana  v.  San  Francisco,  19  Cal.  486;  People  v.  Gray,  23  Cal.  125;  Keller 
V.  Weeks,  22  Cal.  460. 

17.  PoUce  Jury  v.  Britton,  15  "Wall.  566  (1872).  To  same  effect,  see  Bear- 
man  V.  Board  of  PoUce,  42  Miss.  238;  Wells  v.  Supervisors,  102  U.  S.  625;  Hill 
V.  City  of  Memphis,  134  U.  S.  198;  Glass  v.  Parish  of  Concordia,  113  La.  544, 
37  So.  189. 

18.  Claiborne  County  v.  Brooke,  111  U.  S.  400. 

19.  See  State  v.  Glover,  155  U.  S.  517,  15  Sup.  Ct.  Rep.  186;  State  v.  Hawes, 
112  Ind.  322,  14  N.  E.  87;  Bloomington  School  v.  National  School  Furnishing 
Co.,  107  Ind.  43,  7  N.  E.  760;  MerriU  v.  Monticello,  138  U.  S.  673,  11  Sup.  Ct. 
Rep.  441. 

20.  Parcel  v.  Barnes,  25  Ark.  261. 

21.  Clark  v.  Polk  County,  19  Iowa,  248. 

22.  Hyde  v.  County  of  Franklin,  27  Vt.  186;  Daviess  County  Court  v.  Howard, 
13  Bush,  102. 

23.  Exchange  Bank  v.  County  of  Lewis,  28  W.  Va.  273. 

24.  Clarke  v.  Des  Moines,  19  Iowa,  200. 

25.  Short  v.  City  of  New  Orleans,  4  La.  Ann.  281;  Goldschmidt  v.  New  Orleans, 
5  La.  Ann.  436. 

26.  Abbott  v.  North  Andover,  145  Mass.  455. 


536  MUNICIPAL   CORPORATIONS   AS    PARTIES     §§  422a,  423 

§  422a.  The  "towns"  in  New  England  are  territorial  divisions 
created  by  the  legislatures  for  the  more  convenient  and  effectual 
administration  of  certain  functions  of  political  government.  In 
the  absence  of  statutory  or  constitutional  restrictions,  they  have 
the  power  to  borrow  money  for  legal  town  purposes.  But  this  power 
to  borrow  money  is  regarded  as  strictly  limited  to  money  necessary 
for  the  discharge  of  legal  liabilities.  It  is  limited  in  amount  as  in 
purpose  and  must  be  exercised  by  the  town  in  town  meeting  upon 
proper  warrant  and  by  vote  either  authorizing  the  act  of  borrowing 
beforehand  or  afterward  ratifying  the  prior  act.  It  is  not  enough 
that  the  money  was  paid  to  some  town  officer  and  by  him  used  in 
discharging  some  legal  duty  or  liability  of  the  town.  There  must  be 
legal  action  in  the  town  meeting.  ^^ 

§  423.  Difference  between  public  and  private  corporations. — If 

private  corporations,  to  increase  their  profits,  embark  in  enterprises 
not  authorized  by  their  charter,  still,  as  to  third  persons,  and  when 
necessary  for  the  advancement  of  justice,  the  stockholders  will  be 
presumed  to  have  assented,  since  it  is  in  their  power  to  restrain  their 
officers  when  they  transgress  the  limits  of  their  chartered  authority.^^ 
But  municipal  corporations  stand  upon  a  different  ground.    They  are 

27.  Lovejoy  v.  Inhabitants  of  Foxcroft,  91  Me.  368,  40  Atl.  141;  Otis  v.  Stock-- 
ton,  76  Me.  506;  Brown  v.  Winterport,  79  Me.  305,  9  Atl.  844;  Hurd  v.  St.  Alban, 
81  Me.  443,  7  Atl.  168;  Dickinson  v.  Conway,  12  Allen,  487;  Railroad  Nat.  Bank 
V.  Lowell,  109  Mass.  214;  Bank  v.  Hadley,  128  Mass.  503;  Brown  v.  Melrose,  155 
Mass.  587,  30  N.  E.  87. 

28.  Lloyd  v.  West  Branch  Bank,  15  Pa.  St.  174.  It  was  held  that,  although 
a  bank  had  no  authority  to  receive  certain  notes  on  deposit,  yet,  if  received, 
it  was  liable  for  them.  Coulter,  J.,  said:  "The  recognized  and  known  function- 
aries, and  especially  the  officers  of  a  bank,  are  held  out  to  the  world  as  having 
authority  to  act  according  to  the  general  usage,  practice,  and  course  of  the  business 
of  such  institutions.  If  it  were  otherwise,  there  would  be  no  safety  for  the  public 
in  doing  business  with  any  one  of  such  institutions;  because  their  charters  differ 
in  some  respects,  and  individuals  cannot  be  presumed  to  carry  these  documents 
in  their  pockets  as  a  vade-mecum.  Their  acts,  therefore,  within  the  scope  of  such 
usage,  practice,  and  course  of  business,  will  bind  the  corporation  in  favor  of  third 
persons  transacting  business  with  them,  and  who  did  not  know  at  the  time  that 
the  officer  was  acting  beyond  and  above  the  scope  of  his  authority.  The  property 
of  stockholders  is  not  bound  by  the  irregular,  unauthorized  transaction  or  declara- 
tions of  their  officers,  beyond  the  just  sphere  of  their  legal  action.  But  if  stock- 
holders, without  objection  or  interference,  witness  a  course  of  business,  usage, 
and  practice  on  the  part  of  their  officers,  this  justifies  third  persons  in  believing 
that  such  usage  of  the  officers  is  sanctioned  by  the  principal  and  authorized  by 
law."  Bradley  v.  Ballard,  55  111.  420. 


§  423  MUNICIPAL   CORPORATIONS   AS    PARTIES  537 

not  organized  for  gain,  but  for  the  purpose  of  government;  and  debts 
illegally  contracted  by  their  officers  cannot  be  made  binding  upon  the 
taxpayers  from  the  presumed  assent  of  the  latter. 

The  principle  is  applicable  to  both  public  and  private  corporations, 
as  it  is  to  individuals,  that  where  they  borrow  money  from  a  bank  or 
other  institution,  it  does  not  lie  in  their  mouth  to  show  that  the 
transaction  was  of  a  character  prohibited  by  the  charter  of  such  bank 
or  other  institution.^ 

29.  Township  of  Pine  Grove  v.  Talcott,  19  Wall.  619,  and  cases  therein  cited. 


CHAPTER  XV 

DRAFTS   OR   WARRANTS   OF   ONE   CORPORATE  OFFICER  UPON 

ANOTHER 

SECTION   I 

DRAFTS   OR  WARRANTS   OF   PRIVATE  CORPORATIONS 

§424.  In  the  first  place,  as  to  drafts,  orders,  or  warrants  of 
private  corporations. — Sometimes,  in  dealing  with  corporations,  one 
agent  or  officer  draws  upon  another,  and  in  respect  to  private  cor- 
porations the  doctrine  may  be  regarded  as  settled  by  weight  of 
authority,  and  by  principle,  that,  provided  the  act  be  not  ultra  vires, 
an  instrument  so  drawn  is,  in  effect,  the  draft  of  the  corporation 
upon  itself,  and  may  be  treated  either  as  an  accepted  bill,  or  as  a 
promissory  note.  Such  drafts  come  within  a  statutory  provision 
respecting  "  bills  and  notes  for  the  direct  payment  of  money."  ^  They 
are  frequently  given  for  mere  convenience  in  keeping  accounts,  and 
providing  concurrent  vouchers;  and  as  it  is  not  necessary,  when  bills 
and  notes  are  drawn  payable  at  a  particular  place,  to  aver  or  prove 
presentment  there  as  a  condition  precedent  to  binding  the  acceptor 
or  maker,  so  it  is  considered  that  it  is  not  necessary  to  aver  or  prove 
presentment  to  the  drawee  in  person,  or  at  his  place  of  business  or 
residence,  or  to  give  notice  of  nonpayment,  before  suing  the  corpora- 
tion, which  is  regarded  as  acceptor  or  maker.  ^  This  view  has  been 
applied  in  numerous  cases:  where  the  president  and  secretary  of  a 
water  company  drew  upon  its  treasurer,  and  the  corporation  executed 
a  mortgage  signed  in  like  manner  to  secure  the  draft;  ^  where  the 
secretary  of  a  railroad  company  drew  upon  its  treasurer;  ^  where  the 

1.  Gilstrah  v.  St.  Louis,  etc.,  R.  Co.,  50  Mo.  491. 

2.  See  1  Parsons  on  Notes  and  Bills,  63;  Rio  Grande  Extension  Co.  v.  Coby, 
7  Colo.  301,  citing  the  text;  Hazard  v.  Cole,  1  Idaho  Ter.  289. 

3.  Dennis  v.  Table  Mountain  Water  Co.,  10  Cal.  369  (1858).    A  similar  case 
is  Hasey  v.  White  Pigeon  Beet  Sugar  Co.,  1  Doug.  193  (1843). 

4.  Indiana,  etc.,  R.  Co.  v.  Davis,  20  Ind.  6  (1863);  Maux  Ferry  Gravel  R,  Co. 
V.  Branegan,  40  Ind.  361,  overruling  earlier  cases. 

538 


§§  425,  426      DRAFTS,    ETC.,    OF  PRIVATE    CORPORATIONS  530 

president  of  a  railroad  company  drew  upon  its  treasurer  for  a  specified 
sum,  stated  as  being  amount  due  the  payee  for  work  done  as  con- 
tractor; ^  where  the  agent  of  a  trading  corporation  drew  upon  its 
treasurer,  who  accepted  the  draft.^ 

§  425.  The  contrary  doctrine  to  that  of  the  text  at  one  time  pre- 
vailed in  Indiana,'^  but  was  subsequently  overruled  by  the  cases 
already  quoted.  It  has  prevailed  also  in  Alabama,  where  it  is  held 
that  a  company  draft  of  the  railroad  corporation,  on  the  treasurer, 
signed  by  the  president,  must  be  presented,  and  notice  given  of  dis- 
honor (unless  such  precedent  steps  be  excused)  before  action  can  be 
sustained.^ 

§  426.  In  England,  where  the  directors  of  an  assurance  company 
drew  on  its  cashier,  Wilde,  C.  J.,  said:  "The  company  indicate  that 
they  mean  to  pay,  by  a  direction  to  their  officer  to  pay,  and  they 
point  out  to  whom  payment  is  to  be  made.  It  appears  to  me  that  the 
instrument  contains  all  that  is  essential  to  constitute  a  promissory 
note."  ^ 

Under  Negotiable  Instrument  statute. — Under  the  provisions  of  the 
statute,  ^°  it  has  been  held  that  where  a  bill  of  exchange  is  drawn  by  a 


5.  Fairchild  v.  Ogdensburgh,  etc.,  R.  Co.,  15  N.  Y.  337  (1857);  approved  in 
Mobley  v.  Clark,  28  Barb.  391  (1858). 

6.  Shaw  V.  Stone,  1  Cush.  256,  Shaw,  C.  J.:  "The  right  of  the  holders  to  pro- 
ceed against  the  company  as  drawer  was  perfect,  without  demand  on  the  acceptor 
or  notice  to  the  indorsers.  Walwyn  v.  St.  Quintin,  1  Bos.  &  P.  652.  Nor,  supposing 
them  to  be  foreign  bills,  would  a  protest  be  necessary." 

7.  Marion,  etc.,  R.  Co.  v.  Dillon,  7  Ind.  404  (1856).  The  president  of  a  rail- 
road company  drew  upon  its  treasurer.  There  was  no  allegation  of  present- 
ment. Perkins,  J.,  said:  "If  a  man  drew  a  bill  or  order  directly  upon  himself 
payable  immediately,  it  is  his  promissory  note,  and  may  be  sued  on  accordingly. 
In  such  case  he  is  the  payor  as  well  as  the  drawer,  and  by  the  very  act  of  drawing 
admits  he  is  to  pay,  and  that  he  has  not  then  the  money  with  which  to  make  pay- 
ment. But  where  the  debt  is  due  from  a  company,  and  it  is  the  duty  of  one  officer 
or  set  of  oflBcers  to  allow  demands,  and  draw  upon  another  officer  who  has  the 
custody,  and  is  charged  with  the  duty  of  the  disbursement  of  the  company's 
funds  for  payment,  such  order  must,  as  a  general  rule,  be  presented  in  a  reasonable 
time  for  payment."  See  also  the  overruled  cases,  Marion  v.  Logansport  R.  Co., 
7  Ind.  648  (1856);  English  v.  Trustees,  6  Ind.  438  (1855);  Marion  etc.,  R.  Co. 
V.  Hodge,  9  Ind.  163  (1857). 

8.  Wetumpka,  etc.,  R.  Co.  v.  Bingham,  5  Ala.  663  (1843). 

9.  Allen  v.  Sea  Fire  &  Life  Assurance  Co.,  9  C.  B.  574. 

10.  Appendix,  sec.  130. 


540  DRAFTS   OF   CORPORATE    OFFICER  §   427 

corporation  upon  itself,  the  instrument  may  be  treated  as  an  accepted 
bill  or  as  a  promissory  note  at  the  election  of  the  holder. ^^ 


SECTION  II 

DRAFTS   OR   WARRANTS   OF  MUNICIPAL   CORPORATIONS 

§  427.  In  the  second  place,  as  to  municipal  drafts,  orders,  or 
warrants. — Frequently  a  draft,  order,  or  warrant  is  drawn  by 
one  officer  of  a  municipal  corporation  upon  another;  or  by  the  select- 
men of  a  town,  or  supervisors  of  a  county,  upon  an  officer,  for  the 
payment  of  corporate  indebtedness  to  the  payee.  The  intention  in 
such  case  is,  as  a  general  rule,  to  furnish  vouchers  to  the  proper  dis- 
bursing officer,  and  not  to  put  negotiable  instruments  in  circulation. 
And  it  has  been  generally,  and  as  we  think  justly,  considered  that 
such  drafts,  orders,  or  warrants  are  not  negotiable  instruments,  and 
cannot  be  regarded  either  as  bills  of  exchange  or  promissory  notes, 
cutting  out  equities  as  against  the  corporation — on  the  ground  that 
there  is  no  implied  authority  in  such  officers  to  execute  negotiable 
instruments.^^  It  has  been  so  held  where  the  selectmen  of  a  town 
drew  an  order  on  the  treasurer  payable  to  bearer;  ^^  where  the  auditor 
of  a  county  drew  upon  the  treasurer;  ^^  where  the  auditor  of  the  city 
of  San  Francisco  drew  a  warrant  upon  the  treasurer,  purporting  on 
its  face  to  be  for  a  certain  sum  "as  ordered  by  the  board  of  super- 
visors;" ^^  where  county  judges  drew  a  warrant  upon  the  treas- 

11.  Pavenstedt  v.  New  York  Life  Ins.  Co.,  96  N.  E.  104,  203  N.  Y.  91,  affirm- 
ing order  99  N.  Y.  S.  614,  113  App.  Div.  866,  and  answering  question  certified, 
104  N. Y.  S. 1135. 

12.  Camp  V.  Knox  County,  3  Lea,  199;  People  v.  Johnson,  100  111.  544,  citing 
the  text;  Miner  v.  Vedder,  66  Mich.  101;  People  v.  Hall,  8  Colo.  485;  People  v. 
Stupp,  49  Hun,  546;  Jerome  v.  Commissioners,  18  Fed.  873;  Shakespear  v.  Smith, 
77  Cal.  638;  Bank  of  Santa  Cruz  v.  Bartlett  (Cal.),  20  Pac.  682;  Heth  Township 
V.  Lewis,  17  N.  E.  113;  Gibson  v.  Rains,  11  Lea,  20.  See  cases  cited  -post;  Laplace 
V.  Laplace  et  al.,  43  La.  Ann.  284,  8  So.  914;  Bartley  v.  State,  53  Nebr.  311,  73 
N.  W.  744;  Thompson  v.  Searcy  County,  6  C.  C.  A.  674,  57  Fed.  1030;  Watson 
V.  City  of  Huron,  38  C.  C.  A.  264,  97  Fed.  449. 

13.  Smith  V.  Cheshire,  13  Gray,  318;  ante,  §  1;  Davis  v.  Steuben  School  Town- 
ship, 19  Ind.  App.  694,  50  N.  E.  1. 

14.  People  V.  Gray,  23  Cal.  125.  To  same  effect,  see  Clark  v.  Polk  County, 
19  Iowa,  248;  Keller  v.  Hicks,  22  Cal.  460. 

15.  Dana  v.  San  Francisco,  19  Cal.  490,  Baldwin,  J.,  saying:  "We  think  that 
the  plaintiff,  counting  alone  upon  the  county  scrip  or  warrants,  as  negotiable 
instruments,  evidencing  of  themselves  an  indebtedness  on  the  part  of  the  county, 


§  427  DRAFTS,    ETC.,    OF   MUNICIPAL   CORPORATIONS  541 

urer;  ^^  where  the  mayor  and  recorder  of  a  city  drew  a  warrant  on  the 
treasurer  payable  to  "A.  H.  W.,  or  bearer,  out  of  any  moneys  in  the 
general  fund  not  otherwise  appropriated;"  ^^  where  the  supervisors  of 
a  county  drew  upon  the  treasurer;  ^^  where  the  clerk  of  the  township 
board  of  education  drew  upon  the  township  treasurer;  ^^  where  the 
directors  of  a  school  district  drew  upon  the  township  treasurer;  ^  and 
where  a  town  treasurer  accepted  an  order  drawn  upon  him  by  the 
highway  board. ^^  And  special  assessment  vouchers,  issued  in  favor 
of  a  contractor,  are  not  negotiable  instruments.-^ 

So  it  has  been  held  that  the  mayor  and  recorder  of  a  city  have 
no  implied  power  to  execute  negotiable  warrants.^^  In  a  recent  case 
where  the  clerk  of  a  county  drew  upon  the  treasurer  for  a  certain 
amount  payable  to  bearer,  the  United  States  Supreme  Court,  speak- 

cannot  maintain  his  pretensions.  This  seems  to  be  decided  by  the  case  of  The 
People  V.  Supervisors  of  El  Dorado  County,  11  Cal.  170.  The  reason  is,  that  the 
auditor  had  no  authority  to  draw  a  bill  of  exchange,  but  he  can  only,  in  certain 
cases,  issue  warrants  upon  the  order  of  the  supervisors,  or  the  allowance  by  the 
board,  of  an  account  which  is  chargeable  as  a  debt  upon  the  county.  The  warrant 
is  not  intended  to  constitute  a  new  debt,  or  evidence  of  a  new  debt,  against  the 
county,  but  is  the  prescribed  means  the  law  has  devised  for  drawing  money  from 
the  county  treasury.  It  may  be  very  true,  that  the  warrant,  as  an  open  account, 
may  be  assigned,  and  the  assignee  be  protected  as  a  holder  of  a  claim  against  the 
county.  But  this  would  be,  not  because  the  indorsement  of  the  warrant  carried 
with  it  the  legal  title  of  the  scrip  to  the  assignee,  as  an  indorsee  under  the  law 
merchant,  but  because  the  transaction  would  be,  in  equity,  the  assignment  of  the 
debt  on  which  the  scrip  issued,  and  an  authority  to  the  assignee  to  receive  the 
money.  The  question  here  is,  not  whether  the  county  had  the  power  to  make  a 
bill  of  exchange,  but  whether  the  auditor,  when  under  the  statute  he  issues  a 
wr.rrant,  has  the  power  to  give  it  the  form  and  qualities  of  such  an  instrument. 
We  think  he  has  not,  and  that  the  paper,  as  here  presented  has  no  such  effect,  if 
indeed  it  was  so  designed."  "If  the  plaintiff  has  a  vahd  claim  upon  the  county, 
it  ought  to  be  paid;  but  he  must  proceed  to  enforce  it  in  some  other  mode."  Na- 
tional Bank  v.  Herold,  74  Cal.  603;  Wright  v.  Kinney,  123  N.  C.  618,  31  S.  E.  814; 
McPeeters  v.  Blankenship,  123  N.  C.  651,  31  S.  E.  876. 

16.  Hyde  v.  County  of  Franklin,  27  Vt.  186;  Goodwin  v.  East  Hartford, 
70  Conn.  18,  38  Atl.  876,  citing  text;  Goose  River  v.  Willow  Lake  School  Town- 
ship, 1  N.  Dak.  26,  44  N.  W.  1002,  26  Am.  St.  Rep.  605. 

17.  Clark  v.  Des  Moines,  19  Iowa,  200. 

18.  Chemung  Canal  Bank  v.  Supervisors,  5  Den.  517;  Leach  v.  County  of 
Wilson,  62  Tex.  331. 

19.  Steinbeck  v.  Treasurer,  etc.,  22  Ohio  St.  144.  See  State  v.  Huff,  63  Mo. 
288. 

20.  School  Directors  v.  Fogleman,  76  111.  189. 

21.  Goodwin  v.  East  Hartford,  70  Conn.  18,  38  Atl.  876. 

22.  First  Nat.  Bank  of  Chicago  v.  Elgin,  136  111.  App.  453. 

23.  Clark  v.  Des  Moines,  19  Iowa,  201. 


542  DRAFTS   OF   CORPORATE    OFFICER  §  428 

ing  of  county  warrants,  said:  "The  warrants  being  in  form  negotiable 
are  transferable  by  delivery,  so  far  as  to  authorize  the  holder  to  de- 
mand payment  of  them,  and  to  maintain,  in  his  own  name,  an  action 
upon  them.  But  they  are  not  negotiable  instruments  in  the  sense  of 
the  law  merchant,  so  that  when  held  by  a  bona  fide  purchaser,  evi- 
dence of  their  invalidity  or  defenses  available  against  the  original 
payee  would  be  excluded.  The  transferee  takes  them  subject  to  all 
legal  and  equitable  defenses  which  existed  to  them  in  the  hands  of 
such  payee."  ^^ 

§  428.  Draft  of  municipal  officer  phrased  in  negotiable  words. — 

It  has  been  held,  however,  in  a  number  of  cases  that  where  corporate 
authorities  are  empowered  by  law  to  draw  warrants,  or  orders  in 
payment  of  debts,  that  they  will  be  deemed  negotiable  if  phrased 
in  negotiable  words,  and  may  be  sued  upon  by  a  transferee,  like  any 
other  negotiable  instrument.  Thus,  where  the  charter  of  the  city  of 
Brooklyn  required  an  order  or  warrant  of  the  common  council  on  the 
treasurer,  for  drawing  money  from  the  treasury,  a  draft  on  the  treas- 
urer running,  "Pay  Alexander  LjTin,  or  order,  fifteen  hundred  dollars 
for  award  No.  7,  and  charge  to  Bedford  Road  Assessment,"  and  signed 
by  the  mayor  and  the  clerk  of  the  common  council,  was  held  to  be  a 
negotiable  bill  of  exchange. ^^ 

24.  Wall  V.  County  of  Monroe,  103  U.  S.  (13  Otto)  77.  See  Mayor  v.  Ray, 
19  Wall.  468,  and  ante,  §  420;  County  Ouachita  v.  Wolcott,  103  U.  S.  (13  Otto) 
559;  National  Bank  v.  Herold,  74  Cal.  603;  Erskine  v.  Steele  County,  4  N.  Dak. 
339,  60  N.  W.  1050;  Hartley  v.  State,  53  Nebr.  311,  73  N.  W.  744. 

25.  Kelly  v.  Mayor  of  Brooklyn,  4  Hill,  265,  Cowen,  J. :  The  draft  was  signed 
and  countersigned  according  to  the  statute,  by  the  mayor  and  clerk.  There  is 
nothing  in  the  statute  expressing  or  implying  an  inhibition  to  make  the  warrants 
negotiable."  "Independently  of  any  statute  provision,  a  corporation  may  issue 
negotiable  paper  for  a  debt  contracted  in  the  course  of  its  proper  business.  Moss 
V.  Oakley,  2  Hill,  265.  This  is  a  power  incident  to  all  corporations,  and  no  provi- 
sion in  its  charter  or  elsewhere,  merely  directing  a  certain  form  in  affirmative 
words,  should  be  so  construed  as  to  take  away  the  power.  The  draft  in  question 
was  issued  by  the  agents  of  the  defendants,  acting  according  to  the  usual  course 
in  such  matters.  A  disavowal  by  the  corporation,  if  allowed,  might  operate  as  a 
fraud  upon  plaintiff,  and  upon  others.  The  money,  when  drawn  for,  or  soon  after, 
was  in  the  possession  of  the  corporation;  and  it  stood  a  debtor  to  the  plaintiffs 
pro  tanto."  But  see  contra,  Clark  v.  Des  Moines,  19  Iowa,  290;  Short  v.  New 
Orleans,  4  La.  Ann.  281 ;  Goldschmidt  v.  New  Orleans,  5  La.  Ann.  436.  In  the  case 
of  Bardsley  v.  Sternberg,  17  Wash.  243,  49  Pac.  499,  it  was  held  that  warrants 
issued  by  a  city  are  not  negotiable  in  the  sense  of  excluding  inquiry  into  the 
legality  of  their  issue  or  of  excluding  defenses  thereto,  and  a  subsequent  holder 
does  not  occupy  the  position  of  an  innocent  purchaser. 


§§  429,  430     DRAFTS,    ETC.,    OF   MUNICIPAL    CORPORATIONS         543 

So,  where  the  clerk,  under  the  order  of  court,  drew  a  warrant  pay- 
able to  A.  B.,  or  bearer,  according  to  statutory  form,  it  was  held  that 
it  was  negotiable  by  delivery,  and  the  creditor  could  not  recover 
against  the  county  without  producing  it.^ 

§  429.  Indorsements. — When  a  municipal  corporation  warrant 
is  deemed  a  commercial  instrument,  negotiable  like  an  ordinary 
bill  of  exchange,  the  party  who  transfers  it  with  his  indorsement  is 
subject  to  the  liabilities  and  entitled  to  the  privileges  of  an  ordinary 
indorser  of  a  negotiable  instrument.^^  But  when  such  an  instrument 
is  regarded  as  a  mere  voucher,  and  not  a  bill  or  note,  the  transferrer 
by  indorsement  is  not  deemed  an  "indorser,"  in  the  commercial  sense 
of  the  term,  and  could  not  be  held  liable  as  such,  though  the  form  of 
the  paper  be  negotiable.^  He  would  be  liable,  however,  to  refund 
the  consideration  if  the  instrument  were  not  valid  and  legal  according 
to  its  purport.^ 

§  430.  Presentment. — In  the  case  of  municipal  corporations,  it 
has  been  considered  that  an  order  by  an  officer  or  representative 
upon  the  disbursing  authorities  must  be  presented  before  the  cor- 
poration can  be  sued,  though,  perhaps,  no  notice  of  dishonor  would 
be  necessary.  This  view  was  applied  in  Maine  and  Vermont,  where 
the  selectmen  of  a  town  drew  upon  its  treasurer.^" 

26.  Crawford  County  v.  Wilson,  7  Ark.  219.  But  see  this  case  explained  in 
Wall  V.  County  of  Monroe,  103  U.  S.  (13  Otto)  79.  See  Sweet  v.  Carver  County, 
16  Minn.  107;  Commissioners  of  Floyd  County  v.  Day,  19  Ind.  451. 

27.  Bull  V.  Sims,  23  N.  Y.  571. 

28.  Keller  v.  Hicks,  22  Cal.  460. 

29.  Keller  v.  Hicks,  22  Cal.  460. 

30.  Varner  v.  Nobleborough,  2  Greenl.  126  (1822),  Mellen,  C.  J.:  "The  select- 
men were  the  agents  of  the  town,  drawing  the  order  on  their  account  on  the 
town's  banker.  The  case  may  be  justly  compared  to  that  of  a  draft  by  a  man  on 
his  banker,  or  a  note  payable  at  his  banker's,  or  by  his  agent.  In  which  cases  it 
seems  settled  that  the  draft  or  note  must  be  presented  at  the  place  appointed. 
But,  in  addition  to  the  authority  of  decided  cases,  so  nearly  resembling  this  in 
principle,  a  strong  argument  against  the  present  action  arises  out  of  the  general — 
perhaps  we  may  say  universal — mode  of  conducting  the  affairs  of  a  town  in  the 
settlement  of  accounts  and  payment  of  debts  due  from  the  corporation  to  in- 
dividuals. Persons  transacting  business  according  to  an  established  and  well- 
known  usage,  are  presumed  to  assent  to  such  usage  and  contract  in  reference  to  it. 
Now,  it  is  universally  understood  that  selectmen,  who  draw  an  order  on  behalf 
of  the  town  in  favor  of  any  of  their  creditors,  have  not  the  funds  of  the  town  in 
their  hands,  but  that  they  are  in  the  possession  of  the  treasurer.  When  any 
creditor  of  the  town  receives  an  order  on  the  treasurer  for  the  amount  due  to 


544  iDRAFTS   OF   CORPORATE    OFFICER  §§  431,  432 

But  other  authorities,  following  the  analogies  of  private  corpora- 
tions, regard  such  orders  like  bills  of  exchange  drawn  by  a  party 
upon  himself,  and  which  may  be  treated  either  as  accepted  bills  or  as 
promissory  notes;  and  hold,  therefore,  that  the  corporation  is  bound 
absolutely  for  the  debt  without  either  presentment  or  notice.^^ 

§  431.  Suit  on  original  indebtedness. — When  the  warrant  or 
order  has  been  refused  payment,  the  creditor  may  sue  upon  the  orig- 
inal indebtedness  of  the  corporation.^^  Where  there  was  no  express 
or  implied  power  in  the  officer  who  executed  it  to  issue  the  warrant, 
the  plaintiff  cannot  make  it  even  the  prima  facie  ground  of  recovery, 
and  must  resort  to  the  original  consideration;  ^^  but  when  issued  by 
an  officer  having  a  general  power  to  issue  warrants,  it  will  be  presumed 
to  be  upon  a  consideration,  and  if  there  be  any  defense,  it  must  be 
pleaded  and  proved  by  the  defendant.  ^^ 

§  432.  It  is  not  incumbent  upon  a  creditor  to  take  a  town  order 
in  discharge  of  a  debt  due  him,  although  it  is  the  usage  of  the  town 
to  settle  its  indebtedness  by  giving  an  order  of  its  selectmen  on  the 
treasurer,  similar  to  that  offered. ^^  But  if  he  takes  such  order  he 
cannot  recover  the  amount  of  the  debt,  as  it  seems,  without  producing 


him,  he  must  be  considered  as  understanding  these  facts  and  assenting  to  this 
mode  of  receiving  payment,  and  as  accepting  the  order  under  an  imphed  engage- 
ment to  conform  to  the  estabUshed  usage,  and  present  the  order  to  the  treasurer 
for  payment.  Good  faith  requires  him  to  do  this,  and  the  law  considers  him  as 
promising  so  to  do.  If,  on  presenting  the  order,  payment  be  refused,  the  town 
which  drew  the  order  on  itself  must  be  answerable  instanter,  for  the  reason  before 
assigned.  But  no  sound  reason  can  be  given  why  a  town  should  be  subjected  to 
the  perplexity  and  costs  of  an  action,  before  the  payee  of  an  order  will  give  himself 
the  trouble  to  do  his  duty  and  request  payment  of  the  money  due  him  according 
to  the  terms  of  it.  We  have  no  reason  to  believe  but  that  the  contents  of  the 
order  would  have  been  promptly  paid  on  application  at  the  treasury.  Justice,  as 
well  as  law,  are  against  the  plaintiffs  according  to  the  facts  before  us."  Pease  v. 
Cornish,  19  Me.  193;  Dahymple  v.  Whittingham,  26  Vt.  346.  See  Kelly  v.  Mayor 
of  Brooklyn,  4  Hill,  265. 

31.  Steel  V.  Davis  County,  2  G.  Greene  (Iowa),  469. 

32.  Short  V.  City  of  New  Orleans,  4  La.  Ann.  281;  Goldschmidt  v.  The  Same, 
5  La.  Ann.  436. 

33.  AUison  v.  Juniata  County,  50  Pa.  St.  353.    See  Dana  v.  San  Francisco, 
19  Cal.  491. 

34.  Commissioners  of  Floyd  County  v.  Day,  19  Ind.  451. 

35.  Benson  v.  Carmel,  8  Greenl.  110;  Willey  v.  Greenfield,  30  Me.  452;  Dillon  on 
Municipal  Corporations  (1st  ed.),  §  410,  p.  398. 


§§  433,  434     DRAFTS,    ETC.^    OF  MUNICIPAL  CORPORATIONS        545 

it.^^  And  if  once  paid,  it  cannot  be  the  subject  of  recovery  even  by 
a  bona  fide  holder,  at  least  where  it  is  not  deemed  a  negotiable  instru- 
ment.^'' 

When  such  warrants  or  orders  are  issued  as  vouchers,  they  do  not 
bear  interest  after  demand  and  refusal  to  pay;  ^^  but  some  of  the 
authorities  which  regard  them  as  negotiable  instruments,  hold  that 
interest  is  recoverable  after  dishonor,^^ 

§  433.  Payable  out  of  particular  fund. — Where  a  warrant  or 
order  is  made  payable  out  of  a  particular  fund,  it  creates  no  general 
charge  against  the  corporation,  but  only  against  the  fund  which  is 
designated.^"  It  has  been  so  held  where  the  order  contained  the 
memorandum,  "and  charge  the  same  to  account  of  Union  avenue;"  ^^ 
and  where  it  was  payable  out  of  "the  road  and  canal  fund."  ^^ 

But  if  the  memorandum  merely  indicate  the  consideration,  or  the 
source  of  reimbursement,  it  would  be  different.  So  held  where  there 
was  written,  "it  being  his  proportionate  part  of  the  surplus  revenue 
fund;"  ^^  so  where  it  ran,  "for  award  No.  7,  and  charge  to  Bedford 
Road  Assessment;"  ^^  so  where  it  was  payable  "out  of  any  funds 
belonging  to  the  city  not  before  specially  appropriated."  ^^ 

§434.  Suit  by  transferee. — Whether  or  not  the  indorsee  or  as- 
signee of  a  corporation  warrant  or  order  drawn  by  one  officer  upon 
another,  can  sue  the  county  or  city  in  his  own  name,  is  another 
question  which  has  frequently  arisen.  Where  such  papers  are  deemed 
negotiable,  an  indorsee  or  transferee  may  of  course  sue  upon  them  as 
upon  any  other  negotiable  instrument.^^     But  where  they  are  re- 


36.  Sweet  v.  Carver  County,  16  Minn.  107;  Crawford  County  v.  Wilson,  7 
Ark.  219. 

37.  Chemung  Canal  Bank  v.  Supervisors,  5  Den.  517. 

38.  Allison  v.  Juniata  County,  59  Pa.  St.  353  (1865);  Dyer  v.  Covington 
Township,  19  Pa.  St.  200  (1852). 

39.  Commissioners  of  Leavenworth  v.  Keller,  6  Kan.  518. 

40.  Lake  v.  Trustees,  4  Den.  520;  Kinsberry  v.  Pettis  County,  48  Mo.  207; 
Travellers'  Ins.  Co.  v.  Denver,  11  Colo.  438,  citing  the  text. 

41.  Lake  v.  Trustees,  supra. 

42.  Kingsberry  v.  Pettis  County,  supra. 

43.  Pease  v.  Cornish,  19  Me.  191. 

44.  Kelly  v.  Mayor,  4  Hill,  263. 

45.  Bull  V.  Sims,  23  N.  Y.  570. 

46.  KeUy  v.  Mayor,  4  Hill,  263;  Dah-ymple  v.  Town  of  Whittingham,  26  Vt. 
345  (but  see  Hyde  v.  County  of  Franklin,  below);  Crawford  County  v.  Wilson, 

35 


546  DRAFTS   OF   CORPORATE    OFFICER  §  435 

garded  as  mere  vouchers  drawn  by  one  officer  upon  another  for  con- 
venience in  disbursing  funds,  the  contrary  view  has  generally  pre- 
vailed— that  the  transferee  cannot  sue  upon  them  in  his  own  name."*' 
The  views  of  the  United  States  Supreme  Court  on  this  question  have 
been  already  referred  to.^  It  must  in  general  be  solved  by  the  law  of 
the  Forum. 

§  435.  Right  of  transferee  of  county  warrant  to  sue  in  his  own 
name. — By  some  authorities  it  is  considered  that  though  town  or 
county  orders  payable  to  bearer,  or  payable  to  order  and  indorsed, 
are  not  commercial  paper  in  the  hands  of  bona  fide  indorsees  or 
transferees  for  value,  so  as  to  exclude  evidence  touching  the  legality 
of  their  inception,  or  so  as  to  cut  out  defenses  which  would  be  good 
against  the  payee;  yet  they  may  be  sued  upon  by  the  indorsee  or 
transferee  in  his  own  name,  in  like  manner  as  the  assignee  of  a  non- 
negotiable  instrument. ^^ 

7  Ark.  219;  Commissioners  of  Leavenworth  v.  Keller,  6  Kan.  510.  See  Great 
Falls  Bank  v.  Farmington,  41  N.  H.  33. 

47.  Hyde  v.  County  of  Franklin,  27  Vt.  185;  Snyder  v.  Bovaird,  122  Pa.  St. 
444;  Allison  v.  Juniata  County,  50  Pa.  St.  353,  Thompson,  J.:  "It  was  distinctly 
said  in  that  case  (Dyer  v.  Covington  Township,  7  Hair.  [19  Pa.  St.],  200),  that  an 
action  does  not  lie  on  such  paper,  and  in  this  I  entirely  concur.  It  is  neither  a 
bill,  note,  check,  nor  contract,  nor  is  it  a  satisfaction  of  the  original  indebtedness, 
and  the  suit  should  ordinarily  be  on  that."    See  Smith  v.  Cheshire,  13  Gray,  318. 

48.  See  ante,  §  427. 

49.  Emery  v.  Mariaville,  56  Me.  316;  Sturtevant  v.  Liberty,  46  Me.  459; 
Clark  V.  Polk  County,  19  Iowa,  248;  Andover  v.  Grafton,  7  N.  H.  303,  over- 
ruled by  Great  Falls  Bank  v.  Farmington,  41  N.  H.  33.  This  view  is  taken  by 
Judge  Dillon.  Dillon  on  Municipal  Corporations  (1st  ed.),  §  406,  p.  394.  See 
ante,  §§  420,  427. 


CHAPTER  XVI 

THE   FEDERAL   AND    STATE    GOVERNMENTS    AS    PARTIES    TO 
NEGOTIABLE   INSTRUMENTS 


SECTION  I 

GENERAL    PRINCIPLES    AS     TO     GOVERNMENTAL    LIABILITY,     AND 
LIABILITY    OF   AGENTS 

§  436.  There  is  no  doubt  that  when  an  officer  of  the  government, 
Federal  or  State,  who  is  authorized  to  bind  the  government  as  drawer, 
maker,  or  acceptor  of  a  negotiable  instrument,  draws  or  accepts  a  bill, 
or  makes  a  note  in  behalf  of  the  United  States,  or  the  State  which  he 
represents,  its  validity  cannot  be  questioned  when  it  has  passed  mto 
the  hands  of  a  bona  fide  holder  for  value,  without  notice  of  any  defect. 
The  government  would  then  be  bound  by  its  negotiable  paper  just  as 
an  individual.  This  doctrine  was  laid  down  by  the  United  States  Su- 
preme Court  in  a  case  where  the  Bank  of  the  Metropolis,  being  sued 
for  a  balance  due  the  United  States,  pleaded  as  a  set-off  a  draft  drawn 
by  Edwin  Porter  on  Richard  C.  Mason,  treasurer  of  the  Post-Office 
Department,  at  ninety  days,  and  accepted  by  him  as  treasurer;  and 
also  four  drafts,  at  ninety  days,  drawn  by  James  Reeside  on  Amos 
Kendall,  Postmaster-General,  and  "accepted  on  condition  that  his 
contracts  be  complied  with."  The  right  of  the  officers  to  accept,  on 
behalf  of  the  government,  was  not  questioned,  and  the  court  held 
them  valid,  declaring  that):  "When the  United  States,  by  its  author- 
ized officer,  becomes  a  party  to  a  negotiable  paper,  they  have  all  the 
rights,  and  incur  all  the  responsibilities,  of  individuals  who  are  parties 
to  such  instruments;"  and  that  all  the  bank  had  to  look  to  "was  the 
genuineness  of  the  acceptance  and  the  authority  of  the  officer  to 
give  it."  ^    At  the  present  time  there  seems  to  be  no  officer  of  the 

1.  United  States  v.  Bank  of  Metropolis,  15  Pet.  377  (See  this  case  explained 
in  The  Floyd  Acceptances,  7  Wall.  666);  McCann  v.  Randall  (Mass.),  17  N.  E. 
81;  Broadway  Sav.  Institution  v.  Town  of  Pelham,  83  Hun,  96,  31  N.  Y.  Supp. 
402. 

547 


648  FEDERAL   AND    STATE    GOVERNMENTS   AS   PARTIES       §  437 

Federal  government  who  has  authority  to  bind  it  as  a  party  to  a  bill 
or  note.^  The  government  being  affected  by  the  same  rules  as  affect 
individuals  in  commercial  transactions,  will  be  barred  from  recovery 
of  money  paid  on  a  forged  indorsement,  when  it  delays  too  long  to 
give  notice.^  The  United  States  were  held  liable  by  the  Supreme 
Court  to  a  bona  fide  holder  of  interest-bearing  treasury  notes,  printed 
by  the  Treasury  Department  from  genuine  plates,  and  perfect  in 
form,  never  issued,  however,  by  any  authorized  officer,  but  fraud- 
ulently or  surreptitiously  put  in  circulation.  Much  stress  was  laid 
upon  the  fact  that  the  notes  were  perfect,  as  ready  for  circulation  and 
use  as  coins  from  the  mint,  leaving  nothing  to  be  done  to  fix  their 
character  as  money,  except  the  mere  act  of  placing  them  in  circu- 
lation.^ 

§  437.  The  Floyd  Acceptances. — In  the  case  of  The  Floyd  Ac- 
ceptances, 7  Wall.  667,  before  the  United  States  Supreme  Court,  the 
authority  of  government  officers  to  draw  or  accept  bills  was  discussed 
in  a  suit  upon  the  following  instrument: 

"Washington,    November   28,    1859. 
"$5,000. 

"Ten  months  after  date,  for  value  received,  pay  to  our  own  order,  at  the  Bank 
of  the  Republic,  New  York  city,  five  thousand  dollars,  and  charge  to  account  of 
our  contract  for  suppUes  for  the  army  in  Utah. 

"RUSSELL,  MAJORS  &  WADDELL. 
"Hon.  J.  B.  Floyd,  Secretary  of  War. 
"  [Indorsement.] 
"Russell,  Majors  &  Waddell. 

"  [Acceptance.] 
"War  Department,  November  28,  1859. 
"Accepted: 
"John  B.  Floyd, 

"Secretary  of  War." 

Suit  was  brought  by  a  bona  fide  indorsee  for  value,  but  the  court 
held  that  he  could  not  recover,  although  it  was  proved  that  the  army 
in  Utah  was  in  imminent  danger  from  cold  and  starvation  at  the  time 
when  the  secretary  accepted  the  bill  in  order  to  secure  supplies  to 
save  it,  on  the  ground  that  there  was  no  usage  or  practice  by  which 

2.  The  Floyd  Acceptances,  7  Wall.  666. 

3.  United  States  v.  Central  Nat.  Bank,  6  Fed.  134. 

4.  Cooke  V.  United  States,  91  U.  S.  389.  But  see  District  of  Columbia  v. 
Cornell,  130  U.  S.  655. 


§§  437a,  438  GOVERNMENTAL   LIABILITY  549 

the  Secretary  of  War  was  authorized  to  accept  such  bills  in  behalf 
of  the  United  States;  and  that  although  it  was  then  and  had  been 
the  practice  of  the  heads  of  departments  to  accept  drafts  or  bills  for 
the  transmission  of  funds  to  disbursing  officers,  or  for  the  payment 
of  those  serving  in  distant  stations,  or  for  services  rendered — such 
practice  did  not  extend  to  cases  of  this  kind,  and  there  was  no  express 
authority  to  any  officer  of  the  government  to  draw  or  accept  bills  of 
exchange.^ 

§  437a.  Capacity  of  State  to  contract. — The  State  has  capacity 
to  enter  into  contract,  incurring  liability  absolute  or  contingent,  as 
a  principal  debtor,  or  as  indorser,  guarantor,  or  surety,  when  appro- 
priate to  the  just  exercise  of  its  powers,  save  so  far  as  capacity  may 
be  restrained  by  constitutional  limitation.  When  it  enters  into  con- 
tracts, while  it  obtains  all  the  rights,  it  incurs  all  the  obligations  of 
individuals  who  are  parties  to  like  contracts.  Its  contracts  are  of  the 
same  obligation,  of  the  same  incidents,  measured  and  governed  by 
the  same  principles  of  law  as  are  the  contracts  of  individuals.  The 
contract  may  be  of  the  class  known  as  negotiable  or  commercial  paper; 
and  the  State  may  be  drawer,  acceptor,  indorser,  or  guarantor  of 
such  paper.® 

§  438.  Warrants  of  government  officers. — A  warrant  issued  by 
the  auditor  of  a  State  upon  the  treasurer  for  an  amount  due  a  creditor 
is  not  a  negotiable  instrument,'^  nor  is  a  warrant  drawn  by  the  comp- 
troller of  a  State  upon  the  treasurer.^    And  it  has  been  held  by  the 

6.  The  Floyd  Acceptances,  7  Wall.  666.  Nelson,  Grier,  and  Clifford,  JJ., 
dissented.  Miller,  J.,  who  deUvered  the  opinion  of  the  court,  said:  "The  United 
States  V.  Bank  of  Metropolis  is  the  case  mainly  relied  on  as  establishing  the  doc- 
trine contended  for  by  plaintiffs,  and  is  confidently  asserted  to  be  conclusive  of  the 
cases  under  consideration,  unless  overruled.  *  *  *  The  opinion  of  the  court, 
after  stating  the  facts,  opens  with  the  declaration  that  '  when  the  United  States, 
by  its  authorized  officer,  becomes  a  party  to  negotiable  paper,  they  have  aU  the 
rights,  and  incur  all  the  responsibilities,  of  individuals,  who  are  parties  to  such 
instruments.'  And  fiulher  on  it  is  said,  that  'an  unconditional  acceptance  was 
tendered  to  it  (the  bank)  for  discount;  *  *  *  all  it  had  to  look  to  was  the  genuine- 
ness of  the  acceptance,  and  the  authority  of  the  officer  to  give  it.'  If  this  language 
has  any  significance,  it  is  that  the  authority  of  the  officer,  like  the  genuineness  of 
the  signature,  is  always  to  be  inquired  into  at  the  peril  of  the  party  taking  an 
acceptance  purporting  to  bind  the  government." 

6.  State  ex  rel.  Plock  v.  Cobb,  64  Ala.  156,  Brickell,  C.  J. 

7.  State  V.  Dubuclet,  23  La.  Ann.  267. 

8.  National  Bank  v.  Herold,  74  Cal.  603.    See  ante,  §  427. 


550   FEDERAL   AND   STATE    GOVERNMENTS   AS    PARTIES  §§  439, 440 

United  States  Supreme  Court  that  an  order  drawn  by  the  government 
of  the  United  States  upon  the  government  of  France,  for  an  amount 
due  by  treaty  stipulation,  was  not  a  bill  of  exchange  in  the  sense  of 
the  law  merchant.^ 

§  439.  Foreign  governments  may  also  be  parties  to  negotiable  in- 
struments. In  a  case  before  the  United  States  Supreme  Court  the 
bills  in  suit  were  signed:  "Le  Tombe,  Le  Consul  General,"  and  di- 
rected: "Au  citoyen  Payeur  General  des  defenses  du  Departement 
de .  A  la  Tresorerie  Nationale  a  Paris."  They  bore  a  certifi- 
cate showing  that  they  had  been  registered  at  the  consulate  of  France 
for  the  port  of  Philadelphia,  and  a  declaration  by  Adet,  the  minister 
plenipotentiary  of  the  French  Republic,  that  the  faith  of  the  French 
nation  was  pledged  for  their  payment,  and  requesting  the  proper 
officer  of  the  treasury  to  pay  them.  The  court  was  unanimously  of 
opinion  that  the  bills  were  drawn  upon  account  of  the  French  govern- 
ment, and  that  Le  Tombe  was  not  personally  bound.  ^"^ 

§440.  Governmental  and  private  agents. — In  dealing  with  the 
officers  and  agents  of  government,  whether  Federal  or  State,  it  is 
important  to  remember  that  they  stand  in  a  different  relation  to 
their  principals  from  private  agents.  Private  agents,  who  are  held 
out  as  such  by  their  principals  to  the  public,  will  bind  them  whenever 
they  act  within  the  apparent  scope  of  their  authority.  And  although 
they  violate  instructions,  it  will  be  no  defense  to  the  principal,  who, 
having  clothed  them  with  the  semblance  of  authority,  cannot  deny 
its  reality.  But  with  public  agents  it  is  entirely  different.  Their 
powers  and  duties  are  defined  by  statute,  which  is  notice  to  the  world 
of  the  limitations  to  their  authority;  and  no  pretension  of  authority, 
or  customary  action,  can  amplify  that  authority  beyond  the  statutory 
limitation."  This  rule  is  absolutely  necessary  to  protect  the  pubfic 
interest  against  losses  and  injuries  arising  from  the  fraud,  mistake, 
or  rashness,  or  indiscretion  of  public  agents.^^  aj^  j^  better  that  an 
individual  should  occasionally  suffer  from  the  mistakes  of  public 
officers  or  agents,  than  to  adopt  a  rule  which,  through  improper  com- 
binations or  collusion,  might  be  turned  to  the  detriment  and  injury 

9.  United  States  v.  Barker,  12  Wheat.  559. 

10.  Jones,  Indorsee,  v.  Le  Tombe,  3  Dall.  384. 

11.  Pierce  v.  United  States,  1  N.  H.  270;  The  Floyd  Acceptances,  7  Wall. 
666;  Broadway  Sav.  Inst.  v.  Town  of  Pelham,  83  Hun,  96,  31  N.  Y.  Supp.  402. 

12.  State  of  Missouri  v.  Bank  of  Missouri,  45  Mo,  528,  Wagner,  J. 


§  441  GOVERNMENTAL   LIABILITY  551 

of  the  public."  ^^  The  difference  in  the  statement  of  the  rule  as  appli- 
cable to  public  and  private  agents  is,  however,  rather  a  difference  aris- 
ing from  the  customary  difference  of  fact  in  the  circumstances  under 
which  they  act,  than  in  the  principle  applicable  to  them.  For  even 
as  to  private  agents,  the  principal  is  not  bound  by  their  acts  in  excess 
of  authority,  when  the  party  dealing  with  them  has  an  opportunity 
to  inspect  that  authority,  and  observe  its  hmitations.  This  oppor- 
tunity is  rarely  afforded  in  private  agencies;  whereas  the  statute  of 
public  record  is  a  conspicuous  notice  to  the  world  of  the  public  agent's 
power. 

§  441.  Public  bonds  and  treasury  notes. — Coupon  bonds  issued 
by  the  Federal  ^*  and  State  governments  ^°  are  established  as  in  all 
respects  negotiable  instruments;  and  the  rights  of  parties  are  ascer- 
tained, as  a  general  rule,  by  the  same  principles  which  apply  to  like 
instruments  issued  by  corporations.  The  treasury  notes  of  the  United 
States  are  deemed  negotiable  instruments,  and  their  negotiability 
is  not  affected  by  the  fact  that  they  are  issued  under  the  treasury 
seal,  nor  by  the  fact  that  when  issued  the  name  of  the  payee  is  left 
blank. ^^  A  clause  in  such  a  note  giving  the  holder  the  option,  upon 
maturity,  to  convert  it  into  bonds,  does  not  destroy  its  negotiability 
so  long  as  the  option  is  not  exercised,  nor  is  negotiability  destroyed 
by  a  clause  reserving  the  option  to  the  government  to  pay  in  coin  or  in 
paper  money.  But  when  the  holder  exercises  the  option  given  him, 
as  by  indorsing  on  the  note,  "Pay  Secretary  of  the  Treasury  for  re- 
demption," the  negotiability  of  the  note  is  destroyed.^''  In  a  recent 
ease  involving  these  questions,  D wight.  Commissioner,  said:  "There 
is  nothing  to  prevent  the  holder  from  taking  bonds  at  any  time, 
though  the  notes  cannot  be  actually  converted  into  bonds  until 
maturity.  Until  an  election  is  exercised  they  remain  treasury  notes; 
when  that  occurs  their  function  is  at  an  end,  and  the  holder  has  only 

13.  Whiteside  v.  United  States,  93  U.  S.  (3  Otto)  257;  Mayer  v.  Eschback,  17 
Md.  282. 

14.  Texas  v.  Hardenberg,  10  Wall.  58;  Texaa  v.  White,  7  Wall.  700;  Morgan 
V.  United  States,  113  U.  S.  476;  Seybel  v.  National  Currency  Bank,  54  N.  Y.  288; 
Spooner  v.  Holmes,  102  Mass.  503. 

15.  State  of  Illinois  v.  Delafield,  8  Paige  Ch.  527;  Arents  v.  Commonwealth, 
18  Gratt.  750;  Railroad  Companies  v.  Schutte,  103  U.  S.  118;  State  ex  rel.  Plock 
V.  Cobb,  64  Ala.  128. 

16.  Dinsmore  v.  Duncan,  57  N.  Y.  573;  Vermilye  v.  Adams  Express  Co., 
21  Wall.  138. 

17.  Ibid. 


552         FEDERAL   AND    STATE    GOVERNMENTS   AS   PARTIES       §  441 

a  claim  against  the  United  States  for  the  proper  amount  of  bonds. 
This  is  a  chose  in  action,  and  not  negotiable."  ^^  If  the  government, 
instead  of  the  holder,  had  the  option  to  pay  or  convert  notes  into 
bonds,  they  would  not  be  negotiable.^^  The  United  States  Supreme 
Court  has  described  the  character  of  these  notes;  and  held  that  after 
maturity  the  purchaser  took  them  subject  to  the  rights  of  antecedent 
holders,  to  the  same  extent  as  in  other  dishonored  commercial 
paper.  ^° 

18.  Dinsmore  v.  Duncan,  57  N.  Y.  580. 

19.  Vermilye  v.  Adams  Express  Co.,  21  Wall.  138. 

20.  Vermilye  v.  Adams  Express  Co.,  21  Wall.  138,  Miller,  J.,  saying:  "The 
first  thing  which  presents  itself  on  the  state  of  facts  is  to  determine  the  character 
of  those  notes  as  it  affects  the  law  of  their  transferability  at  the  time  they  were 
purchased  by  appellants,  for  notwithstanding  some  testimony  about  the  erasure 
of  an  indorsement  on  some  of  the  notes,  we  are  of  opinion  that  it  was  so  skill- 
fully done  as  not  to  attract  attention  with  the  usual  care  in  examining  such  notes 
given  by  bankers.  They  were  the  ordinary  form  of  negotiable  instruments, 
payable  at  a  definite  time,  and  that  time  passed  and  they  were  unpaid.  This 
was  obvious  on  the  face  of  the  paper.  The  fact  that  the  holder  had  an  option  to 
convert  them  into  other  bonds  does  not  change  their  character.  That  this  option 
was  to  be  exercised  by  the  holder,  and  not  by  the  United  States,  is  all  that  saves 
them  from  losing  their  character  as  negotiable  paper;  for  if  they  had  been  absolutely 
payable  in  other  bonds  or  in  bonds  or  money  at  the  option  of  the  maker,  they 
would  not,  according  to  all  the  authorities,  be  promissory  notes,  and  they  can  lay 
claim  to  no  other  form  of  negotiable  instrument.  As  it  is,  they  were  negotiable 
promissory  notes  nine  months  overdue  when  purchased  by  appellants.  They 
were  not  legal  tenders,  made  to  circulate  as  money,  which  must,  from  the  nature 
of  the  functions  they  are  to  perform,  remain  free  from  the  liability  attaching  to 
ordinary  promises  to  pay  after  maturity.  Nor  were  they  bonds  of  the  class  which, 
having  a  long  time  to  run,  payable  to  holder,  have  become  by  the  necessities  of 
modern  usage  negotiable  paper,  with  all  the  protection  that  belongs  to  that  class 
of  obligations.  These  were  simply  notes,  negotiable,  it  is  true,  having  when  issued 
three  years  to  run,  which  three  years  had  long  expired,  and  the  notes  were  due 
and  unpaid.  We  cannot  agree  with  counsel  for  appellants,  that  the  simple  fact 
that  they  were  the  obligation  of  the  government  takes  them  out  of  the  rule  which 
subjects  the  purchaser  of  overdue  paper  to  an  inquiry  into  the  circumstances  under 
which  it  was  made,  as  regards  the  rights  of  antecedent  holders.  The  government 
pays  its  obligations  according  their  to  terms  with  far  more  punctuality  than  the 
average  class  of  business  men.  The  very  fact  that  when  one  of  its  notes  is  due 
the  money  can  certainly  be  had  for  it,  if  payable  in  money,  should  be  a  warning 
to  the  purchaser  of  such  an  obligation  after  its  maturity  to  look  to  the  source 
from  which  it  comes,  and  to  be  cautious  in  paying  his  money  for  it.  In  the  case 
of  Texas  v.  White,  7  Wall.  700,  the  bonds  of  the  government  issued  to  the  State 
of  Texas  were  dated  July  1,  1851,  and  were  redeemable  after  the  31st  day  of 
December,  1864.  This  court  held  that  after  that  date  they  were  to  be  considered 
as  overdue  paper,  in  regard  to  their  negotiability,  observing  that  in  strictness, 
it  is  true,  they  were  not  payable  on  the  day  when  they  became  redeemable,  but 


§§  442,  443  GOVERNMENTAL   LIABILITY  553 

If  a  treasury  note  be  drawn  payable  to  order,  and  indorsed  spe- 
cially to  a  certain  person,  a  thief  or  finder  cannot  acquire,  or  pass  a 
title  valid  against  the  indorser,  or  the  true  owner — as  every  person 
taking  it  would  have  notice  by  the  special  indorsement,  that  only  the 
indorsee  could  give  title.^^ 

§  442.  Diversion  of  pledged  funds  by  State ;  sales  of  bonds  at  less 
than  par  value. — When  a  State  borrows  money  on  bonds  issued  for 
that  purpose,  and  pledges  a  certain  fund  for  the  interest  to  accrue 
thereon,  such  pledge  has  been  deemed  a  part  of  the  contract  with  the 
holders  of  the  bonds,  and  that  to  divert  it  would  impair  the  obligation 
of  the  contract — which  it  is  beyond  the  power  of  the  State  to  do.-^ 
If  the  legislature  of  a  State  authorize  its  officers  to  borrow  money  and 
sell  its  bonds  or  stocks  for  that  purpose  at  par  value,  a  sale  at  a  rate 
less  than  par  value  would  be  void;  and  a  sale  of  bonds  or  stocks  which 
draw  interest  from  the  day  of  sale,  but  which  are  to  be  paid  for  in 
future  instalments,  only,  and  without  interest,  is  a  sale  at  less  than 
par  value.^^ 

§  443.  Presumption  as  to  act  being  official. — Whenever  a  public 
officer  makes  a  contract  or  engagement  which  is  fairly  within  the 
scope  of  his  authority,  the  presumption  of  law  is  that  he  made  it 
officially,  and  in  his  public  character,  unless  the  contrary  appears 
by  satisfactory  evidence.^^  Accordingly,  where  bills,  notes,  or  other 
evidences  of  debt  are  made  payable  to  an  officer  of  the  United  States, 
and  it  appears,  either  from  their  face  or  extraneous  evidence,  that 
they  were  for  the  benefit  of  the  United  States,  the  action  should  be 
brought  in  the  name  of  the  United  States,  and,  under  like  circum- 
stances, if  payable  to  a  State  officer,  suit  should  be  brought  in  the 
name  of  the  State.  These  doctrines  were  enforced  where  a  bill,  pay- 
able to  "Thomas  T.  Tucker,  Treasurer  of  the  United  States,"  was 


the  known  usage  of  the  United  States  to  pay  all  bonds  as  soon  as  the  right  of  pay- 
ment accrues,  except  when  a  distinction  between  redeemability  and  payability 
is  made  by  law  and  shown  on  the  face  of  the  bonds,  requires  the  application  of  the 
rule  respecting  overdue  obUgations  to  bonds  of  the  United  States  which  have 
become  redeemable,  and  in  respect  to  which  no  such  distinction  is  made." 

21.  Myers  v.  Friend,  1  Rand.  13.    See  post,  §  441. 

22.  State  v.  Cardozo,  8  Rich.  71.    See  -post,  §§  446,  448;  28  Am.  Rep.  275. 

23.  State  of  Illinois  v.  Delafield,  8  Pai^e  Ch.  527. 

24.  Park  v.  Ross,  11  How.  374;  Balcombe  v.  Northrup,  9  Minn.  176;  Bur- 
roughs on  Public  Securities,  §  3,  p.  10;  Story  on  Agency,  §  303. 


554         FEDERAL   AND    STATE    GOVERNMENTS   AS    PARTIES     §  443a 

sued  on  in  the  name  of  the  United  States;  ^^  where  a  note  was  payable 
to  "I.  E.  F.,  U.  S.  Indian  Agent,  his  successors  in  office,  or  order,  for 
the  use  of  the  Winnebago  Tribe,  etc.;"  ^  where  a  note  was  payable 
to  "James  Irish,  Land  Agent  of  Maine."  "^ 

§  443a.  Who  are  to  be  deemed  public  agents? — It  is  observed 
by  the  editor  of  the  American  Reports  that  "the  books  are  singularly 
destitute  of  cases  precisely  in  point,"  as  to  the  liability  of  public 
agents  as  parties  to  negotiable  instruments;  ^  but  it  may  be  more 
accurately  said  that  many  of  the  cases  have  failed  to  note  the  distinc- 
tion between  public  and  private  agents,  and  to  define  who  are  public 
and  private  agents.  Those  who  are  in  the  performance  of  official 
functions,  whether  for  the  Federal  or  State  governments,  or  for  any 
of  the  municipal  subdivisions  of  the  State  governments,  seem  clearly 
to  come  under  the  classification  of  public  agents;  and  when  they  sign 
themselves  as  parties  to  negotiable  instruments  for  the  hona  fide 
purpose  of  discharging  official  fiscal  duties,  they  should  be  deemed 
to  be  acting  in  their  public  character  and  not  to  undertake  a  personal 
obligation.  The  cases  which  arise  upon  drafts  or  orders  of  one  muni- 
cipal officer  or  agent  upon  another  have  been  already  considered,  and 
many  of  them  can  only  rest  upon  this  theory,  although  it  is  not  ex- 
pressly so  stated  in  the  decisions.^^ 

In  a  recent  Indiana  case  negotiable  notes  in  the  ordinary  form 
customary  in  that  State  were  signed  by  several  persons  adding  to  one 
note,  "  Trustees  of  Monticello  School,"  and  to  another  simply  "  School 
Trustees,"  and  it  was  contended  that  these  words  were  simply  de- 
scriptio  personcB,  and  that  the  parties  were  individually  bound.  But 
the  Supreme  Court  said:  "It  is  clear  that  a  school  town  or  township 
is  a  purely  public  corporation,  and  the  trustees  thereof  public  agents. 
These  notes,  therefore,  which  were  confessedly  executed  upon  con- 

25.  In  Dugan  v.  United  States,  3  Wheat.  172,  Marshall,  C.  J.,  said:  "If  it  be 
generally  true  that  when  a  bill  is  indorsed  to  the  agent  of  another  for  the  use 
of  his  principal,  an  action  cannot  be  maintained  in  the  name  of  such  principal 
(on  which  point  no  opinion  is  given),  the  government  should  form  an  exception 
to  such  rule,  and  the  United  States  be  permitted  to  sue  in  their  own  name,  when- 
ever it  appears  not  only  on  the  face  of  the  instrument,  but  from  all  the  evi- 
dence that  they  alone  were  interested  in  the  subject-matter  of  the  controversy." 
See  also  United  States  v.  Boyce,  2  McLean,  352. 

26.  Balcombe  v.  Northrup,  9  Mmn.  173. 

27.  State  v.  Boies,  2  Fairf.  474;  Irish  v.  Webster,  5  Greenl.  171. 

28.  37  Am.  Rep.  142. 

29.  See  ante,  §  427  et  seq. 


§  443a  GOVERNMENTAL   LIABILITY  655 


sideration  moving  only  to  the  use  and  benefit  of  the  appellant  (the 
school  town),  are  binding  upon  no  one  unless  upon  the  appellant."  ^° 
And  there  are  several  cases  which  accord  with  these  views,  and  which 
seem  to  us  sound  and  just,  and  in  accordance  with  the  broad  prin- 
ciples applicable  to  public  agencies.^^  But  the  individual  signers  of 
similar  notes  have  been  held  liable  in  a  number  of  decisions,  the 
attorneys  and  the  courts  seeming  to  lose  sight  of  the  distinction  be- 
tween public  and  private  agents.^- 

In  doubtful  cases  parol  evidence  is,  in  general,  admissible  to  show 
by  surrounding  circumstances  that  the  contract  was  made  on  behalf 
of  the  public.^^    The  inquiry  in  all  such  cases,  and  especially  as  be- 


30.  School  Town  of  Monticello  v.  Kendall,  72  Ind.  208,  37  Am.  Rep.  139, 
142,  and  notes.  But  it  has  also  been  held  in  Indiana  that  a  township  trustee 
cannot  be  held  personally  hable  for  the  amount  of  a  township  order,  by  reason 
of  a  written  statement  made  by  him  to  the  purchaser  thereof  that  the  order 
was  all  right,  where  such  order  was  on  its  face  void.  See  Fu-st  Nat.  Bank  of 
Elkhart  v.  Osborne,  18  Ind.  App.  442,  48  N.  E.  256. 

31.  In  Hodges  v.  Runyan,  30  Mo.  491,  the  note  purported  that  the  president 
of  the  board  of  school  trustees  promised  in  their  behalf,  and  it  was  held  that 
the  signers  were  not  personally  bound.  In  Baker  v.  Chambers,  4  Iowa,  429,  the 
note  was  given  by  "the  undersigned  Directors  of  School  District  No.  — "  and 
it  was  held  that  they  were  only  bound  officially  as  directors,  and  parol  evidence 
to  bind  them  personally  was  excluded.  In  Fox  v.  Drake,  8  Cow.  191,  the  action 
was  on  an  instrument  signed  by  A.  &  B.  as  "Commissioners  for  building  the  Court 
House  at  Owego  Village,"  and  the  expressed  consideration  was  "for  work  and 
labor  on  the  Court  House  in  the  village  of  Owego,"  Savage,  C  J.,  said:  "This  is  a 
case  in  which  the  defendants  are  not  personally  liable,  unless  it  was  clearly  their 
intention  to  assume  personal  responsibility,  which  does  not  appear." 

32.  See  ante,  §  403;  Cahokia  School  Trustees  v.  Rautenburg,  88  111.  219.  The 
note  commenced,  "I  promise,"  and  was  signed  by  "A.  &  B.,  School  Trustees," 
and  the  parties  were  held  personally  hable.  In  accord,  see  Fowler  v.  Atkinson, 
6  Minn.  579.  In  Wing  v.  Gluck,  Iowa,  S.  C,  June,  1881,  cited  37  Am.  Rep.  142, 
it  was  held  that  the  school  trustees  were  mdividually  liable  on  a  note  similar  to 
that  in  the  case  of  School  Town  of  Monticello  v.  Kendall,  above  cited,  and  parol 
evidence  to  show  the  real  principal  was  excluded;  but  the  question  whether  the 
township  was  Uable  was  not  discussed.  The  court  said:  "Most  clearly  such 
distinct  township  cannot  be  said  to  be  a  party  to  the  contract,  so  far  as  its  terms 
are  concerned.  It  follows  that  unless  the  contract  can  be  held  to  be  the  contract 
of  the  defendants,  it  is  the  contract  of  no  one."  American  Ins.  Co.  v.  Stratton, 
59  Iowa,  696.  In  Bayliss  v.  Peterson,  15  Iowa,  279,  the  signers  were  held  liable 
where  the  promise  was  made  as  "Committeemen  for  the  Erection  of  a  School- 
house  in  District  No.  1."  See  ante,  §  305.  Committeemen,  who  are  the  mere 
subagents  of  official  boards,  may  perhaps  be  distinguishable  from  the  officials 
themselves  in  respect  to  the  principles  applicable  to  their  liability. 

33.  Walker  v.  Christian,  21  Gratt.  291;  Burroughs  on  PubUc  Securities,  p.  10. 


556  FEDERAL   AND    STATE    GOVERNMENTS    AS    PARTIES  §§  444,  445 

tween  privy  parties,  is,  to  whom  was  the  credit  given?  and  the  matter 
then  becomes  a  mere  question  of  evidence.^"* 

§  444.  Ratification  of  assumed  public  authority. — No  official  or 
agent  of  the  government.  Federal  or  State,  cun  ratify  a  contract,  save 
one  capable  of  making  it  for  the  government.  Thus,  the  legislature 
of  Illinois,  having  authorized  the  issue  of  bonds  in  a  particular  way, 
the  recognition  by  the  governor  of  the  validity  of  bonds  issued  in  a 
different  way  could  impart  no  validity  to  them.  "For,"  said  the 
court,  "no  person  can  confirm  an  unauthorized  agreement,  made  by 
another,  unless  he  had  himself  the  power  to  authorize  the  making  of 
such  an  agreement.  As  the  sovereign  power  of  the  State,  by  a  legis- 
lative act,  had  prohibited  any  of  its  officers  or  agents  from  selling  its 
stocks  below  their  par  value,  it  follows,  of  course,  that  nothing  short 
of  a  law  of  the  State,  proceeding  from  the  same  authority,  can  legalize 
such  a  transaction."  ^'^  But  if  the  legislature  had  the  power  to  author- 
ize their  issue,  its  ratification  subsequently  would  be  equivalent.^^ 
And  such  ratification  might  be  absolute,  or  conditioned  upon  a 
future  event,  in  which  case,  the  condition  being  fulfilled,  it  would 
become  absolute. ^'^ 

§  445.  As  to  the  liability  of  public  agents,  a  different  rule  (as 
already  seen)  prevails  from  that  applicable  to  private  agents.  In 
the  ordinary  course  of  things,  an  agent  contracting  on  behalf  of  the 
government  or  of  the  public,  is  not  personally  bound  by  such  a  con- 
tract, even  though  he  would  be  by  the  terms  of  the  contract,  if  it  were 
an  agency  of  a  private  nature.  The  reason  of  the  distinction  is,  that 
it  is  not  to  be  presumed  either  that  the  public  agent  means  to  bind 
himself  personally  in  acting  as  a  functionary  of  the  government,  or 
that  the  party  dealing  with  him  in  his  public  character  means  to  rely 
on  his  individual  responsibility.^^  If,  however,  a  functionary  of  the 
government,  without  disclosing  his  official  character,  or  the  public 
nature  of  the  transaction  in  the  instrument,  issued  a  negotiable 

34.  2  Kent  Com.  (7th  ed.),  810.    See  Biddle  on  Stockbrokers,  97,  99. 

35.  State  of  Illinois  v.  Delafield,  8  Paige  Ch.  542. 

36.  Opinion  of  Court  to  the  Governor,  49  Mo.  225. 

37.  Butler,  Treasurer,  v.  Dubois,  Auditor,  29  111.  105. 

38.  Walker  v.  Christian,  21  Gratt.  297;  Hodgson  v.  Dexter,  1  Cranch  S.  C. 
345;  2  Kent  Com.  (7th  ed.)  810;  Story  on  Agency,  §  302;  Macheath  v.  Haldimand, 
1  T.  R.  172;  Story  on  Agency,  §§306-312.  See  Edwards  on  Bills,  90.  Parol 
proof  is  admissible  to  establish  the  fact  that  the  maker  signed  as  a  public  agent. 
Keokuk  Falls  Imp.  Co.  v.  Kingsland  &  Douglas  Mfg.  Co.,  5  Okl.  32,  47  Pac.  484. 


§§  445a,  446    STATE    SECURITIES   RECEIVABLE    FOR   TAXES  557 

instrument  in  his  own  name,  it  would  seem  clear  that  a  bona  fide 
holder  without  notice  might  hold  him  individually  responsible.  And 
it  is  thought  that  an  intention  should  be  imputed  to  him  to  incur 
personal  liability  whenever  he  draws  a  bill  or  note  in  his  simple 
individual  name.^^ 

§  445a.  Liability    of    public    agent    exceeding    authority. — Not 

being  bound  by  the  contract  made  officially,  the  question  remains, 
is  the  public  agent  bound  in  an  action  of  tort  for  assuming,  without 
authority,  to  bind  his  principal,  as  is  the  case  with  private  agents?  ^^ 
Where  such  agent  has  acted  in  good  faith,  and  there  has  been  no  fraud 
or  imposition,  it  would  seem  that  he  is  not,  for  those  who  deal  with 
him  ordinarily  have  notice  of  the  extent  of  his  authority  from  the 
statutes  under  which  it  is  derived,  and  must  judge  at  their  peril  of  its 
extent  and  limitations.^^ 


SECTION   II 

STATE   SECURITIES   MADE   RECEIVABLE    FOR   TAXES 

§446.  By  section  10,  article  1,  of  the  Constitution  of  the  United 
States,  it  is  provided  that  no  State  shall  pass  any  law  "impairing 
the  obligations  of  contracts."  This  provision  was  intended  to  pre- 
vent interferences  by  State  legislatures  with  the  relations  of  debtors 
and  creditors;  and  it  has  been  urged  with  great  force,  that  it  was  not 
designed  to  apply  to  undertakings  of  States  themselves,  and  that  one 
legislature  could  not  pass  any  act  which  a  subsequent  one  could  not 
repeal,  although  such  repeal  would  abrogate  or  impair  engagements 
entered  into  under  pre-existing  legislation.  But  it  has  been  decided 
that  a  State  may  be  a  contracting  party  within  the  meaning  of  the 
Constitution,  and  that,  if  a  legislative  body  make  a  contract  on  behalf 
of  the  State,  no  subsequent  session,  and  no  new  legislative  body,  can 
repeal  the  law  by  which  it  was  made,  so  as  to  impair  the  obligation 
contracted.  "^^ 

39.  Story  on  Agency,  §  306. 

40.  Ante,  §  306. 

41.  See  Burroughs  on  Public  Securities,  11,  12;  Dillon  on  Municipal  Corpora- 
tions (1st  ed.),  §  177  and  notes.  See  Story  on  Agency,  §  319  et  seq.,  as  to  liability 
of  public  agents  for  negligence  and  misfeasance. 

42.  New  Jersey  v.  Wilson,  7  Cranch,  164. 


558  FEDERAL   AND  STATE    GOVERNMENTS   AS    PARTIES  §§  447,  448 

§  447.  Cases  from  Arkansas  and  Tennessee. — These  principles 
have  an  immediate  bearing  on  State  and  corporation  securities,  and 
have  been  applied  to  them  in  a  number  of  cases.  In  1836,  the  legis- 
lature of  Arkansas  chartered  "The  Bank  of  the  State  of  Arkansas," 
the  whole  capital  of  which  belonged  to  the  State.  Its  charter  pro- 
vided ''that  the  bills  and  notes  of  said  institution  shall  be  received  in 
all  payments  of  debts  due  to  the  State  of  Arkansas,"  but  this  provision 
was  repealed  by  the  legislature  in  1845.  At  the  time  of  its  repeal  a 
large  amount  of  the  issues  of  the  bank  were  in  circulation,  and  a  judg- 
ment debtor  of  the  State,  after  the  repeal,  tendered  the  amount  due 
by  him  in  bank  notes  to  the  collecting  officer,  who  refused  to  receive 
them.  The  Supreme  Court  of  the  United  States  held  that  the  legis- 
lation aforesaid  constituted  a  contract  which  no  subsequent  legisla- 
tion could  impair;  and  that  the  collecting  officer  might  be  compelled 
by  mandamus  to  receive  the  notes  tendered.''^  In  a  subsequent  case 
which  went  up  from  Tennessee,  a  similar  decision  was  rendered  by  the 
same  tribunal,  which  held  the  contract  of  the  State  to  receive  the  bank 
notes  for  all  pubfic  dues  irrepealable.  This  guaranty  was  thought  in 
no  sense  a  personal  one,  but  attached  to  the  notes  themselves  as  much 
as  if  written  on  the  back  thereof;  that  it  went  with  them  everywhere 
as  long  as  they  existed,  and  was  a  standing  invitation  to  all  persons 
to  receive  them,  even  though,  after  the  notes  were  issued,  the  law 
declaring  their  receivability  should  be  repealed.  "The  quality  of 
negotiability  is  annexed  to  the  notes  in  words  that  cannot  be  mis- 
understood, and  which  indicate  the  purpose  of  the  legislature,  that 
they  should  be  used  by  every  one  indebted  to  the  State."  ^^ 

§  448.  Virginia  decisions.— In  Virginia,  the  decisions  of  the 
United  States  Supreme  Court  have  been  followed.  It  appeared  in 
the  case  presented  that  the  State  of  Virginia,  by  her  legislature,  had 
undertaken  to  issue  coupon  bonds  for  two-thirds  of  her  entire  in- 
debtedness, the  remaining  third  being  assumed  to  be  the  proportion 
which  should  be  discharged  by  West  Virginia,  which  State  had  been 
forcibly,  and  without  Virginia's  consent,  torn  out  of  her  boundaries. 
It  was  provided  in  the  act  of  the  Virginia  Assembly  that  the  coupons 
of  the  new  issue  of  bonds  should  be  receivable  "  at  and  after  maturity 
for  all  taxes,  debts,  and  demands  due  the  State."  Some  of  her  credit- 
ors accepted  this  adjustment  of  their  bonded  debt,  and  a  holder  of 

43.  Woodruff  v.  Trapnall,  10  How.  190. 

44.  Furman  v.  Nichols,  8  Wall.  44.    See  also  Keith  v.  Clark,  97  U.  S.  (7  Otto) 
454,  and  Tennessee  v.  Sneed,  96  U.  S.  (6  Otto)  69. 


§  448  STATE    SECURITIES   RECEIVABLE    FOR   TAXES  559 

some  of  the  coupons  tendered  them  to  the  sheriff  of  Richmond  in 
payment  of  taxes.  In  the  meantime,  the  law  authorizing  the  receipt 
of  the  coupons  for  taxes  and  other  demands  had  been  repealed,  and 
the  Assembly  had  passed  an  act  prohibiting  the  collecting  officers  of 
the  State  from  receiving  the  coupons  in  discharge  "of  taxes  or  other 
demands  of  the  State  now  due,  or  that  shall  hereafter  become  due." 
The  Supreme  Court  of  Appeals  held  that  the  prior  act  constituted  a 
contract  between  Virginia  and  her  creditors  who  accepted  its  terms, 
and  was  upon  sufficient  considerations;  and  that  no  subsequent 
legislative  act  could  repeal  the  provision  that  the  coupons  issued 
should  be  receivable  for  taxes;  and,  accordingly,  sustained  the  per- 
emptory mandamus  which  had  been  awarded  compelling  the  sheriff 
to  receive  them.''^  But  in  subsequent  cases  the  court  held  that  the 
legislature  had  full  power  to  repeal  the  funding  act  as  against  all 
creditors  who  had  not  accepted  its  terms  at  the  time  of  such  repeal. 
And  in  still  more  recent  cases  (there  being  a  change  meantime  in  the 

46.  Antoni  v.  Wright,  22  Gratt.  833.  Bouldin,  J.,  with  whom  concurred 
Moncure  and  Christian,  JJ.,  delivered  the  opinion  of  the  court,  which  is  a  model 
of  judicial  style.  Staples,  J.,  dissented.  The  current  of  decisions  is  so  strong 
in  favor  of  the  views  stated  in  the  text  that  they  may  be  regarded  as  settling  the 
law.  Many  learned  lawyers  believe,  however,  that  they  rest  upon  a  mistaken 
notion — that  States  were  never  contemplated  as  contracting  parties,  in  that  clause 
of  the  Constitution  which  prohibits  the  passage  of  laws  by  States  which  impair 
the  obligation  of  contracts;  and  we  can  but  think  that  the  decisions  quoted  have 
sacrificed  the  spirit  to  the  letter  of  the  law,  and  shorn  States  of  their  sovereignty, 
under  color  of  a  constitutional  provision  only  designed  to  exact  good  faith  from 
individuals  in  their  deaUngs  with  one  another.  In  Clarke  v.  Tyler,  Sergeant, 
30  Gratt.  134,  it  was  held  that  coupons  attached  to  bonds  issued  under  the  Vir- 
ginia Funding  Act,  were  receivable  for  fines.  In  Williamson  v.  Massey,  Auditor, 
33  Gratt.  237,  the  above  decisions  were  reaffirmed,  and  it  was  held  that  an  act 
exempting  coupons  from  taxation  was  valid  under  the  Constitution  of  Virginia. 
In  Hartman  v.  Greenhow,  102  U.  S.  (12  Otto)  672,  the  Virginia  decisions  were 
approved;  and  a  statute  of  that  State  requiring  the  tax  on  the  bonds  of  the  State 
to  be  deducted  from  the  coupons  held  by  a  different  owner  was  held  void.  Antoni 
v.  Greenhow,  107  U.  S.  769,  2  Sup.  Ct.  Rep.  91;  Virginia  Coupon  Cases,  114  U.  S. 
269,  5  Sup.  Ct.  Rep.  903,  923-925,  928,  931,  932,  962,  1020;  McGahey  v.  Virginia, 
135  U.  S.  662,  10  Sup.  Ct.  Rep.  972;  McCullough  v.  Virginia,  172  U.  S.  106,  19 
Sup.  Ct.  Rep.  134;  Poindexter  v.  Greenhow,  114  U.  S.  270,  5  Sup.  Rep.  Ct.  903, 
962;  Marye  v.  Parsons,  114  U.  S.  325,  5  Sup.  Ct.  Rep.  932,  962;  Carter  v.  Green- 
how, 114  U.  S.  117,  5  Sup.  Ct.  Rep.  928,  962;  Moore  v.  Greenhow,  114  U.  S.  338, 
5  Sup.  Ct.  Rep.  1020;  Chappin  v.  Taylor,  116  U.  S.  550,  6  Sup.  Ct.  Rep.  518; 
Royal  V.  Virginia,  116  U.  S.  572,  6  Sup.  Ct.  Rep.  510;  Sand  v.  Edmonds,  116 
U.  S.  585,  6  Sup.  Ct.  Rep.  516;  Stewart  v.  Virginia,  117  U.  S.  612,  6  Sup.  Ct.  Rep. 
922;  In  re  Ayers,  123  U.  S.  443,  8  Sup.  Ct.  Rep.  164;  Wise  v.  Rogers,  24  Gratt. 
169;  Maury  v.  Rogers,  24  Gratt.  169. 


560         FEDERAL   AND    STATE    GOVERNMENTS   AS    PARTIES       §  448 

personnel  of  the  court)  the  earUer  decisions  were  reversed,  and  the 
doctrine  maintained  that  the  State  could  annul  the  receivability  of 
coupons  for  taxes. ^^  If  the  States  are  to  retain  their  autonomy,  their 
sovereign  control  of  taxation  is  indispensable. 

And  they  may  require  the  holders  of  coupons  on  State  bonds  to 
prove  their  genuineness.'*^ 

46.  Vashon  v.  Greenhow,  81  Va.  336;  Commonwealth  v.  McCullough,  90 
Va.  598,  19  S.  E.  114;  McGahey  v.  Commonwealth,  85  Va.  519,  8  S.  E.  244. 

47.  McGahey  v.  Commonwealth,  85  Va.  519;  Lambe  v.  Commonwealth,  85 
Va.  530. 


BOOK  III 

THE  NEGOTIATION   OF  THE  INSTRUMENT 
CHAPTER  XVII 

PRESENTMENT   FOR  ACCEPTANCE 

SECTION    I 

NATURE  OF  AND  NECESSITY  FOR  PRESENTMENT  FOE  ACCEPTANCE 

§449.  It  is  the  right  of  the  holder  of  a  bill  to  present  it  for,  and 
insist  on  its  acceptance,  even  so  late  as  the  day  before  .t  fa^ls  due     If 
not  presented  for  acceptance  until  the  day  it  falls  due  the  nght  to 
dland  acceptance  becomes  merged  in  the  right  to  demand  pay- 
ment    If  the  bill  be  presented  for  acceptance  before  ,t  falls  due,  >t 
becomes  dishonored  if  acceptance  be  refused;  and  not.ce  must  be 
forthwith  given  to  the  parties  whom  it  is  intended  to  charge.'    And 
u     may  ft  once  be  instituted  against  the  drawer,  and  agamst  the 
ndorTers.=    This  rule  of  commercial  law  is  so  general  and  bmd  ng 
hat  a  statute  of  a  State  which  forbids  a  suit  from  bemg  brought  m 
such  a  case  until  after  the  maturity  of  the  b.U,  can  have  no  effect 
upon  suits  brought  in  the  United  States  courts.    The  requisition  of  a 
State  statute  like  this  would  be  a  violation  of  the  ieneraUommerc.a 
law,  which  a  State  has  no  power  to  impose,  and  which  the  courts  of 
the  United  States  would  be  boundto  disregard.^    So  also  if  the  State 

1.  Chitty  on  Bills  (13th  Am.  ^.)':^;  OoodaU  v.  DoUey   1  T.  R  712.    S«= 

1.  ^niw  g     ;^    f  Washington  v.  Tnplett,  1  Pet.  25, 

SL?^.^m^air2  ?;.    ITO/Smith  v.  Roach,  7  B.  Mon.  17;  Laodnun  v. 

"rSr-Worarfv^.S;  K*.  „.  deea,    S.  al.  L-Ka.  V.  Lad^  2B 

^:,n^ri^-riiiiir"snt:-,"^i"se^ 

Heald,  1/ ATK.  ^y/,  i^diiuu  306,  the  drawer  of  a 

sr.re.c.r::sisTo™i"xfp^^^ 

Uable.     Vaughn  v.  Farmers'  &c.  Nat.  Bank  (Tex.  Civ.  App.),  126  S.  W. 
3.  Watson  v.  Tarpley,  18  How.  517. 

OR  561 


562  PRESENTMENT   FOR   ACCEPTANCE  §§  450,  451 

statute  seeks  to  make  the  right  of  recovery,  in  a  suit  brought  in  ease 
of  nonacceptance,  dependent  upon  proof  of  subsequent  presentment, 
protest,  and  notice  for  nonpayment.* 

§  450.  When  drawer  of  bill  requiring  presentment  for  accept- 
ance, bound  without  such  presentment. — Presentment  to  the 
drawee,  it  has  been  held,  is  necessary,  even  though  the  drawer  has 
requested  him  not  to  accept;  ^  but  the  holder  is  not  bound  to  present 
again  after  refusal  to  accept  and  notice  given,  even  though  the  drawer 
requests  him  to  do  so,  and  promises  that  the  bill  shall  be  honored.® 

The  only  cases  in  which  the  holder  of  a  bill  which,  according  to  its 
tenor,  should  be  presented  for  acceptance,  can  charge  the  drawer 
without  presenting  it  for  acceptance,  arise  when  the  relations  between 
the  drawer  and  drawee  are  such  as  to  constitute  the  drawing  of  the 
bill  a  fraud  upon  the  holder.^  When  the  bill  is  presented  the  accept- 
ance must  be  according  to  its  tenor  to  pay  in  money.  If  it  be  to  pay 
by  another  bill,  it  is  no  acceptance,  and  the  bill  should  be  protested.^ 

§  451.  Effect  of  acceptance. — Before  acceptance  the  drawee  is 
under  no  liability  to  accept,  unless  he  has  specially  contracted  to 
do  so,  and  the  holder,  as  it  is  generally  held,  cannot  sue  him,  even 
though  he  have  funds  of  the  drawer  in  his  hands.^  But  an  acceptance 
operates  as  a  full  legal  assignment  of  the  amount  to  the  holder,  and 
the  acceptor  is  bound  to  pay  it.^°  It  has  been  much  debated  whether 
or  not  a  bill  before  acceptance  operates  as  an  assignment  when  drawn 
upon  funds  of  the  amoimt  it  calls  for;  and  it  seems  to  be  settled  by  the 
authorities  that  if  drawn  for  the  whole  amount  it  operates  as  an  equi- 
table assignment,  which  will  take  precedence  of  any  subsequent  lien 
or  charge  upon  them;  ^^  and  that  after  notice  to  the  drawee  it  will 

4.  Ibid. 

6.  HiU  V.  Heap,  Dowl.  &  R.  N.  P.  57.    See  1  Parsons  on  Notes  and  Bills,  338. 

6.  Hickligg  V.  Hardey,  7  Taunt.  312. 

7.  Smith  on  Mercantile  Law  (Holcombe  &  Gholson's  ed.),  304;  Bank  of  Wash- 
ington V.  Triplett,  1  Pet.  25. 

8.  Russell  V.  Phillips,  14  Q.  B.  891. 

9.  Mandeville  v.  Welch,  5  Wheat.  277;  Schimmelpennich  v.  Bayard,  1  Pet. 
264;  Tiernan  v.  Jackson,  5  Pet.  580.  The  case  of  Corser  v.  Craig,  1  Wash.  C.  C. 
424,  has  been  overruled.  Luff  v.  Pope,  5  Hill,  413,  7  Hill,  577;  New  York  and 
Virgmia  State  Bank  v.  Gibson,  5  Duer,  574;  Harris  v.  Clark,  3  N.  Y.  93. 

10.  See  vol.  1,  §§  15,  78  et  seq. 

11.  Mandeville  v.  Welch,  5  Wheat.  277;  Anderson  v.  De  Soer,  6  Gratt.  364; 
Gibson  v.  Cooke,  20  Pick.  15.    See  ante,  chapter  1,  section  III,  §  15  et  seq. 


§§  452,  453  FORMALITIES  OF  PRESENTMENT  FOR  ACCEPTANCE    563 

bind  him.^2  And  it  has  been  so  held  of  a  draft  nonnegotiable.^^  But 
when  a  bill  is  for  only  a  part  of  the  drawer's  funds,  it  is  said  that  it 
does  not  operate  as  an  assignment  against  the  drawee,  unless  he 
accepts,  for  the  reason  that  the  creditor  cannot  be  permitted  without 
the  debtor's  assent  to  split  up  one  cause  of  action  into  several.^* 
Where  the  draft  is  not  negotiable,  the  weight  of  authority  is  to  this 
effect. ^^  This  subject  has  been  fully  discussed  in  a  previous  portion 
of  this  work.^^ 

§  452.  Effect  of  failvire  to  present  for  acceptance. — Whenever 
it  is  incumbent  on  the  holder  to  present  the  bill  for  acceptance  or 
payment,  if  he  fails  to  do  so  at  the  proper  time,  he  will  lose  not  only 
his  remedy  on  the  bill,  but  also  on  the  consideration  or  debt  in  respect 
of  which  it  was  given  or  transferred.^^  This  doctrine  is  well  settled, 
and  was  well  expressed  in  an  Arkansas  case,  where  Scott,  J.,  said: 
"  In  case  a  plaintiff  has  lost  by  his  own  laches  his  legal  recourse  against 
the  defendant  upon  the  bill  or  note,  it  is  m  vain  that  he  brings  it  into 
court  and  offers  to  cancel  it,  with  the  expectation  of  being  allowed, 
after  cancellation,  to  proceed  to  recover  on  the  original  consideration. 
As  well  might  he  hope,  by  such  means,  to  revive  a  cause  of  action  that 
had  been  barred  by  the  statute  of  limitations."  ^^ 


SECTION  II 

FORMALITIES  OF  PRESENTMENT  FOR  ACCEPTANCE 

§  453.  In  order  that  every  step  in  the  procedure  may  be  properly 
taken,  it  is  important  to  consider:  (1)  What  bills  must  be  presented 
for  acceptance;  (2)  By  and  to  whom  such  presentment  should  be 
made;  (3)  The  place  where  such  presentment  should  be  made;  and 
(4)  The  manner  of  making  presentment  for  acceptance. 

12.  Ibid. 

13.  Cutts  V.  Perkins,  12  Mass.  209;  Morton  v.  Naylor,  1  Hill,  583. 

14.  Story,  J.,  in  Mandeville  v.  Welch,  5  Wheat.  277;  Gibson  v.  Cooke,  20  Pick. 
15. 

15.  1  Parsons  on  Notes  and  Bills,  334. 

16.  Section  15  et  seq. 

17.  Adams  v.  Darby,  28  Mo.  182;  Smith  v.  Miller,  43  N.  Y.  171  (1870),  52 
N.  Y.  546  (1873);  Cambidge  v.  Allenby,  6  B.  &  C  373;  Darrach  v.  Savage,  1 
Show.  155  (1691);  Benjamin's  Chalmers'  Digest,  149.    See  §§  971,  1276. 

18.  Oracle  v.  Sandford,  9  Ark.  238  (1848);  Adams  v.  Boyd,  33  Ark.  33. 


564  PRESENTMENT   FOR   ACCEPTANCE  §  454 

§  454.  In  the  first  place,  as  to  what  bills  should  be  presented  for 
acceptance. — Bills  payable  on  demand  (which  are  immediately 
payable  on  presentment),  or  payable  at  a  certain  number  of  days 
after  date,  or  after  any  other  certain  event,  or  payable  on  a  day 
certain,  need  not  be  presented  for  acceptance  at  all,  but  only  for 
payment.  And  the  fact  that  such  bills  are  payable  at  a  bank,  or  other 
particular  place,  does  not  alter  the  rule  on  the  subject, ^^  But  it  is 
usual  and  best,  when  the  bill  is  payable  at  a  future  day,  to  present 
it  for  acceptance,  in  order  to  ascertain  whether  it  will  certainly  be 
honored,  and  to  procure  the  assurance  of  the  acceptor's  liability. -° 
And  in  such  cases,  if  acceptance  be  refused,  the  holder  must  make 
protest,  and  give  notice  in  the  same  manner  as  if  the  bill  were  payable 
at  so  many  days  after  sight.^^ 

Bills  payable  at  sight,  or  at  so  many  days  after  sight,  or  after 
demand,  or  after  any  other  event  not  absolutely  fixed,  must  be  pre- 
sented to  the  drawee  for  acceptance  and  payment,  or  for  acceptance 
only,  without  unreasonable  delay,  or  the  drawer  and  indorsers  will  be 
discharged,  for  they  have  an  interest  in  having  the  bills  accepted 
immediately  in  order  to  shorten  the  time  of  payment,  and  thus  put  a 
limit  to  the  period  of  their  liabiUty;  and  also  enable  them  to  protect 
themselves  by  other  means  before  it  is  too  late,  if  the  bill  is  not  ac- 
cepted and  paid  within  the  time  originally  contemplated  by  them.^^ 

19.  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Townsley  v.  Sumrall,  2  Pet. 
170;  Allen  v.  Suydam,  20  Wend.  321;  Batchellor  v.  Priest,  12  Pick.  399;  Bank  of 
Bennington  v.  Raymond,  12  Vt.  401;  Smith  v.  Roach,  7  B.  Mon.  17;  Carmichael  v. 
Bank  of  Pennsylvania,  4  How.  (Miss.)  567;  Glasgow  v.  Copeland,  8  Mo.  268; 
Orr  V.  Maginnis,  7  East,  362;  Dunn  v.  O'Keefe,  5  Maule  &  S.  282;  Walker  v. 
Stetson,  19  Ohio  St.  400;  Story  on  Bills,  §  228.  It  not  being  necessary  to  present  a 
bill  payable  on  a  day  certain  for  acceptance,  an  agreement  not  to  present  it  for 
acceptance  will  not  discharge  an  indorser,  although  the  drawee  says  it  will  not  be 
accepted  or  paid.  Fall  River  Bank  v.  Willard,  5  Mete.  (Mass.)  216.  An  order  or 
draft,  having  no  time  of  payment  expressed,  is  payable  on  demand,  and  does  not 
need  to  be  presented  for  acceptance.  Westberg  v.  Chicago  Lumber  &  Coal  Co., 
117  Wis.  589,  94  N.  W.  572,  citing  text. 

20.  United  States  v.  Barker,  4  Wash.  C.  C.  464;  Story  on  Bills,  §  228. 

21.  Glasgow  v.  Copeland,  8  Mo.  268;  Allen  v.  Suydam,  20  Wend.  321;  United 
States  V.  Barker,  4  Wash.  C.  C.  464;  Landrum  v.  Trowbridge,  2  Mete.  (Ky.)  281; 
Philpott  V.  Bryant,  3  Car.  &  P.  244,  in  which  case  Park,  J.,  said:  "I  should 
destroy  half  the  trade  of  the  city  of  London,  if  I  were  to  hold  that  bills  made 
payable  so  many  days  after  date  must  be  presented  for  acceptance." 

22.  Allen  v.  Suydam,  20  Wend.  321;  Aymar  v.  Beers,  7  Cow.  705;  Robinson 
V.  Ames,  20  Johns.  146;  Wallace  v.  Agry,  4  Mason,  336,  5  Mason,  118;  Mitchell 
V.  Degrand,  1  Mason,  176;  Bell  v.  First  Nat.  Bank,  115  U.  S.  379;  Story  on  Bills, 
§  228.    Whether  or  not  bills  payable  at  sight  are  entitled  to  grace,  is  a  question 


§  455      FORMALITIES   OF   PRESENTMENT   FOR   ACCEPTANCE        565 

When  the  words  "acceptance  waived"  are  embodied  in  a  bill,  the 
ordinary  proceedings  in  acceptance  are  dispensed  with,  and  merged 
into  those  of  payment  or  nonpayment.^^ 

§  455.  In  the  second  place,  as  to  the  person  by  and  to  whom  pre- 
sentment for  acceptance  should  be  made. — The  bill  must  be  pre- 
sented by  the  holder  or  his  authorized  agent,  and  to  the  drawee  or 
his  authorized  agent.-^  The  party  in  possession  of  the  bill  is  with 
ostensible  legal  title  thereto,  presumed  to  be  the  holder,  and  to  have 
the  right  to  make  presentment  for  acceptance  or  payment. ^^  The 
drawee  may  accept  without  risk,  and  if  he  refuse,  the  protest  will 
inure  to  the  benefit  of  the  rightful  holder.^^  If  the  drawee  cannot  be 
found,  and  any  person  has  been  uidicated  to  be  resorted  to  in  case  of 
need  (au  besoin),  the  bill  should  be  presented  to  that  person. ^^ 

If  the  bill  be  drawn  upon  two  persons  not  partners,  it  seems  that 
it  must  be  presented  to  both,  if  not  paid  by  the  first;  ^  but  this  has 
been  doubted,  for  the  reason  that  the  holder  would  not  be  bound  to 
take  the  single  acceptance  of  the  other;  and  if  he  did,  it  would  be  at 
his  own  risk,  if  the  bill  were  not  protested.  ^^  But  if  the  bill  be  drawTi 
upon  a  firm,  presentment  to  any  partner  is  sufficient,^°  and  the  fact 

about  which  authorities  differ,  though  preponderating  in  favor  of  the  allowance  of 
grace.    See,  on  this  subject,  chapter  XX,  on  Presentment  for  Payment,  section 

IV,  §  617;  Benjamin's  Chalmers'  Digest,  149;  Citizens'  Nat.  Bank,  etc.,  v.  Third 
Nat.  Bank,  etc.,  19  Ind.  App.  69,  49  N.  E.  171,  citing  text. 

23.  Webb  v.  Mears,  9  Wright,  222;  Deneyre  v.  Milno,  10  La.  Ann.  324;  English 

V.  WaU,  12  Rob.  (La.)  132;  Liggett  v.  Weed,  7  Kan.  276;  Carson  v.  Russell,  26 
Tex.  472. 

24.  Hofrichter  v.  Enyeart,  71  Nebr.  771,  99  N.  W.  658. 

25.  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Freeman  v.  BojTiton,  7  Mass. 
483;  Agnew  v.  Bank  of  Gettysburg,  2  Harr.  &  Gill,  478.  See  chapter  XX,  on 
Presentment  for  Payment,  section  I,  §  572  et  seq.  A  presentment  made  by  the 
lawfully  authorized  agent  of  the  rightful  holder  is  a  legal  one,  and  if  he  was  not 
the  authorized  agent,  the  presentment  would  inure  to  the  benefit  of  the  rightful 
holder,  whoever  he  might  be.  Milin's  Nat.  Bank  v.  Cobbs,  53  Tex.  Civ.  App. 
1,  115  S.W.  345  (1909). 

26.  Chitty  on  Bills  (13th  Am.  ed.),  311. 

27.  Story  on  Bills,  §  229;  Edwards  on  Bills,  402. 

28.  Willis  V.  Green,  5  Hill,  232;  Storj-  on  Bills,  §  229.  See  Union  Bank  v. 
Willis,  8  Mete.  (Mass.)  504;  Arnold  v.  Dresser,  8  Allen,  435;  Gates  v.  Beecher, 
60  N.  Y.  523;  Am.  Law  Reg.,  July,  1875,  p.  440. 

29.  Story  on  Bills,  §  229,  note  9.  See,  on  this  subject,  Harris  v.  Clark,  10 
Ohio,  5;  and  Greenough  v.  Smead,  3  Ohio  St.  415. 

30.  Greatlake  v.  Brown,  2  Cranch  C.  C.  541;  Story  on  Notes,  §  239;  1  Parsons 
on  Notes  and  Bills,  135;  Holtz  v.  Boppe,  37  N.  Y.  634. 


566  PRESENTMENT   FOR   ACCEPTANCE  §§  456-458 


that  the  firm  has  been  dissolved  by  bankruptcy  does  not  render  it 
necessary  to  present  the  bill  to  both. 


31 


§  456.  Presentment  for  acceptance  to  agent. — The  holder  must 
be  careful,  when  he  does  not  find  the  drawee  in  person,  to  assure 
himself  that  the  party  to  whom  he  presents  the  bill  for  acceptance 
is  his  authorized  agent.  And  though  in  the  case  of  a  presentment 
for  payment  it  may  suffice  to  demand  payment  at  the  residence  of 
the  acceptor,  yet  in  case  of  a  presentment  for  acceptance,  the  holder 
must  endeavor  to  see  the  drawee  or  his  authorized  agent,  person- 
ally. And,  therefore,  where  in  an  action  against  the  drawee  on  a 
refusal  to  accept,  it  appeared  that  the  witness  had  carried  the  bill 
to  a  place  which  was  described  to  him  as  the  drawee's  house,  and 
that  he  offered  it  to  a  person  in  a  tanyard,  who  refused  to  accept 
it,  and  the  witness  did  not  know  the  drawee's  person,  nor  could 
he  swear  that  the  person  to  whom  he  offered  the  bill  was  he,  or 
represented  himself  to  be  so,  it  was  held  that  the  evidence  of  present- 
ment to  the  drawee  for  acceptance  was  insuflScient.^^ 

§  457.  Presentment  to  clerk  in  counting-room. — There  is  no 
doubt  that  a  clerk  found  at  the  drawee's  counting-room  is  a  com- 
petent party  for  the  bill  to  be  presented  to,  and  to  refuse  acceptance 
of  it;  and  it  seems  that  it  is  not  necessary  to  show  that  such  clerk  was 
the  clerk  of  the  drawee  authorized  to  accept  or  refuse  acceptance  of 
bills;  but  parol  evidence  is  admissible  to  prove  that  the  clerk  was  au- 
thorized to  refuse  acceptance.  ^^ 

§  458.  Presentment  for  acceptance  in  case  of  drawee's  death. — 

Chitty  says,  and  Byles  quotes  his  words  with  approval,  that  "if  on 
presentment  it  appear  that  the  drawee  is  dead,  the  holder  should 
inquire  after  his  personal  representative,  and,  if  he  live  within  a 
reasonable  distance,  should  present  the  bill  to  him."  ^'^  Story  states 
that  the  drawee's  death  will  be  "no  excuse  for  the  omission  of  pre- 
sentment of  the  bill  for  acceptance,"  ^^  and  Roscoe  considers  that 

31.  Gates  v.  Beecher,  60  N.  Y.  523. 

32.  Cheek  v.  Roper,  5  Esp.  175. 

33.  Nelson  v.  Fotterall,  7  Leigh,  180;  Stainback  v.  Bank  of  Virginia,  11  Gratt. 
260. 

34.  Chitty  on  Bills  (13th  Am.  ed.),  [*280],  318,  citing  Molloy,  chap.  2,  c.  10, 
§  34;  Pothier  Pleadings,  146;  Byles  (Sharswood's  ed.),  [*177],  303;  Story  on  Bills, 
§236. 

35.  Story  on  Bills,  §§  230,  236. 


§  459      FORMALITIES   OF   PRESENTMENT   FOR   ACCEPTANCE        567 

"the  cases  with  regard  to  presentment  of  bills  where  the  party  is 
dead,  etc.,  apply  also  to  presentment  for  acceptance."  ^^  But  it 
has  well  been  observed  on  this  subject  by  Edwards  that  "upon 
principle,  it  is  not  easy  to  see  upon  what  ground  the  holder  is  bound 
to  present  a  bill  drawn  upon  the  deceased  to  his  executor  or  ad- 
ministrator for  acceptance.  An  acceptance  by  the  representative, 
binding  himself  personally,  is  not  according  to  the  tenor  of  the  bill ; 
neither  is  an  acceptance  qualified  so  as  to  render  him  responsible  to 
pay  out  of  the  assets  that  may  come  into  his  hands."  "  The  holder 
could  not  be  bound  to  take  the  representative's  acceptance  in  either 
form,  and  it  would  be  reasonable  to  hold  that  where  the  drawee  was 
dead  the  bill  might  be  protested,  and  recourse  had  against  the  other 
parties. 

§  459.  In  the  third  place,  as  to  the  place  where  presentment  for 
acceptance  may  be  made;  Sergeant  Onslow's  act.— It  was  at  one 

time  a  question  much  litigated  in  England,  whether,  if  a  bill  payable 
generally— that  is,  without  specification  of  a  place  of  payment — was 
accepted  payable  at  a  particular  place,  such  an  acceptance  was  a 
qualified  one.  It  was  decided  in  the  House  of  Lords  (contrary,  how- 
ever, to  the  opinion  of  eight  of  the  twelve  judges  to  whom  the  question 
was  referred),  that  such  an  acceptance  was  a  qualified  one,  and  that 
a  demand  at  the  particular  place  named  was  a  condition  precedent 
to  a  recovery  against  the  acceptor,  as  well  as  against  the  drawer  and 
indorser.3^  'pjjis  decision  led  to  the  passage  of  the  statute  of  1  and  2 
Geo.  IV.,  c.  78  (called  Sergeant  Onslow's  act),  in  which  it  was  recited 
that  the  practice  and  understanding  of  merchants  had  been  different; 
and  enacted  that  an  acceptance  payable  at  a  particular  place  without 
further  expression,  should  not  be  deemed  a  conditional  acceptance; 
but  if  it  were  payable  at  a  specified  place  "only,  and  not  otherwise,  or 
elsewhere,"  it  should  be  deemed  conditional. 

36.  Roscoe  on  Bills,  146,  147. 

37.  Edwards  on  Bills,  401.  See  also  Edwards  on  Bills,  454,  note  2.  In  Thomp- 
son on  Bills,  282,  it  is  said:  " It  has  been  said  that  if  the  drawee  is  dead  the  holder 
should  present  it  to  his  nearest  heirs,  and  protest  it  on  their  refusal  to  accept, 
though  they  have  not  yet  taken  up  his  succession.  This  should  certainly  be  done 
where  the  drawee's  heirs  have  taken  up  his  succession.  But  otherwise,  there  is  no 
person  representing  him,  as  to  the  bill,  and  the  presentment  of  it  then  appears  as 
futile  as  if  made  to  a  stranger.  In  such  a  case,  it  seems  necessary  that  a  holder 
should,  within  a  reasonable  time,  notify  to  the  other  parties  the  drawee's  death, 
by  which  presentment  has  become  impossible." 

38.  Rowe  V.  Young,  2  Brod.  &  B.  165,  2  Bligh,  391. 


568  PRESENTMENT   FOR   ACCEPTANCE  §§  460-462 

§  460.  American  statutes  and  decisions  as  to  place  of  presentment 
for  acceptance. — In  many  of  the  States  of  the  United  States  the 
English  statute  has  been  substantially  enacted;  and  the  courts,  with 
few  exceptions,  have,  independently  of  statute,  followed  the  judgment 
of  the  eight  judges  against  the  House  of  Lords.  Therefore,  by  the 
American  law,  it  is  settled  that  demand  of  payment  at  the  place 
specified  need  not  be  averred  by  the  plaintiff;  but  if  the  acceptor  was 
at  the  place  at  the  time  specified,  and  ready  to  pay  the  money,  it  was 
a  matter  of  defense  to  be  pleaded  on  his  part;  which  defense,  however, 
is  no  bar  to  the  action,  but  goes  only  in  reduction  of  damages,  and  in 
prevention  of  costs.^^  This  subject  will  be  more  fully  discussed  when 
we  come  to  consider  presentment  for  payment. 

But  at  any  rate,  the  presentment  of  the  bill  or  note  for  acceptance 
should  be  at  the  place  of  the  domicile  of  the  drawee,  whether  it  be 
payable  generally,  or  at  a  particular  place — the  place  of  payment 
being  immaterial  until  after  acceptance.^"^  If  the  drawee  has  removed 
his  residence  from  the  place  to  which  it  is  addressed — or  really  resided 
at  a  different  place — the  bill  should  be  presented  at  his  new  or  real 
place  of  domicile,  if  the  holder  can  ascertain  it  by  diligent  inquiries/^ 
If  by  such  inquiries  the  drawee's  place  of  domicile  cannot  be  ascer- 
tained, or  if  he  has  absconded,  the  bill  may  be  treated  as  dishonored.^^ 

§  461.  Presentment  for  acceptance  may  be  either  at  the  dwelling 
or  the  place  of  business  of  the  drawee. — If  the  drawee  has  his 
dwelling-house  in  one  part  of  the  town  or  city,  and  his  place  of  busi- 
ness at  another,  it  may  be  made  at  either  place;  and  if  the  drawee 
resides  in  one  town,  and  has  his  place  of  business  at  another,  the 
holder  may  present  the  bill  at  either.*^ 

§  462.  How  presentment  for  acceptance   should   be   made. — 

The  holder  of  the  bill  should  have  it  in  his  possession,  make  an  actual 
exhibit  of  it  to  the  drawee,  and  request  its  acceptance.^^    "The  term 

39.  See  1  Parsons  on  Notes  and  Bills,  305-311;  Story  on  Bills,  §§355-357; 
Byles  on  Bills  (Sharswood's  ed.),  318,  319,  and  341-346;  Edwards  on  Bills,  426, 
428;  Bayley,  115.  In  Indiana,  the  House  of  Lords  has  been  followed.  See  Pre- 
sentment for  Payment,  chapter  XX,  section  V. 

40.  Chitty  on  Bills  (13th  Am.  ed.),  316. 

41.  Anderson  v.  Drake,  14  Johns.  114;  Freeman  v.  Boynton,  7  Mass.  483; 
Bateman  v.  Joseph,  12  East,  433. 

42.  Ibid.;  Chitty,  316. 

43.  Story  on  Bills,  §  236. 

44.  1  Parsons  on  Notes  and  Bills,  348. 


§§  463,  464      TIME    OF   PRESENiMENT   FOR   ACCEPTANCE  569 

'presentment'  imports  not  a  mere  notice  of  the  existence  of  a  draft 
which  the  party  has  in  his  possession,  but  the  exhibiting  of  it  to  the 
person  on  whom  it  is  drawn,  that  he  may  see  the  same,  and  examine 
his  accounts  or  correspondence,  and  judge  what  he  shall  do;  whether 
he  shall  accept  the  draft  or  not."  ^^  But  while  it  is  better  in  all  cases 
to  avoid  all  question  by  observance  of  the  formality  indicated,  the 
drawer  and  indorsers  may  be  charged  by  due  protest  and  notice  where 
the  bill  is  not  thus  actually  exhibited  to  the  drawee,  but  he  is  enabled 
by  seeing  it  or  otherwise  to  give,  and  does  give,  an  intelligent  response 
to  the  request  to  accept  it.^ 

§  463.  Production  of  bill. — If  the  holder  does  not  produce  the 
bill,  the  drawee  may  require  him  to  do  so,  and  decline  accepting,  save 
in  the  proper  form  by  writing  his  name  on  its  face;  and  then  unless 
the  holder  produces  it  the  drawer  cannot  be  charged  with  the  penalties 
of  nonacceptance;  but  if  the  drawee  makes  no  such  requirement  and 
does  what  is  equivalent  to  acceptance  he  cannot  afterward  refuse  to  be 
held  on  the  ground  that  he  did  not  see  the  bill.'^'^ 

If  the  holder  leave  the  bill  with  the  acceptor,  and  by  his  negUgence 
enable  a  third  party  to  get  possession  of  it,  he  cannot  hold  the  acceptor 
liable  in  an  action  of  trover.^ 

Either  one  of  a  set  of  bills  may  be  presented  and  accepted;  and  the 
indorsement  of  one  of  a  set  carries  all,  and  indorsee  may  maintain 
trover  for  the  rest.^^ 

SECTION   III 

TIME  OF  PRESENTMENT  FOR  ACCEPTANCE 

§  464.  In  connection  with  the  time  of  presentment  for  acceptance, 
we  shall  consider  (1)  the  time  of  day  for  such  presentment,  and  (2)  the 
period  of  time  within  which  such  presentment  must  be  made. 

45.  Fall  River  Union  Bank  v.  Willard,  5  Mete.  (Mass.)  216;  Edwards  on 
Bills,  505. 

46.  Fisher  v.  Beckwith,  19  Vt.  31;  Carmichael  v.  Bank  of  Pennsylvania,  4 
How.  (Miss.)  567;  First  Nat.  Bank  v.  Hatch,  76  Mo.  22,  citing  the  text. 

47.  Fall  River  Union  Bank  v.  Willard,  5  Mete.  (Mass.)  216;  Golsen  v.  Golsen, 
127  111.  App.  84. 

48.  Morrison  v.  Buchanan,  6  Car.  &  P.  18. 

49.  Downes  &  Co.  v.  Church,  13  Pet.  205;  Walsh  v.  Blatchley,  6  Wis.  422; 
Perreira  v.  Jopp,  cited  in  10  B.  &  C.  450;  Chitty,  Jr.,  1477;  Edwards  on  Bills,  304 
and  165. 


570  l^RESENTMENT   FOR   ACCEPTANCE  §§  464a,  465 

§  464a.  Time  of  day  for  presentment  for  acceptance :  business 
hours. — And  in  the  first  place:  presentment  for  acceptance  should 
in  all  cases  be  made  during  the  usual  hours  of  business,  and  such 
hours,  except  where  presentment  must  be  at  a  bank,  generally  range 
through  the  whole  day  to  hours  of  rest  in  the  evening.^"  Eight  o'clock 
in  the  evening  would  not  be  too  late  to  present  a  bill  for  acceptance 
to  a  tradesman.^^  And  it  matters  not  at  what  hour  it  is  made,  pro- 
vided an  answer  be  given  by  an  authorized  person.^-  But  it  is  a  mere 
nullity  if  made  at  an  unreasonable  hour — after  bedtime  or  business 
hours — if  no  such  answer  be  given. ^^  If  there  is  a  known  custom  or 
usage  in  a  town  or  city,  which  regulates  business  hours,  that  should 
govern  in  determining  the  proper  hour  for  presentment  at  the  drawee's 
place  of  business.^^ 

§  465.  Within  what  period  of  time  presentment  for  acceptance 
must  be  made. — It  seems  to  be  the  general  commercial  law  of  the 
civilized  world,  that  when  a  bill  is  payable  at  a  day  certain — as,  for 
instance,  on  a  day  named,  or  a  fixed  day  after  date — it  need  not  be 
presented  until  the  day  of  payment,  in  order  to  charge  the  drawer  or 
an  indorser.^^  The  reason  of  this  is  that  the  drawer,  by  fixing  a  day 
certain  for  payment,  assumes  the  responsibility  of  providing  funds  at 
that  time,  whatever  may  have  been  his  previous  credit  with  the 
drawee.  And  as  to  the  indorser,  by  the  very  act  of  indorsement,  he 
draws  a  new  bill  on  the  same  terms;  and,  besides,  he  waives  his  right 
of  immediate  acceptance  by  not  enforcing  it  himself,  but  putting  his 
bill  into  circulation  without  acceptance.^^  There  are,  however,  two 
exceptions  to  this  general  rule  that  it  is  not  necessary  to  present  a  bill 
payable  at  a  fixed  time  for  acceptance,  but  only  at  maturity  for  pay- 
ment :  First,  when  there  is  an  express  direction  to  the  payee  or  holder 

50.  Elford  V.  Teed,  1  Maule  &  S.  28,  6  Maule  &  S.  44;  Parker  v.  Gordon,  7 
East,  385;  Cayuga  County  Bank  v.  Hunt,  2  Hill,  635.  See  chapter  XX,  on  Pre- 
sentment for  Payment,  section  III;  Edwards  on  Bills,  399. 

51.  Chitty  on  Bills  [*313]. 

52.  Chitty  on  Bills  [*316]. 

53.  Story  on  Bills,  §  237. 

54.  Story  on  Bills,  §§  236,  349;  Story  on  Notes,  §  135. 

55.  Townsley  v.  Sumrall,  2  Pet.  178;  Goupy  v.  Harden,  7  Taunt.  159;  Bachellor 
V.  Priest,  12  Pick.  399.  Presentment  for  payment  and  presentment  for  acceptance 
are  two  different  acts,  and  presentment  for  acceptance  must  be  made  before  the 
instrument  presented  for  acceptance  is  due.  First  Nat.  Bank  of  Omaha  v.  Whit- 
more,  177  Fed.  397. 

56.  Verplanck,  Senator,  in  Allen  v.  Suydam,  17  Wend,  368,  20  Wend.  321. 


§  466  TIME    OF   PRESENTMENT   FOR   ACCEPTANCE  571 

of  a  bill;  and,  second,  when  it  is  put  into  the  hands  of  an  agent  for 
negotiation.  If  payable  at  sight,  or  at  a  certain  time  after  sight,  or 
on  demand,  the  only  rule  which  can  be  laid  down  is  that  it  must  be 
presented  within  a  reasonable  time,"  unless  there  be  some  well- 
established  usage  of  trade  which  fixes  a  definite  time  for  such  present- 
ment, in  which  case  such  usage  would  control.^^  If  the  bill  be  not 
presented  within  a  reasonable  time,  the  drawee  is  discharged,  although 
all  the  parties  continue  solvent,  and  there  is  no  damage  caused  by  the 
delay.^^ 

Under  Negotiable  Instrument  statute. — Under  the  provisions  of  the 
statute,^"  it  has  been  held  that  though  the  date  of  payment  of  a  bill 
of  exchange  is  fixed,  it  may  be  presented  at  any  time,  and  if  the  drawee 
refuses  to  accept  it,  the  bill  may  be  treated  as  dishonored.^^ 

§  466.  General  rule  as  to  reasonable  time ;  when  question  of  law 
and  when  question  of  fact. — "What  reasonable  time  is,"  said 
Story,  J.,  in  a  case  before  the  United  States  Circuit  Court,^^  "depends 
upon  the  circumstances  of  each  particular  case,  and  no  definite  rule 
has  been  as  yet  laid  down,  or  indeed  can  be  laid  down  to  govern  all 
cases.  The  question  is  a  question  of  fact  for  the  jury,  and  not  of  law 
for  the  abstract  decision  of  the  court.  Such,  I  take  it,  is  the  doctrine 
of  the  authorities."  ^^  A  more  accurate  statement  of  the  rule,  as  we 
conceive,  is  that  of  Bigelow,  J,,  in  a  Massachusetts  case:^*  "Ordin- 
arily," says  he,  "the  question  whether  a  presentment  was  within  a 

57.  Wallace  v.  Agry,  4  Mason,  336;  Mullick  v.  Radakissen,  9  Moore  P.  C. 
66;  Bridgeport  Bank  v.  Dyer,  19  Conn.  136. 
68.  Mellish  v.  Rawdon,  9  Bing.  416. 

59.  Mullick  V.  Radakissen,  9  Moore  P.  C.  66,  28  Eng.  L.  &  Eq.  86;  Carter  v. 
Flower,  16  M.  &  W.  743;  Thomburg  v.  Emmons,  23  W.  Va.  333,  citing  the  text. 

60.  Appendix,  sees.  159,  150,  151. 

61.  National  Park  Bank  v.  Saitta,  111  N.  Y.  S.  927, 127  App.  Div.  624,  affirmed 
196  N.  Y.  548,  89  N.  E.  1106,  the  lower  court  quoting  from  Allen  v.  Suydam,  17 
Wend.  (N.  Y.)  368:  "Although,  when  such  bill  is  made  payable  at  a  day  certain 
at  a  fixed  time  after  its  date,  presentment  for  acceptance  before  that  time  is  not 
necessarj'  in  order  to  charge  the  drawer  or  indorsers,  it  is  to  the  owner's  interest 
that  the  bill  should  be  so  accepted,  as  only  by  accepting  it  does  the  drawee  become 
bound  to  pay  it,  and  until  such  acceptance  the  owner  has  for  his  debtor  only  the 
drawer,  and  the  step  is  one  which  a  prudent  man  of  business,  ordinarily  careful 
of  his  own  interests,  would  take  for  his  protection." 

62.  Wallace  v.  Agry,  4  Mason,  336. 

63.  Fry  v.  Hill,  7  Taunt.  397;  Goupy  v.  Harden,  7  Taunt.  159;  Muilman  v. 
D'Egmno,  2  H.  Bl.  565;  Fernandez  v.  Lewis,  1  McCord,  322;  Nicholas  v.  Black- 
more,  27  Tex.  586. 

64.  Prescott  Bank  v.  Caverly,  7  Gray,  217. 


572  PRESENTMENT   FOR   ACCEPTANCE  §§  467,  468 

reasonable  time,  is  a  mixed  question  of  law  and  fact,  to  be  decided  by 
the  jury,  under  proper  instructions  from  the  court.  And  it  may  vary 
very  much,  according  to  the  particular  circumstances  of  each  case. 
If  the  facts  are  doubtful  or  in  dispute,  it  is  the  clear  duty  of  the  court 
to  submit  them  to  the  jury.  But  when  they  are  clear  and  uncontra- 
dicted, then  it  is  competent  for  the  court  to  determine  whether  the 
time  required  by  law  for  the  presentment  has  been  exceeded  or  not."  ^^ 
"In  this  State"  (New  York),  says  Edwards  on  Bills,  391,  "the 
question  is  considered  one  of  law  to  be  decided  by  the  court,"  quoting 
Aymar  v.  Beers,  7  Cow.  705.  The  cases  cited  in  Aymar  v.  Beers  in 
support  of  this  doctrine  related  to  notice.  The  principle  of  the  text 
seems  to  us  far  more  reasonable. 

§  467.  Due  diligence  must  be  exercised. — It  is  not  necessary 
for  the  holder  to  take  the  first  opportunity  to  present  for  acceptance,^ 
though  to  avoid  question  in  case  of  loss  it  is  advisable  to  do  so — due 
diligence — that  is,  presentment  within  a  reasonable  time,  is  all  that 
is  necessary.  "The  distinction  is,"  as  was  said  by  Gibbs,  C.  J., 
"between  bills  payable  at  a  certain  number  of  days  after  date,  and 
bills  payable  at  a  certain  number  of  days  after  sight.  In  the  former, 
the  holder  is  bound  to  use  all  due  diligence,  and  present  the  bill  at 
maturity ;  but  in  the  latter  case,  he  has  a  right  to  put  the  bill  into  cir- 
culation before  he  presents  it,  and  then,  of  course,  it  is  uncertain  when 
it  will  be  presented  to  the  drawee.  It  is  to  the  prejudice  of  the  holder 
if  he  delays  to  do  it,  and  he  loses  his  money  and  interest."  ^"^ 

§  468.  Circumstances  affecting  reasonable  time  for  presentment 
for  acceptance. — There  are  certain  circumstances  which  may  affect 

65.  The  rule  as  stated  by  Professor  Parsons  (Notes  and  Bills,  340  [vol.  I]) 
is  substantially  this:  He  says,  "Where  the  facts  are  few  and  simple  and  the  acts 
or  admissions  of  parties  clear  and  unequivocal,  the  question  is  one  of  law  for  the 
court.  But  where  the  rights  and  habilities  of  the  parties  depend  on  contracts,  and 
a  variety  of  transactions  and  dealings  arising  therefrom,  or  where  the  facts  are 
contradictory  and  complicated,  it  is  a  question  for  the  jury  to  determine."  See 
also  Shute  v.  Robins,  3  Car.  &  P.  80  (Eng.  C.  L.);  Straker  v.  Graham,  4  M.  &  W. 
721;  Mulhck  v.  Radakissen,  28  Eng.  L.  &  Eq.  86;  Chambers  v.  Hill,  26  Tex.  472; 
Northwestern  Coal  Co.  v.  Bowman,  69  Iowa,  153,  citing  the  text;  Dyas  v.  Hanson, 
14  Mo.  App.  368,  citing  the  text. 

66.  Muilman  v.  D'Eguino,  2  H.  Bl.  565;  Prescott  Bank  v.  Caverly,  7  Gray, 
217;  Citizens'  Nat.  Bank,  etc.  v.  Third  Nat.  Bank,  etc.,  19  Ind.  App.  69,  49  N.  E. 
171,  citing  text. 

67.  Goupy  v.  Harden,  7  Taunt.  159. 


§§  469,  470      TIME    OF   PRESENTMENT   FOR   ACCEPTANCE  573 

the  question  of  reasonable  time,  such,  for  instance,  as:  (1)  The  passing 
of  the  bill  into  circulation;  (2)  The  fluctuations  of  the  rate  of  exchange 
and  (3)  The  facilities  of  communication  between  the  parties. 

§  469.  Passing  of  bill  into  circulation.— And  in  the  first  place, 
a  larger  latitude  is  allov/ed  for  presentment  for  acceptance  when  the 
holder  transfers  the  bill  and  it  passes  into  circulation.  In  such  cases 
a  long  delay,  say  of  a  year  or  more,  would  not  be  negligence;  but  if 
the  transferrer  came  again  in  possession  of  the  bill,  a  more  stringent 
rule  would  be  applied  to  him  than  to  transferees.^^  But  if  the  holder 
retains  possession  of  the  bill  for  an  unreasonable  time,  and  thus  locks 
it  up  from  circulation,  he  makes  it  his  own,  and  will  have  no  remedy 
against  antecedent  parties  from  or  through  whom  he  derived  title.®^ 

§  470.  As  illustrations.— Where  A.,  of  Calcutta,  drew  a  bill, 
payable  sixty  days  after  sight,  on  B.,  of  Hong  Kong,  and  indorsed 
it  to  C,  of  Calcutta,  and  the  latter,  finding  bills  on  China  unsalable, 
without  the  prospect  of  improvement,  kept  the  bill  five  months,  and 
then  indorsed  it  to  C,  who  forwarded  it  for  acceptance,  which  was 
refused,  it  was  held  that  the  drawer  was  discharged  by  the  unreason- 
able delay,  although  the  parties  were  solvent,  and  he  had  suffered  no 
damage.™  In  South  Carolina,^^  it  appeared  that  a  bill  drawn  in 
Charleston,  South  Carolina,  on  New  York,  at  three  days  was  not 
presented  for  two  and  a  half  months.  The  holder  lived  several  days 
in  the  same  house  with  the  drawee;  and  it  was  held  that  the  drawer 
was  discharged  by  the  delay.  In  another  case,  one  month's  delay 
was  held  too  much,  the  distance  between  the  residence  of  the  drawer 
and  the  drawee  being  only  eighteen  miles,  with  communication  three 
times  a  week  between  them.^^ 

In  Louisiana,  it  appeared  that  a  bill  drawn  in  New  Orleans  on 
Liverpool,  at  thirty  days,  was  sent  by  way  of  New  York,  and  a  delay 
of  two  and  a  half  months  in  presentment  was  held  no  laches;  and  it 

68.  Muilman  v.  D'Eguino,  2  H.  Bl.  565;  Angaletos  v.  The  Meridian  Nat. 
Bank  of  Indiana,  4  Ind.  App.  573,  31  N.  E.  368. 

69.  Byles  (Sharswood's  ed.)  [*176],  302;  Bayley  on  Bills,  227;  Chitty  [*275- 
276],  312;  Story  on  BUls,  §231;  Robinson  v.  Ames,  20  Johns.  146;  Cowan  v. 
Jackson,  20  Johns.  176;  Fry  v.  Hill,  7  Taunt.  397;  Thornburg  v.  Emmons,  23 
W.  Va.  334,  citing  the  text. 

70.  Mullick  V.  Radakissen,  28  Eng.  L.  &  Eq.  86,  9  Moore  P.  C.  66;  Parker  v. 
Reddick,  65  Miss.  246. 

71.  Fernandez  v.  Lewis,  1  McCord  (S.  C),  322. 

72.  Bolton  V.  Harrod,  9  Mart.  326.    Dumont  v.  Pope,  7  Blackf.  367. 


574  PRESENTMENT   FOR   ACCEPTANCE  §  471 

has  been  frequently  held  that,  while  a  holder  would  hardly  be  war- 
ranted in  sending  the  bill  to  a  remote  place  wholly  out  of  the  course 
of  trade,  yet  he  may  put  it  in  circulation,  or  send  it  to  any  other  place 
within  reasonable  mercantile  regulations  for  remittance  or  sale.  A 
bill  drawn  in  Havana  on  London  may  be  forwarded  by  way  of  the 
United  States;  one  drawn  in  London  by  way  of  Paris  and  Genoa;  and 
one  drawn  in  New  Orleans  on  Liverpool  by  way  of  New  YorkJ^ 

§  471.  Further  illustrations. — Bills  drawn  in  London  on  Cal- 
cutta at  ninety  days  were  circulated  seventy-eight  days  in  England, 
and  the  delay  was  held  no  laches;  ^^  and  like  decisions  were  rendered 
where  a  bill  was  drawn  in  London  on  Lisbon  at  thirty  days,  cir- 
culated through  Paris  and  Genoa,  and  presented  after  a  delay  of 
three  months  and  ten  days;  ^^  where  a  bill  was  drawn  in  Plymouth 
on  London  at  twenty  days'  sight,  and  was  not  presented  for  nine 
days;  ^^  where  one  was  drawn  in  Windsor  on  London,  and  was  not  pre- 
sented for  four  days  (Sunday  intervening) ; "  where  a  bill  was  drawn 
at  sixty  days  at  Augusta,  Georgia,  on  New  York,  and  was  put  in 
circulation  and  not  presented  for  two  months  and  a  half;  ^^  and  where 

73.  In  Wallace  v.  Agry,  4  Mason,  333,  Story,  J.,  said:  "It  has  been  said  that 
the  plaintiff  was  bound  to  send  it  (the  bill)  directly  from  Havana  to  England  by 
some  regular  conveyance,  and  had  no  right  to  remit  it  to  Boston  for  sale.  I  am  of 
a  different  opinion.  The  party  who  receives  a  negotiable  bill  payable  after  sight 
has  a  right  to  sell  it  in  the  market  where  he  resides,  or  to  send  it  to  any  other  place 
for  sale.  He  is  not  bound  personally  to  make  a  remittance  of  it,  or  to  send  it 
directly  to  the  country  on  which  it  is  drawn.  He  is  at  full  liberty  to  put  it  in  cir- 
culation, or  to  send  it  to  any  other  place  for  sale  or  remittance;  and  the  only 
limitation  upon  this  right  is,  that  he  shall  have  it  presented  within  a  reasonable 
time,  be  the  conveyance  direct  or  indirect.  To  be  sure,  the  usage  of  trade  is  to  be 
consulted  on  this  as  on  other  occasions.  The  holder  of  such  a  bill  is  not  at  liberty 
to  send  it  to  very  remote  places,  wholly  out  of  the  course  of  trade,  if  there  be 
unreasonable  delay  thereby,  in  the  presentment  for  acceptance;  and  thus  to  fix 
the  drawer  with  an  indefinite  responsibility.  But,  on  the  other  hand,  the  trans- 
mission in  a  direct  trade  is  not  necessary.  No  one  can  doubt  that,  by  the  course  of 
trade,  many  bills  of  exchange  drawn  in  Havana  on  England  are  sent  to  the  United 
States  for  remittance  or  sale.  The  very  testimony  in  this  case  establishes  this 
fact.  It  would  be  a  most  inconvenient  rule  to  hold  that  such  a  negotiation  of 
bills  was  at  the  sole  peril  of  the  holder.  I  know  of  no  rule  of  law  reaching  to  such 
extent.  In  my  judgment,  the  remittance  of  the  bill  to  Boston  for  sale  was  not  a 
discharge  of  the  defendants." 

74.  Muilman  v.  D'Eguino,  2  H.  Bl.  565. 

75.  Goupy  V.  Harden,  7  Taunt.  397. 

76.  Shute  V.  Robins,  Moody  &  M.  133,  3  Car.  &  P.  80. 

77.  Fry  v.  Hill,  7  Taunt.  397. 

78.  Robinson  v.  Ames,  20  Johns.  146;  Edwards  on  Bills,  389. 


§  472  TIME    OF   PRESENTMENT   FOR   ACCEPTANCE  575 

a  bill  drawn  in  Antigua  on  London  at  ninety  days,  was  circulated  for 
six  months — a  packet  leaving  Antigua  for  London  once  a  month.^^ 

§  472.  Where  a  sight  draft  on  New  York  was  indorsed  to  the  plain- 
tiff in  Wisconsin,  and  was  not  mailed  to  New  York  for  presentment 
for  fourteen  days,  it  was  held  prima  facie  evidence  of  laches,  but  might 
be  rebutted.^"  But  presentment  in  Boston  on  Wednesday,  during 
banking  hours,  of  a  bill  at  sight,  indorsed  to  the  holder  in  Lowell 
after  banking  hours  the  previous  Saturday,  and  forwarded  by  the 
holder  to  Boston  on  Tuesday,  was  held  sufficient  to  charge  an  in- 
dorser.^^  Delay  of  twenty-one  days  to  forward  sight  drafts  received 
at  Detroit,  Michigan,  on  Chicago,  Illinois,  was  held  too  long.^^ 

Where  a  draft  was  drawn  on  New  York  by  a  bank  in  Erie,  Penn- 
sylvania, in  favor  of  a  traveling  agent  who,  in  pursuance  of  his  busi- 
ness, did  not  return  to  his  home  in  New  Jersey,  where  he  had  the 
first  opportunity  to  negotiate  it,  until  ten  days  after  its  date,  it  was 
held  that  the  delay  was  not  unreasonable  under  the  circumstances.^^ 
In  an  Illinois  case  where  an  inland  bill  drawn  at  sight  on  a  Chicago 
bank  was  mailed  on  the  day  of  its  date  to  the  payee's  address  in 
Dakota  Territory,  and  was  received  by  him  after  some  delay  in  the 
mail,  and  by  him  at  the  first  opportunity  put  in  circulation,  and  no 
delay  was  suffered  other  than  that  incident  to  the  transaction  of  busi- 
ness in  a  sparsely-populated  territory;  and  the  bill  was  presented 
for  payment  thirty-five  days  after  date,  and  protested  for  nonpay- 
ment— it  was  held  that  the  drawer,  who  was  duly  notified,  was  bound, 
the  bank  having  failed  in  the  meantime.^^ 

79.  Gowan  v.  Jackson,  20  Johns.  176. 

80.  Walsh  V.  Dart,  23  Wis.  334. 

81.  Prescott  Bank  v.  Caverly,  7  Gray,  217. 

82.  Phoenix  Ins.  Co.  v.  Allen,  11  Mich.  30;  Phoenix  Ins.  Co.  v.  Gray,  13  Mich. 
191.  See  Chambers  v.  Hill,  26  Tex.  586,  where  two  and  a  half  years  was  held 
a  fatal  delay. 

83.  National  Newark  Banking  Co.  v.  Second  Nat.  Bank,  63  Pa.  St.  404. 

84.  Montelius  v.  Charles,  76  111.  305,  Scott,  J.,  saying:  "Bills  both  inland 
and  foreign,  having  the  quality  of  negotiabiUty,  are  intended,  in  some  degree, 
to  be  used  as  a  part  of  the  circulation  of  the  country,  and  are  indispensable  in 
the  conduct  of  extended  commercial  transactions.  They  afford  a  safe  and  con- 
venient mode  of  making  payments  of  indebtedness  between  distant  points. 
Banking-houses  that  for  a  consideration  issue  such  bills,  must  be  understood 
to  do  so  in  accordance  with  the  known  custom  of  the  country — that  they  will 
be  put  in  cii-culation  for  a  Umited  period.  If  this  were  not  so,  their  value  would 
be  greatly  depreciated,  and  their  utility  in  commercial  transactions  would  be 
destroyed."  See  also  Shute  v.  Robins,  3  Car.  &  P.  80;  Jordan  v.  Wheeler,  20 
Tex.  698;  Nichols  v.  Blackmore,  27  Tex.  586. 


576  PRESENTMENT   FOR   ACCEPTANCE  §§  473,  474 

§  473.  In  the  second  place :  The  falling  or  rismg  of  the  rate  of 
exchange  in  the  place  of  residence  of  the  drawee,  should  be  taken 
into  consideration  in  determining  whether  or  not  there  was  unreason- 
able delay;  and  if  exchange  were  steady,  without  prospect  of  change, 
or  were  rising,  a  shorter  and  less  extended  period  of  time  would  be 
thought  reasonable;  while  if  the  exchange  fell  inmiediately  after  the 
sale  of  the  bill,  the  jury  might  then  think  a  more  extended  period 
might  fairly  and  reasonably  be  allowed  the  holder,  in  order  to  enable 
him  bona  fide  to  endeavor  to  make  a  fair  profit,  or,  at  all  events,  to 
endeavor  to  secure  him  from  loss.^^  In  an  English  case  the  bill  was 
drawn  in  Calcutta  on  Hong  Kong,  at  sixty  days,  and  the  indorsee  kept 
the  bill  five  months.  Held,  that  there  was  laches.  Parke,  B.,  saying: 
The  court  "thought  that  the  evidence  proved  that,  for  the  whole  of 
the  time,  a  period  of  more  than  five  months,  bills  on  China  were  alto- 
gether unsalable  in  Calcutta;  that  such  was  the  permanent  and  regu- 
lar state  of  the  market;  and  that  although,  if  there  was  a  reasonable 
prospect  of  the  state  of  things  being  better  in  a  short  time,  the  holder 
would  have  had  a  right,  with  a  view  to  his  own  interests,  to  keep  the 
bill  for  some  time,  he  had  no  such  right  when  there  was  no  hope  of  the 
amendment  of  that  state  of  things;  and  we  are  of  opinion  that  the  evi- 
dence fully  justified  this  conclusion  from  it,  and  that  the  court,  de- 
ciding on  facts  as  a  jury,  were  perfectly  right."  ^* 

§  474.  In  the  third  place :  The  facility  of  communication  between 
the  places  should  be  considered  in  determining  the  question  of 
laches,  when  the  party  who  presents  the  bill  has  had  it  in  his  possession 
for  some  length  of  time;^^  as  also  the  distance  between  the  places.^^ 
In  an  English  case,^^  the  bill  was  drawn  in  Carbonear,  Newfoundland- 
on-Poole,  England,  at  ninety  days,  and  was  not  presented  until  three 
months  after  date.  Carbonear  is  twenty  miles  from,  and  was  in  daily 
communication  with,  St.  Johns,  from  which  the  mails  were  sent  to 
England  three  times  a  week.  The  average  length  of  the  voyage  was 
eighteen  days.  No  excuse  being  shown  for  delay,  it  was  held  that  the 
bill  was  not  presented  in  a  reasonable  time. 

85.  Mellish  v.  Rawdon,  9  Bing.  416,  2  Moore  &  S.  500;  Wallace  v.  Agry,  4 
Mason,  336;  MuUick  v.  Radakissen,  28  Eng.  L.  &  Eq.  86. 

86.  MulUck  V.  Radakissen,  28  Eng.  L.  &  Eq.  86. 

87.  Shute  V.  Robins,  Moody  &  M.  133,  3  Car.  &  P.  80;  Straker  v.  Graham,  4 
M.  &  W.  721;  Mullick  v.  Radakissen,  9  Moore  P.  C.  66,  28  Eng.  L.  &  Eq.  86; 
Dumont  v.  Pope,  7  Blackf .  367. 

88.  Nichols  v.  Blackmore,  27  Tex.  586. 

89.  Straker  v.  Graham,  5  M.  &  W.  721. 


§§  475,  476    TIME    OF   PRESENTMENT   FOR   ACCEPTANCE  577 

§  475.  The  question  not  affected  by  solvency  of  the  drawer. — 

But  the  continued  solvency  of  the  drawer,  and  the  want  of  proof  of 
actual  loss  by  laches,  are  not  circumstances  to  be  considered  in  answer 
to  the  objection  of  delay  in  presentment;  the  simple  question  being, 
whether  or  not  the  delay  was  reasonable  under  the  circumstances  of 
the  case.  In  an  English  case,  where  this  subject  was  considered,  it 
was  said:^°  ''It  remains  to  consider  only  one  point,  which  was  in- 
sisted on  in  the  court  below  and  also  argued  at  the  bar  before  us, 
namely:  that  as  the  drawers  remained  perfectly  solvent  from  the  date 
of  the  bill  to  the  present  time,  the  rule  as  to  presenting  in  a  reasonable 
time  did  not  apply,  and  that  there  was  no  laches  which  would  con- 
stitute a  defense  by  the  drawers  unless  they  had  incurred  a  loss  by  that 
laches.  The  court  below  decided  that  the  solvency  of  the  drawers, 
and  the  want  of  actual  loss  by  laches,  constituted  no  answer  to  the 
objection  of  laches.  We  think  they  were  right.  *  *  *  Xhis  point 
was  fully  considered  in  the  case  of  Carter  v.  Flower,  16  M.  &  W.  743, 
and  we  believe  admits  of  no  doubt;  and  we  agree  with  the  court  below, 
that  the  continued  solvency  of  the  drawers  does  not  prevent  the  ap- 
plication of  the  rule  that  the  bill  must  be  presented  in  a  reasonable 
time,  with  reference  to  the  interest  of  the  drawer  to  put  the  bill  into 
circulation,  or  the  interest  of  the  drawee  to  have  the  bill  speedily 
presented." 

§  476.  Agent*s  duty  in  presenting  for  acceptance. — It  has  been 
already  seen  that  there  are  two  exceptions  to  the  general  rule  that 
it  is  not  necessary  to  present  a  bill  payable  at  a  time  certain  for 
acceptance  before  it  becomes  due — the  first  arising  when  there  is  an 
express  direction  to  the  payee  or  holder  of  the  bill,  and  the  second, 
when  the  bill  is  put  in  the  hands  of  an  agent  for  negotiation.  In 
Allen  V.  Suydam,  17  Wend.  368  (confirmed  in  20  Wend.  321),  it  was 
held  that  an  agent  who  received  a  bill,  payable  after  date,  for  collec- 
tion, and  which  had  not  been  accepted,  was  bound  to  present  it  with- 
out unreasonable  delay;  and  having  delayed  for  seventeen  days  to  do 
so,  he  was  Uable  to  his  principal  for  all  damages  he  might  have  sus- 
tained by  his  delay.  This  is  a  leading  case,  and  was  decided  upon 
thorough  argument  and  consideration.  It  is,  however,  criticised  and 
dissented  from  by  Professor  Parsons,^^  on  the  ground  that  as  it  would 
not  be  negligence  in  the  principal  to  delay,  it  would  be  unjust  to 

90.  MuUick  V.  Radakissen,  9  Moore  P.  C.  46,  28  Eng.  L.  &  Eq.  86. 

91.  1  Parsons  on  Notes  and  Bills,  346-347. 

37 


578  PRESENTMENT   FOR   ACCEPTANCE  §§  477,  478 

consider  it  such  in  the  agent,  and  the  latter  should  not  be  held  re- 
sponsible without  some  express  or  implied  instruction  to  present 
immediately.  But  we  are  inclined  to  coincide  with  the  case  cited,^^ 
which  is  supported  by  the  analogy  of  the  Scotch  law,^^  and  by 
English  authority .^^ 

§  477.  A  case  remarkable  for  its  similarity  to  the  New  York  case 
above  quoted  was  decided  by  the  Scotch  Court  of  Session  in  like 
manner.  A  bill,  payable  at  Glasgow  three  days  after  date,  was  sent 
to  agents  at  that  city  for  collection.  Before  the  day  of  payment  the 
drawer  failed,  and  the  Glasgow  bank  refused  to  accept.  It  was  not 
clear  whether  the  bank  would  have  accepted  the  draft  if  it  had  been 
immediately  presented,  for  the  bank  had  no  funds  of  the  drawer,  and 
the  practice  had  been  to  make  provision  for  such  drafts  at  the  day 
of  payment.  In  an  action  against  the  agents,  the  court  held  "that,  as 
agents,  they  were  bound  immediately  to  present  the  bill  for  accep- 
tance." ^^ 

§  478.  Effect  of  war,  sickness,  inevitable  accident,  and  other  rea- 
sonable causes  of  delay. — Any  reasonable  cause,  such  as  sickness,^^ 
inevitable  accident,  or  intervention  of  war,  or  other  circumstances 
beyond  the  holder's  control,  will  excuse  delay  in  presentment  for 
acceptance.®^  But  these  and  other  circumstances,  excusing  delay  or 
failure  to  make  the  presentment  for  acceptance,  will  be  hereafter  con- 
sidered in  connection  with  the  consideration  of  the  excuses  which 
may  be  made  for  like  delay  or  failure  in  respect  to  presentment  for 
payment,  and  giving  notice  of  dishonor. 

92.  See  Redfield  &  Bigelow's  Leading  Cases,  34,  35,  and  ante,  §  330. 

93.  Thompson  on  Bills  (Wilson's  ed.)  277. 

94.  Vanwart  v.  Wooley,  3  B.  &  C.  439,  5  Dowl.  &  R.  374;  Chitty  on  Bills 
(13th  Am.  ed.),  311;  Byles  (Sharswood's  ed.),  299;  Roscoe  on  Bills,  141,  note 
26;  Citizens'  Nat.  Bank,  etc.  v.  Third  Nat.  Bank,  etc.,  19  Ind.  App.  69,  49  N.  E. 
171,  citing  text. 

95.  Bank  of  Scotland  v.  Hamilton,  1  Bell  Com.  409. 

96.  In  Aymar  v.  Beers,  7  Cow.  705,  the  defendant  sought  to  excuse  delay 
in  presenting  for  acceptance  on  account  of  the  payee's  sickness.  The  court 
below  rejected  the  evidence;  but  the  court  above  held  that  sickness  was  an  excuse, 
and  ordered  a  new  trial.    See  Byles  on  Bills  (Sharswood's  ed.)  [*176],  302. 

97.  United  States  v.  Barker,  1  Paine  C.  C.  156.  In  this  case,  a  bill  drawn  in 
the  United  States  on  Liverpool  was  presented  three  months  from  date.  War 
existing  between  the  two  countries,  it  was  held  no  laches.  The  decision  in  this 
case  as  to  the  validity  of  the  bill  cannot  be  sustained.  See  ante,  chapter  Vlli, 
section  II,  §  217. 


CHAPTER  XVIII 

ACCEPTANCE  OF  BILLS  OF  EXCHANGE 

SECTION  I 

THE   NATURE   OF   ACCEPTANCE 

§  479.  The  drawer  of  a  bill  undertakes  that  when  it  is  presented  to 
the  drawee  he  will  accept  it;  and  by  acceptance  is  meant  an  under- 
taking on  his  part  to  pay  it  according  to  its  tenor;  ^  the  drawer  is  not 
liable  until  acceptance.^  The  acceptor,  by  his  act,  engages  to  pay  the 
holder,  whether  payee  or  indorsee,  the  full  amount  of  the  bill  at 
maturity;  and  if  he  does  not,  the  holder  may  sue  him.^ 

If  the  drawee  have  funds  in  his  hands  belonging  to  the  drawer, 
it  is  his  duty,  according  to  mercantile  usage,  to  honor  the  bill  by 
accepting  it;  but  he  is  not  legally  bound  to  do  so  by  the  mere  fact  that 
he  holds  such  funds,  any  more  than  a  debtor  is  legally  bound  to 
execute  a  promissory  note  to  his  creditor  for  the  amount  due  upon  his 
request  to  do  so.^  But  there  may  be  relations  between  the  drawer  and 
drawee  which  make  it  incumbent  on  the  latter  to  honor  the  bill. 
Thus  if  the  drawee  has  been  suppUed  with  funds  for  the  express  pur- 
pose of  meeting  the  bill;  or  if  he  have  money  on  deposit  under  such 

1.  RusseU  V.  Phillips,  14  Q.  B.  891  (68  Eng.  C.  L.);  Byles  (Sharswood's  ed.) 
[*178],  304;  Bayley  (2d  Am.  ed.),  154;  Story  on  Bills,  §  272;  Cox  v.  National 
Bank,  100  U.  S.  (10  Otto)  712.  In  Washington,  drawer  may  be  sued  on  con- 
tract to  accept  as  an  original  undertaking.  See  Kelley  v.  Greenough,  9  Wash. 
6.59,  38  Pac.  1.58.  If  the  draft  is  conditional,  a  general  acceptance  is  upon  the  same 
conditions.    Hannay  v.  Guaranty  Trust  Co.  of  New  York,  187  Fed.  686. 

2.  Poole  V.  Carhart,  71  Iowa,  37. 

3.  Hoffman  &  Co.  v.  Milwaukee  Bank,  12  Wall.  181;  Bayley  on  Bills,  96. 
"Acceptance  of  a  bill  at  common  law,  and  under  our  statute,  is  merely  the  signi- 
fication by  the  drawee  of  his  assent  to  the  order  of  the  drawer.  The  legal  meaning 
of  acceptance  is  that  the  acceptor  engages  to  pay  the  instrument  according  to 
the  tenor  of  his  acceptance.  In  other  words,  it  is  a  promise  to  pay."  Van  Buskirk 
V.  State  Bank  of  Rocky  Ford,  35  Colo.  142,  83  Pac.  778,  117  Am.  St.  Rep.  182. 

4.  Story  on  Bills,  113,  117,  238;  Edwards  on  Bills,  405;  Chitty  (13th  Am.  ed.) 
1*281],  318,  319.     See  chapter  XLIX,  on  Checks,  sections  X  and  XI,  vol.  II. 

579 


580  ACCEPTANCE   OF   BILLS    OF   EXCHANGE         §§480,  481 

circumstances  as  imply  a  contract  on  his  part  to  accept  the  bill,  as, 
for  instance,  if  he  be  a  banker,  and  the  bill  (or  check)  be  drawn  on  a 
cash  account,  he  will  be  answerable  in  an  action  of  tort  for  not  honor- 
ing the  draft.  But  until  he  has  accepted  the  bill  he  is  not  Uable  as  a 
party  to  it.^ 

§  480.  Relation  of  drawee  to  bill  before  acceptance.— Until  a 
drawee  accepts  the  draft,  he  does  not  become  liable  to  the  payee 
named.^  Until  then,  so  entirely  is  he  a  stranger  to  it,  that  he  may 
himself  discount  it.  And  he  may  then  transfer  it  as  the  bona  fide 
holder  to  another,  who  may  sue  and  charge  the  drawer.^  He  may 
discount  it  either  for  the  drawer,  the  payee,  or  an  indorsee.  "  If  the 
acceptor  discounts  the  bill  for  the  drawer,  and  then  indorses  it  away, 
the  drawer  will  be  liable  upon  it  to  the  holder,  and  the  transfer  by 
the  drawer  to  the  acceptor  will  operate  as  an  indorsement,  although, 
at  the  time,  the  drawer  does  not  intend  to  transfer  by  way  of  indorse- 
ment, being  under  the  impression  that  the  bill  is  discharged  by  coming 
into  the  hands  of  the  acceptor.  Nor  will  the  payment  of  the  amount, 
less  the  discount,  be  deemed  a  payment  of  the  bill  by  the  acceptor."  ^ 
If  the  drawee  comes  into  possession  of  the  bill  before  its  dishonor, 
there  is  no  presumption  that  he  takes  it  with  the  obligation  to 
accept.® 

§  481.  Dispensing  with  and  waiver  of  acceptance. — Sometimes, 
though  infrequently,  the  bill  directs  the  drawee  to  pay  the  amount 
specified,  at  a  certain  time,  "without  acceptance,"  or  contains 
upon  its  face  the  expression  "acceptance  waived."  In  such  cases 
the  bill  is  not  impaired  in  its  negotiability,  but  the  effect  is  to  merge 
the  ordinary  proceedings  on  acceptance,  or  nonacceptance,  into  those 


6.  Marzetti  v.  Williams,  1  B.  &  Ad.  415  (20  Eng.  C.  L.);  Anderson  &  Co.  v. 
Jones,  102  Ala.  537,  14  So.  871;  Shutt  Imp.  Co.  v.  Erwin,  66  Kan.  261,  71  Pac.  521. 
In  the  absence  of  acceptance,  an  action  cannot  be  maintained  on  an  order. 
Dugane  v.  Huedza  Pokroku  No.  4,  (la.)  119  N.  W.  141. 

6.  Gamer  v.  Thomson,  35  Tex.  Civ.  App.  283,  79  S.  W.  1083. 

7.  Attenborough  v.  McKenzie,  36  Eng.  L.  &  Eq.  562;  Desha  v.  Stewart,  6 
Ala.  852;  Swope  v.  Ross,  40  Pa.  St.  186;  Story  on  Bills  (Bennett's  ed.),  §  223. 

8.  Swope  V.  Ross,  40  Pa.  St.  186,  Strong,  J.  In  Attenborough  v.  McKenzie, 
supra,  the  holder  of  the  bill  took  it  by  indorsement  after  it  was  due  from  the 
transferee  of  the  acceptor.  The  ruling  goes  to  the  length  that  even  the  accepting 
drawee  of  a  bill  may  take  it  as  an  indorsee,  and  as  such  may  issue  it. 

9.  Desha  v.  Stewart,  6  Ala.  852;  Erickson  v.  Inman,  34  Oreg.  44,  54  Pac.  949, 
citing  and  approving  text. 


§  482  WHAT   BILLS   REQUIRE    ACCEPTANCE  581 

of  payment  or  nonpayment,  and  the  drawer  is  bound  just  as  upon  an 
accepted  bill.^° 

SECTION   II 

WHAT  BILLS  REQUIRE  ACCEPTANCE,  AND  BY  WHOM  AND  WHEN  THEY 
SHOULD  BE  ACCEPTED 

§  482.  We  come  now  to  consider  the  form  of  procedure  in  procuring 
acceptance. 

And  in  the^rs^  place:  There  are  some  bills,  such  as  are  drawn  pay- 
able immediately  on  demand,  which  are  not  presented  for  acceptance, 
but  only  for  payment.  They  are  considered  in  the  preceding  chapter 
on  "Presentment  for  Acceptance."  And  there  are  some  bills  which 
do  not  need  acceptance,  in  order  to  bind  the  drawee,  or  rather  in 
which  the  act  of  drawing  itself  constitutes  acceptance.  Thus,  a  bill 
drawn  without  being  addressed  to  any  drawee, ^^  or  drawn  by  a  party 
upon  himself,  ^2  or  by  a  partner  upon  the  firm  of  which  he  is  a  member, 
for  partnership  purposes. ^^  Where  a  draft  is  drawn  by  an  agent  on 
his  principal,  by  authority,  it  is  equivalent  to  a  draft  drawn  by  the 
drawee  on  himself,  and  consequently  an  acceptance  by  the  drawee  is 
not  necessary.^'*  A  bill  drawn  by  the  president  of  a  corporation  in  its 
behalf,  on  the  treasurer  thereof,  would  be  a  bill  drawn  by  the  cor- 
poration on  itself,  and  hence  not  need  acceptance;  ^^  but  if  not  drawn 
on  the  treasurer  in  his  official  character,  it  would  be  otherwise. ^^ 

Under  Negotiable  Instrument  statute.— The  rule  of  the  text  that  a 
bill  drawn  by  a  party  upon  himself  does  not  need  acceptance  is  rec- 
ognized by  the  statute.^^  A  draft  drawn  by  an  agent  on  his  principal 
by  authority  of  the  principal  is  equivalent  to  a  draft  drawn  by  the 
principal  upon  himself, ^^  but  when  done  without  the  authority  of  the 

10.  Denegre  v.  Milne,  10  La.  Ann.  324;  English  v.  Wall,  12  Rob.  (La.)  132; 
Webb  V.  Mears,  9  Wright,  222;  Carson  v.  Russell,  26  Tex.  452;  Miller  v.  Thom- 
son, 3  M.  &  G.  576  (42  Eng.  C.  L.);  Rey  v.  Kmnear,  2  Moody  &  R.  117. 

11.  Marion,  etc.,  R.  Co.  v.  Hodge,  9  Ind.  163;  Dougal  v.  Cowles,  5  Day,  511. 

12.  Hasey  v.  WTiite  Pigeon  Co.,  1  Doug.  193;  Cunningham  v.  Wardwell,  3 
Fairf.  466;  Roach  v.  Ostler,  1  Man.  &  R.  120;  cited  1  Parsons  on  Notes  and  Bills, 
288.    See  ante,  §  128. 

13.  Dougal  V.  Cowles,  5  Day,  511;  Miller  v.  Thompson,  3  M.  &  G.  576. 

14.  Gray  Tie  &  Lumber  Co.  v.  Farmers'  Bank,  109  Ky.  694,  60  S.  W.  537. 

15.  Hasey  v.  White  Pigeon  Co.,  1  Doug.  193.    See  ante,  §  129. 

16.  Halsted  v.  The  Mayor,  5  Barb.  218. 

17.  Appendix,  sec.  130. 

18.  First  Nat.  Bank  v.  Home  Ins.  Co.,  New  York,  16  N.  Mex.  66,  113  Pac.  815. 


582  ACCEPTANCE    OF   BILLS   OF   EXCHANGE         §§  483-485 

principal,  the  section  of  the  statute  that  no  person  is  liable  on  the 
instrument  whose  signature  does  not  appear  thereon,  applies,  and 
the  principal  is  not  liable  thereon  until  it  has  been  accepted. ^^ 

§  483.  Either  of  a  set  of  bills  may  be  presented  for  acceptance, 

and  if  not  accepted,  a  right  of  action  accrues  immediately  ujjon  ilue 
notice  against  all  the  antecedent  parties  to  the  bill,  without  any 
others  of  the  set  being  presented.^o  But  the  drawee  should  accept 
but  one  of  the  set,  for  if  two  or  more  of  the  set  should  be  accepted, 
and  should  come  into  the  hands  of  different  holders,  ami  the  acceptor 
should  pay  one,  he  might  also  be  obliged  to  pay  the  others  also." 

Where  one  of  a  set  which  was  made  and  accepted  in  blank  is 
filled  up,  varying  from  the  others,  not  only  in  date  and  amount, 
but  also  as  to  time  and  place  of  payment,  and  is  negotiated  by  the 
correspondent  of  the  acceptor  to  a  bona  fide  party,  without  notice 
that  such  act  was  done  without  authority,  the  acceptor  is  liable 
to  such  bona  fide  holder.-- 

It  seems  that  if  the  drawee  accept  two  or  more  parts  of  a  set  of 
bills,  and  the  several  parts  come  into  the  hands  of  different  bona  fide 
holders  without  notice,  he  will  be  liable  to  pay  on  each  part. 


23 


§  484.  In  the  second  place,  as  to  the  person  who  may  accept  a  bill. 

—The  drawing  of  a  bill  imi)orts  a  contract  on  the  part  of  the  drawer 
that  the  drawee  is  a  person  competent  to  accept;  and,  therefore,  if  the 
holder  upon  presentment  of  the  bill  ascertams  that  the  drawee  is 
incapable  of  contracting — for  instance,  is  a  minor,  an  idiot,  or  a 
married  woman — he  may  cause  it  to  be  protested,  and  proceed  against 
antecedent  parties,  as  usual  in  cases  of  dishonor.-"* 

§  485.  Stranger  cannot  accept  bill  except  for  honor. — Except  in 
cases  of  acceptance  for  honor,  no  one  can  accept  a  bill  except  the 
party  on  whom  it  is  draA\Ti,  or  his  authorized  agent. --^    Thus,  if  it 

19.  Appendix,  sec.  18.  Seattle  Shoe  Co.  v.  Packard,  43  Wash.  527,  86  Pac. 
845,  117  Am.  St.  Rep.  1064. 

20.  Downec  v.  Church,  13  Pet.  207;  Bank  of  Pittsburg  v.  Neal,  22  How.  108. 

21.  Bank  of  Pittsburg  v.  Neal,  22  How.  109. 

22.  Bank  of  Pittsburg  v.  Neal,  22  How.  97. 

23.  Bank  of  Pittsburg  v.  Neal,  22  How.  96. 

24.  Edwards  on  Bills,  381;  Chitty  on  Bills  (13th  Am.  ed)  [*192],  221;  Thomp- 
son on  Bills,  92;  Story  on  Bills,  §  107.  See  MelUsh  v.  Simeon,  2  H.  Bl.  378; 
Tooting  V.  Hubbard,  3  Bos.  &  P.  291. 

25.  Davis  V.  Clarke,  6  Q.  B.  16  (51  Eng.  C.  L.);  Jenkins  v.  Hutchmson,  13 


§  4S5  WHAT   BILLS   REQUIRE    ACCEPTANCE  583 

be  addressed  to  A.,  an  acceptance  by  B.,  unless  for  honor,  will  not 
bind  him  as  acceptor.'^  But  the  holder  of  such  a  paper  might  treat 
it  as  a  note.^'^  There  cannot  be  a  series  of  acceptors;  ^  and  if  a  bill 
addressed  to  one  be  accepted  by  two  persons,  it  has  been  thought 
that  the  acceptance  of  the  first  will  be  vitiated  b}-  having  been  altered 
in  an  essential  part,^  unless  made  with  the  acceptor's  consent.  But  if 
any  other  person,  after  an  acceptance,  subsequently  accepts  the  bill 
for  the  purpose  of  guaranteeing  his  credit,  at  the  acceptor's  request, 
in  the  usual  form  of  an  acceptance,  then,  if  there  is  a  sufficient  con- 
sideration, he  may  be  bound  thereby  as  a  guarantor;  but  he  is  not 
liable  as  an  acceptor.^''  This  proposition  seems  to  be  well  supported 
by  the  authorities  upon  this  subject.  And  the  addition  will  not  be 
a  material  alteration.^^ 

Q.  B.  744  (66  Eng.  C.  L.);  Polhill  v.  Walter,  3  B.  &  Ad.  114  (23  Eng.  C.  L.); 
May  V.  Kelly,  27  Ala.  497;  Keenan  v.  Naah,  8  Minn.  409. 

26.  Davis  v.  Clarke,  6  Q.  B.  16  (51  Eng.  C.  L.);  May  v.  Kelly,  27  Ala.  497. 

27.  Fielder  v.  Marshall,  30  L.  J.  C.  P.  158  (1861),  9  C.  B.  (N.  S.)  606;  Ames 
on  Bills  and  Notes,  111;  Benjamin's  Chalmers'  Digest,  67.  See  a7ite,  §  98;  post, 
§  485. 

28.  Jackson  v.  Hudson,  2  Campb.  447;  Bayley  on  Bills,  100;  Story  on  Bills, 
§  254.  In  Malcomson  v.  Malcomson,  1  L.  R.  Ir.  228  (1878),  a  bill  was  drawn 
on  a  firm  doing  business  in  the  name  of  the  "  Milford  Spinning  Co.,"  and  Mr.  Mal- 
comson, a  member,  accepted  it  "for  M.  S.  Co.  and  self."  The  vice-chancellor 
said:  "There  was  no  legal  acceptance  by  Mr.  M.,  and  it  is  not  his  bill." 

29.  Thompson  on  Bills,  112,  212,  there  being  no  agreement  as  to  any  guaranty. 

30.  Storj'  on  Bills,  §254;  Chitty  on  Bills  (13th  Am.  ed.),  321;  Jackson  v. 
Hudson,  2  Campb.  447.  In  this  case  the  bill  was  drawn  on  and  accepted  by 
I.  Irving.  Under  his  acceptance  a  defendant  wrote,  "Accepted,  Jos.  Hudson, 
payable  at,  etc."  Hudson  was  sued  as  acceptor;  and  plaintiff  offered  to  prove  that 
he  had  had  dealings  with  Irving,  and  had  refused  to  trust  him  further,  unless  de- 
fendant would  become  his  surety;  and  the  defendant,  in  order  to  guarantee  Irv- 
ing's  credit,  wrote  the  acceptance  in  the  bill.  Lord  Ellenborough  said  this  was  no 
acceptance,  but  a  collateral  undertaking,  which  should  have  been  declared  on  as 
such.  See  Bayley  on  Bills,  100.  In  Thompson  on  Bills,  212,  it  is  said:  "It  seems 
that  a  second  person  may  accept  a  bill  addressed  to  a  first,  if  he  accept  on  the  foot- 
ing expressed  or  understood  at  the  time  the  bill  was  issued  that  he  was  to  be  a 
cautioner  for  the  first ;  and  if  a  person  in  this  way  become  validly  a  party  to  a 
bill,  he  stands  toward  the  holder  in  the  same  relation  as  if  he  were  a  coprincipal, 
his  rights  as  a  cautioner  merely  regulating  his  right  of  relief  against  the  true 
principal."  But  it  was  recently  held  by  the  House  of  Lords  that,  in  Scotland  as 
in  England,  a  bill  can  only  be  accepted  by  the  drawee;  and  that  no  other  person 
can  be  subjected  to  a  joint  obligation  with  him;  and  further,  that  a  party  signing 
the  bill  on  the  back  after  the  acceptor  could  not  be  regarded  as  a  guarantor, 
there  being  no  memorandum  within  the  Statute  of  Frauds.  Steele  v.  McKinlay, 
43  L.  J.  358.    See  Malcomson  v.  Malcomson,  1  L.  R.  Ir.  228. 

31.  Smith  v.  Lockridge,  8  Bush,  425  (1871).    In  this  case  the  bill  was  addressed 


584  ACCEPTANCE    OF   BILLS   OF   EXCHANGE         §§  486,  487 

In  an  English  case,  where  the  bill  was  addressed  by  John  Hart  to 
"Mr.  John  Hart,  payable  to  me  or  order" — across  its  face  was  written, 
''Accepted,  H.  J.  Clarke" — it  was  held  that  Clarke  could  not  be  sued 
as  acceptor,  and  Coleridge,  J.,  said:  "Acceptance  can  only  be  made 
by  the  party  addressed,  or  for  his  honor.  Here  the  last  is  not  pre- 
tended, and  the  first  cannot  be  presumed."  ^^  A  party  may  be  bound 
as  an  acceptor  by  any  name  or  designation  he  may  see  fit  to  adopt, 
provided  it  clearly  appears  by  extraneous  evidence  who  was  intended ; 
and  if  he  intends  to  contract  by  a  certain  designation,  he  is  estopped 
to  deny  that  the  name  by  which  he  assumed  to  enter  into  the  contract 
was  the  appropriate  appellation.  "  The  West  Tennessee  Department 
of  the  Life  Association  of  America"  would,  therefore,  be  bound  upon 
an  acceptance  made  by  its  proper  officer  of  a  bill  addressed  to  "The 
Western  Department  of  the  Life  Association  of  America."  ^^ 

§486.  Where  a  person  other  than  the  one  addressed  as  drawee 
writes  his  name  across  the  face  of  the  bill,  it  would  be  competent 
for  him  to  show  as  between  immediate  parties  (and  on  account  of 
its  ambiguity,  perhaps,  as  to  others)  in  what  character  he  intended  to 
be  bound.^'* 

But  if  a  party  accept  a  bill  in  which  no  drawee  is  named,  it  will 
be  regarded  as  acknowledging  that  he  was  the  drawee  and  will  operate 
as  a  complete  accepted  instrument.  ^^ 

§  487.  An  acceptance  may  be  made  by  an  agent;  but,  certainly, 
the  holder  may  require  the  production  by  him  of  clear  and  explicit 
authority  from  his  principal  to  accept  in  his  name,  and  without  its 


to  W.  T.  and  George  Lane,  and  by  them  accepted.  It  was  indorsed  by  S.  H.  Lane, 
H.  Smith,  and  J.  J.  Anderson,  and  discounted  by  D.  S.  Lockridge.  Smith  and 
Anderson,  two  of  the  indorsers,  claimed  that  it  was  accepted  by  the  Lanes  only 
when  they  indorsed  it,  and  afterward  that  it  was  altered  by  being  accepted  by 
J.  A.  Blaydes,  without  their  knowledge  or  consent.  Blaydes'  name  was  written 
across  the  face  of  the  bill  as  an  acceptor;  but  the  court  held  that  he  could  not  be  an 
acceptor,  and  that  it  was  not  an  alteration  which  discharged  the  indorsers,  because 
in  nowise  changing  their  obhgations  or  duties. 

32.  Davis  v.  Clarke,  6  Ad.  &  El.  (N.  S.)  16  (51  Eng.  C.  L.). 

33.  Hascall  v.  Life  Assn.  of  America,  5  Hun,  152.    See  vol.  I,  §  399. 

34.  Curry  v.  Reynolds,  44  Ala.  349. 

35.  Wheeler  v.  Webster,  1  E.  D.  Smith,  1;  ante,  §97;  1  Parsons  on  Notes 
and  Bills,  289;  Gray  v.  Milner,  8  Taunt.  739,  3  J.  B.  Moore,  90;  Davis  v.  Clarke, 
6  Q.  B.  16;  Thompson  on  Bills  (Wilson's  ed.)  212;  Benjamin's  Chalmers'  Digest, 
50. 


§  487  WHAT   BILLS   REQUIRE   ACCEPTANCE  585 

production  may  treat  the  bill  as  dishonored;  ^^  and  it  has  been  doubted 
whether  the  holder  is  bound  to  acquiesce  in  an  acceptance  by  an  agent, 
as  such  an  acceptance  would  multiply  the  proofs  of  the  holder's  title.^^ 
But  if  the  agency  were  clear,  we  think  the  holder  would  be  bound  to 
take  the  agent's  acceptance— acceptance  by  procuration,  as  it  is 
termed.^^  If  the  holder  takes  an  acceptance  from  one  unduly  alleging 
his  agency,  and  without  giving  notice  to  antecedent  parties,  they  will 
be  released,  if  the  principal  refuses  to  ratify  the  act.^^ 

If  the  bill  be  drawn  upon  an  agent  in  his  individual  name,  it  would 
seem  clear  on  principle  that  none  but  he,  as  an  individual,  could 
accept.  But  in  Georgia,  where  the  drawee  was  designated  simply  as 
"William  S.  Scruggs,"  an  acceptance  by  him  "for  the  Opinion  News- 
paper," was  held  to  bind  the  firm  doing  business  under  that  name.^° 
This  view  could  only  be  sustained  upon  the  theory  that  the  firm 
adopted  and  used  his  name.  In  Colorado,  where  the  bill  was  ad- 
dressed to  "F.  D.  H.,  Treasurer,"  and  accepted  in  like  style,  and  the 
direction  was  to  charge  to  the  account  of  a  certain  company,  evidence 
was  admitted  in  an  action  brought  by  the  payee  to  show  that  the 
drawee  accepted  in  an  official  capacity  as  treasurer  of  and  for  the 
company  he  represented.^^  In  Mississippi,  a  client  drew  on  his 
attorney,  and  the  latter,  declining  to  accept  in  his  own  name,  accepted 
as  agent  of  the  principal,  all  the  parties  being  present;  and  it  was  held 
that  the  circumstances  were  admissible  in  evidence,  and  that  the 
paper  might  be  treated  as  the  note  of  the  principal,  and  that  he  was 
bound  without  demand  or  notice  of  dishonor.'*^ 

Under  Negotiable  Instrument  statute.— Under  the  statutory  pro- 
vision requiring  an  acceptance  of  a  bill  to  be  in  writing  signed  by 
the  drawee,  one  cannot  be  a  party,  and,  in  the  same  transaction,  an 
agent  of  the  opposite  party,  except  with  the  full  knowledge  and  con- 
sent of  such  principal. "^^ 

36.  Atwood  V.  Mannings,  7  B.  &  C.  278  (14  Eng.  C.  L.);  Byles  on  Bills  (Shars- 
wood's  ed.),  113;  Chitty  (13th  Am.  ed.),  320;  Thompson  on  Bills,  211;  Roscoe  on 
Bills,  71;  Beawes,  87. 

37.  Coore  v.  Callaway,  1  Esp.  115;  Byles,  113;  Chitty,  321;  Roscoe,  171. 

38.  Beawes,  No.  87;  Thompson  on  Bills,  211. 

39.  Thompson,  211;  Chitty,  321. 

40.  Markham  v.  Hazen,  48  Ga.  570.    And  see  also  Hardy  v.  Pilcher,  57  Miss. 

18,  and  §  418. 

41.  Hager  v.  Rice,  4  Colo.  90. 

42.  Hardy  v.  Pilcher,  57  Miss.  18. 

43.  Appendix,  sec.  132.  United  States  Nat.  Bank  of  Vale  v.  First  Trust  &  Sav. 
Bank  of  Brogan,  (Ore.)  119  Pac.  343,  holding  that  it  was  incompatible  for  the 


586  ACCEPTANCE    OF   BILLS   OF   EXCHANGE         §§  488,  489 

§  488.  Bills  drawn  on  joint  parties  and  partners. — If  a  bill  is 
drawn  on  two  persons  not  partners,  both  should  accept,  and  if  either 
refuse,  the  bill  may  be  protested  for  his  nonacceptance;  ^^  but  the 
party  accepting  will  be  bound  by  his  acceptance."^  If  the  bill  is 
addressed  to  two  persons,  "or  either  of  them,"  acceptance  by  either 
is  a  sufl&cient  compliance  with  its  mandate.''^ 

If  a  bill  be  drawn  upon  a  firm,  it  may  be  accepted  by  any  one  of 
the  partners  in  the  partnership  name;  "^  and  it  will  be  a  good  accept- 
ance of  the  firm  (as  we  think,  although  the  authorities  are  in  conflict), 
if  only  the  name  of  the  accepting  partner  be  signed,  as  it  will  be  under- 
stood to  signify  that  the  firm  responds  to  the  request  of  the  bill,  and 
that  the  signing  partner  attests  it."^  But  whether  the  acceptance  be 
in  the  name  of  the  firm,  or  of  the  signing  partner,  it  will  not  bind  the 
firm  as  against  the  drawer  cognizant  of  the  facts,  unless  the  bill  was 
drawn  for  partnership  purposes,''^  except  in  the  hands  of  a  bona  fide 
holder  for  value,  without  notice,  in  which  event  it  would  be  vaUd 
whether  drawn  for  partnership  purposes  or  otherwise.^*^ 

§  489.  If  a  bill  drawn  on  an  individual  member  of  a  firm  be  accepted 
by  him  in  the  name  of  the  firm,  it  will  bind  him  individually,  but  not 
the  firm;  ^^  and  if  a  bill  be  dra^vn  on  a  firm,  and  accepted  by  a  person 
describing  himself  as  manager  or  agent,  there  may  be  an  action 
against  him  as  acceptor,  although  he  may  have  falsely  affirmed  his 
authority  to  accept,  and  the  firm  be  not  bound.^^    An  acceptance  of 


cashier  of  one  bank,  the  payee,  to  act  as  agent  of  another  bank,  as  drawer,  in 
accepting  checks. 

44.  Chitty  on  Bills  (13th  Am.  ed.),  73,  321;  Dupays  v.  Shepherd,  Holt,  297. 

45.  Owen  v.  Van  Uster,  10  C.  B.  318  (70  Eng.  C.  L.);  Bayley  on  Bills,  40, 
101;  Byles  [*180],  306;  Smith  v.  Melton,  133  Mass.  369. 

46.  Thompson  on  Bills,  212. 

47.  Pinkney  v.   Hall,    1   Salk.   126   (1696);   Mason  v.  Rumsey,   1   Campb. 

384. 

48.  Byles  on  Bills  (Sharswood's  ed.),  126;  Mason  v.  Rumsey,  1  Campb.  384; 
Chitty  (13th  Am.  ed.),  53-54;  Wells  v.  Masterman,  2  Esp.  731;  Dolman  v. 
Orchard,  2  Car.  &  P.  104;  Tolman  v.  Hanrahan,  44  Wis.  133.  The  contrary 
doctrine  has  been  held.  See  Heenan  v.  Nash,  8  Minn.  409,  and  cases  cited;  and 
aiite,  chapter  IX,  on  Partners  as  Parties,  §  362.  The  statute  law  of  Michigan  is 
otherwise.    Gooding  v.  Underwood,  89  Mich.  178,  50  N.  W.  818. 

49.  Pinkney  v.  Hall,  1  Salk.  126. 

50.  Catskill  Bank  v.  Stall,  15  Wend.  364;  Bau-s  v.  Cochran,  4  Serg.  &  R.  397; 
Livingston  v.  Roosevelt,  4  Johns.  351. 

51.  Nichols  V.  Diamond,  24  Eng.  L.  &  Eq.  403. 

52.  Owen  v.  Van  Uster,  10  C.  B.  318  (70  Eng.  C.  L.). 


§  490  WHAT   BILLS   REQUIRE   ACCEPTANCE  587 

a  bill  drawn  on  him  by  a  member  of  a  firm  will  bind  him  only,  although 
expressed  to  be  on  account  of  the  firm.^^ 

If  a  new  partner  be  introduced  into  a  jfirm,  an  acceptance  by  the 
old  partners  for  an  old  debt  in  the  name  of  the  new  firm  will  not,  in 
the  hands  of  the  party  taking  it  and  cognizant  of  the  facts,  bind  the 
new  partner.  ^^ 

§  490.  In  the  third  place,  as  to  the  time  when  acceptance  may 
be  made. — The  acceptor  may  make  his  acceptance  before  the  bill 
has  been  signed  by  the  drawer,  and  while  it  is  otherwise  incomplete, 
and  deliver  it  to  be  completed  by  the  necessary  insertions;  ^^  and  his 
acceptance  is  valid  if  made  after  the  bill  is  overdue,^^  and  after  it  has 
been  dishonored  by  refusal  to  accept,  or  by  nonpajnnent,  followed  by 
protest.^^  It  is  not  necessary  that  the  bill  should  be  drawn  by  the 
same  person  to  whom  the  acceptor  handed  the  blank  acceptance.  ^^ 
And  where  the  blank  acceptance  was  filled  up  after  the  lapse  of  twelve 
years,  and,  as  the  jury  found,  after  the  lapse  of  a  reasonable  time,  the 
acceptor  was  held  liable  to  a  bona  fide  indorsee.^^  Furthermore,  the 
acceptor  in  blank  will  be  liable  for  any  amount  for  which  the  bill  is 
filled  up  when  it  has  passed  into  the  hands  of  any  bona  fide  holder, 
without  notice  that  his  authority  has  been  exceeded.®" 

Acceptance  dates  from  delivery,  until  which  time  it  is  revocable;  ^^ 
but  if  not  in  the  hands  of  the  acceptor,  and  accepted  verbally,  this 
principle  would  have  no  application.®^ 

63.  Thompson  on  Bills,  212. 

54.  Shireff  v.  Wilks,  1  East,  48. 

55.  Harvey  v.  Cane,  34  L.  T.  R.  64.    See  ante,  §  91  et  seq. 

66.  Story  on  Bills,  §§  238,  250;  1  Parsons  on  Notes  and  Bills,  290;  Byles  on 
Bills  (Sharswood's  ed.),  [*182];  Thompson  on  Bills,  214;  Williams  v.  Winans, 
2  Green  (N.  J.),  339;  Mechanics'  Bank  v.  Livingston,  33  Barb.  458;  Spalding 
V.  Andrews,  48  Pa.  St.  413. 

57.  Chitty  on  Bills  (13th  Am.  ed.),  *2S6;  Thompson  on  Bills,  214;  Benjamin's 
Chalmers'  Digest,  46;  Bigelow  on  Bills  and  Notes,  50;  Story  on  Bills,  §  250; 
Byles  on  Bills  (Sharswood's  ed.),  [*182];  Wynne  v.  Raikes,  5  East,  513;  Jackson 
V.  Pigot,  1  Ld.  Raym.  364,  12  Mod.  212;  Stockwell  v.  Bramble,  3  Ind.  428;  Grant 
V.  Shaw,  16  Mass.  344. 

58.  Schultz  V.  Ashley,  7  Car.  &  P.  99  (32  Eng.  C.  L.).    See  ante,  §§  142,  143a. 

59.  Montague  v.  Perkins,  22  Eng.  L.  &  Eq.  516. 

60.  Bank  of  Commonwealth  v.  Curry,  2  Dana,  142;  Moody  v.  Threlkeld,  13 
Ga.  55;  Byles  on  Bills  (Sharswood's  ed.),  308. 

61.  Cox  V.  Troy,  5  B.  &  Aid.  474.  But  see  Thornton  v.  Dick,  4  Esp.  270; 
Johnson  on  Bills,  33;  Trent  Tile  Co.  v.  Fort  Dearborn  Nat.  Bank,  54  N.  J.  L. 
35,  23  Atl.  423. 

62.  1  Parsons  on  Notes  and  Bills,  291. 


588  ACCEPTANCE    OF   BILLS   OF   EXCHANGE        §§  491,  492 

After  delivery  of  the  acceptance,  it  is  a  binding  contract,  whether  it 
be  on  account  of  funds  of  the  drawer  in  hand  or  for  accommodation 
of  parties  to  the  bill.^^ 

If  there  is  a  settled  usage  on  the  part  of  the  bank  to  which  a  bill 
is  sent  for  collection,  not  to  note  it  as  dishonored,  after  calling  on  the 
drawee  for  acceptance,  it  will  be  a  good  defense  against  the  charge 
of  negligence.^'* 

§  491.  Acceptance  of  bill  after  maturity,  and  after  death  of 
drawer. — There  may  be  acceptance  of  a  bill  after  it  has  become 
payable,  and  after  protest,  in  which  case  the  bill  is  regarded  as  payable 
on  demand. ^^  And  after  acceptance  has  been  once  refused,  the  drawee 
may  afterward  accept,  and  bind  himself  as  acceptor — but  he  cannot 
bind  the  other  parties  unless  the  bill  was  duly  protested.^^ 

Death  of  the  drawer  is  no  revocation  of  a  bill  in  the  hands  of  a 
bo?ia  fide  holder;  and,  therefore,  after  his  death,  it  may  be  accepted 
by  the  drawee,  although  he  has  knowledge  of  the  fact.^^  The  pre- 
sumption is  that  a  bill  was  accepted  before  maturity,  and  within  a 
reasonable  time  after  date.^^ 

§  492.  Drawee  may  deliberate  twenty-four  hours  whether  or  not 
to  accept. — When  the  bill  is  presented  to  the  drawee  for  accept- 
ance, he  is  entitled,  if  he  desires  it,  to  a  reasonable  time  to  examine 
into  the  state  of  his  accounts  with  the  drawer,  and  deliberate  whether 
or  not  he  will  honor  the  bill.  To  afford  him  this  opportunity,  which 
it  may  be  very  necessary  for  him  to  avail  of,  he  is  allowed  twenty-four 
hours,  and  it  is  usual  to  leave  the  bill  with  him  for  that  period ;  ^^ 

63.  Trent  Tile  Co.  v.  Fort  Dearborn  Nat.  Bank,  54  N.  J.  L.  34,  23  Atl.  423. 

64.  Bank  of  Washington  v.  Triplett,  1  Pet.  25. 

65.  Billing  v.  De  Vaux,  3  M.  &  G.  565;  Christie  v.  Pearl,  7  M.  &  W.  491; 
Jackson  v.  Pigot,  1  Ld.  Raym.  364;  Mitford  v.  Walcot,  1  Ld.  Raym.  374;  Bayley 
on  Bills,  181;  Story  on  Bills,  §  250;  Williams  v.  Winans,  2  Green,  339;  Stockwell 
V.  Bramble,  3  Ind.  428;  Bank  of  Louisville  v.  EUery,  34  Barb.  630;  Kyd  on  Bills, 
73;  Roscoe  on  Bills,  172. 

66.  Wynne  v.  Raikes,  5  East,  514;  Thompson  on  Bills  (Wilson's  ed.),  214; 
Chitty  [*286],  324. 

67.  Cutts  V.  Perkins,  12  Mass.  206;  Thompson  on  Bills,  215;  Chitty  [*287], 
325;  Hammond  v.  Barclay,  2  East,  227.  See  post,  §  498,  and  chapter  on  Checks, 
§  1618a. 

68.  Roberts  v.  Bethell,  12  C.  B.  778  (74  Eng.  C.  L.). 

69.  Connelly  v.  McKean,  64  Pa.  St.  113;  Case  v.  Burt,  15  Mich.  82;  Overman 
V.  Hoboken  City  Bank,  31  N.  J.  L.  (3  Vroom)  563;  Montgomery  County  Bank 
V.  Albany  City  Bank,  8  Barb.  399;  1  Parsons  on  Contracts,  266;  Bellasis  v.  Hester, 


§  493  WHAT   BILLS   REQUIRE    ACCEPTANCE  589 

though  it  has  been  said  that  if  the  post  goes  out  in  the  meantime,  the 
bill  should  be  protested  immediately  if  not  accepted,  and  notice  of 
dishonor  sent7°  But  this  rule  is  too  rigid/^  especially  in  countries 
like  the  United  States,  in  which  the  mail  facilities  are  so  great;  nor 
does  it  consist  with  the  rule  allowing  a  whole  day  for  preparation  of 
notice. 

But  if  the  drawee  refuses  to  accept  within  the  twenty-four  hours 
the  bill  must  be  protested  immediately;  ^^  and  if  at  the  end  of  twenty- 
four  hours  the  drawee  does  not  signify  his  acceptance,  protest  must 
be  immediately  made,  and  notice  givenJ^ 

§  493.  When  acceptance  irrevocable. — When  the  bill  is  once 
accepted  and  issued,  the  acceptance  is  irrevocable.^^  But  a  drawee 
although  he  has  written  his  acceptance  on  the  bill,  may  change  his 
mind  and  cancel  it  before  delivery  of  the  bill  to  the  holder.^^  And 
where  a  bill  was  returned  by  the  drawee  with  an  obliterated  accept- 
ance, without  evidence  to  account  for  the  obliteration,  it  was  held 
that  there  could  be  no  recovery  upon  it.^^ 

But  after  the  acceptance  has  once  been  communicated  to  the  holder 
— as  by  redelivery  of  the  bill,  accepted — it  has  been  said  that  even 
with  the  holder's  consent  the  drawee  cannot  then  revoke,  because  the 
drawer  and  indorsers  have  acquired  an  interest  in  the  acceptance.''^ 
But  if  it  were  discovered  by  the  acceptor  immediately  after  the 

1  Ld.  Raym.  280;  Ingram  v.  Foster,  2  J.  P.  Smith,  242;  Byles  on  Bills  (Shars- 
wood's  ed.),  303;  1  Parsons  on  Notes  and  Bills,  348;  Byles  on  Bills  (Am.  ed.), 
139;  Story  on  Bills,  §  237;  Kyd,  126;  Roscoe,  46;  Edwards,  400;  Chitty  on  Bills 
(13th  Am.  ed.),  317,  321;  Johnson  on  Bills,  30.     See  also  -post,  500. 

70.  Bellasis  v.  Hester,  1  Ld.  Raym.  280;  Thompson  on  Bills  (Wilson's  ed.), 
213;  Beawes,  No.  17;  Byles  on  Bills  (Sharswood's  ed.),  303. 

71.  Morrison  v.  Buchanan,  6  Car.  &  P.  18;  Chitty  on  Bills  (13th  Am.  ed.), 
317-321. 

72.  1  Parsons  on  Notes  and  Bills,  348;  Chitty  on  Bills  (13th  Am.  ed.)  [*279], 
317;  Edwards,  400. 

73.  Ingram  v.  Foster,  2  J.  P.  Smith,  242. 

74.  Wells  V.  Western  Union  Tel.  Co.,  (la.)  123  N.  W.  371,  holding  that  a  tele- 
graph message  directed  from  one  bank  to  another  bank  stating  that  it  will  honor 
a  certain  person's  draft  for  a  certain  amount,  amounts  in  law  to  an  acceptance 
of  that  draft,  from  which  the  bank  cannot  recede. 

75.  Cox  V.  Troy,  5  B.  &  Aid.  474,  1  Dowl.  &  R.  38;  Chitty  on  Bills  [*308], 
347;  Edwards,  418. 

76.  Cox  V.  Troy,  5  B.  &  Aid.  474,  1  Dowl.  &  R.  38.  This  was  previously 
doubted.  Chitty  on  Bills  [*308],  347;  Thompson  on  Bills,  220;  Byles  (Share- 
wood's  ed.)  1*189],  320. 

77.  Chitty  [*308],  347. 


590  ACCEPTANCE    OF   BILLS   OF   EXCHANGE        §§  494,  495 

accepted  bill  had  been  redelivered  to  the  drawee  that  he  was  not  in 
funds  as  he  had  supposed,  so  that  his  acceptance  was,  in  fact,  made 
under  a  mistake,  he  may  recall  and  revoke  it,  provided  there  be  yet 
time  for  the  holder  to  notify  the  drawer  and  indorsers,  and  save  him- 
self from  lossJ^  If  the  drawee  retain  the  bill  after  intimating  his 
acceptance,  he  cannot  return  and  revoke  it7® 

§  494.  As  to  the  date  of  acceptance. — If  the  acceptance  bears 
a  date,  it  will  be  taken  as  prima  facie  evidence  of  the  time  when 
it  was  made,  even  when  the  date  is  in  a  different  handwriting  from 
the  rest  of  the  acceptance.^°  When  the  acceptance  bears  no  date, 
there  is  no  presumption  that  it  was  made  at  the  date  of  drawing;  but, 
on  the  contrary,  it  will  be  presumed  that  it  was  made  afterward.^^ 
The  presumption  is,  that  it  was  made  within  a  reasonable  time  after 
drawing,  and  prior  to  the  term  of  payment.^^  It  is  said,  in  Pardessus, 
that  it  may  be  inferred  to  have  been  accepted  on  the  date  of  the  bill.^^ 

§  495.  Where  a  bill  (says  Mr.  Chitty)  payable  at  days,  usances, 
or  otherwise,  after  sight,  is  accepted,  it  is  usual  and  proper  to  require 
the  drawee  to  certify  or  write  the  day  of  the  presentment  of  the 
acceptance,  by  which  means,  in  case  of  dispute,  the  same  evidence 
which  will  establish  the  handwriting  to  the  acceptance  itself  will  also 
prove  the  time  it  was  made.^^  But  it  has  been  decided  that  if,  on 
production  of  such  a  bill,  an  acceptance  appears  to  have  been  written 
by  the  defendant  under  a  date  which  is  not  in  his  handwriting,  the 
date  is  evidence  of  the  time  of  acceptance,  because  it  is  the  usual 
course  of  business  in  such  cases  for  a  clerk  to  write  the  date,  and  for 
the  party  to  write  his  acceptance  under  the  date.^^  If  there  be  no 
date  it  may  be  inferred  to  have  been  accepted  on  the  date  of  the 
bill.«« 

It  has  been  suggested  that  when  accepting  a  foreign  bill  for  a  large 
amount,  and  without  advice,  it  is  advisable,  and  a  proper  precaution, 

78.  Irving  Bank  v.  Wetherald,  36  N.  Y.  335.  See  chapter  XLIX,  on  Checks, 
section  II,  vol.  II. 

79.  Smith  v.  M'Lure,  5  East,  476. 

80.  Glossup  v.  Jacob,  4  Campb.  227,  1  Stark.  70;  Thompson  on  Bills,  217. 

81.  Begbi  v.  Levi,  1  C.  &  J.  180. 

82.  Roberts  v.  Bethel,  22  L.  J.  C.  P.  69. 

83.  1  Pardessus,  393. 

84.  Chitty  on  Bills   (13th  Am.  ed.)   [*292],   330. 

85.  Glossup  v.  Jacob,  4  Campb.  227,  1  Stark.  69. 

86.  Chitty  on  Bills  [*292],  330. 


§§  496,  497        FORM   AND   VARIETIES   OF   ACCEPTANCE  591 

to  specify  the  amount  in  words  and  figures  (e.  g.,  $2,000.    Accepted 
for  two  thousand  dollars)  to  avoid  the  risk  of  alteration.^^ 


SECTION  III 

FORM  AND  VARIETIES  OF  ACCEPTANCE — EXPRESS  AND  IMPLIED 
ACCEPTANCE 

§  496.  According  to  the  law  merchant,  an  acceptance  may  be 
(1)  expressed  in  words  or  (2)  implied  from  the  conduct  of  the  drawee. 
(3)  It  may  be  verbal  ^^  or  written.  (4)  It  may  be  in  writing  on  the 
bill  itself  or  on  a  separate  paper.  (5)  It  may  be  before  the  bill  is 
drawn  or  afterward.^^  And  (6)  there  may  be  absolute,  conditional, 
and  qualified  acceptances. 

Acceptance  by  telegram  has  been  held  sufficient;  ^°  and  under  the 
statutes  of  New  York,  which  make  an  unconditional  promise  to 
accept  a  bill  before  it  is  drawn  equivalent  to  actual  acceptance  in 
favor  of  a  party,  who  upon  the  faith  thereof  receives  it  for  valuable 
consideration,  it  has  been  adjudged  that  a  telegram  written  and  sent 
by  the  promisor  operates  as  acceptance.^^ 

By  statute,  in  many  of  the  States,  these  principles  of  the  law 
merchant  governing  acceptances,  are  modified,  or  repealed  in  one 
respect  or  another,  as  will  be  seen  hereafter. 

§  497.  (1)  As  to  express  acceptance  it  is  usually  made  by  writ- 
ing the  word  "accepted"  across  the  face  of  the  bill  (which  the  drawee 
may  do  with  pen  or  pencil),  and  adding  the  acceptor's  signature.    But 

87.  Chitty  on  Bills  [*300],  338. 

88.  Jarvis  v.  Wilson,  46  Conn.  90;  Spurgeon  v.  Swain,  13  Ind.  App.  188,  41 
N.  E.  397. 

89.  Text  approved,  Whilder  v.  M.  &  P.  Nat.  Bank,  64  Ala.  28. 

90.  Post,  §  551a;  Central  Savings  Bank  v.  Richards,  109  Mass.  414;  Nevada 
Bank  v.  Luce,  139  Mass.  488.  See  §  560,  and  note;  Lindley  v.  First  Nat.  Bank,  76 
Iowa,  630;  In  re  Armstrong,  41  Fed.  382,  citing  the  text;  Brinkman  v.  Hunter, 
73  Mo.  172;  First  Nat.  Bank  v.  Clark,  61  Md.  401;  Franklin  Bank  v.  Lynch, 
52  Md.  280;  Molson's  Bank  v.  Howard,  8  Jones  &  S.  15;  Coffman  v.  Campbell, 
87  111.  98;  Whilden  v.  Merchants,  etc.,  Bank,  64  Ala.  1;  Garrettson  v.  Bank,  47 
Fed.  687;  Wells  v.  Western  Union  Tel.  Co.,  (la.)  123  N.  W.  371.  An  acceptance 
by  telegram  has  been  held  sufficient,  within  the  meaning  of  a  statute  avoiding 
acceptances  on  separate  paper,  except  in  favor  of  a  person  to  whom  such  accept- 
ance shall  have  been  shown.    Garretson  v.  North  Atchison  Bank,  39  Fed.  166. 

91.  Molson's  Bank  v.  Howard,  8  Jones  &  S.  15. 


592  ACCEPTANCE    OF   BILLS    OF   EXCHANGE  §  497a 

by  the  law  merchant  neither  the  word  nor  the  signature  is  necessary — 
''accepted"  ^2  without  a  signature,  "seen,"^^  "honored,"  ^^  "pre- 
sented,"^^ "I  will  pay  the  bill,"  ^^  or  writing  the  day  and  month 
when  presented  ;^^  or  a  written  direction  of  the  drawee  on  the  bill  to 
some  other  person  to  pay  it,^^  or  the  signature  of  the  drawee  alone,^ 
or  the  word  "excepted,"  it  being  obviously  intended  for  "accepted."  * 
The  words,  "I  take  notice  of  the  above,"  were  recently  held  in  Mas- 
sachusetts not  necessarily  to  import  acceptance;  and  even  if  they  did, 
unexplained,  to  be  open  to  explanation,  as  between  immediate  par- 
ties.2  Where  the  drawee  wrote  his  name  across  the  bill,  it  was  held 
inadmissible  for  him  to  show  that  he  refused  to  write  "accepted,"  for 
the  name  alone  imported  it.^  In  Arkansas  the  words,  "Protest 
waived.  Payment  guaranteed,"  written  on  the  draft  by  the  drawee, 
were  held  to  constitute  a  vaUd  acceptance.^ 

§  497a.  Part  payment  of  bill. — Merely  pajang  and  crediting  a 
part  of  the  amount  on  the  bill  would  not  amount  to  an  acceptance 
in  writing;  ^  and  even  where  a  parol  acceptance  is  sufficient,  a  part 

92.  Philips  V.  Frist,  19  Me.  77;  Dufaur  v,  Oxenden,  1  Moody  &  R.  90;  Leslie 
V.  Hastings,  1  Moody  &  M.  119. 

93.  Barnet  v.  Smith,  10  Fost.  256;  Spear  v.  Pratt,  2  Hill,  582. 

94.  Anonymous,  Comb.  401. 

95.  Story  on  Bills,  §  243;  1  Parsons  on  Notes  and  Bills,  282. 

96.  Ward  v.  Allen,  2  Mete.  (Mass.)  53;  Leach  v.  Buchanan,  4  Esp.  226. 

97.  1  Parsons  on  Notes  and  Bills,  243;  Cunningham  on  Bills,  26. 

98.  Moore  v.  Whithy,  Buller  N.  P.  270;  Harper  v.  West,  1  Cranch  C.  C.  192. 

99.  Spear  v.  Pratt,  2  Hill,  582;  Wheeler  v.  Webster,  1  E.  D.  Smith,  1;  Kyd  on 
Bills,  80.  But  where  the  drawee  wiote  on  the  back  of  the  bill,  the  vulgar  and 
contemptuous  expression,  "Kiss  my  foot,"  signing  his  name  thereto,  it  was  held  a 
rejection  of  the  bill.  Norton  v.  Knapp,  64  Iowa,  112;  Fowler  v.  Gates  City  Bank, 
88  Ga.  29, 13  S.  E.  831. 

1.  Miller  v.  Butler,  1  Cranch  C.  C.  170;  Cortelyou  v.  Maben,  22  Nebr.  697; 
Vanstrum  v.  Liljengren,  37  Minn.  191. 

2.  Cook  V.  Baldwin,  120  Mass.  317  (1876). 

3.  Kaufman  v.  Barrenger,  70  La.  Ann.  419. 

4.  Block  V.  Wilkerson,  42  Ark.  256,  citing  the  text. 

5.  Bassett  v.  Haines,  9  Cal.  261.  In  this  case  it  appeared  that  A.  drew  an 
order  on  B.  in  favor  of  C.  for  $206.50.  C.  presented  it  to  B.,  who  paid  $22.50 
thereon,  and  the  amount  was  receipted  on  the  back  in  the  handwriting  of  B., 
and  signed  by  C.  The  court  said:  "The  only  question  in  the  case  is,  whether 
this  constitutes  an  acceptance  'in  writing,  signed  by  the  acceptor,'  as  required 
by  the  sixth  section  of  the  act  relating  to  bills  of  exchange  and  promissory  notes." 
Wood's  Digest,  72.  "We  think  it  clear  that  this  was  no  acceptance,  either  at 
common  law  or  under  the  statute.  Haines  may  have  owed  the  drawer,  Willse, 
the  sum  of  twenty-two  dollars  and  fifty  cents,  and  no  more.    If  so,  the  payment 


§  497b  FORM   AND    VARIETIES   OF   ACCEPTANCE  693 

payment  by  the  drawee  is  not  such  a  recognition  as  will,  as  matter  of 
law,  bind  him  to  pay  the  remainder,  for  it  may  have  been  accompanied 
with  positive  refusal  to  pay  more.^ 

§  497b.  Statutory  requirements  of  acceptance  in  writing  on  the 
bill.— In  the  year  1821  it  was  enacted  in  England,  by  the  statute 
1  &  2  Geo.  IV.,  chap.  78,  §  2,  that  "no  acceptance  shall  be  sufficient 
to  charge  any  person,  unless  such  acceptance  be  in  writing  on  such 
bill."  Since  that  statute  it  has  been  laid  down  by  high  authority  that 
a  mere  signature  on  the  face  of  the  bill,  without  any  words  of  accept- 
ance, may  be  an  acceptance  in  writing  within  the  meaning  of  the 
statute;  ^  and,  on  the  other  hand,  that  words  of  acceptance  without 
a  signature,  if  intended  as  an  acceptance,  might  suffice.^  By  statute 
19  &  20  Victoria,  chap.  78,  §  2,  it  was  enacted  "that  no  acceptance 
of  any  bill  of  exchange  shall  be  sufficient  to  buid  or  change  any  person, 
unless  the  same  be  in  writing  on  such  bill,  and  signed  by  the  acceptor 
or  some  person  duly  authorized  by  him."  After  this  enactment  it  was 
contended  that  masmuch  as  before  its  passage  a  mere  signature  was 
deemed  an  acceptance  in  writing — within  the  statute  1  &  2  Geo.  IV., 
it  was  still  not  the  less  so;  and  that  inasmuch  as  it  was  a  signature 
of  the  acceptor,  the  bill  was  both  accepted  in  writing  and  signed  by 
the  acceptor  within  the  meaning  of  the  statute  19  &  20  Victoria. 
But  looking  at  the  history  of  the  statute,  Lord  Denman  was  of  the 
contrary  opinion:  and  the  mere  signature  was  held  not  to  amount  to 
an  acceptance  under  the  later  statute.^  The  decision,  however,  was 
immediately  nullified  by  act  of  Parliament. ^^    Under  a  similar  statute 

of  that  amount,  and  the  indorsement  of  the  same  upon  the  paper,  would  not 
imply  that  he  accepted  and  would  pay  the  whole.  The  receipt  is  evidence  that 
Haines  owed  only  that  sum  and  paid  it.  In  all  the  instances  cited  by  the  counsel 
of  plaintiff,  the  writing  on  the  bill  related  to  the  entire  amount.  But  the  receipt 
only  relates  to  the  amount  paid,  and  implies  no  acceptance  of  the  order  for  the 
balance.  Besides  this,  the  receipt  is  not  signed  by  the  acceptor,  within  the  mean- 
ing of  the  statute."  But  see  White  v.  Rosencrantz,  123  Cal.  634,  56  Pac.  436,  69 
Am.  St.  Rep.  90. 

6.  Cook  V.  Baldwin,  120  Mass.  317  (1876).   See  post,  §  499. 

7.  Byles  on  Bills  (12th  ed.),  191.  See  Ames  on  Notes  and  Bills,  vol.  I,  p.  166. 
In  Leshe  v.  Hastings,  1  Moody  &  R.  199  (1831),  it  was  held  that  a  blank  ac- 
ceptance, that  is,  a  mere  signature,  was  "an  acceptance  m  writmg.  See  also 
Molloy  V.  Delves,  7  Bing.  428 ;  Baker  v.  Jubber,  1  M.  &  G.  212,  semble. 

8.  Dufaur  v.  Oxenden,  1  Moody  &  R.  90  (1831).  See  also  Corlett  v.  Con- 
way, 5  M.  &  W.  655,  per  Parke,  B.;  Chitty  on  Bills  (13th  Am.  ed.),  [*291]. 

9.  Hindlaugh  v.  Blakey,  3  C.  P.  D.  136.     See  also  post,  §  504. 

10.  See  Steele  v.  McKinlay,  34  Eng.  Rep.  106. 

38 


594  ACCEPTANCE    OF   BILLS   OF   EXCHANGIJ  i  497b 

in  New  York,  to  that  of  19  &  20  Victoria,  the  mere  signature  of  the 
drawee  was  deemed  a  sufficient  acceptance,  Cowen,  J.,  saying:  "This 
is  treated  by  the  law  merchant  as  a  written  acceptance — a  signing  by 
the  drawer.  *  *  *  It  is  supposed  that  the  rule  has  been  altered 
by  1  R.  S.  757  (2d  ed,).  This  requires  the  acceptance  to  be  in  writing, 
and  signed  by  the  acceptor  or  his  agent.  The  acceptance  in  question 
was,  as  we  have  seen,  declared  by  the  law  merchant  to  be  both  a 
writing  and  a  signing.  The  statute  contains  no  declaration  that  it 
should  be  considered  less.  *  *  *  The  whole  purpose  was  doubt- 
less to  obviate  the  inconvenience  of  the  old  law,  which  gave  effect 
to  a  parol  acceptance."  ^^ 

Under  Negotiable  Instrument  statute. — The  statute  declares  that 
acceptance  of  a  bill  must  be  in  writing  and  signed  by  the  drawee. ^^ 
This  section  of  the  statute,  abolishing  verbal  and  implied  acceptances 
by  providing  that  the  acceptance  must  be  in  writing  and  signed  by  the 
drawee,  must  be  construed  in  connection  with  a  further  section,  de- 
claring that  the  action  of  the  drawee  in  destroying  a  bill  or  in  not  re- 
turning it,  as  required  by  the  section,  shall  be  deemed  an  acceptance 
of  it;  and  a  constructive  acceptance  of  a  bill  imder  the  latter  section 
is  as  effective  to  charge  the  drawee  as  an  acceptance  in  -uTiting  under 

11.  Spear  v.  Pratt,  2  Hill,  582  (1842);  Bigelow  on  Bills  and  Notes  (2d  ed.), 
32;  Edwards  on  Bills,  411-415;  Wheeler  v.  Webster,  1  E.  D.  Smith,  1;  Peter- 
son V.  Hubbard,  28  Mich.  197;  Kaufman  v.  Barringer,  20  La.  Ann.  419,  accord; 
Mechanics'  Bank  v.  Yager,  62  Miss.  529.  In  New  York  the  acceptance  must 
appear  upon  the  bill,  except  as  against  a  person  who  has  taken  the  bill  upon  the 
faith  of  an  acceptance  contained  in  a  separate  paper.  (1  R.  S.  §§  6,  7,  p.  768.) 
Fairchild  v.  Feltman,  32  Hun,  398. 

12.  Appendix,  sec.  132.  See  also  Izzo  v.  Ludington,  79  N.  Y.  S.  744,  79  App. 
Div.  272,  affirmed  178  N.  Y.  621,  70  N.  E.  1100;  Seattle  Shoe  Co.  v.  Packard,  43 
Wash.  527,  86  Pac.  845,  117  Am.  St.  Rep.  1064.  Under  the  statute,  section  185, 
declaring  that  the  provisions  of  that  act  with  respect  to  bills  of  exchange  payable 
on  demand  shall  apply  with  equal  force  to  checks,  and  section  132  providing  that 
the  acceptance  of  a  bill  of  exchange  must  be  in  writing,  the  acceptance  of  a  check 
must  be  in  writing.  Baltimore,  etc.,  R.  Co.  v.  First  Nat.  Bank  of  Alexandria,  102 
Va.  753,  47  S.  E.  837.  The  acceptance  may  be  on  a  separate  paper.  Lehnard  v. 
Sidway  (Mo.  App.),  141  S.  W.  430.  In  Wadhams  v.  Portland  &  Y.  R.  Co.,  37 
Wash.  86,  79  Pac.  597,  it  was  held  that  it  must  be  alleged  in  the  complaint  that  the 
acceptance  was  in  writing.  Before  the  N.  I.  L.,  but  under  a  statute  requiring  an 
acceptance  to  be  in  writing,  it  was  held  that  the  declaration  need  not  allege  that 
the  acceptance  was  in  writing,  though  that  must  be  proved.  Faircloth-Byrd 
Mercantile  Co.  v.  Adkinson  (Ala.),  52  So.  419.  And  see  Bamsdale  v.  Waltemeyer, 
142  Fed.  415,  wherein  it  was  held,  under  a  Colorado  statute,  that  when  the  answer 
does  not  affirmatively  show  that  the  acceptance  was  by  parol,  it  is  equivalent  to  a 
plea  of  a  written  acceptance. 


§§  498,  498a      FORM   AND   VARIETIES   OF   ACCEPTANCE  595 

the  former  section. ^^  And  a  further  section,  providing  that  the  holder 
of  a  bill  presenting  the  same  for  acceptance  may  require  that  the 
acceptance  be  written  on  the  bill,  and,  if  such  request  is  refused,  may 
treat  the  bill  as  dishonored, ^^  has  been  held  not  to  be  confined  to  sight 
bills,  but  to  be  applicable  to  all  bills  of  exchange,  and  although  a  bill 
be  presented  for  acceptance  before  the  date  of  payment  fixed,  and 
the  drawee  refuses  to  accept  it,  the  holder  may  treat  the  bill  as  dis- 
honored, and  has  acquired  the  immediate  right  to  call  on  the  other 
parties  to  the  bill.^^ 

§  498.  Position  of  acceptor's  signature. — Although  usual,  it  is 
not  necessary  for  the  signature  when  written  to  be  across  the  face 
of  the  bill.  It  may  be  written  at  the  bottom  of  the  bill  immediately 
below  the  drawer's  name,  or  it  may  be  written  above  and  parallel 
to  it.  Thompson  says:  "The  position  of  the  drawee's  subscription 
seems  immaterial,  provided  it  be  there,  for  it  may  be  written  above 
as  well  as  below  that  of  the  drawer;  and  as  it  has  been  held  that  an 
indorsement  may  be  written  on  the  face  of  the  bill,  an  acceptance  may, 
as  is  sometimes  the  case,  be  indorsed."  ^^ 

A  letter  from  the  drawee  to  the  drawer,  the  latter  being  dead,  but 
the  former  not  knowing  it,  has  been  held  an  acceptance,  on  the  ground 
that  it  was  so  intended.  ^^ 

§  498a.  Death  of  drawer  no  revocation  of  bill. — The  death  of 
the  drawer  is  no  revocation  of  a  bill  if  it  has  been  delivered  to  the 
payee,  and  the  drawee  may  accept  and  pay  it.^^  "  The  death  of  the 
drawer,"  says  Parsons,  "is  no  objection  whatever  to  an  ordinary 
acceptance  by  the  drawee,  whether  with  or  without  knowledge,  for 
the  death  is  no  revocation  of  the  bill  if  it  has  passed  into  the  hands  of 
a  holder  for  value.  "^^    This  view  seems  to  us  entirely  correct  and  has 

13.  Appendix,  sec.  137.  Wisner  v.  First  Nat.  Bank,  220  Pa.  21,  68  Atl.  955, 
17  L.  R.  A.  (N.  S.)  1266. 

14.  Appendix,  sec.  133. 

15.  National  Bank  Park  v.  Saitta,  111  B.  Y.  S.  927, 127  App.  Div.  624,  affirmed 
196N.Y.548,  89N.E.  1106. 

16.  Thompson  on  Bills,  220. 

17.  Billing  v.  D  Vaux,  3  M.  &  G.  565. 

18.  Ante,  §491;  Cutts  v.  Perkins,  12  Mass.  206;  Thompson  on  Bills,  216, 
Story  on  Bills,  §  250;  1  Parsons  on  Notes  and  Bills,  287;  Chitty  on  Bills  [*287] 
325;  Hammond  v.  Barclay,  2  East,  227,  acceptance  was  before  the  drawee  had 
notice  of  the  death  of  the  drawer. 

19.  1  Parsons  on  Notes  and  Bills,  287,  and  note  6.  See  chapter  on  Checks, 
§  1618a;  Story  on  Bills,  §  250. 


596  ACCEPTANCE   OF   BILLS   OF   EXCHANGE      §§  499,  499a 

the  sanction  of  authority.^"  Upon  the  delivery  of  the  bill  to  the  payee, 
the  liability  of  the  drawer  becomes  complete,  if  the  holder  is  guilty 
of  no  laches,  and  it  results  that  the  drawer  has  a  right  to  discharge 
that  liability.2i 

§  499.  Implied  acceptance. — (2)  Acceptance  may  be  implied 
from  the  conduct  of  the  drawee.  Any  act  which  clearly  indicates  an 
intention  to  comply  with  the  request  of  the  drawer,^^  or  any  conduct 
of  the  drawee  (no  statute  intervening)  from  which  the  holder  is 
justified  in  drawing  the  conclusion  that  the  drawee  intended  to  accept 
the  bill,  and  intended  to  be  so  understood,  will  be  regarded  as  an 
acceptance.^^ 

§  499a.  Effect  of  detention  of  bill. — Keeping  a  bill  a  consider- 
able length  of  time  without  returning  an  answer,  may,  under  some 
circumstances,  be  considered  as  an  acceptance,  especially  if  the  drawee 
be  informed  that  delay  will  be  so  considered,  and  there  be  an  inference 
from  the  language  of  the  drawee  that  he  intended  an  acceptance.-^ 

The  cases  have  been  decided  upon  special  circumstances,  and,  as  a 
general  rule,  the  mere  detention  for  an  unreasonable  time  is  not  con- 
sidered as  amounting  to  an  acceptance.^^ 

Thus,  where  a  bill  has  been  sent  to  the  drawee  by  mail  for  accept- 

20.  Cutis  V.  Perkins,  12  Mass.  206. 

21.  Cults  V.  Perkins,  12  Mass.  210-211  (1815). 

22.  Andressen  v.  First  Nat.  Bank,  2  Fed.  125,  in  which  case  bank  paid  part 
cash  and  issued  certificate  of  deposit  for  the  balance.    See  ante,  §  497a. 

23.  1  Parsons  on  Notes  and  Bills,  287;  Byles  on  Bills  (Sharswood's  ed.)  [*185], 
315;  Billing  v.  De  Vaux,  3  M.  &  G.  565;  McCutchen  v.  Rice,  56  Miss.  455.  See 
Lockhart  v.  Moss,  53  Mo.  App.  633. 

24.  Chitty  on  Bills  [*295],  334;  Byles  on  Bills  (Sharswood's  ed.)  [*185],  315; 
Bayley  on  Bills,  193;  Harvey  v.  Martin,  1  Campb.  425.  See  Jeune  v.  Ward,  2 
Stark.  326,  note,  1  B.  &  Aid.  653;  Edwards  on  Bills,  418;  Lockhart  v.  Moss,  53 
Mo.  App.  633.     See  also  ante,  §  492,  and  -post,  §  500. 

25.  Mason  v.  Barff,  2  B.  «fe  Aid.  26;  Koch  v.  Howell,  6  Watts  &  S.  350;  Colo- 
rado Nat.  Bank  v.  Boettcher,  5  Colo.  190,  citing  the  text;  Holbrook  v.  Payne, 
24  N.  E.  210.  UnaflFected  or  uncontrolled  by  statute,  an  acceptance  of  a  bill  of 
exchange  or  check  may  be  impUed  from  the  conduct  of  the  drawee.  Such  acts  or 
conduct  on  his  part  which  indicate  clearly  an  intention  to  honor  the  bill  and  from 
which  the  drawer  may  infer  such  intention  is  regarded  as  an  acceptance,  and  will 
impose  liability  on  the  drawee;  unreasonable  detention,  as  well  as  the  destruction, 
of  the  bill,  retaining  sufficient  funds  to  meet  an  outstanding  check  by  the  drawee 
in  settling  the  drawer's  accoimt,  and  other  circumstances,  are  regarded  as  an 
hnplied  acceptance.  Wisner  v.  First  Nat.  Bank,  220  Pa.  21,  68  Atl.  955,  17  L. 
R.  A.  (N.  S.)  1266. 


§  500  FORM   AND   VARIETIES   OF   ACCEPTANCE  597 

ance,  with  the  view  of  waiting  for  funds  or  securities  to  be  forwarded 
by  the  drawer,  and  is  retained  by  the  drawee,  it  is  not  an  imphed 
acceptance,  for  the  retention  is  consistent  \vath  the  rights  of  all  par- 
ties.26  And  where  the  holder  leaves  a  bill  for  acceptance,  it  is  his 
duty  to  call  for  it  within  a  reasonable  time,  so  as  to  ascertain  whether 
it  has  been  accepted  or  not;  and  if  he  does  not  call  for  it  wdthin  a 
reasonable  time,  there  would  be  no  ground  to  insist  that  its  retention 
was  an  implied  acceptance.^'^ 

§  500.  Whether  the  destruction  of  the  bill  by  the  drawee  will 
amount  to  an  acceptance  has  been  a  question  upon  which  learned 
judges  have  differed  in  opinion.  In  an  English  case  where  the  drawee 
refused  acceptance,  but  retained  and  subsequently  destroyed  the 
bill,  Lord  Ellenborough  thought  it  amounted  to  acceptance;  but 
Bayley,  Abbott,  and  Holroyd,  JJ.,  thought  otherwise,  and  it  was  so 
determined.2^  But  the  court  seemed  to  be  of  the  opinion  that  if  there 
had  not  been  a  previous  refusal  to  accept,  the  destruction  of  the  bill 
would  have  been  an  impHed  acceptance.^ 

The  drawer  in  such  cases  has  his  remedy  of  trover  for  the  destruc- 
tion of  the  bill;  ^°  and  it  is  singular,  as  is  well  observed  by  Chitty,  that 
it  should  ever  have  been  supposed  that  the  tortious  act  of  destroying 
a  bill,  which  is  calculated  to  defeat  the  remedy  on  the  bill,  should 
have  been  deemed  evidence  of  a  contract  on  the  part  of  the  drawee 
to  pay  the  bill  to  the  holder.^^  In  New  York  by  Revised  Statutes 
(§  11,  2d  ed.,  p.  757)  it  is  provided  that  ''every  person  upon  whom  a 
bill  of  exchange  is  drawn,  and  to  whom  the  same  is  delivered  for 
acceptance,  who  shall  destroy  such  bill,  or  refuse  within  twenty-four 
hours  after  such  delivery,  or  within  such  other  period  as  the  holder 
may  allow,  to  return  the  bill,  accepted  or  nonaccepted,  to  the  holder, 
shall  be  deemed  to  have  accepted  the  same."  This  statute  it  has  been 
held,  applies  only  to  cases  in  which  the  acts  of  the  drawee  are  of  a 
tortious  character,  and  imply  an  unauthorized  conversion  by  him, 
and  not  to  cases  in  which  the  bill  is  willingly  left  in  his  hands  by  the 
holder,  and  no  demand  therefor  is  made.^^ ^ 

26.  Mason  v.  Barff,  supra. 

27.  Jeune  v.  Ward,  2  Stark.  326,  1  B.  &  Aid.  654,  Bayley,  J. 

28.  Jeune  v.  Ward,  2  Stark.  326,  1  B.  &  Aid.  653.    See  Edwards  on  Bills,  417. 

29.  Jeune  v.  Ward,  supra,  Holroyd,  J. 

30.  Story  on  Bills,  §248;  1  Parsons  on  Notes  and  Bills,  285;  Johnson  on  Bills,  31. 

31.  Chitty  on  Bills  [*296],  335;  Edwards  on  Bills,  418. 

32.  Matteson  v.  Moulton,  11  Hun,  268.  See  also  Gates  v.  Eno,  4  Hun,  96, 
and  ante,  §§492,  499a. 


598  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  |  500 

Under  Negotiable  Instrument  statute.— The  statute  provides  that 
''Where  a  drawee  to  whom  a  bill  is  delivered  for  acceptance  destroys 
the  same,  or  refuses  within  twenty-four  hours  after  such  delivery,  or 
within  such  other  period  as  the  holder  may  allow,  to  return  the  bill 
accepted  or  nonaccepted  to  the  holder,  he  will  be  deemed  to  have 
accepted  the  same."  ^^  It  has  been  shown  that,  in  the  absence  of 
special  circumstances,  it  was  the  rule  at  common  law  that  the  mere 
failure  to  return  a  bill  is  not  an  acceptance,  and  it  has  been  held  that 
the  statute  reiterates  the  common  law  rule.  Under  that  rule,  mere 
retention  is  not  suflficient  to  charge  the  drawer  with  refusal  to  return 
the  bill  to  the  holder;  there  must  have  been  either  destruction  or 
refusal  to  return  to  the  holder  after  a  demand  for  its  return.^*  The 
view  that  the  statute  is  merely  declaratory  of  the  common  law  rule 
is  supported  by  another  section  declaring  that  "The  acceptance  must 
be  in  writing  and  signed  by  the  drawee."  ^^  And  similar  statutory 
provisions  which  had  been  enacted  before  the  uniform  Negotiable 
Instrument  statute  was  passed  or  in  States  which  have  not  adopted 
that  statute,  have  been  so  construed.^^  In  Pennsylvania,  however,  a 
different  construction  of  the  statute,  as  originally  passed,  has  been 
made,  and  it  has  been  held  that  the  statute  does  not  contemplate  a 
tortious  refusal  to  return,  amounting  to  a  conversion,  but  that  the 
neglect  or  failure  to  return  to  the  holder  within  twenty-four  hours 
after  delivery  to  the  drawee  is  a  refusal  to  return  within  the  meaning  • 

33.  Appendix,  sec.  137. 

34.  Westberg  v.  Chicago  Lumber,  etc.,  Co.,  117  Wis.  589,  94  N.  W.  572,  wherein 
the  court  said:  "The  doctrine  of  constructive  acceptance  is  based  on  the  general 
principles  of  estoppel.  If  the  conduct  of  the  drawee  will  prejudice  the  existing 
rights  of  the  holder,  unless  it  means  acceptance,  and  the  drawee  has  knowledge  of 
such  fact,  he  is  estopped  to  deny  the  only  purpose  which  could  render  his  con- 
duct innocuous ;  namely,  acceptance  of  the  bill.  This  underlying  principle  suggests 
the  reasons  for  many  of  the  limitations  upon  the  implication  of  acceptance  from 
conduct;  as  for  example,  that  such  implication  arises  only  when  the  bill  is  pre- 
sented for  acceptance,  and  that  no  one  but  the  holder  (payee  or  indorsee)  can 
make  such  technical  presentment.  *  *  *  Only  when  the  drawee  knows  that 
acceptance  is  expected  would  he  suppose  that  his  conduct  can  lead  to  a  beUef 
that  he  does  accept.  Only  when  the  presentment  is  by  the  holder,  whose  conduct 
and  rights  must  be  affected  by  acceptance  or  refusal,  is  the  drawee  charged  by 
the  strict  rules  of  the  law  merchant  with  notice  that  his  conduct  may  so  injuriously 
affect  the  person  delivering  the  bill  to  him."  It  should  be  noticed,  however,  that 
this  construction  is  required  in  Wisconsin  by  the  language  of  the  statute,  which 
adds  to  section  137  that  "  Mere  retention  of  the  bill  is  not  an  acceptance." 

35.  Appendix,  sec.  132. 

36.  St.  Louis,  etc.,  R.  Co.  v.  James,  78  Ark.  490,  95  S.  W.  804;  Matteson  v. 
Moulton,  79  N.  Y.  627;  Dickinson  v.  Marsh,  57  Mo.  App.  566. 


§  501  FORMS   AND   VAUIETIES   OF   ACCEPTANCE  599 

of  the  statute.^^  But  soon  after  this  decision,  the  legislature  met  this 
construction  of  the  statute  by  an  amendment  of  the  section:  "That 
the  mere  retention  of  such  bill  by  the  drawee,  unless  its  return  has 
been  demanded,  will  not  amount  to  an  acceptance:  And  provided 
further.  That  the  provisions  of  this  section  shall  not  apply  to  checks."  ^^ 
In  an  action  upon  drafts,  in  order  to  raise  the  presumption  of  ac- 
ceptance by  destruction  of  the  same  or  refusal  to  return  them  accepted 
or  nonaccepted,  the  plaintiff  must  sustain  the  burden  of  proof  that 
the  drafts  were  negotiable  paper  of  the  nature  and  kind  that  could  be 
presented  for  acceptance,  and  that  they  were  actually  delivered  to 
the  drawee  for  acceptance  and  not  for  payment. ^^ 

§  501.  Other  illustrations  of  constructive  or  implied  acceptance. — 

It  has  been  held  that  if  the  drawee  of  a  bill,  drawn  and  indorsed  for 
his  accommodation,  procure  the  same  to  be  discounted,  and  promise 
to  pay  it  at  maturity,  he  constitutes  himself  an  acceptor;  ^"^  and  that 
a  promise  to  pay  a  bill  at  maturity  amounts  to  an  acceptance. ^^ 
Also,  that  authority  "to  draw  on  us  or  either  of  us,"  and  "We  hereby 
jointly  and  severally  hold  ourselves  accountable  for  the  acceptance 
and  pajTnent  of  such  drafts,"  binds  the  signers  jointly  and  severally 
to  the  pa}Tiient  of  acceptances  by  each  other.  ^^ 

37.  Wisner  v.  First  Xat.  Bank,  220  Pa.  21,  68  Atl.  955.  In  that  case  the  court 
said:  "The  drawee  to  whom  a  bill  is  delivered  for  acceptance  is  deemed  or  taken 
to  have  accepted  it  under  this  section  of  the  act  (a)  where  he  destroys  it;  (b)  where 
he  refuses  within  twenty-four  hours  after  dehvery  to  return  the  bill  accepted  or 
non-accepted  to  the  holder;  and  (c)  where  he  refuses  withm  such  other  period 
as  the  holder  may  allow  to  return  the  bill  accepted  or  nonaccepted  to  the  holder. 
WTien  either  of  these  conditions  exists  the  drawee  becomes  an  acceptor  of  the 
bill,  and  assumes  hability  as  such.  An  imphed  or  a  verbal  acceptance  of  a  bill  is 
abolished  by  the  act  and  there  are  now  only  two  modes  of  acceptmg  a  bill;  (1)  By 
writing,  signed  by  the  drawee,  as  provided  in  section  132,  and  (2)  by  a  nonreturn 
of  the  bill,  which  is  declared  by  the  section  under  consideration  to  be  equivalent 
of  an  acceptance.  The  manifest  purpose  in  requiring  the  prompt  return  of  the 
bill  is  in  the  mterest  of  and  for  the  protection  of  the  holder.  It  is  immaterial  to 
the  drawer  when  the  bill  is  returned,  as  he  is  protected  by  the  notice  of  dishonor; 
and  hence  this  section  of  the  act  reqmring  prompt  action  in  returning  the  bill  was 
obviously  enacted  for  the  benefit  of  the  holder  of  the  bill."  See  also  State  Bank  v. 
Weiss,  91  N.  Y.  Supp.  276. 

38.  Laws  of  Pennsylvania,  1909,  No.  169. 

39.  Fu^t  Nat.  Bank  v.  Whitmore,  177  Fed.  397. 

40.  Bank  of  Rutland  v.  Woodruff,  34  Vt.  89;  Bigelow  on  Bills,  53;  Benjamin's 
Chahners'  Digest,  44.  Aliier  if  discounted  by  drawee.  Swope  v.  Ross,  40  Pa. 
St.  186. 

41.  Spaulding  v.  Andrews,  12  Wright,  411. 

42.  Michigan  State  Bank  v.  Pecks,  2  Williams,  200. 


600  ACCEPTANCE    OF   BILLS   OF   EXCHANGE        §§  502,  503 

§  502.  If  the  drawee  has  expressly  or  impliedly  promised  the  in- 
tended drawer  to  accept  the  bill,  to  be  drawn  upon  him  for  a  valuable 
consideration,  and  should  afterward  refuse  to  perform  such  contract, 
the  drawer  may  recover  re-exchange  and  damages  consequent  upon 
its  dishonor.  ^^  And  where  the  drawee  has  funds  of  the  drawer,  very 
slight  circumstances  will  support  the  presumption  of  a  contract  to 
accept.^^ 

A  promise  to  notify  a  party  when  he  may  draw  a  bill  amounts  to  an 
undertaking  to  accept  the  bill  when  drawn  in  pursuance  thereof.'*^ 

It  has  been  said  that  the  words,  "  I  will  not  accept  this  bill,"  written 
across  the  face  of  it,  amounts  to  acceptance,  but  it  is  impossible  to 
suppose  that  any  such  doctrine  is  maintainable  unless  it  could  be 
shown  that  the  word  "not"  was  unintentionally  inserted.^^  If  it 
were  inserted  to  deceive  the  holder,  it  has  been  suggested  that  the 
drawee  might  be  bound/^  "I  protest  the  within,"  written  on  the 
back  of  a  draft  by  the  drawee,  has  been  considered  sufficient  evidence 
of  due  presentment  and  refusal.^ 

§  503.  Acceptance  on  separate  paper. — There  is  no  doubt  that, 
in  the  absence  of  statutory  interdiction,  an  acceptance  may  be  upon 
a  separate  paper,  as  in  a  letter,  for  instance,  as  well  as  upon  the  bill 
itself.'*^  The  drawee  cannot  be  held  liable  upon  a  contract  of  accept- 
ance external  to  the  bill,  unless  the  language  used  clearly  and  un- 
equivocally imports  an  absolute  promise  to  pay.*""  Thus,  a  written 
promise  to  accept  an  existing  bill,  or  "that  it  shall  meet  with  due 

43.  Chitty  on  Bills  (13th  Am.  ed.)  [*281],  319;  Smith  v.  Brown,  2  Marsh.  41, 
6  Taunt.  340. 

44.  Laing  v.  Barclay,  1  B.  &  C.  398,  2  Dowl.  &  R.  530. 

45.  Smith  v.  Brown,  2  Marsh.  41,  6  Taunt.  340. 

46.  1  Parsons  on  Notes  and  Bills,  283;  Roscoe  on  Bills,  178. 

47.  Roscoe  on  Bills,  178. 

48.  Pridgen  v.  Cox,  13  Tex.  257. 

49.  Billmg  V.  De  Vaux,  3  M.  &  G.  565;  Hatcher  v.  Stalworth,  25  Miss.  376; 
Fairlie  v.  Herring,  3  Bing.  625;  Pierson  v.  Dunlap,  Cowp.  571;  Wynne  v.  Raikes, 
5  East,  514;  Grant  v.  Hunt,  1  M.,  G.  &  S.  44;  McEvers  v.  Mason,  10  Johns.  207; 
Greele  v.  Parker,  5  Wend.  414;  §  550  et  seq. 

50.  First  Nat.  Bank  v.  Commercial  Sav.  Bank,  74  Kan.  606,  87  Pac.  746,  8 
L.  R.  A.  (N.  S.)  1148,  118  Am.  St.  Rep.  340.  Where  a  bill  of  exchange  has  had 
written  thereon  by  the  drawee,  before  endorsement  by  the  payee,  a  statement 
that  it  will  be  credited  to  the  account  of  the  payee  on  return  properly  endorsed, 
and  there  has  been  verbal  assurance  that  the  amount  has  in  fact  been  credited 
to  the  payee,  there  is  both  a  written  and  a  verbal  acceptance.  Milmo  Nat.  Bank 
V.  Cobbs,  53  Tex.  Civ.  App.  1, 115  S.  W.  345. 


§  504  VERBAL   AND   WRITTEN   ACCEPTANCE  601 

honor";  or  that  the  drawee  "will  accept  or  certainly  pay  it" — or  any 
other  equivalent  language,  has  been  held  to  amount  to  acceptance. ^^ 
But  if  the  language  be  equivocal — if  it  be  merely  stated,  "Your  bill 
shall  have  attention" — it  is  not  sufficient, ^^  And  it  has  been  held 
that  a  clear  and  unequivocal  promise  to  pay  on  contract  of  acceptance 
external  to  the  bill  is  not  made  by  returning  to  a  telegraphic  inquiry, 
"Is  J.  F.  Donald's  check  on  you  $350  good?"  the  telegraphic  re- 
sponse, "J.  F.  Donald's  check  is  good  for  sum  named."  ^^  Promises 
to  accept  are  hereafter  considered. 


SECTION  IV 

VERBAL   AND    WRITTEN   ACCEPTANCE 

§  504.  Acceptance  is  usually  effected  by  the  drawer's  writing  his 
name  across  the  face  of  the  bill.  And  it  seems  that  the  holder  may 
always  insist  on  such  an  acceptance  in  writing,  and  in  default  thereof 
treat  the  bill  as  dishonored.^^  But  there  is  no  doubt  that  a  verbal  as 
well  as  a  written  acceptance  is  by  the  law  merchant  binding  on  the 
drawee.^^ 

Statutes  in  some  States  require  an  acceptance  to  be  in  writing. ^^ 

51.  Ibid.  See  §  550  et  seq.]  Burke  v.  Utah  Nat.  Bank,  47  Nebr.  247,  66  N.  W. 
295. 

62.  Rees  v.  Warwick,  2  B.  &  Aid.  113. 

53.  First  Nat.  Bank  v.  Commercial  Sav.  Bank,  74  Kan.  606,  87  Pac.  746,  8 
L.  R.  A.  (N.  S.)  1148,  118  Am.  St.  Rep.  340. 

54.  Chitty  on  Bills  (13th  Am.  ed.)  [*287],  326;  Edwards  on  Bills,  417. 

55.  Lumley  v.  Palmer,  2  Stra.  1000;  Chitty,  Jr.,  275  (1735);  Sproat  v.  Mat- 
thews, 1  T.  R.  182  (1786);  Grant  v.  Shaw,  16  Mass.  34;  Phelps  v.  Northrup, 
56  111.  156;  Sturges  v.  Fourth  Nat.  Bank,  75  111.  595;  Miller  v.  Neihaus,  51  Ind. 
401,  case  of  an  order;  Scudder  v.  Union  Nat.  Bank,  91  U.  S.  (1  Otto)  406;  Pierce 
V.  Kittredge,  115  Mass.  374;  Dunovan  v.  Flynn,  118  Mass.  539;  Spaulding  v. 
Andrews,  48  Pa.  St.  411;  Jarvis  v.  Wilson,  46  Conn.  90;  McCutchen  v.  Rice, 
56  Miss.  455;  Barcroft  v.  Denny,  5  Houst.  (Del.)  10;  Neumann  v.  Shroeder,  71 
Tex.  84;  Louisville  R.  Co.  v.  Caldwell,  98  Ind.  246;  Weinhauer  v.  Morrison, 
49  Hun,  498;  Chitty  on  Bills  (13th  Am.  ed.)  [*289],  327;  Story  on  Bills,  §242; 
Edwards  on  Bills,  417,  422;  1  Parsons  on  Notes  and  Bills,  285;  Byles  (Sharswood's 
ed.)  [*184],  313;  Bayley,  chapter  VI,  section  1;  Putnam  Nat.  Bank  v.  Snow,  172 
Mass.  569,  52  N.  E.  1079,  citing  and  approving  text;  Spurgeon  v.  Swain,  13  Ind. 
App.  188,  41  N.  E.  397;  Exchange  Bank  v.  Hubbard,  10  C.  C.  A.  295,  62  Fed.  112; 
Dickinson  v.  Marsh,  57  Mo.  App.  566;  Haeberle  v.  O'Day,  61  Mo.  App.  390; 
Milmo  Nat.  Bank  v.  Cobbs,  53  Tex.  Civ.  App.  1,  115  S.  W.  345. 

56.  See  Faircloth-Byrd  Mercantile  Co.  v.  Adkinson,  167  Ala.  344,  52  So.  419; 


602  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  504a 

In  England,  by  statute  19  &  20  Victoria,  chap.  97,  §  6,  it  is  provided 
that  "no  acceptance  of  a  bill  of  exchange,  inland  or  foreign,  shall  be 
sufficient  to  bind  or  charge  any  person,  unless  the  same  be  in  writing 
on  such  bill,  signed  by  the  acceptor  or  some  person  duly  authorized 
by  him."  And  it  has  been  held  that  the  word  "accepted"  written 
across  the  face  of  the  bill,  but  unsigned,  did  not  satisfy  the  statute." 
It  has  been  held,  however,  under  a  statute  providing  that  an  accept- 
ance of  a  bill  of  exchange  must  be  in  writing,  but  that  it  is  a  sufficient 
acceptance  if  the  acceptor  writes  "his  name  across  the  face  of  the  bill, 
with  or  without  other  words,"  that  the  manner  of  acceptance  thus 
authorized  is  merely  permissive  and  does  not  exclude  any  other  mode 
of  acceptance,  so  long  as  it  is  in  writing  and  clearly  discloses  an  in- 
tention to  accept.^* 

§  504a.  Words  amounting  to  acceptance. — In  the  absence  of 
statutory  provision,  any  words  used  by  the  drawee  to  the  drawer 
or  holder,  which  by  reasonable  intendment  signify  that  he  honors 
the  bill,  will  amount  to  such  acceptance;  though  it  would  be  different 
if  the  words  were  addressed  to  a  stranger  having  no  interest  in  the 
bill.  Thus,  where  a  foreign  bill  drawn  on  defendant  was  protested 
by  nonacceptance  and  returned,  and  afterward  the  drawee  told  the 
plaintiff,  "If  the  bill  comes  back  I  will  pay  it,"  was  held  an  accept- 
ance.^^ So,  if  the  drawee  say,  "Leave  your  bill  with  me,  and  I  will 
accept  it."  ^°  So,  where  the  holder  met  in  the  street  the  drawee  of  the 
bill  which  had  been  sent  to  his  counting-house,  and  returned  un- 
accepted, and  the  drawee  said,  "  If  you  will  send  it  to  the  counting- 
house  again,  I  will  give  directions  for  its  being  accepted,"  Lord  Ellen- 
Flat  V.  Mulhall,  4  Mo.  App.  476;  Erickson  v.  Inman,  34  Oreg.  44,  54  Pac.  949. 
As  to  the  effect  of  the  Statute  of  Frauds,  see  -post,  §  566.  Under  a  statute  declar- 
ing that  to  make  an  acceptance  of  a  bill  of  exchange  binding  it  must  be  in  writing, 
signed  by  the  party  to  be  charged  therewith,  or  by  some  person  by  him  lawfully 
authorized  so  to  do,  where  goods  were  sold  to  the  payee  of  a  bill  of  exchange  on 
the  faith  of  a  parol  acceptance  of  the  same,  which  was  not  made  as  an  inducement 
to  or  in  contemplation  of  the  sale,  the  acceptor  was  not  hable  to  the  seller  in  an 
action  on  the  bill.    Lewin  v.  Greig,  115  Ga.  127,  41  S.  E.  497. 

57.  Hindhaugh  v.  Blakey,  1  C.  P.  Div.  136.  Since  this  decision,  and  in  con- 
sequence of  it,  an  act  has  been  passed  by  the  British  Parliament  declaring  that  a 
wTitten  acceptance  of  a  bill  shall  not  be  deemed  insufficient  because  consisting 
merely  of  the  signature  of  the  acceptor  written  thereon.  See  41  Vict.,  chap.  XIII ; 
Steele  v.  McKinlay,  34  Eng.  Rep.  106.    See  ante,  §  497b. 

58.  Hughes  Bros.  v.  Rawhide  Gold  Mining  Co.,  16  Cal.  App.  293,  116  Pac.  969. 

59.  Cox  V.  Coleman,  Chitty,  Jr.,  on  Bills,  274  (1732). 

60.  Chitty,  Jr.,  12;  Bayley  on  Bills,  chap.  VI,  §  1. 


§§  505,  506         VERBAL   AND    WRITTEN   ACCEPTANCE 


603 


borough  held  that  if  the  bill  had  been  sent  accordingly,  it  would  oper- 
ate as  an  acceptance,  but  otherwise  not,  the  words  being  conditional.^^ 
So,  where  the  drawees  requested  that  funds  should  be  placed  in  their 
hands  to  meet  a  certain  bill,  and  after  the  bill  was  left  at  their  house 
and  was  not  accepted,  one  of  them,  on  being  complained  to,  said: 
"What!  not  accepted!  we  have  had  the  money;  they  ought  to  be  paid, 
but  I  do  not  interfere  in  this  business;  you  should  see  Mr.  P.,"  Best, 
C.  J.,  said:  "We  are  all  of  opinion  that  there  has  been  a  good  accept- 
ance of  the  bill."  62 

§  505.  Where  the  drawee,  on  hearing  a  bill  read,  says  it  is  correct, 
and  shall  be  paid,  it  is  an  acceptance,^^  drawn  on  the  faith  of  a 
consignment  of  goods,  and  the  drawee  refused  to  accept  before  the  bill 
of  lading  and  invoices  came  to  hand,  but  after  their  arrival  called  on 
the  holder's  agent,  and  said  that  if  he  would  get  the  bill  back  he  would 
accept  and  pay  it,  and  the  bill  was  accordingly  returned,  it  was  held 
as  an  acceptance.^*  So,  if  the  drawee  of  a  bill  at  sight  promise  to  pay 
it  on  a  subsequent  day  named,  it  is  an  acceptance.^^  The  words, 
"Will  pay  A.  Harper  draft  $2,300  for  stock,"  by  telegram,  have  been 
held  an  unconditional  acceptance.^^ 

§  506.  Verbal  acceptance  must  not  be  equivocal.— The  words 
used  must  evince  a  clear  intention  on  the  part  of  the  drawee  to  bind 
himself  to  the  payment  of  the  bill  at  all  events,  in  order  to  amount 
to  an  acceptance,  and  equivocal  language  will  not  suffice.  Therefore, 
where  the  drawee  said,  on  the  day  after  presentment  for  acceptance, 
when  the  plaintiff's  clerk  called  for  the  bill,  "There  is  your  bill,  it  is 
all  right,"  it  was  held  no  acceptance.^^  So,  saying,  when  a  bill  is  pre- 
sented for  payment,  that  "it  will  be  paid,"  if  said  with  reference  to 
immediate  payment,  will  not  amount  to  an  acceptance,  if  the  holder 
decline  immediate  payment  on  the  terms  proposed,  because  he  makes 
an    ulterior  demand.^s     go^   saying,    "The  bill  shall    have    atten- 

61.  Anderson  v.  Hick,  3  Campb.  179  (1812). 

62.  FairUe  v.  Herring,  11  Moore,  320,  3  Bing.  525  (1826). 

63.  Ward  v.  Allen,  2  Mete.  (Mass.)  53. 

64.  Grant  v.  Shaw,  16  Mass.  341. 

65.  Clarke  v.  Gordon,  3  Rich.  (S.  C.)  311.    But  see  Peck  v.  Cochran,  7  Pick.  35. 

66.  Coffman  v.  Campbell,  87  111.  98;  Gambrill  v.  The  Brown  Hotel  Co.,  11  Colo. 
App.  529,  54  Pac.  1025.  See  also  State  Bank  of  Beaver  County  v.  Bradstreet, 
89  Nebr.  186,  130  N.  W.  1038  as  to  a  telegram  accepting  a  "draft  for  horses." 

67.  Powell  V.  Jones,  1  Esp.  17  (1763),  per  Lord  Kenyon. 

68.  Anderson  v.  Heath,  4  Maule  &  S.  303  (1815). 


(304  ACCEPTANCE    OF   BILLS   OF   EXCHANGE         §§  507-508 

tion,"  ^^  or,  "I  will  pay  it,  but  I  cannot  now.  I'll  give  you  a  bill  at 
three  months,"  '^°  will  not  suffice.  So  it  has  been  held  that  if  the 
drawee  of  a  bill  say  he  cannot  accept  it  without  further  direction  from 
A.  B.,  and  A.  B.  afterward  desire  him  to  accept  and  draw  upon  C.  D. 
for  the  amount,  the  mere  drawing  a  bill  upon  C.  D.  will  not  amount 
to  an  absolute  acceptance,  nor  can  become  such  before  the  bill  upon 
C.  D.  is  accepted.^^ 

§  507.  Words  addressed  to  stranger  not  acceptance. — In  order 
to  amount  to  an  acceptance,  the  words  used  must  be  addressed  to 
the  drawer  or  holder,  or  their  agent,  or  to  some  one  who  takes  the 
bill  on  the  faith  and  credit  imparted  by  them;  and  if  the  drawee  say 
to  a  mere  stranger,  "I  must  accept  and  pay  the  bill,"  or,  "  I  shall  have 
to  accept  or  pay  it,"  it  is  no  acceptance.^^  For,  as  acceptance  is  a 
contract,  it  must  be  assented  to  by  both  parties,  and  a  mere  stranger 
has  no  privity  with  the  drawee. 

§  507a.  Verbal  acceptance  must  be  assented  to  by  holder  of  the 
bill,  since  in  all  cases  he  has  a  right  to  insist  on  an  acceptance  in 
writing  on  the  bill  itself,  in  order  to  avoid  mistakes  and  prevent 
difficulties  which  may  arise  from  mere  parol  proof  thereof.'^^ 

SECTION   V 

ABSOLUTE,    CONDITIONAL,    VARIANT,    AND    QUALIFIED   ACCEPTANCE 

§  508.  It  is  the  right  of  the  holder  of  the  bill  to  require  an  absolute 
and  unconditional  acceptance— that  is,  an  acceptance  in  conformity 
with  the  tenor  of  the  bill— and  may  cause  it  to  be  protested  unless  it 
be  so  accepted.^*  The  holder  may,  however,  at  his  risk,  take  a  condi- 
tional, varying,  or  qualified  acceptance,  and  in  such  cases  the  acceptor 

69.  Rees  v.  Warwick,  2  B.  &  Aid.  113  (1818). 

70.  Reynolds  v.  Peto,  11  Exch.  410,  33  Eng.  L.  &  Eq.  481.  See  also  Bon- 
nell  V.  Mawha,  8  Vroom,  200;  Rulo  First  Nat,  Bank  v.  Gordon,  45  Mo.  App. 
293. 

71.  Smith  V.  Nissen,  1  T.  R.  269. 

72.  Martin  v.  Bacon,  2  S.  C.  132;  Bayley  on  Bills,  chapter  VI,  section  I,  §  109; 
Edwards  on  Bills,  416;  1  Parsons  on  Notes  and  Bills,  286;  Benjamin's  Chalmers' 
Digest,  44. 

73.  Story  on  Bills,  §§  242,  247;  Edwards  on  Bills,  417. 

74.  In  Boehm  v.  Garcias,  1  Campb.  425,  the  bill  was  drawn  on  Lisbon,  "pay- 
able in  effective  and  not  in  val  reals."    The  drawee  offered  to  accept  it  payable  in 


§  508  ABSOLUTE    AND   QUALIFIED   ACCEPTANCE  605 

will,  if  the  condition  be  complied  with,  or  the  qualification  admitted, 
be  bound  thereby;  and  the  holder  will  Ukewise  be  bound  by  it/^ 
Where  the  bill  as  drawn  requested  the  drawee  to  pay  the  amount  on 
May  28th,  Patterson,  J.,  said:  "It  was  competent  for  him  by  his 
acceptance  to  extend  the  time  of  payment  subject  to  an  option  in  the 
holder  to  take  such  acceptance,  and  agree  to  such  alteration,  or  treat 
the  bill  as  dishonored  by  nonacceptance."  ^^  The  burden  of  proof  is 
on  the  plaintiff  to  show  performance  of  the  condition  of  a  conditional 
acceptance;  ^^  and,  although  absolute  then  it  should  be  set  out  as 
conditional,  with  an  averment  of  performance/^ 

Under  Negotiable  Instrument  statute. — Under  the  statutory  defini- 
tion of  an  acceptance  of  a  bill  of  exchange,^^  an  acceptor  may  impose 

val  denaros,  another  sort  of  currency.  Lord  EUenborough,  in  suit  brought  by  the 
holder  against  the  drawee,  said:  "The  plaintiff  had  a  right  to  refuse  this  ac- 
ceptance; the  drawee  of  a  bill  has  no  right  to  vary  the  acceptance  from  the  terms 
of  the  bill,  unless  they  be  unambiguously  and  unequivocally  the  same.  Therefore, 
without  considering  whether  a  payment  in  denaros  might  have  satisfied  the  term 
effective,  an  acceptance  in  denaros  was  not  a  sufficient  acceptance  of  a  bill  drawn 
payable  in  effective.  The  drawee  ought  to  have  accepted  generally,  and  an  action 
being  brought  against  them  on  the  general  acceptance  the  question  would  prob- 
ably have  risen  as  to  the  meaning  of  the  term,"  Parker  v.  Gordon,  7  East, 
385;  Gammon  v.  SchmoU,  5  Taunt.  344;  Thompson  on  Bills,  219;  Beawes,  No. 
265;  Story  on  Bills,  §  272;  Chitty  (13th  Am.  ed.)  [*287-288],  326;  Shackleford  v. 
Hooker,  54  Miss.  716;  Green  v.  Raymond,  9  Nebr.  298;  Gibson  v.  Smith,  76 
Ga.  34,  citing  the  text.  In  Louisiana,  it  has  been  held  that  a  dated  acceptance 
to  pay  on  a  specified  day,  which  is,  in  fact,  the  last  day  of  grace,  is  according  to 
the  tenor  of  the  bill.  Kenner  v.  Creditors,  19  Mart.  540.  See  as  to  conditional 
acceptance  by  letter.  Shaver  v.  Western  Union  Tel.  Co.,  57  N.  Y.  459. 

75.  A  qualified  acceptance  which  is  taken  and  reUed  upon  by  the  payee  be- 
comes, upon  a  compliance  with  its  condition,  as  binding  an  obligation  and  as 
effective  an  assignment  of  the  debt  as  an  absolute  acceptance.  But  there  must  be 
a  compUance  with  the  condition  to  make  such  an  acceptance  effective.  Barnsdall 
V.  Waltemeyer,  142  Fed.  415.  Petit  v.  Benson,  Cumberbach,  452  (1697);  Smith  v. 
Abbott,  2  Stra.  1152;  Julian  v.  Shorbrook,  2  Wills,  9;  Anderson  v.  Hick,  3  Campb. 
179;  McCutchen  v.  Rice,  56  Miss.  455;  Shackleford  v.  Hooker,  54  Miss.  716; 
Green  v.  Raymond,  9  Nebr.  298;  MitcheU  v.  Barring,  10  B.  &  C.  4;  Ford  v. 
Angeh-odt,  37  Mo.  50;  Wintersmith  v.  Post,  4  Zabr.  420;  Crowell  v.  Plant,  53 
Mo.  145;  Taylor  v.  Newman,  77  Mo.  265;  Hughes  v.  Fisher,  10  Colo.  383;  Herter 
V.  Goss,  57  N.  J.  L.  42,  30  Atl.  252. 

76.  RusseU  v.  PhiUips,  14  Q.  B.  900.    See  also  Walker  v.  Atwood,  11  Mod.  190. 

77.  Read  v.  Wilkinson,  2  Wash.  C.  C.  514;  Gammon  v.  SchmoU,  5  Taunt. 
344;  Mason  v.  Hunt,  1  Doug.  297;  Nagle  v.  Homer,  8  Cal.  358;  Liggett  v.  Weed, 
7  Kan.  273;  Fu-st  Nat.  Bank  v.  Bensley,  1  Fed.  609. 

78.  Langston  v.  Corney,  4  Campb.  176;  RaUi  v.  Sarell,  1  DowL  &  R.  N.  P. 
33;  Posey  v.  Bank,  7  Colo.  App.  108, 42  Pac.  684. 

79.  Appendix,  sec.  132. 


606  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  509 

conditions,  and  where  a  drawer,  on  his  acceptance  of  a  draft  payable 
to  a  bank,  transmitted  the  draft  to  the  bank  by  letter  stating  that  the 
acceptance  was  on  the  terms  indicated  in  a  prior  letter  reciting  that 
the  acceptance  was  for  accommodation  only  and  without  any  inten- 
tion to  be  bound  thereon,  the  letters  showed  that  there  was  no  "ac- 
ceptance" of  a  bill  of  exchange,  and  one  taking  from  the  bank  with 
notice,  could  not  enforce  liability  against  the  drawee.^" 

§  509.  Illustrations  of  conditional  acceptances. — Where  an 
order  was  accepted  on  condition  that  the  drawer  became  entitled 
to  payment  on  a  certain  contract,  the  acceptor  is  not  liable  on  the 
acceptance  when  the  drawer  was  found  not  entitled  to  anything  on 
that  contract,  and  cannot  become  liable  thereon  because  the  drawer 
becomes  entitled  to  payment  on  a  different  and  subsequent  contract.^^ 
Acceptances  "to  pay  as  remitted  for;"^^  ^^^  p^^y  ^j^^^^  -^^  ^^^^  f^j. 
the  cargo  of  the  ship  Thetis;"  «=^  "to  pay  when  goods  consigned  to  me 
are  sold;"  *^  "to pay  when  a  cargo  of  equal  value  is  consigned  to 
me;"  ^^  "payable  when  house  is  ready  for  occupancy,"  ^'^  are  examples 

80.  Lehnhard  v.  Sidway,  160  Mo.  App.  83,  141  S.  W.  430. 

81.  GUdden  v.  Massachusetts  Hospital  Life  Ins.  Co.,  187  Mass.  538,  73  N.  E. 
538.  The  acceptance  of  an  order  to  pay  a  certain  sum  out  of  earnings  payable 
by  the  drawee  to  the  drawer,  the  acceptance  being  conditioned  on  the  earnings 
being  sufficient  to  cover  the  amounts  for  the  several  months  enumerated,  does 
not  limit  the  habiUty  of  the  drawee  to  the  net  "earnings"  after  paying  his  expenses 
during  each  month.    Smith  v.  Bates  Mach.  Co.,  182  111.  166,  55  N.  E.  69. 

82.  Banbury  v.  Lissett,  2  Stra.  1211. 

83.  Julian  v.  Shorbrook,  2  Wills,  9. 

84.  Smith  v.  Abbott,  2  Stra.  1152. 

85.  Mason  v.  Hunt,  2  Doug.  297.  Where  a  draft  was  drawn  payable  on  receipt 
by  the  drawee  of  goods  purchased  by  the  drawer,  the  acceptance  of  the  draft  was 
in  effect  an  agreement  upon  the  part  of  the  drawee  to  pay  the  amount  stated 
therein  upon  receipt  of  the  goods.  Fisher  v.  Frank,  8  Cal.  App.  472,  97  Pac.  95. 
(1908). 

86.  Foster  v.  Balmforth,  44  Conn.  435;  Barber  v.  Johnson,  5  App.  D.  C.  305; 
Cook  V.  Wolfendale,  105  Mass.  401.  Under  such  an  acceptance,  the  acceptor 
was  not  liable  thereon  when  the  contractor  did  not  complete  the  building  not- 
withstanding the  destruction  by  fire  without  the  contractor's  fault.  Hogan  v. 
Globe  Mut.  B.  &  L.  Assoc,  140  Cal.  610,  74  Pac.  153,  reversing  71  Pac.  706. 
Where  an  owner  of  property  has  made  a  contract  for  the  erection  of  a  building, 
and  has  accepted  an  order  drawn  by  the  contractor  in  favor  of  the  material  man 
for  an  amount  to  be  paid  out  of  the  last  payment  due  the  contractor,  payments 
made  by  the  owner  to  the  contractor  on  a  supplemental  contract,  of  money  due 
on  the  last  payment,  are  unauthorized  and  not  binding  upon  the  material  man. 
Bearsley  v.  Cook,  154  N.  Y.  707,  49  N.  E.  126,  affirming  35  N.  Y.  S.  12,  89  Hun, 
151.    Where  a  contractor  accepts  an  order  drawn  by  a  subcontractor  to  be  paid 


§  509  ABSOLUTE   AND    QUALIFIED   ACCEPTANCE  607 

of  conditional  acceptances.  So,  where  on  presentment  of  bills  for 
acceptance  the  drawee  said  he  would  have  accepted  them  if  he  had 
had  certain  funds  which  he  had  not  been  able  to  obtain  from  France, 
but  that  when  he  did  obtain  them  he  would  pay  the  bill,  it  was  held  a 
conditional  acceptance.^^  And  it  has  been  held  that  the  words 
"Accepted  payable  on  giving  up  a  bill  of  lading"  constituted  a  condi- 
tional acceptance,  but  not  a  further  condition  to  the  acceptor's 
liability  that  the  bill  of  lading  should  be  given  up  at  the  day  of  matur- 
ity of  the  bill.^^  If  drawee,  on  presentment,  proposes  to  pay  in  fifteen 
days,  it  is  an  acceptance  to  pay  at  that  time,  if  communicated  to  the 
holder .^^  If  a  drawee  accept  a  bill  in  regular  form,  but  upon  an  agree- 
ment with  the  drawer  that  he  should  not  negotiate  it  before  complying 
with  certain  conditions,  and  the  drawer  proceed  to  negotiate  it  with- 
out performance  of  those  conditions,  the  acceptor  would  be  bound  to 
a  bona  fide  holder  without  notice.^"  Where  the  drawer  declines  to 
accept  unconditionally,  but  receives  and  keeps  the  bill  on  a  promise  to 
"try  and  save  the  amount  for  the  holder,"  it  does  not  amount  to  an 
obligatory  acceptance.^  ^  And  where  a  mortgagee  accepted  an  order 
drawn  by  a  third  person  in  favor  of  the  mortgagor  "with  the  full 
understanding  that  it  is  to  be  indorsed  upon  note"  of  the  mortgagor, 

out  of  moneys  due  him  on  his  contract,  the  promise  is  conditional  upon  the  per- 
formance of  his  contract  by  the  subcontactor,  and  when  the  subcontractor  aban- 
doned his  contract  before  performance  of  the  contract,  payments  made  to  induce 
him  to  go  on  with  his  contract  cannot  be  considered  in  determining  whether 
payments  had  been  made  on  the  original  contract  to  the  full  amount  of  the  con- 
tract price.    Pohhnan  v.  Wilcox,  146  Cal.  440,  80  Pac.  625. 

87.  Byles  on  BiUs  [*187],  317;  Mendizabal  v.  Machado,  6  Car.  &  P.  218  (25 
Eng.  C.  L.),  3  Moore  &  S.  841. 

88.  Byles  on  BiUs  [*187],  317;  Smith  v.  Vertue,  30  L.  J.  C.  P.  56,  9  C.  B.  (N. 
S.)  214  (99  Eng.  C.  L.);  Burke  v.  Utah  Nat.  Bank,  47  Nebr.  247,  66  N.  W.  295. 
Where  an  acceptance  was  conditioned  upon  the  receipt  of  indorsed  bills  of  lading, 
and  the  amount  of  the  bill  of  exchange  was  paid  before  it  was  discovered  that  the 
bills  of  lading  were  forged,  the  amount  paid  thereon  may  be  recovered  where  no 
intervening  rights  or  liabilities  were  acquired  or  imposed.  Guaranty  Trust  Co.  v. 
Grotrian,  114  Fed.  433,  57  L.  R.  A.  689,  affirming  105  Fed.  566.  Where  the 
acceptance  of  orders  was  based  upon  a  condition  "that  lumber  to  the  value  of  the 
above  must  be  on  the  switch,"  such  condition  had  reference  to  the  value  of  the 
lumber  on  the  switch  between  the  date  of  the  order  and  the  time  for  its  payment, 
and  did  not  depend  upon  the  existence  of  a  debt  due  from  the  drawer  to  the 
drawee  at  the  time  payment  was  due.  Fletcher  v.  Simms  &  Graham,  75  Ark. 
162,  86  S.  W.  993. 

89.  Wylie  v.  Bryce,  70  N.  C.  425. 

90.  Merritt  v.  Duncan,  7  Heisk.  156. 

91.  McEowen  v.  Scott,  49  Vt.  376. 


608  ACCEPTANCE    OF   BILLS   OF   EXCHANGE        §§  510,  511 

such  stipulation  was  held  to  be  simply  a  refusal  to  accept  the  order 
according  to  its  tenor  and  became  a  proposition  to  the  mortgagor  to 
credit  him  on  his  note  with  the  sum  named,  and  the  mortgagor's 
assent  to  the  proposition  was  essential  before  any  obligation  arose  on 
the  part  of  the  mortgagee  to  pay  the  order  as  proposed.^^ 

§  510.  Refusal  of,  and  assent  to,  conditional  acceptance;  notice 
of  assent. — On  the  offer  of  a  conditional  or  varying  acceptance, 
if  the  holder  resolve  to  reject  it  altogether,  he  may  protest  generally, 
or  give  general  notice  of  nonacceptance;  but  if  he  is  willing  to  accept 
the  offer,  he  should  then  give  notice  of  its  exact  terms  to  all  the  parties, 
and  state  his  readiness  to  accept  the  offer  if  they  will  respectively  con- 
sent.^^  A  general  or  unqualified  protest  or  notice  of  nonacceptance 
would,  in  such  a  case,  evince  that  the  holder  did  not  acquiesce  in  the 
offer,  and  preclude  him  from  afterward  availing  himself  of  it;^*  but 
not  if  he  was  not  aware  of  the  acceptance  when  he  caused  the  bill  to 
be  noted  or  protested  for  nonacceptance.^^ 

§  511.  Qualification  of  rule. — The  rule  above  stated  is  in  re- 
spect to  the  indorsers  of  a  bill  of  absolute  and  invariable  application.^ 
But  in  respect  to  the  drawer,  it  is  subject  to  qualification.  The 
drawer  warrants  that  the  drawee  is  in  funds,  and  that  he  will  accept 
and  pay  the  bill.  And  he  is  bound  to  know  whether  or  not  the  drawee 
is  in  funds.  Therefore,  when  he  draws  without  having  the  right  to  do 
so,  he  is  not  entitled  to  notice  of  dishonor.  And  upon  the  same  princi- 
ple it  is  thought  that  he  cannot  be  injured,  and  will  not  be  discharged 
by  the  holder's  taking  a  qualified  acceptance  payable  at  a  future  day.^' 
True,  such  an  acceptance  is  a  departure  from  the  tenor  of  the  bill; 
but  the  drawer,  having  improperly  drawn  the  bill,  cannot  complain 
of  the  holder  for  taking  those  steps  which  seem  essential  to  prevent 
its  entire  dishonor,  and  to  secure  its  payment.^^ 

Bayley  says  that  "a  neglect  to  give  notice  where  there  is  a  con- 
ditional acceptance,  is  done  away  with  by  the  completion  of  those 
conditions  before  the  bill  becomes  payable;  and  a  neglect,  where 


92.  Pearson  v.  Gooch,  69  N.  H.  571,  45  Atl.  406. 

93.  Chitty's  language  [*301],  340. 

94.  Sproat  v.  Mathews,  1  T.  R.  182. 

95.  Fairlle  v.  Herring,  3  Bing.  625,  11  Moore,  520, 

96.  Edwards  on  Bills,  428,  430. 

97.  Walker  v.  Bank  of  the  State,  13  Barb.  636;  Edwards  on  Bills,  429. 

98.  Edwards  on  Bills,  429. 


§§  512,  513      ABSOLUTE   AND   QUALIFIED   ACCEPTANCE  609 

there  is  an  acceptance  as  to  part,  and  a  refusal  as  to  the  residue  only, 
discharges  the  persons  entitled  to  notice  as  to  the  residue  only."  ^^ 
But  he  cites  no  authority  for  this  doctrine.  It  seems  obviously  illog- 
ical, and  has  been  justly  criticised  and  dissented  from.^ 

§  512.  Where  a  bill  was  drawn  by  a  contractor  on  the  postmaster- 
general,  and  having  been  "accepted  on  condition  that  the  drawer's 
contracts  be  complied  with,"  was  discounted  by  the  defendants,  it 
was  held  that  such  forfeitures  as  had  occurred  previous  to  such  accept- 
ance were  not  within  the  condition.-  ''I  will  see  the  within  paid 
eventually,"  written  on  the  back  of  a  draft,  was  held  a  promise  to 
pay  in  a  reasonable  time.^ 

§  513.  Acceptances  to  pay  "  when  in  funds." — An  acceptance  to 

pay  "when  in  funds,"  renders  the  drawee  liable  only  when  he  has 
funds;  ■*  though  it  has  been  held  that  this  implied  when  the  drawee 
has  funds  which  the  drawer  has  a  present  right  to  demand  and  re- 
ceive, and  that  it  did  not  apply  to  wages  for  daily  labor  earned  after 
acceptance,  and  needed  for  the  daily  subsistence  of  the  laborer.^ 
"When  in  funds"  means  "when  in  cash,"  and  available  securities 
will  not  answer  this  condition  until  actually  converted  into  money.* 
If  the  funds  are  not  received  in  the  acceptor's  lifetime,  but  are  col- 
lected by  the  administrator,  the  latter  is  liable  as  representative  of 
the  deceased;^  but  the  addition  of  the  word  "administrator"  to  an 
acceptance  does  not  make  it  a  conditional  one,  nor  qualify  his 
liability.^ 
Where  the  acceptance  is  to  pay  out  of  the  first  money  received, 


99.  Bayley  on  Bills,  chap.  7,  §  2. 

1.  Story  on  Bills,  §  272,  note  1. 

2.  United  States  v.  Bank  of  the  Metropolis,  15  Pet.  377. 

3.  Brannin  v.  Henderson,  12  B.  Mon.  62. 

4.  Marshall  v.  Clary,  44  Ga.  513.  Where  an  order  was  accepted  containing 
the  words  "Said  order  to  be  paid  on  or  before  November  1,  1899,"  and  also  a 
direction  "and  charge  the  same  to  the  $1,800  payment,"  the  latter  clause  merely 
indicates  to  what  sum,  as  between  the  drawer  and  acceptor,  the  payment  of  the 
order  should  be  charged,  and  by  the  acceptance  the  drawee  was  bound  to  pay  the 
order  by  the  time  stated.     Shepard  v.  Abbott,  179  Mass.  300,  60  N.  E.  782. 

6.  Wintermute  v.  Post,  4  Zabr.  420. 

6.  Campbell  v.  Pettengill,  7  Greenl.  126. 

7.  Swansey  v.  Breck,  10  Ala.  533;  Gallery  v.  Prindle,  14  Barb.  186;  Owen  v. 
Iglanor,  4  Coldw.  15. 

8.  Tassey  v.  Church,  4  Watts  &  S.  346. 

39 


610  ACCEPTANCE   OF   BILLS   OF   EXCHANGE  §  513 

the  acceptor  is  bound  to  pay  from  time  to  time,  on  reasonable  re- 
quest, such  funds  as  he  receives  from  the  drawer;  and  a  judgment  for  a 
certain  sum  which  he  received  is  no  bar  to  another  action  for  a  sum 
subsequently  received.^  An  acceptance  in  the  words,  "Accepted  for 
the  full  amount,  provided  there  is  this  amount  in  my  hands,"  is  an 
absolute  undertaking  to  pay  all  the  money  of  the  drawer  in  the 
drawee's  hands,  not  exceeding  the  amount  of  the  draft.*"  An  accept- 
ance to  pay,  "if  on  settlement  there  is  anything  over,"  becomes  on 
settlement  an  acceptance  for  what  balance  may  be  due  if  the  con- 
dition be  assented  to  by  the  holder.** 

If  the  holder  receive  an  acceptance  to  be  paid  "when  in  funds," 
he  cannot  resort  to  the  drawer  until  the  acceptor  refuses  to  pay  after 
he  is  in  funds;  *^  and  the  conditional  acceptor  will  not  be  liable  if  the 
funds  are  intercepted,  or  compliance  with  the  condition  is  prevented, 
by  operation  of  law.*^ 

Where  the  drawee,  upon  presentment  of  a  bill  or  order,  says,  "  I 


9.  Perry  v.  Harrington,  2  Mete.  (Mass.)  368.  See  also  Knefel  v.  Flanner,  66 
111.  App.  209,  affirmed  166  111.  147,  46  N.  E.  762.  An  acceptance  conditioned  to 
pay  the  amount  out  of  any  money  which  might  come  into  the  acceptor's  hands 
payable  to  the  drawer,  makes  the  drawer  Uable  only  when  the  money  was  received 
payable  to  the  drawer,  and  not  for  money  coming  into  his  hands  from  obligations 
which  had  previously  been  assigned  by  the  drawer  to  parties  other  than  the  payee 
of  the  note.  Knoll  v.  Melone,  1  Cal.  App.  637,  82  Pac.  982.  If  an  order  be  drawn 
payable  out  of  a  specified  fund  to  become  due  from  the  drawee  to  the  drawer, 
acceptance  therefore  binds  the  drawee  to  the  extent  only  that  such  fund  becomes 
available  for  the  purpose.  McMurray  v.  Sisters  of  Charity  of  St.  Elizabeth,  68 
N.  J.  L.  312,  53  Atl.  389.  Where  an  order  to  pay  a  certain  sum  "out  of  the  first 
moneys  due  us  *  *  *  under  our  contract  with  you  *  *  *  ,  after  deducting  *  *  * 
any  money  that  you  may  have  to  advance  in  order  to  get  out"  timber  under  the 
contract,  was  accepted,  the  acceptor  had  the  right  to  make  such  advances  as 
were  required  of  them  to  enable  the  drawer  to  comply  with  his  contracts,  and  in 
determining  what  was  necessary  to  protect  himself  and  the  payee,  the  acceptor 
was  required  to  exercise  good  business  prudence  according  to  the  usual  course  of 
business.  Crane  v.  Williamson,  111  Ky.  271,  63  S.  W.  610.  Where  an  order 
to  pay  to  the  payee  a  certain  sum  out  of  the  proceeds  of  the  sale  of  property, 
after  the  payment  of  certain  other  claims  and  orders,  was  accepted,  the  drawee 
is  liable  thereon  to  the  payee  notwithstanding  a  liability  of  the  drawer  to  him 
further  than  that  stated  on  the  order.  Cramer  v.  Munkres,  14  Wys.  234,  83  Pac. 
374. 

10.  Ray  V.  Faulkner,  73  111.  469. 

11.  Stevens  v.  Androscoggin  Water  Power  Co.,  62  Me.  498. 

12.  Andrews  v.  Baggs,  Minor,  173;  Campbell  v.  Pettengill,  7  Greenl.  126; 
Knox  v.  Reeside,  1  Miles,  294;  Gallery  v.  Prindle,  14  Barb.  186. 

13.  Browne  v.  Coit,  1  McCord,  408. 


§§  514,  515      ABSOLUTE   AND   QUALIFIED    ACCEPTANCE  611 

must  defer  payment  until  in  receipt  of  funds,"  the  language  implies 
that  he  accepts  to  pay  when  in  funds,  and  the  implication  is  the 
stronger  when  he  receives  and  detains  the  instrument.^* 

§  514.  Suits  on  acceptances  to  pay  "  when  in  funds." — In  a  suit 
to  recover  on  such  an  acceptance,  the  burden  of  proof  is  on  the  plain- 
tiff to  show  that  the  acceptor  is  in  funds;  ^^  and  where  a  factor  so 
accepted  an  order  of  a  planter,  it  was  held  that  he  was  only  bound  to 
pay  out  of  the  first  funds  coming  into  his  hands,  after  deducting  ad- 
vances, ^^  Evidence  is  admissible  to  explain  a  conditional  acceptance 
when  its  full  meaning  does  not  appear.  Thus,  an  acceptance  payable 
"when  the  lumber  is  run  to  market,"  is  conditional,  and  the  circum- 
stances require  explanation.  What  lumber?  What  market?  By 
whom,  and  when  to  be  run  to  market?  All  these  proper  inquiries 
to  be  made.^^ 

§  515.  As  to  qualified  acceptances. — As  an  acceptance  may  vary 
from  the  tenor  of  the  order  by  introducing  a  condition,  so  it  may  vary 
from  it  as  to  the  sum,  time,  place,  or  mode  of  payment. ^^  Such  an 
acceptance  is  generally  called  a  qualified  acceptance,  and  the  same 
principles  govern  it  as  govern  a  conditional  acceptance. 

By  receiving  such  qualified  acceptance  the  holder  discharges  all 
antecedent  parties,  unless  he  obtains  their  consent.  ^^  Thus,  if  the 
bill  be  addressed  to  the  drawees  at  their  place  of  residence,  and  it  is 
accepted,  payable  at  a  different  town,  it  is  a  material  variation  if  the 
holder  receives  it,  and  does  not  protest  for  nonacceptance;  2°  but  a 
bill  addressed  generally  to  the  drawee,  in  a  city,  may  be  accepted, 
payable  at  a  particular  bank  in  the  city.^^  If  the  drawee  accept  to 
pay  at  a  certain  future  day,  different  from  that  named  in  the  draft, 


14.  Pope  V.  Huth,  14  Cal.  407. 

15.  Owen  v.  Lavine,  14  Ark.  389;  Andrews  v.  Baggs,  Minor,  173;  Knox  v. 
Reeside,  1  Miles,  294;  Atkinson  v.  Manks,  1  Cow.  691;  Carlisle  v.  Hooks,  58  Tex. 
421,  citing  the  text. 

16.  Hunter  v.  Ingraham,  1  Strobh.  271;  Owen  v.  Iglanor,  4  Coldw.  15. 

17.  Lamon  v.  French,  25  Wis.  37. 

18.  See  Byles  on  Bills  [*186],  316;  Chitty  on  BUls  [*203],  342;  Vanstrum  v. 
Liljengren,  37   Minn.   191. 

19.  Byles  on  Bills  [n86],  316;  Chitty  on  Bills  [*300],  339;  Story,  §  204;  Sebag 
V.  Abithol,  4  Maule  &  S.  462;  Gibson  v.  Smith,  75  Ga.  33. 

20.  Niagara  Bank  v.  Fairman  County,  31  Barb.  403. 

21.  Troy  City  Bank  v.  Lauman,  19  N.  Y.  477;  Meyers  v.  Standart,  11  Ohio 
(N.  S.),  29;  Niagara  Bank  v.  Fairman  County,  31  Barb.  403. 


612  ACCEPTANCE    OF   BILLS   OF   EXCHANGE        §§  516,  517 

and  the  holder  receives  such  acceptance,  it  will  bear  grace  like  all 
engagements  by  negotiable  paper  to  pay  at  a  certain  time.^^ 

§  516.  A  bill  drawn  payable  at  a  certain  time  may  be  accepted  on 
condition  of  being  renewed  to  a  certain  other  time,  and  it  will  be 
properly  declared  on  as  payable  at  the  time  named  in  the  acceptance.^^ 
If  accepted  as  to  part  of  the  amount  drawn  for,  it  is  a  good  acceptance 
as  to  such  part;  ^*  and  if  accepted  payable  partly  in  money  and  partly 
in  bills,  it  is  a  good  acceptance  as  to  the  part  payable  in  money. ^^  The 
holder  may  take  a  partial  acceptance,  but  he  will  discharge  the  drawer 
and  indorsers  unless  he  protests  as  to  the  residue.^* 

§  617.  Conditions  to  written  acceptances. — If  any  conditions  are 
annexed  to  a  written  acceptance,  they  should  appear  on  its  face.  It 
has  been  laid  down  that  acceptance  may  be  rendered  conditional  by 
another  contemporaneous  writing,  ^^  but  such  condition  could  have 
no  effect  against  a  bona  fide  holder  ignorant  of  it.^  The  terms  of  an 
acceptance  in  writing  cannot  be  varied  by  any  contemporaneous 
parol  agreement,  as  that  is  against  the  first  principles  of  the  law  of 
evidence.^^ 

Sometimes  the  words  which  make  the  acceptance  conditional  are 
in  the  bill  or  order  itself,  as  where  the  order  ran,  "Please  pay,  etc., 
out  of  the  amount  to  be  advanced  to  me,  when  the  houses  I  am  now 
erecting  on  your  land  are  so  far  completed  as  to  have  the  plastering 
done,  according  to  our  contract,"  and  in  such  case  if  the  work  were 
never  done,  the  condition  upon  which  the  defendant  would  be  bound 
would  not  be  complied  with.^'^    And  it  matters  not  that  the  contract 

22.  Green  v.  Raymond,  9  Nebr.  295. 

23.  Russell  v.  PhilUps,  14  Q.  B.  891;  Clarke  v.  Gordon,  3  Rich.  311. 

24.  Weggersloffe  v.  Keme,  1  Stra.  214;  Thompson  on  Bills  (Wilson's  ed.)  225. 

25.  Petit  V.  Benson,  Comb.  452;  1  Parsons  on  Notes  and  Bills,  312. 

26.  Marius,  68,  86;  Thompson  on  Bills,  226. 

27.  Bowerbank  v.  Monteiro,  4  Taunt.  884;  Meyer  &  Co.  v.  Decroix,  L.  R., 
App.  Cas.  520  (1891). 

28.  United  States  v.  Bank  of  Metropolis,  15  Pet.  377;  Montague  v.  Perkins, 
22  Eng.  L.  &  Eq.  516;  Story,  §  240;  Edwards,  424;  Thompson,  223. 

29.  Adams  v.  Wordley,  1  M.  &  W.  347;  Besant  v.  Cross,  10  C.  B.  896  (70 
Eng.  C.  L.);  Hoare  v.  Graham,  3  Campb.  57;  Haverin  v.  Donnell,  7  Smedes 
&  M.  244;  Goodwin  v.  McCoy,  13  Ala.  271;  Foster  v.  Clifford,  44  Wis.  569. 
See  ante,  §§  80,  81;  Kervan  v.  Townsend,  25  App.  Div.  256,  49  N.  Y.  Supp.  137, 
citing  text;  Crane  v.  Williamson,  111  Ky.  271,  63  S.  W.  610,  citing  text. 

30.  Newhall  v.  Clark,  3  Cush.  376.  See  CroweU  v.  Plant,  53  Mo.  145;  Greene 
V.  Duncan,  37  S.  C.  239,  15  S.  E.  956. 


§§  518,  519     ABSOLUTE   AND    QUALIFIED    ACCEPTANCE  6lS 

was  canceled  by  agreement  with  the  acceptor,  provided  there  was  no 
fraud.  The  acceptance  of  an  order  payable  "  If  in  funds,"  is  regarded 
as  an  admission  that  the  acceptor  has  funds  to  meet  it,  and  he  can- 
not afterward  allege  want  of  consideration  against  the  holder.^^ 

§  518.  Conditions  to  verbal  acceptances. — Where  a  verbal  ac- 
ceptance is  competent,  a  condition  annexed  to  a  verbal  acceptance 
may  be  shown,  because  it  does  not  vary  or  contradict  the  contract, 
but  shows  what  the  contract  was.^^  But  the  acceptor  having  once 
accepted  absolutely,  cannot  by  subsequent  declarations  annex  a  con- 
dition to  his  liability.^^ 

§  519.  Acceptances  payable  at  a  particular  place;  Sergeant  On- 
slow's Act. — Before  the  statute  1  &  2  Geo.  IV.,  chap.  78,  was 
enacted,  it  was  a  point  much  disputed  whether  a  bill  or  note  drawn 
or  made  payable  at  a  particular  place — or  a  bill  accepted  payable  at  a 
particular  place — should  be  necessarily  presented  at  such  place  in 
order  to  charge  the  acceptor,  maker,  or  other  parties.  Finally  it  was 
decided  in  the  House  of  Lords  that  an  acceptance  payable  at  a  partic- 
ular place  was  a  qualified  acceptance,  rendering  it  necessary,  in  an 
action  against  the  acceptor,  to  aver  and  prove  presentment  at  such 
place.^^  This  led  to  the  passage  of  the  statute  1  &  2  Geo.  IV.,  above 
referred  to,  called  Sergeant  Onslow's  Act,  which  provided  that  an 
acceptance  payable  at  a  particular  place  should  be  deemed  a  general 
acceptance,  unless  expressed  to  be  payable  there  "only,  and  not  other- 
wise or  elsewhere."  Since  that  statute,  a  bill  may,  in  England,  be 
accepted  in  three  different  forms  when  it  is  drawn  generally  on  a 
party — that  is:  First,  it  may  be  accepted  simply  without  more. 
Secondly,  it  may  be  accepted  payable  at  a  particular  banker's  which 
will  be  the  same  in  effect  as  against  the  acceptor;  or,  thirdly,  it  may 
be  accepted  payable  at  a  particular  banker's  '  only,  and  not  otherwise 
or  elsewhere.'"  In  this  latter  case,  it  will  be  deemed  a  qualified 
acceptance;  and  presentment  at  the  banker's  will  be  a  condition 
precedent  to  the  right  of  the  holder  to  maintain  an  action  against 
the  acceptor  thereon.^^ 


31.  Kemble  v.  Lull,  3  McLean,  272;  Edwards  on  Bills,  420. 

32.  Edwards  on  Bills,  426. 

33.  Wells  V.  Brigham,  6  Cush.  6. 

34.  Rowe  V.  Young,  2  Brod.  &  Bing.  165,  2  Bligh,  391,  overruling  the  opinion 
of  eight  of  the  twelve  judges  who  were  consulted. 

36.  Halstead  v.  Skelton,  5  Ad.  &  El.  86.     In  1  Parsons  on  Notes  and  Bills, 


614  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  520 

In  an  action  against  the  drawer,  or  an  indorser,  if  the  bill  be  ac- 
cepted and  payable  at  a  particular  place  named  by  the  acceptor,  it  is 
still  necessary  to  prove  presentment  there.^®  And  so  if  the  bill  be 
drawn  payable  at  a  particular  place,  presentment  must  be  made  there 
in  order  to  charge  the  drawer  or  indorser."  The  statute  1  &  2  Geo.  IV. 
does  not  extend  to  promissory  notes,  and,  therefore,  if  a  note  be  made 
expressly  payable  at  a  particular  place,  it  is  necessary,  in  England, 
to  present  it  there  for  payment  in  order  to  charge  the  maker.^ 

§  520.  Rule  in  the  United  States. — In  the  United  States  a  dif- 
ferent view  from  that  expressed  by  the  House  of  Lords  has  prevailed; 
and  according  to  the  ruling  of  the  Supreme  Court,  and  of  the  great 
current  of  decisions  of  the  State  courts  of  last  resort,  the  effect  and 
construction  of  an  acceptance  would  accord  with  the  act  of  1  &  2  Geo. 
IV. — that  is,  the  acceptance  will  be  regarded  as  general  in  all  cases, 

309-311,  it  is  said:  "If  a  bill  were  accepted  'payable  only  at  such  a  place,'  it  would 
be  so  entirely  conditional  under  the  English  statutes,  that  if  not  demanded  there, 
the  acceptor  would  not  be  liable  at  all.  We  think  this  should  be  the  rule  in  the 
United  States,  on  the  ground  that  such  words  are  equivalent  to  'accepted,  pro- 
vided that,'  or,  'on  condition  that; '  but  it  is  not  certain  that  a  bill  accepted  with 
the  word  'only,'  or  possibly  with  express  words  of  condition,  might  not  be  held 
by  some  courts  as  binding  the  acceptor  to  the  amount  of  the  bill,  but  discharging 
him  from  interest  and  costs,  if  he  had  funds  at  the  proper  place  at  the  maturity 
of  the  bill,  by  which  it  would  then  and  there  have  been  paid.  The  principle  upon 
which  any  such  decision  must  be  founded  is,  that  the  having  the  funds  there  for 
that  purpose  operates  as  a  tender  of  them.  The  cases  which  we  have  been  con- 
sidering are,  as  our  notes  show,  in  a  curious  state  of  conflict,  confusion,  and  un- 
certainty. A  great  number  of  fine  subtile  distinctions  have  been  made  on  a  com- 
paratively narrow  point,  and  it  seems  as  if  ingenuity  and  acuteness  had  been 
exerted  to  make  refinements  in  an  important  commercial  question,  instead  of  an 
endeavor  to  carry  out  the  real  and  honest  intentions  of  the  contracting  parties, 
and  to  produce  uniformity  in  the  law  precisely  there  where  uniformity  is  eminently 
desirable." 

36.  Gibb  V.  Mather,  8  Bing.  214  (21  Eng.  C.  L.);  Maule  &  S.  387,  2  C  &  J. 
254;  Saul  v.  Jones,  28  L.  J.  Q.  B.  37,  1  E.  &  E.  59  (102  Eng.  C.  L.),  Tindal, 
C.  J.,  saying:  "In  cases  between  the  indorsee  and  the  drawee,  upon  a  special  ac- 
ceptance by  the  drawee,  no  doubt  appears  to  have  existed  but  that  a  presentment 
at  the  place  specially  designated  in  the  acceptance  was  necessary  in  order  to  make 
the  drawer  liable  upon  the  dishonor  of  the  bill  by  the  acceptor."  "It  appears  to 
us  that  the  statute  neither  intended  to  alter,  nor  has  it  in  any  manner  altered  the 
liability  of  drawers  of  bills  of  exchange;  but  that  it  is  confined  in  its  operation  to 
the  case  of  acceptors  alone." 

37.  Boydell  v.  Harkness,  3  C.  B.  168  (54  Eng.  C.  L.). 

38.  Sanderson  v.  Bowes,  14  East,  500;  Byles  on  Bills  (Sharswood's  ed.)  [*208], 
344-345. 


§§  521-522  ACCEPTANCE    FOR   HONOR  615 

save  when  the  bill  is  drawn,  or  the  acceptance  expresses  that  it  is  pay- 
able at  a  particular  banker's  "only,  and  not  otherwise  or  elsewhere."  ^^ 
This  subject  will  be  more  fully  discussed  when  we  come  to  consider 
the  principles  governing  "presentment  for  payment."  ^ 


SECTION  VI 

ACCEPTANCE   FOR  HONOR,    OR  SUPRA   PROTEST 

§  521.  There  is  a  peculiar  kind  of  acceptance  called  acceptance 
for  honor,  or  supra  protest.  This  most  frequently  happens  when 
the  original  drawee  (and  the  drawee  au  besoin,  if  any)  refuses  to 
accept  the  bill,  in  which  case  a  stranger  may  accept  the  bill  for  the 
honor  of  some  one  of  the  parties  thereto,  which  acceptance  will 
inure  to  the  benefit  of  all  the  parties  subsequent  to  him  for  whose 
honor  it  was  accepted.'*^ 

§  522.  As  to  the  circumstances  under  which  there  may  be  such 
an  acceptance,  it  is  only  allowable  when  acceptance  by  the  drawee 
has  been  refused,  and  when  the  bill  has  been  protested,  and  hence 
it  is  called  acceptance  supra  protest.*^ 

The  reason  assigned  for  this  is  that  the  drawers  and  indorsers  have 
a  right  to  say  that  the  bill  was  not  primarily  drawn  on  the  acceptor  for 
honor;  and  the  only  proper  proof  of  the  refusal  of  the  original  drawee 
is  by  protest,  that  being  the  known  instrument,  by  the  custom  of 
merchants,  to  establish  the  facts.^^ 

§  523.  As  to  the  method  of  acceptance  for  honor,  it  is  in  this  wise: 
the  acceptor  for  honor,  or  supra  protest,  appears  before  a  notary 
public,  witnesses  and  declares  that  he  accepts  such  protested  bill 
in  honor  of  the  drawer  or  indorser,  as  the  case  may  be,  and  that  he  will 


39.  Wallace  v.  McConnell,  13  Pet.  136.  Numerous  cases  are  cited  in  the 
chapter  on  Presentment  for  Payment.  Forms  of  declarations,  and  an  excellent 
treatise  on  this  subject,  may  be  found  in  4  Rob.  Pr.  (new  ed.),  450-454. 

40.  §  641  et  seq. 

41.  Bayley  on  Bills,  177;  Story,  §§255-256;  Ex  parte  Wackerbath,  5  Ves. 
574;  Konig  v.  Bayard,  1  Pet.  250;  Hussey  v.  Jacob,  1  Ld.  Raym.  88;  May  v. 
Kelly,  27  Ala.  497;  Hoare  v.  Cazenove,  16  East,  391. 

42.  Ibid. 

43.  Story  on  Bills,  §  256. 


616  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  524 

pay  it  at  the  appointed  time.^'*  And  then  he  subscribes  his  name  to 
the  words,  "Accepted  supra  protest  for  the  honor  of  A.  B.,"  or,  as  is 
more  usual,  "Accepts,  S.  P."  ^^ 

Sometimes  the  form  used  is,  "Accepted,  under  protest,  for  honor 
of  Messrs.  ,  and  will  be  paid  for  their  account,  if  regularly- 
protested  and  refused  when  due."-*^  And  the  acceptor  supra  protest 
must  be  particular  to  state  for  whose  honor  he  accepts/^ 

It  is  the  duty  of  the  acceptor  supra  protest,  as  soon  as  he  has  made 
the  acceptance,  to  notify  the  fact  to  the  party  for  whose  honor  it  is 
done;  ""^  and  the  party  paying  a  bill  under  protest  for  honor  must  give 
reasonable  notice  to  the  person  for  whose  honor  he  pays,  otherwise 
he  will  not  be  bound  to  refund.^^ 

§  524.  As  to  who  may  be  acceptor  for  honor. — A  stranger  may 
undoubtedly  accept  for  honor;  and  by  the  word  "stranger"  in  this 
connection  is  meant  any  third  person  not  a  party  to  the  bill.  It 
seems  that  acceptance  for  honor  may  also  be  made  by  the  drawee, 
who,  if  he  does  not  choose  to  accept  the  bill  drawn  generally  on 
account  of  the  person  in  whose  favor,  or  on  whose  account,  he  is 
advised  it  is  drawTi,  he  may  accept  it  for  the  honor  of  the  drawer,  or 
of  the  indorsers,  or  of  all  or  any  of  them.^ 

But  if  the  drawee  were  bound  in  good  faith  to  accept  the  bill,  he 
cannot  change  his  relations  to  the  parties,  and  accept  it  supra  protest 
for  the  honor  of  an  indorser;  he  must  either  accept  or  refuse.^^ 

An  acceptor  supra  protest  for  the  honor  of  an  indorser  may,  how- 
ever, recover  against  such  indorser,  though  he  accepted  at  the  instance 
of  the  drawee,  and  as  his  agent,  provided  the  indorser  were  not  thereby 
damnified.  The  indorser  might  avail  himself  of  any  defense  which 
he  could  have  made,  had  the  drawee  accepted  for  his  honor,  and  then 
sued  upon  the  acceptance.^^  j^  is  immaterial,  indeed,  as  to  the 
defenses  which  a  drawer  or  indorser  may  make  against  an  acceptor 


44.  Gazzam  v.  Armstrong,  3  Dana,  554. 

45.  Thompson  on  Bills,  323;  Byles  (Sharswood's  ed.)  [*265],  402:  Chittv  on 
Bills  [*346],  387. 

46.  Mitchell  v.  Baring,  10  B.  &  C.  4,  4  Car.  &  P.  35. 

47.  Story  on  Bills,  §  256. 

48.  Story  on  Bills,  §  259;  Edwards  on  Bills,  441. 

49.  Wood  V.  Pugh,  7  Ohio,  Part  2,  156. 

50.  Story  on  Bills,  §  259. 

51.  Schimmelpennich  v.  Bayard,  1  Pet.  264;  Chitty  on  Bills  [*345],  386. 
62.  Konig  v.  Bayard,  1  Pet.  250. 


§§  525,  526  ACCEPTANCE    FOR   HONOR  617 

for  honor,  whether  such  acceptor  acted  at  the  instance  of  the  drawer, 
or  as  the  agent  of  the  drawee.  ^^ 

§  525.  Several  acceptors  for  honor  of  different  parties. — While 
there  cannot  be  successive  acceptors  of  a  bill,  generally  speaking, 
there  may  be  several  acceptors  supra  protest  for  the  honor  of  different 
parties  ^'*  that  is,  one  may  accept  for  the  honor  of  the  drawer,  another 
for  the  honor  of  the  first  indorser,  and  another  for  the  honor  of  the 
second  indorser,  and  so  on.^^ 

And  the  acceptor  supra  protest  may  accept  for  the  honor  of  any 
one,  or  all,  of  the  parties  to  the  bill;  and  his  acceptance  should  desig- 
nate for  whose  honor  it  was  made,  in  which  case  it  could  be  at  once 
perceived  for  whose  benefit  it  inured. ^^  If  the  acceptance  do  not 
specify  for  whose  honor  it  was  made,  it  will  be  construed  to  be  for  the 
honor  of  the  drawer;  ^^  and  if  for  the  honor  of  the  bill,  or  of  all  the 
parties,  it  should  be  so  expressed.^^ 

§  526.  As  to  the  rights  of  an  acceptor  for  honor. — By  his  accept- 
ance for  honor,  the  acceptor  has  recourse  against  the  party  for  whose 
honor  he  accepts,  and  all  parties  whom  the  latter  would  have  recourse 
against,  and  none  others.^^  But  the  acceptor  for  the  honor  of  the 
drawer  cannot  recover  against  him  without  proof  of  a  presentment 
for  acceptance  or  payment,  and  refusal  and  notice  to  the  drawer.®" 

If  he  accepts  for  the  honor  of  the  drawer  only,  he  will  in  general 
have  no  recourse  against  the  indorsers;  and  if  for  the  honor  of  an 
indorser,  he  will  have  no  recourse  against  a  subsequent  indorser  ®^ — 


53.  Gazzam  v.  Armstrong,  3  Dana,  554;  Wood  v.  Pugh,  7  Ohio,  156. 

54.  Chitty  on  Bills,  375;  Story  on  Bills,  §  260;  1  Parsons  on  Notes  and  Bills, 
315;  Byles  on  Bills  (Sharswood's  ed.)  [*255],  403;  Beawes,  33. 

65.  Chitty  on  Bills,  376;  Story  on  Bills,  §  260;  Byles  on  Bills  (Sharswood's 
ed.)  [*255],  403. 

56.  Hussey  v.  Jacob,  1  Ld.  Raym.  88;  Lewin  v.  Brunette,  1  Lutw.  896;  1 
Parsons  on  Notes  and  Bills,  313;  Story  on  Bills,  §  256. 

57.  Chitty  [*346],  387;  1  Parsons  on  Notes  and  Bills,  313. 
68.  Gazzam  v.  Armstrong,  3  Dana,  552. 

59.  Byles  (Sharswood's  ed.)  [*259],  406;  Goodall  v.  Polhill,  1  C.  B.  233. 

60.  Baring  v.  Clark,  19  Pick.  220;  Schofield  v.  Bayard,  3  Wend.  488. 

61.  Gazzam  v.  Armstrong,  3  Dana,  554,  Marshall,  J.,  saying:  "We  are  de- 
cidedly of  the  opinion  that  he  (the  acceptor  for  honor)  acquired  no  demand, 
or  right  of  action,  against  any  party  subsequent  to  the  one  for  whom  he  made 
the  payment,  and  that,  even  as  against  the  preceding  parties,  he  was  only  sub- 
stituted to  the  rights  of  that  party  in  the  same  condition  as  if  he  paid  the  bill 


618  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  527 

the  exception  arising  in  cases  where  the  person  for  whose  honor  he 
accepts  the  bill  might  have  recourse  against  either,  as  when  he  is  an 
accommodation  drawer  or  indorser.^^ 

§  627.  As  to  the  liability  of  the  acceptor  for  honor. — The  accept- 
ance for  honor  or  supra  protest  is  not  an  absolute  engagement  like 
an  ordinary  acceptance  for  value.  It  is  a  conditional  engagement, 
and  to  render  it  absolute,  the  performance  of  several  acts  as  conditions 
precedent  are  essential.^^  Such  an  acceptance,  says  Lord  Tenterden, 
C.  J.,  "is  to  be  considered  not  as  absolutely  such,  but  in  the  nature 
of  a  conditional  acceptance.  It  is  equivalent  to  saying  to  the  holder 
of  the  bill, '  keep  this  bill,  don't  return  it,  and  when  the  time  arrives  at 
which  it  ought  to  be  paid,  if  it  be  not  paid  by  the  party  on  whom  it  was 
originally  drawn,  come  to  me  and  you  shall  have  your  money.'"  ^^ 
The  nature  of  such  an  acceptor's  undertaking  is  more  analogous  to 


himself."  In  Mortens  v.  Winnington,  1  Esp.  112,  counsel  contended  that  where  a 
bill  is  taken  up  for  honor  of  a  party,  only  such  party  was  liable.  But  Lord  Kenyon 
was  of  opinion  "that  where  a  bill  is  so  taken  up,  the  party  who  does  so  is  to  be 
considered  as  an  indorsee  paying  full  value  for  the  bill,  and  as  such  entitled  to  all 
remedies  to  which  an  indorsee  would  be  entitled,  that  is,  to  sue  all  the  parties  to 
the  bill."  But  this  proposition  is  too  broad;  for  there  are  cases  in  which  the 
payor  supra  protest  stands  on  a  very  different  footing  from  an  indorsee.  Thus, 
if  he  paid  for  honor  of  the  acceptor,  he  could  not  sue  the  drawer,  aa  the  acceptor 
could  not  sue  him. 

62.  Story  on  BiUs,  §  256. 

63.  Chitty  on  Bills  [*347],  388. 

64.  Williams  v.  Germaine,  7  B.  &  C.  457,  1  Moody  &  R.  394.  In  Hoare  v. 
Cazenove,  16  East,  391  (1812),  Lord  Ellenborough  said:  "It  is  an  undertak- 
ing to  pay  if  the  original  drawee,  upon  a  presentment  to  him  for  payment,  should 
persist  in  dishonoring  the  bill,  and  such  dishonor  by  him  be  notified  by  protest 
to  the  person  who  has  accepted  for  honor.  *  *  *  The  use  and  convenience,  and 
indeed  the  necessity  of  a  protest  upon  foreign  bills  of  exchange,  in  order  to  prove 
in  many  cases  the  regularity  of  proceedings  thereupon,  is  too  obvious  to  warrant 
us  in  dispensing  with  such  an  instrument  in  any  case  where  the  custom  of  mer- 
chants, as  reported  in  the  authorities  of  law,  appears  to  have  acquired  it.  And 
indeed  the  reason  of  the  thing,  as  well  as  the  strict  law  of  the  case,  seems  to  render 
a  second  resort  to  the  drawee  proper,  when  the  unaccepted  bill  still  remains  with 
the  holder;  for  effects  often  reach  the  drawee  who  has  refused  acceptance  in  the 
first  instance,  out  of  which  the  bill  may  and  would  be  satisfied  if  presented  to  him 
again  when  the  period  of  payment  had  arrived.  And  the  drawer  is  entitled  to  the 
chance  of  benefit  to  arise  from  such  second  demand,  or  at  any  rate  to  the  benefit 
of  that  evidence  which  the  protest  affords,  that  the  demand  has  been  made  duly 
without  effect,  as  far  as  such  evidence  may  be  available  to  him  for  purposes  of 
ulterior  resort." 


528 


ACCEPTANCE    FOR   HONOR  619 


that  of  an  indorser  ^^  than  that  of  an  ordinary  acceptor,  and  to  render 
him  absolutely  Uable  it  is  necessary : 

First.  To  present  the  bill  at  maturity  to  the  original  drawee,  not- 
withstanding his  prior  refusal,  because  between  the  time  of  such 
refusal  and  the  time  of  maturity,  effects  may  have  reached  the 
drawee,  out  of  which  he  might,  if  the  bill  were  again  presented, 
pay  it;  and  the  drawer  and  other  parties  are  entitled  to  the  chance 
of  any  benefit  which  might  arise  from  such  second  demand.  And 
if  it  were  not  made  (except  in  the  case  of  a  bill  made  payable  at  a 
place  not  being  the  residence  of  the  drawee),  the  drawer  and  indorsers 
would  be  discharged;  and  as  the  acceptor  supra  protest  would  thereby 
lose  recourse  against  them,  he  is  also  discharged.^^ 

Second.  Upon  refusal  by  the  original  drawee  to  pay  the  bill  when 
it  is  presented  at  maturity,  it  must  be  again  protested  for  nonpay- 
ment, and  such  protest  and  presentment  must  be  alleged  in  the 
declaration  against  the  acceptor  supra  protest.^''  And  Third,  it  is 
then  necessary  to  present  the  bill  in  due  time  to  the  acceptor  supra 
protest.^^ 

If  on  such  presentment  the  acceptor  supra  protest  refuses  to  pay, 
there  must  be  another  formal  protest,  stating  the  presentment  for 
payment  to  the  drawee,  the  protest  for  his  nonpayment,  the  present- 
ment of  the  bill  and  acceptance  to  the  acceptor  supra  protest,  and 
demand  of  payment  of  him,  and  the  protest  for  his  nonpayment;  and 
notice  thereof  must  be  forthwith  forwarded  to  the  drawer  and  in- 
dorsers.^® 

§  528.  Admissions  of  acceptor  for  honor.— There  appears  to  be 
a  conflict  of  opinion  as  to  the  extent  of  the  admission  of  the  acceptor 
supra  protest.  According  to  a  recent  eminent  author,  the  acceptor 
supra  protest  does  not  admit  the  genuineness  of  the  signature  of  any 
party  for  whose  honor  the  acceptance  is  given,  not  even  the  drawer's, 
and,  therefore,  he  could  recover  back  money  paid  to  the  holder  if  the 
bill  turned  out  to  be  a  forgery.™  The  language  of  the  case  cited  in 
support  of  this  doctrine  would  seem  to  sustain  it;  but  confined  to  the 


65.  1  Parsons  on  Notes  and  Bills,  315. 

66.  Chitty  [*348],  389-390;  Story  on  Bills,  §261;  Barry  v.  Clark,  19  Pick. 
220. 

67.  Chitty  [*350],  392;  Story  on  Bills,  §  261. 

68.  Ibid.;Chitty  [*351],  392. 

69.  Chitty  [*352],  393;  1  Parsons  on  Notes  and  Bills,  320. 

70.  1  Parsons  on  Notes  and  Bills,  323. 


620  ACCEPTANCE    OF   BILLS    OF    EXCHANGE  §  528 

point  decided,  it  determines  no  more  than  that  acceptance  for  the 
honor  of  an  indorser  does  not  admit  his  signature/^ 

The  reasoning  of  the  judge  which  leads  to  this  conclusion,  however, 
would  go  to  the  full  extent  of  the  rule  laid  down  by  Professor  Parsons. 
But  it  is  at  least  subject  to  this  modification,  that  one  who  accepts  for 
the  honor  of  the  drawer  is  estopped  from  denying  that  the  bill  is  a 
valid  bill;  and,  consequently,  it  would  not  be  competent  for  him  to 
set  up  as  a  defense  to  an  action  by  an  indorsee  that  the  payee  is  a 
fictitious  person,  and  that  he  was  ignorant  of  the  fact  at  the  time  he 
accepted  the  bill.^^ 

Why,  indeed,  the  acceptor  supra  protest  should  not  be  bound  by 
the  same  rules  which  apply  to  an  ordinary  acceptor  in  the  usual  course 
of  business  we  cannot  perceive.  It  is  his  own  voluntary  act,  and  unless 
he  has  been  imposed  upon  by  the  holder  of  the  bill  to  such  an  extent 
as  to  warrant  a  defense  on  the  distinct  ground  of  fraud,  he  should,  we 

71.  Wilkinson  v.  Johnson,  3  M.  «fe  C.  428.  Abbott,  C.  J.  (Lord  Tenterden), 
said:  "A  bill  is  carried  for  payment  to  the  person  whose  name  appears  as  ac- 
ceptor, or  as  agent  of  an  acceptor,  entirely  as  a  matter  of  course.  The  person 
presenting  very  often  knows  nothing  of  the  acceptor,  and  merely  carries  or  sends 
the  bill  according  to  the  direction  that  he  finds  upon  it;  so  that  the  act  of  pre- 
sentment informs  the  acceptor  or  his  agent  of  nothing  more  than  that  his  name 
appears  to  be  on  the  bill  as  the  person  to  pay  it;  and  it  behooves  him  to  see  that 
his  name  is  properly  on  the  bill.  But  it  is  by  no  means  a  matter  of  course  to  call 
upon  a  person  to  pay  a  bill  for  the  honor  of  an  indorser;  and  such  a  call,  therefore, 
imports,  on  the  part  of  the  person  making  it,  that  the  name  of  a  correspondent,  for 
whose  honor  the  payment  is  asked,  is  actually  on  the  bill;  but  still  his  attention 
may  reasonably  be  lessened  by  the  assertion  that  the  call  itself  makes  to  him  in 
fact,  though  no  assertion  may  be  made  in  words.  And  the  fault,  if  he  pays  on  a 
forged  signature,  is  not  wholly  and  entirely  his  own;  but  begins  at  least  with  the 
person  who  thus  calls  upon  him.  And  though,  where  all  the  neghgence  is  on 
one  side,  it  may  perhaps  be  unfit  to  inquire  into  the  quantum,  yet  where  there 
is  any  fault  in  the  other  party,  and  that  other  party  cannot  be  said  to  be  wholly 
innocent,  he  ought  not,  in  our  opinion,  to  profit  by  the  mistake  into  which  he 
may,  by  his  own  prior  mistake,  have  led  the  other;  at  least,  if  the  mistake  is  dis- 
covered before  any  alteration  in  the  situation  of  any  of  the  other  parties,  that  is, 
while  the  remedies  of  all  the  parties  entitled  to  remedy  are  left  entire,  and  no  one  is 
discharged  by  laches." 

72.  Phillips  v.  Thurn,  18  C.  B.  (N.  S.)  694  (1865),  Erie,  C.  J.,  said:  "I  take  it 
to  be  clear  that  if  the  defendant  had  not  intervened,  and  the  action  had  been 
brought  by  the  holder  of  the  bill  against  the  drawer,  the  drawer  would  have  been 
by  law  compelled  to  admit  that  the  bill  was  a  valid  bill  payable  to  bearer.  *  *  * 
It  seems  to  me  that  there  is  good  reason  for  saying  that  that  which  the  drawer 
would  be  estopped  from  denying,  the  acceptor  for  honor  should  also  be  estopped 
from  denying.  I  think  that  he  is  equally  bound  to  admit  that  the  bill  is  a  valid 
bill." 


§§  529,  530  ACCEPTANCE   FOR  HONOR  621 

think,  be  held  up  to  the  strict  performance  of  his  engagement,  and 
estopped  from  denying  any  fact — such  as  the  validity  of  the  signa- 
tures of  parties — which  it  presupposes."  Certainly  when  the  bill  has 
passed  into  the  hands  of  a  bona  fide  holder  for  value  after  the  accept- 
ance supra  protest,  he  could  not  then  be  permitted  to  open  the  question 
of  forgery.'^ 

§  529.  Holder  not  bound  to  take  acceptance  for  honor. — The 

holder  is  in  no  case  bound  to  take  an  acceptance  for  honor ;  "^  but 
if  he  receives  it,  and  it  is  for  the  honor  of  a  particular  party,  he  cannot 
sue  such  party  until  the  maturity  of  the  bill,  and  its  dishonor  by  the 
acceptor  supra  protest?^  And  if  the  acceptance  is  for  the  honor  of  all 
the  parties  to  the  bill,  he  cannot  sue  any  of  them  until  it  has  matured 
and  been  dishonored." 

But  there  seems  to  be  no  reason  why  the  holder  may  not  sue  prior 
parties,  when  the  acceptance  is  for  honor  of  a  particular  party,  after 
giving  them  due  notice.^^ 

§  530.  Protest  for  better  security. — There  is  another  species  of 
acceptance  for  honor  which  occurs  after  acceptance  and  before  the 
maturity  of  the  bill,  when  the  acceptor  absconds  or  becomes  a  bank- 
rupt or  insolvent.^^  In  this  case  the  holder  is  not  bound  to  protest 
the  bill,  and  his  neglect  to  do  so  will  not  affect  his  remedy  against  any 
prior  party .^^  But  he  may  make  protest  if  he  choose  to  do  so,  and  it 
is  then  called  protest  for  better  security .^^    Mr.  Chitty  says  on  this 

73.  In  Byles  on  Bills  (Sharswood's  ed.)  [*258],  406,  it  is  said:  "The  acceptor 
sujrra  protest  admits  the  genuineness  of  the  signature,  and  is  bound  by  any  estoppel 
binding  on  the  party  for  whose  honor  he  accepts.  Thus,  where  a  bill  was  drawn 
in  favor  of  a  nonexisting  person  or  order,  but  the  name  of  the  drawer,  and  the 
name  of  the  payee  and  first  indorser  were  both  forged  and  the  defendant  accepted 
for  the  honor  of  the  drawer,  it  was  held  that  the  defendant  was  estopped  from 
disputing  that  the  drawer's  signature  was  genuine,  and  that  the  bill  was  drawn  in 
favor  of  a  nonexisting  person,  was  negotiable,  and  had  become  payable  to  bearer." 
See  also  Story  on  Bills,  §262;  Redfield  and  Bigelow's  Leading  Cases,  83-63. 

74.  Story  on  Bills,  §  262;  Salt  Spring  Bank  v.  Syracuse  Sav.  Inst.,  62  Barb.  101. 

75.  Chitty  on  Bills  [*345],  387;  Mitford  v.  Walcott,  12  Mod.  410,  1  Ld.  Raym. 
575;  Gregory  v.  Walcup,  1  Comyns,  76;  Pillans  v.  Van  Mierop,  3  Burr.  1663; 
Byles  on  Bills  (Sharswood's  ed.)  [*256],  403;  Edwards  on  Bills,  443. 

76.  WiUiams  v.  Germaine,  7  B.  &  C.  468, 1  Man.  &  R.  394. 

77.  Story  on  Bills,  §  258;  Chitty,  375. 

78.  Story  on  Bills,  §  258. 

79.  Chitty  on  Bills  [*344],  385. 

80.  Ex  'parte  Wackerbath,  5  Ves.  574. 

81.  Chitty  on  Bills  [*344],  385. 


022  ACCEPTANCE   OP   BILLS   OF   EXCHANGE        §§  531,  532 

Kiil)jocl:  "TIk^  (uistom  of  inorchants  is  stated  to  be,  that  if  tlic  drawee 
of  a  bill  of  exelianf^e  abscond  before  the  day  when  the  bill  is  due,  the 
holder  may  protest  it,  in  order  to  have  better  security  for  the  pay- 
ment, and  should  Rive  notice  to  the  drawer  and  indorsers  of  the  ab- 
sconding; of  the  drawee;  and  if  the  acceptor  of  a  foreign  bill  become 
b.inkrupt  before  it  is  due,  it  seems  that  the  holder  may  also,  in  such 
case,  jnotest  for  better  security;  but  the  acceptor  is  not,  on  account 
of  th(>  bankruptcy  of  the  drawer,  compellable  to  give  this  security. 
'Hie  n(>glect  to  make  this  protest  will  not  affect  the  holder's  remedy 
against  the  drawer  and  indorsers;  and  its  principal  use  appears  to  be 
thai ,  by  giving  notice  to  the  drawers  and  indorsers  of  the  situation  of 
th(>  acceptor,  by  which  it  is  become  improbable  that  payment  will  be 
tnad(>,  (lu\v  :in>  enabled  by  other  means  to  provide  for  the  payment 
of  l\\v  bill  wluMi  due,  and  tiiereby  prevent  the  loss  of  re-exchange,  etc., 
occasioncMl  by  (lie  r(>turu  of  the  bill.  It  may  be  recollected  that, 
I  hough  the  drawi>r  or  indorsers  refuse  to  give  better  security,  the 
holder  nuist,  u(>verthelt>ss,  wait  till  the  bill  be  due  before  he  can  sue 
ell  her  of  Mu)S(>  i)arties."  ^^ 

§  531.  An  acci^ptor  for  honor  of  the  drawer  thereby  releases  the 
acconunodation  acceptor  of  the  bill,  because  an  acceptor  for  honor 
can  aceiuire  only  the  rights  of  the  party  for  whose  honor  he  accepts, 
and  the  drawer  could  not  sue  the  accommodation  acceptor .^^  If  the 
bill  he  i)ayable  at  a  certain  time  after  sight,  and  is  accepted  for  honor, 
thi>  tinu^  runs  from  such  acceptance,  and  not  from  the  presentment 
to  the  drawee.'*'* 

SECTION  VII 

THE   EFFECT   OF   ACCEPTANCE — WHAT   IT   ADMITS 

§  532.  The  effect  of  the  acceptance  of  a  bill  is  to  constitute  the 
acceptor  the  principal  debtor/^""    The  bill  becomes  by  the  acceptance 

82.  Ibid. 

83.  MoDowoll  V.  Cook,  0  Smodos  i!i:  M.  420;  Gazzam  v.  Armstrong,  3  Dana, 
r)04. 

84.  Williams  v.  C.onuaino.  7  B.  ».<:  C.  408.  1  Man.  .t  R.  394,  403. 

85.  'l^htnnpsou  on  Bills.  -J'^O;  Ragsdalo  v.  Grei?ham,  141  Ala.  SOS.  37  So.  367; 
Capital  (.''ity  Ins.  Co.  v.  Quinn,  73  Ala.  500,  citing  the  text;  Jarvis  v.  WiUson,  46 
Conn.  VH);  Cooper  v.  Jones,  79  Ga.  379:  Parnielee  v.  Williams,  72  Ga.  45;  Hall  v. 
Capital  Bank,  71  Ga.  715;  Davis  v.  Baker,  71  Ga.  34;  Huston  v.  Newgas*:,  234 


§  532  THE  EFFECT  OF  ACCEPTANCE  623 

very  similar  to  a  promissory  note— the  acceptor  being  the  promisor, 
and  the  drawer  standing  in  the  relation  of  an  indorser  ^^  or  a  surety  .^^ 

But  in  respect  to  the  acceptor's  position  with  regard  to  the  drawer, 
and  the  amount  for  which  he  renders  himself  liable  by  accepting  the 
bill,  it  is  well  to  observe  that  the  acceptance  does  not  entitle  the 
acceptor  to  charge  it  in  account  against  the  drawer  from  the  date  of 
acceptance,  unless  he  pays  the  whole  amount  at  the  time,  or  dis- 
charges the  drawer  from  all  responsibility.^^ 

Like  the  maker  of  a  note,  the  acceptor  is  bound  by  all  the  terms 
of  the  instrument,  and  if  it  contain  a  stipulation  for  payment  of 
attorney's  fees,  he  is  bound  by  it.^^ 

If  the  acceptance  be  for  the  drawer's  accommodation,  the  acceptor 
does  not  thereby  become  entitled  to  sue  the  drawer  upon  the  bill;  but 
when  he  has  paid  the  bill,  and  not  before,  he  may  recover  back  the 
amount  from  the  drawer  in  an  action  for  money  had  and  received,^" 
and  if  a  bill  has  been  drawn  for  the  benefit  and  accommodation  of  the 
acceptor,  and  he  has  received  the  proceeds  and  benefit  thereof,  then 

111.  285,  84  N.  E.  910,  reversing  135  111.  App.  117  (as  to  an  acceptance  for  accom- 
modation of  the  drawer);  Hamilton  v.  Catchings,  58  Miss.  92,  although  he  ac- 
cepts for  accommodation;  Bank  of  Indian  Territory  v.  First  Nat.  Bank,  109  Mo. 
App.  665,  83  S.  W.  537;  Heurtematte  v.  Morris,  101  N.  Y.  63,  citing  the  text; 
Bank  V.  Loan  &  Trust  Co.,  119  N.  C.  554,  26  S.  E.  131,  citing  and  approving  the 
text;  Milmo  Nat.  Bank  v.  Cobbs,  53  Tex.  Civ.  App.  1,  115  S.  W.  345.  In  Georgia, 
if  the  drawer  write  his  name  across  the  face  of  a  draft,  drawn  payable  to  his  order, 
before  acceptance,  it  may  be  declared  as  a  promissory  note.  Patillo  v.  Mayer, 
70  Ga.  715;  Bank  v.  Loan  &  Trust  Co.,  119  N.  C.  554,  26  S.  E.  131,  citing  and 
approving  text.  So  absolutely  is  the  acceptor  regarded  as  a  primary  debtor,  it 
has  been  decided  that  the  owner  or  holder  of  a  bill  of  exchange  is  under  no  duty  to 
such  acceptor  to  retain  or  render  available,  collateral  security  for  the  payment  of 
the  bill  received  from  the  payee  or  indorser  thereon.  See  Fowler  v.  Gates  City 
Bank,  88  Ga.  29,  13  S.  E.  831.  Upon  the  fulfillment  of  the  terms  of  a  conditional 
acceptance  the  acceptor  became  bound  as  the  principal  debtor  to  the  payee,  and 
the  payee  was  not  bound  to  return  mortgaged  property  or  to  foreclose  a  mort- 
gage given  him  by  the  drawer  before  he  could  maintain  an  action  agamst  the 
acceptor.    Crutchfield  v.  Martin,  117  Pac.  194,  27  Okl.  764. 

86.  Haddock,  Blanchard  &  Co.  v.  Haddock,  192  N.  Y.  499,  85  N.  E.  682,  19 
L.  R.  A.  (N.  S.)  136,  affirming  103  N.  J.  S.  584. 

87.  In  re  Stevens,  74  Vt.  408,  52  Atl.  1034.  The  drawee  of  a  check,  when  he 
accepts  it,  makes  himself  the  guarantor  thereof.  Farmers'  &  Merchants'  Bank  v. 
Bank  of  Rutherford,  115  Tenn.  64,  88  S.  W.  939,  112  Am.  St.  Rep.  817. 

88.  Bracton  v.  WilUng,  4  Call,  288. 

89.  Smith  v.  Muncie  National  Bank,  29  Ind.  158. 

90.  Planters'  Bank  v.  Douglas,  2  Head,  699;  Christian  v.  Keen,  80  Va.  377, 
citing  the  text;  Martm  v.  Muncy,  40  La.  Ann.  190;  Church  v.  Swope,  38  Ohio 
St.  493;  Abraham  v.  Mitchell,  112  Pa.  St.  230. 


624  ACCEPTANCE    OF   BILLS    OF   EXCHANGE        §§  533,  534 

the  drawer  is  the  accommodation  party,  and  the  obligation,  as  be- 
tween the  drawer  and  acceptor,  is  that  of  the  acceptor."  If  the 
acceptor  put  the  bill  in  circulation,  he  is  estopped  from  showing  it  was 
then  paid.®^ 

§  533.  What  acceptance  admits:  (1)  Signature  of  drawer.— It 
follows  from  the  fact  that  the  acceptor  assumes  to  pay  the  bill,  and 
becomes  the  principal  debtor  for  the  amount  specified,  that  acceptance 
is  an  admission  of  everything  essential  to  the  existence  of  such  lia- 
bility. Therefore,  acceptance  is,  in  the  first  place,  an  admission  of  the 
signature  of  the  drawer,  the  drawee  being  supposed  to  know  his 
correspondent's  handwriting,  and,  by  accepting,  to  acknowledge  it; 
and  m  a  suit  against  the  acceptor  he  would  not  be  permitted  to  plead 
or  show  that  the  handwriting  was  not  the  drawer's,  and  would  be 
bound  by  his  acceptance  even  though  the  drawer's  name  were  forged "" 


93 


§  534.  (2)  Admission  of  funds  of  drawer  in  drawee's  hands.— 

In  the  second  place,  acceptance  admits  that  the  acceptor  had  funds 
of  the  drawer  in  his  hands,  for  the  drawing  of  the  bill  implies  this,  and 
acceptance  in  the  usual  course  of  business  only  follows  when  it  is  the 
fact.  Therefore,  the  acceptor  cannot  deny  that  he  was  in  funds  when 
suit  is  brought  by  a  holder  of  the  bill,^^  and  knowledge  by  the  holder 

91.  Bailey  v.  Wood,  114  Ky.  27,  69  S.  W.  1103. 

92.  Hinton  v.  Bank  of  Columbus,  9  Port.  463. 

93.  Wilkinson  v.  Lutwidge,  1  Stra.  648  (1726).  Lord  Raymond,  C.  J.,  thought 
acceptance  acknowledged  handwriting  of  the  drawer,  but  was  not  conclusive 
evidence.  In  Jenys  v.  Fawler,  2  Stra.  946  (1732),  it  was  held  that  proof  of  forgery 
of  drawer's  handwriting  was  inadmissible.  Hoffman  &  Co.  v.  Bank  of  Milwaukee, 
12  Wall.  193;  Goetz  v.  Bank  of  Kansas  City,  119  U.  S.  556;  Johnston  v.  Com- 
mercial Bank,  37  W.  Va.  343;  Hortsman  v.  Henshaw,  11  How.  177;  Bank  of  the 
United  States  v.  Bank  of  Georgia,  10  Wheat.  333;  White  v.  Continental  Nat. 
Bank,  64  N.  Y.  316;  Goddard  v.  Merchants'  Bank,  4  N.  Y.  147;  Canal  Bank  v. 
Bank  of  Albany,  1  Hill  (N.  Y.),  287;  Bank  of  Commerce  v.  Union  Bank,  3  N.  Y. 
235;  Levy  v.  Bank  of  United  States,  1  Binn.  27;  Peoria  R.  Co.  v.  Neill,  16  111. 
269;  EUis  v.  Ohio  Life,  etc.,  Co.,  4  Ohio  St.  628;  Whitney  v.  Bunnell,  8  La.  Ann. 
429;  Leach  v.  Buchanan,  4  Esp.  226;  Price  v.  Neal,  3  Burr.  1354;  Smith  v.  Chester, 
1  T.  R.  654;  Wilkinson  v.  Johnson,  3  B.  &  C.  428;  Sanderson  v.  Coleman,  4  M.  & 
G.  309;  Angel  v.  Ellis,  1  McGloin,  57;  Welch  v.  Mayer,  4  Colo.  App.  440,  36  Pac. 
613;  Neal  v.  Coburn,  92  Me.  146,  42  Atl.  348,  69  Am.  St.  Rep.  495;  Belknap  v. 
Davis,  19  Me.  455;  Trust  Co.  of  America  v.  Hamilton  Bank,  112  N.  Y.  S.  84, 
127  App.  Div.  515;  Title  Guarantee  &  Trust  Co.  v.  Haven,  111  N.  Y.  S.  305,  126 
App.  Div.  802;  Havana  Cent.  R.  Co.  v.  Knickerbocker  Trust  Co.,  198  N.  Y. 
422,  92  N.  E.  12. 

94.  Hoffman  v.  Bank  of  Milwaukee,  12  Wall.  181;  Hortsman  v.  Henshaw,  11 


§  535  THE  EFFECT  OF  ACCEPTANCE  625 

of  a  draft  as  to  there  being  no  funds  of  the  drawer  with  the  acceptor 
to  meet  the  draft  cannot  reheve  the  acceptor  of  the  effect  of  his 
acceptance  of  the  draft;  ^^  though  as  between  himself  and  the  drawer 
it  is  only  prima  facie  evidence  that  the  drawer  had  funds  in  his  hands, 
and  he  may  rebut  this  presumption  by  showing  that  the  acceptance 
was  for  the  drawer's  accommodation,  or  otherwise  under  circum- 
stances which  place  him  under  no  obligation  to  pay  the  bill  to  him.^^ 
But,  notwithstanding  the  presumption  that  the  acceptor  has  funds  of 
the  drawer,  yet,  where  bills  have  been  drawn  upon  letters  of  credit 
to  enable  a  party  to  purchase  and  ship  merchandise,  this  presumption 
is  rebutted,  and  the  drawer  becomes  the  primary  debtor,  and  is 
liable  to  the  acceptor  for  his  advances.  But  if  the  acceptor  has  notice 
that  one  of  two  joint  drawers  of  such  a  bill  has  merely  loaned  his 
name  to  give  currency  to  the  bill,  such  drawer  is  no  more  liable  to  the 
acceptor  than  if  he  had  merely  indorsed  the  bill.^' 

§  535.  (3)    Admission   of   drawer's   capacity  to   draw. — In   the 

How.  177;  Raborg  v.  Peyton,  2  Wheat.  385;  Kemble  v.  Lull,  3  McLean,  272; 
Ragsdale  v.  Greshan,  141  Ala.  308,  37  So.  367,  citing  text;  Jarvis  v.  Wilson,  46 
Conn.  90  (case  of  parol  acceptance);  Ray  v.  Morgan,  112  Ga.  923,  38  S.  E.  335, 
53  L.  R.  A.  210;  Heurtematte  v.  Morris,  101  N.  Y.  63,  citing  the  text;  Jordan  v. 
Tarkington,  4  Dev.  357;  Milmo  Nat.  Bank  v.  Cobbs,  53  Tex.  Civ.  App.  1,  115  S. 
W.  345;  Grumback  v.  Hirsch,  17  Tex.  Civ.  App.  618,  43  S.  W.  1031;  In  re  Stevens, 
74  Vt.  408,  52  Atl.  1034.  In  an  action  by  the  payee  against  the  drawee  of  an 
order  drawn  by  a  vendor  against  his  vendee,  the  fact  that  advances  had  been  made 
by  the  vendee  after  the  presentation  and  acceptance  of  the  order  would  be  no 
defense,  unless  made  in  pursuance  of  an  agreement  entered  into  between  the 
original  parties  before  the  acceptance  of  the  order,  or  unless  the  payee  knew  of 
such  advances  and  assented  thereto.  Wadhams  &  Co.  v.  Inman,  Poulsen  &  Co., 
38  Oreg.  143,  63  Pac.  11.  Where  a  contractor  for  the  construction  of  a  railroad 
accepted  an  order  drawn  upon  him  by  a  subcontractor,  on  the  supposition  that 
he  and  the  subcontractor  had  a  lien  on  the  railroad  for  the  amount  of  their  work 
and  that  the  amount  of  their  estimates  would  be  collected,  he  is  liable  on  the 
acceptance  though  it  turned  out  that  the  railroad  became  insolvent  and  that  he 
was  mistaken  in  the  assumption  that  the  full  amount  of  the  subcontractor's  work 
would  be  paid  for.  Chattanooga  Grocery  Co.  v.  Livingston,  (Tenn.  Ch.  App.) 
59S.W.  470(1900). 

95.  Milmo  Nat.  Bank  v.  Cobbs,  53  Tex.  Civ.  App.  1,  115  S.  W.  345. 

96.  See  chapter  on  Consideration,  §§  174-176;  Turner  v.  Browder,  5  Bush, 
216;  Park  v.  Nichols,  20  111.  App.  143;  Klopfer  v.  Levi,  33  Mo.  App.  322.  And 
it  follows  that  the  acceptance  of  a  draft  by  the  drawee  is  no  evidence  of  a  loan 
by  him  to  the  drawer — the  drawee  is  presumably  a  debtor  for  the  amount  of  the 
draft,  and  payment  of  it,  and  discharge  of  the  debt.  Doyle  v.  Ungliah,  143  N.  Y. 
556,  38N.  E.  711. 

97.  Turner  v.  Browder,  5  Bush,  216;  ante,  §  176. 

40 


626  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  536 

third  place,  the  acceptor  admits  the  capacity  of  the  drawer  to  draw 
the  bill,  for  otherwise  it  would  not  be  valid;  ^^  and,  therefore,  he  cannot 
set  up  a  plea,  that  the  drawer  of  a  bill,  which  he  had  accepted,  was  a 
body  corporate  having  no  legal  authority  to  draw  the  bill,^^  or  was  a 
bankrupt,^  infant,^  married  woman,^  or  fictitious  person.'*  When  the 
bill  is  drawn  in  the  name  of  a  firm,  acceptance  admits  that  there  is 
such  a  firm,^  and  if  it  be  drawn  by  a  person  as  executor,  it  admits  his 
right  to  sue  in  that  character.^ 

§  536.  (4)  Admission  of  payee's  capacity  to  indorse.— In  the 

fourth  place,  the  acceptor  admits  the  capacity  of  the  payee  to  indorse 
the  bill  when  it  is  drawn  payable  to  the  payee's  order,  for  by  the  very 
act  of  acceptance  he  agrees  to  pay  to  his  order;  ^  and,  therefore,  he 
cannot  show  that  at  the  time  of  acceptance  the  payee  was  an  infant,^ 


98.  Story  on  Bills,  §  113;  Byles  (Sharswood's  ed.)  [*193],  325;  Thompson  on 
Bills,  230,  231;  Title  Guarantee  &  Trust  Co.  v.  Haven,  ill  N.  Y.  S.  305,  126  App. 
Div.  802. 

99.  Halifax  v.  Lyle,  3  Welsby,  Hurl.  &  G.  (Exch.)  466.  And  so  the  payment  of 
checks  drawn  by  the  treasurer  of  a  corporation  payable  to  himself  individually, 
by  the  deposit  bank  of  the  corporation  was  an  acknowledgment  by  such  bank 
that  the  treasurer  possessed  authority  from  the  corporation  to  draw  such 
checks.  Havana  Cent.  R.  Co.  v.  Knickerbocker  Trust  Co.,  198  N.  Y.  422,  92 
N.  E.  12. 

1.  Braithwaite  v.  Gardiner,  8  Q.  B.  473.  Lord  Denman,  C.  J.,  quotmg  Lord 
Abinger's  opinion  in  Pitt  v.  Chappelew,  8  M.  &  W.  616,  said:  "Lord  Abmger  was 
a  high  authority  on  subjects  of  this  kind.  It  is  clear  what  his  opmion  was  on  the 
point  of  estoppel  in  Pitt  v.  Chappelew,  and  I  think  it  rests  on  sound  pruaciples. 
In  this  case,  all  parties  knowing  the  bankrupt's  situation,  the  defendant  accepts 
a  bill  drawn  by  him.  He  thereby  admits  that  the  bankrupt  had  power  to  draw 
upon  him;  and,  therefore,  on  a  short  and  simple  ground,  always  the  best,  I  am  of 
opinion  that  the  plamtiff  has  a  right  to  maintain  this  action." 

2.  Taylor  v.  Croker,  4  Esp.  187;  Jones  v.  Darch,  4  Price,  300;  Crutchfield  v. 
Martm,  27  Okl.  764,  117  Pac.  194. 

3.  Smith  V.  Marsack,  6  C.  B.  486;  Cowton  v.  Wickersham,  54  Pa.  St. 
302. 

4.  Cooper  v.  Meyer,  10  B.  &  C.  468,  5  Man.  &  R.  387. 

5.  Bass  V.  Clive,  4  Maule  &  S.  13. 

6.  Aspinall  v.  Wake,  10  Bing.  51. 

7.  See  ante,  §§  93,  242. 

8.  Jones  v.  Darch,  4  Price,  300  (1817).  The  payee  was  an  infant,  and  the 
acceptor  knew  it  when  he  accepted.  Taylor  v.  Croker,  4  Esp.  187  (1803).  The 
drawers,  who  were  infants,  had  drawn  the  bill  payable  to  their  own  order.  Lord 
EUenborough  held  that  the  acceptance  admitted  their  power  to  indorse,  and  the 
acceptor  could  not  show  they  were  infants.  Byles  (Sharswood's  ed.)  [*193] 
325. 


§  oo7  THE    EFFECT   OF   ACCEPTANCE  627 

an  insane  person,^  a  married  woman/"  a  bankrupt/^  or  a  corporation 
without  legal  existence.^-  It  is  a  general  principle,  applicable  to  all 
negotiable  securities,  that  a  person  shall  not  dispute  the  power  of 
another  to  indorse  such  an  instrument,  when  he  asserts  by  the  instru- 
ment which  he  issues  to  the  world,  that  the  other  has  such  power.  ^^ 
Indeed,  there  could  be  no  reason  why  the  acceptor  should  be  inter- 
ested to  show  that  the  payee  was  incompetent  to  make  the  order;  for 
he  has  been  guaranteed  in  that  regard  by  the  drawer,  and  may  charge 
the  amount  in  account  against  him  whether  the  payee  were  compe- 
tent or  not. 

§  537.  (5)  Admission  of  agent's  handwriting  and  authority. — In 

the  fifth  place,  if  the  bill  be  dra\\Ti  by  one  professing  to  act  as  agent  of 
the  drawer,  the  acceptance  admits  his  handwriting  and  authority  as 
agent  to  draw.^^  In  the  leading  case  of  Robinson  v.  Yarrow,  the  ques- 
tion arose  between  the  acceptor  and  the  indorsee  of  the  drawer  by 
procuration,  and  the  doctrine  is  stated  in  the  text  in  the  language 
generally  used  by  text-writers  and  judges.  It  is,  however,  contended 
with  force  in  a  recent  Louisiana  case,  that  the  doctrine  only  applies 
as  between  the  acceptor  and  a  bona  fide  transferee  without  notice  of 
want  of  authority  in  the  agent  to  draw;  and  that  as  between  the 
acceptor  and  the  payee  who  has  taken  the  bill  from  the  agent,  the 
former  is  not  estopped  from  showing  that  the  agent  drew  without 
authority,  the  payee  being  himself  under  obligation  to  make  due  in- 
quiry. ^^    And  this  seems  to  be  a  reasonable  limitation  of  the  principle. 

9.  Smith  V.  Marsack,  6  C.  B.  486.    See  ante,  §§  93,  242. 

10.  Smith  V.  Marsack,  6  C.  B.  486.  But  in  Massachusetts  it  has  been  held 
that  evidence  of  the  insanity  of  the  payee  at  the  time  the  note  was  executed  was 
admissible.    Peaslee  v.  Robins,  3  Mete.  (Mass.)  164.    See  ante,  §  93. 

11.  Drayton  v.  Dale,  2  B.  &  C.  293  (1823),  which  was  the  case  of  a  note  made 
payable  to  the  order  of  a  bankrupt.  Bayley,  J.,  in  Drayton  v.  Dale,  supra. 
Approved  in  Smith  v.  Marsack,  6  C.  B.  486.   See  ante,  §  242. 

12.  See  ante,  chapter  III,  §  93. 

13.  See  chapter  XLII,  on  Forgery,  section  III;  Mayer  v.  Old,  57  Mo.  App. 
639,  text  cited. 

14.  Robmson  v.  Yarrow,  7  Taunt.  455  (1817),  1  Moore,  150;  Chitty,  Jr.,  on 
Bills,  993;  Ames  on  Bills,  475;  Bigelow  on  Bills,  569;  Byles  on  Bills  (Sharswood's 
ed.),  *34,  111;  Chitty  on  Bills  (13th  Am.  ed.),  *639,  717;  1  Parsons  on  Notes  and 
Bills,  322. 

15.  Angel  v.  Ellis,  1  McGloin,  61,  McGloin,  J.,  saying:  "A  party  accepting 
a  commercial,  negotiable  draft  or  bill  of  exchange  guarantees  the  authority  of 
the  drawer  to  execute  the  same,  and  the  genuineness  of  his  signature.  This  prin- 
ciple has  been  held  applicable  to  such  an  instrument  drawn  by  an  agent,  and  the 


628  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  538 

§  538.  What  acceptance  does  not  admit:  (1)  Signature  of  payee. 
— ^But  beyond  these  admissions  the  acceptance  does  not  go.  In  the 
first  place,  it  does  not  admit  the  genuineness  of  the  signature  of  the 
payee  when  it  purports  to  bear  his  indorsement,  or  that  of  any  other 
indorser,  for  with  their  handwriting  he  is  not  presumed  to  be  famiUar; 
and,  therefore,  if  the  signature  of  the  payee  or  other  indorser  be 
forged,  the  acceptor  will  not  be  bound  to  pay  the  bill  to  any  one  who 
is  compelled  to  trace  title  through  such  indorsements.^^  And  if  he 
has  gone  so  far  as  to  pay  the  bill  to  any  one  holding  it  under  such 
forged  indorsement,  he  may,  as  a  general  rule,  recover  back  the 
amount."  The  rule  would  not  apply,  however,  where  the  drawer  had 
issued  the  bill  with  the  forged  indorsement  upon  it,  for  then  the 

authority  of  the  agent  declared  to  be  amongst  the  things  guaranteed  by  the  ac- 
ceptance. Robinson  v.  Yarrow,  7  Taunt.  445.  There  is  really  no  reason  why, 
in  the  hands  of  an  innocent  holder,  the  guarantee  should  not  extend  so  far.  But 
as  one  who  received  a  draft  from  a  forger  with  notice,  actual  or  legal,  could  not 
impose  such  guarantee  upon  the  acceptor,  and  as  one  dealing  with  an  agent 
must,  at  his  peril,  inquire  into  the  scope  of  that  agent's  authority,  and  is  negligent 
if  he  do  not,  it  is  reasonable  to  hold  a  person  taking  a  draft,  executed  by  a  manda- 
tory, as  charged  with  knowledge  as  to  the  character  and  extent  of  the  agency, 
and  not  protected  by  the  acceptance,  as  an  innocent  person  would  be.  And  in 
view  of  this  obligation  upon  the  part  of  persons  dealing  primarily  and  directly 
with  agents,  the  drawer  has  as  much  right,  and  perhaps  more,  to  presume  that 
the  payee  has  performed  his  prior  duty,  and  ascertained  the  extent  of  the  agent's 
power  before  taking  his  draft,  as  the  negUgent  payee  has  to  suppose  that  the  ac- 
ceptor would  not  commit  himself  unless  the  draft  were  correct.  At  all  events, 
this  enforced  guarantee,  peremptorily  debarring  the  acceptor  upon  commercial 
paper  from  setting  up  error,  fraud,  forgery,  or  other  similar  defenses,  is  in  deroga- 
tion of  the  general  law,  existing  only  in  favor  of  commerce.  Where  the  contract 
is  not  in  the  shape  of  commercial  paper,  it  is  open  to  attack  and  recission  for 
error,  violence,  fraud,  or  menace,  or  illegality,  or  absence,  or  failure  of  considera- 
tion, under  our  Civil  Code.  Civ.  Code,  arts.  1881,  1893,  1819,  1824,  1846,  1847, 
1850.  If,  therefore,  defendants  accepted  this  order  in  error,  as  we  believe  they 
did,  we  stand  face  to  face  with  express  provisions  of  law,  which  accord  them  the 
right  to  be  relieved,  and  we  must  be  governed  thereby.  Civ.  Code,  arts.  1821, 
1881." 

16.  Holt  V.  Ross,  54  N.  Y.  474;  Edwards  on  Bills,  432.  In  White  v.  Con- 
tinental Nat.  Bank,  64  N.  Y.  320,  Allen,  J.,  says:  "The  plaintiffs  as  drawees  of 
the  bill  were  only  held  to  acknowledge  the  signature  of  their  correspondents;  by 
accepting  and  paying  the  bill  they  only  vouched  for  the  genuineness  of  such 
signatures,  and  were  not  held  to  a  knowledge  of  the  want  of  genuineness  of  any 
other  part  of  the  instrument,  or  of  any  other  names  appearing  thereon,  or  of  the 
title  of  the  holder."  LyndonviUe  Nat.  Bank  v.  Fletcher,  68  Vt.  85,  34  Atl.  38,  54 
Am.  St.  Rep.  874. 

17.  Ibid.;  Canal  Bank  v.  Bank  of  Albany,  1  Hill  (N.  Y.),  287;  Dick  v.  Leverich, 
XI  La.  573;  WUUams  v.  Drexel,  14  Md.  566. 


§§  539,  540       THE  EFFECT  OF  ACCEPTANCE  629 

acceptor  could  charge  the  amount  in  account  against  him,  and  as  the 
forged  indorsement  could  in  such  case  subject  him  to  no  loss,  he  would 
not  be  entitled  to  recover  back  the  amount. ^^  The  acceptance  does 
not  admit  the  signature  of  the  indorser,  even  when  the  bill  is  payable 
to  the  drawer's  order,  and  purports  to  be  indorsed  by  him  in  the  same 
handwriting  as  the  drawer's.^^  But  if  the  drawer  is  a  fictitious  person, 
and  the  bill  is  payable  to  the  drawer's  order,  the  acceptor's  under- 
taking is  that  he  will  pay  to  the  signature  of  the  same  person  that 
signed  for  the  drawer;  and  in  such  case  the  holder  may  show,  as 
against  the  acceptor,  that  the  signature  of  the  fictitious  drawer  and 
of  the  first  indorser  are  in  the  same  handwriting.^ 

§  539.  (2)  Acceptance  no  admission  of  agency  to  indorse. — In 

the  second  place,  acceptance  does  not  admit  agency  to  indorse,  which 
must  be  proved  by  the  holder  in  order  to  recover  against  the  acceptor, 
even  though  the  acceptor  acknowledges  agency  to  draw  the  bill,  and 
the  indorsement  was  upon  it  at  the  time  of  acceptance.  Thus,  where 
a  bill  was  drawn  over  the  signature,  "A.  Henry  p.  proc.  C.  Staeben 
&  Co.,"  and  was  expressed  to  be  payable  "to  our  order,"  and  was 
indorsed  in  like  manner  as  drawn:  "A.  Henry  p.  proc.  C.  Staeben 
&  Co.,"  and  was  accepted  by  the  defendant,  and  sued  on  by  the  plain- 
tiff, it  was  held  that,  in  order  to  recover,  he  must  prove  the  procur- 
ation to  indorse.  And  Park,  J.,  said:  "The  mere  acceptance  proves 
the  drawing,  but  it  never  proves  the  indorsement;  it  is  not  at  all 
necessary  that  a  power  given  to  draw  bills  by  procuration  should 
enable  the  agent  to  indorse  by  procuration;  the  first  is  a  power  to  get 
funds  into  the  agent's  hands,  the  other  to  pay  them  out."  ^^ 

§  540.  (3)  Acceptance  no  admission  of  genuineness  of  terms  in 
body  of  the  bill. — In  the  third  place,  the  acceptance  does  not  ad- 
mit the  genuineness  of  the  terms  contained  in  the  body  of  that  bill  at 
the  time  of  the  acceptance;  and,  therefore,  if  at  that  time  they  had 
been  altered  so  as  to  purport  to  bind  the  drawer  for  a  larger  sum,  or 

18.  See  chapter  XLII,  on  Forgery,  section  III;  Hortsman  v.  Henshaw,  11 
How.  177;  Meacher  v.  Fort,  3  Hill  (S.  C),  227;  Coggill  v.  American  Exchange 
Bank,  1  N.  Y.  113. 

19.  Robinson  v.  Yarrow,  7  Taunt.  455;  Canal  Bank  v.  Bank  of  Albany,  1 
Hill  (N.  Y.),  287;  Beeman  v.  Duck,  11  M.  &  W.  257;  WiUiams  v.  Drexel,  14  Md. 
566.    See  chapter  XLII,  on  Forgery,  section  III. 

20.  Cooper  v.  Meyer,  10  B.  &  C.  468;  Beeman  v.  Duck,  11  M.  &  W.  251. 

21.  Robinson  v.  Yarrow,  7  Taunt.  455  (1817).  See  ante,  §  537;  Benjamin's 
Chalmers'  Digest,  211. 


630  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  541 

in  a  different  manner  than  that  of  the  original  l^ill,  he  will  not  be 
bound  by  his  acceptance  to  pay  the  amount,  unless  the  drawer  had 
by  his  own  carelessness  afforded  opportunity  for  the  alteration,  and 
the  acceptor  could,  therefore,  charge  him  in  account  with  the  whole 
amount.^^  But  where  the  drawer  alters  it  himself,  or  acquiesces  in  an 
alteration,  before  acceptance,  it  binds  him,  and,  therefore,  the  ac- 
ceptor.^^ 

If  the  drawer  were  not  responsible  for  affording  the  opportunity 
for  the  alteration  to  be  made,  the  acceptor  could  not  only  defend 
against  a  recovery  upon  the  bill,  but  might  himself  recover  back  the 
amount  paid  upon  it,  or,  at  least,  to  the  extent  of  the  amount  for 
which  he  would  still  remain  liable  to  the  drawer.^^  If,  however,  the 
acceptor  were  himself  responsible  for  issuing  the  bill  in  such  a  form 
as  to  admit  of  its  being  easily  forged  or  altered — as  where  an  acceptor 
wrote  his  acceptance  in  blank,  on  an  agreement  with  the  drawer  that 
he  should  not  draw  for  over  $1,000,  and  the  latter  inserted  a  larger 
sum  and  passed  the  bill  to  the  plaintiff — he  would  be  bound  for  the 
whole  amount,  and  could  not  recover  it  back  if  paid.^^ 


SECTION  VIII 

EXTINGUISHMENT  OF  ACCEPTOR'S   OBLIGATION 

§  541.  The  obligation  of  the  acceptor  may  be  discharged,  extin- 
guished, or  waived:  (1)  by  operation  of  law;  (2)  by  payment;  (3)  by 
release;  and  (4)  by  express  or  implied  waiver  or  agreement  of  the 
parties. 

In  the  first  place,  as  to  discharge  by  operation  of  law,  this  occurs 
when  the  acceptor  is  discharged  by  force  and  effect  of  the  laws  of  the 
place  where  the  acceptance  was  made — as,  for  example,  by  going  into 
bankruptcy,  or  pleading  successfully  the  Statute  of  Limitations.-^ 

22.  Young  V.  Grote,  4  Bing.  253;  Young  v.  Lehman,  63  Ala.  519;  White  v. 
Continental  Nat.  Bank,  64  N.  Y.  320;  Marine  Nat.  Bank  v.  National  City  Bank, 
59  N.  Y.  68.  See  chapter  XLIX,  on  Checks,  and  chapter  XLII,  on  Forgery;  also 
chapter  XLIII,  on  Alteration,  section  YI. 

23.  Langton  v.  Lazarus,  5  M.  &  W.  628-629;  Ward  v.  Allen,  2  Mete.  (Mass.) 
57. 

24.  Bank  of  Commerce  v.  Union  Bank,  3  N.  Y.  230.  See  chapter  XLIX,  on 
Checks,  sections  XIII,  XIV;  on  Forgery,  section  III. 

25.  Van  Duzer  v.  Howe,  21  N.  Y.  531. 

26.  1  Parsons  on  Notes  and  Bills,  328. 


§  542  EXTINGUISHMENT   OF   ACCEPTOR'S   OBLIGATION  631 

In  the  second  place,  the  acceptor  may  be  discharged  by  payment 
of  the  bill  according  to  its  tenor.  This  branch  of  the  subject  is  else- 
where fully  considered,  ^^  as  is  also  the  discharge  by  release.  ^^ 

§  542.  Holder's  waiver  of  acceptor's  contract. — In  the  fourth 
place,  as  to  when  an  acceptor  may  be  discharged  by  the  express  or 
implied  waiver  or  agreement  of  the  parties,  it  is  a  general  principle  of 
law  that  an  executory  contract,  whether  sealed  or  unsealed,  may  be 
discharged  before  breach  by  mere  verbal  agreement,  or  by  a  waiver 
of  the  rights  accruing  under  it.^  But  after  breach  it  can  only  be  dis- 
charged by  payment,  release  (under  seal),  or  by  taking  some  collateral 
thing  in  satisfaction,  or  by  merger  by  operation  of  law,  as  by  judg- 
ment, or  taking  a  higher  security.^"  But  cases  of  bills  of  exchange  are 
said  to  form  an  exception  to  this  rule,  and  the  liability  of  the  acceptor, 
or  other  party,  remote  or  immediate,  though  complete,  may  be  dis- 
charged, by  an  express  renunciation  of  his  claim  on  the  part  of  the 
holder  without  consideration.^^ 


27.  See  chapter  XXXVIII,  on  Payment,  vol.  II. 

28.  See  chapter  XL,  on  Discharges,  etc.,  §  2,  vol.  II. 

29.  Story  on  Bills,  §  266;  1  Parsons  on  Notes  and  Bills,  324  et  seq.;  Chitty  on 
Bills  [*310],  349.  See  especially  Byles  on  Bills  [*192],  324;  Sharswood's  note  1; 
also  Foster  v.  Dawber,  6  Exch.  850,  Parke,  B.;  Dobson  v.  Espie,  26  L.  J.  (N.  S.) 
240  (1857). 

30.  Story  on  Bills,  §  266. 

31.  Byles  on  Bills  (Sharswood's  ed.)  [*190-191],  322.  It  is  therein  said:  "It 
is  a  general  rule  of  law  that  a  simple  contract  may,  before  breach,  be  waived  or 
discharged,  without  a  deed  and  without  a  consideration;  but  after  breach  there 
can  be  no  discharge,  except  by  deed,  or  upon  sufficient  consideration.  To  this 
rule  it  has  been  repeatedly  held  that  contracts  on  bills  of  exchange  form  an  ex- 
ception, and  that  the  liability  of  the  acceptor,  or  other  party  remote  or  immediate, 
though  complete,  may  be  discharged  by  an  express  renunciation  of  his  claim  on 
the  part  of  the  holder  without  consideration.  The  exception  seems  at  fu-st  to 
violate  a  fundamental  rule,  but  the  reason  may  be  that  the  distinction  between 
a  release  under  seal,  and  a  release  not  under  seal,  is  quite  unknown  in  foreign 
countries.  An  express  and  complete  renunciation  by  the  holder  of  his  claim  on 
any  party  to  the  bill  is,  therefore,  according  to  the  law  merchant,  equivalent  to 
a  release  under  seal.  And  as  it  would  be  highly  inconvenient  to  introduce  nice 
distinctions  and  nice  questions  of  international  law,  all  the  contracts  on  a  foreign 
bill,  though  negotiated  or  made  in  England,  and  all  the  contracts  on  an  inland  bill, 
depending,  as  they  do,  on  the  same  law  merchant,  may  be  so  released.  And  such 
a  relaxation  of  the  general  rule  in  the  case  of  bills  of  exchange  is  not  unreasonable 
on  another  ground.  The  money  due  at  the  maturity  of  a  bill  of  exchange  is  in 
practice  expected  to  be  paid  immediately,  and  in  many  cases  with  remedies 
over  in  favor  of  the  debtor.    Parties  liable  who  are  expressly  told  that  recourse 


632  ACCEPTANCE    OF   BILLS   OF   EXCHANGE         §§  543,  544 

§  543.  Discharge  of  acceptor  for  accommodation, — In  the  case 
of  acceptances  for  accommodation,  the  principles  upon  which  this 
doctrine  rests  are  not  difficult  to  discover.  The  acceptor  is,  indeed,  ac- 
cording to  the  form  and  nature  of  his  contract,  primarily  liable  to  the 
holder.  But  the  debt  which  he  has  bound  himself  to  pay,  is  in  every 
respect  the  debt  of  another  person  to  the  payee  or  the  holder;  and  the 
payee  or  holder,  while  having  the  right  to  sue  the  acceptor  as  his  prin- 
cipal debtor,  has  such  relations  to  the  party  for  whose  accommodation 
the  bill  has  been  accepted,  that  it  is  not  urmatural  for  him  to  be  in  ne- 
gotiation with  such  party  respecting  its  settlement.  And  when  he 
relinquishes  his  claim  against  the  acceptor,  it  is  nothing  more  than 
a  waiver  of  his  right  to  hold  him  as  primarily  bound  for  another's 
debt,  for  which  he  may  be  regarded  in  some  sort,  though  not  to  all 
intents  and  purposes,  as  a  surety.  Thus  where  the  holder  knowing 
that  the  acceptance  was  for  accommodation,  and  himself  possessed 
goods  of  the  drawer  from  the  proceeds  of  which  he  expected  payment, 
told  the  acceptor  and  his  creditors  that  he  should  look  to  the  drawer, 
and  not  come  upon  the  acceptor;  and,  in  consequence,  the  acceptor 
assigned  his  property  for  the  benefit  of  his  creditors,  it  was  held,  that 
if  by  the  facts  an  unconditional  renunciation  was  estabUshed,  it  was 
a  discharge  of  the  acceptor,  although  the  goods  in  the  possession  of  the 
holder  proved  to  be  of  little  value,  and  the  drawer  was  insolvent;  but 
if  the  words  imported  only  that  the  renunciation  was  conditional,  and 
that  the  holder  only  looked  to  the  drawer  in  the  first  instance,  the 
acceptor  was  not  discharged.^^  So  where  the  holder  arrested  the 
acceptor,  and  finding  that  he  had  accepted  for  accommodation  of 
Dallas,  the  drawer,  his  attorney,  took  security  from  Dallas,  and  wrote 
to  the  acceptor  that  "  he  had  settled  with  Dallas,  and  he  (the  acceptor) 
need  not  trouble  himself  further,"  it  was  held  that  the  acceptor 
was  discharged.^^  But  where  an  accommodation  acceptor  applied 
to  the  holder  to  give  up  the  bill,  which  he  refused  to  do,  but  said  the 
acceptor  should  not  be  troubled  about  it,  it  was  held  under  the  cir- 
cumstances, that  the  acceptor  was  not  discharged.^* 

§  544.  Renunciation  of  right  to  hold  acceptor  liable. — The  text- 
will  not,  in  any  event,  be  had  to  them,  are  almost  sure,  in  consequence,  to  alter 
their  conduct  and  position." 

32.  Whately  v.  Tricker,  1  Campb.  35  (1807);  Chitty,  Jr.,  740;  Chitty  on  Bills 
[*311],  350;  Story  on  Bills,  §  266;  1  Parsons  on  Notes  and  Bills,  324. 

33.  Black  v.  Peele,  cited  in  Dingwall  v.  Dunster,  1  Doug.  247;  Chitty,  Jr., 
403;  Bayley  on  Bills,  188. 

34.  Adams  v.  Gregg,  2  Stark.  531  (1819);  Chitty,  Jr.,  1076. 


§  545  EXTINGUISHMENT   OF   ACCEPTOR'S   OBLIGATION  633 

writers  generally  concur  in  the  doctrine  that  even  where  the  accept- 
ance is  for  value  and  in  the  usual  course  of  business  an  express  re- 
nunciation by  the  holder  of  the  right  to  proceed  against  the  acceptor 
operates  as  a  waiver  of  such  right,  and  discharges  the  acceptor.^^ 
And  there  is  authority  to  support  the  doctrine.  Where  one  Walpole 
holding  a  bill  accepted  by  Pulteney,  agreed  to  consider  his  acceptance 
at  an  end,  and  wrote  in  his  bill-book  the  memorandum,  "  Pulteney's 
acceptance  at  an  end,"  and  kept  the  bill  from  1772  to  1775  without 
calling  on  Pulteney,  it  was  held  that  the  latter  was  discharged.^^  In 
the  cases  where  the  renunciation  is  express,  it  will  discharge  the  ac- 
ceptor, although  without  consideration,  for  the  reason  that  it  would 
operate  as  a  fraud  upon  him  to  hold  otherwise.  And  the  doctrine 
arises  out  of  the  peculiar  relations  of  the  parties.^^  The  acceptor 
enters  into  his  engagement  with  funds  of  the  drawer  in  his  hands,  or 
under  some  business  arrangement  according  to  his  course  of  dealing 
and  if  the  holder  expressly  renounces  claim  against  him,  his  hands 
are  then  untied,  and  he  is  left  free  to  account  to  the  drawer  for  the 
funds  in  his  hands,  or  at  least  is  no  longer  bound  to  appropriate  them 
to  the  payment  of  the  bill,  or  to  carry  out  the  arrangements  con- 
templated for  its  payment.  To  permit  the  holder,  after  thus  exon- 
eratmg  the  acceptor,  to  recur  to  him  for  payment,  would  work  in  many 
cases  the  harshest  injustice  and  he  is  estopped  from  doing  so.^ 

§  545.  Requisites  to  renunciation  of  right  to  hold  acceptor  liable. 

—It  is  absolutely  requisite  according  to  some  authorities  that  the 
renunciation  of  claim  against  the  acceptor  should  be  express.^^    In 

36.  Bayley  on  Bills,  187,  188;  Story  on  Bills,  §267;  1  Parsons  on  Notes  and 

Bills,  325. 

36.  Walpole  v.  Pulteney,  cited  in  Dingw'all  v.  Dunster,  1  Doug.  248;  Chitty, 
Jr.,  401;  Story  on  Bills,  §  267;  Succession  of  Foerster,  43  La.  Ann.  190,  9  So.  17. 

37.  Byles  on  Bills  [*191],  323.    See  remarks  of  that  author  quoted  in  note  1, 

§  542. 

38.  See  Story  on  Bills,  §  267.  Very  nearly  concording  with  the  text  is  the 
observation  of  Professor  Parsons,  in  1  Parsons  on  Notes  and  Bills,  326-327, 
note  10,  where  it  is  said:  "The  true  ground  it  is  conceived  is,  that  a  waiver  works 
by  way  of  estoppel  rather  than  by  way  of  contract.  We  should  prefer  to  state 
the  rule  thus:  an  express  renunciation,  founded  upon  a  consideration,  or  honestly 
and  fairly  acted  upon  by  the  holder,  so  as  to  put  him  in  a  worse  situation  than  if 
the  renunciation  had  not  been  made;  or  any  act  upon  the  part  of  the  holder, 
giving  the  acceptor  reasonable  ground  to  infer  that  the  former  had  renounced  all 
claim  upon  him,  and  acted  upon,  amounts  to  discharge." 

39.  Dingwall  v.  Dunster,  1  Doug.  247,  13  East,  430  (1780);  Byles  on  Bills 
CSharswood's  ed.)  [*191],  323;  Edwards  on  Bills,  435. 


634  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  546 

a  case  where  the  accommodation  acceptor  wrote  to  the  holder  that 
he  had  been  informed  that  the  drawer  had  taken  up  the  bill,  and 
given  another  to  his  (the  holder's)  satisfaction,  and  the  holder  took 
no  notice  of  it,  but  received  interest  from  the  drawer  for  several  years, 
and  during  that  time  did  not  call  on  the  acceptor,  it  was  held  that 
the  latter  was  not  discharged.  Ashurst,  J.,  said:  "An  acceptor  makes 
himself  a  debtor,  and  his  case  is  different  from  that  of  the  other  parties 
to  the  bill.  Nothing  but  an  express  discharge  will  do."  Willes,  J.: 
"I  do  not  think  silence  can  discharge  the  acceptor.  No  case  of  tacit 
discharge  has  been  produced."  Buller,  J.:  "Nothing  but  an  express 
agreement  can  discharge  an  acceptor."*"  But  if  an  agreement  may  dis- 
charge the  acceptor  we  do  not  see  why  it  may  not  be  implied  as  well 
as  expressed.  It  is  the  fact  and  not  the  form  that  should  be  looked  to. 
And  all  that  is  necessary  to  discharge  the  acceptor  is  that  the  renun- 
ciation of  claim  against  him  should  be  clearly  made  out  whether  by 
words  or  acts.  What  is  meant  by  the  declaration  that  the  renuncia- 
tion must  be  express  is  doubtless  nothing  more  than  that  it  must  be 
unmistakable,  distinct,  and  direct,  and  is  not  to  be  inferred  from  the 
mere  circumstance  of  delay.  To  say  that  "the  circumstances  must 
amount  to  an  express  renunciation"  defines  the  correct  doctrine — 
that  it  must  be  equally  as  clear.'*^ 

§  546.  What  will  not  discharge  acceptor. — It  is  quite  clear  that. 


40.  Dingwall  v.  Dunster,  supra. 

41.  See  Farquhar  v.  Southey,  2  Car.  &  P.  497;  Wintermute  v.  Post,  4  N.  J.  L. 
420.  In  Parker  v.  Leigh,  2  Stark.  228  (1817),  indorsee  sued  acceptor.  It  ap- 
peared that  when  he  tlireatened  suit,  the  acceptor  called  to  ascertain  the  amount, 
and  the  plaintiff  showed  an  account  containing  several  claims,  among  which  was 
the  bill  sued  on.  The  plaintiff  said  that  as  to  the  sum  on  the  bill  for  £300,  he 
should  look  to  the  drawer  for  it;  that  the  sum  of  £160  was  due  upon  it,  and  that 
he  held  the  warrant  of  attorney  of  an  Irish  baronet  for  the  amount.  The  defend- 
ant supposing  that  he  was  settling  the  whole  of  the  plaintiff's  claim,  paid  the 
amount,  which  he  said  he  should  not  otherwise  have  done.  The  court  did  not 
regard  the  renunciation  as  unconditional;  but  that  the  holder  only  intended  to 
look  to  the  drawer  first.  This  is,  we  think,  the  gist  of  the  decision.  Lord  Ellen- 
borough  said:  "If  he  does  not  expressly  renounce  aU  claim  upon  the  security,  it 
still  remains  valid  in  point  of  law.  If  the  party  were  to  forego  a  bill  in  equity 
on  that  account,  it  would  be  a  good  consideration  for  a  renunciation  of  part  of  his 
claim;  but  the  ground  of  renunciation  must  be  distinctly  proved.  The  plaintiff 
probably  might  suppose  that  Williams  (the  drawer)  would  pay  the  bill,  and  that 
he  should  not  have  occasion  to  call  upon  the  defendant.  I  am  of  opinion  that 
in  point  of  law  the  circumstances  do  not  amount  to  an  express  renunciation,  and 
nothing  short  of  that  will  be  sufficient  to  discharge  the  defendant  from  his  ac- 
ceptance of  the  bill."    Bayley  on  Bills,  189. 


§§  547,  548     EXTINGUISHMENT   OF   ACCEPTOR'S   OBLIGATION     635 

as  the  acceptor  is  the  prmcipal  debtor,  mere  delay  to  proceed  against 
him  will  not  discharge  him.^^  It  was  so  held  where,  in  a  suit  by  an 
indorsee  against  the  acceptor,  no  demand  was  proved  till  three  months 
after  the  bill  had  fallen  due,  and  the  drawer  had  in  the  meantime 
become  insolvent/^  Nor  will  receiving  interest  from  the  drawer  or 
indorser;  ^^  nor  giving  time  to  them  when  the  acceptance  is  for 
value.^^  And  when  the  acceptance  is  for  accommodation,  the  case 
will  not  be  altered,  as  we  think,^  though  some  cases  take  a  different 
view.^^  This  branch  of  the  subject  is  amply  discussed  in  the  chapter 
on  Principal  and  Surety.'*^ 

§  547.  Failure  of  consideration  for  acceptance. — If  the  consid- 
eration inducing  an  acceptance  afterward  fail,  it  will,  nevertheless, 
be  binding  to  the  payee  or  other  holder,  if  such  failure  were  not 
occasioned  by  his  fault ;  ^^  and  if  by  the  acceptance  the  time  of  pay- 
ment were  extended,  or  the  terms  of  the  bill  otherwise  varied,  the 
acceptor  cannot  object  to  the  alteration;  ^  nor  will  his  obligation  be 
varied  by  the  fact  that  the  bill  was  accepted  after  the  time  of  pay- 
ment had  passed.^^ 

§  548.  Effect  on  acceptance  of  taking  security  and  giving  time  to 
another  party. — An  acceptor,  being  the  primary  debtor  as  to  the 
holder,  -will  not  be  discharged  by  taking  security  from  the  other 
parties,  or  giving  them  time  to  pay  the  bill.^^  But  taking  a  coexten- 
sive security  from  the  acceptor  himself  by  specialty  will  discharge 
him,^^  unless  it  recognizes  the  bill  as  still  existing,  in  which  case  it  will 

42.  Ante,  §  545. 

43.  Anderson  v.  Cleveland,  13  East,  430  (1779).  Lord  Mansfield  said:  "The 
acceptor  of  a  bill  or  maker  of  a  note  always  remains  liable.  The  acceptance  is 
proof  of  having  assets  in  his  hands,  and  he  ought  never  to  part  with  them,  unless 
he  is  sure  that  the  bill  has  been  paid  by  the  drawer." 

44.  Farquhar  v.  Southey,  2  Car.  &  P.  497,  Moody  &  M.  14;  Dingwall  v. 
Dunster,  1  Doug.  247. 

45.  Story  on  Bills,  §  268;  post,  §  547. 

46.  1  Parsons  on  Notes  and  Bills,  325.  See  chapter  XLI,  on  Discharge  of 
Surety,  vol.  II. 

47.  Ibid.;  Beveridge  v.  Richmond,  14  Mo.  App.  405. 

48.  See  chapter  XLI,  vol.  II. 

49.  Corbin  v.  Southgate,  3  Hen.  &  M.  319. 

50.  United  States  v.  Bank  of  Metropolis,  15  Pet.  395;  2  Rob.  Pr.  (new  ed.)  151. 

61.  Mitford  v.  Wallcot,  1  Salk.  129. 

62.  Stor>'  on  Bills,  §  268,  and  numerous  cases  cited.    See  ante,  §  546. 

63.  AnseU  v.  Baker,  15  Q.  B.  20  (69  Eng.  C.  L.). 


636  ACCEPTANCE    OF   BILLS   OF   EXCHANGE  §  549 

not.^'*  If  the  holder  receive  from  the  acceptor  another  bill  indorsed 
by  the  acceptor,  as  satisfaction  or  security  for  the  first  bill,  he  dis- 
charges him  both  as  acceptor  and  indorser,  by  neglect  to  give  him 
notice  of  dishonor  of  the  last  bill;  ^^  but  not  if  the  last  bill  was  given 
as  collateral  security  and  not  indorsed  by  him.^^ 

§  549.  Evidence  of  renunciation. — A  cancellation  by  the  holder 
or  by  a  third  party  is  evidence  of  a  waiver,  and  whether  the  cancella- 
tion in  the  latter  case  was  by  the  holder's  consent  or  not,  is  for  the 
jury  to  determine.^'^  If  the  cancellation  is  by  mistake,  it  does  not 
operate  as  a  discharge;  ^^  but  if  the  holder,  knowing  the  mistake, 
causes  the  bill  to  be  noted  for  nonacceptance,  he  is  estopped  from 
saying  it  was  accepted.^® 

Under  Negotiable  Instrument  statute. — The  statute  contains  pro- 
visions respecting  renunciation  and  cancellation  of  negotiable  in- 
struments,^" and  under  the  statute,  it  has  been  held  that  a  paper 
written  and  signed  by  a  payee,  that  "  The  enclosed  note  I  wish  to  be 
cancelled  in  case  of  my  death  "  was  not  an  express  renunciation  of  his 
rights  either  against  the  maker  or  upon  the  instrument.''^ 

54.  Twopenny  v.  Young,  3  B.  &  C.  208. 
66.  Bridges  v.  Berry,  3  Taunt.  130. 

66.  Bishop  V.  Rowe,  3  Maule  &  S.  362. 

67.  Sweeting  v.  Halse,  9  B.  &  C.  365  (17  Eng.  C.  L.),  4  Man.  &  R.  287;  Suc- 
cession of  Foerster,  43  La.  Ann.  190,  9  So.  17. 

68.  Wilkinson  v.  Johnson,  3  B.  &  C.  428;  Raper  v.  Bh-kbeck,  15  East,  17; 
NovelH  V.  Rossi,  2  B.  &  Ad.  757. 

69.  Sproat  v.  Matthews,  1  T.  R.  182;  Bentnick  v.  Dorrien,  6  East,  199;  1 
Parsons  on  Notes  and  Bills,  328. 

60.  Appendix,  sees.  122,  123.  The  statutory  rule  that  where  the  plaintiff 
claimed  that  cancellation  of  a  note  was  unintentional,  by  mistake,  or  without 
authority,  the  burden  was  upon  him  to  establish  such  facts,  was  recognized  in 
First  Nat.  Bank  v.  Gridley,  98  N.  Y.  S.  445,  112  App.  Div.  398. 

61.  Leask  v.  Dew,  92  N.  Y.  S.  891,  102  App.  Div.  529,  aflarmed  184  N.  Y.  599, 
77  N.  E.  1190. 


CHAPTER  XIX 

PROMISES  TO  ACCEPT  BILLS  OF  EXCHANGE— HOW  AFFECTED 
BY  THE  STATUTE  OF  FRAUDS 


SECTION    I 

WRITTEN  AND  VERBAL  PROMISES  TO  ACCEPT  EXISTING  AND 
NONEXISTING    BILLS 

§  550.  First :  A  written  promise  to  the  drawer  to  accept  an  exist- 
ing bill,  which  is  communicated  to  a  third  party,  and  induces  him 
to  take  the  bill  upon  the  credit  thereby  excited,  is  undoubtedly, 
by  the  decisions  in  England  and  in  the  United  States,  the  same  as 
an  actual  acceptance.  "The  defendant,"  said  Lord  EUenborough, 
in  such  a  case,  "has  thereby  enabled  another  with  truth  to  assert, 
and  furnished  him  with  the  means  of  proving  that  assertion,  by  the 
production  of  the  defendant's  letter,  that  he  had  undertaken  to 
accept  the  bills,  which  in  ordinary  mercantile  understanding  amounts 
to  an  acceptance,  and  by  that  credit  was  attached  to  the  bills.  *  *  * 
It  may  be  for  the  convenience  of  mercantile  affairs  that  a  bill  may  be 
accepted  by  a  collateral  writing,  without  the  bill  itself  coming  to  the 
actual  touch  of  the  acceptor,  which  would  sometimes  create  great 
delay.  This  acceptance  being  by  writing  comes  within  all  the  cases 
cited."  ^    And  to  this  extent  go  all  the  decisions.^ 

§  551.  Second :  A  written  promise  to  the  drawer  to  accept  a  non- 
existing  bill,  which  is  communicated  to  a  third  party,  and  induces 

1.  Clarke  v.  Cock,  4  East,  57  (1803). 

2.  McEvers  v.  Mason,  10  Johns.  213;  Goodrich  v.  Gordon,  15  Johns.  6;  Wilson 
V.  Clements,  3  Mass.  10;  Greele  v.  Parker,  5  Wend.  514;  Grant  v.  Shaw,  16  Mass. 
341;  Edson  v.  Fuller,  2  Fost,  183;  1  Parsons  on  Notes  and  Bills,  298;  Cassel  v. 
Dows,  1  Blatchf.  C.  C.  335;  Cook  v.  MUtenberger,  23  La.  Ann.  377;  Steman  v. 
Harrison,  42  Pa.  St.  57;  Vance  v.  Ward,  2  Dana,  95;  CarroUton  Bank  v.  Tayleur, 
16  La.  (O.  S.)  490;  Russell  v.  Wiggin,  2  Story  C.  C.  214;  Storer  v.  Logan,  9  Mass. 
58;  Nimocks  v.  Woody,  97  N.  C.  1;  Ruiz  v.  Renald,  100  N.  Y.  256;  Brown  v. 
Ambler,  66  Md.  395. 

637 


638  PROMISES   TO   ACCEPT   BILLS   OF   EXCHANGE  §  551 

him  to  take  the  bill,  it  is  also  agreed  by  the  English  and  United  States 
decisions  to  be  the  same  as  an  actual  acceptance.  The  United  States 
Supreme  Court  declares  that  "  upon  a  review  of  the  cases  which  are 
reported,  a  letter  written  within  a  reasonable  time  before  or  after 
the  date  of  a  bill  of  exchange,  describing  it  in  terms  not  to  be  mis- 
taken, and  promising  to  accept  it,  is,  if  shown  to  the  person  who 
afterward  takes  the  bill  on  the  credit  of  the  letter,  a  virtual  accept- 
ance." ^  And  where  the  letter  was  written  on  the  17th  of  April,  and 
the  bills  were  drawm  on  the  1st  of  May  following,  and  taken  on  the 
faith  of  the  promise  to  accept  contained  in  it,  Lord  Mansfield  said :  ^ 
"If  one  man,  to  give  credit  to  another,  makes  an  absolute  promise 
to  accept  his  bill,  the  drawer  or  any  other  person  may  show  such 
promise  on  the  exchange  to  get  credit;"  and  held  that  the  letter- 
writer  would  be  bound  as  an  acceptor.  So,  the  promise  must  be 
unconditional,  and  to  this  extent  the  authorities  generally  concur.^ 

3.  Coolidge  v.  Payson,  2  Wheat.  66;  Boyce  v.  Edwards,  4  Pet.  Ill;  Schim- 
melpennich  v.  Bayard,  1  Pet.  264;  Bank  of  Atchison  County  v.  Bohart  Com- 
mission Co.,  84  Mo.  App.  421. 

4.  Mason  V.Hunt,!  Doug.  297  (1780). 

5.  Kennedy  v.  Geddes,  8  Port.  268;  Kennedy  v.  Geddes,  3  Ala.  581;  Whilder 
V.  M.  &  P.  N.  B.,  64  Ala.  30;  Kendrick  v.  Campbell,  1  Bailey,  552;  Goodrich 
V.  Gordon,  15  Johns.  11;  Greele  v.  Parker,  5  Wend.  414;  Storer  v.  Logan,  9  Mass. 
58;  Wilson  v.  Clements,  3  Mass.  10;  Gates  v.  Parker,  43  Me.  544;  Steman  v. 
Harrison,  42  Pa.  St.  57;  Vance  v.  Ward,  2  Dana,  95;  Russell  v.  Wiggin,  2  Story 
C.  C.  214;  Wildes  v.  Savage,  1  Story  C.  C.  22.  But  it  is  also  held,  in  this  case,  that 
if  the  biU  be  payable  after  sight,  and  not  after  date,  a  promise  to  accept  a  non- 
existing  bill  does  not  amount  to  an  acceptance.  There  are  distinctions  between 
an  action  on  a  biU  or  check  as  an  accepted  bill  and  one  founded  on  a  breach  of 
promise  to  accept.  Van  Buskirk  v.  State  Bank  of  Rocky  Ford,  35  Colo.  142, 
83  Pac.  778,  117  Am.  St.  Rep.  182.  An  unconditional  promise  in  writing  to  accept 
an  order  is  an  acceptance  of  the  order  under  the  provisions  of  section  3197,  Civ. 
Code.  James  v.  E.  G.  Lyons  Co.,  134  Cal.  189,  66  Pac.  210,  147  Cal.  69,  81  Pac. 
275,  the  court  saying  that  the  statute,  in  speaking  of  an  unconditional  promise, 
uses  the  word  as  it  is  generally  used  and  understood  in  the  law  of  contracts,  and 
it  was  intended  only  that  the  promise  spoken  of  should  be  free  from  all  those 
limitations  which  are  usually  referred  to  as  conditions  in  treaties  on  contracts. 
It  was  clearly  not  contemplated  that  a  mere  limitation  as  to  the  amount  or  pur- 
pose of  the  drafts  would  render  the  promise  conditional,  within  the  meaning  of 
the  statute.  In  Missouri,  a  bill  may  be  accepted  before  it  is  drawn  by  a  collateral 
xmdertaking,  though  it  must  be  in  writing,  and  unconditional,  under  Revised 
Statutes,  1889,  section  721,  but  a  letter  promising  to  "pay  his  drafts  for  cost  of 
cattle,  or  hogs,  not  to  exceed  two  car  loads  at  a  time,  made  on  day  of  shipment," 
is  too  general  to  be  regarded  as  an  actual  acceptance  of  a  particular  bill.  Bank 
of  Atchison  County  v.  Bohart  Com.  Co.,  84  Mo.  App.  421.  Where  live  stock 
brokers  promised  to  honor  the  draft  of  a  cattle  buyer,  to  be  drawn  on  them  for  a 


§  551a  WRITTEN   AND    VERBAL   PROMISES  639 

In  a  New  York  case  where  the  defendant  authorized  in  writing  one 
Loveland  as  his  agent  to  draw  upon  him,  and  money  was  advanced 
upon  a  bill  drawn  by  the  agent  in  pursuance  of  such  authority,  it  was 
said:  ''The  language  of  the  instrument  amounts  to  an  unconditional 
written  promise  to  accept  the  draft,  plaintiff  having  discounted  it 
upon  the  faith  of  the  authority  for  a  valuable  consideration.^  But 
where  the  right  to  draw  is  conditioned  upon  the  performance  of  some 
act,  or  the  existence  of  certain  facts,  it  has  been  held  that  it  must 
appear  that  the  act  has  been  performed,  or  the  facts  exist."  ^ 

§  551a.  Promise  to  accept  by  telegram. — A  telegram,  it  has  been 
held,  would  stand  on  the  same  footing  as  a  letter;  and  telegraphic 
authority  to  draw  at  thirty  days  for  $2,500  was  accordingly  held  a 
valid  acceptance.  It  was  said  in  Massachusetts  by  Morton,  J. :  "The 
telegram  sent  to  the  St.  Louis  Zinc  Co.  was  an  authority  for  it  to  draw 
the  bills  of  exchange  in  suit,  and  necessarily  implied  a  promise  to 
accept  it.  This  telegram  was  shown  to  the  plaintiffs,  who  thereupon 
discounted  the  bill.  They  took  the  bill  upon  the  faitn  of  the  defend- 
ants' promise,  and  are  entitled  to  hold  them  as  acceptors."  ^  Where 
a  party  was  authorized  by  telegram  to  draw  for  a  certain  amount,  and 
by  a  second  telegram  to  increase  the  amount  provisionally,  and  the 
party  drew  for  both  amounts,  and  obtained  a  discount  of  the  second 
draft,  suppressing  the  fact  that  the  first  draft  for  the  smaller  amount 
had  already  been  drawn,  the  drawee  was  held  not  liable.^  And  where 
authority  by  telegram  to  draw  was  subsequently  countermanded  by 

certain  amount,  if  two  carloads  were  consigned  to  them,  the  promise  was  a  con- 
ditional one,  and  they  were  not  liable  on  a  draft  when  only  one  car  was  con- 
signed, unless  they  waived  the  condition  by  accepting  and  selling  the  property 
actually  consigned  to  them,  with  notice  that  no  further  consignment  had  been 
or  would  be  made.  First  State  Bank  of  Aberdeen  v.  Thuet,  86  Minn.  364,  93 
N.  W.  1.  Compare  McPhee  &  McGinnity  v.  Fowler,  36  Colo.  202,  8.5  Pac.  421, 
holding  that  where  the  drawee  of  an  order  held  property  of  the  maker  sufficient 
to  pay  the  order,  he  was  liable  under  his  contract  to  accept  the  order,  though 
there  was  a  condition  attached  to  his  agreement  to  accept,  which  had  not  been 
performed  by  the  maker. 

6.  Merchants'  Bank  v.  Griswold,  9  Hun,  565. 

7.  Bank  of  Montreal  v.  Recknagel,  109  N.  Y.  491;  Germania  Nat.  Bank  v. 
Taaks,  101  N.  Y.  442;  Bank  of  Atchison  County  v.  Bohart  Commission  Co.,  84 
Mo.  App.  421. 

8.  Central  Sav.  Bank  v.  Richards,  109  Mass.  414;  Bank  of  Montreal  v.  Thomas, 
16  Ont.  503;  Garretson  v.  North  Atchison  Bank,  39  Fed.  166;  Allentown  Nat. 
Bank  V.  Kimes,  12  Phila.  329;  Garretson  v.  Bank,  47  Fed.  867. 

9.  Nevada  Bank  v.  Luce,  139  Mass.  488. 


640  PROMISES   TO    ACCEPT   BILLS   OF   EXCHANGE  §  552 

a  later  telegram,  the  drawee  was  held  not  liable  in  damages  to  a  holder 
to  whom  the  drawer  had  exhibited  the  authority,  suppressing  the 
countermand.^'' 

§  552.  Third :  As  to  a  written  promise  to  the  drawer  to  accept 
an  existing  bill,  which  was  not  communicated  to  the  holder,  and 

therefore,  did  not  enter  into  the  inducement  to  take  it,  the  decisions 
are  in  a  condition  of  inextricable  confusion.  In  a  number  of  them  the 
inquiry  whether  or  not  the  holder  was  induced  by  the  promise  to  take 
the  bill,  is  held  the  criterion  of  its  effect,  whether  such  promise  be 
written  or  verbal.  In  others,  it  is  considered  immaterial.  In  an 
early  case,  where  the  bill  was  drawn  April  3d,  and  the  letter,  declaring 
that  "it  should  be  duly  honored  and  placed  to  the  drawer's  debit," 
within  ten  days  after,  but  not  communicated  to  the  holder,  it  was  held 
an  acceptance,  available  to  him.^^  Subsequently,  where  the  plaintiffs, 
who  were  indorsees  of  the  payee,  sued  the  drawee  of  a  bill,  who  had 
written  a  letter  to  the  drawer,  after  the  bill  had  been  protested  for 
nonacceptance  while  in  the  plaintiff's  hands,  stating  that  they  "would 
accept  or  certainly  pay  all  the  bills  which  have  hitherto  appeared." 
Lord  EUenborough  adhered  to  this  precedent,  declaring  that  he  only 
conformed  to  an  established  rule  of  law  "on  a  subject  which,  least 
of  all  others,  endured  uncertainty  and  change."  ^^  But  this  view 
may  be  regarded  as  overruled,  for  the  great  preponderance  of  au- 
thority is  to  the  effect  that,  unless  the  holder  took  the  bill  on  the 
face  of  the  promise,  it  is  not  an  acceptance. ^^  And  in  Massachusetts, 
it  has  been  held  that  a  promise  to  accept  a  bill  contained  in  a  letter  to 
the  drawer,  written  after  the  holder  took  the  bill,  would  not  enable 
him  to  sue  the  drawee  as  acceptor,  even  though  the  bill  was  expressed 

10.  First  Nat.  Bank  v.  Clark,  61  Md.  400,  48  Am.  Rep.  114;  Franklin  Bank 
V.  Lynch,  52  Md.  280. 

11.  Powell  V.  Monnier,  1  Atk.  611  (1737). 

12.  Wynne  v.  Raikes,  5  East,  514,  2  Smith,  98  (1804).  See  Fairlee  v.  Herring, 
3  Bing.  525  (1826). 

13.  Pierson  v.  Dunlop,  2  Cowp.  571  (1777);  Kennedy  v.  Geddes,  8  Port.  268; 
Lagrue  v.  Woodruff,  28  Ga.  649;  McEvers  v.  Mason,  10  Johns.  207;  Lewis  v. 
Kramer,  3  Md.  289;  Storer  v.  Logan,  8  Mass.  58;  Wilson  v.  Clements,  3  Mass.  10. 
The  rule  that  in  the  case  of  a  written  promise  to  the  drawer  to  accept  an  existing 
bill,  it  is  not  an  acceptance  unless  the  holder  took  the  bill  on  account  of  the  prom- 
ise, applies  to  written  acceptances  not  written  on  the  face  of  the  paper,  because 
it  is  the  desire  of  the  law  to  restrict  within  the  narrowest  limits  the  doctrine  of  lia- 
bility to  an  action  on  negotiable  paper  by  reason  of  anything  not  appearing  on 
the  face  of  the  paper.  Milmo  Nat.  Bank  v.  Cobbs,  53  Tex.  Civ.  App.  1, 115  S.  W. 
345 


§§  553,  554  WRITTEN   AND   VERBAL   PROMISES  641 

to  be  drawn  "against  twelve  bales  of  cotton,"  and  had  been  dis- 
counted on  the  credit  thereof.^*  There  are,  however,  cases  in  the 
United  States  which  hold  the  contrary  view  as  applied  to  existing 
bills,  and  maintain  that  they  need  not  have  been  taken  on  faith  of  the 
promise  to  make  it  operate  as  an  acceptance.^* 

§  553.  Fourth:  As  to  a  written  promise  to  the  drawer  to  accept 
a  nonexisting  bill,  which  was  not  communicated  to  the  holder  before 
he  received  it,  the  decisions  are  alike  jarring  and  perplexing.  More 
than  a  century  ago  it  was  held  that  a  written  promise,  contained  in  a 
letter,  to  honor  a  bill  to  be  drawn,  operated  as  an  acceptance  of  it, 
although  the  credit  on  which  the  bill  was  drawn  was  given  before  the 
promise  to  accept  was  made;  and  the  doctrine  there  recognized  is  that 
a  naked  promise  to  accept  operates  as  an  acceptance,  whether  the 
holder  take  the  bill  on  the  faith  of  it  or  not.  Lord  Mansfield  said: 
" '  I  will  give  the  bill  due  honor,'  is  the  same  as  accepting  it.  If  a  man 
agrees  that  he  will  do  the  formal  part,  the  law  looks  upon  it  (in  the 
case  of  an  acceptance  of  a  bill)  as  if  actually  done.  This  is  an  engage- 
ment *  to  accept  the  bill,  if  there  was  a  necessity  to  accept  it,  and  to 
pay  it  when  due,'  and  they  could  not  afterward  retract.  It  would  be 
very  destructive  to  trade,  and  to  trust  in  commercial  dealing  if  they 
could."  Mr.  Justice  Wilmot  said:  "Fides  servanda  est;  an  acceptance 
for  the  honor  of  the  drawer  shall  bind  the  acceptor,  and  so  shall  a 
verbal  acceptance.  And  whether  this  be  an  actual  acceptance,  or  an 
agreement  to  accept,  it  ought  equally  to  bind."  Mr.  Justice  Yates, 
said:  "A  promise  to  accept  is  the  same  as  an  actual  acceptance;  and  a 
small  matter  amounts  to  an  acceptance."  Mr.  Justice  Aston  de- 
clared that  "a  promise  to  accept  was  an  implied  acceptance."  ^^ 

§  554.  But   Lord  Mansfield  soon  qualified  the  opinion  quoted, 

14.  Bank  of  St.  Louis  v.  Rice,  98  Mass.  288,  107  Mass.  41. 

15.  Mason  v.  Dousay,  35  111.  424;  Jones  v.  Bank  of  Iowa,  34  111.  313;  Read  v. 
Marsh,  5  B.  Mon.  8. 

16.  Pillan  v.  Van  Mierop,  3  Burr.  1663  (1875).  See  ante,  §  552.  In  Read  v. 
Marsh,  5  B.  Mon.  10  (1844),  Breck,  J.,  said:  "It  seems  to  be  now  well  settled  that 
a  letter,  promising  to  accept  or  protect  a  bill,  whether  written  before  or  after  it 
is  drawn,  may  operate  as  an  acceptance,  and  that  it  may  so  operate,  although  the 
holder  has  not  been  induced  by  such  letter  or  promise  to  take  the  bill."  A  promise 
to  accept  or  to  honor  a  bill  or  order  not  in  existence,  but  subsequently  drawn  in 
favor  of  the  promisee,  who  takes  it  for  value  or  for  a  pre-existing  debt,  is  as  effec- 
tive as  an  acceptance  after  the  order  is  drawn.  Barnadall  v.  Waltemeyer,  142  Fed. 
415. 

41 


642  PROMISES   TO    ACCEPT   BILLS   OF   EXCHANGE     §§  555-557 

by  observing  in  a  subsequent  case  (where,  however,  the  promise 
was  made  to  the  holder  of  an  existing  bill),  that:  "It  has  been  truly 
said,  as  a  general  rule,  that  the  mere  answer  of  a  merchant  to  the 
drawer  of  a  bill,  saying,  *  he  will  duly  honor  it,'  is  no  acceptance  unless 
accompanied  with  circumstances  which  may  induce  a  third  person 
to  take  the  bill  by  indorsement.  But  if  there  are  any  such  circum- 
stances, it  may  amount  to  an  acceptance,  though  the  answer  be  con- 
tained in  a  letter  to  the  drawer."  '^  And  this  view  generally  obtains, 
that  the  promise  to  the  drawer  must  induce  the  holder  to  take  the 
bill  thereafter  drawn,  in  order  to  amount  to  acceptance  of  it.^^ 

§  555.  Fifth:  As  to  a  verbal  promise  to  accept  an  existing  bill, 
which  is  communicated  to  the  holder,  and  induces  him  to  take  it, 
it  was  conceded  by  Le  Blanc,  J.,  in  the  case  cited  below, '^  that  it 
would  amount  to  an  acceptance  (upon  the  authority  of  Pierson  v. 
Dunlop,  ante,  §  554),  but  the  bill  in  question  having  been  drav  n 
subsequent  to  the  promise,  this  particular  question  did  not  arise. 

§  556.  Sixth:  As  to  a  verbal  promise  to  accept  a  nonexisting 
bill,  which  is  communicated  to  the  holder  and  induces  him  to  take 
it;  this  particular  point  was  decided  by  the  Court  of  Exchequer 
which  held  that,  notwithstanding  the  bill  had  been  discounted  on  the 
credit  of  the  promise,  by  the  holder,  it  did  not  amount  to  an  accept- 
ance of  it.^°   And  the  same  view  has  been  taken  in  the  United  States.^^ 

§  557.  Seventh :  As  to  a  verbal  promise  to  accept  an  existing  bill, 
not  communicated  to  the  holder  before  he  takes  it. — We  know  of 

17.  Pierson  v.  Dunlop,  2  Cow.  571  (1777). 

18.  Lewis  V.  Kramer,  3  Md.  289;  Storer  v.  Logan,  9  Mass.  58;  ante,  §  552; 
Seaboard  Nat.  Bank  v.  Burleigh,  74  Hun,  400,  26  N.  Y.  Supp.  587. 

19.  Johnson  v.  CoUings,  1  East,  98  (1800). 

20.  Bank  of  Ireland  v.  Archer,  11  M.  «fe  W.  (1843),  Parke,  B. 

21.  Kennedy  v.  Geddes,  8  Port.  268.  See  2  Rob.  Pr.  (new  ed.)  156;  Rule  First 
Nat.  Bank  v.  Gordon,  45  Mo.  App.  293.  Where  a  bond  and  mortgage  were  made 
by  an  owner  of  land  to  secure  advances  which  should  be  made  by  the  holder  of 
the  bond  in  the  construction  of  buildings  on  the  land,  the  holder  of  the  bond 
and  mortgage  is  liable  for  the  promise  of  his  agent  to  accept  orders  drawn  by  the 
owner  notwithstanding  he  has  furnished  funds  to  the  full  amount  of  the  bond  and 
mortgage.  Eighth  Ward  Bank  of  Brooklyn  v.  McLoughlin,  99  N.  Y.  S.  362, 
113  App.  Div.  750.  An  oral  promise,  given  for  the  benefit  of  a  purchaser  of  goods, 
that  the  promisor  "would  stand  for"  a  certain  amount  on  a  thirty  day  draft 
drawn  on  the  promisor  was  a  promise  to  accept  a  draft  and  not  to  pay  for  goods 
bought.    Pake  v.  Wilson,  127  Ala.  240,  28  So.  665. 


§§  558,  559  WRITTEN    AND   VERBAL   PROMISES  643 

no  case  in  which  this  identical  question  has  been  decided.  Its  deter- 
mination must  be  reached  according  to  the  principles  stated  under 
other  heads. 

Since  the  above  suggestion  was  made  in  a  former  edition  of  this 
work  the  precise  point  was  decided  in  Vermont  in  favor  of  the  vaUdity 
of  a  parol  promise  made  by  the  drawee  to  the  drawer  of  a  bill  after  it 
had  been  drawn,  but  which  had  not  been  communicated  to  the  payee 
before  he  received  it,  the  court,  by  Taft,  J.,  saying:  "An  acceptance 
may  be  by  parol,  and  may  be  given  the  drawer,  and  may  be  given 
after  the  bill  is  drawn  as  in  the  case  at  bar.  The  acceptance  inures  to 
the  benefit  of  the  payee.    It  is  in  its  legal  effect  a  promise  to  him.^'^ 

§  558.  Eighth:  As  to  a  verbal  promise  to  accept  a  nonexisting 
bill  not  communicated  to  the  holder,  this  was  held  no  acceptance 
in  an  English  case;  but  Le  Blanc,  J.,  thought,  if  he  had  taken  the 
bill  on  the  faith  of  the  promise,  it  would  be  different.  Grose,  J., 
declared  that:  "No  authority  has  been  cited  to  show  that  by  the 
law  merchant  a  mere  promise  to  accept  a  bill  to  be  drawn  in  future, 
amounts  to  an  actual  acceptance  of  the  bill  when  drawn."  Lord 
Kenyon,  C.  J.,  said  that  the  fact  that  this  was  a  nonexisting  bill 
varied  the  case  from  those  previously  decided,  and  that  "he  knew 
not  by  what  law  such  a  promise  was  binding  as  an  acceptance,"  ^'' 
and  this  view  is  generally  concurred  in.^^ 

§  559.  From  this  review  of  the  adjudicated  cases  it  will  be  seen 
how  vacillating  and  conflicting  they  have  been.  In  some  the  criterion 
is  declared  to  be,  whether  or  not  the  holder  took  the  bill  on  the  faith 
of  the  promise.  In  others,  this  is  deemed  immaterial.  In  some,  a 
distinction  is  taken  between  existing  and  nonexisting  bills;  and  in 
some  between  written  and  verbal  promises.  And  it  is  often  lamented 
that  anything  has  been  deemed  to  be  an  acceptance  of  a  bill  but  an 
express  acceptance  in  writing.^^  Certainly  this  would  have  greatly 
simplified  the  law;  but  this  is  not  the  law.  And  amid  jarring  opinions 
we  are  left  to  pursue  the  course  which  reason  commends.  As  verbal 
acceptance  is  as  effectual  as  written  acceptance,  it  would  seem  to 

22.  In  re  Goddard's  Estate,  66  Vt.  419,  29  Atl.  634.    See  §  559. 

23.  Johnson  v.  Collings,  1  East,  98  (1800).    See  2  Rob.  Pr.  (new  ed.)  153. 

24.  Bank  of  Michigan  v.  Ely,  17  Wend.  508;  Wilson  v.  Clements,  3  Mass.  10. 

25.  Johnson  v.  Collings,  1  East,  98  (1800),  Lord  Kenyon,  C.  J.;  Boyce  v.  Ed- 
wards, 4  Pet.  122;  Espy  v.  Bank  of  Cincinnati,  18  Wall.  620;  2  Rob.  Pr.  (new  ed.) 
153. 


644  PROMISES   TO   ACCEPT   BILLS   OF   EXCHANGE  §  560 

follow  as  a  necessary  sequence,  that  a  parol  promise  to  accept  should 
be  as  effectual  as  a  written  promise — provided  no  statutory  enactment 
discriminated  between  them.  In  either  case,  however,  it  is  a  sound 
view  of  the  law,  as  it  seems  to  us,  to  require  either  that  the  promise 
should  be  made  to  the  holder  of  the  bill  then  in  possession  of  it,  in 
which  case  he  is  brought  in  privity  with  the  drawee;  ^^  or  that  the 
promise,  when  made  to  the  drawer,  should  have  been  communicated 
to  the  holder,  and  entered  into  the  inducement  to  his  taking  it.  It  is 
true,  that  if  there  had  been  an  actual  acceptance  of  the  bill  by  parol, 
or  otherwise,  before  the  holder  took  it,  it  would  be  available  to  him, 
although  he  was  unconscious  of  it  until  afterward.  It  would  be  the 
same  as  a  faintly  written  acceptance  on  the  bill,  subsequently  dis- 
covered— for  it  was  engrafted  on  the  bill  in  law  at  the  time.  But  a 
promise  to  accept  is  different.  When  made  to  the  drawer  it  may  be 
construed  as  authority  to  him  to  tell  the  holder  that  the  drawee  will 
accept  it.  If  the  drawer  exercises  that  authority  the  holder  is  brought 
in  privity  with  the  drawee,  and  the  promise  to  accept  may  be  regarded, 
in  such  a  case,  as  an  acceptance  by  anticipation.  But  if  not  communi- 
cated to  the  holder  the  drawer  only  is  wronged  by  the  breach  of 
promise — the  proposition  from  the  drawee  to  the  drawer,  the  au- 
thority from  the  drawee  is  unexercised — ^no  new  credit  or  obligation 
respecting  the  bill  is  created ;  and  the  drawer,  in  case  of  subsequent 
dishonor,  must  be  left  to  sue  the  drawee  for  breach  of  promise  to 
accept. 

§  560.  What  requisite  to  make  promise  to  accept  nonexisting  bill 
amount  to  acceptance. — In  order  that  the  promise  to  accept  a  non- 
existing  bill  shall  amount  to  acceptance,  there  are  two  indispensable 
requisites:  First,  that  it  should  be  written  within  a  reasonable  time 
before  the  bill  is  drawn,  for  otherwise  the  drawer  will  be  presumed  to 
have  declined  to  act  on  the  authority  granted  him  to  draw,  and  the 
drawee  will  not  be  construed  to  have  intended  an  indefinite  liability.''^ 
And  second,  the  promise  must  so  describe  the  bill  that  there  can  be  no 
doubt  of  its  application  to  it.^^    High  authorities  go  further,  and  ds- 

26.  Miln  V.  Prest,  4  Campb.  393  (1816). 

27.  Coolidge  v.  Payson,  2  Wheat.  66;  Greele  v.  Parker,  5  Wend.  414;  Cassel  v. 
Dows,  1  Blatchf.  C.  C.  335.  In  First  Nat.  Bank  v.  Hensley,  2  Fed.  609,  it  was 
held  that  a  year's  delay  was  unreasonable.  Putnam  Nat.  Bank  v.  Snow,  172  Mass. 
569,  52  N.  E.  1079. 

28.  See  Franklin  Bank  v.  Lynch,  52  Md.  270;  Krakauer  v.  Chapman,  16  App. 
Div.  115,  45  N.  Y.  Supp.  127,  citing  text.    It  is  not  necessary  that  the  promise, 


§  560  WRITTEN    AND    VERBAL   PROMISES  645 

clare  that  the  promise  must  put  its  finger,  so  to  speak,  upon  the  specific 
bill;  and  that  otherwise,  if  the  promise  be  broken,  the  promisor  may 
be  sued  by  the  drawer  for  breach  of  promise  to  accept;  but  cannot  be 
sued  by  any  one  as  acceptor.^  Thus  where  a  letter  of  credit  addressed 
to  Mr.  A,  stated:  "Mr.  B.  C,  of  D.,  is  authorized  to  draw  on  us  for 
the  amount  of  any  lots  of  cotton  which  he  may  buj'  and  ship  to  us,  as 
soon  after  as  opportunity  will  offer;  such  drafts  will  be  duly  honored 

to  be  binding  under  the  statute,  section  3197,  Civ.  Code,  must  relate  to  and  de- 
scribe a  particular  bill,  or  the  particular  bill  referred  to  in  the  complaint;  it  is 
sufficient  if  it  can  be  fairly  inferred  from  the  language  of  the  promise  that  it  was 
intended  to  include  the  bill  of  exchange  upon  which  the  action  is  based.  James  v. 
E.  0.  Lyons  Co.,  134  Cal.  189,  66  Pac.  210,  147  Cal.  09,  81  Pac.  275.  No  obliga- 
tion to  honor  any  draft  excepting  one  shipped  to  the  drawee  is  assumed  by  a  live 
stock  commission  firm  in  writing  thus  to  a  bank:  "We  will  honor  Mr.  Payne's 
draft  for  one  thousand  dollars  on  hogs  or  cattle.  Should  he  want  more  at  any 
time,  have  him  call  on  us  by  phone  and  we  will  make  arrangements  to  handle  his 
stock.  We  limit  our  customers  as  we  have  to  keep  our  bank  account  up  here." 
Stough  V.  Healy,  75  Kan.  526,  89  Pac.  898,  10  L.  R.  A.  (N.  S.)  918,  the  court- 
saying  that  it  was  not  a  promise  to  pay  any  draft  within  the  amount  named,  with- 
out regard  to  the  use  made  of  the  proceeds  or  the  shipment  of  any  stock  to  the 
drawees. 

29.  See  an(e,  §  511;  Coolidge  v.  Payson,  2  Wheat.  66;  Boyce  v.  Edwards,  4 
Pet.  Ill;  Schimmelpennich  v.  Bayard,  1  Pet.  234;  Casssl  v.  Dows,  1  Blatchf. 
335;  Carrollton  Bank  v.  Tayleur,  10  La.  (O.  S.)  490;  Carnegie  v.  Morrison,  2 
Mete.  (Mass.)  406;  Brinkman  v.  Hunter,  73  Mo.  172.  In  Franklin  Bank  v.  Lynch, 
52  Md.  270,  it  was  held  that  a  telegraphic  message,  "You  may  draw  on  me  for 
$700,"  was  not  an  acceptance,  but  might  be  sued  on  as  a  promise  to  accept,  the 
court  saying  that  the  telegram  did  not  point  to  or  designate  the  draft.  First  Nat. 
Bank  v.  Clark,  01  Md.  400;  Brinkman  v.  Hunter,  73  Mo.  172.  And  accordingly 
it  has  been  held  that  where  the  defendants  had  guaranteed  a  draft  in  sixty  days, 
with  interest  at  7  per  cent.,  drawn  by  B.  for  wool  sold  to  a  corporation  of  which 
they  were  the  directors,  the  indorsement  being  as  follows:  "We  hereby  guarantee 
the  payment  of  the  within  draft  and  waive  notice  of  nonpayment  and  protest"; 
and  they  agreed  that  if  B.  would  ship  certain  other  wool  to  the  corporation  and 
draw  upon  it  for  the  price  thereof  at  sixty  days,  they  would  "indorse  the  draft 
as  heretofore,"  held  that  this  did  not  bind  them  to  indorse  the  draft  bearing  in- 
terest; the  words  "as  heretofore"  having  reference  only  to  the  form  of  the  in- 
dorsement and  not  to  the  amount  or  rate  of  interest  of  the  draft.  See  Tansey  v. 
Peterson,  88  Iowa,  544,  55  N.  W.  577.  And  a  promise  to  accept  a  draft  for  a  stated 
sum  does  not  extend  to  a  draft  for  that  sum  with  exchange,  thus  increasing  the 
amount  of  the  draft.  Lindley  v.  First  Nat.  Bank,  70  Iowa,  030;  State  Bank  of 
Fox  Lake  v.  Citizens'  Nat.  Bank  of  King  City,  114  Mo.  App.  003,  90  S.  W.  123. 
Where  a  draft  for  a  certain  amount  "with  exchange"  was  returned  with  a  letter 
refusing  to  accept  the  draft  but  promising  to  accept  one  for  $5  less  than  that  stated, 
the  letter  is  a  promise  to  accept  a  duplicate  of  the  draft  for  the  smaller  amount, 
and  this  means  for  such  amount  "with  exchange."  Stough  v.  Healy,  75  Kan. 
526,  89  Pac.  898,  10  L.  R.  A.  (N.  S.)  918. 


646  PROMISES   TO    ACCEPT   BILLS   OF   EXCHANGE  §  561 

by,  yours,  etc.,  E.  F.;"  it  was  held  that  it  did  not  operate  as  an  acc(>pt- 
ance  of  certain  bills  drawn  by  A.  on  E.  F.  The  reasons  assigned  wore, 
first,  that  it  was  written  two  years  before  the  bill  was  drawn,  and, 
further,  "what  is  conclusive  against  its  being  considered  an  accept- 
ance," said  Thompson,  J.,  "is,  that  it  has  no  reference  whatever  to 
these  particular  bills,  but  is  a  general  authority  to  draw  at  any  time, 
and  to  any  amount,  upon  lots  of  cotton  shipped  to  them."  ^ 

§  561.  But,  while  it  should  clearly  appear  that  the  bill  corresponds 
to  the  authority,  or  promise,  we  cannot  perceive  that  there  should 
be  any  nicety  of  description  either  as  to  number,  amount,  date,  or 
otherwise.  The  burden  of  proof  is  upon  the  holder  to  establish  that 
by  comparing  the  face  of  the  bill  with  the  promise;  or  the  bill  in  con- 
nection with  the  transaction  in  which  it  is  drawn  with  the  promise — 
that  it  comes  fairly  and  reasonably  within  its  terms.  This  done,  there 
can  be  no  reason  why  the  promisor  may  not  be  sued  as  an  acceptor, 
as  well  as  for  breach  of  promise  to  accept.  In  either  case  the  corre- 
spondence of  the  bill  with  the  promise  must  be  proved,  and  a  cause  of 
action  existing  there  does  not  seem  to  be  any  sufficient  reason  for 
determining  that  the  character  of  the  proof  must  shape  its  form,  and 
also  determine  whether  it  shall  be  brought  by  the  holder  of  the  bill 
who  has  taken  it  on  the  faith  of  the  promise,  or  by  the  drawer,  whose 
just  expectations  have  been  disappointed.  The  doctrine  that  the 
drawer  may  sue  for  breach  of  promise  to  accept  when  the  bill  is  not 
accurately  described  in  the  promise,  but  that  such  promise  does  not 
operate  as  an  acceptance,  has  been  well  said  to  rest  on  a  distinction 
without  a  difference.^  ^  And  in  New  York  the  views  here  expressed 
have  been  adopted  in  numerous  cases.  Where  the  letter  of  credit  ad- 
dressed to  the  drawers,  ran,  "  I  hereby  authorize  you  to  draw  on  me, 
at  ninety  days,  from  time  to  time,  for  such  amounts  as  you  may 
require,  provided  that  the  whole  amount  running  and  unpaid  shall 
not  exceed  three  thousand  dollars,  etc.,"  Bronson,  J.,^-  after  quoting 
the  cases  cited  in  the  subjoined  note,^^  said:  "These  cases  show  that 
the  written  promise  to  accept  need  not  contain  a  particular  descrip- 

30.  Boyce  v.  Edwards,  4  Pet.  II.  As  to  when  letter  of  credit  amounts  to  ac- 
ceptance, see  post,  §  1799,  vol.  II,  and  Lefargue  v.  Harrison,  70  Cal.  380. 

31.  Bissell  V.  Lewis,  4  Mich.  450;  Nelson  v.  First  Nat.  Bank,  48  111.  39. 

32.  Ulster  County  Bank  v.  McFarland,  5  Hill  (N.  Y.),  432  (1843),  3  Den.  553 
(1846);  Seaboard  Nat.  Bank  v.  Burleigh,  74  Hun,  400,  26  N.  Y.  Supp.  587. 

33.  Parker  v.  Greele,  2  Wend.  545;  Greele  v.  Parker,  5  Wend.  414;  Bank  of 
Michigan  v.  Ely,  17  Wend.  508. 


§  561  WRITTEN    AND    VERBAL   PROMISES  647 

tion  or  identification  of  the  bill  to  be  drawn.  It  is  enough  that  it  be 
drawn  in  pursuance  of  the  authority.  The  plaintiff  received  and  dis- 
counted the  bill  upon  the  faith  of  the  letter,  and  it  was  drawn  in 
pursuance  of  the  authority;  the  judge  was  right  in  charging  the  jury 
that  there  was  a  sufficient  acceptance."  And  in  an  Illinois  case  this 
view  was  admirably  stated  and  illustrated.^^ 

34.  In  Nelson  v.  First  Nat.  Bank,  48  111.  39,  it  appeared  that  a  party  had  taken 
a  check  upon  the  faith  of  a  promise  by  the  bank  to  pay  the  drawer's  check.    The 
court  said:  "It  is  objected  in  the  present  case  by  counsel  for  appellee,  that  the 
promise  to  pay  by  the  bank  did  not  sufficiently  identify  the  checks  to  which  the 
promise  was  to  be  applied,  and  the  case  of  Boyce  v.  Edwards,  4  Pet.  122,  is  cited 
as  an  authority  in  point.    The  authority  of  that  case  is  certainly  to  the  effect 
that  the  promise  of  the  bank  cannot  be  treated  as  a  technical  acceptance,  for  want 
of  identification  of  the  checks.    We  may  be  permitted  to  say,  however,  that  the 
difTerence  between  a  promise  to  accept  a  particular  bill  or  check  to  be  thereafter 
drawn,  and  a  promise  to  accept  all  chocks  which  a  [)erson  might  draw  for  a  specific 
purpose,  is  so  extremely  technical  and  refined  that  we  .should  be  inclined,  where 
the  plaintiff  had  received  the  check  or  bill  upon  the  faith  of  the  promise,  and  had 
sued  on  the  promise  as  an  acceptance,  to  hold  with  the  Supreme  Court  of  Michi- 
gan, Bbsell  V.  Lewis,  4  Mich.  450,  that  it  was  a  distinction  without  a  difference. 
It  seems  to  us  a  fair  construction  of  the  language  of  Chief  Justice  Marshall  would 
require,  not  that  the  promise  should  describe  the  bill  to  be  drawn  and  accepted, 
by  its  date  and  amount,  and  the  name  of  the  drawee,  as  that  would  be  generally 
impossible;  but  merely  in  such  a  mode  that  there  could  be  no  possil)le  doubt  as 
to  the  application  of  the  promise  to  the  bill  to  be  dra%vn.    A  description  of  suffi- 
cient certainty  could  thus  be  made  to  apply  to  a  series  of  bills,  as  well  as  to  one 
bill.    In  the  present  case,  foi  example,  there  can  be  no  difficulty  in  applying  the 
promise  of  the  bank  to  the  check  under  consideration.    Indeed,  in  this  very  case 
of  Boyce  v.  Edwards,  the  court,  while  giving  so  technical  a  construction  to  the 
language  of  Chief  Justice  IVLarshall,  say  the  reason  of  the  rule  is,  'that  the  party 
who  takes  the  bill  ui)on  the  credit  of  such  authority  may  not  be  mistaken  in  its 
application.'    If  that  be  the  reason  of  the  rule,  it  would  seem  that  any  description 
should  be  held  sufficiently  certain  which  would  leave  no  doubt  that  a  particular 
bill  or  series  of  bills  was  intended  by  the  promise,  and  had  been  negotiated  upon 
its  faith."     "The  question,  however,  whether  the  promise  in  this  case  can  be 
considered  a  technical  acceptance,  we  do  not  propose  to  decide,  and  it  is,  indeed, 
of  no  practical  importance,  for  in  this  same  case  of  Boyce  v.  Edwards,  on  which 
counsel  for  appellant  rely  as  showing  the  promise  not  to  be  an  actual  acceptance, 
it  is  held  that,  though  a  recovery  cannot  be  had  upon  the  bill  as  an  accepted  bill, 
it  may  be  had  in  an  action  founded  upon  a  breach  of  the  promise  to  accept.    In 
an  action  of  the  latter  character  the  court  say,  'The  evidence  may  be  of  a  more 
general  character,  and  the  authority  to  draw  may  be  collected  from  circumstances, 
and  extended  to  all  bills  coming  fairly  within  the  scope  of  the  promise.'    The 
court  further  say,  '  as  respects  the  rights  and  the  remedy  of  the  immediate  parties 
to  the  promise  to  accept,  and  all  others  who  may  take  bills  upon  the  credit  of  such 
promise,  they  are  equally  secure  and  equally  attainable  by  an  action  for  the 
breach  of  the  promise  to  accept,  as  they  could  be  by  an  action  on  the  bill  itself.' 


648  PROMISES   TO   ACCEPT   BILLS    OF   EXCHANGE      §§  562,  563 

§  562.  To  what  bills  the  doctrines  stated  are  applicable. — The 

rule  that  the  promise  to  accept,  designating  the  specific  bill,  amounts 
to  an  acceptance,  seems  applicable  only  to  the  cases  of  bills  payable 
on  demand,  or  at  a  fixed  time  after  date,  and  not  to  bills  payable  at 
or  after  sight;  for,  in  order  to  constitute  an  acceptance  in  the  latter 
cases,  a  presentment  is  indispensable,  since  the  time  that  the  bill  is 
to  run  cannot  be  otherwise  ascertained.^^  And  a  mere  promise  to 
accept  without  more,  it  is  thought,  applies  only  to  bills  payable  at 
the  drawee's  or  payee's  place  of  business.^^ 

An  offer  to  accept  a  draft  which  is  still  in  the  drawer's  hands  may 
be  withdrawn  at  any  time  before  it  has  been  actually  presented  for 
acceptance.^^ 

§  563.  In  respect  to  the  person  who  may  avail  himself  of  an 
acceptance,  it  is  obvious  that  if  it  be  written  upon  the  bill,  every 
holder  acquires  it  as  constituting  in  chief  the  instrument  itself.  And 
there  seems  to  be  no  difference  in  the  law  when  the  acceptance  is 
contained  in  a  separate  writing,  or  has  been  by  parol  merely,  and 
whether  the  holder  has  been  informed  of  its  existence  or  not.  Thus, 
where  a  letter  was  written  by  the  drawees  of  a  bill  in  England  to  the 
drawer  in  America,  stating  that  "they  would  certainly  accept  or  pay 
the  bill,"  it  was  held  an  acceptance  in  law,  although  the  bill  was  re- 
fused payment,  and  the  letter  was  not  received  by  the  drawer  until 
after  the  bill  became  due.^^  And  so,  where  there  had  been  a  parol 
acceptance  of  a  bill,  it  was  held  that  the  acceptor  was  bound  to  the 
indorsee,  although  the  latter  had  caused  the  bill  to  be  protested  in 
ignorance  of  such  acceptance. 

"It  has  been  determined  in  a  great  variety  of  cases,"  said  Best, 

That  a  recovery  may  be  had  in  an  action  of  the  character  above  indicated,  is  also 
held  in  Cassel  v.  Dows,  1  Blatchf.  335;  Russell  v.  Wiggins,  2  Story,  213;  Lonsdale 
V.  Lafayette  Bank,  18  Ohio,  126;  Bissell  v.  Lewis,  4  Mich.  450.  See  also  Storer  v. 
Logan,  9  Mass.  55;  Carnegie  v.  Morrison,  2  Mete.  (Mass.)  406;  Goodrich  v.  Gor- 
don, 15  Johns.  6;  Schimmelpennich  v.  Bayard,  1  Pet.  264."  "That  the  promise 
of  the  bank  in  this  case  so  far  identified  the  checks  to  which  it  was  to  be  applied 
as  to  enable  the  appellant  to  maintain  an  action  for  its  breach,  is  settled  by  the 
foregoing  authorities  and  by  others  which  might  be  cited."  Brinkman  v.  Hunter, 
73  Mo.  172,  citing  the  text. 

35.  See  Story  on  Bills  (Bennett's  ed.),  §  249;  Edwards  on  Bills,  414;  Wildes  v. 
Savage,  1  Story  C.  C.  28,  cited  approvingly  in  Franklin  Bank  v.  Lynch,  52  Md. 
270. 

36.  Michigan  State  Bank  v.  Leavenworth,  28  Vt.  209. 

37.  Ilsley  v.  Jones,  12  Gray,  260. 

38.  Wynne  v.  Raikes,  5  East,  514  (1804). 


§§  564,  565  WRITTEN   AND   VERBAL   PROMISES  649 

C.  J.,  "that  if  a  bill  comes  into  a  man's  hands  with  a  parol  acceptance, 
though  the  party  who  receives  the  bill  does  not  know  of  that  parol 
acceptance,  he  has  a  right  to  avail  himself  of  it  afterward.  It  is 
impossible  for  any  man  to  doubt,  on  principles  of  conmion  sense, 
that  such  ought  to  be  the  law;  for  if  I  take  a  bill,  I  take  it  with  every 
advantage  the  holder  had  before  it  came  into  my  hands.  *  ♦  * 
If  the  plaintiffs  were  ignorant  of  this  (the  parol  acceptance),  it  is 
quite  impossible  that  that  which  they  have  done  in  ignorance  can 
prejudice  any  right  which  was  before  vested  in  them."  ^^ 

§  564.  The  measure  of  damages  for  nonperformance  of  an  agree- 
ment to  accept  a  draft  for  the  drawer's  accommodation,  which  is 
still  in  his  hands,  is  the  inconvenience  and  loss  thereby  occasioned 
to  him,  and  not  the  amount  of  the  draft. ^^  In  case  a  debt  is  lost 
by  the  negligence  of  an  agent  to  present  the  bill  for  acceptance  or 
payment,  the  measure  of  damages  is  prima  facie  the  amount  of  the 
bill,  but  evidence  is  admissible  to  reduce  the  amount  to  a  nominal 
sum.^^  And  where  a  former  agent,  without  actual  authority,  and  with 
nothing  due  him,  has  drawn  on  his  former  principal  through  a  bank 
instructed  by  the  principal  to  pay  such  drafts,  in  a  suit  by  the  bank 
to  recover  the  amount  paid  on  such  draft,  it  can  recover  only  the 
amount  paid  before  receiving  notice  of  the  agent's  want  of  authority.'*^ 

§  565.  If,  by  promise  and  liability  to  accept,  a  drawee  induces  a 
drawer  to  draw  upon  him,  and  then  refuses  to  honor  the  bill,  he  will 
be  liable  for  all  damages  incurred,  including  protest.  In  a  case  before 
the  United  States  Supreme  Court  it  appeared  that  the  defendant  had 
ordered  the  plaintiff  to  purchase  salt  for  him,  and  drew  on  him  for  the 
amount,  and  he  having  so  purchased  and  drawn,  it  was  held  that  the 
defendant  was  bound  to  accept  the  bills,  and  having  failed  to  do  so 
that  the  plaintiff  was  entitled  to  recover  the  amount  of  the  bills,  with 
damages  and  costs  of  protest,  upon  a  count  for  money  paid  and  ex- 
pended, and  that  the  bills  themselves  were  good  evidence  on  that 
count.^^ 

39.  Fairlee  v.  Herring,  3  Bing.  525,  11  Moore,  520  (1826). 

40.  Ilsley  v.  Jones,  12  Gray,  260. 

41.  Allen  v.  Suydam,  20  Wend.  321;  Van  Wort  v.  WooUey,  5  Dowl.  &  R.  See 
§§  329,  330. 

42.  Baeschlin  v.  Chamberlain  Banking  House,  67  Nebr.  196,  93  N.  W.  412, 
holding  further  that  the  fact  that  the  remainder  had  been  previously  placed  to 
the  agent's  credit  in  the  bank  is  not  sufficient. 

43.  Riggs  V.  Lindsay,  7  Cranch,  500.    At  common  law  a  breach  of  a  verbal 


650  PROMISES   TO    ACCEPT   BILLS    OF    EXCHANGE  §  566 

It  seems  that  if  a  person  should  write  a  factor  that  he  had  con- 
signed him  certain  goods,  and  would  draw  a  bill  on  the  credit  thereof 
for  a  certain  amount,  the  factor,  if  he  accepted  the  assignment,  would 
be  bound  to  accept  the  bill;  and  that  the  payee  of  such  a  bill  could  sue 
the  factor  as  upon  a  breach  of  promise  to  accept." 


SECTION    II 

HOW  PAROL  ACCEPTANCE  IS  AFFECTED  BY  THE  STATUTE  OF  FRAUDS 

§  566.  In  those  States  where  there  is  no  statute  prescribing  what 
shall  constitute  an  acceptance,  the  question  of  the  validity  of  a  verbal 
acceptance  may  become  referable  to  the  Statute  of  Frauds,  which 
declares  that  all  promises  to  pay  the  debt  of  another  shall  be  void 
unless  in  writing.  An  eminent  legal  writer  says  on  this  subject  that: 
"The  parol  acceptance  being  no  more  than  a  parol  promise,  it  seems 
to  the  author  that  whether  or  not  the  acceptance  can  be  charged  on 
such  promise  may  depend  on  whether  the  promise  is  to  pay  a  debt  of 
his  own,  or  to  answer  for  the  debt  of  another.  For,  in  the  latter  case, 
no  action  can  be  lawfully  brought  unless  the  promise,  or  soni'  mem- 
orandum or  note  thereof,  be  in  writing  and  signed  by  the  party  to  1)6 
charged  thereby  or  his  agent.  Such  is  the  provision  of  the  Code  of 
Virginia."  ^^  This  view  has  been  taken  in  Maine,  where  it  was  held 
that  a  parol  promise  to  accept  an  order  from  a  debtor  in  favor  of  his 
creditor,  between  whom  and  the  maker  of  the  promise  there  was  no 
privity,  was  invalid  under  the  Statute  of  Frauds,  as  a  promise  to  pay 
the  debt  of  another.^''  And  there  are  other  authorities  to  the  same 
effect — that  acceptance  must  be  in  writing  if  it  be  to  pay  the  debt  of 
another,  otherwise  it  will  be  void.'"'^ 

agreement  to  accept  a  bill  of  exchange  when  drawn  gives  sufficient  ground  for  an 
action  against  the  promisor  by  the  payee  if  the  l;tt((>r  relied  on  the  promise  in 
taking  and  discounting  the  draft.  Bank  of  LaddDuin  \-.  Bright-Coy  Commission 
Co.,  139  Mo.  App.  110,  120  S.  W.  648  (1900  > 

44.  1  Parsons  on  Notes  and  Bills,  291. 

45.  Conway  Robinson,  in  his  Practice,  vol.  II  (new  ed.),  p.  153;  Louisville, 
etc.,  R.  Co.  V.  Caldwell,  98  Ind.  250,  citing  the  text. 

46.  Plummer  v.  Lyman,  49  Me.  229;  Haeberle  v.  O'Day,  61  Mo.  App.  390. 

47.  Wakefield  v.  Greenhood,  29  Cal.  600,  Sawyer,  J.,  dissenting;  Manley  v. 
Geagan,  105  Mass.  445.  A  verbal  acceptance  by  the  drawee  of  a  bill  of  exchange, 
who  holds  no  fund  belonging  to  the  drawer  and  is  not  indebted  to  him,  is  within 
the  statute  of  frauds;  and  the  fact  that  the  order  was  left  with  the  dravvo!!  when 


§  567  HOW    AFFECTED    BY    STATUTE    OF    FRAUDS  651 

§  567.  Whether  the  Statute  of  Frauds  restricts  the  law  merchant. 
— It  may  well  be  doubted,  however,  whether  or  not  the  Statute  of 
Frauds  applies  to  that  class  of  engagements  which  are  regulated 
by  the  peculiar  doctrines  of  the  law  merchant,  and  the  weight  of 
reason  and  of  authority  incline  us  to  the  opinion  that  it  does  not. 
A  recent  discriminating  writer  on  "Verbal  Agreements"  lays  it  down 
as  a  cardinal  principle,  that  "contracts,  the  construction,  validity, 
and  evidence  of  which  depend  upon  so  much  of  the  law  merchant  as 
the  common  law  recognizes,  or  the  provisions  of  some  other  stat- 
ute, are  exceptions  to  the  operation  of  this  clause  of  the  Statute  of 
Frauds;"  ^^  and  the  numerous  cases  which  have  held  a  verbal  ac- 
ceptance or  promise  to  accept  as  binding  are  generally  based  upon  the 
open  assertion  or  tacit  aclcnowledgment  of  this  theory.  A  standard 
author  considers  a  bill  of  exchange  as  a  preferable  form  of  security, 
on  the  ground  that  the  Statute  of  Frauds  does  not  apply  to  it;  "^ 
and  such  is  the  general  understanding,  as  we  believe,  of  the  com- 
mercial world/'" 


he  verbally  agreed  to  pay  it  does  not  make  any  difference.  Chicago  Heights 
Lumber  Co.  v.  Miller,  219  III.  79,  76  N.  E.  52,  109  Am.  St.  Rep.  314,  affirming 
117  111.  App.  468. 

48.  Throop  on  Verbal  Agreements,  p.  159,  §  85. 

49.  Chitty  on  Bills,  page  4,  in  which  it  is  said:  "This  security  is  m  some  re- 
spects preferable  to  many  others  of  a  more  formal  nature;  for  each  of  the  parties 
to  a  bill,  by  merely  writing  his  name  upon  it  as  drawer,  acceptor,  or  indorser, 
impliedly  guarantees  the  due  payment  of  it  at  maturity,  and  the  consideration, 
in  respect  of  which  he  became  a  i)arty  to  it,  can  rarely  be  inquired  into;  whereas, 
in  the  case  of  an  ordinary  guaranty,  the  statute  against  frauds  requires  the  con- 
sideration to  be  e.xpressed,  and  other  matters  of  form  which  frequently  render  an 
impUed  guarantee  wholly  inoperative."  In  Nelson  v.  First  Nat.  Bank  of  Chicago, 
48  111.  41,  where  a  parol  promise  to  pay  checks  of  the  drawer  was  held  binding,  the 
court  said,  per  Lawrence,  .1.:  "If  a  parol  promise  to  accept  an  existing  though 
nonpresent  check  is  binding,  we  are  wholly  unable  to  discover  why  it  should  not 
be  equally  so  as  to  a  nonexisting  bill,  under  the  authority  of  the  American  cases, 
in  none  of  which  is  any  distinction  made  between  parol  and  written  promises  of 
this  character,  except  where  a  written  promise  is  expressly  required  by  statute." 
See  anle,  pp.  424,  425. 

50.  Edward  Mine's  Lumber  Co.  v.  Anderson,  141  III.  App.  527,  quoting  text; 
Spalding  v.  Andrews,  48  Pa.  Ct.  411;  In  re  Goddard's  Estate,  66  Vt.  419,  29  Atl. 
634.  In  Butler  v.  Prentiss,  6  Mass.  430,  Parsons,  C.  J.,  says:  "Neither  a  bill 
of  exchange  on  its  face  nor  the  mdorsements  are  within  the  Statute  of  Frauds." 
In  Pillans  v.  Van  Mierop,  3  Burr.  1674,  the  defendants,  in  expectation  of  having 
funds  of  the  payee  in  their  hands,  agreed  to  honor  the  plaintiff's  draft  to  be  there- 
after drawn  to  reimburse  them  for  money  lent  him.  After  the  loan,  but  before 
the  draft  was  drawn,  the  payee  failed,  and  the  defendants  notified  the  plaintiff 
that  the  draft  would  not  be  accepted;  but  it  was  drawn  nevertheless  and  dis- 


652  PROMISES   TO   ACCEPT   BILLS   OF   EXCHANGE     §§  568,  569 

§  568.  It  is  not  necessary,  however,  as  it  seems,  to  maintain  that 
the  Statute  of  Frauds  is  wholly  inapplicable  to  the  cases  arising  under 
the  law  merchant  (although  such  is,  as  we  think,  the  true  doctrine), 
in  order  to  sustain  the  validity  of  verbal  acceptances  and  promises  to 
accept.  They  may  be  enforced  in  some  cases  upon  well-established 
principles  of  estoppel.  The  theory  of  a  bill  of  exchange  is  that  the 
drawer  puts  the  payee  in  his  place,  and  gives  him  the  right  to  receive 
funds  in  the  drawee's  hands  belonging  to  him.  When  the  drawee 
accepts  or  promises  to  accept,  he  says,  in  effect,  to  the  payee,  "  It  is 
true,  I  have  funds  of  the  drawer,  and  will  pay  them  to  you  as  he 
directs."  Now,  if  he  really  has  funds,  ho  does  not  undertake  to  pay 
"the  debt  of  another"  than  himself,  but  simply  to  pay  his  own  debt 
"to  another"  than  his  original  creditor,  as  is  conceded;  ^^  and  when 
an  acceptance  or  promise  to  accept  is  communicated  to  the  holder, 
and  he  takes  the  bill  on  the  faith  thereof,  he  has  a  right  to  presume 
the  condition  of  things  which  the  acceptor  or  promisor  to  accept 
impliedly  asserts,  and  such  acceptor  or  promisor  should  be  estopped 
from  denying  it.  A  promise  by  A.  to  pay  his  debt  to  B.,  by  paying 
B.'s  debt  to  C,  has  been  well  said,  in  Wisconsin,  by  Dixon,  C.  J.,  not 
to  come  under  the  Statute  of  Frauds,  because  simply  a  promise  to 
pay  his  own  debt  "  in  that  particular  way."  ^^ 

§  569.  Verbal  acceptance  without  funds. — There  are  cases  which 
hold  that  a  verbal  acceptance  without  funds,  or  promise  to  accept, 
would  not  be  valid,  no  consideration  being  given  to  the  inquiry 

honored.  The  agreement  being  by  written  correspondence,  no  question  arose  as 
to  the  Statute  of  Fraud;  but  Lord  Mansfield  said  he  had  no  idea  that  "promises 
for  the  debt  of  another"  were  appHcable  to  the  present  case;  that  this  was  a  mer- 
cantile transaction,  and  credit  was  given  upon  a  supposition  "that  the  person 
who  was  to  draw  upon  the  undertakers  within  a  certain  time  had  goods  in  his 
hands,  or  would  have  them.  Here  the  plaintiffs  trusted  to  this  undertaking, 
therefore  it  is  quite  upon  another  foundation  than  that  of  a  naked  promise  from 
one  to  pay  the  debt  of  another."  As  between  the  acceptor  and  the  payee,  the 
acceptance  of  an  order  is  an  original  and  direct  undertaking  and  is  not  within  the 
statute  of  frauds.     Ragsdale  v.  Gresham,  141  Ala.  308,  37  So.  3G7,  citing  text. 

51.  Shields  v.  Middleton,  2  Cranch  C.  C.  205;  Van  Reimsdyck  v.  Kane,  1 
Gall.  C.  C.  633;  Pike  v.  Irwin,  1  Sandf.  14;  Strohecker  v.  Cohen,  1  Spear  (S.  C), 
349.  Brown  on  Statute  of  Frauds,  §§  172-174.  Agreement  to  pay  one's  own 
debt  "to  another"  is  not  agreement  to  pay  debt  of  another.  Spadine  v.  Reed, 
7  Bush,  455;  Besshears  v.  Rowe,  46  Mo.  501.  See  also  Spalding  v.  Andrews, 
48  Pa.  St.  411 ;  Dunbar  v.  Smith,  66  Ala.  490. 

52.  Putney  v.  Farnham,  27  Wis.  187.  See  §  570,  note  54;  In  re  Goddard'a 
Estate,  66  Vt.  419,  29  Atl.  634. 


§  570  HOW    AFFECTED    BY   STATUTE    OF   FRAUDS  653 

whether  or  not  the  holder  knew  the  fact  that  the  acceptance  or 
promise  was  for  accommodation.^^  When  the  holder  knows  such 
promise  or  acceptance  to  be  for  accommodation,  it  stands  on  the  same 
footing  as  a  promise  to  indorse,  which  must  be  in  writing  in  order  to 
be  valid,  being  plainly  an  engagement  to  answer  for  the  debt  of 
another;  ^^  but  the  inferences  to  be  drawn  without  such  knowledge 
are  altogether  different,  and  it  would  create  rather  than  prevent 
fraud,  to  permit  the  drawee  to  repudiate  his  acknowledgment  of 
funds  after  a  third  party  has  contracted  upon  the  faith  of  it.^^ 

§  570.  When  Statute  of  Frauds  does  not  apply. — Where  there  is 
a  new  and  independent  consideration  moving  at  the  time  from  the 
party  to  whom  the  promise  is  made,  the  Statute  of  Frauds  does  not 
apply.^^  Thus,  the  United  States  Supreme  Court  held,  that  if  a 
person  verbally  undertake  to  accept  a  bill  in  consideration  that 
another  will  purchase  one  already  d^aw^l,  or  to  be  thereafter  drawn, 
and  as  an  inducement  to  the  purchaser  to  take  it,  and  the  bill  is 
purchased  upon  the  credit  of  such  promise  for  a  sufficient  considera- 
tion, such  promise  to  accept  was  binding  upon  the  party,  and  that 
it  was  an  original  promise,  and  not  a  promise  to  pay  the  debt  of  an- 
other within  the  Statute  of  Frauds.  In  this  case  the  suit  was  for 
damages  for  breach  of  the  contract,  and,  therefore,  it  was  not  de- 
cided that  such  a  promise  constituted  acceptance.^' 

63.  Pike  v.  Irwin,  1  Sandf.  14;  Quin  v.  Hanford,  1  HUl  (N.  Y.),  82;  Brown 
on  Statute  of  Frauds,  174.    See  Townslcy  v.  Sumrall,  2  Pet.  170. 

54.  Carville  v.  Crane,  5  HiU  (N.  Y.),  583;  Taylor  v.  Drake,  4  Strobh.  431; 
Barnett  v.  Wing,  62  Hun,  125, 16  N.  Y.  Supp.  567. 

55.  See  Edward  Hine's  Lumber  Co.  v.  Anderson,  141  111.  App.  527. 

56.  See  Brown  on  Statute  of  Frauds,  §  175,  note.  A  note  or  memorandum  suffi- 
cient to  take  a  contract  out  of  the  operation  of  the  Statute  of  Frauds,  must  state 
the  whole  contract  with  reasonable  certainty,  so  that  the  names  of  the  parties 
thereto  and  the  substance  thereof  may  be  made  to  appear  from  the  writing  itself, 
without  recourse  to  parol  evidence.  See  Cheever  v.  Schall,  87  Hun,  32,  33  N.  Y. 
Supp.  751;  Guild  &  Co.  v.  Conrad,  Q.  B.  885  (1894).  If  goods  were  sold  on  the 
sole  credit  of  an  oral  promise,  given  for  the  benefit  of  the  purchaser,  that  the 
promisee  "would  stand  for"  a  certain  amount  on  a  thirty  day  draft  drawn  on  the 
promisor,  his  promise  is  original  and  not  within  the  statute;  but  if  any  credit  was 
given  to  the  person  to  whom  the  goods  were  delivered,  the  promise  is  collateral 
and  within  the  statute  of  frauds.    Pake  v.  Wilson,  127  Ala.  240,  28  So.  665. 

57.  Townley  v.  Sumrall,  2  Pet.  170,  Story,  J.,  said:  "This  is  not  a  case  falling 
within  the  object  or  mischiefs  of  the  Statute  of  Frauds.  If  A.  says  to  B.,  pay  so 
much  money  to  C,  and  I  will  repay  it  to  you,  it  is  an  original,  independent  prom- 
ise; and  if  the  money  is  paid  on  the  faith  of  it,  it  has  been  always  deemed  an 
obligatory  contract,  even  though  it  be  by  parol,  because  there  is  an  original 


654  PROMISES   TO    ACCEPT   BILLS   OF    EXCHANGE  §  570 

consideration  moving  between  the  immediate  parties  to  the  contract.  Damage  to 
the  promisee  constitutes  as  good  a  consideration  as  a  benefit  to  the  promisor.  In 
cases  not  absolutely  closed  by  authority,  this  court  has  already  expressed  a  strong 
inclination  not  to  extend  the  operation  of  the  Statute  of  Frauds  so  as  to  embrace 
original  and  distinct  promises  made  by  different  persons  at  the  same  time  upon  the 
same  general  consideration.  D'Wolf  v.  Rabaud,  1  Pet.  476.  *  *  *  The  questit)n 
whether  a  parol  promise  to  accept  a  nonexisting  bill  amounts  to  an  acceptance  of 
the  bill  when  drawn,  is  quite  a  different  question,  and  does  not  arise  in  this  case. 
If  the  promise  to  accept  were  binding,  the  plaintiff  would  be  entitled  to  recover, 
although  it  should  not  be  deemed  a  virtual  acceptance;  and  the  point,  whether 
it  was  an  acceptance  or  not,  docs  not  appear  to  have  been  made  in  the  court  be- 
low."   Kelley  v.  Greenough,  9  Wash.  659,  38  Pac.  158,  citing  the  text. 


CHAPTER  XX 

PRESENTMENT  FOR  PAYMENT 

§  571.  The  engagement  entered  into  by  the  acceptor  of  a  bill  and 
the  maker  of  a  note  is,  that  it  shall  be  paid  at  its  maturity — that  is, 
on  the  day  that  it  falls  due,  and  at  the  place  specified  for  payment,  if 
any  place  be  designated — upon  its  presentment.  This  engagement 
is  absolute,  but  that  of  the  drawer  of  a  bill  and  the  indorser  of  a  bill 
or  note  is  conditional,  and  contingent  upon  the  true  presentment  at 
maturity,  and  notice  in  case  it  is  not  paid.  The  maker  and  acceptor 
are  bound,  although  the  bill  or  note  be  not  presented  on  the  day  it 
falls  due;  ^  but  the  drawer  and  indorsers  are  discharged  if  such  pre- 
sentment be  not  made,  unless  some  sufficient  cause  excuses  the  holder 
for  failure  to  perform  that  duty.^  It  is  important,  therefore,  to  as- 
certain how  the  presentment  should  be  provided  for  by  the  holder  of 

1.  Sims  V.  National  Commercial  Bank,  73  Ala.  251;  Wescott  v.  Patton,  10 
Colo.  App.  545,  51  Pac.  1021;  McNair  v.  Moore,  55  S.  C.  435,  33  S.  E.  491,  74 
Am.  St.  Rep.  7G0.  The  fact  that  one  is  an  accommodation  maker  of  a  promis- 
sory note,  does  not  alter  this  rule.  See  Carlton  v.  White,  99  Ga.  384,  27  S.  E. 
704,  affirming  the  case  of  Mayer  v.  Thomas,  97  Ga.  772,  25  S.  E.  9G1;  Steiner 
&  Lobman  v.  Jeffries  et  al.,  118  Ala.  573,  24  So.  37;  Gormley  v.  Hartray,  105  111. 
App.  625;  Bardsley  v.  Washington  Mill  Co.,  54  Wash.  553,  103  Pac.  822, 132  Am. 
St.  Rep.  1133.  Where  a  contract  for  the  purchase  of  land  was  assigned,  and  the 
assignee  assumed  the  payment  of  the  notes  given  for  the  purchase  money,  it  was 
not  necessary  that  the  payee  should  demand  payment  before  bringing  suit. 
Baltes  Land  Stone  &  Oil  Co.  v.  Sutton,  32  Ind.  App.  14,  69  N.  E.  179. 

2.  Chitty  on  Bills  (13th  Am.  ed.)  [*353],  396;  Story  on  Notes,  §  201;  Bayley  on 
Bills,  chap.  VIT,  §  1;  Cox  v.  National  Bank,  100  U.  S.  (10  Otto.)  712;  Magruder  v. 
Bank  of  Washington,  3  Pet.  92;  Germania  Bank  v.  Trapnell,  118  Ga.  578,  45  S.  E. 
446;  Westbay  v.  Stone,  112  Mo.  App.  411,  87  S.  W.  34;  Harvey  v.  Girard  Nat. 
Bank,  119  Pa.  St.  212;  Farquhar  &  Co.  v.  Higham,  16  N.  D.  106,  112  N.  W.  557. 
Where  it  does  not  appear  in  a  case  whether  payment  of  a  note  would  have  been 
made  on  presentment  and  demand,  the  presumption  is  that  it  would  have  been 
so  paid,  and  the  failure  of  such  presentment  and  demand  injured  the  indorser  to 
the  extent  of  the  full  amount  of  the  note  and  interest,  and  discharged  him  from 
all  liability  upon  the  note.  Hayward  v.  Empire  State  Sugar  Co.,  93  N.  Y.  S. 
449,  105  App.  Div.  21.  But  if  the  indorser,  who  is  discharged  by  such  negligence, 
voluntarily  pay  the  note,  he  cannot  afterward  recover  from  the  holder.  Oil  Well 
Supply  Co.  v.  Exchange  Nat.  Bank  (Pa.),  18  Atl.  935. 

655 


656  PRESENTMENT   FOR   PAYMENT  §§  572,  573 

the  bill  or  note,  lest  by  failure  to  observe  the  necessary  precautions, 
the  drawer  and  indorsers  may  be  discharged,  and  the  solvency  of  his 
debt  destroyed  or  impaired.    We  shall  consider,  therefore,  in  order: 

(1)  The  person  by  whom  the  bill  or  note  should  be  presented. 

(2)  The  person  to  whom  the  bill  or  note  should  be  presented. 

(3)  The  time  of  presentment. 

(4)  Days  of  grace,  and  computation  of  time. 

(5)  The  place  of  presentment. 

(6)  The  mode  of  presentment. 

Under  Negotiable  Instrument  statute. — Under  the  statute,  present- 
ment of  the  instrument  for  payment  is  necessary  to  charge  indorsers,' 
and  it  is  as  necessary,  when  a  note  provides  that  the  option  to  declare 
the  whole  debt  due  for  nonpayment  of  interest  may  be  exercised,  to 
make  demand  in  order  to  charge  a  mere  indorser,  as  in  other  cases. ^ 


SECTION   I 

BY  WHOM  PRESENTMENT  FOR  PAYMENT  MUST  BE  MADE 

§  572.  Any  bona  fide  holder  of  a  negotiable  instrument,  or  any  one 
lawfully  in  possession  of  it  for  the  purpose  of  receiving  payment,  may 
present  it  for  payment  at  maturity.^  A  notary  public,  or  any  agent 
duly  authorized,  may  make  presentment  of  the  instrument  for  pay- 
ment; and  it  is  well  settled  that  this  authority  need  not  be  in  writing.^ 

§  573.  When  possession  of  bill  or  note  evidences  holder's  right  to 
present  it  for  payment. — The  mere  possession  of  a  negotiable  in- 
strument which  is  payable  to  the  order  of  the  payee,  and  is  indorsed 

3.  Appendix,  sec.  70.    Williams  v.  Paintsville  Nat.  Bank,  137  S.  W.  535,  143 

Ky.  781,  as  to  accommodation  indorsers. 

4.  Albraith  v.  Shepard,  43  Wash.  698,  86  Pac.  1113. 

5.  Lefty  v.  Mills,  4  T.  R.  170;  Bachellor  v.  Priest,  12  Pick.  399;  Sussex  Bank  v. 
Bald^v^n,  2  Hair.  487;  Hofrichter  v.  Enyeart,  71  Nebr.  771,  99  N.  W.  658.  A 
person  in  possession  under  a  blank  indorsement  or  with  an  indorsement  to  himself 
will  be  deemed  a  holder  for  this  purpose.  Ewen  v.  Wilboe,  99  111.  App.  132, 
affirmed  70  N.  E.  575,  208  111.  492. 

6.  Teaver  v.  Lincoln,  21  Pick.  267,  in  which  case  presentment  was  made  by  a 
sheriff;  Shed  v.  Brett,  1  Pick.  40;  Hartford  Bank  v.  Barry,  17  Mass.  94;  Free- 
man V.  Boynton,  7  Mass.  483;  Sussex  Bank  v.  Baldwin,  2  Harr.  487;  Hartford 
Bank  v.  Stedman,  3  Conn.  489;  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Williams 
V.  Matthews,  18  Cow.  252. 


§  573  BY   WHOM   MADE  657 

by  him  in  blank,  or  of  a  negotiable  instrument  payable  to  bearer,  is 
in  itself  sufficient  evidence  of  his  right  to  present  it,  and  to  demand 
payment  thereof,^    and  payment  to  such  person  will  always  be  valid. 

7.  Hays  v.  Dickey,  67  Ark.  169,  53  S.  W.  887;  Gumaer  v.  Sowers,  31  Colo. 
164,  71  Pac.  1103;  American  Agricultural  Chemical  Co.  v.  Graham,  9  Ga.  App. 
479,  71  S.  E.  761;  South  &  Lane  People's  Nat.  Bank,  4  Ga.  App.  92,  60  S.  E.  1087; 
Henderson  v.  Davisson,  157  111.  379,  41  N.  E.  560;  Magel  v.  Milligan,  150  Ind. 
583,  65  Am.  St.  Rep.  382;  Crumrine  v.  Estate  of  Crumrine,  14  Ind.  App.  641,  43 
N.  E.  322;  Carnahan  v.  Lloyd,  4  Kan.  App.  605,  46  Pac.  323;  Massachusetts 
Nat.  Bank  v.  Snow,  187  Mass.  159,  72  X.  E.  959;  Bachellor  v.  Priest,  12  Pick. 
399;  Huntley  v.  Hitchinson,  91  Minn.  244,  97  N.  W.  971;  Thomas  v.  Thomas,  107 
Mo.  459,  18  S.  W.  27;  Weber  v.  Orten,  91  Mo.  680,  citing  the  text;  Lowerj-  v. 
Danforth,  95  Mo.  App.  441,  69  S.  W.  39;  Kuch  v.  Cornett,  79  Mo.  App.  574; 
Allen  V.  Harris,  79  Mo.  App.  490;  New  England  Loan  &  Trust  Co.  v.  Robinson, 
56  Nebr.  51,  76  N.  W.  415,  71  Am.  St.  Rep.  657;  City  Nat.  Bank  v.  Thomas,  46 
Nebr.  862,  65  N.  W.  895;  Brooks  v.  Hoh,  65  Mo.  App.  613;  Newmarket  Sav.  Bank 
V.  Hanson,  67  N.  H.  502,  32  Atl.  774;  Drew  v.  Phelps,  18  N.  H.  572;  Havana 
Cent.  R.  Co.  v.  Knickerbocker  Trust  Co.,  198  N.  Y.  422,  92  N.  E.  12;  National 
Revere  Bank  v.  National  Bank  of  the  RepubUc,  172  N.  Y.  102,  64  N.  E.  799; 
Fourth  Nat.  Bank  v.  Mahon,  38  App.  Div.  198,  56  N.  Y.  Supp.  566;  Southwick 
V.  Ely,  15  N.  H.  541;  Beaman  v.  Ward,  132  N.  C.  68,  43  S.  E.  545;  Triplett  v. 
Foster,  115  N.  C.  335,  20  S.  E.  475;  Jackson  v.  Love,  82  N.  C.  405;  Drinkall  v. 
Movins  State  Bank,  11  N.  B.  10,  88  N.  W.  724,  57  L.  R.  A.  341,  95  Am.  St.  Rep. 
693;  BrNTijolfson  v.  Osthus,  12  N.  D.  42,  96  N.  W.  261;  Price  v.  Winnebago  Nat. 
Bank,  14  Okl.  268,  79  Pac.  105;  Owens  v.  Snell,  29  Oreg.  483,  44  Pac.  824;  Third 
Nat.  Bank  v.  Angell,  18  R.  L  1,  29  Atl.  500;  Watford  v.  Wingham,  64  S.  C.  509, 
42  S.  E.  597;  Mars  v.  Mars,  27  S.  C.  135;  Cone  v.  Bro^Ti,  15  Rich.  (S.  C.)  262; 
Myrick  Bros.  Co.  v.  Jackson,  44  Tex.  Civ.  App.  553,  99  S.  W.  143;  Garrett  v. 
Findlater,  21  Tex.  Civ.  App.  635,  53  S.  W.  839;  Grant  v.  Ennis,  5  Tex.  Civ.  App. 
44,  23  S.  W.  998;  Brooks  v.  James,  16  Wash.  335,  47  Pac.  751;  Yakima  Nat.  Bank 
V.  Knipe,  6  Wash.  348,  33  Pac.  834;  Milwaukee  Trust  Co.  v.  Van  Valkenburg, 
132  Wis.  638,  112  N.  W.  1083.  See  posl,  §§  812  (especially  note  89),  1191,  1230. 
The  fact  that  such  note  is  past  due  when  po.ssession  is  received  will  not  alter  the 
presumption.  Marshall  v.  Myers,  96  Mo.  App.  643,  70  S.  W.  927.  Possession 
of  certificates  of  deposit  indorsed  by  the  payee  is  e^^dence  of  the  indorsee's  title 
to  them.  Kavanagh  v.  Bank  of  America,  139  111.  404,  88  N.  E.  171.  Production 
of  a  note  and  coupon  for  interest  thereon,  but  detached  therefrom,  by  a  person 
not  named  therein  as  payee,  the  note  and  coupon  as  well  being  in  form  payable 
to  order,  and  the  note  being  duly  indorsed,  but  the  coupon  having  no  indorsement, 
raises  a  presumption  that  the  owner  became  the  holder  of  the  note  when  the  coupon 
was  attached  thereto,  and  formed  a  mere  incident  thereof,  and  so  did  not  require 
any  indorsement  separately  from  that  on  the  note.  ^Milwaukee  Trust  Co.  v. 
Van  Valkenburgh,  132  Wis.  638,  112  N.  W.  1083.  If  a  payee  of  a  note  makes  an 
indorsement  thereon  to  G.,  but  delivers  it  to  M.,  and  M.  brings  action  thereon, 
his  possession  of  the  note,  with  proof  that  he  paid  the  payee  therefor,  will  raise  a 
presumption  that  the  note  was  never  deUvered  to  G.,  and  is  sufficient  prima  facie 
evidence  of  M.'s  ownership  of  the  note.  Menzie  v.  Smith,  63  Nebr.  666,  88  N.  W. 
855.    The  rule  does  not  apply  to  an  agent  who  has  been  furnished  with  money  by 

42 


658  PRESENTMENT   FOR    PAYMENT  §  574 

unless  he  is  kno\\-n  to  the  payor  to  have  acquired  possession  wrong- 
fully. And  if  the  party  holding  possession  of  a  negotiable  instrument 
which  is  not  indorsed  by  the  payee,  or  has  been  indorsed  by  him 
specially  to  another,  and  has  not  been  indorsed  over  by  such  indorsee, 
but  has  been  placed  in  the  holder's  hands  as  agent,  for  the  purpose  of 
receiving  payment,  such  agent  may  present  it  for  payment,  and 
payment  to  him  will  be  valid;  even,  as  it  has  boon  held,  although 
made  in  a  manner  different  from  that  provided  for  in  the  instructions 
to  the  agent.  The  fact  that  the  instrument  is  not  indorsed  by  the 
owner  is,  as  has  been  held,  under  such  circumstances,  of  no  impor- 
tance. Such  indorsement  would  be  necessary  to  the  negotiation  of  the 
instrument,  but  it  would  not  be  necessary  to  the  validity  of  the  pay- 
ment.^ 

Under  Negotiable  Instrument  statute. — Where  a  note,  indorsed  in 
blank,  is  presented  for  discount,  the  person  in  possession  is  the 
bearer,^  but  mere  naked  possession  of  paper  payable  to  order,  not 
indorsed,  does  not  prove  title.  ^*^ 

§  574.  Possession  of  bill  or  note  unindorsed  by  payee  no  evidence 
of  right  to  present  it. — -When,  however,  a  bill  or  note  unindorsed 
by  the  payee,  or  indorsed  by  the  payee  specially,  and  unindorsed 
by  his  indorsee,  is  in  the  possession  of  another  person,  the  ques- 
tion whether  or  not  its  bare  possession  is  evidence  of  his  right  to 
demand  payment,  is  of  a  different  character.  Without  the  indorse- 
ment of  the  payee  or  special  indorsee,  such  possession  would  clearly 
not  entitle  the  holder  to  the  privileges  of  a  bona  fide  holder  for  value, 
as  at  best  he  would  only  hold  the  equitable  title  to  the  instrument,-^ 
and  could  not  sue  at  law  upon  it  as  a  ground  of  action. ^^    But  it 

his  principal  to  purchase  notes.  Threadgill  v.  Commissioners,  IIG  N.  C.  016, 
21  S.  E.  425.  The  rule  stated  in  the  text  has  been  held  in  Indiana  to  be  inapplic- 
able to  nonnegotiable  paper.  See  Mitchell  v.  St.  Mary,  148  Ind.  Ill,  47  N.  E. 
584,  50  N.  E.  5G4.    See  also,  §§  741,  781a,  812,  1181a. 

8.  See  Doubleday  v.  Kress,  60  Barb.  196  (1871),  and  §  575;  Snyder  v.  Moon, 
5  Kan.  App.  447,  49  Fac  327;  State  v.  Stebbins,  132  Mo.  332,  33  S.  W.  1147, 
citing  text. 

9.  Appendix,  sec.  191.  Massachusetts  Nat.  Bank  v.  Snow,  187  Mass.  159, 
72   N.   E.  959. 

10.  Swanby  v.  Northern  State  Bank  (Wis.),  137  N.  W.  763. 

11.  See  chapter  XXII,  on  Transfer  by  Assignment,  §  741;  also  chapter  XXIV, 
section  VI;  Macky  v.  Craig,  144  Ind.  223,  43  N.  E.  6;  Bishop  v.  Chase,  156  Mo. 
158,  56  S.  W.  1080,  citing  text;  Hair  v.  Edwards,  104  Mo.  App.  213,  77  S.  W.  1089; 
Johnson  County  Savings  Bank  v.  Scroggin  Drug  Co.,  152  N.  C.  142,  67  N.  E.  253. 

12.  Hull  V.  Conover,  35  Ind.  372  (1871);  Portern  v.  Cushman,  19  111.  572; 


§  575  BY   WHOM  MADE  659 

might  be  contended  (and  we  were  at  one  time  of  the  opinion)  that 
such  possession  should  be  regarded  as  evidence  of  the  holder's  right 
to  demand  payment  as  the  agent  of  the  payee  or  special  indorsee;  and 
that  a  payment  to  him  would  be  valid,  although  he  was  in  fact  not 
authorized  to  receive  it.^^  But  this  we  are  now  satisfied  was  a  mis- 
conception of  the  law.^^  Certainly  if  he  were  in  fact  the  owner's 
agent,  a  payment  to  him  would  be  valid,  although  he  had  produced 
no  other  evidence  of  the  fact  than  the  unindorsed  instrument  at  the 
time  when  he  received  it.  But  the  payment  without  other  evidence 
of  ownership  or  agency  would  be  at  the  payor's  risk.  Possession 
without  the  indorsement  might  have  been  acquired  by  fraud  or  theft, 
and  alone  could  not  constitute  sufficient  evidence  of  any  right  to  the 
instrument  whatever,  being  without  transfer  of  title,  or  any  collateral 
circumstance  of  a  transfer  in  trust.  Had  the  owner  authorized  the 
holder  to  act  as  his  agent,  an  indorsement  "for  collection"  in  terms, 
an  indorsement  in  blank,  or  a  written  authority  to  collect  it,  would 
be  the  natural  and  proper  mode  of  communicating  the  fact. 

§  575.  Presentment  by  unauthorized  person. — Mr.  Chitty  says 
that  any  person  who  happens,  whether  by  accident  or  otherwise 
(as  by  the  failure  of  an  agent),  to  be  the  holder  at  the  time  the  bill 
or  note  becomes  due,  and  although  he  has  no  right  to  require  pajTiient 
for  his  own  benefit,  may  and  ought  to  demand  payment,  and  give 
notice  of  nonpayment  so  as  to  prevent  loss.^^ 

Doubtless  the  act  of  such  unauthorized  person  would  be  sufficient 
to  prevent  loss,  as  the  owner's  ratification  of  it  would  be  presumed; 
but  it  is  not  probable  that  the  learned  author  intended  to  intimate 
the  opinion  that  a  payment  to  him  would  be  valid  unless  ratified,  or 
that  his  mere  possession  of  the  instrument,  unless  it  was  payable  to 
bearer  or  indorsed  in  blank,  was  in  itself  evidence  of  a  right  to  act  as 

Bausmann  v.  Kelley,  38  Minn.  205;  Jackson  v.  Bank,  92  Tenn.  154,  20  S.  W.  802, 
36  Am.  St.  Rep.  81. 

13.  See  Southern  Law  Review  for  April,  1873,  p.  273. 

14.  See  ante,  §  573;  post,  §  1230;  Story  on  Agency,  §  98;  Doubled".y  v.  Kress, 
50  N.  Y.  413  (overruling  same  case  in  60  Barb.  181),  Peckham,  J.,  saying:  "Mere 
possession  of  the  note  by  the  assumed  agent,  Murray,  unindorsed,  without  any 
other  sustaining  facts,  is  not  sufficient  to  authorize  payment  to  him."  Harmon 
V.  Sullivan,  3  Mo.  App.  583;  Bamett  v.  Ringgold,  80  Ky.  289. 

15.  Chitty  on  BUls  (13th  Am.  ed.)  [*365],  410.  See  also  [*394],  445.  In  a 
very  early  case  it  is  said:  "If  a  wrong  person  do  show  the  bill,  by  the  custom  of 
merchants  this  is  a  good  payment."  Anonymous,  Styles,  366  (1652);  Edwards 
on  Bills,  494. 


660  PRESENTMENT   FOR    PAYMENT  §  576 

or  for  the  owner.  The  doctrine  of  the  text  is  sustained  by  high  au- 
tliority; '"  and  since  the  foregoing  was  written  has  been  judicially 
established  in  New  York,"  and  found  favor  in  Ohio.^^  But  in  North 
C'arolina  the  contrary  view  has  been  takon.'^  If  the  holder  have  and 
(>xhibit  extraneous  evidence  of  his  ownership  of  the  instrument,  such, 
for  instance,  as  an  assignment  and  mortgage  duly  executed,  this  will 
sudicc  without  indorsement,  and  the  party  to  whom  it  is  presented 
would  then  have  no  right  to  insist  on  an  indorsement.^"  Mere  posses- 
sion of  a  bond  will  not  justify  payment  to  the  holder  without  au- 
thority, express  or  implied,  to  collect.^' 

§  576.  Presentment  by  indorser. — Whether  or  not  an  indorser  of 
a  bill  or  note  which  has  upon  it  a  subsequent  special  indorsement, 
and  no  prior  indorsement  in  blank,  is  shown  by  mere  possession  of 
the  paper  to  be  entitled  to  demand  payment,  has  been  much  ques- 
tioned. There  are  a  number  of  cases  which  hold  that  such  an  in- 
dorser cannot  demantl  payment,  for  the  reason  that  it  would  seem 
from  the  face  of  the  paper  itself  that  he  had  parted  with  his  title;  and 
(hat  a  receipt  from  the  last  indorsee,  or  a  reindorsement  to  him, 
would  be  necessary  to  re-establish  it.  This  doctrine  was  laid  down  in 
an  early  case  by  the  Supreme  Court  of  the  United  States,^^  and  some 
of  the  State  tribunals  have  taken  the  same  view;  ^^  but  in  a  more 

16.  Thompson  on  Bills,  245;  Pothior,  168. 

17.  Wanlrop  v.  Dunlop,  1  Ilun,  325  (1874);  Doubleday  v.  Kress,  50  N.  Y. 
•110  (1872);  Iliinnon  v.  Sullivan,  3  Mo.  App.  583  (accord). 

18.  Dodpi'  V.  National  Exchange  Bank,  30  Ohio  St.  1. 

19.  Jackson  v.  Love,  82  N.  C.  405;  Holly  v.  Holly,  94  N.  C.  672. 

20.  Pease  v.  \\'arren,  25  Mich.  9  (1S74).  The  bank  denied  the  right  of  the 
holder  to  insist  on  payment  without  proving  the  payee's  indorsement.  Cooley, 
.1.,  said:  "The  indorsement  would  have  been  necessary  to  (>nable  him  (the  holder) 
to  sue  at  law  on  the  notc^s  in  his  own  name,  but  if  he  was  the  real  o^Tier  he  was 
entitled  to  demand  and  receive  i)ayment  whether  they  were  indorsed  or  not,  and 
tlie  formal  assignment,  duly  acknowledged  and  recorded,  was  the  best  possible 
(iroof  of  ownership." 

21.  Brown  v.  Taylor,  32  Gratt.  135.  Query  a«  to  conamercial  paper,  p.  137. 
S(>e  article  in  Virginia  Law  Journal  for  January,  1881,  p.  1. 

22.  WcMx  V.  Lindo,  7  Cranch  S.  C.  159. 

23.  Thonipson  v.  Flower,  13  Mart.  301,  where  it  was  held  that  the  last  indorse- 
ment being  canc(>led  was  insuflicient.  See  also  Sprigg  v.  Cuny,  19  Mart.  253. 
In  Dehers  v.  Harriott,  1  Show.  1G3,  it  was  held  that  a  bill  payable  to  A.,  and 
indorsed  by  him  to  B.,  and  by  B.  to  C,  might  be  sued  on  by  B.,  it  appearing, 
however,  that  C.  had  no  interest.  And  in  Mendez  v.  Carreroon,  1  Ld.  Raym.  742, 
the  prior  indorser  suing  the  acceptor  was  nonsuited,  it  appearing  that  he  had 
been  sued  by  a  subsequent  indorser,  and  not  appearing  that  he  had  paid  the  bill. 


§  577  BY   WHOM   MADE  661 

recent  case  the  Supreme  Court  of  the  United  States  expressed  the 
opposite  opinion,  which  seems  to  us  the  correct  one.^''  Some  of  the 
cases  hold  that  possession  of  the  b'ill  by  a  prior  indorser  is  sufficient 
where  the  subsequent  indorsements  are  canceled;  ^^  but  the  better 
view  seems  to  be,  and  it  is  sustained  by  most  respectable  authority, 
that  it  makes  no  difference  that  the  subsequent  indorsements  remain 
uncanceled. ^^  The  party  may  not  be  still  the  proprietor  in  interest 
of  the  instrument,  but  his  possession  of  it  would  be  prima  facie  evi- 
dence that  he  had  paid  it  himself  to  a  subsequent  indorsee,  and  had 
reacquired  the  right  to  demand  payment.^^  And  it  would  also  be 
consistent  with  the  idea  that  he  was  holding  it  and  suing  for  the 
benefit  of  a  subsequent  indorsee.^^ 

§  577.  It  is  intimated  by  Story  that  a  different  rule  might  apply 
where  the  note  was  not  originally  negotiable  to  order,  or,  if  negotiable, 
had  been  indorsed  restrictively  to  a  particular  person  only;  and  where, 
of  course,  in  either  case,  the  holder  in  possession  is  not  the  payee  or 
the  special  indorsee  thereof.  Under  such  circumstances  he  considers 
the  mere  production  of  the  note  is  not  ordinarily  deemed  a  sufficient 
title  or  authority  to  demand  payment.^^  This  is  not  in  accordance 
with  the  views  of  Chitty,  or  the  ratio  decidendi  of  cases  already 
quoted;  for  while  title  to  the  instrument  cannot  pass  without  the 
indorsement,  the  possession,  it  has  been  thought,  may  still  be  evidence 
of  agency  to  demand  payment.  For  reasons  already  stated,  we  think 
the  views  of  Story  are  correct.^" 

24.  Dugan  v.  United  States,  3  Wheat.  172  (1818).  See  Domingo  Franca 
V. ,  12  Mod.  345  (1699). 

25.  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Bowie  v.  Duvall,  1  Gill  &  J.  175; 
Chautauqua  County  Bank  v.  Davis,  21  Wend.  584;  Dollfus  v.  Frosch,  1  Den. 
3B7;  Brinkley  v.  Going,  Breese,  288;  Kyle  v.  Thompson,  2  Scam.  432. 

26.  See  post,  §  1198;  Dugan  v.  United  States,  3  Wheat.  172;  Lonsdale  v. 
Ikown,  3  Wash.  C.  C.  404;  Picquet  v.  Curtis,  1  Sumn.  478;  Norris  v.  Badger, 
(1  Cow.  449;  Bank  of  Kansas  City  v.  Mills,  24  Kan.  610;  Bynum  v.  Hobbs  (Tex. 
Civ.  App.),  121  S.  W.  900. 

27.  Gumaer  v.  Jackson,  37  Colo.  39,  86  Pac.  885;  Carolina  Locust  Pin  &  Mica 
Co.  V.  Chattanooga  Machinery  Co.,  3  Ga.  App.  732,  60  S.  E.  375;  Van  Vlissingen 
V.  Roth,  121  111.  App.  600;  Alderton  v.  Williams,  130  Mich.  626,  90  N.  W. 
601. 

28.  See  Batchellor  v.  Priest,  12  Pick.  399;  Bank  of  the  United  States  v.  United 
States,  2  How.  711 ;  Jones  v.  Fort,  9  B.  &  C.  764;  Merz  v.  Kaiser,  20  La.  Ann.  377; 
Henderson  v.  Davisson,  157  111.  379,  41  N.  E.  560. 

29.  Story  on  Notes,  §  247. 

30.  See  arUe,  §§  574,  575. 


662  PRESENTMENT   FOR   PAYMENT  §§  578-580 

§  578.  When  holder  is  dead. — If  the  holder  die  before  the  time 
for  presentment  for  payment,  it  must  be  made  by  his  personal  rep- 
resentative.^^ If  there  be  no  personal  representative  at  the  time, 
presentment  and  demand  within  a  reasonable  time  after  his  appoint- 
ment will  be  sufficient  to  charge  subsequent  parties,  although  pre- 
sentment and  demand  were  not  made  at  maturity. ^- 

If  the  holder's  estate  has  passed  to  an  assignee  in  bankruptcy,  the 
assignee,  or  some  person  authorized  by  him,  should  make  present- 
ment.^^ If  the  holder  is  afemms  sole,  and  she  has  become  a  married 
woman  at  maturity,  the  presentment  should  be  made  by  her  hus- 
band; and  a  presentment  by  her,  without  his  consent  or  authority, 
would  be  insufficient  to  charge  the  maker,  or  validate  a  payment. 
If  the  note  belonged  to  a  partnership,  and  one  member  be  dead  at 
maturity,  presentment  should  be  made  by  the  survivor. 

§  579.  Whether  or  not  demand  of  payment  of  a  foreign  bill  by 
a  notary's  clerk  is  sufficient  as  ground  of  protest. — There  is  no 
doubt,  as  we  have  already  seen,  that  any  person,  whether  he  be  a 
notary  or  not,  having  a  bill  or  note  in  possession,  and  whether  the 
bill  be  foreign  or  inland,  may  demand  payment  and  receive  the 
amount  due;  and  that  a  payment  to  such  person  by  the  drawee  will 
discharge  his  obligation. 

But  in  respect  to  foreign  bills  which  are  dishonored  by  refusal  of 
acceptance  or  payment,  the  liability  of  the  drawer  and  indorsers  can 
only  be  preserved  by  a  protest  and  notice — notice  alone  being  nec- 
essary in  the  case  of  inland  bills.  ^^  And  the  custom  is,  when  a  foreign 
bill  is  dishonored,  to  cause  it  to  be  placed  in  the  hands  of  a  notary 
public,  and  again  presented  on  the  same  day,  if  indeed  it  were  not 
presented  by  a  notary  in  the  first  instance,  and  to  be  protested  by 
him  for  nonacceptance  or  payment,  as  the  case  may  be.^^  The  ques- 
tion has  been  much  debated  whether  or  not  a  presentment  by  a 
notary's  clerk  will  suffice  as  the  foundation  of  such  protest,  and  the 
authorities  are  at  war  upon  it. 

§  580.  English   authorities.— In   Leftly   v.    Mills,^^   Buller,    J., 

31.  1  Parsons  on  Notes  and  Bills,  360;  Story  on  Promissory  Notes,  §  249. 

32.  White  v.  Stoddard,  11  Gray,  528. 

33.  1  Parsons  on  Notes  and  Bills,  360;  Edwards  on  Bills,  494. 

34.  Joseph  V.  Salomon,  19  Fla.  633,  citing  the  text. 

35.  Brooks'  Notary  (3d  Ed.),  71  (1876). 

36.  4  T.  R.  170  (1791). 


§  580  BY   WHOM   MADE  663 

said:  "I  am  not  satisfied  that  it  was  a  proper  demand,  for  it  was  only 
made  by  the  banker's  clerk.  The  demand  of  a  foreign  bill  must  be 
made  by  a  notary  public,  because  he  is  a  public  officer."  This  dictum 
led  Mr.  Chitty,  in  an  early  edition  of  his  work,  to  give  apparent 
approval  of  the  doctrine  that  the  notary  in  person  must  make  the 
demand.  A  correspondence  then  ensued  between  him  and  the  no- 
taries of  London,  the  latter  insisting  "not  only  that  by  mercantile 
usage  such  presentment  is  regular  (by  a  notary's  clerk),  and  is  almost 
invariably  adopted,  but  that  as  far  back  as  the  memory  of  the  oldest 
notary  here  can  extend,  it  has  always  been  the  custom  so  to  present 
them."  And  further,  that  commercial  business  must  instantly  come 
to  a  stand  if  a  different  rule  prevailed;  "because  it  would  be  just  as 
impossible  for  all  the  bills  in  this  country  to  be  presented  in  person  by 
notaries  as  by  bankers."  In  reply,  Mr.  Chitty  insisted,  after  careful 
consideration,  that  "it  was  clear,  that  strictly  the  notary  himself 
must  in  all  cases  make  demand  of  payment  before  he  protests;"  ^^ 
though  he  observes  elsewhere  in  his  work,  that  "the  number  of  bills 
requiring  presentment  is  frequently  so  great  as  to  render  a  present- 
ment by  the  notary  himself  impossible;  and  the  constant  practice 
is  for  the  clerk  to  make  the  presentment."  ^*  And  in  a  recent  edition, 
it  is  said  in  a  note  by  the  learned  editor,  that  the  practice  to  allow 
the  notary's  clerk  to  make  the  demand  "is  amply  justified  by  the 
law  of  principal  and  agent,  and  not  questioned  in  any  case  which  has 
occurred  before  the  courts  of  England."  ^^  Professor  Parsons  quotes 
this  language  with  seeming  approbation,^''  and  there  are  considera- 
tions which  go  far  to  show  that  at  common  law  demand  by  the  notary's 
clerk  is  sufficient.  In  Scotland  it  is  considered  sufficient,^^  and.  suffi- 
ciency of  such  demand,  it  has  been  said,  is  implied  from  a  case  in  the 
Common  Pleas,^-  but  it  seems  that  in  that  case  the  bill  was  not  foreign. 
And  in  another  English  case,'*^  reported  more  fully  in  Chitty  on 
Bills,^^  than  by  the  reporters,  and  cited  in  New  York,^^  it  would  seem 
that  Puller's,  J.,  diztum  is  considered  the  law  of  the  realm.     It  ap- 

37.  Chitty  on  BUls  (13th  Am.  ed.)  [*4901,  519. 

38.  Ibid.    [*333],  374. 

39.  Ibid.  (10th  Eng.  ed.)  355,  note  4. 

40.  1  Parsons  on  Notes  and  Bills,  360. 

41.  Thompson  on  Bills  (Wilson's  ed.),  311. 

42.  Poole  V.  Dicas,  1  Bing.  N.  C.  649  (1835).    See  1  Parsons  on  Notes  and 
Bills,  641. 

43.  Vandewall  v.  TyrreU,  1  Moody  &  M.  87,  22  Eng.  C.  L.  258. 

44.  Chitty  on  Bills  (8th  Lond.  ed.),  p.  495,  note;  (13th  Am.  ed.)  519,  note. 
46.  Onondaga  County  Bank  v.  Bates,  3  Hill  (N.  Y.),  57. 


664  PRESENTMENT    FOR    PAYMENT  §  581 

peared  that  the  notary's  clerk  presented  a  ioreign  bill,  drawn  in 
Jamaica,  on  London,  and  afterward  drew  up  the  certificate  of  protest, 
which  was  signed  and  sealed  l)y  the  notary  himself,  in  due  form.  It 
is  stated  in  Chitty,  though  not  by  the  reporters,  that  Lord  Tenterden, 
C.  J.,  said  it  was  a  void  protest — that  it  was  a  false  certificate — that 
the  notary  had  signed  a  paper  stating  "I  presented  and  demanded," 
when  it  appeared  in  evidence  that  only  his  clerk  had  presented  the 
l,ill,  and  he  himself  knew  nothing  of  it.  And  the  predominant  view 
is  that  in  England  the  demand  should  be  made  by  the  notary  in  person. 

§  581.  State  of  the  authorities  in  the  United  States. — If  it  were 
a  question  of  original  impression  we  should  strongly  favor  the  ad- 
missibility of  demand  by  a  notary's  clerk;  and  upon  principle  we 
cannot  perceive  any  sufficient  reason  why  it  should  not  be  allowed. 
In  point  of  fact,  the  custom  is  almost  universal  for  the  demand  to  be 
made  by  the  clerk,  and  whenever  such  custom  is  proved  as  existing 
in  a  particular  place,  it  is  recognized  as  controlling.  When  the  demand 
is  made  by  the  clerk,  the  responsibility  of  the  notary  is  nevertheless 
as  binding,  as  the  clerk  is  merely  his  agent;  and  every  consideration 
of  convenience  would  seem  to  sustain  the  practice. 

But  in  the  United  States  the  courts  have,  almost  without  dissent, 
held  that  at  common  law  it  is  necessary  that  the  notary  himself  should 
make  the  demand  of  a  foreign  bill ;  and  that  in  order  to  establish  the 
sufficiency  of  a  demand  by  his  clerk,  a  general  custom,  or  a  statutory 
enactment  authorizing  such  practice,  must  be  proved. ^^ 

In  a  recent  case  decided  in  Missouri,^^  in  an  action  upon  a  foreign 
bill  drawn  in  St.  Louis  on  New  York,  and  in  its  sequel  decided  in  New 
York  ^^  in  an  action  against  the  notary  for  negligence  in  not  protesting 
it  duly,  the  necessity  of  demand  by  the  notary  in  person  was  illus- 
trated in  the  most  positive  form. 

In  the  first  case  (Commercial  Bank  v.  Barksdale),  it  appeared  thct 

46.  Sacrider  v.  Brown,  3  McLean,  481  (1844);  Ocean  Nat.  Bank  v.  Williams, 
102  Mass.  143;  Cribbs  v.  Adams,  13  Gray,  597;  Chenowith  v.  Chamberlin,  6 
B.  Mon.  60  (1845);  Bank  of  Kentucky  v.  Carey,  6  B.  Mon.  629  (1846);  McClane 
V.  Fitch,  4  B.  Mon.  600  (1844);  Carter  v.  Brown,  6  Humplir.  548;  Commercial 
Bank  v.  Barksdale,  36  Mo.  563  (1865);  Wittenberg  v.  Spalding,  33  Mo.  421; 
Commercial  Bank  v.  Varnum,  3  Lans.  86  (1870),  is  overruled  in  49  N.  Y.  275 
(1872);  Burch  v.  Hill,  24  Tex.  153;  Locke  v.  Haling,  24  Tex.  311;  Donegan  v. 
Wood,  49  Ala.  242. 

47.  Commercial  Bank  v.  Barksdale,  36  Mo.  563  (1865). 

48.  Commercial  Bank  v.  Varnum,  49  N.  Y.  (1872);  overruling  same  case  in 
3  Lans.  86. 


§  581  BY   WHOM   MADE  665 

the  bill  was  protested  in  New  York  city  on  the  5th  of  January,  1861 ; 
that  payment  was  demanded  by  Turney,  a  notary;  that  the  protest 
was  made  out  by  Varnum,  also  a  notary,  who  was  a  copartner  with 
Tumey  in  the  notarial  business.  Holmes,  J.,  delivering  the  opinion 
said:  "It  is  well  established  that  the  presentment  and  demand  must 
be  made  by  the  same  notary  who  protests  the  bill;  it  cannot  be  done 
by  a  clerk,  or  by  any  other  person  as  his  agent,  though  he  be  also  a 
notary.  The  protest  is  to  be  evidence  of  the  facts  stated  in  it,  of  which 
the  notary  is  supposed  to  have  personal  knowledge,  and  credit  is 
given  to  his  official  statements  by  the  commercial  world  on  the  faith 
of  his  public  and  official  character."  ^^ 

In  court  the  instrument  speaks  as  a  witness.  Such  statements 
made  merely  upon  the  information  of  another  person  would  amount 
to  hearsay  only,  if  the  notary  were  himself  upon  the  stand  as  a 
Yv'itness. 


43.  "The  notarial  protest  must  state  facts  known  to  the  person  who  makes  it, 
and  he  cannot  delegate  his  official  character  or  his  functions  to  another.     The 
presentment  and  protest  are  governed  by  the  law  of  the  place  where  the  bill  is 
payable;  and  on  this  principle  it  has  been  held  that  where  the  statute  law  of  the 
State  (as  in  Louisiana)  authorizes  notaries  to  appoint  deputies,  a  protest  made 
by  such  deputy,  duly  appointed,  would  be  recognized  as  sufficient.     Carter  v. 
Brown,  7  Humphr.  548.    But  no  case  seems  to  have  gone  further  than  this:  Such 
deputy  may  be  considered  as  having  a  semi-official  character,  and  sufficient 
authority  by  force  of  the  statute;  but  without  some  change  in  the  general  rule  of 
law,  one  notary  can  neither  delegate  his  functions  nor  impart  his  own  official 
character  to  another.    Here  two  notaries  were  in  partnership  in  general  business, 
and  one  of  them  undertook  to  present  the  bill  and  make  the  demand,  and  the 
other  to  draw  up  the  protest  and  give  the  notice.    They  were  both  notaries,  but 
as  such  they  were  distinct  public  officers,  and  there  can  be  no  partnership  in  such 
matters.    No  law  or  custom  was  proved  to  have  existed  in  the  State  or  city  of 
New  York  which  changes  the  general  rule  of  the  law  merchant  on  this  subject. 
It  must  follow  that  the  protest  made  by  Varnum  can  have  no  validity;  nor  will 
that  made  by  Turney  any  more  avail.     It  seems  to  be  clearly  established  by  the 
general  current  of  authority  that  the  protest  must  be  made  on  the  same  day  with 
the  presentment  and  demand,  though  a  noting  of  the  protest  on  the  bill  itself 
may  be  regarded  as  an  incipient  protest,  or  a  preliminary  step  toward  a  protest, 
which  may  be  completed  afterward,  at  any  time,  by  drawing  up  the  protest  in 
form.     Here  there  was  no  noting  of  the  bill  for  protest,  or  any  memorandum 
marked  on  the  bill  by  Turney;  nor  is  there  any  proof  of  any  distinct  note,  entry, 
or  memorandum  of  protest  made  by  him  on  that  day,  in  any  other  way  than  upon 
the  bill  itself.    It  would  appear  that  he  did  not  make  the  demand  for  the  purpose 
of  protesting  the  bill  himself,  but  as  the  agent  of  his  partner,  the  other  notary. 
He  neither  protested  the  bill  nor  noted  it  for  protest  at  the  time;  and  his  drawing 
up  of  a  protest,  long  afterward,  must  be  regarded  as  having  no  basis  of  contem- 
poraneous fact  or  present  authority,  and  as  being  entirely  void." 


666  PRESENTMENT    FOR    PAYMENT  §§  582,  583 

§  582.  In  the  case  in  New  York,  the  Commercial  Bank  sued  the 
notary,  Varnum,  into  whose  hands  the  bill  was  placed  for  demand, 
and  protest  if  necessary,  for  negligence  in  not  duly  performing  his 
function.  And  it  appeared  that  he  gave  the  bill  to  his  partner,  Tumey, 
who  presented  it  for  payment;  and  on  the  same  day  an  entry  was 
made  in  Vamum's  protest  book  under  the  joint  supervision  of  Tur- 
ney  and  himself,  stating  that  the  bill  was  presented  and  jirotested  by 
Varnum.  This  was  signed  by  Varnum;  Tumey 's  name  not  being 
mentioned,  but  his  initials  were  placed  opposite.  It  was  held  that 
by  the  common  law  the  defendant  would  be  liable,  but  that  evidence 
of  a  general  custom  would  be  admissible  to  show  that  in  New  York 
the  practice  for  a  notary's  clerk  to  make  the  demand  v»'as  recognized.''" 

To  the  same  effect  are  numerous  cases,  and  we  know  of  no  case  in 
the  United  States  in  Avhich  a  contrary  doctrine  has  been  distinctly 
held;  so  that  however  weighty  may  seem  the  considerations  which 
uphold  a  contrary  view,  m  this  country  the  principle  may  be  regarded 
as  settled.^^ 

§  583.  Distinction  taken  in  Kentucky  between  clerk  and  deputy. 

— In  Kentucky  a  distinction  exists  between  the  inferences  to  be  drawn 

50.  Commercial  Bank  v.  Varnum,  49  N.  Y.  275  (1872),  overruling  same  case 
in  3  Lans.  86  (1870),  Peckham,  J.,  saying:  "Conceding  the  rule  at  common  law 
to  be,  in  the  absence  of  any  custom  or  usage  on  the  subject,  that  the  presentment 
and  demand  must  be  made  by  the  notary  in  person,  was  the  testimony  offered, 
of  the  universal  usage  in  the  city  of  New  York  for  the  clerk  of  the  notary  to  make 
such  presentment  and  demand,  admissible?  It  may  be  remarked  that  the  usage 
of  merchants  has  established  the  great  body  of  the  law  in  reference  to  bills  of  ex- 
change. It  gave  grace  to  such  bills,  and  this  changed  the  contract.  It  has  settled 
the  particular  time  of  demand  by  the  notary.  The  rule  of  law  that  requires  a 
protest  of  a  foreign  bill  is  wholly  founded  upon  the  custom  of  merchants.  Dennis- 
toun  V.  Stewart,  17  How.  603.  In  the  absence  of  any  established  rule  of  law  in 
this  State,  by  decision  of  the  court  or  by  any  statute  requiring  a  demand  to  be 
made  by  the  notary  in  person,  it  is  not  perceived  why  a  usage  such  as  was  ap- 
proved was  not  admissible  as  proof  upon  the  subject.  This  was  the  view  of  the 
learned  justice  who  tried  this  case,  but  he  was  of  opinion  that  the  law  had  been 
otherwise  settled  in  this  State.  In  this,  I  think,  he  was  clearly  in  error.  All  the 
decisions  referred  to  by  him  or  upon  the  argument  at  bar  were  confined  to  the 
admissibiUty  of  certificates  of  protest,  and  notice  of  bills,  and  notes  under  the 
statute  of  1833,  p.  395.  That  statute  made  no  provision  as  to  what  constituted  a 
protest,  but  provided  simply  what  the  notary's  certificate  should  prima  facie 
prove,  and  had  no  reference  whatever  to  the  admissibility  of  this  offered  evidence, 
or  to  the  duties  of  notaries  at  common  law  in  protesting  a  foreign  bill." 

51.  Chenowith  v.  Chamberlin,  6  B.  Mon.  60  (1845);  Ellis'  Admr.  v.  Com- 
mercial Bank,  7  How.  (Miss.)  294  (1843);  Sacrider  v.  Brown,  3  McLean,  381 
(1844). 


§  584  BY   WHOM   MADE  667 

from  a  demand  by  the  notary's  clerk  and  by  his  deputy,  which  seems 
to  us  too  refining,  and  not  to  be  sustained.  There  it  was  held  that 
proof  of  a  general  custom  for  the  notary's  clerk  to  make  demand 
prevailing  in  New  Orleans  was  admissible,  and  proof  of  presentment 
by  the  clerk  sufficient.^^  In  a  subsequent  case,  where  the  presentment 
was  also  made  in  New  Orleans  by  a  notary's  clerk,  it  was  held  insuffi- 
cient as  foundation  for  the  pretest,  because  no  evidence  of  the  custom 
authorizing  it  appeared  in  the  record,^^  These  two  decisions  were, 
doubtless,  correct;  but  in  a  still  later  case  it  was  held  that  where  the 
notary  certified  respecting  a  foreign  bill  that  he  "presented  the  bill 
for  pajrment  by  his  deputy,  Auguste  Commandeur,"  it  was  sufiicient, 
although  there  was  no  evidence  that  by  the  laws  of  Louisiana  a  deputy 
was  authorized  to  perform  such  functions.  The  court  held  that  offi- 
cial authority  or  authority  of  the  principal  might  be  implied  in  the 
deputy,  when  no  such  authority  would  be  imphed  in  a  mere  clerk. 
And  while  it  could  find  no  authority,  as  was  observed,  for  presentation 
by  a  deputy,  it  considered  that  the  impracticability  of  the  notary 
acting  in  person  in  a  great  commercial  city,  in  all  cases,  and  the  seem- 
ing necessity  for  authorizing  action  l:)y  deputy,  furnished  prima  facie 
presumption  that  the  presentation  and  protest  were  made  in  accord- 
ance with  the  law  or  usage  of  New  Orleans.  ^^ 

This  decision  is  directly  controverted  bj--  the  cases  in  IVIissouri  and 
New  York,  before  cited  and  seems  to  us  objectionable,  on  the  double 
ground  that  the  notary  who  makes  the  presentment  must  also  make 
the  protest,  and  that  departures  from  the  common  law,  whether  by 
statute,  must  be  proved.  Indeed,  the  courts  of  Kentucky  could  take 
no  judicial  notice  of  the  statute  of  Louisiana,  which  must  be  placed 
before  them  in  evidence  in  authentic  form  before  it  can  be  noticed. 

§  584.  The  rule  applies  to  protests  of  inland  bills  and  promissory 
notes  when  protest  of  such  instruments  is  allowable. — The  rule 
requiring  the  demand  and  protest  to  be  made  by  the  notary  in  person 
applies,  in  order  to  give  it  full  force  and  effect,  although  the  instru- 
ment protested  may  be  an  inland  bill  or  a  promissory  note.  As  to 
them,  no  protest  is  necessary,  but  by  statute  m  many  of  the  States 
it  may  be  made,  and  be  accorded  the  same  effect  as  in  the  case  of  a 

62.  McClane  v.  Fitch,  4  B.  Mon.  600  (1844). 

63.  Chenowith  v.  ChamberliR,  5  B.  Mon.  60  (1845). 

64.  Bank  of  Kentucky  v.  Gary,  6  B.  Mon.  629  (1846).  In  Louisiana  the  no- 
tary's deputy  may  make  presentment  and  perform  notarial  functions.  Buckley 
V.  Seymour,  30  La.  Ann.  1384. 


668  PRESENTMENT   FOR    PAYMENT  §§  585,  586 

foreign  bill.  But  in  such  cases,  in  order  to  possess  the  same  effect,  it 
must  be  made  by  the  same  person,  and  based  upon  the  same  pre- 
liminary notarial  demand,  as  in  the  case  of  a  foreign  bill.  For  quoad 
the  form  and  effect  of  the  protest  they  are  placed  on  the  same  footing 
as  foreign  bills.  Thus,  in  New  York,  where  the  protest  certified  that 
the  notary  caused  the  note  to  be  presented,  it  was  held  insufficient, 
because  he  could  not  delegate  his  functions  to  another;  and  that, 
indeed,  such  certificate  would  be  objectionable  as  evidence  of  present- 
ment, because  the  notary  had  no  personal  or  official  knowledge  of 
the  fact,  and  it  was  but  hearsay  evidence  at  most.^^  So  it  was  held 
that  certificate  of  the  notary  that  the  note  was  presented  by  his  clerk 
would  be  defective  on  like  grounds.^^ 

§  585.  But  it  is  to  be  observed  respecting  inland  bills  and  prom- 
issory notes  that  as  no  protest  is  necessary,  and  although  no  protest 
when  relied  on  will  be  valid  unless  made  by  the  notary  in  person,  yet 
demand  of  payment  of  an  inland  bill  or  of  a  promissory  note  may  be 
made  by  the  clerk,  which  will  be  sufficient  as  the  foundation  of  notice 
from  the  notary,  or  other  person  acting  for  the  holder.  But  the  testi- 
mony of  the  clerk  would  be  necessary  to  show  the  due  presentment, 
and  the  testimony  of  the  notary  or  other  party  acting  for  the  holder 
to  show  due  transmission  or  service  of  the  notice.^^ 

§  586.  Statutory  authority  or  general  custom  may  be  proved. — 

It  is  clear  upon  principle,  and  it  is  agreed  bj^  the  authorities,  that 
where  there  is  a  statute  authorizing  the  demand  or  protest  to  be  made 
by  a  notary's  deputy  or  clerk,  or  by  any  other  official,  or  where  there 
is  a  general  custom  recognizing  such  practice  it  may  be  proved,  and 
that  in  such  cases  it  will  be  sufficient  to  show  that  the  statute  or 
custom  was  observed.  Thus,  it  has  been  held  by  the  United  States 
Supreme  Court  that  where,  as  in  Mississippi  (as  was  proved),  a  jus- 
tice of  the  peace  is  authorized  by  statute  to  perform  the  functions 
and  duties  of  a  notary,  his  act  of  protest  is  equally  valid  as  that  of  a 
notary.  "Quoad  hoc,"  said  the  court,  "he  acts  as  a  notary.""-*  And 
so,  where  it  was  in  evidence  that,  by  the  laws  of  Louisiana,  each 
notary  was  authorized  to  appoint  one  or  more  deputies  to  assist  him 

55.  Onondaga  County  Bank  v.  Bates,  3  Hill  (N.  Y.),  56  (1842). 

56.  Sheldon  v.  Benham,  4  Hill,  129  (1843) ;  to  same  effect,  Wamick  v.  Crane, 
4  Den.  460  (1847);  Gawtry  v.  Doane,  51  N.  Y.  90  (1872). 

67.  Hunt  V.  Maybee,  7  N.  Y.  269  (1852). 

68.  Burke  v.  McKay,  2  How.  66  (1844). 


§  587  BY   WHOM    MADE  669 

in  making  protests  and  delivering  notices,  and  the  protest  on  its  face 
stated  that  the  notary  A.,  by  his  deputy  B.,  presented  the  bill,  etc., 
it  was  held  sufficient.^^ 

So,  it  has  been  held  in  an  number  of  cases,  that  evidence  of  a  cus- 
tom for  a  notary  to  act  by  his  clerk  is  admissible,®''  and  in  Massachu- 
setts the  doctrine  was  well  expressed  by  Bigelow,  J.®^ 

In  Virginia,  the  Court  of  Appeals  was  unanimous  as  to  this  doctrine, 
but  divided  equally  as  to  whether  or  not  at  common  law,  presentment 
by  the  notary's  clerk  was  sufficient.®^ 

It  is  quite  clear  that  in  no  case  can  the  clerk  make  the  protest,  how- 
ever it  may  be  determined  as  to  the  presentment  and  demand.®^ 

§  687.  Custom  for  notary's  clerk  to  make  presentment  must  be 
shown  to  relate  to  foreign  bills. — There  may  be  a  custom  for  nota- 
ries' clerks  to  make  presentment  as  foundation  of  protest  of  inland 
bills  and  of  promissory  notes,  and  yet  it  may  not  extend  to  include 
foreign  bills.  And  when  a  protest  of  a  foreign  bill  has  been  based  on 
presentment  by  a  notary's  clerk,  the  plaintiff  must  not  only  show  a 
general  custom  or  practice  for  the  clerk  to  make  presentment  of  bills 
and  notes,  but  must  show  distinctly  that  the  custom  extended  to 
foreign  bills.  As  said  in  a  Massachusetts  case,  by  Ames,  J. :  ®* 
"The  plaintiff  wholly  failed  to  prove  the  existence  of  any  well-settled 
local  usage  in  New  York  that  would  authorize  a  notary  in  the  case 
of  a  foreign  bill  to  make  a  presentment  and  demand  of  payment  b}' 

59.  Carter  v.  Union  Bank,  7  Humphr.  548  (1847). 

60.  Commercial  Bank  v.  Vamum,  49  N.  Y.  275  (1872),  overruling  3  Lans.  86 
(1870);  Commercial  Bank  v.  Barksdale,  36  Mo.  563;  Willenberger  v.  Spalding, 
33  Mo.  421;  Nelson  v.  Fotteral,  7  Leigh,  179.    See  ante,  §  582,  note. 

61.  In  Cribbs  v.  Adams,  13  Gray,  600,  Bigelow,  J.,  said:  "By  the  common  law, 
as  we  imderstand  it,  and  according  to  the  uniform  practice  in  the  Commonwealth, 
the  duties  of  a  notary  must  be  performed  personally,  and  not  by  a  clerk  or  deputy. 
He  is  a  sworn  officer,  clothed  with  important  public  duties,  which  in  their  nature 
imply  a  public  confidence  and  trust.  Doubtless,  by  well-settled  usage  in  some 
places,  and  in  others  by  express  provision  of  statute,  notaries  are  authorized  to 
employ  clerks  or  deputies  to  perform  official  acts  coming  within  the  sphere  of  their 
duty,  and  are  employed  to  certify  and  authenticate  their  acts  by  their  own  no- 
tarial certificates  in  like  manner  as  if  such  acts  had  been  performed  by  themselves 
personally.  But  such  usage  or  provision  of  law  is  a  fact  to  be  proved  by  evidence. 
At  the  trial  of  this  case  the  plaintiff  offered  no  evidence  that  a  notary  in  Louisiana 
(where  the  bill  was  protested)  was  authorized,  either  by  usage  or  statute,  to  em- 
ploy a  deputy,  or  to  authenticate  his  acts  by  own  certificate." 

62.  Nelson  v.  Fotteral,  7  Leigh,  180. 

63.  Sacrider  v.  Brown,  3  McLean,  481  (1844). 

64.  Ocean  Nat.  Bank  v.  Williams,  102  Mass.  143. 


670  PRESENTMENT   FOR   PAYMENT  §  588 

his  clerk  or  deputy,  and  to  certify  and  authenticate  notarial  acts  so 
performed  in  the  same  manner  as  if  he  had  performed  them  himself. 
The  witnesses  who  testify  that  it  is  customary  in  the  city  of  New  York 
for  the  clerks  of  notaries  to  present  and  demand  payment  of  drafts, 
and  for  notaries  to  protest  upon  such  presentment  and  demand, 
wholly  fail  to  give  any  information  upon  the  point  whether  that 
custom  applies  to  and  includes  the  case  of  foreign  bills.  One  of  them 
says  that  his  attention  had  never  been  called  to  that  distinction,  and 
the  other  makes  no  allusion  to  it.  It  hardly  need  be  said  that  a  local 
usage,  in  derogation  of  the  general  rules  of  law,  requires  clearer  and 
better  evidence  of  its  existence  antl  validity." 

In  Pennsylvania,  where  a  promissory  note  was  dishonored,  and 
the  plaintiff  offered  in  evidence  the  certificate  of  a  notary,  by  which 
it  was  certified  that  the  notary  had  given  the  indorser  notice  of  non- 
payment; but  the  notary,  on  the  trial,  testified  that  the  certificate 
was  in  the  handwriting  of  his  son,  then  absent  in  the  West  Indies; 
that  his  son  had  attended  to  the  presentment  and  notice;  and  he 
himself  had  no  personal  knowledge  on  the  subject.  This  testimony 
was  not  objected  to,  and  it  was  held  that,  under  the  peculiar  circum- 
stances of  the  case,  and  the  Pennsylvania  statute  making  notarial 
certificates  competent  evidence,  that  the  certificate  was  admissible 
as  matter  of  evidence,  to  be  weighed  with  the  rest  of  the  testimony 
by  the  jury,^^ 

SECTION  II 

TO  WHOM  PRESENTMENT  FOR  PAYMENT  MUST  BE  MADE 

§  588.  Presentment  for  payment  must  be  made  to  the  drawee 
or  acceptor  of  the  bill,  or  maker  of  the  note,  or  to  an  authorized 
agent.  A  personal  demand  is  not  necessary,  and  it  is  sufficient 
to  make  the  demand  at  his  usual  residence  or  place  of  business  of  his 
wife  or  other  agent;  for  it  is  the  duty  of  an  acceptor  or  promisor,  if  he 
is  not  present  himself,  to  leave  provision  for  the  payment  of  his  bills 
or  notes.^^ 

65.  Stewart  v.  Allison,  6  Serg.  &  R.  324. 

66.  Matthews  v.  Haydon,  2  Esp.  509;  Brown  v.  McDermott,  5  Esp.  265;  Jack- 
son V.  Mclnnis,  33  Oreg.  529,  54  Pac.  884;  55  Pac.  535,  72  Am.  St.  Rep.  755,  cit- 
ing text.  Where  a  note  is  payable  at  a  certain  bank,  and  the  bank  is  in  the  hands 
of  a  receiver,  it  is  not  necessary  to  present  the  note  to  the  receiver  personally, 
aa  the  receiver  has  no  authority  to  appropriate  funds  that  have  come  into  his 


§§  589,  590  TO   WHOM   MADE  671 

There  is  no  doubt  that  a  clerk  found  at  the  counting-room  of 
the  acceptor  or  promisor  is  a  competent  party  for  presentment  for 
payment  to  be  made  to,  without  showing  any  special  authority  given 
him.^^  But  where  the  protest  stated  the  mere  fact  of  presentment 
"at  the  office  of  the  maker,"  it  will  be  considered  insufficient,  as  not 
showing  that  the  paper  was  presented  to  party  at  the  office  authorized 
to  pay  or  refuse  payment.^^  A  demand  upon  the  servant  of  the 
owner  "who  used  to  pay  money  for  him,"  was  held  sufl&cient  in  Eng- 
land.«» 

§  589.  Presentment  to  drawee  in  person. — It  has  been  indicated 
by  Chitty,  in  his  work  on  Bills,^"  that  while  in  making  presentment 
for  acceptance  the  holder  should,  if  possible,  see  the  drawee  person- 
ally, in  the  presentment  for  payment  it  is  not  necessary,  it  being 
sufficient  if  it  be  made  at  the  house  of  the  acceptor.  But  we  concur 
with  Story ,^^  that  there  is  no  just  foundation  for  the  distinction.  If, 
indeed,  the  drawee  does  not  happen  to  be  present  when  the  call  is 
made  at  his  house  or  counting-room  to  present  the  bill  for  acceptance, 
the  holder,  it  seems,  is  not  bound  to  consider  it  as  a  refusal  to  accept, 
but  may  wait  a  reasonable  time  for  the  return  of  the  drawee  who  has 
as  yet  incurred  no  obligation  respecting  the  bill,  and  may,  indeed,  be 
ignorant  of  its  existence.  The  holder  may  even  wait  until  the  next 
day  to  renew  his  call  to  present  for  acceptance.^^  But  no  such  delay 
is  allowable  in  making  presentment  to  the  acceptor  for  payment. 

It  is  the  duty  of  the  acceptor,  who  is  the  principal  debtor,  to  pro- 
vide for  the  payment  of  the  bill;  and  if  he  is  not  in  himself,  and  there 
is  no  one  present  to  answer  for  him,  when  the  holder  calls  at  his  house 
or  counting-room,  the  bill  should  be  treated  as  dishonored,  and 
protested  for  nonpayment. 

§  590.  Presentment  to  person  on  premises. — If  presentment  be 

possession  as  receiver  to  the  payment  of  the  note.    Schlesinger  v.  Schultz,  96  N.  Y. 
S.  383,  llOApp.  Div.  356. 

67.  Stainback  v.  Bank  of  Virginia,  11  Gratt.  2G0;  Nelson  v.  Fotteral,  7  Leigh, 
180;  Draper  v.  demons,  4  Mo.  .52;  Stewart  v.  Etien,  2  Cai.  121;  Reynolds  v. 
Chettle,  2  Campb.  .596;  Bradley  v.  Northern  Bank,  60  Ala.  259. 

68.  Nave  v.  Richardson,  36  Mo.  130. 

69.  Bank  of  England  v.  Newman,  12  Mod.  241,  1  Ld.  Raym.  442. 

70.  Chitty  on  Bills  (13th  Am.  ed.)  [*366],  412. 

71.  Story  on  Bills  (Bennett's  ed.),  §  350. 

72.  Ibid.;  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Mitchell  v.  De  Grand,  1 
Mason,  176. 


672  PRESENTMENT   FOR   PAYMENT  §§  590a,  591 

made  at  the  place  specified  in  the  instrument,  or  in  the  case  of  one 
payable  generally  at  the  place  of  business  of  the  acceptor  or  maker 
during  business  hours,  or  at  his  domicile  during  a  reasonable  hour 
of  the  day,  it  is  sufficient  if  it  be  made  to  any  person  to  be  found 
upon  the  premises,  especially  if  the  maker  be  absent  or  inaccessible.^' 
Where  presentment  was  made  to  the  wife  of  the  maker,  she  informing 
the  holder  that  her  husband  was  out  of  town,  it  was  held  sufficient/* 
And  so  it  was  deemed  sufficient  to  charge  the  indorser  where  the 
holder  presented  the  bill  to  an  inmate  of  the  maker's  house,  who  was 
coming  out,  and  who  stated  that  the  acceptor  had  removed — the 
holder  leaving  a  card  containing  notice  for  the  acceptor  of  the  matur- 
ity of  the  billJ^  Where  there  is  no  one  to  answer,  presentment  at  the 
maker's  dwelUng  is  sufficient/^ 

§  590a.  General  principles  as  to  presentment  and  demand. — The 
general  rule  as  to  the  presentment  and  demand  of  commercial  paper 
may  be  stated  as  follows:  The  presentment  and  demand  must  be 
made  within  reasonable  hours  on  the  day  of  maturity.  For  the  pur- 
pose of  fixing  the  liabiUty  of  indorsers,  the  note  or  bill  is  payable  on 
demand  at  any  time  during  those  hours.  What  are  reasonable  hours 
will  depend  upon  the  question  whether  or  not  the  note  or  bill  is  pay- 
able at  a  place  or  bank,  where,  by  the  established  usage  of  trade,- 
business  transactions  are  limited  to  certain  stated  hours.  If  there 
are  such  stated  hours  where  the  note  or  bill  is  payable,  the  present- 
ment and  demand  must  be  made  within  those  hours;  but  if  there  are 
no  stated  hours,  and  no  place  of  payment  is  designated  in  the  note  or 
hill,  the  presentment  and  demand  may  be  made  either  at  the  place  of 
business  or  residence  of  the  maker  or  acceptor;  if  at  his  place  of  busi- 
ness, it  must  be  within  the  usual  business  hours  of  the  city  or  town;  if 
at  his  residence,  then  within  those  hours  when  the  maker  or  acceptor 
may  be  presumed  to  be  in  a  condition  to  attend  to  business.^^ 

§  591.  When  acceptor  or  maker  is  dead. — If  the  acceptor  or 

maker  be  dead  at  the  time  of  the  maturity  of  the  bill  or  note,  it  should 

73.  Cromwell  v.  Hynson,  2  Campb.  596;  Phillips  v.  Astberg,  2  Taunt.  206; 
Draper  v.  demons,  4  Mo.  52. 

74.  Moodie  v.  Morrall,  1  Const.  Rep.  367. 

75.  Buxton  v.  Jones,  1  M.  &  G.  83,  1  Scott's  N.  R.  19;  Story  on  Bills  (Bennett's 
ed.),  §  350,  note  1. 

76.  Stivers  v.  Prentice,  3  B.  Mon.  461. 

77.  McFarland  v.  Pico,  8  Cal.  631 ;  Haber  v.  Brown,  101  Cal.  445,  35  Pac.  1035. 


§  592  TO   WHOM   MADE  673 

be  presented  to  his  personal  representative,  if  one  be  appointed,  and 
his  place  of  r-esidence  can,  by  reasonable  inquiries,  be  ascertained/^ 
If  there  be  no  personal  representative,  then  presentment  should  be 
made,  and  payment  demanded,  at  the  dwelling  house  of  the  deceased, 
if  the  instrument  were  payable  generally."^  But  if  it  was  drawTi 
payable  at  a  particular  place,  then  it  will  be  sufficient  that  it  was 
l)resented  at  such  place,^" 

Under  Negotiable  Instrument  statute. — Under  various  provisions 
of  the  statute,^^  when  no  place  of  payment  is  specified,  there  must  be 
due  diligence  in  attempting  to  present  the  note  to  the  administrator 
of  the  deceased  maker .^^ 

§  592.  In  partnership  cases. — Presentment  of  a  bill  drawn  upon 
or  accepted  by,  and  of  a  note  executed  by,  a  copartnership  firm,  is 
sufficient,  if  made  to  any  one  of  the  members  of  such  firm.^^  And 
if  the  signatures  of  the  parties  entitled  to  presentment  be  apparently 
that  of  a  partnership,  as,  for  instance,  if  signed  "Waller  &  Burr," 
presentment  to  either  is  sufficient.^^ 

Even  after  the  dissolution  of  the  firm,  presentment  to  any  one 
of  the  partners  is  sufficient,  for  as  to  the  bill  or  note  upon  which  they 
are  liable,  the  liability  continues  until  duly  satisfied  or  discharged.^^ 
As  said  in  Maryland,  where  presentment  of  a  partnership  note  was 
made  to  one  of  the  firm  after  dissolution,  by  Archer,  C.  J.:^^  "It 
might  be  sufficient  to  say  that  this  dissolution  had,  by  no  evidence  in 

78.  Gower  v.  Moore,  25  Me.  IG;  Price  v.  Young,  1  Nott  &  McC.  438;  Story  on 
Notes,  §§241-253;  Magruder  v.  Union  Bank,  3  Pet.  87;  Juniata  Bank  v.  Hale, 
16  Serg.  &  R.  167;  Piper  v.  Hay  ward,  127  N.  Y.  S.  240. 

79.  Ibid.;  Story  on  Notes,  §  253;  Story  on  Bills,  §  346.    See  chapter  XVII,  §  458. 

80.  Boyd's  Admr.  v.  City  Sav.  Bank,  15  Gratt.  501;  Price  v.  Young,  1  Nott 
&  McC.  438;  Philpot  v.  BjTant,  1  Moore  &  P.  754,  3  Car.  &  P.  244,  4  Bing.  717; 
Holtz  V.  Boppe,  37  N.  Y.  634;  Thompson  on  Bills  (Wilson's  ed.),  285.  See  ante, 
§455. 

81.  Appendix,  sees.  76,  83,  89. 

82.  Reeds  v.  Spear,  94  N.  Y.  S.  1007,  107  App.  Div.  144.  See  also,  post,  sender 
§  790,  as  to  the  indorser  being  entitled  to  notice  of  dishonor  under  such  circum- 
stances. 

83.  Branch  of  State  Bank  v.  McLeran,  26  Iowa,  306;  Shed  v.  Brett,  1  Pick. 
401;  Thompson  on  Bills  (Wilson's  ed.),  281. 

84.  Erwin  v.  Downs,  15  N.  Y.  375. 

85.  Crowley  v.  Barry,  4  Gill,  194;  Fourth  Nat.  Bank  v.  Heuschuk,  52  Mo. 
207;  Hubbard  v.  Matthews,  54  N.  Y.  50;  Brown  v.  Turner,  15  Ala.  (N.  S.)  632; 
Coster  V.  Thomason,  19  Ala.  (N.  S.)  717. 

86.  Crowley  v.  Barry,  4  Gill,  194. 

43 


(574  PRESENTMENT    FOR    PAYMENT  §§  593,  594 

the  case,  been  brought  home  to  the  knowledge  of  the  holder  of  the 
note.  But  we  do  not  desire  to  determine  the  question  on  this  ground, 
because  we  are  clearly  of  opinion  that  a  demand  on  one  of  the  partners 
was  sufficient,  as  each  partner  represents  the  partnership.  Before  a 
dissolution,  it  clearly  would  not  be  necessary  to  make  a  demand  on 
both,  nor  could  it  be  necessary  after  a  dissolution,  for  the  partnership 
as  to  all  antecedent  transactions  continues  until  they  are  closed." 

And  it  has  been  held  that  demand  on  the  agent  of  one  partner 
after  dissolution,  in  the  absence  of  the  other  partner,  was  sufficient.*^ 

§  593.  Presentment  when  one  member  of  firm  is  dead. — In  the 

event  of  the  death  of  one  of  the  members  of  the  firm  to  which  pre- 
sentment should  be  made  before  the  maturity  of  the  bill  or  note, 
the  presentment  should  be  made  to  the  survivors,  and  not  to  the 
personal  representative  of  the  deceased,  because  the  liability  devolves 
upon  the  surviving  partner.^^ 

§  594.  Where  there  are  several  promisors  not  partners. — When 
the  note  is  executed  by  several  joint  promisors  who  are  not  partners, 
but  liable  only  as  joint  and  several  promisors,  it  has  been  held,  and, 
as  we  think,  correctly,  that  presentment  should  be  made  to  each,  in 
order  to  fix  the  liability  of  an  indorser.^''  But  a  difficulty  presents 
itself  which  might  seem  to  characterize  this  doctrine  as  harsh  and 
unreasonable,  and  which  has  caused  it  to  be  held  that  quoad  hoc  the 
promisors  are  to  be  regarded  as  promisors,  and  presentment  to  one 
equivalent  to  presentment  to  all.  "Now,  suppose,"  it  has  been  said, 
in  Ohio,  by  Hitchcock,  J,,^"  "the  makers  resided  in  different  States, 
or  in  different  and  distinct  parts  of  the  same  State,  how  could  demand 

87.  Brown  v.  Turner,  15  Ala.  832. 

88.  Cayuga  County  Bank  v.  Hunt,  2  Hill  (N.  Y.),  635;  Story  on  Bills,  §§  346- 
362;  1  Parsons  on  Notes  and  Bills,  362;  Barlow  v.  Coggan,  1  Wash.  Ter.  257. 

89.  Blake  v.  McMillen,  22  Iowa,  258,  33  Iowa,  150  (1871);  Union  Bank  v. 
Willis,  8  Mete.  (Mass.)  504;  Arnold  v.  Dresser,  8  Allen,  435.  In  Britt  v.  Law- 
son,  15  Hun,  123,  it  was  held  that  the  rule  applies  where  one  maker  is  principal 
debtor,  and  the  others  are  sureties;  unless  their  relations  appeared  on  the  face 
of  the  note,  or  the  indorser  is  proved  to  have  known  them.  See  also  ante,  §  455, 
and  Gates  v.  Beecker,  60  N.  Y.  523;  Benedict  v.  Schmieg,  13  Wash.  477,  43  Pac. 
374,  52  Am.  St.  Rep.  61;  Closz  &  Mickelson  v.  Miracle,  103  Iowa,  198,  72  N.  W. 
502. 

90.  Harris  v.  Clark,  10  Ohio,  5;  McClelland  v.  Bishop,  42  Ohio  St.  120.  In 
this  case  the  note  was  the  joint  obligation  of  husband  and  wife,  and  while  void 
as  to  the  latter,  it  was  held  that  presentment  to  her,  the  husband  having  ab- 
sconded, was  sufficient  to  bind  the  indorser. 


§§  595,  596  TO   WHOM   MADE  675 

be  made  of  all  in  order  to  charge  an  indorser?  It  must  be  made  on  the 
day  the  note  falls  due,  or,  where  days  of  grace  are  allowed,  on  the 
last  day  of  grace.  Will  it  be  said  that  the  demand  can  be  made  at 
different  and  distant  places  on  the  same  day  through  the  agency  of 
letters  of  attorney?  I  believe  such  a  practice  has  not  been  heard  of, 
at  least  we  have  found  nothing  like  it  in  the  books."  And  the  court 
concluded  that  they  were  to  be  regarded  as  partners. 

Under  Negotiable  Instrument  statute. — Under  the  statute,  an  in- 
formal demand  on  one  of  the  two  joint  debtors  is  not  such  a  demand 
as  will  charge  an  indorser.^  ^ 

§  595.  Distinction  between  joint  promisors  and  partners. — These 
views  are  more  plausible  than  satisfactory,  and  the  argument  ab 
inconvenienti  is  well  presented.  But  joint  promisors  are  no  more 
partners  than  joint  indorsers.  To  construe  them  to  be  partners 
is  to  make  a  new  contract  between  them,  and  to  vary  the  condition 
precedent  of  the  indorser's  liability.  And  although  it  might  be 
more  convenient  if  they  were  partners,  the  inconvenience  in  enforcing 
their  contract  does  not  change  it. 

If  they  were  in  different  places  at  the  maturity  of  the  note,  and 
it  could  be  only  presented  to  one,  due  diligence  would  only  require 
its  presentment  to  the  others  in  such  time  as  they  could  be  reached; 
and  the  impossibility  of  presenting  to  all  on  the  day  of  maturity  would 
excuse  nonpresentment  to  those  at  other  places.  Such,  at  least,  is 
our  conception  of  the  true  solution  of  the  question,  and  it  is  borne 
out  by  high  authority,  and  certainly  by  much  more  satisfactory 
reasoning  than  that  above  quoted.^^ 

§  596.  Where  the  note  is  several  as  well  as  joint,  the  indorser 
might  be  held  as  indorser  of  the  maker  to  whom  the  note  was  duly 
presented,  as  the  holder  would  have  the  right  to  treat  the  note  as 
the  several  note  of  each  maker.  But  he  would  have  lost  recourse 
against  the  indorser  as  upon  the  joint  note  of  the  comakers,  or  the 
several  note  of  the  maker  as  to  whom  no  presentment  was  made  or 
excuse  given.^^ 

91.  Appendix,  sec.  78.  State  of  New  York  Nat.  Bank  v.  Kennedy,  130  N.  Y.  S. 
412,  145  App.  Div.  669. 

92.  See  1  Parsons  on  Notes  and  Bills,  363,  note  w;  Story  on  Notes,  §  239,  and 
especially  §  255,  and  note  2.  There  seems  to  be  no  English  precedent  on  the  ques- 
tion. T -lining  v.  Wise,  64  Cal.  422,  citing  the  text.  See  cases  cited  in  note  82  to 
§594. 

93.  Story  on  Promissory  Notes,  §  255,  note  2. 


676  PRESENTMENT   FOR   PAYMENT  §§  597,  598 

In  the  event  of  the  death  of  a  joint  maker,  presentment  should 
be  made  to  the  survivor,  upon  whom  the  debt  devolves.  If  the  note 
were  several  also,  it  might  be  different,  as  the  holder  is  at  liberty  to 
elect  "upon  whom  he  will  make  demand."  ^* 


SECTION   III 

TIME   OF   PRESENTMENT   FOR   PAYMENT 

§  597.  Upon  what  day  presentment  should  be  made. — In  respect 
to  the  maker  of  a  note  and  the  acceptor  of  a  bill,  it  is  not  important 
upon  what  day  the  presentment  is  made,  provided  it  be  made  at 
some  time  before  the  Statute  of  Limitations  bars  action  against 
them.^^  And  provided,  also,  that  the  note  is  not  made,  nor  the  bill 
drawn  or  accepted,  payable  at  a  certain  place.  In  such  cases  only 
is  it  desirable  that,  as  respects  the  maker  or  acceptor,  the  bill  or  note 
should  be  presented  on  the  exact  day  of  its  maturity;  and  even  in 
such  cases  it  makes  no  difference  that  the  presentment  was  not 
punctually  made  on  that  very  day,  unless  the  maker  or  acceptor 
should  suffer  some  loss  or  damage  by  the  delay. 

§  598.  In  respect,  however,  to  the  drawer  of  a  bill  and  the  indorser 
of  a  bill  or  note,  it  is  essential  to  the  fixing  of  their  Uability  that  the 
presentment  should  be  made  on  the  day  of  maturity,  provided  it  is 
within  the  power  of  the  holder  to  make  ['J^    If  the  presentment  bo 

94.  Story  on  Promissory  Notes,  §  256. 

95.  Chitty  on  Bills  (13th  Am.  ed.)  [*354],  396;  Milmo  Nat.  Bank  v.  Cobbs, 
53  Tex.  Civ.  App.  1,  115  S.  W.  345;  Netzger  v.  Waddell,  1  N.  Mex.  Ter.  409.  In 
Greeley  v.  Whitehead,  35  Fla.  523,  17  So.  643,  48  Am.  St.  Rep.  258,  it  was  held 
that  the  maker  of  such  note  is  still  liable  to  pay  though  the  note  be  not  presented 
at  time  and  place  designated,  and  it  devolves  upon  him  to  show  as  matter  of 
defense  a  readiness  at  time  and  place  to  meet  the  note,  and  such  defense  must  be 
set  up  by  plea,  and  can  only  be  in  bar  of  damages  and  cost  of  suit. 

96.  1  Parsons  on  Notes  and  Bills,  373;  Pendleton  v.  Knickerbocker  Life  Ins. 
Co.,  7  Fed.  170;  First  Nat.  Bank  of  Omaha  v.  Whitmore,  177  Fed.  397;  Hoyland 
v.  National  Bank,  137  Ky.  682,  126  S.  W.  356;  Nevius  v.  Moore,  221  Mo.  330,  120 
S.  W.  43;  McBride  v.  Illinois  Nat.  Bank,  121  N.  Y.  S.  1041,  138  App.  Div.  339; 
Galbraith  v.  Shepard,  43  Wash.  698,  86  Pac.  1113.  Where  a  draft  was  drawn 
payable  sixty  days  after  sight  on  a  consignment  with  the  bill  of  lading  attached, 
with  a  stipulation  in  the  draft  "to  be  surrendered  upon  payment  of  this  bill  before 
maturity  imder  discount  on  or  before  arrival  of  vessel,"  the  fact  that  the  bill 
was  drawn  against  the  proceeds  of  the  consignment  and  had  the  bill  of  lading 
attached  does  not  change  the  date  of  maturity  fixed  by  the  drafts,  and  it  was  not 


§§  599,  600  TIME  OF  677 

made  before  the  bill  or  note  is  due,  it  is  entirely  premature  and  nuga- 
tory, and,  so  far  as  it  affects  the  drawer  or  indorser,  a  perfect  nullity^ 
And  if  it  be  made  after  the  day  of  maturity,  it  can,  as  matter  of  course, 
be  of  no  effect,  as  the  drawer  or  indorser  will  already  have  been  dis- 
charged, unless  there  were  sufficient  legal  excuse  for  the  delay .^* 
The  evidence  must  be  distinct  as  to  the  promptness  of  the  present- 
ment or  the  excuse  for  delay,  as  the  burden  of  proof  is  on  the  plaintiff.^ 
Under  Negotiable  Instrument  statute. — The  statute  declares  the 
common  law  rule  as  to  the  time  of  presentment  for  payment.^ 

§  599.  If  a  note  be  payable  in  instalments,  the  presentment 
should  be  made  on  each  consecutive  instalment  as  it  falls  due,  as 
if  it  were  (as  in  fact  it  is  legally  considered)  a  separate  note  in  itself.^ 
It  would  be  different,  probably,  if  the  condition  were  annexed  to  the 
note  that  upon  failure  to  meet  any  instalment,  the  whole  should  fall 
due,  in  which  case  notice  should  be  communicated  to  the  drawer  or 
indorser  that  the  whole  sum  was  due,  and  the  holder  looked  to  him 
for  payment.^ 

§  600.  At  what  hour  of  the  day  presentment  should  be  made.— 

When  the  bill  or  note  is  made  payable  at  a  bank,  it  should  be  presented 
during  banking  hours,  the  parties  executing  their  paper  payable  at  a 
particular  place,  being  bound  by  its  usage;  and  in  such  case  a  pre- 
sentment after  banking  hours  is  insufficient/    But  it  is  settled  that 

the  duty  of  the  holder  of  the  draft  to  present  it  for  payment  on  the  arrival  of  the 
vessel.  Hammond,  Snyder  &  Co.  v.  American  E.xpress  Co.,  107  Md.  295,  68 
Atl.  496  (190S).  An  indorser  of  a  nonnegotiable  promissory  note  is  not  entitled 
to  have  demand  and  protest  made,  or  notice  of  nonpayment.  Herrick  v.  Edwards, 
lOG  Mo.  App.  633,  81  S.  W.  463;  Tilden  v.  Goldy  Mach.  Co.,  9  Cal.  App.  9,  98 
Pac.  39. 

97.  Griffin  v.  Goff,  12  Johns.  423;  Jackson  v.  Newi;on,  8  Watts,  401;  Farm- 
ers' Bank  v.  Duvall,  7  Gill  &  J.  78;  Mechanics'  Bank  v.  Merchants'  Bank,  6 
Mete.  (Mass.)  13;  Closz  &  Michclson  v.  Miracle,  103  Iowa,  198,  72  N.  W.  502; 
Demelman  v.  Prazier,  193  Mass.  588,  79  N.  E.  812. 

98.  Windham  Bank  v.  Norton,  22  Conn.  213;  Rauer  v.  Broder,  107  Cal.  282, 
40  Pac.  430. 

99.  Robinson  v.  Blen,  20  Me.  109;  Pendleton  v.  Knickerbocker  Life  Ins.  Co., 
7  Fed.  170. 

1.  Appendix,  sec.  71.    Hampton  v.  MiUer,  78  Conn.  267,  61  Atl.  952. 

2.  Oridge  v.  Sherborne,  11  M.  &  W.  374. 

3.  See  1  Parsons  on  Notes  and  Bills,  374;  Creteau  v.  Glass  Co.,  40  App.  Di\ . 
215,  57  N.  Y.  Supp.  1103. 

4.  1  Parsons  on  Notes  and  Bills,  419;  Parker  v.  Gordon,  7  East,  385;  Elford  v. 
Teed,  1  Maule  &  S.  28;  Thompson  on  Bills  (Wilson's  ed.),  302;  Byles  on  Bills 


578  PRESENTMENT   FOR    PAYMENT  §  601 

when  a  bill  or  note  is  payable  at  a  bank,  a  demand  made  at  the  bank 
after  banking  hours,  the  officers  being  there,  and  a  refusal,  the  cashier 
or  teller  stating  that  there  were  no  funds,  is  sufficient.^ 

And  likewise,  if  any  person  is  left  at  the  bank  to  give  an  answer,* 
:ind  it  matters  not  that  the  notary  making  the  presentment  enters 
by  the  back  doorJ  It  seems  that  if  the  maker  of  a  note  payable  at 
a  bank  goes,  and  remains  there  during  business  hours,  prepared  to 
pay,  or  places  funds  in  bank  and  holds  them  there  until  the  close  of 
business,  and  then  withdraws  them,  in  consequence  of  the  non- 
presentment  of  the  note,  the  indorscr  would  be  discharged,  not- 
withstanding presentment  to  an  officer  found  at  the  bank  after 
business  hours.^ 

In  an  action  against  the  acceptor  on  a  bill  payable  in  London,  and 
accepted  payable  at  D.  &  Co.'s,  a  presentment  at  D.  &  Co.'s  between 
7  and  8  o'clock  in  the  evening  was  proved,  and  that  a  boy  returned,  as 
answer,  "no  orders."  Lord  EUenborough  said  that  if  the  banker 
appointed  a  person  to  give  an  answer,  a  presentment  at  any  time 
while  that  person  was  in  attendance,  was  sufficient.^ 

Where,  by  usage  of  the  bank  at  which  the  instrument  is  payable, 
the  payor  is  allowed  until  the  expiration  of  banking  hours  for  pay- 
ment, a  demand  made  before  that  time,  unless  the  instrument  con- 
tinues in  bank  until  banking  hours  have  expired,  is  sufficient.^" 

§  601.  If  the  bill  or  note  be  payable  generally  "  at  bank  "—no 
particular  bank  being  named— the  hour  will  be  determined  by  the 
usual  banking  hours  at  the  several  banks  of  the  place  where  it  is 

(Sharswood's  ed.),  340;  Story  on  Bills,  §§  236,  349;  Story  on  Notes,  §  235;  Citizens' 
Nat.  Bank,  etc.  v.  Third  Nat.  Bank,  etc.,  19  Ind.  App.  69,  49  N.  E.  171,  citing 
text;  Clough  v.  Holden,  115  Mo.  336,  21  S.  W.  1071,  37  Am.  St.  Rep.  393,  citing 
text. 

6.  Salt  Springs  Nat.  Bank  v.  Burton,  58  N.  Y.  432;  Bank  of  Syracuse  v.  Hollis- 
ter,  17  N.  Y.  46;  Bank  of  Utica  v.  Smith,  18  Johns.  230;  First  Nat.  Bank  v. 
Owen,  23  Iowa,  185;  Goodloe  v.  Godley,  13  Smedes  &  M.  227;  Cohen  v.  Hunt, 
2  Smedes  &  M.  227;  Flint  v.  Rogers,  15  Me.  67;  Reed  v.  Wilson,  41  N.  J.  L. 
(13  Vroom)  20;  Niblack  v.  Park  Nat.  Bank,  169  111.  517,  48  N.  E.  438,  61  Am.  St. 
Hep.  203. 

6.  Gamett  v.  Woodcock,  1  Stark.  475,  6  Maule  &  S.  44;  Salt  Springs  Nat. 
Bank  v.  Burton,  58  N.  Y.  432. 

7.  Commercial  Bank  v.  Hamer,  7  How.  (Miss.)  448. 

8.  Salt  Springs  Nat.  Bank  v.  Burton,  58  N.  Y.  432. 

9.  Garnett  v.  Woodcock,  supra. 

10.  Planters'  Bank  v.  Markham,  5  How.  (Mis8.)  397;  Harrison  v.  Crowder, 
6  Smedes  &  M.  464. 


§  602  TIME   OF  679 

payable. ^^  It  is  for  the  jury  to  say  what  are  business  hours,  and  in 
fixing  them  otherwise  than  in  respect  to  the  banks,  they  are  to  have 
reference  to  the  general  hours  of  business  at  the  place,  rather  than  to 
the  custom  of  any  particular  trade. ^-  The  courts  of  England  take 
judicial  notice  of  the  banking  hours  of  London, ^^  but  not  of  outside 
cities  or  places. ^^  Morse  says:  "American  courts  are  wont  to  take 
judicial  notice  of  the  banking  hours  of  any  large  city  lying  within  the 
area  of  the  jurisdiction  of  the  court;  though  there  is  no  authority  for 
supposing  that  the  banking  hours  of  the  city  of  New  York  would  be 
considered  as  judicially  known  to  the  courts  of  Boston  or  Chicago,  or 
vice  versa.  Unquestionably  proof  would  have  to  be  introduced."  ^^ 
Under  Negotiable  Instrument  statute. — Under  the  rule  that  what 
constitutes  business  hours  of  a  bank,  within  the  meaning  of  the 
statute,  has  reference  to  the  general  custom  at  the  place  of  the  par- 
ticular transaction  in  question,  it  has  been  held  that  where  the 
evidence  shows  that  a  draft,  after  taking  its  course  through  the 
clearing  house,  was  presented  to  the  drawee  for  payment  on  the 
afternoon  of  the  same  day  between  the  hours  of  three  and  six  o'clock, 
and  that  such  was  the  customary  way  of  doing  such  business  where 
the  drawee  was  located,  the  statute  was  satisfied.^^ 

§  602.  When  the  instrument  is  not  payable  at  a  designated  place, 
presentment  may  be  made  at  any  reasonable  hour  during  the  day — 
during  what  are  termed  "business  hours,"  which,  it  is  held,  range 
through  the  whole  day  to  the  hours  of  rest  in  the  evening.^'^  But 
the  mere  fact  that  the  payor  had  retired  to  rest  would  not  vitiate 
the  presentment,  unless  it  was  at  an  hour  when,  according  to  the 
habits  and  usages  of  the  community,  it  might  be  expected  that  he 

11.  United  States  Bank  v.  Carneal,  2  Pet.  543;  Church  v.  Clark,  21  Pick.  310. 

12.  Thompson  on  Bills,  302. 

13.  Parker  v.  Gordon,  7  East,  385;  Jameson  v.  Swinton,  2  Taunt.  225. 

14.  Hare  v.  Henty,  10  C.  B.  (N.  S.)  65. 

15.  Morse  on  Banking,  371;  Clough  v.  Holden,  115  Mo.  336,  21  S.  W.  1071, 
37  Am.  St.  Rep.  393,  citing  text. 

16.  Appendix,  sees.  72,  75.  Columbian  Banking  Co.  v.  Bowen,  134  Wis.  218, 
114  N.  W.  451,  the  court  holding  further  that  in  case  of  a  transaction  occurring  in 
a  foreign  jurisdiction,  as  in  the  instance  in  question,  the  court  cannot  take  judicial 
notice  of  what  constitutes  reasonable  hours  on  a  business  day,  but  the  matter  is 
open  to  proof. 

17.  Nelson  v.  Fotterall,  7  Leigh,  194;  Cayuga  County  Bank  v.  Hunt,  2  Hill 
(N.  Y.),  635;  Salt  Springs  Nat.  Bank  v.  Burton,  58  N.  Y.  432;  Skelton  v.  Dansten, 
92  111.  49;  Vaughan  v.  Potter,  131  111.  App.  334. 


6g0  PRESENTMENT   FOR    PAYMENT  §  603 

had  retired.^*    If  the  presentment  be  during  the  hours  of  rest  it  will 
be  entirely  unavailing.  ^^ 

§  603.  Business  hours  in  reference  to  business  places,  and  places 
of  residence.— When  presentment  is  at  the  place  of  business  it 
must  be  during  the  hours  when  such  places  are  customarily  open,^® 
or,  at  least,  while  some  one  is  there  competent  to  give  an  answer. 
It  is  only  when  presentment  is  at  the  residence  that  the  time  is  ex- 
tended to  the  hours  of  rest.'^  But  presentment  at  any  hour  cannot 
be  considered  unreasonable  if  any  person  competent  to  answer  be 
found  there  who  gives  an  answer  refusing  to  pay,^^  and  an  averment 
of  presentment  and  demand  at  the  maker's  office  has  been  held  to 
import  that  it  was  during  the  usual  hours  of  business.^^ 

Whore,  however,  a  bill  was  presented  for  payment  at  a  bank  in 
the  morning,  and  refused  for  want  of  effects,  and  afterward  presented 
at  6  o'clock  in  the  evening  (effects  being  lodged  in  the  meantime), 
and  again  refused,  business  hours  having  closed  at  5  o'clock,  it  was 
decided  that  they  were  not  liable  in  damages  to  the  drawer,  their 
customer,  for  the  refusal— they  had  paid  the  bill  and  expense  of 
notary  next  day.^"* 

18.  Farnsworth  v.  Allen,  4  Gray,  453,  in  which  case  presentment  was  made 
at  9  p.  M.,  at  the  maker's  residence,  ten  miles  from  Boston.  He  and  his  family 
had  retired.  Held  sufficient.  In  Barclay  v.  Bailey,  2  Campb.  527,  Lord  Ellen- 
borough  sustained  a  presentment  made  as  late  as  8  p.  m.,  at  the  house  of  a  trader; 
Waring  v.  Betts,  90  Va.  46,  17  S.  E.  739. 

19.  Wilkins  v.  Jadis,  2  B.  &  Ad.  188,  in  which  case  the  bill  was  presented  at 
the  place  named  in  the  acceptance,  between  7  and  8  p.  m.,  but  the  door  was  shut 
and  no  one  answered.  Dana  v.  Sawyer,  22  Me.  294,  in  which  presentment  was  a 
few  minutes  before  midnight,  the  maker  being  waked  up  at  his  residence. 

20.  Lunt  V.  Adams,  17  Me.  230,  in  which  case  presentment  at  8  A.  M.,  at  the 
maker's  storehouses,  was  held  insufficient.  See  Dana  v.  Sawyer,  22  Me.  244. 
Presentment  at  8  p.  m.,  at  an  attorney's  office,  was  held  sufficient  in  Triggs  v. 
Neuenham,  1  Car.  &  P.  631;  and  in  Morgan  v.  Davison,  1  Stark  114,  presentment 
at  a  counting-room  between  6  and  7  p.  m.  was  held  sufficient. 

21.  In  Barclay  v.  Bailey,  2  Campb.  427,  presentment  at  8  p.  m.,  at  the  maker's 
residence  was  held  sufficient;  Clough  v.  Holden,  115  Mo.  336,  31  S.  S.  1071,  37 
Am.  St.  Rep.  393,  citing  text. 

22.  Henry  v.  Lee,  2  Chitty,  125;  Garnett  v.  Woodcock,  1  Stark.  475,  6  Maule  & 
S.  44;  Thompson  on  Bills,  303;  Chitty  (13th  Am.  Ed.)  [*387],  438. 

23.  Wallace  v.  Crilleo,  46  Wis.  577.  Presentment  after  5  p.  m.,  to  the  indorser 
and  last  manager  of  a  bank  at  his  place  of  residence  when  the  bank  at  which  the 
note  was  payable,  had  ceased  to  exist.  Held  sufficient.  Waring  v.  Betts,  90  Va. 
36,  17  S.  E.  739. 

24.  Whittaker  v.  Bank  of  England,  Tyrwh.  268. 


§  604  TIME   OP  681 

§  604.  Within  what  time  bills  and  notes  specifying  no  time  of 
payment  must  be  presented  for  payment. — If  no  time  for  payment 
be  named  in  the  bill  or  note  it  is  payable  on  demand;  ^^  all  the  text- 
writers  and  the  adjudicated  cases  tell  us  that  a  bill  payable  at  sight, 
or  at  a  fixed  time  after  sight,  or  on  demand,  and  a  note  payable  on  de- 
mand, must  be  presented  for  acceptance  or  payment,  as  the  case 
may  be,  "within  a  reasonable  time."  But  in  determining  what  is 
reasonable  time  we  are  left  a  riddle  which  it  is  difficult  to  solve.^* 
The  maker  of  the  note,  who  is  the  principal  debtor,  is  bound  to 
pay  whenever  payment  is  demanded  (unless  it  be  barred  by  limita- 
tion), no  matter  what  period  of  time  may  have  elapsed  since  its 
execution,  and  when  a  bill  payable  at  so  many  days  after  sight  has 
been  presented  and  accepted,  the  acceptance  fixes  the  period  at 
which  it  must  be  presented  to  the  acceptor  for  payment.  But  within 
that  time  such  a  bill  must  be  presented  in  order  to  preserve  the  lia- 
bility of  the  drawer  and  indorsors,  and  the  note  presented  in  order  to 
preserve  that  of  the  indorsers,  is  a  problem  which  has  puzzled  courts 
and  juries  no  little.  And  an  eminent  jurist  has  said  in  respect  to  the 
time  within  which  it  is  necessary  to  present  for  payment  a  note  pay- 
able on  demand  in  order  to  charge  an  indorser,  that  "  it  depends  upon 
so  many  circumstances  to  determine  what  is  a  reasonable  time  in  a 
particular  case,  that  one  decision  goes  but  little  way  in  establishing 
a  precedent  for  another."  ^'^  Some  of  the  text-writers  treat  of  bills, 
promissory  notes,  bankers'  cash  notes  and  checks,  as  falling  within 
one  rule;  and  a  failure  to  discriminate  between  these  various  classes 
of  commercial  paper  has  confused  the  decisions  upon  the  subject,  and 
left  them  in  a  state  of  contrariety  and  antagonism  which  it  is  impos- 
sible to  reconcile.  In  a  previous  chapter  on  presentment  for  accept- 
ance we  have  discussed  the  question  of  reasonable  time  in  respect  to 
the  presentment  for  acceptance  of  bills;  and  the  doctrines  there  laid 
down  are  almost  entirely  applicable  to  the  presentment  of  bills  for 
payment.-^    The  reasonable  time  for  presentment  of  checks,  which 

25.  Thompson  v.  Ketcham,  8  Johns.  189;  Cornell  v.  Moulton,  3  Den.  12; 
Michigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  11;  Finer  v.  Clary,  17  B.  Mon.  663; 
Bowman  v.  McChesney,  22  Gratt.  609;  Whitlock  v.  Underwood,  2  B.  &  C.  157. 
See  ante,  §§  88,  89;  Collins  v.  Trotter,  81  Mo.  278,  citing  the  text. 

26.  Bacon  v.  Bacon,  94  Va.  688,  27  S.  E.  576;  Foley  v.  Emerald  Brewing  Co., 
61  N.  J.  L.  430,  39  Atl.  650. 

27.  Shaw,  C.  J.,  in  Seaver  v.  Lincoln,  21  Fick.  267;  Bacon  v.  Bacon,  94  Va. 
688,  27  S.  E.  576;  Morgan  v.  United  States,  113  U.  S.  501,  5  S.  Ct.  583;  Oleson  v. 
Wilson,  20  Mont.  544,  52  Fac.  372,  63  Am.  St.  Rep.  638. 

28.  Chapter  XVII,  section  III. 


682  PRESENTMENT   FOR    PAYMENT  §§  605,  606 

are  of  a  different  nature,  will  hereafter  be  discussed;  ^  and  we  shall 
endeavor  here  to  give  the  principles  which  determine  within  what 
time  a  bill  or  note  payable  on  demand  must  be  presented  for 
payment. 

§  605.  In  the  first  place,  respecting  bills  payable  on  demand. — 

Such  instruments  would  seem  to  be  closely  assimilated  to  bank 
checks,  and  to  contemplate  the  immediate  payment  of  the  amount 
called  for.  They  are  payable  immediately  on  presentment,  with- 
out grace,  and  if  the  drawee  and  the  payee  or  indorsee  reside  in  the 
same  place,  it  is  laid  down  by  a  number  of  the  authorities  that  they 
must  be  presented  within  business  hours  of  the  day  on  which  they  are 
drawn  in  order  to  hold  the  drawer  in  the  event  of  the  failure  of  the 
drawee  to  honor  them."''"  And  that  if  the  drawee  resides  in  a  different 
place  they  must  be  forwarded  by  the  regular  post  of  the  day  after 
they  are  received.^^  But  these  rules  are  not  inflexible.  What  is 
reasonable  time  must  depend  upon  circumstances  and  in  many  cases 
upon  the  time,  the  mode,  and  the  i)lace  of  receiving  the  bills,  and  upon 
the  relations  of  the  parties  between  whom  the  question  arises.^^ 
Where  the  draft  required  indorsement  by  a  school  board,  which  had 
to  be  convened,  delay  of  a  week  to  forward  it  was  held  justifiable.^-^ 
The  question,  in  so  far  as  it  relates  to  sight  drafts,  has  been  hereto- 
fore considered,  and  the  cases  collated.^* 

§  606.  Promissory  notes  payable  on  demand  would  seem  to 
stand  on  a  different  footing.  An  action  lies  against  the  maker  of  a 
demand  note  without  preliminary  demand. ^^    With  respect  to  fixing 

29.  Chapter  XLIX,  on  Checks,  section  III,  vol.  II. 

30.  Byles  on  Bills  (Sharswood's  ed.),  337-338;  Thompson  on  Bills  (Wilson's 
ed.),  297;  Chitty  on  Bills  (13th  Am.  ed.),  431;  Finer  v.  Clary,  17  B.  Mon.  645; 
Kampmann  v.  Williams,  70  Tex.  571,  citing  the  text;  McMonigal  v.  Brown,  45 
Ohio  St.  504,  citing  the  text;  Burnham,  etc.,  v.  W.  S.  McCormick,  etc.,  18  Utah, 
42,  55  Pac.  77;  Anderson  v.  Gill,  79  Md.  312,  29  Atl.  527,  47  Am.  St.  Rep.  402, 
citing  and  approving  text;  Angaletos  v.  The  Meridian  Nat.  Bank  of  Indiana, 
4  Ind.  App.  573,  31  N.  E.  368. 

31.  Ibid.;  Chitty  on  Bills,  432;  Parker  v.  Reddick,  65  Miss.  246,  citing  the  text. 

32.  Story  on  Notes,  §  493.  See  ante,  §§  468-478,  inclusive;  Morgan  v.  United 
States,  113  U.  S.  501;  Marbourg  v.  Brinkman,  23  Mo.  App.  513,  citing  the  text; 
Dyas  v.  Hanson,  14  Mo.  App.  386;  Nutting  v.  Burked,  48  Mich.  241;  CoUingwood 
V.  Merchants'  Bank,  15  Nebr.  121. 

33.  Muncy  Borough  School  District  v.  Commonwealth,  84  Pa.  St.  464. 

34.  Montelius  v.  Charles,  76  111.  305;  ante,  §  472. 

35.  Knecht  v.  Boshold,  138  111.  App.  430;  Hyman  v.  Doyle,  103  N.  Y.  S.  778, 


§  607  TIME   OF  683 

the  liability  of  an  indorser,  it  is  difficult  to  perceive  why  the  maker 
should  execute  his  promise  to  pay  on  demand  if  immediate  payment 
were  contemplated;  and  although  the  holder  may  present  it  at  once 
for  payment,  if  he  be  so  inclined,  this  would  seem  to  be  a  privilege 
rather  than  a  duty.  Why  not  pay  the  money  at  once,  if  the  note 
must  be  presented  at  once  in  order  to  charge  the  indorser?  In  Eng- 
land, a  note  on  demand  is  regarded  as  a  continuing  security  which  it  is 
not  necessary  to  present  for  payment  on  the  next  day  when  the  parties 
reside  in  the  same  place;  or  to  send  by  the  post  of  the  next  day  when 
they  reside  in  different  places;  ^  but  in  the  United  States,  as  a  general 
rule,  a  different  view  is  taken,  and  payment  must  be  speedily  de- 
manded, in  order  to  preserve  recourse  against  the  indorser,  and  to 
preserve  the  note  from  defenses  which  may  be  made  against  overdue 
paper."  It  is  better  in  all  cases  where  the  question  is  not  settled,  to 
decline  taking  a  note  on  demand  by  indorsement;  or  if  taken,  to  pre- 
sent it  with  the  utmost  dispatch. 

§  607.  When  note  given  for  a  loan. — When  the  note  payable 
on  demand  has  been  given  for  a  loan  of  money,  it  would  then  seem 
clear  that  it  was  intended  as  a  continuing  security,  and  the  imme- 
diate presentment  would  not  be  necessary  in  order  to  charge  the  in- 

53  Misc.  Rep.  597;  Field  v.  Sibley,  77  N.  Y.  S.  252,  74  App.  Div.  81,  affirmed  174 
N.  Y.  514,  66  N.  E.  1108;  Farmers'  Nat.  Bank  v.  Venner,  192  Mass.  531,  78  N.  E. 
540. 

36.  Brooks  v.  Mitchell,  9  M.  &  W.  15;  Morgan  v.  United  States,  113  U.  S.  501. 
Statute  of  Limitations  runs  from  date  of  note  on  demand.  Wheeler  v.  Warner, 
47  N.  Y.  519;  Finch  v.  Skilton,  79  Hun,  531,  29  N.  Y.  Supp.  925.  See  authorities 
cited  in  §  1215. 

37.  See  1  Parsons  on  Notes  and  Bills,  376,  377;  Keys  v.  Fenstermaker,  24  Cal. 
331.  Delay  of  two  weeks  held  to  discharge  indorser.  In  a  recent  case,  the  Su- 
preme Court  of  North  Carolina,  decided  that  a  note  payable  on  demand  is  due  on 
the  day  of  its  date,  and  that  the  purchaser  of  such  note  takes  it  subject  to  all  the 
defenses  available  against  it  in  the  hands  of  the  payee.  Causey  v.  Snow,  122  N.  C. 
326,  29  S.  E.  359.  As  to  the  rule  in  New  Jersey,  see  Foley  v.  Emerald  Brewing 
Co.,  61  N.  J.  L.  430,  39  Atl.  6.50;  Oleson  v.  Wilson,  20  Mont.  544,  52  Pac.  372, 
63  Am.  St.  Rep.  638.  In  Michigan  it  has  been  held  that  in  order  to  bind  an  in- 
dorser upon  a  demand  note,  demand  must  be  made  for  payment  in  a  reasonable 
time  in  order  to  bind  the  indorser;  and  that  a  delay  of  two  and  a  half  years,  where 
the  parties  reside  in  the  same  city,  would  discharge  the  indorser.  Home  Sav. 
Bank  v.  Hosie,  119  Mich.  116,  77  N.  W.  625.  On  an  issue  whether  presentment 
for  payment  was  made  in  a  reasonable  time,  it  may  be  shown  that  it  was  the  cus- 
tom of  banks  to  hold  for  years  demand  paper  with  an  indorser,  if  the  parties  were 
good  and  the  bank  did  not  require  the  funds.  State  of  New  York  Nat.  Bank  v. 
Kennedy,  130  N.  Y.  S.  412,  145  App.  Div.  669. 


684  PRESENTMENT   FOR    PAYMENT  §  608 

dorser.^*  In  Scotland,  as  well  as  in  the  United  States,^'  this  view  ha3 
been  taken;  and  though  high  authority  has  maintained  a  different 
doctrine/"  we  can  but  regard  it  as  one  that  strikes  the  mind  with  the 
utmost  force. ^^  Where  demand  was  not  made  for  twenty-one  months, 
it  has  been  considered  sufficient  in  such  a  case;  ^^  and  in  Scotland, 
where  a  bill  on  demand  was  granted  as  a  loan  and  not  as  a  remittance, 
presentment  six  months  after  date  was  held  sufficient.  ^^ 

§  608.  Notes  payable  on  demand  "  with  interest." — When  the 
note  is  payable  on  demand  with  interest,  it  would  seem  to  have  been 
intended  as  a  continuing  interest-bearing  security;  but  upon  this 
question,  as  upon  those  alreadj^  discussed  respecting  notes  payable 
on  demand,  the  authorities  are  in  painful  contrariety. 

In  England  where  a  note  of  £1,000  payable  on  demand  with  in- 
terest had  been  indorsed  and  transferred  several  years  after  its  date, 
and  the  question  was  whether  the  indorsee  took  it  subject  to  equities 
between  prior  parties,  the  court  said:  "If  a  promissory  note,  payable 
on  demand,  is  after  a  certain  time  to  be  treated  as  overdue,  although 
payment  has  not  been  demanded,  it  is  no  longer  a  negotiable  instru- 
ment. But  a  promissory  note,  payable  on  demand,  is  intended  to  be 
a  continuing  security.    It  is  quite  unlike  the  case  of  a  check,  which 

38.  Thompson  on  Bills  (Wilson's  ed.),  301,  citing  Leith  Banking  Co.  v.  Walker's 
Trustees,  14  S.  B.  D.  332;  Bacon  v.  Harris  (R.  I.),  10  Atl.  650,  citing  the  text; 
McDonnell  v.  Burns,  28  C.  C.  A.  174,  83  Fed.  866,  citing  text. 

39.  Vreeland  v.  Hyde,  2  Hall,  429,  the  court  saying:  "The  rule  requiring  pre- 
sentment within  a  reasonable  time  was  intended  for  and  is  applicable  to  negotiable 
instruments  made  for  commercial  purposes  only.  It  was  not  intended  for  cases 
of  suretyship  or  notes  of  a  like  description,  and  the  present  one  is  evidently  ex- 
cluded from  the  rule  by  the  peculiar  circumstances  attending  it.  Here  the  holder 
was  an  old  man,  not  connected  with  business,  residing  at  some  distance  from  the 
city.  The  defendant  knew  the  circumstances,  and  cannot  claim  any  peculiar 
indulgence  from  a  consideration  of  these  facts,  as  each  case  must  be  governed 
by  the  circumstances  attending  it.  In  this  there  must  be  judgment  for  the 
plaintiff." 

40.  1  Parsons  on  Notes  and  Bills,  380,  note  d;  Bayley  on  Bills,  chap.  VII,  p.  142, 
note;  Perry  v.  Green,  4  Harr.  61;  Sice  v.  Cunningham,  1  Cow.  397,  in  which  case 
a  delay  of  five  months,  all  the  parties  residing  in  New  York  city,  was  held  to  dis- 
charge the  indorser;  Martin  v.  Winslow,  2  Mason,  241,  seven  months'  delay  held 
fatal;  Field  v.  Nickerson,  13  Mass.  131,  seven  months'  delay  held  fatal,  although 
the  accommodation  indorser  was  told  by  one  of  the  makers  that  the  note  would 
not  be  demanded  immediately. 

41.  Bacon  v.  Bacon,  94  Va.  688,  27  S.  E.  576. 

42.  Vreeland  v.  Hyde,  2  Hall,  429. 

43.  Note,  supra,  Thompson  on  Bills,  301. 


§  609  TIME    OF  685 

is  intended  to  be  presented  speedily."  **  The  circumstance  that  the 
note  bore  interest  did  not  control  the  decision  of  the  court;  but  in 
New  York  that  feature  was  considered  material;  and  where  such  a 
note  was  transferred  three  or  four  weeks  after  date,  it  was  said,  "  It 
would  be  contrary  to  the  general  course  of  business  to  demand  pay- 
ment short  of  some  proper  point  for  computing  interest,  such  as  a 
quarter,  half  a  year,  a  year,  etc.,"  and  it  was  held  that  the  note  was 
not  overdue  so  as  to  admit  a  plea  of  want  of  consideration.^^  But 
in  a  later  case,  where  the  note,  payable  on  demand,  with  interest,  was 
transferred  nearly  three  months  after  date,  the  parties  having  their 
places  of  business  in  the  same  street  of  the  same  city,  it  was  held  over- 
due, so  as  to  admit  equities;  "'^  and  in  an  earlier  case  a  similar  note, 
transferred  two  and  a  half  months  after  date,  was  held  open  to  defense 
of  part  payment  before  transfer. ^'^  In  Vermont  the  note  was  held 
overdue  at  time  of  indorsement,  ten  months  after  date."*^  In  Connect- 
icut, a  note  payable  "on  demand,  with  interest,"  need  not  be  de- 
manded for  four  months,  by  statute.^^ 

§  609.  Conflicting  authorities. — In  respect  to  the  time  within 
which  a  note,  payable  on  demand,  with  interest,  must  be  presented, 
in  order  to  charge  an  indorser,  the  like  contrariety  exists.  Eight 
months'  delay  was  held  to  discharge  an  indorser  in  one  case;  ^°  seven 
months  in  another;  '"^  five  months  and  a  half  in  another,  all  the  parties 
residing  in  the  same  place.°^ 

On  the  other  hand,  a  delay  of  twenty-one  months  to  present  a 
note  payable  on  demand  with  interest,  has  been  held  not  to  discharge 
the  indorser.^^  And  in  a  later  case,  in  New  York,  where  the  note, 
payable  on  demand,  with  interest,  was  indorsed  for  accommodation 
at  the  time  of  its  date,  which  was  the  5th  of  May,  1852,  and  the  in- 
terest was  paid  by  the  maker  for  three  years,  and  demand  of  payment 

44.  Brooks  v.  Mitchell,  9  M.  &  W.  15.  See  also  Borough  v.  White,  4  B.  &  C. 
225;  Gascoyne  v.  Smith,  1  M.  &  Y.  338. 

45.  Wethey  v.  Andrews,  3  Hill  (N.  Y.),  582. 

46.  Herrick  v.  Woolverton,  41  N.  Y.  581. 

47.  Losee  v.  Dunkin,  7  Johns.  70. 

48.  Morey  v.  Wakefield,  41  Vt.  24. 

49.  Rhodes  v.  Seymour,  36  Conn.  6. 

50.  Field  v.  Nickerson,  13  Mass.  131. 

61.  Martin  v.  Winslow,  2  Mason,  241. 

62.  Sice  V.  Cunningham,  1  Cow.  397.  See  also  Perry  v.  Green,  4  Harr. 
61. 

63.  Vreeland  v.  Hyde,  2  Hall,  429.    See  ante,  §  607. 


586  PRESENTMENT   FOR    PAYMENT  §  610 

was  made  and  refused,  and  notice  given  on  the  24th  of  December, 
1855,  it  was  held  that  the  indorser  was  still  bound. ^^ 

Seven  days'  delay  was  not  considered  too  long  in  Massachusetts, 
under  the  circumstances,  the  court  not  paying  consideration  to  the 
fact  that  the  note  bore  interest.  ^^  In  California,  the  matter  is  reg- 
ulated by  statute.  ^^ 

§  610.  The  true  principle  to  be  deduced. — Where  these  ques- 
tions remain  undetermined,  the  authorities  are  so  much  at  war  that 
it  would  be  difficult  to  predict  what  rule  would  commend  itself  to 
the  court.  It  seems  to  us  that  where  the  note  was  indorsed  at  the 
time  of  making,  and  whether  it  bore  interest  or  not,  it  should  be  re- 
garded as  a  continuing  security,  and  would  not  be  overdue  in  the 
hands  of  the  payee,  either  so  as  to  open  equities  or  to  discharge  the 
indorser  until  payment  was  demanded  and  refused.  But  when  trans- 
ferred by  indorsement,  it  would  become,  by  the  very  act  of  indorse- 
ment, a  draft  by  the  indorser  upon  the  maker;  and  the  indorsee  hold- 
ing it  should  regard  it,  as  it  is  in  fact,  a  demand  through  him  for  the 
amount  due  the  indorser.  And  it  should,  therefore,  be  presented 
immediately,  subject  only  to  such  qualifications  as  apply  to  a  bill 
payable  at  sight." 

The  following  observations,  in  "  Byles  on  Bills,"  ^^  on  this  subject, 
seem  to  us  worthy  of  quotation.  Says  the  author:  "A  common  prom- 
issory note  payable  on  demand  differs  from  a  bill  payable  on  demand, 
or  a  check,  in  this  respect :  the  bill  and  check  are  evidently  intended  to 
be  presented  and  paid  immediately,  and  the  drawer  may  have  good 
reasons  for  desiring  to  withdraw  his  funds  from  the  control  of  the 
drawee  without  delay;  but  a  common  promissory  note  payable  on 
demand  is  very  often  originally  intended  as  a  continuing  security, 
and  afterward  indorsed  as  such.    Indeed,  it  is  not  uncommon  for  the 

54.  Merritt  v.  Todd,  23  N.  Y.  28  (1861).  This  case  has  been  questioned  in 
Thillman  v.  Guible,  32  La.  Ann.  260  (1880),  where  delay  of  four  years  to  present 
a  demand  note  bearing  interest  was  held  unreasonable,  and  the  accommodation 
indorser  was  discharged.  See  Parker  v.  Stroud,  98  N.  Y.  379,  approving  Merritt 
V.  Todd,  supra;  Grim  v.  Starkweather,  88  N.  Y.  339;  Turner  v.  Iron  Mining  Co., 
74  Wis.  359,  approving  Thillman  v.  Guible,  supra;  National  Hudson  River  Bank 
V.  K.  &  H.  R.  Co.,  17  App.  Div.  232,  45  N.  Y.  Supp.  588. 

55.  Seaver  v.  Lincoln,  21  Pick.  267. 

56.  See  Machado  v.  Fernandez,  74  Cal.  362;  Wills  v.  Booth,  6  Cal.  App.  197, 
91  Pac.  759. 

57.  Bassenhorst  v.  Wilby,  45  Ohio  St.  339,  citing  the  text. 
68.  Sharswood's  ed.  338. 


§  611  TIME   OF  687 

payee,  and  afterward  the  indorsee,  to  receive  from  the  maker  interest 
periodically  for  many  years  on  such  a  note.  And  sometimes  the  note 
is  expressly  made  payable  with  interest,  which  clearly  indicates  the 
intention  of  the  parties  to  be,  that  though  the  holder  may  demand 
payment  immediately,  yet  he  is  not  bound  to  do  so.  It  is,  therefore, 
conceived  that  a  common  promissory  note  payable  on  demand, 
especially  if  made  payable  with  interest,  is  not  necessarily  to  be  pre- 
sented the  next  day  after  it  has  been  received  in  order  to  charge  the 
indorser;  and  when  the  indorser  defends  himself  on  the  ground  of 
delay  in  presenting  the  note,  it  will  be  a  question  for  the  jury  whether, 
under  all  the  circumstances,  the  delay  of  presentment  was  or  was  not 
unreasonable." 

§  611.  Presentment  for  payment  when  the  instrument  was  over- 
due at  time  of  indorsement.— When  a  negotiable  instrument  is  in- 
dorsed after  maturity,  payment  must  be  demanded  of  the  payor 
within  a  reasonable  time,  and  notice,  in  the  event  of  a  refusal,  given 
to  the  indorser,  in  order  to  charge  him — it  being  regarded  as  equiv- 
alent to  one  payable  on  demand.''^ 

59.  Beer  v.  Clifton,  98  Cal.  233,  33  Pac.  204,  35  Am.  St.  Rep.  172,  citing  text; 
Wills  V.  Booth,  6  Cal.  App.  197,  91  Pac.  759;  Hawkins  v.  Shields  (Miss.),  57  So. 
4;  Light  v.  Kingsbury,  50  Mo.  331;  McKewer  v.  Kirtland,  33  Iowa,  352;  Graul  v. 
Strutzel,  53  Iowa,  712;  Tyler  v.  Young,  6  Casey,  143;  McKinney  v.  Crawford,  8 
Serg.  &  R.  351;  Patterson  v.  Todd,  18  Pa.  St.  426;  overruling  Bank  of  North 
America  v.  Barrierc,  1  Yeates,  360;  Leavitt  v.  Putnam,  1  Sandf.  199;  Berry  v. 
Robinson,  9  Johns.  121;  Beebe  v.  Brooks,  12  Cal.  308;  Bishop  v.  Dexter,  2  Conn. 
419;  Goodwin  v.  Davenport,  47  Me.  112;  Dwight  v.  Emerson,  2  N.  H.  159;  Levy 
V.  Drew,  14  Ark.  334;  Jones  v.  Middleton,  29  Iowa,  188;  Benton  v.  Gibson,  1  Hill 
(S.  C),  56;  Poole  v.  Tolleson,  1  McCord,  199;  Course  v.  Shackleford,  2  Nott  & 
McC.  283;  Ecpert  v.  Condres,  3  Const.  Rep.  69;  Union  Bank  v.  Ezell,  10  Humphr. 
385;  Stothart  v.  Parker,  1  Tenn.  260.  See  vol.  II,  §  996;  Bassenhorst  v.  Wilby, 
45  Ohio  St.  336,  citing  the  text;  Smith  v.  Caro,  9  Oreg.  280,  citing  the  text;  Rosson 
V.  Carroll,  90  Tenn.  90,  16  S.  W.  66,  citing  the  text.  After  quoting  the  text  in 
approval,  the  court  says:  "It  will  be  observed  that  the  latter  author,  Mr.  Daniel, 
does  not  in  terms  state  when  the  notice  shall  be  given;  but  he  does  say,  in  effect 
that  the  same  rule  as  to  notice  is  applicable  to  a  note  indorsed  after  maturity  as 
to  one  payable  on  demand.  He  makes  substantially  the  same  statement  in  sec- 
tion 996  of  the  same  learned  and  valuable  treatise,  and  at  the  same  time  men- 
tions the  fact  that  some  of  the  cases  have  been  less  strict  on  the  subject  of  notice, 
thereby  departing  from  the  principle  by  him  deemed  clearly  correct."  After  an 
elaborate  review  of  the  authorities  and  quoting  from  Parsons,  Chitty,  Byles, 
Tiedeman,  Wade,  and  others,  the  court  says:  "The  irresistible  conclusion  from 
the  authorities  is  that  the  rule  with  respect  to  the  time  within  which  notice  of 
nonpayment  must  be  given  to  the  indorser  is  the  same,  whether  the  indorsement 
be  made  before,  or  after,  the  maturity  of  the  note." 


688  PRESENTMENT   FOR   PAYMENT  §  612 

The  same  circumstances  and  considerations  which  determine  the 
question  whether  or  not  a  bill  or  note  payable  on  demand  has  become 
overdue,  so  as  to  let  in  equitable  defenses  by  the  original  parties 
against  the  transferee,  alike  determine  the  question  whether  or  not 
the  presentment  has  been  in  a  reasonable  time  so  as  to  charge  the 
drawer  or  indorser.^'*  Such  at  least  is  the  doctrine  in  the  United 
States  according  to  the  weight  of  authority,  though  there  are  cases 
which  dissent  from  it.  Some  of  them  maintain  that  when  the  note 
is  overdue  at  the  time  of  transfer,  the  rule  requiring  presentment  is 
to  be  less  stringent  than  where  it  has  some  time  to  run.^^  While  by 
others  a  more  stringent  rule  is  applied ;  ®^  and  it  has  been  said  that, 
"if  the  indorsement  be  made  after  the  note  falls  due,  the  demand  of 
payment  must  be  made  as  if  the  note  fell  due  the  day  of  indorse- 
ment." ^^ 

§  612.  How  question  of  reasonable  time  determined. — Many  of 
the  authorities  hold  that  the  question  of  reasonable  time  is  for  the 
jury  to  determine  as  matter  of  fact;  ^"^  while  others  maintain  that  it 
is  matter  of  law  for  the  court.^^  But  neither  is  strictly  correct.  It  is 
a  mixed  question  of  law  and  fact  in  most  cases,  to  be  determined  upon 
hypothetical  instructions  of  the  court,  like  all  other  contested  matters. 
And  those  authorities  seem  to  us  unassailable  which  hold  that  when 
the  facts  are  few  and  simple,  or  are  presented  upon  a  special  verdict 
or  demurrer  to  evidence,  it  is  within  the  province  of  the  court  to 

60.  Field  v.  Nickerson,  13  Mass.  131;  Berry  v.  Robinson,  9  Johns.  121;  Sice  v. 
Cunningham,  1  Cow.  397;  Bishop  v.  Dexter,  2  Conn.  417;  Course  v.  Shackleford, 
2  Nott  &  McC.  283;  Kennon  v.  McRea,  7  Port.  175;  Bull  v.  First  Nat.  Bank,  14 
Fed.  613,  citing  the  text.  "A  bill  negotiated  after  day  of  payment  is  like  a  bill 
payable  at  sight."  Dehers  v.  Harriott,  1  Show.  163;  1  Parsons  on  Notes  and 
Bills,  372-376,  382;  Bayley  on  Bills,  chap.  VII,  §  1,  p.  125. 

61.  Rugby  V.  Davidson,  2  Const.  Rep.  33;  Hall  v.  Smith,  1  Bay,  330;  Mc- 
Kinney  v.  Crawford,  8  Serg.  &  R.  351. 

62.  Nash  v.  Harrington,  2  Aik.  9;  Aldis  v.  Johnson,  1  Vt.  136. 

63.  Aldis  V.  Johnson,  1  Vt.  136;  Landon  v.  Bryant,  69  Vt.  203,  37  Atl. 
297. 

64.  Hawkins  v.  Shields  (Miss.),  57  So.  4;  Field  v.  Nickerson,  13  Mass.  131; 
Hankey  v.  Trotman,  1  W.  Bl.  1;  Goupy  v.  Harden,  7  Taunt.  159;  Straker  v. 
Graham,  4  M.  &  W.  721.  In  case  of  notes  indorsed  after  maturity,  it  has  been 
so  held  in  Eccles  v.  Ballard,  2  McCord,  388;  Gray  v.  Bell,  2  Rich.  67,  and  other 
decisions  in  South  Carolina. 

65.  Himmelman  v.  Hotaling,  40  Cal.  Ill;  Gray  v.  Bell,  2  Rich.  67;  Sylvester 
V.  Crapo,  15  Pick.  92;  Sice  v.  Cunningham,  1  Cow.  408;  Dennett  v.  Wyman,  13 
Vt.485 


§  612  TIME    OF  689 

determine.^"  When  they  are  complicated  and  doubtful,  and  are  not  so 
presented,  they  must,  of  course,  be  left  for  the  ascertainment  and 
judgment  of  the  jury,  under  instructions  from  the  court.  When  the 
facts  are  ascertained  it  is  for  the  court  to  determine  what  is  reasonable 
time  as  matter  of  law.^^ 

Under  Negotiable  Instrument  statute. — The  statute  provides  tluit 
where  an  instrument  is  payable  on  demand,  presentment  must  he 
made  within  a  reasonable  time  after  its  issue.^^    The  statute  furtht:- 

66.  See  chapter  XVII,  on  Presentment  for  Acceptance,   §  3;  Derbishire  v. 
Parker,  6  East,  3;  Tindal  v.  Brown,  1  T.  R.  167  (reasonable  notice  which  stanf! 
on  same  footing);  Mellish  v.  Rawdon,  9  Bing.  416;  Wyman  v.  Adams,  12  Cui^',. 
210;  Taylor  v.  Breden,  3  Johns.  136  (case  of  notice);  Anderson  v.  Royal  Exchjirr 
Assurance  Co.,  7  East,  43;  Ball  v.  Wardell,  Willes,  204. 

67.  Muncy  Borough  School  District  v.  Commonwealth,  84  Pa.  St.  471;  Bassen 
horst  V.  Wilby,  45  Ohio  St.  338,  citmg  the  text;  Bacon  v.  Harris  (R.  I.),  10  At! 
650,  citing  the  text. 

68.  Appendix,  sec.  71.  In  Commercial  Nat.  Bank  v.  Zimmerman,  185  N.  Y. 
210,  77  N.  E.  1020,  holding  that  defendant  need  not  plead  in  the  answer  that  the 
note  was  not  presented  within  a  reasonable  time  after  its  issue,  the  court  said: 
''The  burden  is  on  the  holder  of  a  note,  when  seeking  to  charge  an  indorser,  to 
prove  due  and  timely  presentment  and  the  giving  of  notice  to  the  indorser  of 
its  dishonor.  The  obligation  of  the  indorser  is  conditional  upon  all  the  steps  hav- 
ing been  taken  by  the  holder,  which  the  statute  has  prescribed  as  to  presentment 
and  as  to  notice  of  nonpayment,  etc.  The  Negotiable  Instrument  Law  is  the 
codification  of  the  law  merchant  upon  the  subjects  treated  and,  in  setting  forth 
what  is  requu-ed  of  the  holder  of  a  note,  it  casts  upon  him  the  burden  to  prove 
that  the  requirements  were  all  complied  with.  They  were  necessary  conditions 
of  his  right  to  recover.  Presentment  of  a  demand  note  within  a  reasonable  time 
is  a  requirement  of  the  statute  and  the  liability  of  the  indorser  to  make  good  the 
contract  of  the  maker,  unlike  that  of  guarantor,  is  conditional  and  depends  upon 
the  holder's  having  made  a  case  under  the  statute  of  an  obligation,  which  he  has 
caused  to  mature  and,  by  appropriate  legal  steps,  to  become  an  indebtedness  of 
the  contractmg  parties."  Compare  German-American  Bank  v.  Mills,  91  N.  Y.  S. 
142,  99  App.  Div.  312.  Where  a  note  was  not  expressly  payable  on  demand,  and 
blanks  were  left  in  which  to  put  in  the  dates,  and  the  payee  was  expressly  author- 
ized by  the  maker  to  fill  in  the  blanks,  to  which  permission  the  indorser  assented, 
such  note  was  not  a  demand  note,  and  the  payee  did  not  lose  his  rights  against 
the  indorser  by  not  presenting  the  note  and  protesting  the  same  within  a  reason- 
able time  after  receiving  the  note.  Usefof  v.  Herzenstein,  119  N.  Y.  S.  290,  65 
Misc.  Rep.  45.  See  also  appendix,  sees.  7,  14,  124.  In  Hampton  v.  Miller,  78 
Conn.  267,  61  Atl.  952,  the  Negotiable  Instrument  statute  was  evidently  over- 
looked, as  imder  a  previous  statute  declaring  that  diligence  requires  a  demand 
for  payment  at  the  end  of  four  months,  if  there  had  been  no  previous  demand, 
and  upon  nonpayment  to  give  an  indorser  notice,  it  was  held  that  where  from 
the  terms  of  an  indorsed  note  payable  on  demand  it  was  understood  that  payment 
was  not  intended  to  be  required  at  the  expiration  of  four  months  from  its  date, 
this  was  a  waiver  of  the  statutory  requirements,  and  the  parties  placed  themselves 

44 


690  PRESENTMENT   FOR    PAYMENT  §  612 

declares  that  in  determining  what  is  a  "reasonable  time"  or  an  "un- 
reasonable time,"  regard  is  to  be  had  to  the  nature  of  the  instrument, 
the  usage  of  trade  or  business  (if  any)  with  respect  to  such  instrument, 
and  the  facts  of  the  particular  case.^^  The  question  of  the  usage  of 
trade  or  business  has  been  held  to  be  one  of  fact,  and  in  the  absence 
of  any  evidence  to  bring  the  case  within  the  statute  by  evidence  of 
"the  usage  of  trade  or  business,  if  any,  with  respect  to  such  instru- 
ments," a  demand  should  be  made  according  to  the  law  existing  before 
this  statute  was  enacted.'"  The  statute  has  been  understood  as 
abolishing  the  distinction  which  had  theretofore  been  recognized  by 
some  courts  between  notes  payable  on  demand  and  notes  payable 
on  demand  "with  interest."  ^^  With  respect  to  the  time  of  present- 
under  the  common  law  rule  that  when  a  negotiable  instrument  is  payable  on  de- 
mand, demand  of  payment  must  be  made  upon  the  maker  within  a  reasonable 
time  or  the  indorser  will  stand  discharged. 

69.  Appendix,  sec.  19.3.  Sheffield  v.  Cleland,  19  Idaho,  612,  115  Pac.  20; 
German-American  Bank  v.  Mills,  91  N.  Y.  S.  142,  99  App.  Div.  312.  When  a 
demand  note,  with  indorsers,  was  given  a  friendly  arrangement  between  the 
parties,  with  the  imderstanding  that  the  payee  should  ask  for  payment  when  she 
needed  the  money,  the  indorsers  cannot  defend  on  the  ground  that  the  note  was 
not  presented  within  a  reasonable  time  because  it  was  not  presented  imtil  seven 
months  after  date.    Becker  v.  Horowitz,  114  N.  Y.  S.  IGl. 

70.  Merritt  v.  Jackson,  181  Mass.  69,  62  N.  E.  987,  holding  further  that  when' 
the  holder  cf  a  note  payable  on  demand  seeks  to  hold  an  indorser,  the  burden  is 
on  him  to  show  that  a  demand  was  made  upon  the  maker  within  a  reasonable 
time,  and  if  there  is  any  usage  of  trade  or  any  part  or  circumstances  to  excuse  a 
delay,  the  burden  is  on  him  to  show  it,  and  that  protest  must  be  made  within  GO 
days.  See  also  Toole  v.  Crafts,  196  Mass.  397,  82  N.  E.  22.  Where  a  demand 
note  was  indorsed  three  years  after  its  date  by  which  the  indorser  waived  "de- 
mand, notice  and  protest,"  it  was  held  to  be  a  question  for  the  jury  upon  the 
evidence  whether  the  parties  had  in  mind  a  protest  made  within  60  days  of  the 
date  of  the  note,  which  would  have  fixed  the  Uability  of  the  indorser,  under  sec- 
tion 71,  and  the  ruling  in  Merritt  v.  Jackson,  swpra,  construing  section  193  of  the 
act,  or  a  protest  to  be  made  in  the  immediate  future  which  would  have  been 
wholly  inefficacious  to  affect  the  rights  of  the  parties.  Toole  v.  Crafts,  196  Mass. 
397,  82  N.  E.  22. 

71.  Commercial  Nat.  Bank  v.  Zimmerman,  185  N.  Y.  210,  77  N.  E.  1020, 
holding  that  in  the  case  of  a  demand  note  bearing  interest,  indorsed  for  the  maker's 
accommodation,  and  the  payment  secured  by  the  deposit  of  certain  securities, 
and  where  the  payee  had  complained  to  the  indorser  two  years  after  the  making 
of  the  note  of  its  nonpayment,  and  twice,  a  year  later,  had  written  that  the  maker 
was  in  default  as  to  interest,  delay  in  taking  steps  to  charge  the  indorser  by  pre- 
sentment for  payment  and  by  protest  for  nonpayment  until  more  than  three  and 
a  half  years  had  elapsedj  was  an  unreasonable  delay.  In  Schleeinger  v.  Schultz, 
96  N.  Y.  S.  383,  110  App.  Div.  356,  it  was  held  that  a  note  payable  "on  demand 
after  date  *  *  *  with  interest"  is  a  demand  note  written  within  the  provisions  of 


§§  613,  614     DAYS   OF   GRACE,    AND    COMPUTATION    OF   TIME      691 

ment  of  a  bill  of  exchange  the  statute  provides  that  presentment  for 
payment  will  be  sufficient  if  made  within  a  reasonable  time  after  the 
last  negotiation  thereof.'^ 

SECTION   IV 

DAYS   OF   GRACE,    AND    COMPUTATION    OF   TIME 

§  613.  A  bill  of  exchange,  or  a  negotiable  promissory  note  importing 
in  its  language  to  be  payable  upon  a  certain  day,  is  not  in  reality 
payable  to  all  intents  and  purposes  upon  that  day;  but  ordinarily  not 
until  three  days  after,  according  to  the  rules  of  the  law  merchant,  as  it 
prevails  in  England  and  the  United  States.  This  period  of  extension 
of  time  of  payment  is  termed  "days  of  grace." 

§  614.  Origin  and  nature  of  days  of  grace. — They  were  origi- 
nally days  allowed  by  way  of  favor  to  the  drawee  of  a  foreign  bill  to 
enable  him  to  provide  funds  for  its  payment  without  inconvenience; 
and  were  called  "days  of  grace,"  or  "respite  days,"  because  they  were 
gratuitous,  and  dependent  on  the  holder's  pleasure,  and  not  to  be 
claimed  as  a  right  by  the  person  on  whom  it  was  incumbent  to  pay 
the  billJ^  By  custom,  however,  they  became  universally  recognized; 
and,  although  still  termed  "days  of  grace,"  they  are  now  considered 
wherever  the  law  merchant  prevails  as  entering  into  the  constitution 
of  every  bill  of  exchange  and  negotiable  note,  both  in  England  and 
the  United  States,  and  form  so  completely  a  part  of  it  that  the  instru- 
ment is  not  due  in  fact  or  in  law  until  the  last  day  of  grace.^"*  There- 
section  7,  and  not  at  a  determinable  future  time,  within  the  provisions  of  sec- 
tion 4,  and  need  not  be  presented  for  payment  the  day  after  it  bore  date  under 
section  71,  and  that  presentation  within  ten  months  was  timely  to  hold  the  in- 
dorser. 

72.  Appendix,  sec.  71.  In  Columbian  Banking  Co.  v.  Bowen,  134  Wis.  218, 
114  N.  W.  451,  the  court  said:  "A  bill  of  exchange  payable  on  demand,  regardless 
of  its  character,  put  in  circulation,  so  long  as  its  circulating  character  is  preserved 
may  be  outstanding  without  impairing  the  liability  of  the  indorsers  thereof. 
Formerly  the  length  of  time  within  which  a  bill  of  exchange  might  circulate  with- 
out impairing  such  liability  was  more  or  less  uncertain,  rendering  it  very  difficult 
to  determine  any  one  case  by  the  decision  in  another.  That  difficulty  was  removed 
60  far  as  practicable,  by  the  provision  that  only  the  time  need  be  considered  inter- 
vening between  the  last  negotiation  and  the  presentment.  That  is  recognized 
as  a  radical  change  in  the  law  as  it  formerly  existed." 

73.  Chitty  on  Bills  (13th  Am.  ed.)  [*374],  422. 

74.  Chitty,  422;  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Odgen  v.  Saunders, 


692  PRESENTMENT  FOR   PAYMENT  §§  615,  616 

fore,  a  demand  of  payment  on  the  day  before  or  after  the  third  day  of 
grace  would  not  authorize  a  protest,  or  charge  drawer  or  indorscr/^ 
And  interest  is  chargeable  on  the  period  of  grace  allowed  without  im- 
peachment as  usurious7^  This  indulgence  was  often  important  to 
the  drawee,  who  might  not  be  instantly  in  funds,  nor  advised  that 
the  bill  would  at  that  time  be  presented  for  payment;  and  also  even 
when  it  was  accepted,  because  of  the  scarcity  of  the  precious  metals 
in  which  payment  was  to  be  made.  And  they  fixed  a  limit  to  the 
time  which  the  holder  might  indulge  the  payor  without  being  guilty 
of  laches  in  not  protesting  it." 

§  615.  All  the  parties  to  the  bill  or  note,  being  parties  to  the 
same  contract,  are  bound  by  one  construction,  and  the  law  which 
fixes  grace  for  drawer  or  maker  fixes  it  also  as  to  the  indorser,  and 
vice  versa;  ^^  and  a  special  usage  varying  the  allowance  of  grace  from 
that  recognized  by  the  law  merchant,  as  to  notes  discounted  in  bank, 
will  be  binding  upon  indorser  as  well  as  maker,  although  he  had  no 
knowledge  of  it.^^ 

§  616.  Grace   on  inland  bills  and  promissory  notes. — It   was 

doubtful  at  one  time  whether  grace  was  allowable  on  inland  bills 
as  well  as  foreign;  ^°  but  this  was  in  the  remote  past.^^  In  England 
it  was  also  at  one  time  questioned  whether  or  not  promissory  notes 
were  entitled  to  grace;  ^^  but  it  was  long  since  settled  that  they  were, 
the  statute  of  3  &  4  Anne  (1704)  placing  them  on  the  same  footing 


12  Wheat.  213;  Bell  v.  First  Nat.  Bank,  115  U.  S.  373;  Ferris  v.  Saxton,  1  South. 
17;  Blacker  &  Co.  v.  Ryan,  65  Mo.  App.  230. 

75.  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Donegan  v.  Wood,  49  Ala. 
242. 

76.  Bank  of  Utica  v.  Wager,  2  Cow.  712;  Ogden  v.  Saunders,  12  Wheat. 
213. 

77.  Story  on  Bills,  §  333. 

78.  Central  Bank  v.  Allen,  16  Me.  41;  Hogan  v.  Cuyler,  8  Cow.  203;  Love  v. 
Nelson,  Mart.  &  Y.  237. 

79.  Mills  V.  Bank  of  the  United  States,  11  Wheat.  431. 

80.  Cramlington  v.  Evans,  2  Ventr.  307  (1691),  no  mention  of  grace;  Tassell 
V.  Lewis,  1  Ld.  Raym.  743  (1696). 

81.  Brown  v.  Harraden,  4  T.  R.  148  (1791),  Lord  Kenyon,  C.  J.,  said:  "It 
has  been  settled  for  more  than  half  a  century  that  they  are  payable  at  the  same 
time  as  foreign  bills  of  exchange."    Leftly  v.  Mills,  4  T.  R.  170  (1791). 

82.  May  v.  Cooper,  Fortescue,  376  (1722);  Dexlaux  v.  Hood,  Buller  N.  P. 
274  (1752). 


§  617  DAYS   OF   GRACE,    AND   COMPUTATION    OF   TIME  693 

as  bills.^^  In  the  United  States  some  cases  have  denied  that  grace 
was  allowable  on  inland  bills,^'*  or  promissory  notes;  ^^  but  they  have 
generally  been  declared  to  be  as  much  entitled  to  it  as  foreign  bills, 
and  except  where  a  statute  provides  otherwise  they  are  so  everywhere 
regarded.^'' 

§  617.  What  bills  and  notes  entitled  to  grace ;  whether  sight  bills 
entitled  to. — All  bills  of  exchange  and  negotiable  notes  are  en- 
titled to  grace;  ^^  except  those  payable  on  demand  ^^  or  without 
specification  of  time,  in  which  case  on  demand  without  grace  is  under- 
stood,^^ or  those  expressly  payable  without  grace.^°  And  where  a 
coupon  note  is  negotiable  within  the  meaning  of  a  statute,  it  is  en- 
titled to  the  days  of  grace  provided  for  by  the  statute.^^  The  author- 
ities are  uniform  in  support  of  this  statement  of  the  law,  except  in 
respect  to  its  inclusion  of  sight  bills  and  notes,  which  by  some  is 
denied  and  by  others  doubted.  In  England  there  has  not  been,  that 
we  are  aware  of,  a  direct  decision  of  the  question;  but  it  has  been  taken 
for  granted  in  some  cases,  and  distinctly  intimated  in  others,  that  a 
sight  bill  or  note  is  entitled  to  three  days'  grace;  ^-  and  the  authority 

83.  Brown  v.  Harraden,  4  T.  R.  148  (1791). 

84.  1  Parsons  on  Notes  and  Bills,  322. 

85.  Jones  v.  Fales,  4  Mass.  245;  Cook  v.  Gray,  Hempst.  C.  C.  47  (1827);  Harrel 
V.  Bixler,  Walk.  176. 

86.  Ogden  v.  Saunders,  12  Wheat.  213,  note;  Norton  v.  Lewis,  2  Conn.  478 
(1818),  note;  Cook  v.  Darling,  2  R.  I.  385,  note;  Hudson  v.  Matthews,  Morris 
(Iowa),  94  (1841),  note;  Crenshaw  v.  M'Kiernan,  Minor,  295,  note;  Beck  v. 
Thompson,  4  Harr.  &  J.  531  (1819),  note;  Green  v.  Raymond,  9  Nebr.  299. 
When  a  statute  abolishes  days  of  grace  on  certain  kinds  of  notes,  unless  stipulated 
therein,  and  such  notes  do  not  contain  such  stipulation,  notice  of  nonpayment 
given  at  the  time  the  notes  mature  is  not  premature.  Lowell  Trust  Co.  v.  Pratt, 
183  Mass.  379,  67  N.  E.  363. 

87.  Brown  v.  Harraden,  4  T.  R.  148;  Cook  v.  Darling,  2  R.  I.  385;  Brown  v. 
Chancellor,  61  Tex.  440,  citing  the  text;  1  Parsons  on  Notes  and  Bills,  404;  Story 
on  Bills,  §  342;  Story  on  Notes,  §  224. 

88.  Ibid.;  Chitty  (13th  Am.  ed.)  [*377],  426;  Byles  [*201];  Edwards,  523; 
Oridge  v.  Sherborne,  11  M.  &  W.  374;  Barboiu-  v.  Bayen,  5  La.  Ann.  303;  Cammer 
V.  Harrison,  2  McCord,  246;  Woodruff  v.  Merchants'  Bank,  25  Wend.  673;  Wood 
River  Bank  v.  First  Nat.  Bank,  36  Nebr.  744,  55  N.  W.  239. 

89.  Story  on  Bills,  §  343.  First  Nat.  Bank  v.  Price,  52  Iowa,  570,  the  bill 
bore  interest.  Held,  nevertheless,  payable  on  demand  without  grace.  1  Par- 
sons on  Notes  and  Bills,  381 ;  Dunkle  v.  Nichols,  101  Ind.  474,  in  which  case  the 
note  was  payable  "on  or  before  Dec.  25th,  1881,  after  date." 

90.  See  post,  §  633. 

91.  Hartsuff  v.  Hall,  58  Nebr.  417,  78  N.  W.  716. 

92.  In  Webb,  v  Fairmauer,  3  M.  &  W.  473  (1838),  Bolland,  B.,  said:  "In 


694  PKESENTMENT   FOR    PAYMENT  §  617 

of  text-writers,  both  foreign  and  American,  as  well  as  of  adjudicated 
cases  in  this, country,  greatly  preponderates  in  favor  of  such  allow- 
ance. It  seems  clearly  reasonable  that  bills  at  sight  should  have  grace, 
as  they  are  never  presented  for  acceptance,  but  for  payment;  and 
the  theory  of  indulgence  to  the  drawee,  upon  which  grace  is  allowed 
upon  drafts  payable  at  a  specified  time  after  date,  or  after  sight, 
would  apply  with  greater  force  to  those  payable  at  sight.  And  we 
have  no  hesitation  in  saying,  in  concurrence  with  the  doctrine  ex- 
pressly stated,  or  to  be  derived  from  what  is  said  by  Chitty,  Chitty,  Jr., 
Bayley,  Byles,  Maxwell,  Roscoe,  Edwards,  Story,  Parsons,  Kent,  and 
others,  that  negotiable  instruments  payable  at  sight  are,  and  should  be, 
entitled  to  grace,^^  though  there  is  respectable  authority  and  opinion 
to  the  contrary.^*  The  weight  of  authority  in  the  United  States  is  to 
this  effect.^^  In  Scotland  the  question  does  not  appear  to  have  been 
decided,  but  the  inclination  of  opinion  is  to  the  allowance  of  graco.°^ 

the  case  of  a  bill  payable  at  sight,  it  has  been  decided  over  and  over  again  that 
the  holder  cannot  sue  upon  it  until  after  the  expiration  of  the  third  day  after 
sight."  In  Coleman  v.  Sayer,  1  Barn.  303  (1728),  the  chief  justice  said  that  by  the 
custom  of  London  grace  was  allowed  on  sight  bills.  In  DehcTS  v.  Harriot,  1  Show. 
163  (1691),  it  seemed  agreed  that  sight  bills  should  be  demanded  on  the  third  day 
of  grace.  In  Jansen  v.  Thomas,  3  Doug.  421  (1784),  Lord  Mansfield  said:  "I  be- 
lieve there  is  great  doubt  as  to  the  usage  about  the  three  days'  grace."  Bullcr,  J:, 
said:  "In  a  case  before  Willes,  C.  J.  (1743),  a  special  jury  certified  that  on  bills 
at  sight  three  daj^s  were  allowed.  That  was  an  action  on  an  inland  bill.  I  know 
that  they  differ  about  it  in  the  city,  but  in  general  it  is  taken."  The  decision  was 
that  a  bill  at  sight  should  have  been  stamped,  not  coming  within  the  provisions 
of  the  Stamp  Act  excluding  bills  on  demand.  Thornburg  v.  Emmons,  23  W.  Va. 
333,  citing  the  text. 

93.  In  Chitty  on  Bills  (13th  Am.  ed.),  426,  and  Bayley  on  Bills,  151,  it  is  so 
distinctly  laid  down.  Chitty,  Jr.,  on  Bills,  50.  In  Byles  on  Bills  (Sharswood's 
ed.),  336,  it  is  said:  "The  weight  of  authority  has  been  considered  to  incline  in 
favor  of  such  an  allowance."  Maxwell  on  Bills,  81-82;  Roscoe's  Digest,  162; 
Edwards  on  Bills,  523;  Story  on  Notes,  §224;  Story  on  Bills,  §§228,  342.  In 
§342  Story  says:  "The  doctrine  seems  now  well  established,  both  in  England 
and  America,  that  days  of  grace  are  allowed  on  bills  payable  at  sight."  1  Parsons 
on  Notes  and  Bills,  405-406;  3  Kent  Com.  103;  Redfield  &  Bigelow  Lead.  Cas.  307. 
See  also  1  Bell  Com.  416;  Selwyn's  N.  P.,  Bills  of  Exchange,  6;  Benjamin's  Chal- 
mers' Digest,  30. 

94.  Johnson  on  Bills,  9;  Kyd  on  Bills,  10;  Beawes,  by  Chitty,  vol.  I,  p.  608; 
Trask  v.  Martin,  1  E.  D.  Smith,  505. 

95.  The  following  cases  are  to  this  effect:  Walsh  v.  Dart,  12  Wis.  635;  Cribbs 
v.  Adams,  13  Gray,  597;  Hart  v.  Smith,  15  Ala.  807;  Knott  v.  Venable,  42  Ala. 
186;  Lucas  v.  Ladew,  28  Mo.  596;  Nimick  v.  Martin,  1  Month.  Law  Mag.  15,  17 
West.  L.  J.  380;  Thornburg  v.  Emmons,  23  W.  Va.  334,  citing  the  text. 

96.  Forbes  on  Bills,  142. 


§§  618,  619      DAYS   OF   GRACE,    AND    COMPUTATION    OF   TIME      695 

A  bill  payable  one  day  after  sight  is  really  payable  four  days  after 
sight,  three  days'  grace  being  added.^^ 

§  618.  Such  being  the  rule  of  the  law  merchant,  it  will  be  presumed 
that  a  bill  or  note  payable  at  sight  is  entitled  to  grace.  In  a  number 
of  the  States,  however,  it  is  provided  by  statute  that  such  instruments 
shall  not  have  grace,  and  in  others  that  they  shall  have  grace.  In 
some  States  it  may  be  that  well-established  custom  or  usage  has 
settled  the  practice  to  disallow  it.^^  If  such  be  the  law  or  custom  of  a 
particular  State  or  locality,  it  will  be  incumbent  on  the  party  alleging 
to  show  it;  and  otherwise  the  rule  of  the  general  law  merchant  pre- 
vailing throughout  the  United  States  must  govern.^^ 

§  619.  The  expression  "  after  sight "  in  a  bill  of  exchange  has  a 
different  signification  from  the  like  expression  in  a  promissory  note. 
In  a  bill  of  exchange  it  means  after  acceptance,  or  protest  for  non- 
acceptance,  and  not  after  a  mere  private  exhibition  to  the  drawee, 
for  the  sight  must  appear  in  a  legal  way.^  Eut  a  note  is  incapable  of 
acceptance,  and  the  words  "at  or  after  sight"  used  in  it  would  merely 
import  that  payment  was  not  to  be  demanded  until  it  had  been  again 
exhibited  to  the  maker. ^  Marius  says:  "A  bill  payable  so  many 
days  after  sight  is  to  be  accounted  so  many  days  next  after 
the  bill  shall  be  accepted,  or  else  protested  for  nonacceptance, 
and  not  from  the  date  of  the  bill,  nor  from  the  day  that  the  same 
came  to  hand  or  was  privately  exhibited  to  the  party  on  whom  it  is 
drawn,  to  be  accepted,  if  he  do  not  accept  thereof;  for  the  sight  must 
appear  in  a  legal  way,  which  is  approved  either  by  the  parties  under- 
writing the  bill,  acceptance  thereof,  or  by  protest  made  for  non- 
acceptance."  ^ 

97.  Craig  v.  Price,  23  Ark.  634. 

98.  This  is  supposed  to  be  the  case  in  Virginia.  In  Indiana  sight  bills  have 
grace  by  statute.  A  statute  relating  to  checks,  etc.,  drawn  upon  banks,  banking 
associations,  etc.,  governs  the  case  of  a  check  drawn  upon  a  national  bank  and 
payable  "ninety  days  after  date,"  and  under  the  particular  statute  the  check 
matured  at  the  expiration  of  the  time  without  any  days  of  grace.  Jocque  v. 
McRae,  142  Mich.  370,  105  N.  W.  874. 

99.  See  Cribbs  v.  Adams,  13  Gray,  497. 

1.  Campbell  v.  French,  6  T.  R.  212;  Mitchell  v.  De  Grand,  1  Mason,  176; 
Byles  [*76],  170;  [*201],  336. 

2.  Hohnes  v.  Kerrison,  2  Taunt.  323;  Sutton  v.  Toomer,  7  B.  &  C.  416;  Dixon  v. 
Nuttall,  1  Cromp.,  M.  &  R.  307. 

3.  Marius,  19,  cited  and  approved  in  Campbell  v.  French,  supra,  by  Lord 
Kenyon. 


696  PRESENTMENT    FOR    PAYMENT  §§  620-622 

§  620.  Only  those  instruments  which  are  negotiable  by  the  law 
merchant,  or  those  which  are  placed  upon  the  same  footing  by  statute, 
and  are,  strictly  speaking,  commercial  instruments,  are  entitled  to 
grace.  In  England,  where,  under  the  statute  of  3  &  4  Anne,  a  note 
payable  to  a  particular  person  is  negotiable,  although  the  words 
"or  order"  or  "or  bearer"  be  not  added,  it  would  have  grace;  ^  and 
so  whenever  such  a  note  is  not  negotiable;  ^  but  where  such  a  note  is 
not  negotiable,  it  would  be  otherwise.^ 

§  621.  Grace  on  instalments. — If  the  bill  or  note  be  payable  in 
instalments,  it  is  entitled  to  grace  on  each  instalment,  for  it  is  really 
so  many  instruments  in  one  form/  If  it  is  payable  "on  demand  at 
sight,"  it  is  the  same  as  if  payable  "at  sight."  ^ 

The  days  are  always  calculated  exclusively  of  the  nominal  day  of 
payment.^ 

§  622.  Number  of  days  allowed  by  law  merchant  and  by  custom. 

—The  law  merchant,  as  it  prevails  in  England  and  the  United  States, 
limits  the  allowance  of  grace  to  three  days,^°  and,  although  it  is 
settled  that  by  specially  established  usage  in  a  particular  locality  it 
may  be  denied  altogether,  or  a  different  number  of  days  may  be 
granted, ^^  the  courts  take  judicial  notice  of  the  period  fixed  by  the 
law  merchant,  and  will  recognize  that  only  unless  the  usage  varying 
it  is  alleged  and  proved. ^^    In  the  District  of  Columbia  the  usage  at 

4.  Smith  V.  Kendall,  6  T.  R.  123  (1794);  Grain  v.  Bode,  5  Wyo.  255,  39  Pac. 
747. 

5.  See  Dutchess  Cotton  Mfg.  Co.  v.  Davis,  14  Johns.  238;  Downing  v.  Back- 
enstoes,  3  Cai.  137. 

6.  Backus  v.  Danforth,  10  Conn.  297;  Avery  v.  Stewart,  10  Conn.  69;  Lamkin 
V.  Nye,  43  Miss.  241;  Tranter  v.  Hibberd,  108  Ky.  265,  56  S.  W.  169,  quoting 
text. 

7.  Oridge  v.  Sherborne,  11  M.  &  W.  374.  Not  so  as  to  mere  instalments  of 
interest.    Macloon  v.  Smith,  49  Wis.  200. 

8.  Dixon  V.  Nuttall,  1  Cromp.,  M.  &  R.  307. 

9.  Story  on  Bills,  §  335. 

10.  Chitty  on  Bills  (13th  Am.  ed.);  Hill  v.  Lewis,  Skin.  410  (1694);  Wood 
V.  Corl,  4  Mete.  (Mass.)  203. 

11.  Jackson  v.  Henderson,  3  Leigh,  197;  Renner  v.  Bank  of  Columbia,  9 
Wheat.  581;  Mills  v.  Bank  of  the  United  States,  11  Wheat.  431;  Wood  v.  Corl,  4 
Mete.  (Mass.)  203;  Kilgore  v.  Bulkley,  14  Conn.  362;  Bank  of  Columbia  v. 
Magruder,  6  Harr.  &  J.  172;  City  Bank  v.  Cutter,  3  Pick.  414;  Morse  on  Banking, 
335;  but  contra,  Woodruff  v.  Merchants'  Bank,  25  Wend.  673,  6  Hill  (N.  Y.),  174; 
Bowen  v.  Newell,  8  N.  Y.  190;  Edwards  on  Bills,  520,  521. 

12.  Jackson  v.  Henderson,  3  Leigh,  197;  Renner  v.  Bank  of  Columbia,  9  Wheat. 


§  623  DAYS    OF   GRACE    AND    COMPUTATION    OF   TIME  697 

one  time  prevailed  to  allow  four  days,  and  it  was  sustained  as  binding 
upon  parties  to  negotiable  instruments  there  payable,  by  the  United 
States  Supreme  Court. ^^  It  extended,  however,  only  to  notes  dis- 
counted in  bank.^^  In  Louisiana,  at  one  time,  ten  days  were  allowed; 
but  this  was  changed  by  statute  to  conform  to  the  law  merchant  in 
the  United  States,^°  and,  of  course,  no  custom  can  affect  a  positive 
enactment.  ^^ 

§  623.  Usages  of  banks  as  to  grace. — The  Supreme  Court  of  the 
United  States  has,  Ij}'  several  decisions,  sanctioned  the  usages  of 
banks  in  particular  localities,  in  making  demand,  and  giving  notice 
of  nonpayment,  in  a  manner  or  at  a  time  varying  from  the  general 
law  merchant,  ^^  and  its  views  are  concurred  in  by  other  high  au- 
thorities. The  following  principles  on  this  subject  may  be  regarded 
as  established:  First,  That  the  usage  be  notorious,  in  order  that  an 
inference  may  be  dra^\Ti  that  it  is  known  to  the  public,  and  especially 
to  those  dealing  with  the  bank,  and,  therefore,  create  the  further 
inference  of  expressed  or  implied  assent.  Second,  That  when  a  usage 
has  been  sanctioned  by  judicial  decision  it  becomes  settled  law.  No 
further  proof  is  necessary  to  establish  it,  and  no  evidence  is  admissible 
to  controvert  the  law  laid  down  by  the  court. ^^  Third,  That  it  should 
apply  to  a  place  rather  than  to  a  particular  bank.^^  Fourth,  That 
it  need  not  be  known  to  the  party  dealing  with  the  bank  at  a  particular 
place.^° 

581;  Bank  of  Columbia  v.  Magruder,  6  Harr.  &  J.  172;  Dollfus  v.  Frosch,  1  Den. 
:5G7;  Wood  v.  Corl,  4  Mete.  (Mass.)  203;  Lucas  v.  Ladero,  28  Mo.  242;  Reed  v. 
Wilson,  41  N.  J.  L.  (13  Vroom)  29.  In  Kentucky  it  has  been  held  to  be  entirely 
a  matter  of  local  custom.    Goddin  v.  Shepley,  7  B.  Mon.  575. 

13.  Renner  v.  Bank  of  the  United  States,  11  Wheat.  431.  See  Fowler  v. 
Brantley,  14  Pet.  318. 

14.  Cookendorfer  v.  Preston,  4  How.  317. 

15.  In  1805,  and  see  Stat,  of  1855-1858;  Dubreys  v.  Farmer,  22  La.  Ann. 
478. 

16.  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

17.  Renner  v.  Bank  of  Columbia,  9  Wheat.  587;  Adams  v.  Otterback,  15 
How.  539. 

18.  Cookendorfer  v.  Preston,  4  How.  317;  Edie  v.  East  India  Co.,  2  Burr. 
1221. 

19.  Renner  v.  Bank  of  Columbia,  9  Wheat.  587;  Mills  v.  Bank  of  the  United 
States,  11  Wheat.  430;  Adams  v.  Otterback,  15  How.  539;  Dorchester,  etc., 
Bank  v.  Milton  Bank,  1  Cush.  177. 

20.  Mills  V.  Bank  of  the  United  States,  11  Wheat.  431;  Fowler  v.  Branily, 
14  Pet.  318;  Lime  Rock  Bank  v.  Hewett,  52  Me.  531;  Morse  on  Banking,  372-373. 


698  PRESENTMENT   FOR   PAYMENT  §§  624,  625 

§  624.  The  term  "  month,"  and  computation  of  months. — By  the 

common  law  of  England  a  month  is  deemed  a  lunar  month,  and  is 
computed  accordingly  in  construing  common-law  contracts  and 
statutes;  ^^  but  by  the  law  merchant,  both  in  England  and  the  United 
States,  a  month  is  construed  to  mean  a  calendar  month  in  all  cases 
of  negotiable  instruments,  and  of  mercantile  contracts.^^  Therefore, 
a  bill  dated  the  first  day  of  January,  and  payable  one  month  after 
date,  would  be  payable  (grace  included)  on  the  fourth  day  of  Feb- 
ruary; and  one  dated  February  1st,  payable  one  month  after  date, 
would  likewise  be  payable  (grace  included)  on  the  fourth  day  of 
March,  although  February  is  two  or  three  days  (in  leap-year)  shorter 
than  January.  When  one  month  is  longer  than  the  next  succeeding 
month,  the  computation  of  a  month  does  not  carry  it  into  a  third 
month.  Thus  a  month  dating  from  the  31st  of  January  would  expire 
on  the  28th  or  29th  of  February,  as  the  case  might  be;  and  in  leap- 
year,  a  month  counting  from  the  31st,  30th,  or  29th  of  January,  would 
end  on  the  29th  of  February,  and  the  last  day  of  grace  would  be 
March  3d.  But  if  a  bill  or  note  were  dated  January  28th,  a  month 
therefrom  would  terminate  on  February  28th,  and  presentment 
should  be  on  March  2d.2^  The  general  rule  was  stated  in  a  New  York 
case  ^^  by  Folger,  J. :  "  In  computing  the  time  when  a  note,  payable 
at  a  certain  number  of  months  after  date,  will  become  due,  the  rule 
is  to  exclude  the  day  of  the  date  from  the  calculation,  and  include 
the  day  of  payment,  when  no  days  of  grace  are  allowed.^^  When 
a  promissory  note  is  dated  on  a  day  of  any  month,  and  made  payable 
at  a  specified  number  of  months  after  date,  without  days  of  grace, 
it  accrues  due  and  payable  on  the  same  day  in  the  stipulated  number 
of  months  afterward  with  the  day  of  the  date  of  the  note."  ^^ 

§  625.  Computation  of  time  when  instrument  payable  on  last  day 

21.  Chitty  on  Bills  (13th  Am.  ed.)  [*373],  420. 

22.  Thomas  v.  Shoemaker,  6  Watts  &  S.  179;  McMurchey  v.  Robinson,  10 
Ohio  St.  496:  Lang  v.  Gale,  1  Maule  &  S.  Ill;  Matter  of  Swonford,  6  Maule 
&  S.  226. 

23.  Wagner  v.  Kenncr,  2  Rob.  (La.)  120;  Chitty  (13th  Am.  ed.)  [*373],  421; 
1  Parsons  on  Notes  and  Bills,  409. 

24.  Roehner  v.  Knickerbocker  Life  Ins.  Co.,  63  N.  Y.  163  (1875). 

25.  Citing  Bellasis  v.  Hester,  1  Ld.  Raym.  280;  Campbell  v.  French,  6  T.  R. 
212. 

26.  Citing  Hartford  Bank  v.  Barry,  17  Mass.  94;  Ripley  v.  Greenleaf,  2  Vt. 
129.  See  also  Doyle  v.  Fu^t  Nat.  Bank  of  Birmingham,  131  Ala.  294,  30  So.  880, 
90  Am.  St.  Rep.  41. 


§  626  DAYS   OF   GRACE,    AND    COMPUTATION    OF   TIME  699 

of  month. — And  whenever  a  note  is  made  on  the  last  day  of  a 
month,  the  corresponding  day  of  the  next  month  is  estimated  as 
the  termination  of  a  month  from  date.  Thus,  if  payable  a  month 
from  February  29th,  in  leap-year,  presentment  should  be  on  the 
1st  of  April,  and  if  on  the  30th  of  September,  presentment  should 
be  on  the  2d  of  November,^^  If  dated  on  an  impossible  date,  such 
as  the  31st  of  September,  the  law  adopts  the  nearest  day  by  the 
doctrine  of  cy  pres  (as  near  as  may  be) ;  and  the  computation  will  be 
from  the  30th  of  September.^^ 

§  626.  As  to  the  computation  of  days. — In  computing  the  num- 
ber of  days  which  a  bill  or  note,  payable  at  or  in  so  many  days  from 
date,  has  to  run,  the  day  of  date  is  always  excluded;  ^^  and  if  payable 
at  so  many  days  after  sight,  after  demand,  or  after  a  particular  event, 
the  day  of  sight,^°  demand,  or  of  the  happening  of  the  event  is  Uke- 
wise  excluded.^^  So,  if  it  be  presented  on  one  day,  and  accepted  on 
another,  the  day  of  acceptance  is  excluded.^-  The  expressions,  "in 
thirty  days," — "in  thirty  days  from  date," — "at  thirty  days," — and 
"thirty  days  after  date,"  are  synonymous.^''  As  said  in  Maine,  by 
Howard,  J. :  "  If  there  be  several  notes  of  the  same  date,  some  pay- 
able in  six  months,  some  in  six  months  from  date,  and  some  in  six 
months  after  date,  they  all  have  the  same  pay-day.  In  all  of  them  the 
day  of  the  date  is  excluded."  ^^ 

27.  Wagner  v.  Kenner,  2  Rob.  (La.)  129;  Wood  v.  Mullen,  3  Rob.  (La.)  299; 
Chitty  [*373],  421;  1  Parsons  on  Notes  and  Bills,  409;  Story  on  Notes,  §213a; 
Story  on  Bills,  §  330;  Edwards,  515. 

28.  Wagner  v.  Kenner,  2  Rob.  (La.)  120;  1  Parsons  on  Notes  and  Bills, 
410. 

29.  Coleman  v.  Sayer,  1  Barn.  303;  Henry  v.  Jones,  8  Mass.  453;  Ammidown 
V.  Woodman,  31  Me.  580;  Taylor  v.  Jacoby,  2  Pa.  St.  495;  Hill  v.  Norvell,  3 
McLean,  583.    Formerly  otherwise,  Bellasis  v.  Hester,  1  Ld.  Raym.  303. 

30.  Coleman  v.  Sayer,  1  Barn.  303;  Lester  v.  Garland,  15  Ves.  248;  Sturdy 
V.  Henderson,  4  B.  &  Aid.  592;  Loring  v.  Hailing,  15  Johns.  120;  Mitchell  v. 
De  Grand,  1  Mason,  176. 

31.  Ibid.;  Barlow  v.  Planters'  Bank,  9  How.  (Miss.)  129. 

32.  Mitchell  v.  De  Grand,  1  Mason,  176. 

33.  Ammidown  v.  Woodman,  31  Me.  580;  Henry  v.  Jones,  8  Mass.  453.  In 
this  case  the  court  said:  "In  the  case  at  bar  the  note  was  made  payable  at  sixty 
days,  without  adding,  as  is  customary,  from  the  date.  But  the  intention  is 
apparent,  and  the  court  will  supply  the  omission.  The  meaning  must  be  the 
same  as  in  sixty  days  from  the  date,  otherwise  a  note  payable  in  one  day  would 
be  payable  immediately,  which  would  be  an  absurdity." 

34.  Ammidown  v.  Woodman,  supra. 


700  PRESENTMENT   FOR    PAYMENT  §§  627,  628 

§  627.  How  Sundays  and  days  of  religious  observance  and  holi- 
days counted. — There  is  a  peculiarity  about  the  calculation  of 
grace,  which  denotes  its  origin  as  arising  from  indulgence.  If  a  bill 
or  note  without  grace,  or  any  noncommercial  instrument  for  pay- 
ment of  money,  falls  due  on  a  Sunday  or  a  legal  holiday,  it  is  not  pay- 
able until  the  next  regular  business  day,  for  the  payor  is  not  compel- 
lable by  law  to  pay  on  the  exact  day  named,  and  the  next  day  is  the 
first  day  that  the  creditor  can  demand  payment.^^  But  the  debtor 
cannot  require  the  creditor  to  extend  his  indulgence  beyond  three 
calendar  days;  and,  therefore,  when  grace  on  a  bill  or  note  entitled 
to  it  expires  on  a  Sunday  or  other  nonbusiness  day,  the  bill  or  note 
would  fall  due  on  the  day  preceding.  Thus,  if  grace  expired  on 
Sunday,  it  would  fall  due  on  Saturday;  ^'^  and  if  a  holiday  (such  as 
Christmas-day)  fell  on  the  Saturday  before  the  Sunday  of  its  matu- 
rity, it  would  fall  due  on  the  Friday  preceding.^^^  The  latest  business 
day  within  or  before  the  period  of  grace  is  the  day  of  payment,'* 
even  though  all  grace  be  excluded.^^  If  a  holiday  or  Sunday  inter- 
venes, or  is  the  nominal  day  of  grace,  it  is  counted  as  one  of  the  days 
of  grace.^°  Courts  take  judicial  notice  of  the  almanac,  and,  therefore, 
of  the  dates  on  which  Sunday  falls.^^ 

§  628.  Days  of  religious  observance. — Days  observed  according 
to  the  religious  usages  of  a  race  or  sect  differing  from  those  which 
generally  prevail,  as  days  of  religious  worship,  fasts  or  festivals,  stand 
on  the  same  footing  as  the  Christian  Sabbath,  in  respect  to  those 
who  belong  to  such  race  or  sect.  Religious  liberty  and  freedom  of 
conscience  require  this.    Thus,  a  Jew,  it  is  said,  could  not  be  com- 

35.  Avery  v.  Stewart,  2  Conn.  69;  Salter  v.  Burt,  20  Wend.  205;  Kuntz  v. 
Temple,  48  Mo.  75;  Barrett  v.  Allen,  10  Ohio  St.  426;  Colms  v.  Bank,  4  Baxt. 
422;  Brennan  v.  Vogt  &  Son,  97  Ala.  647,  11  So.  893;  Capital  Nat.  Bank  v.  Amer- 
ican Exch.  Bank,  51  Ncbr.  707,  71  N.  W.  743. 

36.  Bussard  v.  Levering,  6  Wheat.  192;  Kuntz  v.  Temple,  48  Mo.  75;  Bar- 
rett V.  Allen,  10  Ohio,  426;  Tasscll  v.  Lewis,  1  Ld.  Rayra.  743;  Reed  v.  Wilson, 
41  N.  J.  L.  (13  Vroom)  29;  Morris  v.  Richards,  45  L.  T.  R.  (N.  S.)  210,  Alb.  L.  J., 
Jan.  21,  1882,  p.  53.  Contra,  see  First  Nat.  Bank  v.  McAllister,  33  Nebr.  646, 
50  N.  W.  1040;  National  Bank  v.  American  Exch.  Bank,  51  Nebr.  707,  71  N.  W. 
743,  citing  text;  Bartlett  v.  Leathers,  84  Me.  241. 

37.  Story  on  Bills,  §  338. 

38.  Story  on  Bills,  §338. 

39.  1  Parsons  on  Notes  and  Bills,  402. 

40.  Wooley  v.  Clements,  11  Ala.  229;  Bartlett  v.  Leathers,  84  Me.  241. 

41.  Reed  v.  Wilson,  41  N.  J.  L.  (13  Vroom)  29;  Brennan  v.  Carl,  Vogt  &  Son, 
97  Ala.  647. 


§§  629,  630      DAYS    OF   GRACE,    AND    COMPUTATION    OF   TIME      701 

pelled  to  pay  or  receive  payment  on  Saturday,  if  he  observed  it  as  a 
day  of  abstinence  from  secular  business.^^  "The  law  merchant  re- 
spects the  religion  of  different  people."  ^^ 

§  629.  What  days  are  legal  holidays  are  determined  by  statute 
law  and  by  the  decisions  of  the  courts  in  the  various  States.  Christ- 
mas is  universally  regarded  as  a  legal  holiday.  The  Fourth  of  July 
is  everywhere  regarded  so  in  the  United  States;  £.nd  in  many  of  them 
the  22d  of  February  and  fast  and  Thanksgiving  days  and  New  Year's 
day,  likewise.  In  most  of  the  States  there  are  statutes  specifying  the 
legal  holidays  and  prescribing  the  practice  with  respect  to  them;  but, 
independent  of  them,  usage  would  determine  whether  any  day  was  to 
be  so  regarded,  and  also  the  regulations  concerning  it.'**  In  Massachu- 
setts, it  has  been  held  that  although  commencement  day  at  Harvard 
University  was  not  a  legal  holiday,  yet  that  a  usage  of  any  bank  in 
respect  to  notes  falling  due  on  that  day,  to  make  a  demand  and  to 
send  notice  the  day  previous,  would  bind  an  indorser,  conusant  of  the 
usage  of  a  note  discounted  for  him  at  that  bank;  and  whether  the  note 
was  payable  at  the  bank  or  not  was  immaterial.** 

But  the  usage  of  a  bank  in  a  particular  city  to  regard  New  Year's 
day  as  a  holiday,  would  not  justify  a  demand  the  day  previous,  so  as 
to  charge  an  indorser,  unless  he  had  express  knowledge  of  the  usage, 
or  previous  dealings  with  the  bank,  from  which  such  knowledge  could 
be  inferred.*^ 

It  has  been  held  that  a  law  making  a  legal  holiday,  and  thereby 
affecting  notes  as  to  grace,  does  not  impair  the  obligation  of  a  con- 
tract.*^   This  view,  however,  has  been  questioned.** 

§  630.  A  bill  or  note  operates  as  from  its  date  as  soon  as  it  is 
delivered,  whether  it  be  truly  dated,  or  antedated,  or  postdated, 
although  it  does  not  become  an  operative  contract  until  it  is  de- 
livered.*^   When  there  is  no  date  or  an  impossible  one,  it  operates 


42.  Story  on  Bills,  §  340;  1  Parsons  on  Notes  and  Bills,  .530. 

43.  Lindo  v.  Unsworth,  2  Campb.  602,  Lord  Ellenborough. 

44.  1  Parsons  on  Notes  and  Bills,  403. 

45.  City  Bank  v.  Cutter,  3  Pick.  414. 

46.  Dabney  V.  Campbell,  9  Humphr.  680.    See  Mills  v.  Bank  of  U.S.,  11  Wheat. 
431. 

47.  Barlow  v.  Gregory,  31  Conn.  261. 

48.  See  Duerson's  Admr.  v.  Alsop,  27  Gratt.  238  (1876),  Staples,  J. 

49.  PoweU  V.  Waters,  8  Cow.  699.     See  ante,  §§  83-85. 


702  PRESENTMENT   FOR    PAYMENT  §§  631,  632 

from  its  delivery;  ^^  and  if  no  date  or  delivery  is  shown,  from  the 
time  when  it  appears  to  have  first  been  in  existence.^^  The  objec^i, 
of  the  date  is  simply  to  fix  the  time  of  maturity;  ^^  and  parol  evidence 
cannot  be  admitted  to  vary  it,^^  unless  between  the  immediate  parties 
upon  application  to  equity  on  the  ground  of  fraud  or  mistake. 

§  631.  As  to  usance. — When  bills  are  drawn  in  one  country  of 
Europe  upon  another,  they  are  frequently  made  payable  at  one, 
two,  or  more  usances,  instead  of  at  so  many  months  or  days.  "Us- 
ance" is  a  French  term,  and  signifies  the  time  which,  according  to  the 
usage  of  the  countries  between  which  the  bills  are  drawn,  is  appointed 
for  payment  of  them.^''  The  length  of  the  usance  differs  in  different 
countries;  and  what  period  it  signifies  is  not  taken  judicial  notice  of 
by  foreign  courts,  but  must  be  averred  and  proved.^^  Between  the 
United  States  and  the  European  nations,  it  seems  that  no  usances  are 
established;  ^^  and  in  Europe  the  practice  of  drawing  bills  at  a  certain 
number  of  days  or  months  is  taking  the  place  of  drawing  at  usance.-" 
When  a  month  constitutes  the  usance,  a  half  usance  is  fifteen  days, 
and  bills  may  be  drawn  at  half,  or  double,  or  treble  usance.^^  Usance 
is  calculated  exclusively  of  the  day  of  date,  and  grace  is  allowed  a,s  in 
other  cases.^* 

§  632.  Style. — The  Gregorian  calendar,  or  new  style  of  com- 
puting time,  is  adopted  in  the  United  States,  and  everywhere  else, 
except  in  Russia,  and  those  countries  where  the  Greek  Church  is 
the  estabhshed  religion.  They  use  the  Juhan  calendar,  or  old  style, 
as  it  is  called.  There  is  the  difference  of  twelve  days  between  the  two 
styles;  and  the  addition  of  that  number  to  the  old  makes  the  new 
style.  The  1st  of  January  in  St.  Petersburg,  Russia,  is,  therefore,  the 
13th  of  January  in  England  and  the  United  States.  The  style  of  the 
place  of  payment,  however,  always  prevails;  and  if  a  bill  were  drawn 
in  London  on  the  1st  of  September,  payable  in  St.  Petersburg  on  the 

50.  Meclianics'  Bank  v.  Schuyler,  7  Cow.  337. 

51.  Mahior  v.  LeBlanc,  12  La.  Ann.  207. 

52.  BrewKtor  v.  McCardlc,  8  Wend.  478. 

53.  Hu-ston  v.  Young,  33  Mo.  85. 

54.  Chitty  on  Bills  (13th  Am.  ed.)  [*3711,  418;  Story  on  Bills,  §§  50,  144,  332. 

55.  Chitty  [*371],  418. 

56.  1  Pur.sons  on  Notes  and  Bills,  389. 

57.  Chitty,  418. 

58.  Ibid. 
69.  Ibid. 


§§  633,  634     DAYS  OF   GRACE,   AND   COMPUTATION  OF  TIME      703 

1st  of  January,  it  would  fall  due  on  the  day  corresponding  to  the  13th 
of  January  in  England;  and  vice  versa.^^  This  is  because  the  parties 
are  to  be  regarded  as  contracting  in  reference  to  the  meaning  of  terms 
at  the  place  of  their  fulfilment.^^ 

§  633.  How  grace  dispensed  with. — By  any  language  in  the  bill 
or  note  of  that  import,  grace  may  be  disallowed.  And  such  words 
as  "without  grace,"  or  "no  grace,"  obviously  disallow  it;^^  and  the 
word  "fixed"  has  been  held  to  have  the  same  import.^''  But  the 
expression  "without  defalcation"  does  not;  ^^  nor  would  a  mere 
marginal  memorandum  of  the  day  of  the  month  and  year  on  which 
the  time  after  date  at  which  the  instrument  was  expressed  to  be 
payable  fell  due.^^  But  where  a  bill  at  sixty  days'  sight  was  accepted 
on  September  14th,  payable  November  16th,  it  was  held  that  Novem- 
ber 16th  was  indicated  by  the  acceptor  to  be  the  absolute  day  of  pay- 
ment, he  having  intended  to  allow  for  grace  in  his  calculation;  and 
that  presentment  on  that  day  was  necessary .^^ 

§  634.  Place  of  payment  regulates  grace. — The  allowance  of 
grace  is  always  determined  by  the  law  of  the  place  where  the  bill  or 
note  is  payable.^''  But  the  law  merchant  allov.-ing  grace,  and  fixing 
it  at  three  days,  will  be  followed  unless  it  be  affirmatively  proved  that 
the  law  of  such  place  is  different.  Thus,  if  executed  and  sued  on  in 
this  country,  where  three  days  are  allowed,  and  payable  in  France, 
where  grace  is  abolished,^^  three  days'  grace  would  be  accorded,  un- 
less the  law  of  France  were  proved.^^ 

60.  Story  on  Bills,  §  331;  1  Parsons  on  Notes  and  Bills,  388. 

61.  Chitty  on  Bills  [*369],  417. 

62.  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

63.  Durnford  v.  Patterson,  7  Mart.  460. 

64.  McDonald  v.  Lee,  12  La.  435;  Bell  v.  First  Nat.  Bank,  115  U.  S.  382. 

65.  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

66.  Kenner  v.  Creditors,  19  Mart.  540,  20  Mart.  36;  Bell  v.  First  Nat.  Bank, 
115  U.  S.  382 

67.  Chitty  on  Bills  (13th  Am.  ed.)  [*376],  425;  Story  on  Notes,  §  216;  Story 
on  Bills,  §  334;  Byrant  v.  Edson,  8  Vt.  325;  Bowen  v.  Newell,  13  N.  Y.  290; 
Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Kilgore  v.  Buckley,  14  Conn.  362; 
Skelton  v.  Dunsten,  92  111.  49.    See  post,  §  908. 

68.  Code  of  Commerce,  art.  135. 

69.  Dollfus  V.  Frosch,  1  Den.  367. 


704  PRESENTMENT   FOR   PAYMENT  §  635 

SECTION  V 

PLACE    OF    PRESENTMENT   FOR    PAYMENT 

§  635.  At  what  place  presentment  should  be  made,  when  bill  or 
note  is  payable  generally. — The  presentment  of  the  bill  or  note 
for  payment  should  be  made  at  the  city,  town  or  other  place  in  which 
the  acceptor  or  maker  has  his  home  or  domicile,  or  his  place  of  busi- 
ness, provided  there  be  no  place  designated  in  the  instrument  or 
agreed  upon  by  the  parties  as  the  place  where  it  shall  be  paid  at  ma- 
turity .^"^  If  such  place  is  designated  or  agreed  upon,  it  will  be  suffi- 
cient to  make  presentment  thereJ^  And  averment  of  presentment 
there  is  always  sufficient,  without  any  addition^^  If  the  bill  be  ad- 
dressed to  the  drawee  in  a  particular  city,  as  for  instance,  to  "A.  B., 
New  York,"  the  city  named  would  be  regarded  as  the  place  of  pre- 
sentment for  payment,  if  the  acceptance  be  without  explanation  or 
condition/^  If  the  maker  or  acceptor  has  both  a  dwelling-house  and  a 
business  house  in  the  same  city,  town  or  other  place,  the  presentment 
may  be  made  at  either/^     And  if  the  maker  or  acceptor  have  a 

70.  Oakley  v.  Beauvais,  11  La.  487;  Mitchell  v.  Baring,  10  B.  &  C.  11;  Cox  v. 
National  Bank,  100  U.  S.  (10  Otto)  713;  People's  Bank  v.  Lutterloh,  95  N.  C. 
495.  Where  a  note  provided  that  if  the  interest  were  not  paid  monthly  the  whole 
sum  of  both  principal  and  interest  should  become  due  immediately,  and  the  note 
was  not  by  its  terms  payable  at  a  special  place  but  the  maker  had  an  established 
place  of  business,  ready  and  willing  to  pay  the  interest  when  due,  the  owner  could 
not  exercise  the  option  to  declare  the  whole  due  on  failure  to  pay  interest  without 
giving  the  maker  an  opportunity  to  pay  by  presentment  and  demand  at  his  place 
of  business.  Bardsley  v.  Washington  Mill  Co.,  54  Wash.  553,  103  Pac.  822,  132 
Am.  St.  Rep.  1133. 

71.  Brent's  Exrs.  v.  Bank  of  Metropolis,  1  Pet.  92;  Eason  v.  Isbell,  47  Ala. 
456  (1868);  Ewen  v.  Wilbor,  99  111.  App.  132,  affirmed  208  111.  492,  70  N.  E.  575. 
Where  a  note  on  its  face  was  made  payable  in  a  named  city,  and  the  maker  added 
to  his  signature  a  certain  address  in  that  city,  presentation  of  the  note  at  the  ad- 
dress so  given,  in  the  absence  of  any  change  of  address  and  notice  thereof  to  the 
payee  or  holder,  would  be  sufficient,  although  the  maker  was  on  that  day  absent 
from  the  city.  Hipp  v.  Fidelity  Mut.  Life  Ins.  Co.,  128  Ga.  491,  57  S.  E.  892,  12 
L.  R.  A.  (N.  S.)  319. 

72.  Hawkey  v.  Borwick,  4  Bmg.  136  (13  Eng.  C.  L.);  Cox  v.  National  Bank,  100 
U.  S.  (10  Otto)  716. 

73.  Cox  V.  National  Bank,  100  U.  S.  (10  Otto)  704.    See  post,  §  640. 

74.  Story  on  Bills,  §  236.  Under  a  statute  providing  that  presentment  must 
be  made  at  the  place  specified  for  payment,  a  demand  by  letter  addressed  to  the 
maker  at  a  business  building  in  the  same  city  not  the  place  of  payment  mentioned 


§  635  PLACE    OF  705 

dwelling-house  or  domicile  in  one  city,  and  a  place  of  business  in  an- 
other, it  will,  as  it  seems,  be  sufficient  to  present  the  instrument  at 
either 7°  If  a  bill  be  payable  m  a  particular  to^vn,  a  presentment  at  all 
of  the  banker's  houses  there  will  suffice.'^  In  such  case,  where  the 
maker  used  due  diligence  to  find  at  what  bank  the  note  was  left  for 
presentment  without  success,  he  was  relieved  from  a  penalty  for  fail- 
ure to  pay  it  the  instant  of  maturity/^  In  an  action  upon  a  draft 
upon  N.  F.  Mills,  "care  of  M.  S.  &  Co.,  No.  114  South  Main  st.,  St. 
Louis,  Mo.,"  the  notarial  certificate  stated  that  the  notary  presented 
it  "at  the  place  of  business  of  N.  F.  Mills,  St.  Louis,  to  the  person  in 
charge  thereof."  It  appeared  that  N.  F.  Mills  had  two  places  of  busi- 
ness in  St.  Louis,  one  of  which  was  No.  114;  and  it  was  held  that  the 
certified  presentment  was  insufficient  to  show  due  dihgence,  to  charge 
the  indorsers.^^ 

When  the  bill  is  presented  for  acceptance,  the  drawee  may  detam 
it  for  twenty-four  hours,  if  he  desire,  before  acting,  to  examine  his 
accounts;  but  when  a  bill  or  note  is  presented  for  payment,  it  must 
be  paid  immediately;  and  the  place  of  presentment  for  payment 
would,  therefore,  seem  more  important  than  the  place  of  presentment 
for  acceptance.  Presentment  for  acceptance  at  the  private  dwelling 
of  the  drawer  is  sufficient;  ^^  and  the  authorities  support  the  doctrine 
that  it  is  equally  sufficient  to  make  presentment  there  for  payment.^" 
In  New  York,  the  rule  is  thus  stated  by  Folger,  J.:  "Demand  of  pay- 
ment at  the  usual  place  of  business  of  the  maker,  though  he  be  absent, 
is  sufficient;  or  at  his  residence;  or  to  him  in  person."  ^^ 

in  the  note,  is  not  suflBcient.  Merchants'  Nat.  Bank  of  Santa  Monica  v.  Bentel, 
15  Cal.  App.  170,  113  Pac.  708. 

75.  Story  on  Bills,  §§  236,  351;  1  Parsons  on  Notes  and  Bills,  422,  note  m. 

76.  Hardy  v.  Woodroofe,  2  Stark.  319;  Byles  [*2071,  323;  Clough  v.  Holden, 
115  Mo.  336,  21  S.  W.  1071,  37  Am.  St.  Rep.  393,  citing  text;  Haber  v.  Brown,  101 
Cal.  445,  35  Pac.  1035. 

77.  Ansel  v.  Olson,  39  Kan.  767. 

78.  Brooks  v.  Higby,  11  Hun,  236  (1877),  Smith,  J.:  "As  it  appears  that  the 
acceptor  had  two  places  of  business  in  St.  Louis,  the  certificate  furnished  no  evi- 
dence whatever  that  the  presentment  and  demand  were  at  the  place  where  the 
draft  was  payable.    The  proof  was  fatally  defective." 

79.  Chitty  on  Bills  (13th  Am.  ed.)  [*278],  316. 

80.  M'Gruder  v.  Bank  of  Washington,  9  Wheat.  198,  the  court  saying:  "It  is 
enough  if  the  demand  be  made  at  his  place  of  abode,  or  generally  at  the  place 
where  he  ought  to  be  found."  Sanderson  v.  Judge,  2  H.  Bl.  509,  it  being  said,  "It 
is  sufficient  if  it  (demand)  be  made  at  the  house  of  the  maker  of  the  note."  Sham- 
burgh  V.  Comagere,  10  Mart.  18;  Stivers  v.  Prentice,  3  B.  Mon.  461. 

81.  Gates  v.  Beecher,  60  N.  Y.  522. 

45 


706  PRESENTMENT   FOR   PAYMENT  §  636 

Under  Negotiable  Instrument  statute. — Under  the  statute  pre- 
scribing the  place  of  presentment  for  payment,  it  has  been  held  that 
where  a  note  expresses  on  its  face  that  it  is  payable  at  a  certain  store, 
a  presentment  of  such  note  at  such  store  for  payment  on  the  day  of  its 
maturity  is  a  proper  place  for  presentment  to  charge  an  indorser, 
as  no  personal  demand  on  the  maker  of  the  note  is  necessary .^^ 

§  636.  When  payor  has  well-known  place  of  business. — When, 
however,  the  maker  or  acceptor  has  a  well-known  house  or  place  of 
business  where  he  is  accustomed  to  transact  his  financial  affairs,  and 
where  demand  may  be  made,  it  would  be  safer  and  more  appropriate 
to  present  it  there.  Certainly  it  would  seem  unreasonable  to  expect, 
during  the  business  hours  of  the  day,  to  find  any  one  at  a  private 
residence  to  answer  respecting  the  payment  of  a  negotiable  instru- 
ment, when  the  maker  or  acceptor,  if  he  have  any  place  of  business, 
would  be  presumably  there;  and  during  such  business  hours  due 
diligence  would  not  appear  to  have  been  exerted  in  demanding  pay- 
ment at  his  house.^^  If,  however,  business  hours  had  closed,  a  present- 
ment at  the  dwelling  would  seem  sufficient.  It  is  undoubted  that  a 
presentment  and  demand  of  payment  at  the  place  of  business  of  the 
maker  or  acceptor  is  sufficient.^'*  Where  it  was  contended  that 
the  demand  should  have  been  made  at  the  maker's  house,  -it 
was  held   otherwise.^^     But    if    the   place   of   business   cannot   be 

82.  Appendix,  sec.  73.  Nelson  v.  Grondahl,  13  N.  D.  363,  100  N.  W.  1093. 
The  phrase  "a  place  of  pajmaent"  does  not  mean  an  individual,  a  corporation, 
or  institution,  and  when  a  note  was  by  its  terms  made  payable  at  a  designated 
branch  of  a  trust  company,  this  referred  to  the  place  of  payment  and  not  to  the 
corporation,  and  presentment  at  the  principal  office  of  the  trust  company  on  the 
date  due  was  not  sufficient  to  change  indorsers.  Ironclad  Mfg.  Co.  v.  Sackin, 
114  N.  Y.  S.  42,  129  App.  Div.  555. 

83.  1  Parsons  on  Notes  and  Bills,  423. 

84.  Lanussa  v.  Massicot,  3  Mart.  361. 

85.  Sussex  Bank  v.  Baldwin,  2  Harrison,  487.  In  this  case  it  was  contended 
that  demand  should  have  been  at  the  dwelling,  but  the  court  said:  "It  appears  by 
the  evidence  that  the  office  in  question  was  the  regular  place  of  business  of  the 
maker;  and  I  have  no  doubt  where  a  person  has  an  office,  or  known  and  settled 
place  of  business  for  the  transaction  of  his  moneyed  concerns,  whether  he  be  a 
banker,  broker,  merchant,  manufacturer,  mechanic,  or  dealer  in  any  other  way,  a 
presentment  and  demand  at  that  place,  as  well  as  a  presentment  and  demand  at 
his  residence,  is  sufficient.  It  must  not,  however,  be  a  place  selected  and  used 
temporarily  for  the  transaction  of  some  particular  business,  as  settling  up  some 
old  books  or  accounts  merely,  but  his  regular  and  known  place  of  business  for  the 
transaction  of  his  moneyed  concerns.  The  counting-room  of  a  banker  or  mer- 
chant may  be  a  proper  place  for  a  demand,  though  the  manufactory  or  work- 


§  637  PLACE  OF  707 

found,^^  then  demand  should  be  made  at  the  maker's  house.^^  If  a 
bill  be  accepted  payable  at  a  banker's,  and  the  banker  is  holder  at 
maturity,  that  fact  alone  amounts  to  presentment;  ^  so  if  it  be  left 
there  for  coUeetion.^^ 

§  637.  Usual  place  of  business ;  rule  when  it  is  closed  and  aban- 
doned.— The  place  of  business  must  be  the  "usual  place  of  busi- 
ness" of  the  party,  and  not  that  used  for  a  mere  temporary  occupa- 
tion; ^°  though  if  it  be  really  the  place  where  he  transacts  his  financial 
concerns,  it  matters  not  that  it  is  a  mere  ofl&ce,  or  desk-room  in  an 
office  with  others,  and  a  demand  there  in  his  absence  made  during 
business  hours  will  be  sufficient.^^  If  the  party  has  closed  and  aban- 
doned his  place  of  business  at  the  time  the  bill  or  note  matures,  but 
has  a  place  of  residence  in  the  city  or  other  place  where  his  business 
was  conducted,  which  could  be  ascertained  by  reasonable  inquiry,  the 
presentment  for  pajonent  should  be  made  at  his  residence,  and  a 
presentment  at  the  former  place  of  business  will  not  suffice.^^  And, 
of  course,  where  the  party  has  no  place  of  business  other  than  the 
dwelling,  the  presentment  must  be  at  the  dwelling.^^  And  so,  if  a 
partnership  place  of  business  be  closed  and  abandoned  when  the  note 
matures,  and  one  of  the  partners  resides  in  the  town  or  city,  present- 
ment at  his  residence  must  be  made.^^  But  ordinarily  the  statement 
of  the  notary's  certificate  that  he  called  at  the  place  of  business  of  the 
acceptor  or  maker  to  make  demand,  during  the  usual  hours  of  bus- 
shop  would  not.  Yet,  if  the  manufacturer  or  mechanic  have  an  office  or  known 
place  of  business  for  the  purpose  aforesaid,  a  good  demand  may  be  made  there. 

86.  Glaser  v.  Rounds,  16  R.  I.  236,  14  Atl.  863. 

87.  Jarvis  v.  Garnett,  39  Mo.  271. 

88.  Bailey  v.  Porter,  14  M.  &  W.  44.  And  if  the  bank  has  meanwhile  become 
insolvent,  demand  of  payment  may  be  made  and  notice  of  nonpayment  given  to 
the  bank  or  some  one  in  possession.  Auten  v.  Manistee  Nat.  Bank,  67  Ark.  243, 
54  S.  W.  337. 

89.  Nichols  v.  Goldsmith,  7  Wend.  160. 

90.  Sussex  Bank  v.  Baldwin,  2  Harr.  457. 

91.  West  V.  Brown,  6  Ohio  St.  542;  Williams  v.  Hoogewerff,  25  Md.  128;  Bank 
of  Commonwealth  v.  Mudgett,  44  N.  Y.  514  (case  of  protest). 

92.  Granite  Bank  v.  Ayres,  16  Pick.  392.  See  vol.  II,  §  1118;  Famsworth  v. 
Mullen,  164  Mass.  112,  41  N.  E.  151;  Reinke  v.  Wright,  93  Wis.  368,  67  N.  W. 
737,  citing  and  approving  text. 

93.  Packard  v.  Lyon,  5  Duer.  82.  Maker  was  a  married  woman  who  kept  a 
boarding-house,  but  her  name  was  not  in  the  directory.  Demand  at  a  bank  where 
note  was  deposited,  with  inquiry  as  to  place  of  residence,  was  held  insufficient, 
and  indorser  was  discharged. 

94.  Granite  Bank  v.  Ayres,  16  Pick.  392. 


708  PRESENTMENT    FOR    PAYMENT  §  638 

iness,  and  found  it  closed,  is  sufficient;  for,  unless  he  has  abandoned 
and  permanently  closed  it,  his  duty  is  to  keep  some  one  there  to 
answer  business  demands  during  business  hours.^^ 

§  638.  When  presentment  is  to  party  in  person,  place  generally 
unimportant. — When  the  presentment  is  made  to  the  maker  or  ac- 
ceptor personally,  the  place  is  not  important,  provided  there  is  an 
express  or  implied  refusal  to  pay.  Presentment  at  the  barn-yard 
has  been  held  sufficient,  the  party  "making  no  objection,  and  inti- 
mating no  readiness  to  pay  ";  ^^  and  even  in  the  street  presentment 
would  seem  to  be  usually  good,  unless  objected  as  improper,  or  some 
reason  were  given  for  the  refusal.^^  This  view  seems  to  us  correct.^^ 
But  it  would  be  more  businesslike  not  to  make  demand  at  such  a 
place,  and  there  are  authorities  which  hold  that  the  party  is  not  bound 
to  pay  any  attention  to  a  demand  so  entirely  outside  of  the  custom  of 
merchants.^^  In  a  case  in  Maine,  demand  on  the  street  of  the  maker, 
he  having  no  place  of  business,  and  raising  no  objection,  was  held 
sufficient  to  charge  the  indorser,  and  the  law  was  laid  down  with  dis- 
crimination and  sound  judgment  by  Virgin,  J.,  who  said:  ^  "it  would 
seem  that  such  a  demand  would  be  more  satisfactory  than  a  mere 
formal  ceremony  of  a  demand  gone  through  at  his  place  of  residence 
during  the  maker's  absence.  And  we  have  no  hesitation  in  declaring 
the  demand  sufficient  under  the  circumstances,  so  far  as  the  place  is 


95.  See  vol.  II,  §  1118. 

96.  Baldwin  v.  Farnsworth,  1  Fairfax,  414. 

97.  1  Parsons  on  Notes  and  Bills,  421. 

98.  King  V.  Crowell,  61  Me.  244  (1873);  Parker  v.  Kellog,  158  Mass.  90,  32 
N.  E.  1038,  citing  text. 

99.  King  V.  Holmes,  11  Pa.  St.  456,  Rogers,  J.,  saying:  "The  court  correctly 
instructed  the  jury  that  a  demand  in  the  street  of  an  acceptor  of  a  bill  of  exchange 
is  not  a  sufficient  demand;  that  when  a  bill  is  payable  generally,  and  not  at  a  par- 
ticular place,  the  demand  must  be  at  the  place  of  business  of  the  acceptor.  But 
if  the  notary,  on  his  way  to  the  place  of  business  of  the  acceptor,  meets  him  on  the 
street,  and  informs  him  of  his  business  and  where  he  is  going,  and  the  acceptor 
offers,  if  he  will  go  to  his  place  of  business,  to  give  him  only  a  check  on  a  broker, 
it  is  not  necessary  for  the  notary  to  proceed  further.  The  demand  at  the  place  of 
business  is  waived  by  the  payor  or  acceptor.  It  is,  in  effect,  a  refusal  to  pay,  for 
an  offer  to  pay  by  a  check  on  a  banker,  in  legal  contemplation,  is  nothing.  It 
is  not  such  a  tender  as  the  notary  would  be  justified  in  accepting.  In  this  case, 
the  acceptor  had  no  cause  of  complaint,  for  the  notary  offered  to  receive  a  check 
on  one  of  the  banks  in  payment  of  the  bill." 

1.  King  V.  Crowell,  61  Me.  244  (1873);  Townsend  v.  Dry  Goods  Co.,  85  Mo. 
508,  citing  the  text. 


§  639  PLACE   OF  709 

concerned,  to  charge  the  defendant  (an  indorser).  We  are  aware 
that  Byles  on  Bills,  196,  declares  that  a  demand  on  the  street  is  not 
sufficient.  Such  is  the  doctrine  expressed,  too,  in  the  author's  notes  in 
Lead.  Cas.  on  Bills,  328,  329.  And  there  are  several  cases  containing 
the  dictum  in  general  terms  that  a  demand  must  be  made  either  at 
the  maker's  place  of  business  or  place  of  residence.  But  our  attention 
has  been  called  to  no  case,  neither  have  we,  after  considerable  research, 
been  able  to  find  any,  wherein  the  court  having  the  question  before 
it,  decided  adversely  to  a  demand  made  on  the  street,  under  circum- 
stances similar  to  those  in  this  case." 

§  639.  Place  of  date  prima  facie  place  of  payment. — The  place 
of  date  in  a  note  does  not,  of  itself,  make  it  payable  there,  and  when 
a  note  is  payable  generally,  the  parties  may  agree  upon  the  place 
where  it  shall  be  presented,  and  parol  evidence  is  admissible  to  prove 
such  an  agreement.^  It  has  been  held  that  where  the  maker  and 
indorsers  have  agreed  where  a  note  payable  generally  shall  be  pre- 
sented for  payment,  presentment  at  such  place  is  sufficient  to  charge 
the  indorsers  as  well  as  the  maker;  ^  and  the  grounds  upon  which  the 

2.  1  Parsons  on  Notes  and  Bills,  424;  Redfield  &  Bigelow's  Lead.  Cas.  326. 
Contra,  Story  on  Notes,  49;  Pierce  v.  Whitney,  29  Me.  188;  McNair  v.  Moore,  55 
S.  C.  435,  33  S.  E.  491. 

3.  Cox  V.  National  Bank,  100  U.  S.  (10  Otto)  713;  Brent's  Exrs.  v.  Bank  of 
the  Metropolis,  1  Pet.  92,  Marshall,  C.  J.,  saying:  "The  plaintiffs  in  error  con- 
tended that  the  testimony  ought  not  to  have  been  admitted,  because  it  was  an 
attempt  by  parol  proof  to  vary  a  written  instrument.  But  this  is  not  an  attempt 
to  vary  a  written  instrument.  The  place  of  demand  is  not  expressed  on  the  face 
of  the  note,  and  the  necessity  of  a  demand  on  the  person,  when  the  parties  are 
silent,  is  an  inference  of  law,  which  is  drawn  only  when  they  are  silent.  A  parol 
agreement  puts  an  end  to  this  inference,  and  dispenses  with  a  personal  demand. 
The  parties  consent  to  a  demand  at  a  stipulated  place,  instead  of  a  demand  on 
the  person  of  the  maker,  and  this  does  not  alter  the  instrument  so  far  as  it  goes, 
but  supplies  extrinsic  circumstances  which  the  parties  are  at  liberty  to  supply. 
No  demand  is  necessary  to  sustain  a  suit  against  the  maker.  His  undertaking  is 
unconditional;  but  the  indorser  undertakes  conditionally  to  pay,  if  the  maker  does 
not,  and  this  imposes  on  the  holder  the  necessity  of  taking  proper  steps  to  obtain 
payment  from  the  maker.  This  contract  is  not  written,  but  is  implied.  It  is, 
that  due  diligence  to  obtain  payment  from  the  maker  shall  be  used.  When  the 
parties  agree  what  this  due  diligence  shall  be,  they  do  not  alter  the  written  con- 
tract, but  agree  upon  an  extrinsic  circumstance,  and  substitute  that  agreement 
for  an  act  which  the  law  prescribes  only  where  they  are  silent."  This  case  was 
based  on  evidence  that  the  indorsers,  as  well  as  the  maker,  had  agreed  that  de- 
mand should  be  made  at  a  particular  place — the  Bank  of  the  Metropolis.  State 
Bank  v.  Hurd,  12  Mass.  171;  Meyer  v.  Hibscher,  47  N.  Y.  265;  Thompson  v. 


710  PRESENTMENT   FOR   PAYMENT  §  640 

decisions  to  this  effect  are  based  are  broad  enough  to  establish  the 
sufficiency  of  presentment  at  any  place  agreed  upon  by  the  maker. 
The  contract  of  the  indorsers  is  to  pay  if  due  diligence  to  obtain  pay- 
ment from  the  maker  is  used  without  effect.  Due  diligence  requires 
presentment  to  the  maker  at  his  dwelhng  or  place  of  business;  and 
if  the  maker  designates  a  place  of  payment,  it  is  as  much  as  to  say, 
I  will  accept  presentment  at  the  place  named,  and  make  it  my  place 
of  business  so  far  as  this  transaction  is  concerned.  Every  obj  ect  which 
would  require  presentment  at  the  place  of  business  is  attained.^ 

§  640.  Due  diligence  in  seeking  maker  to  make  presentment. — 

Whether  or  not  due  diligence  to  find  the  maker  of  a  note  at  the  place 
where  it  is  dated,  will  be  sufficient,  has  been  debated.  The  place  of 
date  is  prima  facie  evidence  that  it  is  the  place  of  the  maker's  resi- 
dence and  place  of  business;  and  it  is  sufficient,  we  should  say,  to 
charge  an  indorser  to  have  the  note  in  that  place  at  the  time  of  ma- 
turity, and  to  make  proper  inquiry  after  the  place  of  the  maker's  resi- 
dence or  place  of  business,  provided  that  the  holder  does  not  know 
that  his  residence  is  elsewhere.^  And  if  it  were  proved  that  the  maker 
resided  elsewhere,  it  would  not  devolve  upon  the  holder  the  burden  of 
showing  that  he  made  inquiries  as  to  his  residence.^    This  doctrine  is 

Ketchum,  4  Johns.  285.  But  see  Anderson  v.  Drake,  14  Johns.  114;  Rose  v.  Mc- 
Cracken,  20  Tex.  Civ.  App.  637,  50  S.  W.  152,  citing  text. 

4.  1  Parsons  on  Notes  and  Bills,  424;  Sussex  Bank  v.  Baldwin,  2  Harrison,  487, 
on  the  ground  of  estoppel.  This  doctrine  is  doubted  in  Redfield  &  Bigelow's 
Lead.  Cas.  427. 

6.  Britton  v.  Nichols,  104  U.  S.  757;  Bank  of  Fayetteville  v.  Lutterloh,  95  N.  C. 
499,  citing  the  text;  Salisbury  v.  Bartleson,  39  Minn.  366.  In  Meyer  v.  Hlbscher, 
47  N.  Y.  270,  it  is  said  by  the  court,  per  Folger,  J.:  "In  such  case  (the  note  being 
dated  at  a  place  and  payable  generally)  the  note  must  be  presented  and  payment 
asked  for  at  the  place  of  business  therein  of  the  maker  if  he  has  one;  and  if  he 
has  no  place  of  business,  then  at  his  place  of  residence.  And  if  he  have  neither 
place  of  business  nor  residence,  then,  if  the  holder  of  the  note  is  at  the  place  where 
it  is  in  general  made  payable,  on  the  day  of  payment,  with  the  note,  ready  to  re- 
ceive payment,  it  is  sufficient  to  constitute  a  presentment  and  demand."  Apper- 
son  V.  Bynum,  5  Coldw.  348;  Staylor  v.  Williams,  24  Md.  199;  Moodie  v.  Morrall, 
3  Const.  Rep.  367;  Stewart  v.  Eden,  2  Cai.  121.  But  see  Apperson  v.  Pritchard, 
9  Heisk.  793;  Hazard  v.  Spencer,  17  R.  I.  566,  23  Atl.  729,  citing  text;  Rose  v. 
McCracken,  20  Tex.  Civ.  App.  637,  50  S.  W.  152,  citing  text;  Haber  v.  Brown, 
101  Cal.  445,  35  Pac.  1035. 

6.  In  Smith  v.  Philbrick,  10  Gray,  252,  Merrick,  J.,  said:  "This  is  an  action 
brought  by  indorsers  against  a  prior  indorser  to  recover  the  contents  of  a  promis- 
sory note.  At  its  maturity  the  holder  placed  it  in  the  hands  of  a  notary  pubhc 
who,  by  his  direction,  went  with  it  to  the  place  of  business  which  the  maker  form- 


§  640  PLACE   OF  711 

sustained  by  high  authority  in  America,  and  is  that  adopted  in  Scot- 
land ;  ^  and  it  seems  to  us  correct,  notwithstanding  that  there  are  cases 
in  which  a  contrary  view  is  taken,  and  that  it  has  been  criticised  by  an 
eminent  author.^  It  is  true  that  the  execution  of  a  note,  and  the  dating 
of  it  at  a  particular  place,  does  not  make  it  necessarily  payable  there,^ 
and  this  is  the  ground  on  which  Professor  Parsons  bases  the  opinion 
that  due  diligence  is  not  exercised  in  presenting  it  there  without 
inquiry;  but  the  question  seems  to  us  not  one  as  to  the  contract  of 
payment,  but  simply  as  to  the  likelihood  of  the  maker's  whereabouts. 
And  in  the  absence  of  other  information,  it  seems  reasonable  to  pre- 
sume that  he  will  be  found  at  the  place  where  he  executes  his  business 
paper,  and  that  if  it  had  been  intended  that  it  should  be  payable 
elsewhere,  it  would  be  so  expressed  on  its  face.^** 

And  when  the  bill  or  note  is  made  on  terms  payable  in  a  city,  with- 
out specification  of  a  particular  place,  and  the  acceptor  or  maker  has 
no  residence  or  place  of  business  there,  it  will  certainly  be  sufficient 
to  charge  the  drawer  or  indorser  if  the  holder  have  the  bill  or  note 

erly  occupied  in  the  city  of  Boston,  and  there  made  inquiry  for  him,  in  order,  if 
he  were  found,  to  present  it  to  him  for  payment.  He  was  not  found,  and  no  de- 
mand of  payment  was  made.  The  defendant  insists  that  he  is  not  Hable  as  in- 
dorser, and  that  this  action  cannot  be  maintained.  The  note  is  dated  and  was 
made  at  Boston,  where  the  maker  then  was  on  a  visit  for  a  temporary  purpose 
only.  He  then,  and  has  ever  since,  resided  at  Port  Lavacca,  in  the  State  of  Texas, 
where  he  had  his  only  place  of  business.  At  the  trial  no  evidence  was  produced  to 
show  whether  the  plaintiff,  or  any  of  the  subsequent  holders  of  the  note,  knew  that 
the  maker's  residence  and  place  of  business  were  in  Boston  or  elsewhere;  there  was 
no  evidence  whatever  upon  that  question.  *  *  *  The  defendant  insists  that 
the  plaintiffs  ought  to  have  been  required,  if  they  would  avail  themselves  of  that 
rule,  to  show  affirmatively  that  both  they  and  all  the  subsequent  holders  of  the 
note  were  ignorant  of  the  fact  that  the  maker  of  the  note  had  no  residence  or  place 
of  business  in  the  city  of  Boston.  This  is  not  so.  The  presumption  is,  as  has  been 
before  stated,  in  the  absence  of  all  other  evidence  upon  the  subject,  that  the  resi- 
dence of  the  promisor  is  at  the  place  where  the  paper  to  which  he  subscribes  his 
name  is  dated.  Either  party  may  controvert  this  presumption,  and  overcome  it 
by  proofs  introduced.  But  no  evidence  to  the  contrary  having  been  laid  before 
the  court,  this  presumption  is  to  stand." 

7.  Thompson  on  Bills  (Wilson's  ed.),  286. 

8.  1  Parsons  on  Notes  and  Bills,  458.  But  see  p.  453,  of  the  same  volume,  in 
which  the  opinion  concords  with  the  text  substantially,  and  varies  from  that  sub- 
sequently given;  also  p.  442.  And  see  chapter  XXIX,  on  Notice,  section  VI; 
Mason  v.  Pritchard,  9  Heisk.  797.  In  this  case  the  maker  signed  himself  as  "Cap- 
tain of  the  steamboat  Southerner." 

9.  Taylor  v.  Snyder,  3  Den.  145;  Lightner  v.  Hill,  2  Watts  &  S.  140;  Anderson 
V.  Drake,  14  Johns.  114;  Fisher  v.  Evans,  5  Binn.  541. 

10.  Davis  v.  Eppler,  38  Kan.  631,  approving  the  text. 


712  PRESENTMENT   FOR   PAYMENT  §  641 

in  the  city  at  maturity,  ready  to  be  presented  and  delivered  up,  if  the 
maker  or  acceptor  should  appear;  ^^  and  certainly  due  inquiry  in  the 
city  named  in  the  address  for  the  acceptor  would  be  sufficient  pre- 
sentment to  charge  drawer  or  indorser.^^  And,  indeed,  it  seems  that 
it  would  be  idle  to  make  a  bill  payable  in  a  particular  city,  without 
naming  a  particular  place  therein,  if  the  drawee  does  not  reside  or 
have  a  place  of  business  there.  The  law  requires  no  useless  ceremony, 
and  the  absence  of  the  party  from  the  place  of  payment  would  dis- 
pense with  the  necessity  of  going  where  it  is  known  he  would  not  be 
found,  and  it  is  not  necessary  that  the  bill  should  be  sent  there  and 
protested.  ^^ 

§  641.  Presentment  of  notes  made,  and  of  bUls  drawn  or  ac- 
cepted, payable  at  a  particular  place  in  England. — In  England,  the 
steps  necessary  to  fix  the  liability  of  parties  to  notes  and  bills  made, 
drawn,  or  accepted,  payable  at  a  particular  place,  were  for  a  long  time 
the  subject  of  much  disputation,  the  history  of  which  it  is  no  longer 
necessary  to  follow  minutely  in  order  to  appreciate  fully  the  settled 
condition  of  the  law,  or  to  understand  its  bearings  upon  the  decisions 
in  the  United  States.  A  case  came  finally  before  the  House  of  Lords, 
in  which  the  effect  of  an  acceptance  in  the  following  language  was  dis- 
cussed: "Accepted,  payable  at  Sir  John  Perring  &  Co.,  bankers,' 
London;"  ^'*  and  that  body,  overruling  the  views  of  eight  of  the  twelve 
judges  whose  opinion  had  been  taken  on  the  question,  decided  that 
the  acceptance  was  conditional,  restricting  the -place  of  payment,  and 
that  the  holder  was  bound  to  present  the  bill  at  the  bankers  named  in 
order  to  charge  the  acceptor.  If  the  holder  brought  an  action  against 
the  acceptor,  it  was  held  necessary  that  he  should  aver  and  prove 
such  presentment,  otherwise  the  declaration  would  be  bad  upon  de- 
murrer. This  decision  led  to  the  passage  of  the  statute  1  &  2  Geo.  IV. 
(generally  called  Sergeant  Onslow's  Act),  by  which  it  was  enacted 
that  an  acceptance  payable  at  the  house  of  a  banker,  or  other  place, 
without  further  expression,  should  be  deemed  a  general  acceptance ; 
but  if  it  were  expressed  payable  at  a  banker's,  or  other  place," only, 
and  not  otherwise  or  elsewhere,"  it  should  be  a  qualified  acceptance, 

11.  Root  V.  Franklin,  3  Johns.  207;  Mascn  v.  Franklin,  3  Johns.  202;  Edwards 
on  Bills,  500.  Compare  Williams,  Admr.  v.  Planters'  &  Mechanics'  Nat.  Bank, 
91  Tex.  651,  45  S.  W.  690. 

12.  Cox  V.  National  Bank,  100  U.  S.  (10  Otto)  704.     See  ante,  §§  90,  635. 

13.  Ibid.;  Edwards  on  Bills,  158. 

14.  Rowe  V.  Young,  2  Brod.  &  B.  165,  Bligh,  391. 


§§  642,  643  PLACE   OP  713 

and  the  acceptor  should  not  be  liable  except  upon  due  demand  at  the 
place  named. 

§  642.  English  statute  not  applicable  to  notes. — This  statute, 
it  will  be  observed,  did  not  apply  to  promissory  notes, ^^  and  the 
liability  of  the  drawer  or  indorser  of  a  bill  remained  unchanged.^^ 
Where  the  place,  therefore,  is  mentioned  in  the  body  of  a  note,  pre- 
sentment must,  in  England,  be  averred  and  proved,"  but  if  a  place 
were  mentioned  in  a  memorandum  beneath  the  maker's  signature, 
it  would  be  regarded  as  directory  only.^^  Where  a  bill  is  drawn  with 
the  expression  of  a  particular  place  only,  and  not  elsewhere  in  the 
body,  and  accepted  without  further  expression  in  the  acceptance,  it 
would  be  within  the  rule  of  the  statute  making  it  a  qualified  accept- 
ance.^^ And  the  words,  "and  not  elsewhere,"  alone  would  be  sufii- 
cient  to  incorporate  the  qualification, ^° 

The  same  principles  apply  where  the  place  of  payment  is  speci- 
fied in  the  body  of  the  bill,  and  the  acceptance  is  simply  according 
to  its  tenor;  and  it  will  be  necessary,  in  order  to  charge  the  drawer, 
to  present  the  bill  at  the  particular  place,  if  one  be  named.^^ 

§  643.  Presentment  at  a  particular  place  in  the  United  States. — 
The  Supreme  Court  of  the  United  States,  and  almost  all  the  courts 
of  last  resort  of  the  several  States,  have  coincided  with  the  views 
presented  by  a  majority  of  the  judges  in  the  case  of  Rowe  v.  Young 
(quoted  in  a  note  to  the  foregoing  paragraph),  and  differing  from 
the  decision  of  the  House  of  Lords  in  that  case;  and  in  the  United 
States  it  may  be  considered  as  settled  that  where  a  note  is  made  pay- 
able at  a  particular  banker's,  or  other  place,^^  or  a  bill  is  drawn  or 

15.  Emblem  v.  Dartnell,  12  M.  &  W.  830. 

16.  Gibb  V.  Mather,  8  Bing.  214. 

17.  Sanderson  v.  Bowes,  14  East,  500. 

18.  Sanderson  v.  Judge,  2  H.  Bl.  509;  1  Parsons  on  Notes  and  Bills,  428.  But 
see  §  643,  post  as  to  rule  in  the  United  States. 

19.  Halsted  v.  Skelton,  5  Q.  B.  86. 

20.  Higgins  v.  Nichols,  7  Dowl.  551. 

21.  Boydell  v.  Harkness,  3  C.  B.  168  (54  Eng.  C.  L.);  Selby  v.  Eden,  3  Bing. 
611,  11  J.  B.  Moore,  511;  Fayle  v.  Bird,  6  B.  &  C.  531,  2  Car.  &  P.  303,  9  Dowl. 
&  R.  639.  See  the  decisions  as  to  Promissory  Notes,  Byles  on  Bills  (Sharswood's 
ed.)  [*246],  342;  1  Parsons  on  Notes  and  Bills,  308,  note  z. 

22.  Wallace  v.  McConnell,  13  Pet.  136;  Cox  v.  National  Bank,  100  U.  S.  (10 
Otto)  714;  Schoharie  County  Nat.  Bank  v.  Bevard,  51  Iowa,  258;  Armistead 
V.  Armistead,  10  Leigh,  525;  Watkins  v.  Crouch,  5  Leigh,  522;  Ruggles  v.  Patten, 
8  Mass,  480;  Caldwell  v.  Cassidy,  8  Cow.  271;  McNairy  v.  Bell,  1  Yerg.  502; 


714  PRESENTMENT   FOR   PAYMENT  §  643 

accepted,  payable  in  like  manner, ^^  it  is  not  necessary,  in  respect 
to  the  maker  or  acceptor,  to  aver  or  prove  presentment  or  demand 
of  payment  at  such  place  on  the  day  the  instrument  became  due 
or  afterward,  in  order  to  maintain  an  action  against  him.^^  The 
only  consequence  of  neglect  of  the  holder  to  present,  as  said  by 
President  Tucker  in  a  Virginia  case,^^  is  "that  the  maker,  if  he  was 
ready  at  the  time  and  place  to  make  the  payment,  may  plead  the 
matter  in  bar  of  damages  and  costs;  but  he  must,  at  the  same  time, 
bring  the  money  into  court  which  the  plaintiff  will  be  entitled  to  re- 
ceive. A  further  consequence,  indeed,  might  follow,  if  any  loss  had 
been  sustained  by  his  failure  to  present;  but  this  must  be  set  up  as 
matter  of  defense."  ^^  And  he  is  only  discharged  to  the  extent  of  the 
loss  or  injury  sustained.^^  If  the  maker  has  funds  in  the  bank,  and 
withdraws  them  after  time  of  payment,  the  holder  is  entitled  to 
principal  and  interest  against  him.^ 

It  has  been  held  that  another  consequence  of  failure  to  present 

Thiel  V.  Conrad,  21  La.  Ann.  214;  Renshaw  v.  Richards,  30  La.  Ann.  398;  Hills 
V.  Place,  48  N.  Y.  520  (1872);  Howard  v.  Bowman,  17  Wis.  459;  McCullough 
V.  Cook,  34  Ind.  334;  Montgomery  v.  Tutt,  11  Cal.  307;  Reeve  v.  Pack,  6  Mich. 
240;  Yeaton  v.  Berney,  62  111.  62;  Hill  v.  Allen,  37  Ind.  541.  Kent  and  Story 
inclined  to  the  Enghsh  rule.  Story  on  Notes,  §§  227,  229,  3  Kent  Com.  99; 
Picquet  v.  Curtis,  1  Sumn.  478;  Merchants'  Bank  v.  Evans,  9  W.  Va.  373;  Baltzer 
V.  Kansas  Pacific  R.  Co.,  3- Mo.  App.  574;  Yeaton  v.  Berney,  62  111.  61;  Insurance 
Co.  V.  Wilson,  29  W.  Va.  543,  citing  the  text;  Mclntyre  v.  Insurance  Co.,  52 
Mich.  188;  Callanan  v.  Williams,  71  Iowa,  363;  Lazier  v.  Horan,  55  Iowa,  77, 
citing  the  text.  The  same  rule  has  been  held  to  apply  to  the  case  of  one  who  was 
a  joint  maker  in  form,  though  in  fact  a  surety.  Chafoin  v.  Rich,  77  Cal.  476; 
Hinkley  v.  Fourth  Nat.  Bank,  77  Ind.  475,  citing  the  text;  Central  Nat.  Bank 
v.  Stoddard,  83  Conn.  332,  76  Atl.  472;  Farmers'  Nat.  Bank  v.  Venner,  192  Mass. 
531,  78  N.  E.  540;  Hillman  v.  Stanley,  56  Wash.  320,  105  Pac.  816. 

23.  Foden  v.  Sharp,  4  Johns.  183;  Blair  v.  Bank  of  Tennessee,  11  Humphr.  84. 

24.  Contrary  decisions  have  been  rendered  in  a  few  cases  in  the  United  States. 
In  Indiana,  Pahner  v.  Hughes,  1  Blackf.  328;  Gilly  v.  Springer,  1  Blackf.  257; 
Alden  v.  Barbour,  3  Ind.  414,  agreed  with  the  Enghsh  doctrine,  but  are  now 
overruled;  Hall  v.  Allen,  37  Ind.  541.  The  decisions  in  Louisiana,  formerly  of 
the  same  tenor,  have  been  overruled,  and  the  general  doctrine  now  prevails  there 
also.  Riley  v.  Cheeseman,  75  Hun,  387,  27  N.  Y,  Supp.  1453;  Brockway  v. 
Gadsden  Mineral  Land  Co.,  102  Ala.  620,  15  So.  431. 

25.  Armistead  v.  Armistead,  10  Leigh,  525,  reaffirming  Watkins  v.  Crouch, 
5  Leigh,  322. 

26.  To  the  same  effect,  see  Story  on  Bills,  §  356;  Bank  v.  Zom,  14  S.  C.  444. 

27.  Lazier  v.  Horan,  55  Iowa,  75.  But  the  maker  has  also  been  held  to  be 
reUeved  from  liability  for  future  accruing  interest  on  the  note.  Cheney  v.  Bilby, 
20  C.  C.  A.  291,  74  Fed.  52. 

28.  Hills  v.  Place,  48  N.  Y.  520  (1872). 


§  644  PLACE   OF  715 

at  the  place  of  payment  as  to  the  maker,  is,  that  where  the  perform- 
ance of  any  contract  which  he  has  made  is  dependent  upon  the  pay- 
ment of  such  paper,  he  cannot  be  held  to  be  in  default  unless  the 
paper  was  presented  at  maturity  at  the  place  at  which  it  was  made 
payable.^^ 

Under  Negotiable  Instrument  statute. — In  an  action  against  the 
maker  of  a  note  payable  at  a  particular  time  and  place,  a  deanand 
need  not  be  averred  and  proved.  If  the  maker  was  ready  and  offered 
at  the  time  and  place  to  pay  it,  this  is  a  matter  of  defense,  to  be 
pleaded  and  proved  by  him.^° 

§  644.  Liability  of  indorser  and  drawer. — In  respect  to  the  in- 
dorser  of  a  bill  or  note,  or  the  drawer  of  a  bill,  payable  at  a  particular 
bank  or  other  place,  the  rule  is  different.  He  is  not  the  original 
debtor,  but  only  a  surety.  His  undertaking  is  not  general,  but  con- 
ditional upon  due  diligence  being  used  against  the  principal  debtor, 
and  such  diligence  requires  presentment  at  the  place  specified,  where 
it  is  to  be  presumed  that  funds  have  been  provided  to  meet  the  bill 
or  note  at  maturity.^^  When  it  is  necessary  to  present  the  paper  at 
the  bank  it  is  insufficient  to  show  a  demand  of  the  cashier.^^  It  has 
been  held  that  presentment  at  a  different  place  from  that  at  which 
the  note  is  payable,  and  an  absolute  refusal  of  the  maker  to  pay,  and  a 
statement  that  any  further  presentment  at  the  place  specified  would 
be  useless,  because  there  were  no  funds  there,  would  not  charge  an 
indorser. ^^   And  where  a  note  payable  at  one  bank  was  by  the  consent 

29.  Robinson  v.  Cheney,  17  Nebr.  673;  Rose  v.  McCracken,  20  Tex.  Civ. 
App.  637,  50  S.  W.  152,  citing  text;  Bank  of  SaUne  v.  Wingfield,  68  Mo.  App.  335. 

30.  Appendix,  sec.  70.  Florence  Oil  &  Refining  Co.  v.  First  Nat.  Bank,  38 
Colo.  119,  88  Pac.  182. 

31.  Bank  of  the  United  States  v.  Smith,  11  Wheat.  171;  Cox  v.  National 
Bank,  100  U.  S.  (10  Otto)  712;  Watkins  v.  Crouch,  5  Leigh,  522;  Brown  v.  HuU, 
23  Gratt.  27;  Shaw  v.  Reed,  12  Pick.  132;  Nichols  v.  Poole,  2  Jones  (N.  C),  33; 
Lawrence  v.  Dobyns,  30  Mo.  196;  Ferner  v.  Williams,  37  Barb.  9;  Chitty  on  Bills 
(13th  Am.  ed.),  409;  Story  on  Notes,  §  230;  Parker  v.  Stroud,  98  N.  Y.  379; 
Brown  v.  Jones,  113  Ind.  46,  citing  the  text;  Dailey  v.  Sharkey,  29  Mo.  App.  519; 
Townsend  v.  Dry  Goods  Co.,  85  Mo.  508,  citing  the  text;  Hazard  v.  Spencer, 
17  R.  L  566,  23  Atl.  729,  citing  text;  May  v.  Jones,  88  Ga.  308,  14  S.  E.  552,  30 
Am.  St.  Rep.  154,  note,  citing  text;  Claflin  County  v.  Feibelman  &  Co.  et  al., 
44  La.  Ann.  518,  10  So.  862,  citing  text;  McBride  v.  Illinois  Nat.  Bank,  121 
N.  Y.  S.  1041,  138  App.  Div.  339;  Merchant's  Nat.  Bank  of  Santa  Monica  v. 
Bentel,  15  Cal.  App.  170,  113  Pac.  708. 

32.  Seneca  County  Bank  v.  Neass,  5  Den.  329;  Insurance  Co.  y,  Wilson,  29 
W.  Va.  544,  citing  the  text. 

33.  Smith  v.  McLean,  2  Taylor,  72. 


716  PRESENTMENT   FOR   PAYMENT  §§  645,  646 

of  an  indorser  negotiated  at  another,  it  was  held  that  demand  at  the 
latter  would  not  charge  the  indorser,  although  there  were  no  funds  in 
the  bank  where  the  note  was  made  payable.^'' 

§  645.  Where  the  instrument  is  payable  "  on  demand,"  or  "  on 
demand  after  a  certain  time." — A  distinction  has  been  taken  by 
some  of  the  courts  in  respect  to  bills  and  notes  payable  "on  demand," 
or  payable  "on  demand  after  a  specified  time,"  and  the  opinion  ex- 
pressed that  in  such  cases  averment  and  proof  of  demand  are  necessary 
as  well  against  the  acceptor  or  maker  as  against  the  drawer  or  in- 
dorser. In  Virginia,  the  Supreme  Court  of  Appeals,  while  decidmg 
according  to  the  current  of  American  authority  m  respect  to  a  note 
payable  at  a  fixed  time,  expressly  restricted  its  application,  and 
Stanard,  J.,  said:^^  "This  decision  does  not  embrace  the  case  of  a 
note  or  obligation  payable  in  terms  on  demand,  at  a  particular  place 
after  the  lapse  of  a  specified  time.  In  such  cases  it  would  probably 
be  held,  that  there  is  no  default  of  the  maker  or  acceptor,  until  such 
demand  be  made,  and,  consequently,  that  no  action  would  accrue 
to  the  payee  until  such  demand  should  be  made." 

In  England,  it  was  said  by  Lord  Ellenborough,  that  in  such  cases 
"the  time  of  payment  depends  entirely  on  the  pleasure  of  the  holder 
of  the  note,"  ^^  and  that  consideration  seemed  to  him  to  render  it 
impracticable  for  the  maker  or  acceptor  to  set  up  the  defense  of 
readiness  to  pay.  The  Supreme  Court  of  the  United  States  has 
followed  the  same  line  of  opinion,  Thompson,  J.,  saying:  ^^  "Where  the 
promise  is  to  pay  on  demand  at  a  particular  place,  there  is  no  cause 
of  action  until  the  demand  is  made,  and  the  maker  of  the  note  cannot 
discharge  himself  by  an  offer  of  payment,  the  note  not  being  due  until 
demanded." 

§  646.  Comments  on  views  presented. — Striking  as  these  views 
may  seem,  they  do  not  appear  to  us  to  bear  analysis  as  affording 
ground  for  departure  from  the  general  principle.  A  bill  or  note 
payable  on  demand  is  payable  immediately,  and  if  on  demand  after 
a  certain  time,  immediately  upon  that  time  arriving.     Although 


34.  Watkins  v.  Crouch,  5  Leigh,  522. 

35.  Armistead  v.  Armistead,  10  Leigh,  52L 

36.  Sanderson  v.  Bowes,  14  East,  500. 

37.  Wallace  v.  McConnell,  13  Pet.  136;  Savage,  C.  J.,  to  same  effect  in  Cald- 
well V.  Cassidy,  8  Cow.  271,  but  overruled  by  Haxtun  v.  Bishop,  3  Wend.  1, 
same  judge. 


§§  647,  648  PLACE   OF  717 

payable  at  a  particular  place,  the  payor  may,  if  he  apprehends  loss 
by  delay,  or  desires  to  discharge  it,  pay  it  anywhere.  And  the  mere 
circumstance  that  it  might  be  more  difficult  for  the  payor  to  show  a 
loss  resulting  from  a  failure  to  present  when  his  liability  was  continu- 
ing to  be  always  ready,  than  when  he  is  only  required  to  shoulder  the 
responsibility  of  being  ready  at  a  fixed  time,  does  not  seem  to  us 
sufficient  to  change  the  rule.  He  has  the  advantage  of  not  being 
subjected  to  a  protest  until  demand  is  made;  he  may  pay  at  any  time 
if  he  pleases,  and  thus  avoid  all  contingency  of  loss;  he  may  still  show- 
loss  if  any  occurs.  Suit  brought  is  itself  a  demand;  and  as  present- 
ment at  the  particular  place,  although  it  be  expressed,  is  no  condition 
precedent  as  to  him,  we  cannot  perceive  how  the  words  "on  demand," 
which  relate  to  time  and  not  to  place,  can  impliedly  create  a  condition 
which  even  express  words  without  the  addition  of  "not  elsewhere"  do 
not  create.  The  difficulty  of  the  defense  does  not  change  the  prin- 
ciple which  requires  it;  and  the  cases  which  so  determine  seem  to 
us  to  adopt  the  true  philosophy  of  the  subject.^^ 

§  647.  In  respect  to  bank  notes,  it  has  been  held  that  when  pay- 
able on  demand — or  on  demand  after  a  certain  time — at  a  designated 
place,  the  demand  must  be  averred  and  proved  against  the  bank;  ^^ 
and  they  have  been  distinguished  from  individual  notes  by  some  of 
the  cases.^°  But  there  are  also  express  decisions  the  other  way;  and 
we  can  perceive  no  sufficient  reason  for  the  distinction."*^  Loss,  if  any, 
may  be  shown  by  the  bank  as  well  as  by  the  individual. 

§  648.  When  instrument  is  payable  at  either  of  the  several  places. 

— If  a  bill  of  exchange  be  drawn  payable  at  either  of  two  places,  and 
is  accepted  accordingly,  as,  for  example,  if  drawn  payable  at  Maid- 
stone or  London,  the  holder  has  his  choice  to  present  it  at  either  place 
for  payment;  and  the  like  rule  applies  to  a  note  made  payable  at 
either  of  two  places.  If  the  bill  or  note  be  not  duly  paid  at  the  place 
where  it  is  presented,  the  holder  may  protest  it  and  give  notice  to  the 

38.  McKinney  v.  Whipple,  21  Me.  98;  Gammon  v.  Everett,  25  Me.  66;  New 
Hope  D.  Bank  v.  Perry,  11  111.  467;  Cook  v.  Martin,  5  Smedes  &  M.  379  (note 
payable  on  demand  five  months  after  date).  Undoubtedly,  however,  if  pleaded 
that  the  money  was  there  and  remained  there  for  payment,  and  so  proved,  it 
would  be  treated  as  a  tender,  and  stop  interest  and  costs.  Hibemia  Bank  & 
Trust  Co.  v.  Smith  (Miss.),  42  So.  345. 

39.  Bank  of  North  Carolina  v.  Bank  of  Cape  Fear,  13  Ired.  75. 

40.  Dougherty  v.  Western  Bank,  13  Ga.  87. 

41.  Montgomery  v.  Elliott,  6  Ala.  701;  Haxtun  v.  Bishop,  3  Wend.  1. 


718  PRESENTMENT  FOR   PAYMENT  §§  649,  650 

drawer  and  indorsers,  who  will  be  bound  by  its  presentment  and  dis- 
honor at  the  place  of  his  election;  although  if  presented  at  the  other 
place  it  would  have  been  duly  paid;  for  in  such  cases  all  the  parties 
agree  to  pay  the  bill  or  note  upon  due  presentment  at  either  place.  *^ 

§  649.  Bills  and  notes  payable  at  either  of  several  banks. — Some- 
times a  promissory  note  is  made  payable  at  any  or  either  of  the  banks 
in  a  particular  place,  by  some  such  expression  as  "payable  at  bank  in 
Boston,"  ^^  or  "at  either  of  the  banks  in  Boston,"  ^^  or  "at  any  bank 
in  Boston,"  ^^  or  by  being  dated  at  a  particular  place  and  made 
payable  "at  bank."  '^^  In  all  such  cases,  the  stipulation  as  to  the 
place  of  payment  is  understood  to  be  for  the  accommodation  of  the 
payee  or  holder,  who  is  given  the  right  to  elect  the  bank  at  which  the 
note  should  be  presented  in  order  to  charge  the  indorsers;  and  if, 
upon  presentment  at  any  or  either  bank  in  the  place  named,  payment 
is  refused,  the  indorsers,  as  well  as  the  maker,  are  bound.  The 
maker's  promise  is  to  pay  the  note  at  any  of  the  banks  in  the  place, 
and  the  duty  is  imposed  upon  him  to  look  at  all  the  banks  for  it,  or 
provide  funds  to  pay  it  at  all  of  them  when  it  is  due."*^  The  office 
of  a  private  banker  is  not  a  bank  within  the  terms  of  a  note  payable 
"at  any  bank  in  Boston." 

§  650.  A  bill  of  exchange  accepted,  payable  in  like  manner,  stands 
upon  the  same  footing  as  a  promissory  note,  and  the  drawer  and 
indorsers,  as  well  as  the  acceptor,  will  be  bound  if  it  be  presented  at 
any  or  either  of  the  banks  in  the  place  named.^^  This  principle  applies 
to  large  cities  with  many  banks,  as  well  as  to  small  cities  with  few ;  ^° 
and  the  opinion  once  intimated  that  where  there  are  several  banks  in 

42.  Beeching  v.  Gower,  1  Holt,  313;  Story  on  Bills,  §  354;  Story  on  Notes, 
§231;  Benjamin's  Chalmers'  Digest,  163;  Bartholomew  v.  First  Nat.  Bank, 
18  Wash.  683,  52  Pac.  239.  Held  in  this  case  that  a  draft  drawn  upon  a  business 
house  in  Monte  Cristo  "via  Everett  Nat.  Bk."  could  be  presented  to  the  latter 
place  for  payment,  and  there  be  protested  for  nonpayment. 

43.  Maiden  Bank  v.  Baldwin,  13  Gray,  154. 

44.  Page  v.  Webster,  15  Me.  249;  Freeman's  Bank  v.  Ruckman,  16  Gratt.  126. 

45.  Langley  v.  Palmer,  30  Me.  467;  Brickett  v.  Spalding,  33  Vt.  109;  Voit 
v.  Corr,  54  Ala.  113. 

46.  Hazard  v.  Spencer,  17  R.  I.  561,  23  Atl.  729. 

47.  Maiden  Bank  v.  Baldwin,  13  Gray,  154,  and  cases  cited  above;  Hazard 
v.  Spencer,  17  R.  I.  561,  23  Atl.  729. 

48.  Way  v.  Butterworth,  108  Mass.  509. 

49.  Jackson  v.  Packer,  13  Conn.  342. 

50.  Langley  v.  Palmer,  30  Me.  467. 


§  651  PLACE   OF  719 

a  large  city,  the  holder  must  give  notice  to  the  promisor  where  the 
paper  is/^^  may  be  regarded  as  overruled. 

It  has  been  urged  against  this  doctrine  in  every  case  which  has 
adopted  it,  that  the  holder  should  give  notice  at  what  particular 
bank  he  elected  to  make  the  demand.  But  it  has  been  well  answered 
that  "to  require  the  holder  to  give  such  previous  notice  would  not 
only  defeat  the  object  of  relieving  him  from  trouble  and  risk,  but 
would  subject  him  to  much  greater  than  if  the  bill  or  note  were  made 
payable  at  one  bank  only;"  ^^  and  that  "if  the  parties  wish  for  more 
certainty  as  to  the  place  of  payment,  let  them  be  more  explicit  in  the 
bill."  ^3 

§  651.  When  drawee  or  acceptor  resides  in  one  place,  and  bill  is 
payable  in  another. — Where  the  drawee  of  a  bill  resides  in  one 
place,  and  it  is  drawn  payable  in  another  place,  it  would  be  sufficient 
to  present  the  bill  for  acceptance  to  the  drawee  at  the  place  where  he 
resides,  and  if  acceptance  were  refused,  it  might  be  there  protested. ^'^ 
And  if  the  bill,  not  accepted,  were  presented  to  the  drawee  at  his 
place  of  residence  for  payment,  and  payment  refused,  and  there  is  no 
particular  place  designated  in  the  bill  for  presentment,  it  would  be 
sufficient,  although  the  bill  was  payable  in  a  certain  city.  Thus, 
where  a  bill  was  drawn  in  Liverpool,  and  was  payable  in  London,  and 
was  protested  for  nonacceptance,  and  also  for  nonpayment  in  Liver- 
pool, where  the  drawee  resided,  Kent,  C.  J.,  said:^^  "A  general 
refusal  to  pay  was  a  refusal  to  pay  according  to  the  face  of  the  bill. 
It  was  equivalent  to  a  refusal  to  pay  in  London.  We  do  not  mean  to 
say  that  the  demand  for  pa5anent  at  Liverpool  was  indispensable. 
The  bill  being  payable  at  London,  it  would  have  been  sufficient  for  the 
holder  to  have  been  there  when  the  bill  fell  due,  ready  to  receive  pay- 
ment. In  the  present  case,  a  protest  at  London,  or  a  demand  and 
protest  at  Liverpool,  were  sufficient,  and  the  holder  might  take  either 
course."  So,  if  the  bill,  drawn  upon  the  drawee  on  one  place  and  pay- 
able in  another,  be  not  accepted  by  the  drawee,  but  is  accepted  supra 
protest  for  his  honor  by  a  third  person,  the  presentment  and  demand 
should  be  made  of  the  drawee  at  the  place  where  he  resides,  and  not 

61.  North  Bank  v.  Abbott,  13  Pick.  465,  Shaw,  C.  J.,  expressed  this  opinion, 
but  the  question  was  not  directly  before  the  court. 

52.  Page  v.  Webster,  15  Me.  24,  Shepley,  J. 

53.  Jackson  v.  Packer,  13  Conn.  342,  Waite,  J. 

54.  Mason  v.  Franklin,  3  Johns.  202. 
66    Mason  v.  Frankhn,  3  Johns.  202. 


720  PRESENTMENT   FOR   PAYMENT  §§  652,  653 

at  the  place  where  it  is  made  payable,  because  there  has  been  no 
acceptance  of  the  bill,  and,  consequently,  the  drawee  has  not  au- 
thorized any  presentment  upon  him,  except  at  his  place  of  residence.^^ 

§652.  When  the  bill  has  been  accepted  by  the  drawee,  and  is 
drawn  payable  in  another  place,  the  case  is  different.  There  the 
acceptor  only  authorizes  the  presentment  at  the  place  designated, 
and  the  drawer  or  indorsers  will  be  discharged  if  the  bill  be  not 
there  presented,  or  ready  for  presentment  at  maturity.^^ 

§  653.  Allegations  in  pleading  as  to  place  of  payment.— While 

it  is  not  necessary  in  a  declaration  to  aver  that  a  bill  or  note,  when 
due,  was  presented  at  the  place  of  payment  and  not  paid,  the  place 
of  payment  is  a  material  part  in  the  description  of  the  note,  and  must 
be  set  out  in  the  declaration.^^  And  it  has  been  said  by  the  United 
States  Supreme  Court:  "Nothing  is  better  established,  both  upon 
principle  and  authority,  than  that  if  the  place  where  a  note  is  payable 
is  omitted  in  the  declaration,  it  is  fatal."  ^^  As  to  the  allegations  of 
the  declaration,  however,  it  has  been  held,  that  if  the  legal  effect  of 
the  instrument  be  that  it  is  payable  only  at  a  particular  place,  it  must 


56.  Mitchell  v.  Baring,  10  B.  &  C.  6,  7.  The  decision  in  this  case  led  to  the 
passage  of  the  act  of  2  &  3  Wm.  IV.,  chap.  98,  by  which  it  was  provided  that 
"All  bills  of  exchange  wherein  the  drawer  or  drawers  thereof  shall  have  expressed 
that  such  bills  of  exchange  are  to  be  payable  in  any  place  other  than  the  place 
by  him  or  them  therein  mentioned  to  be  the  residence  of  the  drawee  or  drawees 
thereof,  and  which  shall  not,  on  the  presentment  for  acceptance  thereof,  be 
accepted,  shall,  or  may  be  without  further  presentment  to  the  drawee  or  drawees, 
protested  for  nonpayment  in  the  place  in  which  such  bills  of  exchange  shall  have 
been  by  the  drawer  or  drawers  expressed  to  be  payable,  unless  the  amounts 
owing  upon  such  bills  of  exchange  shall  have  been  paid  to  the  holder  or  holders 
thereof  on  the  day  on  which  such  bills  of  exchange  would  have  become  payable 
had  the  same  been  duly  accepted."  Chitty  on  Bills  (13th  Am.  ed.)  [*349],  390. 
This  act  seems  practically  to  affect  only  acceptors  supra  protest.  See  chapter 
XVIII,  on  Protest,  section  II,  vol.  II. 

57.  Mitchell  v.  Baring,  10  B.  &  C.  7;  Story  on  Bills,  §§  282,  353. 

58.  Covington  v.  Comstock,  14  Pet.  43.  "A  note  made  payable  at  a  particular 
time  and  place  does  not  impose  upon  the  payee  or  his  assignee  the  necessity  of 
averring  or  proving  a  demand  at  the  time  and  place  fixed  in  the  note;  but  the 
payor  may  show  a  readiness  to  pay  such  demand  at  such  time  and  place."  Ker- 
baugh  V.  Nugent  (Ind.  App.),  95  N.  E.  336,  holding  that  the  maker  of  a  promissory 
note,  payable  at  a  particular  bank,  cannot  discharge  such  obligation  by  depositing 
in  such  bank  the  funds  with  which  to  pay  said  obligation,  unless  the  holder  of 
the  note  has  deposited  it  in  the  bank  for  collection. 

59.  Sebree  v.  Dorr,  9  Wheat.  558. 


§  654  MODE   OF  721 

be  so  averred  in  the  declaration ;  when,  on  the  other  hand,  if  according 
to  its  legal  effect  it  be  payable  generally,  it  would  be  a  misdescription 
to  aver  it  to  be  payable  only  at  a  particular  place.®" 


SECTION  VI 

MODE   OF   PRESENTMENT   FOR   PAYMENT 

§  654.  Presentment  of  the  bill  or  note,  and  demand  of  payment, 
should  be  made  by  an  actual  exhibition  of  the  instrument  itself;  ®^ 
or  at  least  the  demand  of  payment  should  be  accompanied  by  some 
clear  indication  that  the  instrument  is  at  hand,  ready  to  be  delivered, 
and  such  must  really  be  the  case.®^    This  is  requisite  in  order  that  the 

60.  Childs  V.  Laflin,  55  111.  159.  In  this  case  the  note  was  payable  "to  the 
order  of  Laflin,  Butler  &  Co.,  at  their  office,"  and  was  dated  at  Chicago,  which 
is  in  Cook  county,  Illinois.  McAllister,  J.,  said:  "The  note  in  question  is  not 
payable  generally,  but  at  the  office  of  the  appellees.  If  they  had  oflBces  in  two 
counties,  as  it  appears  they  had,  these  extrinsic  facts  might  show  an  ambiguity 
which  would  require  explanation.  But  is  it  the  legal  effect  of  this  instrument, 
that  it  is  payable  only  at  their  office  in  Cook  county?  There  is  nothing  upon  the 
face  of  the  instrument  itself,  except  the  place  of  the  date,  which  has  any  tendency 
to  such  a  conclusion.  But  the  place  of  date  is  not  part  of  the  contract.  It  is  not 
material  to  the  validity  of  the  note,  and  is  always  open  to  be  explained.  It  does 
not  make  the  place  of  payment.  The  place  of  the  date  being  only  -prima  facie 
evidence,  and  subject  to  be  rebutted,  has  no  tendency  to  establish  the  legal  effect 
of  the  instrument,  that  it  was  payable  only  at  their  office  in  Cook  county,  because 
it  is  a  well-established  principle,  that  the  legal  effect  of  an  instrument  in  writing 
can  no  more  be  varied  by  parol  evidence  than  its  express  terms." 

61.  Musson  V.  Lake,  4  How.  262.  In  Draper  v.  Clemens,  7  Mo.  52,  demand 
was  held  insufficient  because  the  bill  was  not  produced.  In  Freeman  v.  Boynton, 
7  Mass.  483,  the  demand  was  held  insufficient  because  it  appeared  that  the  party 
demanding  payment  did  not  have  the  bill  with  him.  To  same  effect,  see  Shaw 
V.  Reed,  12  Pick.  132;  Arnold  v.  Dresser,  8  Allen,  435;  Posey  v.  Decatur  Bank,  12 
Ala.  802;  Nailor  v.  Bowie,  3  Md.  251;  Smith  v.  Gibbs,  2  Smedes  &  M.  479.  See 
§  463. 

62.  While  it  may  not  be  necessary  to  actually  produce  the  note  if  the  maker 
refuses  to  pay  it,  it  must  be  there  at  the  place  for  presentment.  Gilpin  v.  Savage, 
95  N.  E.  656,  201  N.  Y.  167,  34  L.  R.  A.  (N.  S.)  417,  Ann.  Cas.  1912  A  861, 
reversing  judgment,  118  N.  Y.  S.  1108,  132  App.  Div.  948.  While  it  may  not  be 
necessary  to  actually  produce  the  note  if  the  maker  refuses  to  pay  it,  it  must  be 
there  at  the  place  for  presentment.  Gilpin  v.  Savage,  95  N.  E.  656,  201  N.  Y. 
167,  34  L.  R.  A.  (N.  S.)  417,  Ann.  Cas.  1912  A  861,  reversing  judgment  118  N.  Y. 
S.  1108,  132  App.  Div.  948.  Gilpin  v.  Savage,  95  N.  E.  656,  201  N.  Y.  S.  34, 
L.  R.  A.  (N.  S.)  417,  Ann.  Cas.  1912  A  861,  reversing  judgment,  118  N.  Y.  S.  1108, 

46 


722  PRESENTMENT   FOR   PAYMENT  §  654 

drawee  or  acceptor  may  be  able  to  judge  (1)  of  the  genuineness  of  the 
instrument;  (2)  of  the  right  of  the  holder  to  receive  payment;  and 
(3)  that  he  may  immediately  reclaim  possession  of  it  upon  paying  the 
amount.  If,  on  demand  of  payment,  the  exhibition  of  the  paper  is  not 
asked  for,  and  the  party  to  whom  demand  is  made  declines  to  pay  on 
other  grounds,  a  more  formal  presentment  by  actual  exhibition  of  the 
paper  will  be  considered  as  waived.^^ 

It  was  so  held  where,  on  demand  of  payment  of  a  note,  exhibition 
of  it  was  not  asked  for,  the  party  saying  he  was  not  authorized  to 
represent  the  bank,  at  which  it  was  payable.^* 

Where  the  note  was  in  bank,  a  few  rods  from  the  maker's  house, 
and  the  maker  was  informed  by  note  from  the  cashier  that  it  was 
there  and  requested  payment,  it  was  held  sufficient;  ^^  and  it  was 
likewise  so  held,  where  the  statement  in  the  protest  was  that  the 
notary  went,  with  the  draft,  to  the  bank  and  demanded  payment.^^ 
So,  if  the  maker  calls  on  the  holder  on  the  day  of  payment,  at  his  place 
of  business,  declares  his  inability  to  pay  it,  and  requests  him  to  give 
notice  to  the  indorser,  it  is  sufficient  to  charge  the  indorser,  as  an 
exhibition  of  the  paper  would  have  been  useless.^^    But  it  is  better  in 

132  App.  Div.  948,  Gipin  v.  Savage,  95  N.  E.  656,  201  N.  Y.  167,  34  L.  R.  A. 
(N.  S.)  417,  Am.  Cas.  1912  A  861,  reversing  118  N.  Y.  S.  1108,  132  App.  Div. 
948,  and  quoting  text;  Crandallro  v.  Scheppel,  1  Hun,  557;  Etheridge  v.  Ladd, 
44  Barb.  69.  See  ante,  §§  462,  463;  Read  v.  Marine  Bank  of  Buffalo,  59  Hun, 
578,  13  N.  Y.  Supp.  855.  The  fact  that  the  indorser  notified  the  makers 
that  their  notes  were  due  falls  far  short  of  answering  the  requirements  of  the  law 
relative  to  presentment,  demand  and  notice.  Nevins  v.  Moore,  221  Mo.  330, 
120  S.  W.  43. 

63.  Lockwood  v.  Crawford,  18  Conn.  361;  Kmg  v.  Crowell,  61  Me.  244.  See 
Fall  River  Union  Bank  v.  Willard,  5  Mete.  (Mass.)  216,  and  chapter  XVII,  on 
Presentment  for  Acceptance,  §  463;  Porter  v.  Thom,  40  App.  Div.  34,  57  N.  Y. 
Supp.  479,  citing  the  text;  Waring  v.  Betts,  90  Ya.  51,  17  S.  E.  739,  44  Am.  St. 
Rep.  890,  citing  text. 

64.  Waring  v.  Betts,  90  Va.  51, 17  S.  E.  739,  44  Am.  St.  Rep.  890,  citing  text. 

65.  Tredick  v.  Wendell,  1  N.  H.  80.  Where  notes  were  not  presented  to  the 
maker,  but  were  placed  in  a  bank  and  a  letter  written  to  the  maker  some  time 
before  their  maturity  that  they  would  be  in  the  bank  on  the  dates  they  matured, 
to  be  paid,  and  the  bank  was  not  named  in  the  notes  as  the  place  where  they  were 
payable,  this  was  not  a  sufficient  presentation  and  demand  to  hold  the  indorser. 
Bayless  v.  Marbut,  124  Mo.  App.  234,  101  S.  W.  617.  In  Barnett  v.  Elwood  Grain 
Co.,  153  Mo.  App.  458,  133  S.  W.  856,  it  was  held  that  demand  drafts  must  be 
presented  to  the  drawee,  and  notice  that  they  are  in  the  hands  of  a  third  person 
for  collection  is  not  sufficient,  but  that  this  rule  is  subject  to  variation  according 
to  the  usage  of  a  bank  and  its  customers. 

66.  Bank  of  Vergennes  v.  Cameron,  7  Barb.  143. 

67.  Gilbert  v.  Dennis,  3  Mete.  (Mass.)  495. 


§  654a  MODE  OF  723 

all  cases  to  make  an  actual  exhibition  of  the  paper,  in  order  to  avoid 
all  questions.  It  seems  that  delivery  of  written  demand  to  a  servant 
at  the  house  of  the  promisor  is  insufficient.^^  The  demand  of  payment 
should  not  vary  from  the  tenor  of  the  paper;  and  if  it  be  payable 
simply  in  money,  without  specifying  the  kind,  a  demand  for  gold  coin 
would  be  insuflficient  to  charge  an  indorser.^^ 

§  654a.  Presentment,  and  transmission  for  presentment,  by  mail. 

— Bills  of  exchange  are  most  frequently  drawn  on  parties  at  distant 
places,  and  it  is  undoubtedly  legal,  customary,  and  proper  to  forward 
them  by  mail  to  correspondents  or  other  agents  at  the  place  where  the 
drawee  is  addressed,  to  be  by  them  presented,  in  due  course.  And  in 
such  cases  if  by  accident  or  default  in  the  postal  service  they  are  not 
received  in  due  time  to  be  presented  at  maturity,  the  delay  occasioned 
is  excused,  and  the  drawer  and  indorsers  are  held  liable,  provided 
that,  when  the  delay  is  over,  due  diligence  is  exercised  in  making  the 
presentment  afterward.™  It  has  been  said  that  presentment  through 
the  post-office  may  be  sufl&cient.^^  But  such  method  of  presentment 
of  bills  seems  to  be  unknown  to  the  law  merchant,  and  it  might  prove 
a  hazardous  and  fatal  experiment  to  those  who  relied  upon  it.  It  has 
been  held  that  checks  may  be  so  presented,^^  but  the  reasons  for  the 
permissibiUty  of  such  mode  of  presentment  do  not  seem  to  apply  to 
bills  drawn  on  others  than  bankers,  and  Professor  Parsons  has  well 
observed :  "  It  is  not  easy  to  see  how  a  sufficient  demand  can  be  made 
with  safety  through  the  post-office."  ^^ 

Presentment  through  the  mail  by  a  bank  acting  as  collecting  agent, 

68.  Duke  of  Norfolk  v.  Howard,  2  Show.  235  (1681).  But  query  in  cases  of 
sickness  when  the  promisor  is  inaccessible  on  account  of  sickness.  See  1  Parsons 
on  Notes  and  Bills,  271,  272,  note  y. 

69.  Langenberger  v.  Kroeger,  48  Cal.  147. 

70.  See  §§  1068,  1069,  1070;  Pier  v.  Heinrichshoffen,  67  Mo.  163,  cited 
§  1068. 

71.  Benjamin's  Chalmers'  Digest,  161;  Ames  on  Bills  and  Notes,  vol.  II,  p. 
359,  note  1. 

72.  Vol.  II,  §  1599. 

73.  1  Parsons  on  Notes  and  Bills,  371.  Story  says  presentment  "cannot  be 
made  by  a  written  demand  sent  to  him  (the  acceptor)  through  the  post-ofBce." 
Story  on  Bills,  §  325;  Chitty  on  Bills  (13th  Am.  ed.)  [♦366],  412.  In  M'Gruder  v. 
Bank  of  Washington,  9  Wheat.  598,  the  United  States  Supreme  Court  said  as  to 
the  holder  of  a  bill,  by  Johnson,  J.:  "Nor  is  the  benefit  of  the  post-ofBce  allowed 
him  as  in  the  case  of  notice  to  the  indorser."  See  also  Stuckert  v.  Anderson,  3 
Whart.  116;  King  v.  Holmes,  11  Pa.  St.  458;  Hartford  Bank  v.  Green,  11  Iowa, 
476  {semble);  Barnes  v.  Vaughan,  6  R.  I.  259. 


724  PRESENTMENT   FOR   PAYMENT  §§  655,  656 

has  been  held  not  sufficient  to  exonerate  it  from  UabiUty  in  case  of  loss 
resulting  from  the  failure  of  the  drawee,  who  had  remitted  exchange 
on  New  York  in  payment,  instead  of  cash  J^ 

§  655.  Leaving  instrument  in  debtor's  hands. — A  bill  or  note, 
when  presented  for  payment,  cannot  be  left  in  the  debtor's  hands 
as  when  presented  for  acceptance;  and  if  it  is  so  left,  presentment 
cannot  be  considered  as  made  until  payment  is  demanded.  And  if, 
in  the  meantime,  the  debtor  has  stopped  payment,  the  holder  would 
suffer  to  the  extent  of  the  difference  between  the  value  of  the  instru- 
ment at  the  time  it  was  handed  the  debtor  and  the  time  payment 
was  actually  demanded.''^  The  earlier  cases  take  a  contrary  view, 
and  seem  to  us  more  reasonable,  for  the  physical  presentment  of  the 
paper  would  seem  to  imply  in  itself  a  demand  of  payment.^^ 

§  656.  As  to  mode  of  presentment  of  negotiable  paper  payable  at 
a  bank. — When  a  bill  or  note  is  made  payable  at  a  bank,  it  is 
considered  a  sufficient  presentment  of  it  if  it  is  actually  in  the  bank 
at  maturity,  ready  to  be  delivered  up  to  any  party  who  may  be 
entitled  to  it  on  payment  of  the  amount  due;  and  if,  at  the  close  of 
business  hours,  the  bill  or  note  remains  unpaid,  it  is  considered  as  dis- 
honored, and  notice  should  be  immediately  given  to  the  proper  par- 
ties.^^  Such  also  is  the  case  when  the  instrument  is  payable  at  a  par- 
ticular place.^^  Sometimes  a  formal  presentment  of  the  bill  or  note, 
in  such  cases,  at  the  bank,  or  upon  the  maker,  is  made;  and  the  cases 
are  uniform  in  holding  that  such  a  presentment  at  the  bank  is  suffi- 

74.  Harvey  v.  Girard  Nat.  Bank,  119  Pa.  St.  212;  Merchants'  Nat.  Bank  v. 
Goodman,  109  Pa.  St.  424;  Drovers'  Nat.  Bank  v.  Provision  Co.,  117  111.  108; 
German  Nat.  Bank  v.  Burns,  12  Colo.  539;  Kinney  &  Co.  v.  Paine,  Receiver, 
et  al,  68  Miss.  258,  8  So.  747. 

75.  Hayward  v.  Bank  of  England,  1  Stra.  550;  Thompson  on  Bills  (Wilson's 
ed.),  304. 

76.  Turner  v.  Mead,  1  Stra.  416;  Hoar  v.  Da  Costa,  2  Stra.  910. 

77.  Chicopee  Bank  v.  Philadelphia  Bank,  8  Wall.  641;  Bank  of  the  United 
States  V.  Carneal,  2  Pet.  543;  Fullerton  v.  Bank  of  the  United  States,  1  Pet.  604; 
People's  Bank  v.  Brooks,  31  Md.  7;  Graham  v.  Sangston,  1  Md.  68;  Goodloe  v. 
Godley,  13  Smedes  &  M.  233;  Allen  v.  Miles,  4  Harr.  (Del.)  234;  Woodin  v.  Foster, 
16  Barb.  146;  Nichols  v.  Goldsmith,  7  Wend.  160;  Folger  v.  Chase,  18  Pick.  63; 
Berkshire  Bank  v.  Jones,  6  Mass.  524;  Apperson  v.  Union  Bank,  4  Coldw.  445; 
State  Bank  v.  Napier,  6  Humphr.  270;  Ward  v.  Northern  Bank,  14  B.  Mon.  351; 
Reynolds  v.  Chettle,  2  Campb.  596;  Saunderson  v.  Judge,  2  H.  Bl.  509;  Huffaker 
V.  National  Bank,  13  Bush,  649. 

78.  Hunt  V.  Maybee,  7  N.  Y.  266. 


§  657  MODE   OF  725 

cient/^  even  when  the  place  is  mentioned  in  the  memorandum ;  ^° 
but  it  is  settled  that  nothing  more  than  the  presence  of  the  paper 
there  is  necessary.*^  But  it  has  been  held  by  the  United  States  Su- 
preme Court,^^  that  though  commercial  paper  be  physically  in  the 
bank  at  which  it  is  payable,  yet  if  the  bank  is  ignorant  of  this  by  rea- 
son of  the  fact  that  the  letter  in  which  it  was  sent  slipped  through  a 
crack  in  the  cashier's  desk  and  disappeared  before  it  had  been  seen  by 
him,  then  there  would  be  no  presentment,  though  the  acceptor  had 
no  funds  there,  and  did  not  mean  to  pay  the  bill.  And  such  a  dis- 
appearance carried  with  it  a  presumption  of  neghgence  in  the  collect- 
ing bank,  and  threw  upon  it  the  burden  of  proof  to  rebut  it ;  and  that 
in  the  absence  of  such  proof  the  bank  would  be  responsible  to  the 
holder  for  the  amount  of  the  bill  or  note. 

§  657.  When  paper  is  property  of  bank. — If  the  paper  is  the 
property  of  the  bank  at  which  it  is  paj'^able,  its  presence  there  at 
maturity  need  not  be  proved  by  the  plaintiff,  as  the  presumption  of 
law  is  that  the  paper  was  in  the  bank,  and  the  burden  rests  on  the 
defendant  to  show  the  contrary .^^  Even  when  it  is  not  the  property 
of  the  bank,  it  is  not  necessary  to  show  that  it  was  in  the  hands  of  the 
proper  officer;  ^^  nor  is  this  material,  its  presence  in  the  bank  being 
sufficient.^^  Sometimes  the  accounts  of  the  promisor  are  examined 
to   see   if   there   are   funds    to   meet   the   paper   payable   at   the 

79.  Hunt  V.  Maybee,  7  N.  Y.  266.  See  also  Woodbridge  v.  Brigham,  13  Mass. 
556;  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Anderson  v.  Drake,  14  Johns.  114; 
Bank  of  SjTacuse  v.  HolHster,  17  N.  Y.  46;  Gale  v.  Kemper,  10  La.  205;  Commer- 
cial Bank  v.  Hamer,  7  How.  (Miss.)  448;  Jensk  v.  Doylesburg,  4  Watts  &  S.  505; 
Rahm  v.  Philadelphia  Bank,  1  Rawle,  335;  Cohen  v.  Hunt,  2  Smedes  &  M.  227; 
Evans  v.  St.  John,  9  Port.  186;  Apperson  v.  Union  Bank,  4  Coldw.  445. 

80.  Saunderson  v.  Judge,  2  H.  Bl.  509. 

81.  State  Bank  v.  Napier,  6  Humphr.  270;  Gillett  v.  Averill,  5  Den.  85;  Ogden  v. 
Dobbin,  2  Hall,  112;  Gilbert  v.  Dennis,  3  Mete.  (Mass.)  495;  FuUerton  v.  Bank  of 
the  United  States,  1  Pet.  604;  Merchants'  Bank  v.  Elderkin,  25  N.  Y.  178;  First 
Nat.  Bank  v.  Crittenden,  2  Thomp.  &  C.  118;  Douglass  v.  Bank,  97  Tenn.  133, 
36  S.  W.  874,  citing  text;  Dykman  v.  Northbridge,  1  App.  Div.  26,  36  N.  Y.  Supp. 
962. 

82.  Chicopee  Bank  v.  Philadelphia  Bank,  8  Wall.  641. 

83.  Chicopee  Bank  v.  Philadelphia  Bank,  8  Wall.  641;  Fullerton  v.  Bank  of 
the  United  States,  1  Pet.  604;  Bank  of  the  United  States  v.  Carneal,  2  Pet.  543; 
Seneca  County  Bank  v.  Neass,  5  Den.  329;  State  Bank  v.  Napier,  6  Humphr. 
270;  Folger  v.  Chase,  18  Pick.  63;  Berkshire  Bank  v.  Jones,  6  Mass.  524. 

84.  Folger  v.  Chase,  18  Pick.  63. 

86.  State  Bank  v.  Napier,  6  Humphr.  270. 


726  PRESENTMENT   FOR   PAYMENT  §  658 

bank;  ^^  but  this  is  unnecessary,  any  competent  evidence  being  avail- 
able to  show  that  there  were  no  funds  there  to  meet  it,  and  that  no  one 
offered  payment.^^  It  is  doubtful,  at  least,  whether  the  mere  fact 
that  the  bank  had  funds  of  the  promisor  in  its  possession  which  con- 
stitute any  defense  for  the  indorser,  as  the  direction  of  the  promisor  is 
necessary  to  give  the  right  to  appropriate  the  money  to  the  payment 
of  the  paper;  but  it  is  conceived  that  if  the  bank  in  such  case  has 
become  the  owner  of  the  paper,  it  would  constitute  a  defense  to  the 
indorser.  Such  is  the  opinion  of  Professor  Parsons.^  Where  a  note 
was  payable  at  the  ''Union  Bank  of  Memphis,"  and  there  was  no 
such  bank  there,  but  a  "Branch  of  the  Union  Bank,"  it  was  held 
sufficient  to  make  presentment  at  such  branch.^^  If,  upon  repairing 
to  the  bank  at  which  the  paper  is  made  payable,  during  business 
hours,  it  is  found  closed,  without  any  one  there  to  answer,  the  pro- 
test may  be  made  without  demand  or  further,  inquiry .^° 

§  658.  Conventional  demand  by  notice  that  bill  or  note  is  held 
in  bank.^In  some  of  the  States  it  has  become  customary  for  banks 
of  a  particular  place,  which  are  the  holders  of  negotiable  paper,  to 
issue  a  notice  to  the  promisor  a  few  days  before  maturity,  informing 
him  that  the  paper  is  in  bank,  setting  forth  the  date  when  it  will  be- 
come payable,  and  requesting  him  to  come  there  and  pay  it.  Such 
notice  constitutes  a  conventional  demand,  and  a  neglect  to  comply 
with  it  is  such  a  refusal  as  amounts  to  dishonor  of  the  paper.  The 
custom  prevails  where  the  paper  is  payable  at  the  bank  giving  the 
notice,^^  and  has  been  sustained  by  judicial  decision,  as  well  where 
it  is  not  made  so  payable,  but  is  placed  there  for  collection.^^  In 
Massachusetts  this  custom  has  become  so  general  and  universal  that 
every  one  who  incurs  the  liability  of  maker  and  indorser  is  presumed 
to  have  contracted  in  reference  to  it,  and  knowledge  on  his  part  may 

86.  Saunderson  v.  Judge,  2  H.  Bl.  509;  Bank  of  South  Carolina  v.  Flagg,  1  Hill 
(S.  C.)  177;  Maurin  v.  Perat,  16  La.  276. 

87.  State  Bank  v.  Napier,  6  Humphr.  270;  Gillett  v.  Averill,  5  Den.  85. 

88.  Vol.  I,  Notes  and  Bills,  437. 

89.  Worloy  v.  Waldran,  3  Sneed,  548. 

90.  Thompson  v.  Commercial  Bank,  3  Coldw.  46;  Carter  v.  Union  Bank,  7 
Humphr.  548. 

91.  Lincoln  &  Kennebec  Bank  v.  Page,  9  Mass.  155;  Same  v.  Hemmatt,  9 
Mass.  159;  Camden  v.  Doremus,  3  How.  515. 

92.  Jones  v.  Fales,  4  Mass.  245;  Widgery  v.  Munroe,  6  Mass.  449;  Weld  v. 
Gorham,  10  Mass.  366;  Whitewell  v.  Johnson,  17  Mass.  449;  Mechanics'  Bank  v. 
Merchants'  Bank,  6  Mete.  (Mass.)  24. 


§  65d  MODE  OF  727 

be  presumed.®^  Before  the  law  had  there  become  so  settled,  it  was 
held  that  proof  of  the  party's  being  conversant  with  the  usage  was 
requisite;  ^'^  but  where,  by  the  usage,  demand  was  made  in  this  form 
upon  the  maker,  it  was  immaterial  to  the  indorser  to  prove  that  he 
was  acquainted  with  it — it  being  sufficient  that  he  received  due 
notice  of  dishonor.®^  Evidence  of  the  usage  is  sufficient  in  proof  of 
an  averment  of  presentment  to  the  maker.^^  In  Maine  the  custom 
is  sanctioned  by  judicial  decisions,^^  but  it  has  elicited  adverse  ex- 
pressions in  New  Hampshire;  ^^  and  in  Maryland,  the  evidence  of  its 
existence  was  regarded  as  insufficient,  with  a  distinct  intimation  from 
the  court  that  it  would  not  be  respected  if  proved.^^  In  Rhode 
Island  such  conventional  demand  is  declared  to  be  contrary  to  the  law 
merchant,  and  insufficient,^  and  a  recent  writer  well  characterizes 
the  practice  in  Massachusetts  and  Maine  as  provincial.^  When  a 
bill  or  note  is  payable  at  a  bank,  a  presentment  to  a  bank  officer  must 
be  taken  to  have  been  at  the  bank.* 

§  659.  In  respect  to  the  maker  of  a  note  or  the  acceptor  of  a  bill 

in  terms  payable  at  a  particular  place,  this  custom  to  inform  him 

93.  Grand  Bank  v.  Blanchard,  23  Pick.  505.  Shaw,  C.  J.,  said,  respecting 
this  customary  notice,  as  constituting  a  demand,  that  "It  has  become  so  universal 
and  continued  so  long,  that  it  may  well  be  doubted  whether  it  ought  not  now  to 
be  treated  as  one  of  those  customs  of  merchants  of  which  the  law  will  take  notice, 
so  that  every  man  who  is  sufficiently  a  man  of  business  to  indorse  a  note  may  be 
presumed  to  be  acquainted  with  it,  and  assent  to  it,  at  least  until  the  contrary  is 
expressly  shown.  It  is  to  be  recollected  that  the  rules  respecting  presentment, 
demand,  and  dishonor  of  bills  of  exchange  and  promissory  notes,  and  indeed  the 
lex  mercatoria,  generally  originated  in  the  custom  of  merchants,  which  custom 
was  a  matter  of  fact  to  be  proved  by  the  party  relying  on  it,  and  to  be  determined 
by  the  jury.  But  when  a  custom  has  been  definitely  settled  by  judicial  decisions, 
it  is  taken  notice  of  as  a  part  of  the  law  of  the  land,  and  need  not  be  proved  as  a 
fact  in  each  case." 

94.  Weld  V.  Gorham,  10  Mass.  366.  So  held  also  in  Leavitt  v.  Simes,  3  N.  H. 
14;  Edwards  on  Bills,  509. 

95.  Whitewell  v.  Johnson,  17  Mass.  449. 

96.  North  Bank  v.  Abbot,  13  Mass.  466;  Boston  Bank  v.  Hodges,  9  Mass.  420; 
City  Bank  v.  Cutter,  3  Pick.  414. 

97.  Marine  Bank  v.  Smith,  18  Me.  99;  Gallagher  v.  Roberts,  11  Me.  489;  1 
Parsons  on  Notes  and  Bills,  370,  371. 

98.  Moore  v.  Waitt,  13  N.  H.  415. 

99.  Farmers'  Bank  v,  Duvall,  7  Gill  &  J.  78. 

1.  Barnes  v.  Vaughn,  6  R.  I.  259;  Ames  on  Bills  and  Notes,  vol.  II,  p.  358. 

2.  Ames  on  Bills  and  Notes,  vol.  II,  p.  862,  index  heading,  24.  See  also  2  Ames 
on  Bills  and  Notes,  359,  note  1,  and  post,  §  661. 

3.  Barbaroux  v.  Waters,  3  Mete.  (Ky.)  304. 


728  PRESENTMENT   FOR    PAYMENT  §§660,  661 

that  his  paper  is  there,  and  that  he  is  requested  to  meet  it,  amounts 
to  nothing  more  than  a  reminder  from  creditor  to  debtor  that  it 
is  hoped  he  will  comply  with  his  agreement.  When  the  bill  or  note, 
however,  is  payable  generally,  the  acceptor  or  maker  can  only  dis- 
charge his  contract  by  seeking  the  payee  or  holder,  at  maturity,  and 
paying  the  amount;  and  notification  that  his  paper  may  be  paid  at  a 
particular  place  is  information  where  his  agent  to  receive  payment 
may  be  conveniently  found.  But  it  is  difficult  to  see  how  the  holder 
can  restrict  the  acceptor  or  maker  to  payment  at  that  particular 
place,  except  upon  the  ground  that  the  bank  itself  is  to  be  regarded 
as  in  law  the  holder,  and  it  is  the  duty  of  the  principal  party  to  pay 
such  holder  at  its  only  locality — its  place  of  business. 

§  660.  In  respect  to  the  drawer  or  indorser,  the  holder's  con- 
tract, when  the  bill  or  note  is  payable  generally,  is,  that  he  will 
present  the  instrument  to  the  acceptor  of  maker.  It  is  the  holder's 
duty,  in  order  to  hold  the  drawer  or  indorser,  to  go  to  the  acceptor 
or  maker  with  the  bill  or  note,  and  demand  payment;  and  it  is  stretch- 
ing the  principle  which  authorizes  proof  of  custom  in  certain  cases 
very  far  to  permit  the  holder  to  reverse  the  established  rule  of  law 
in  respect  to  drawer  or  indorser,  and  notify  the  acceptor  or  maker  to 
come  to  him,  at  a  place  designated  by  himself,  to  suit  his  own  con- 
venience.^ 

The  theory  upon  which  the  custom  is  regarded  as  controlling, 
is  that  the  holder  is  bound  to  use  due  diligence  to  demand  payment — 
that  the  maker  or  acceptor  waives  any  further  demand  than  at  the 
place  designated  by  the  maker — and  that  the  drawer  or  indorser 
consents  to  this  customary  waiver  by  entering  into  the  contract 
where  the  custom  exists.  Its  convenience,  as  a  commercial  usage — 
and  the  fact  that  the  apprehension  of  dishonor  in  bank  will  probably 
operate  as  forcibly  to  constrain  prompt  payment  by  the  maker  or 
acceptor  as  a  demand  at  his  counting-room  or  residence — have 
doubtless  gone  far  to  gain  it  countenance  from  the  courts  which  have 
sustained  it. 

§  661.  We  regard  those  decisions  more  in  consonance  with  prin- 
ciples which  have  not  admitted  this  relaxation.  Where  the  instru- 
ment is  in  terms  payable  at  a  bank  in  a  particular  place,  or  it  has 
been  agreed  by  the  drawer  or  indorsers  that  it  shall  be  presented 

4.  Edwards  on  Bills,  510. 


§  662  MODE   OF  729 

in  a  particular  place,  where  a  custom  prevails  as  to  the  mode  of 
presentment,  an  entirely  different  principle  applies.  By  consenting 
to  presentment  there,  the  drawer  or  indorser  consents  to  the  estab- 
lished customary  mode  which  prevails  there,  and  should  for  that  rea- 
son be  bound  by  it.^  It  is  carrying  the  doctrine  too  far  to  hold  that 
he  is  bound  by  such  custom  when  the  paper  has  been  merely  placed  in 
a  bank  there  for  collection,  but  it  is  not  payable  there  in  terms  or  by 
agreement.^  And  the  usage  cannot  be  applied  by  one  bank  alone, 
but  must  be  a  prevalent  custom  of  the  place;  ^  otherwise  the  arbitrary 
will  of  an  individual  banker  or  banking  institution  will  prevail  over 
the  estabhshed  law  or  custom  of  a  whole  community. 

§  662.  Knowledge  of  conventional  method  of  demand. — Knowl- 
edge by  the  drawer  or  indorser  of  the  custom  has  been  regarded  as 
essential  to  its  establishment  as  against  him  in  some  cases.^  But  the 
United  States  Supreme  Court  say  that  parties  are  bound  by  an 
established  usage  of  a  bank  at  which  the  paper  is  payable  "whether 
they  have  a  personal  knowledge  of  it  or  not;"  ^  and  as  the  custom 
must  be  general,  in  order  to  obtain  recognition  as  such,  we  cannot 
perceive  that  knowledge  of  it  enters  into  the  question  any  more  than 
knowledge  of  any  other  rule  of  law.  A  custom  is  not  a  special  per- 
sonal contract,  but  a  general  and  controlling  rule.  "The  parties  are 
presumed  by  implication  to  be  governed  by  the  usage  of  the  bank  at 
which  they  have  chosen  to  make  the  security  itself  negotiable."  ^° 

Under  Negotiable  Instrument  statute. — Several  sections  of  the  stat- 

5.  Mills  V.  Bank  of  the  United  States,  11  Wheat.  431;  Camden  v.  Doremuse, 
3  How.  515;  Edwards  on  Bills,  quoted  supra. 

6.  Pearson  v.  Bank  of  Metropolis,  1  Pet.  89;  Morse  on  Banking,  336,  337; 
Barnes  v.  Vaughan,  6  R.  I.  259.  In  this  case  the  cashier  of  the  bank  mailed  a 
printed  blank  notice  to  the  maker,  that  the  note  was  in  bank  for  collection.  The 
note  was  not  there  payable.    Held,  indorser  discharged. 

7.  Dorchester,  etc.,  Bank  v.  Milton  Bank,  1  Cush.  177;  Morse  on  Banking,  372; 
Adams  v.  Otterback,  15  How.  (U.  S.)  539.  Question,  whether  demand  of  pay- 
ment could  be  postponed  to  fifth  day  of  grace  by  usage  of  two  years'  standing, 
changed  from  former  usage,  the  court  said:  "To  constitute  a  usage,  it  must  apply 
to  a  place  rather  than  to  a  particular  bank.  It  must  be  a  rule  of  all  the  banks  of 
a  place,  or  it  cannot  consistently  be  called  a  usage.  If  every  bank  could  establish 
its  own  usage,  the  confusion  and  uncertainty  would  greatly  exceed  any  local 
convenience  resulting  from  the  arrangement." 

8.  Leavitt  v.  Simes,  3  N.  H.  14. 

9.  Mills  V.  Bank  of  the  United  States,  11  Wheat.  431.  [This  decision  is  mis- 
quoted in  Morse  on  Banking,  p.  336.] 

10.  Mills  V.  Bank  of  the  United  States,  supra,  Story,  J. 


730  PRESENTMENT   FOR   PAYMENT  §  662 

ute  prescribe  the  mode  of  making  presentment  for  payment,"  and  it 
has  been  held,  under  the  statute,  that  a  mere  informal  talk  asking 
payment  of  a  note  and  not  accompanied  with  presentment  of  it,  or 
intended  as  a  formal  presentment  and  demand,  is  not  sufficient  to 
put  a  note  in  dishonor,  ^^  but  the  law  simply  requires  substantial 
compliance  in  reference  to  proper  presentment,  and  mere  omission 
to  observe  the  more  technical  rules  will  not  release  an  indorser  when 
any  omission  to  comply  with  the  technical  rules  does  not  work  to  the 
prejudice  of  the  indorser. ^^ 

11.  See  appendix,  sees.  70,  72,  73,  74,  82,  84,  134. 

12.  State  of  New  York  Nat.  Bank  v.  Kennedy,  130  N.  Y.  S.  412,  145  App. 
Div.  669. 

13.  Gilpin  v.  Savage,  112  N.  Y.  S.  802,  60  Misc.  605,  aflarmed  118  N.  Y.  S. 
1108,  132  App.  Div.  948,  wherein  the  court  said  that  the  right  of  the  maker  to 
have  insisted  on  the  exhibition  of  the  note,  is  personal  to  the  maker,  and  by  not 
demanding  its  production,  he  waived  it,  and  held  that  if,  on  demand  of  payment 
exhibition  of  commercial  paper  is  not  asked,  and  a  party  to  whom  a  demand  is 
made  dechnes  to  pay  on  other  grounds,  a  mere  formal  presentation  by  actual 
exhibition  of  the  paper  will  be  considered  waived;  and  held  further,  that  where  a 
note  was  payable  at  the  home  of  the  maker,  a  demand  by  telephone,  the  talk 
being  immediately  between  the  maker  and  the  holder  of  the  note,  was  sufficient, 
exhibition  of  the  note  not  being  insisted  upon. 


CHAPTER  XXI 

TRANSFER  OF  BILLS  AND  NOTES  BY  INDORSEMENT 

§  663.  A  bill  or  note  payable  to  bearer,  or  indorsed  in  blank,  may 
be  transferred  like  currency  by  mere  delivery;  ^  other  bills  and  notes, 
by  indorsement  of  the  transferrer's  name  thereon,  and  delivery  to  the 
individual  named,  unless  they  are  not  expressed  to  be  payable  to  the 
order  of  any  person,  or  to  bearer,^  in  which  case,  unless  by  statute, 
they  are  not  negotiable  in  the  United  States  and  in  England;  ^  but 
it  is  otherwise  in  Scotland.'*  But  if  the  paper  be  payable  to  A.  B.,  or 
order,  and  A.  B.  indorse  it  to  C.  D.,  without  adding  "or  order,"  C.  D. 
may,  nevertheless,  transfer  it  by  indorsement,  and  it  retains  its 
original  negotiable  character.^ 

§  663a.  Indorsement  of  instrument  which  is  payable  to  bearer. — 

While  commercial  paper  payable  to  bearer,  or  indorsed  in  blank,  may 

1.  South  &  Lane  v.  People's  Nat.  Bank,  4  Ga.  App.  92,  60  S.  E.  1087. 

2.  See  post,  §  729,  and  ante,  §  lOo;  Wookey  v.  Poole,  4  B.  &  Aid.  1;  Myers 
V.  Friend,  1  Rand.  13;  Rees  v.  Conecocheague  Bank,  5  Rand.  326;  Johnson  v. 
Stak.  Co.,  24  111.  75;  Jones  v.  Nellis,  41  111.  482;  New  v.  Walker,  108  Ind.  365, 
citing  the  text;  Everett  v.  Tidball,  34  Nebr.  804,  52  N.  W.  816;  Bank  v.  Sherer, 
108  Cal.  513,  41  Pac.  415;  Meyer  v.  Foster,  147  Cal.  166,  81  Pac.  402;  Roach  v. 
Sanborn  Land  Co.,  135  Wis.  354,  115  N.  W.  1102.  Where  securities  were  given 
for  the  security  of  a  note  payable  to  payee  "or  order,"  the  note  giving  authority 
to  the  "holder  or  holders"  to  sell  the  collaterals  and  apply  the  proceeds  to  the 
payment  of  the  note,  and  that  if  there  should  be  any  surplus  it  might  be  applied 
to  the  payment  of  any  other  note  or  claim  held  by  the  "holder  or  holders,"  the 
phrase  "holder  or  holders"  in  the  different  parts  of  the  note,  is  broad  enough  to 
include  any  person  holding  the  note  under  the  order  of  the  payee.  Richardson  v. 
Winnissimmet  Nat.  Bank,  189  Mass.  25,  75  N.  E.  97. 

3.  Byles  on  Bills  (Sharswood's  ed.)  [*142-143],  258;  Arnold  v.  Sprague,  34 
Vt.  402;  Richards  v.  Daily,  34  Iowa,  428.  In  an  action  on  a  draft  specially  in- 
dorsed to  plaintiff,  and  not  indorsed  in  blank,  so  as  to  make  it  negotiable  by 
delivery,  defenses  between  the  original  parties  are  admissible.  Moore  &  Tabb  v. 
Johnson  County  Savings  Bank  (Miss.),  .58  So.  646. 

4.  Thompson  on  Bills  (Wilson's  ed.),  173. 

5.  Muldrow  v.  Caldwell,  7  Mo.  563;  Lea  v.  Branch  Bank,  8  Port.  119;  Scull 
V.  Edwards,  8  Eng.  (Ark.)  24;  Potter  v.  Tyler,  2  Mete.  (Mass.)  58;  Blackman  v- 
Green,  24  Vt.  17 

731 


732  TRANSFER   BY   INDORSEMENT  |  664 

be  transferred  by  delivery  merety,  yet  if  the  payee  put  his  name  upon 
it,  and  transfers  it,  he  is  liable  as  an  indorser,  such  indorsement  being 
valid  between  the  indorser  and  subsequent  indorsees;^  and  the 
holder  of  paper  payable  to  bearer  and  indorsed,  may  sue  upon  it  as 
bearer  or  indorsee  at  his  election/  ''The  negotiability  of  a  note  pay- 
able to  bearer  is  certainly  not  further  restrained  by  an  indorsement 
in  full,  than  would  be  by  the  same  indorsement,  the  negotiability  of  a 
note  payable  to  order  and  indorsed  in  blank  by  the  payee."  ^  A  note 
payable  to  A.  D.  or  bearer  is  in  legal  effect  the  same  as  if  payable 
simply  to  bearer,  and  no  indorsement  is  necessary  to  pass  the  legal 
title;  but  if  indorsement  of  a  note  payable  to  bearer  be  alleged,  it 
must  be  proved.^ 

§  664.  Indorsement  of  instrument  payable  to  a  certain  person 
"  only." — If  a  note  be  nonnegotiable,  because  payable  to  a  certain 
person  only,  should  he  indorse  it,  it  will  be  binding  upon  him;  and  his 
liability  to  his  immediate  indorsee  will  be  the  same  as  upon  the  in- 
dorsement of  a  negotiable  note;  but  the  principle  is  not  extended  to 
subsequent  indorsees. ^°    And  if  indorsed  by  the  payee  payable  "to 

6.  Bates  v.  Butler,  46  Me.  387;  Hodge  v.  Steward,  1  Salk.  125;  Hill  v.  Lewis', 
1  Salk.  132;  Burmester  v.  Hogarth,  11  M.  &  W.  97;  Brush  v.  Reeves,  3  Johns. 
439;  Gilbert  v.  Nantucket  Bank,  5  Mass.  97;  Eccles  v.  Ballard,  2  McCord,  388; 
Gwinnell  v.  Herbert,  5  Ad.  &  El.  436  (31  Eng.  C.  L.);  Smith  v.  Rawson,  61  Ga. 
208;  Young  v.  Sehon,  53  W.  Va.  127,  44  S.  E.  136,  62  L.  R.  A.  499,  97  Am.  St. 
Rep.  970. 

7.  3  Kent  Com.  44;  Story  on  notes,  §  132;  Bayley,  466;  Eames  v.  Crosier, 
101  Cal.  260,  35  Pac.  873.  A  negotiable  promissory  note  made  payable  to  order 
is  rendered  payable  to  bearer  by  an  indorsement  in  blank  by  the  payee.  Brown  v. 
Fisher,  35  Ind.  App.  549,  74  N.  E.  632.  Where  a  payee  of  an  accommodation  note 
indorsed  the  same  on  the  back,  with  the  indorsement:  "  For  value  received 
1  hereby  assign  all  right,  interest  or  title  in  the  within  note  to  I.  N.  Porter  or 
bearer,"  this  was  sufficient  to  pass  title  to  the  note  notwithstanding  the  name 
I.  N.  Porter  was  that  of  a  fictitious  person,  as  the  note  may  be  treated  as  pay- 
able to  bearer.     Keenan  v.  Blue,  240  111.  177,  88  N.  E.  553. 

8.  Johnson  v.  Mitchell,  50  Tex.  212;  post,  §  69G. 

9.  Wayman  v.  Bend,  1  Campb.  175;  Chitty  on  Bills  (12th  Am.  ed.)  [*198], 
227.  In  Illinois,  under  statute,  a  note  payable  to  A.  B.  or  bearer  must  be  in-, 
dorscd  to  pass  the  legal  title.  Garvin  v.  Wiswell,  83  111.  218;  Wilder  v.  De  Wolf, 
24  111.  191;  Roosa  v.  Crist,  17  111.  191;  Hilborn  v.  Artus,  3  Scam.  344.  So  in 
Alabama  a  note  payable  to  "A.  or  bearer"  is  by  statute  the  same  in  legal  effect 
as  if  payable  to  "A.  or  order,"  and  is  not  negotiable  save  by  indorsement.  Black- 
man  V.  Lehman,  63  Ala.  547. 

10.  See  Story  on  Notes,  §§  128,  129,  130;  Story  on  Bills,  §§  119,  199,  202. 
See  Carruth  v.  Walker,  8  Wis.  252;  Hackney  v.  Jones,  3  Humphr.  612;  ante, 


§  664a  TRANSFER   BY    INDORSEMENT  73S 

order  of"  indorsee,  it  will  be  negotiable  as  between  the  holder  and 
indorsers,  though  not  as  to  the  maker.^^ 

§  664a.  When  indorsement  necessary  to  transfer  legal  title. — 

When  the  instrument  is  made  payable  to  "order,"  the  indorsement 
of  the  payee  is  necessary  to  transfer  the  legal  title;  ^^  and  the  transferee 
without  indorsement,  takes  it  as  a  mere  chose  in  action,  and  must 
aver  and  prove  the  consideration.^^  And  he  takes  it  subject  to  all 
equities  that  attached  to  it  in  the  hands  of  his  transferrer.^^    The 

§  105.  And  a  payee  of  a  nonnegotiable  paper  does  not  become  liable  thereon 
as  an  indorser  merely  by  writing  his  name  on  the  back  of  it,  but  proof  may  be 
made  of  the  actual  agreement  under  which  the  indorsement  was  made.  See 
Jossey  V.  Ruskin,  109  Ga.  319,  34  S.  E.  558,  77  Am.  St.  Rep.  377;  Lynch  v.  Mead, 
99  Iowa,  66,  68  N.  W.  579;  First  Nat.  Bank  v.  Falkenhan,  94  Cal.  141,  29  Pac. 
866;  Kendall  v.  Parker,  103  Cal.  319,  37  Pac.  401,  42  Am.  St.  Rep.  117;  Haber 
V.  Brown,  101  Cal.  445,  35  Pac.  1035.  In  Michigan  it  is  held  that  the  indorse- 
ment of  a  nonnegotiable  instrument  operates  as  an  assignment  of  it.  Merchants' 
Nat.  Bank  v.  Greggs,  107  Mich.  146,  64  N.  W.  1052. 

11.  Carruth  v.  Walker,  8  Wis.  252. 

12.  Hopkirk  v.  Page,  2  Brock.  20;  Hestone  v.  Williamson,  2  Bibb,  83;  Rus- 
sell V.  Swan,  16  Mass.  314;  Blakely  v.  Grant,  6  Mass.  386.  See  §  741  et  seq.; 
Quigley  v.  Mexico  So.  Bank,  80  Mo.  295,  citing  the  text;  Sibley  v.  American 
Exchange  Bank,  97  Ga.  126,  25  S.  E.  470;  Haug  v.  Riley,  Admr.,  101  Ga.  372, 
29  S.  E.  44,  approving  text;  Wade  v.  Elliott  (Ga.  App.),  75  S.  E.  989;  Central 
City  Bank  v.  Rice,  44  Nebr.  594;  State  v.  Stebbins,  132  Mo.  332,  33  S.  W.  1147, 
citing  text;  Everett  v.  Tidball,  34  Nebr.  804,  52  N.  W.  816.  And  when  the  in- 
dorsement is  denied,  the  same  must  be  proved.  Park  v.  Exum,  72  S.  E.  309, 
156  N.  C.  228.  Where  a  statute  prescribes  a  mode  of  transfer  of  the  title  to 
a  promissory  note,  the  mode  is  exclusive,  and  if  the  payee  of  a  promissory  note 
signs  on  the  back  of  the  note  a  receipt  for  interest,  and  subsequently  sells  and 
delivers  the  note,  the  receipts  remain  as  receipts  for  interest  and  as  originally 
intended,  and  it  cannot  be  assumed  that  he  adopts  his  signature  to  the  interest 
receipt  as  made  for  the  purpose  of  assigning  the  legal  title  to  the  purchaser. 
Everett  v.  Sullivan,  102  111.  App.  133. 

13.  Van  Eman  v.  Stanchfield,  10  Minn.  255;  Paris  v.  Wells,  68  Ga.  604,  citing 
the  text.  Under  the  North  Carolina  Code,  the  Supreme  Court  of  that  State  held 
that  a  note  transferred  by  delivery  and  without  indorsement,  vests  in  the  trans- 
feree the  equitable  ownership  of  the  note.  Jenkins  v.  Wilkinson,  113  N.  C.  532, 
18  S.  E.  696.  Ordinarily,  if  an  indorsee  sues  upon  a  note  and  his  title  thereto  is 
challenged  by  a  general  denial,  he  must  prove  his  indorsement  on  said  note  in 
writing,  and  while  the  writing  on  the  note  itself  is  the  best  evidence,  yet  the  fact 
may  be  proven  by  parol  if  done  without  objection  or  after  and  upon  proof  of  the 
loss  or  absence  of  the  note.  See  Moore  v.  Hubbard,  15  Ind.  App.  84,  42  N.  E. 
967. 

14.  Hadden  v.  Rodkey,  17  Kan.  429,  Valentine,  J.:  "If  the  plaintiff  in  such  a 
case  should  desire  the  benefit  that  an  indorsement  would  give  him,  he  should 
plead  and  prove  an  indorsement."    Benson  v.  Abbott,  95  Ga.  69,  22  S.  E.  127; 


734  TRANSFER   BY   INDORSEMENT  §  665 

negotiability  of  a  note  is  not  affected  by  the  fact  that  a  corporation 
indorses  it  through  its  seal.^^ 

Under  Negotiable  Instrument  statute. — Under  several  provisions 
of  the  statute/^  a  note  payable  to  order  does  not  pass  with  the  in- 
cidents of  negotiability  by  mere  delivery,  but  when  such  an  instru- 
ment is  thus  transferred,  the  transferee  holds  with  notice  of  whatever 
equities  the  maker  may  have  had.^' 

§  665.  Delivery  by  indorser. — Delivery  by  the  indorser  is  essen- 
tial to  completion  of  his  contract;  and  delivery  implies  its  acceptance 
by  the  indorsee.  If  a  transferee  of  a  bill  or  note  by  indorsement  send 
it  back  to  his  indorser  as  worthless,  the  indorsement  is  declined,  and 

Massachusetts  Loan  &  Trust  Co.  v.  Twichell,  7  N.  Dak,  440,  75  N.  W.  786, 
citing  text;  Gaylord  v,  Nebraska  Sav.,  etc.,  Bank,  54  Nebr.  104,  74  N.  W.  415, 
69  Am.  St.  Rep.  705.  A  guaranty,  written  upon  a  note  by  the  payee,  is  not  such 
an  indorsement,  though  a  proper  indorsement  may  include  a  guaranty.  Lowry 
Nat.  Bank  v.  Maddosc,  4  Ga.  App.  329,  61  S.  E.  296. 

15.  Rand  v.  Dovey,  83  Pa.  St.  280. 

16.  Appendix,  sees.  30,  31,  49,  52,  58,  59. 

17.  Sublette  v.  Brewington,  139  Mo.  App.  410,  122  S.  W.  1150;  Manufac- 
turers' Commercial  Co.  v.  Blitz,  115  N.  Y.  S.  402,  131  App.  Div.  17;  Mayers  v. 
McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111  Am.  St.  Rep.  879;  Fu-st  Nat.  Bank 
V.  McCullough,  50  Oreg.  508,  93  Pac.  17  L.  R.  A.  (N.  S.)  1105,  126  Am.  St.  Rep. 
758;  O'Connor  v.  Slatter,  48  Wash.  493,  93  Pac.  1078.  Negotiation  is  a  general 
term  descriptive  of  all  those  acts  by  which  a  note  or  bill  is  put  into  circulation  or 
passed  on  in  its  circulation,  and  includes  delivery  in  issue,  transfer  by  delivery, 
or  transfer  by  indorsement.  Knapp  &  Co.  v.  Tidewater  Coal  Co.,  (Conn.)  81 
A.  1063.  Under  section  58  of  the  statute  a  negotiable  instrument  in  the  hands  of 
any  holder  other  than  a  holder  "in  due  course"  is  subject  to  the  same  defenses  as 
if  it  were  nonnegotiable.  Craig  v.  Palo  Alto  Stock  Farm,  16  Idaho,  701,  102  Pac. 
393.  Where  notes  are  in  the  hands  of  a  bank  as  collateral  for  money  advanced, 
and  are  held  without  indorsement,  they  are  subject  to  defenses  and  equities 
available  against  the  payee.  Keel  v.  Construction  Co.,  143  N.  C.  429,  55  S.  E. 
826.  An  allegation  in  an  answer  with  reference  to  a  note  which  was  payable  to 
order,  that  the  defendant  "denies  that  said  note  was  ever  duly  negotiated,"  is 
equivalent  to  a  denial  that  the  note  was  ever  duly  indorsed  and  delivered  for  value. 
Rogers  v.  Morton,  95  N.  Y.  S.  49,  46  Misc.  494.  Where  a  note  was  given  in  con- 
sideration of  money  to  be  advanced  later,  a  transfer  of  the  note  without  indorse- 
ment was  not  in  due  course,  but  the  transferee  took  the  note  free  from  the  defense 
of  want  of  consideration,  notwithstanding  the  statute,  under  the  principle  of 
estoppel.  Marling  v.  Fitzgerald,  138  Wis.  93,  120  N.  W.  388,  the  court  saying 
that  the  rule  that  a  negotiable  instrument  in  the  hands  of  an  assignee  for  value 
(that  is,  by  transfer  without  indorsement)  and  without  notice  of  defenses,  as 
between  the  original  parties  is  subject,  nevertheless,  to  such  defenses,  has  relation 
to  such  equities  or  defenses  as  existed  at  the  time  of  the  transfer,  not  to  latent 
defenses  or  equities  which  possibly  may  at  some  future  time  exist. 


§  666  NATURE  OF  THE  CONTRACT  735 

becomes  invalid;  and  he  acquires  no  new  title  by  merely  getting 
possession,  without  a  new  transfer;  but  there  need  not  be  a  new  in- 
dorsement because  the  former  indorsement  is  capable  of  becoming 
again  valid  by  ratification  or  confirmation.^^  An  offer  to  indorse  for 
another  must  be  accepted  in  a  reasonable  time.^^  If  the  proposed 
indorsee  wrongfully  retain  the  note  after  refusing  its  acceptance,  he 
cannot  upon  payment  of  a  judgment  for  the  wrongful  conversion  hold 
the  indorser  liable;  such  payment  will  invest  him  with  title  to  the 
converted  propert}--  as  of  the  date  of  the  conversion,  which  is  merely 
the  obligation  of  the  makers  of  the  note,  the  contract  of  indorsement 
having  never  been  consummated.^ 

Under  Negotiable  Instrument  statute. — ^The  sections  of  the  statute 
defining  the  word  indorsement,^^  as  to  the  negotiation  of  an  instru- 
ment payable  to  order  being  an  indorsement  completed  by  delivery, 
are  simply  declaratory  of  pre-existing  law.^^  Under  sections  30  and 
49,  although  a  holder  of  an  instrument  payable  to  his  order  may  trans- 
fer such  title  as  the  transferrer  had  therein,  such  transferee  is  not  a 
holder  in  due  course  so  as  to  cut  defenses.^^ 

SECTION  I 

NATURE  OF  THE   CONTRACT,   AND  LIABILITIES  OP  INDORSER 

§  666.  As  to  the  meaning  of  the  term. — Indorsement,   in  its 

18.  Cartwright  v.  Williams,  2  Stark.  340.  See  §  667;  Spencer  v.  Carstardien 
(Colo.),  24  Atl.  882,  citing  the  text.  A  note  will  not  convey  title  to  an  indorsee 
if  not  delivered  during  the  hfetime  of  the  indorser.  Lowrey  v.  Danforth,  95  Mo. 
App.  441,  69  S.  W.  39. 

19.  Claflin  v.  Briant,  58  Ga.  414. 

20.  Haas  v.  Sackett,  40  Minn.  53. 

21.  Appendix,  sees.  30,  191. 

22.  Louisville  Coal  Min.  Co.  v.  International  Trust  Co.,  18  Colo.  App.  345, 
71  Pac.  898,  holding  that  in  an  action  on  a  note  by  a  transferee,  an  allegation  that 
the  payee  "indorsed  and  transferred"  the  note,  is  sufficient,  as  a  simple  allegation 
that  the  payee  indorsed  the  note  would  have  sufficed.  The  "holder,"  under 
section  30  of  the  statute,  is  the  payee,  and  not  a  person  who  claimed  to  have  pos- 
session of  the  notes  as  agent  of  the  payee,  and  attempted  to  transfer  them  by  an 
indorsement  as  agent  of  and  attorney  in  fact  for  the  payee,  and  not  by  his  personal 
indorsement.    Scotland  County  Nat.  Bank  v.  Hohn  (Mo.  App).,  125  S.  W.  539. 

23.  Foster's  Admr.  v.  Metcalfe,  138  S.  W.  314,  144  Ky.  385.  See  also  Mayers 
V.  McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111  Am.  St.  Rep.  879,  holding  that 
section  59  declaring  that  "every  holder  is  deemed  prima  facie  a  holder  in  due 
course,"  etc.,  does  not  affect  the  rule  at  common  law  and  under  the  statute  that 
to  constitute  a  holder  in  due  course  of  an  instrument  payable  to  order,  the  same 
should  be  indorsed. 


736  TKANSFER   BY   INDORSEMENT  §  667 

technical  sense,  is  applicable  only  to  negotiable  paper;  ^*  and  it  is 
important  to  bear  this  in  mind,  as  the  effect  of  indorsing  a  negotiable 
instrument,  and  assigning  or  becoming  the  surety  or  guarantor  of 
one  nonnegotiable  is  very  different.  In  common  parlance,  the  word 
is  indifferently  applied  to  bonds,  bills,  and  promissory  notes,  whether; 
negotiable  or  otherwise,  and  confusion  of  ideas  will  only  be  avoided 
by  holding  in  view  its  definite  legal  signification. 

Indorsing  an  instrument,  in  its  literal  sense,  means  writing  one's 
name  on  the  back  thereof;  ^^  and,  in  its  technical  sense,  it  means 
writing  one's  name  thereon  with  intent  to  incur  the  liability  of  a 
party  who  warrants  payment  of  the  instrument,  provided  it  is  duly 
presented  to  the  principal  at  maturity,  not  paid  by  him,  and  such 
fact  is  duly  notified  to  the  indorser.^^ 

The  liability  of  the  indorser  applies  to  interest  on  the  paper  falling 
due  before  maturity,  but  must  be  fixed  as  to  such  interest  by  demand 
and  notice.  ^'^ 

§  667.  The  term  "  indorsed  "  includes  "  delivered." — When  we 
speak  of  a  negotiable  instrument  being  indorsed  to  a  party,  the 

24.  Orrick  v.  Colston,  7  Gratt.  195;  Bank  of  Marietta  v.  Pindall,  2  Rand.  475. 

25.  Hartwell  v.  Hemenway,  7  Pick.  116;  Commonwealth  v.  Spilman,  124  Mass'. 
327;  Shain  v.  Sullivan,  106  Cal.  208,  39  Pac.  606. 

26.  See  §  688,  as  to  form.  Gray  Tie  &  Lumber  Co.  v.  Farmers'  Bank,  109  Ky. 
694,  60  S.  W.  537.  The  words  "indorse"  and  "indorser"  have  a  popular  as  well 
as  a  technical  meaning,  and  their  use  in  connection  with  the  act  of  one,  not  a  party 
to  a  note,  in  putting  his  name  on  the  back  of  the  note  for  the  purpose  of  increasing 
its  commercial  value,  is  not  inconsistent  with  his  having  signed  as  surety.  Redden 
V.  Lambert,  112  La.  740,  36  So.  668.  Where  a  draft  was  given  for  the  price  of 
goods  and  was  attached  to  a  bill  of  sale,  a  memorandum  on  the  bank,  signed  by 
the  payee:  "Have  this  day  deUvered  to  C.  W.  Neel,  for  Gray  Tie  &  Lumber  Co. 
(the  drawee),  the  ties  named  in  this  draft,  and  said  ties  are  free  from  all  liens  and 
incumbrances  of  any  character;  and  I  hereby  agree  to  pay  all  landing  or  yard 
rent,  bankage  or  wharfage  on  the  ties  named  in  this  draft  until  said  ties  are  re- 
moved. J.  H.  Flora,"  and  immediately  beneath  the  signature  the  following 
printed  statement:  "Draft  not  good  unless  above  bill  of  sale  is  signed,  and  drafts 
also  properly  indorsed,"  is  not  an  "indorsement"  within  the  meaning  of  the  law. 
Gray  Tie  &  Lumber  Co.  v.  Farmers'  Bank,  109  Ky.  694,  60  S.  W.  537.  The  mere 
fact  that  an  attorney  for  the  indorsee  of  a  note  may  have  either  willfully  or  inno- 
cently mistated  to  the  indorser  that  the  indorser  would  not  be  responsible  by  rea- 
son of  the  indorsement,  would  not  preclude  the  indorsee  from  recovering  thereon, 
as  it  was  not  the  misstatement  of  a  fact,  but  only  the  expression  of  an  opinion  as 
to  the  legal  effect  of  the  indorsement.  Wizig  v.  Beisert  (Tex.  Civ.  App.),  120 
S.  W.  954. 

27.  Daily  v.  Bartholomew,  5  Kan.  App.  148,  48  Pac.  923,  quoting  text;  True 
V.  BuUard,  45  Nebr.  409,  63  N.  W.  824. 


§  667a  NATURE  OF  THE  CONTRACT  737 

idea  of  its  being  transferred  and  delivered  to  him  for  consideration  is 
included — the  term  "indorsement"  including  delivery  for  value  to 
the  indorsee;  ^  but  it  is  otherwise  as  to  an  mstrument  not  negotiable.'^ 

§  667a.  Neither  indorsement  nor  acceptance  are  complete  before 
delivery.^" — Accordingly,  where  A.  specially  indorsed  certain  bills 
to  B.,  sealed  them  up  in  a  parcel,  and  left  them  in  charge  ^vith  his 
own  servant  to  be  given  to  the  postman,  it  was  held  that  the  special 
indorsement  did  not  transfer  the  property  in  the  bills  till  delivery, 
and  that  delivery  to  the  servant  was  not  sufficient,  though  it  would 
have  been  otherwise  had  the  delivery  been  made  to  the  postman. ^^ 
But  where  A.  and  B.,  being  partners,  and  indebted  to  C,  A.,  who 

28.  Freeman's  Bank  of  Ruckman,  16  Gratt.  129;  Bank  of  Marietta  v.  Pindall, 
2  Rand.  475;  Thomas  v.  Watkins,  16  Wis.  478;  Dann  v.  Norris,  24  Conn.  333; 
Adams  v.  Jones,  12  Ad.  &  El.  455  (40  Eng.  C.  L.);  Lloyd  v.  Howard,  20  L.  J.  Q.  B. 
1,  14  Q.  B.  995  (69  Eng.  C.  L.);  Marston  v.  Allen,  8  M.  &  W.  493;  Green  v.  Steer, 
1  Q.  B.  707  (41  Eng.  C.  L.);  Hayes  v.  Caulfield,  5  Q.  B.  81  (48  Eng.  C.  L.);  Fred- 
erick V.  Winans,  51  Wis.  472;  Higgins  v.  Bullock,  66  111.  37;  Mt.  Mansfield  Hotel 
Co.  V.  Bailey,  64  Vt.  156,  24  Atl.  136.  See  Codman  v.  Vermont  &  Canada  R. 
Co.,  16  Blatchf.  165;  Verder  v.  Verder,  63  Vt.  38,  21  Atl.  611. 

29.  In  Bank  of  Marietta  v.  Pindall,  2  Rand.  475,  Cabell,  J.,  said:  "The  term 
'indorse,'  when  applied  to  bills  of  exchange,  negotiable  by  the  custom  of  mer- 
chants, or  to  papers  made  negotiable  by  our  statutes,  may  ex  vi  termini  import  a 
legal  transfer  of  the  title.  But  as  to  bonds  and  notes  not  negotiable,  the  legal 
title  to  them  passes  by  assignment  only,  and  as  to  them  indorsement  is  not  equiva- 
lent to  assignment.  As  to  them  assignment  means  more  than  indorsement;  it 
means  by  one  party,  with  intent  to  assign,  and  an  acceptance  of  that  assignment 
by  the  other  party.  The  notes  in  question  are  not  negotiable  according  to  our 
laws,  but  assignable  only.  They  might  well  be  indorsed  in  Virginia  and  assigned 
in  Ohio.  The  pleas,  therefore,  that  they  were  indorsed  in  Virginia,  tendered 
immaterial  issues,  and  were  properly  demurred  to."  But  "indorsed  and  de- 
livered" would  be  sufficient  allegation  of  assignment  as  to  nonnegotiable  paper. 
Freeman's  Bank  v.  Ruckman,  16  Gratt.  129.  In  Commonwealth  v.  Powell,  11 
Gratt.  830,  there  was  an  indictment  against  Powell  for  forging  the  name  of  a 
party  before  the  payee's  on  the  back  of  a  negotiable  note,  Lee,  J.,  said:  "There 
is  no  reason  for  restricting  the  term  'indorsement'  to  the  technical  sense  appHed 
to  it  in  the  lex  mercatoria.  The  primitive  and  popular  sense  of  something  written 
on  the  outside  or  back  of  a  paper,  on  the  opposite  side  of  which  something  else 
had  been  written,  should  be  given  to  the  word  whenever  the  context  shows  it 
to  be  proper,  or  it  is  necessary  to  give  effect  to  the  pleading  or  other  instrument 
in  which  it  may  occur.  And  such  is  the  sense  in  which  it  should  be  understood  in 
this  indictment." 

30.  Rex  V.  Lambton,  5  Price,  528;  Lysaght  v.  Bryant,  9  C.  B.  46  (67  Eng. 
C.  L.).    See  ante,  §  665. 

31.  Rex  V.  Lambton,  5  Price,  428;  Bayley  on  Bills,  137;  Byles  on  Bills  (Shars- 
wood's  ed.)  [*146],  265;  Wulschner  v.  Sells,  87  Ind.  74. 

47 


738  TRANSFER   BY   INDORSEMENT  §  668 

acted  as  C.'s  agent,  with  B.'s  concurrence,  indorsed  a  bill  in  the  name 
of  the  firm,  and  placed  it  among  the  securities  which  he  held  for  C, 
but  no  communication  of  the  fact  was  made  to  C.  personally,  it  was 
held  a  good  indorsement  of  the  firm  to  C.^^ 

§  668.  An  indorsement  cannot  be  partial. — A  bill  or  note  can- 
not be  indorsed  for  part  of  the  amount  due  the  holder,  as  the  law 
will  not  permit  one  cause  of  action  to  be  cut  up  into  several,  and 
such  an  indorsement  is  utterly  void  as  such;  ^^  but  when  it  has  been 
paid  in  part,  it  may  be  indorsed  as  to  the  residue.^'*  And  an  indorse- 
ment of  part  of  the  amount  due  would  give  the  intended  indorsee  a 
lien  on  the  instrument.^^  If  the  indorsement  on  its  face  is  of  the  whole 
instrument,  without  any  apparent  limitation,  so  that  the  holder  could 
enforce  it  against  the  parties  liable  thereon,  it  would  be  immaterial 
that,  as  between  the  indorser  and  his  immediate  indorsee,  a  part  of 
the  amount  only  was  to  be  received  for  the  latter's  benefit,  and  the 
residue  as  trustee  for  his  indorser.^^ 

Where  it  was  indorsed  upon  a  negotiable  note  by  the  payee,  "  Pay 
one-half  of  the  within  note  to  S.  F.,  and  the  other  half  to  E.  B.,"  and 
the  note  was  at  the  time  delivered  to  one  of  the  indorsees  for  the 
benefit  of  both,  it  was  held  that  a  valid  title  was  vested  in  both, 
although  the  other  did  not  accept  the  transfer  until  afterward,  and 
that  it  was  proper  for  them  as  joint  indorsees  to  bring  a  joint  action 
against  the  maker.^^    And  where  distinct  shares  in  a  note  are  sold  to 


32.  Lysaght  v.  Bryant,  9  C.  B.  46  (67  Eng.  C.  L.). 

33.  Lindsay  v.  Price,  33  Tex.  282;  Frank  v.  Kuigler,  36  Tex.  305;  Planters' 
Bank  v.  Evans,  35  Tex.  592.  In  this  case,  on  a  note  for  $500,  the  payee  indorsed 
"Pay  to  L.  four  hundred  dollars  out  of  this  note."  Suit  being  brought  by  a  sub- 
sequent indorsee  in  his  own  name,  alleging  that  he  was  the  legal  and  equitable 
owner,  but  exhibiting  the  note  and  indorsements  as  part  of  his  petition,  the  maker 
and  defendant  demurred.  Held,  that  the  demurrer  was  properly  sustained.  Gold- 
man V.  Blum,  58  Tex.  636;  Hawkins  v.  Cardy,  1  Ld.  Raym.  160;  Bayley  on  Bills 
(Am.  ed.),  92;  Thompson  on  Bills  (Wilson's  ed.),  184;  Hughes  v.  Kiddell,  2  Bay, 
324,  in  which  it  was  held  that  where  two  indorsements  for  parts  of  the  amount 
were  made,  they  were  invalid,  though  together  they  purported  to  transfer  the 
whole. 

34.  Ibid. 

35.  Byles  on  Bills  (Sharswood's  ed.),  291. 

36.  Reid  v.  Furnival,  1  Car.  &  M.  538,  5  Car.  &  P.  499  (24  Eng.  C  L.). 

37.  Flint  v.  Flint,  6  Allen,  36,  Dewey,  J.,  saying:  "This  action  was  properly 
instituted  in  the  names  of  the  present  plaintiffs,  the  indorsement  of  the  entire 
note  being  made  to  the  two  indorsees,  and  the  claim,  as  respects  the  maker,  not 
being  divisible  into  two  separate  causes  of  action.    The  delivery  to  one  of  the 


§  669  NATURE  OF  THE  CONTRACT  739 

different  persons,  they  are  co-owners,  and  one  co-owner  may  maintain 
trover  against  the  other  for  conversion.^ 

It  has  been  held  in  Indiana  that  an  assignment  of  a  half  interest 
in  a  note  by  one  of  the  joint  payees  passed  his  interest  in  equity;  and 
under  the  peculiar  statute  of  Indiana,  that  the  assignee  might  join  in 
a  suit  with  the  other  joint  payee  against  the  maker;  ^^  and  where  part 
interest  in  a  note  is  assigned  for  valuable  consideration  it  may  be 
enforced  by  bill  in  equity;  ^°  and  where  a  note  is  payable  to  "A.  and 
B.,"  an  indorsement  by  one  as  "A.  and  B.,"  is  good  if  the  other  con- 
sents thereto.'*^    Joint  indorsements  are  hereafter  considered.^^ 

§  669.  Nature  of  the  contract  of  indorsement;  it  is  a  separate  and 
independent  contract. — The  indorsement  of  a  bill  or  note  is  not 
merely  a  transfer  thereof,  but  it  is  a  fresh  and  substantive  contract, 
embodying  all  the  terms  of  the  instrument  indorsed  in  itself.'*^    The 

indorsees,  and  a  suit  instituted  and  carried  on  for  the  benefit  of  both,  with  their 
concurrence,  show  a  sufficient  acceptance  of  the  transfer  to  them." 

38.  Conover  v.  Earl,  26  Iowa,  167. 

39.  Groves  v.  Ruby,  24  Ind.  418;  Fordyce  v.  Nelson,  91  Ind.  448;  Earnest  v. 
Barrett,  6  Ind.  App.  371,  33  N.  E.  635. 

40.  Hutchinson  v.  Simon,  57  Miss.  628. 

41.  Cooper  v.  Bailey,  52  Me.  230. 

42.  See  §  701a. 

43.  Brown  v.  Hull,  33  Gratt.  27,  29,  Staples,  J.:  "As  a  new  and  independent 
contract  it  only  takes  effect  from  the  time  it  is  made,  and  must  be  determined 
by  the  laws  then  in  force,  and  the  circumstances  then  existing."  Smith  v.  Caro, 
9  Oreg.  278;  Bank  of  British  North  America  v.  Ellis,  6  Sawy.  98,  citing  the  text; 
Benn  v.  Kutzchan,  24  Oreg.  28,  32  Pac.  763,  quoting  and  approving  text;  Kiel  v. 
Choate,  92  Wis.  417,  67  N.  W.  431,  53  Am.  St.  Rep.  936,  citing  text;  Alabama 
Nat.  Bank  v.  Rivers,  116  Ala.  1,  22  So.  580,  67  Am.  St.  Rep.  95;  Smith  v.  Pick- 
ham,  8  Tex.  Civ.  App.  326,  28  S.  W.  505,  citing  text;  Maddox  v.  Duncan,  143  Mo. 
613,  45  S.  W.  688,  65  Am.  St.  Rep.  678,  text  cited;  The  Johnson,  etc..  Bank  v. 
Lowe,  47  Mo.  App.  151,  citing  text;  Wolford  v.  Rusk,  145  111.  App.  405;  Horowitz 
v.  Wollowitz,  110  N.  Y.  S.  972,  59  Misc.  Rep.  520.  The  indorsement  of  an  in- 
dorser,  using  that  word  in  its  technical  sense,  imports  a  guarantee  of  previous 
signatures,  because  it  is  a  transfer  and  sale;  but  an  indorsement,  which  is  not 
made  for  the  purpose  of  transfer,  but  for  payment,  is  not  an  indorsement  within 
the  law  merchant,  and  does  not  carry  with  it  a  guarantee  of  previous  indorse- 
ments. First  Nat.  Bank  v.  City  Nat.  Bank,  182  Mass.  130,  65  N.  E.  24,  94  Am. 
St.  Rep.  637.  The  words  "The  Mayes  Merc.  Co.,  Transferred  to  W.  H.  Hand- 
ley,"  The  Mayes  Mercantile  Co.  being  the  payee  of  the  note  which  was  negotiable, 
were  a  commercial  indorsement  and  fixed  the  liability  of  the  payee  as  an  indorser; 
the  payee  did  not  become  a  mere  assignor  of  the  note.  Mayes  Mercantile  Co.  v. 
Handley  (Ind.  Ter.),  98  S.  W.  125, 103  S.  W.  599  (1906).  A  contract  attached  to  a 
promissory  note,  and  signed  by  the  payee  thereof,  in  which  he  undertakes  to  trans- 


740  TRANSFER   BY   INDORSEMENT  §  669a 

indorsement  of  a  bill  is  equivalent  to  the  drawing  of  a  new  bill  by  the 
drawer  upon  the  drawee  (or  acceptor,  if  it  be  accepted)  in  favor  of  the 
indorsee;  and  the  indorsement  of  a  note  is  equivalent  to  the  drawing 
of  a  bill  upon  the  maker,  who  stands  in  the  relation  of  acceptor,  as  it 
were,  in  favor  of  the  indorsee. ^^  So  entirely  distinct  and  independ- 
ent is  the  contract  of  the  indorser  of  a  note  from  that  of  the  maker 
that  at  common  law  a  separate  action  against  each  was  indis- 
pensable.^^ 

There  is  no  doubt  that  the  indorser  of  a  bill  or  note  is  a  surety 
and  that  any  change  in  the  contract  by  indulgence  as  to  time  or 
otherwise,  without  his  consent,  will  discharge  him."*^ 

§  669a.  Liabilities  assumed  by  indorser. — The  indorser  engages 
(1)  that  the  bill  or  note  will  be  accepted  or  paid,  as  the  case  may  be, 
according  to  its  purport ;  but  this  engagement  is  conditioned  upon  due 
presentment  or  demand,  and  notice;  •^'  he  also  engages  (2)  that  it  is 
in  every  respect  genuine;  (3)  that  it  is  the  valid  instrument  it  purports 
to  be;  (4)  that  the  ostensible  parties  are  competent;  and  (5)  that  he 
has  lawful  title  to  it  and  the  right  to  indorse  it.  And  if  it  turns  out 
that  any  of  these  engagements  but  that  first  named  are  not  fulfilled, 
the  indorser  may  be  sued  for  recovery  of  the  original  consideration 

fer  the  note,  "and  guaranty  it  as  free  from  any  defense  that  could  be  made  under 
section  27So  of  the  Code  of  Georgia  and  also  guaranty  payment  in  full  on  the  day 
it  is  due,"  is,  in  this  State,  a  contract  of  indorsement.  Baldwin  Fertilizer  Co.  v. 
Carmichael,  116  Ga.  762,  42  S.  E.  1002,  the  court  saying  that  it  was  made,  ac- 
cording to  the  alterations  of  the  petition,  for  the  purpose  of  transferring  the 
note  to  the  plaintiff  in  satisfaction  of  a  claim  held  by  it  against  the  defendant, 
and  the  mere  use  of  the  word  "guaranty"  will  not  make  the  contract  one  of 
guaranty. 

44.  Ingalls  v.  Lee,  9  Barb.  947;  Cundy  v.  Marriott,  1  B.  &  Aid.  696;  Billgerry 
V.  Branch,  19  Gratt.  418;  Brown  v.  Hull,  33  Gratt.  29;  Evans  v.  Gee,  11  Pet.  SO; 
Hill  V.  Lewis,  1  Salk.  132;  Suse  v.  Pompe,  98  Eng.  C.  L.  538;  Edward  on  Bills, 
289;  Chitty  on  Bills  (13th  Am.  ed.)  [*S2],  98;  Bunker  v.  Langs,  76  Hun,  543,  28 
N.  Y.  Supp.  210.  WTiere  a  creditor  has  adjusted  his  indebtedness  by  taking  a  note 
from  the  debtor  and  indorsed  the  note,  and  has  afterwards  been  required  as  in- 
dorser to  pay  the  note,  his  action  against  the  maker  is  one  upon  the  note  and  not 
upon  the  indebtedness,  differing  in  this  respect  from  the  remedy  of  a  surety.  Keys 
V.  Keys'  Estate,  217  Mo.  48,  116  S.  W.  537. 

45.  Brown  v.  Hull,  33  Gratt.  29;  Patterson  v.  Todd,  18  Pa.  St.  426. 

46.  State  Sav.  Bank  v.  Baker,  93  Va.  514,  25  S.  E.  550;  Day  v.  Martin,  87 
Va.  1.    See  §  1303  on  subject  of  Principal  and  Surety. 

47.  Callahan  v.  Bank  of  Kentucky,  82  Ky.  235;  Ankeny  v.  Henry,  1  Ida. 
Terr.  231;  True  v.  Bullard,  45  Nebr.  409,  63  N.  W.  824;  Huttig  Sash  &  Door  Co. 
V.  Gitchell,  69  Mo.  App.  115;  Hawkins  v.  Shields  (Miss.),  57  So.  4. 


§  669b  NATUEE    OF   THE   CONTKACT  741 

which  has  failed,"*^  or  be  held  liable  as  a  party /^  without  proof  of  de- 
mand and  notice.^ 

§  669b.  The  doctrine  of  the  text  that  in  such  cases  the  indorser 
is  bound  without  demand  or  notice  undoubtedly  applies  when  he 
indorses  with  knowledge  of  the  infirmity  that  renders  the  instru- 
ment void;  ^^  and  such  knowledge  is  necessary  to  make  him  so  liable, 
according  to  some  authorities.^^  But  the  better  opinion  is,  we  think, 
that  he  is,  at  least,  bound  to  refund  the  consideration  paid  him  upon 
the  transfer  if  the  instrument  is  void,  for  it  is  not  then  the  thing  which 
it  purported  to  be,  and  which  he  impliedly  represented  it  to  be.^^ 
If  he  be  a  mere  accommodation  indorser,  receiving  no  part  of  the 
consideration,  it  has  been  cogently  argued,  and  has  been  held,  that  he 
is  not  responsible  for  any  alteration  which  may  have  avoided  the 
instrument  unless  there  were  due  demand  and  notice.^'*     But  the 

48.  Chitty  on  Bills  [*95],  116.  Following  the  doctrine  of  the  text,  in  New  York 
it  has  been  held,  that  an  indorser  cannot  defend  against  a  bona  fide  holder  for 
value,  that  the  note  was  never  made  or  delivered  by  the  maker.  Lennon  v. 
Grauer,  2  App.  Div.  513,  38  N.  Y.  Supp.  22;  Earnest  v.  Barrett,  6  Ind.  App.  371, 
33  N.  E.  635;  Spencer  v.  Halpern,  62  Ark.  595,  37  S.  W.  711,  quoting  with  ap- 
proval, the  text;  Andrews  v.  Kramer  et  al.,  77  Miss.  151,  25  So.  156;  First  Nat. 
Bank  v.  Farmers  &  Merchants  Bank,  56  Nebr.  149,  76  N.  W.  430;  Huttig  Sash 
&  Door  Co.  V.  Gitchell,  69  Mo.  App.  115;  Willis  v.  French,  84  Me.  593,  24  Atl. 
1010,  30  Am.  St.  Rep.  416;  Furgerson  v.  Staples,  82  Me.  159,  19  Atl.  158,  17  Am. 
St.  Rep.  70. 

49.  Story  on  Bills,  §  108;  Edwards,  287;  Chitty  (13th  Am.  ed.)  [*243],  277; 
Lake  v.  Haynes,  1  Atk.  281  (1736);  Heylin  v.  Adamson,  2  Burr.  669  (1758);  Bal- 
lingalls  V.  Gloster,  3  East,  483  (1820). 

50.  Copp  V.  M'Dugall,  9  Mass.  1;  Chitty  (13th  Am.  ed.)  [*82],  69.  See  chap- 
ter XXXIII,  section  I,  vol.  II.  The  doctrine  of  the  text  is  approved  in  Cochran 
V.  Atchison,  27  Kan.  728. 

51.  Benjamin's  Chalmers'  Digest,  197.  See  §§  669,  732,  733,  734,  736.  See  on 
this  subject,  vol.  II,  §  1113;  Rossi  v.  National  Bank,  71  Mo.  App.  150,  citing  text. 

52.  See  §§  733,  733a. 

53.  See  §  733a;  Ames  on  BiUs  and  Notes,  vol.  I,  p.  476;  1  Parsons  on  Notes  and 
BUls,  444. 

64.  Susquehanna  Valley  Bank  v.  Loomis,  85  N.  Y.  207.  In  this  case  it  appeared 
that  an  altered  draft  was  indorsed  by  defendant  to  accommodate  a  stranger  and 
enable  him  to  get  the  money  at  a  bank,  the  indorser  receiving  no  part  of  the  con- 
sideration. Held,  that  the  accommodation  indorser  was  not  bound  without  de- 
mand and  notice.  Danforth,  J.,  considered  that  exceptions  to  the  rule  requiring 
notice  should  not  be  multiplied,  that  "the  indorser  does  not  warrant  the  genuine- 
ness of  the  body  of  the  check  as  to  payee  or  amount,"  and  that  as  not  charged  by 
the  law  merchant  in  the  case  adjudicated  he  was  not  bound.  We  submit  that 
the  cases  cited  by  the  court  do  not  sustain  its  judgment.    Money  paid  under  a 


742  TRANSFER  BY  INDORSEMENT  |  670 

consideration  paid  the  party  accommodated  is,  in  such  case,  attribut- 
able to  him,  and  he  would  seem  to  us  to  stand  as  a  surety,  bound  to 
refund  it.  And  the  rule  exacting  notice  to  hold  an  indorser  liable 
seems  to  us  to  apply  to  cases  in  which  he  warrants  payment  at  matu- 
rity, and  not  to  those  cases  in  which  he  passes  an  instrument  affected 
by  some  vice  which  renders  it,  in  fact,  not  the  bill  or  note  it  purports 
to  be. 

§  670.  Liability  of  indorser  "  without  recourse." — When  the  in- 
dorsement is  "without  recourse"  the  indorser  specially  declines  to 
assume  any  responsibility  as  a  party  to  the  bill  or  note;  but  by  the 
very  act  of  transferring  it,  he  engages  that  it  is  what  it  purports  to 
be — the  valid  obligation  of  those  whose  names  are  upon  it.  He  is 
like  a  drawer  who  draws  without  recourse;  but  who  is  nevertheless 
liable  if  he  draws  upon  a  fictitious  party,  or  one  without  funds.  And, 
therefore,  the  holder  may  recover  against  the  indorser  "without 
recourse,"  (1)  if  any  of  the  prior  signatures  were  not  genuine;  ^^  or 
(2)  if  the  note  was  invalid  between  the  original  parties,  because  of  the 
want,  or  illegality  of,  the  consideration;  ^^  or  if  (3)  any  prior  party 
was  incompetent,  or  (4)  the  indorser  was  without  title.^^  In  a  Vir- 
ginia case,  where  a  party  agreed  to  have  a  bond  assigned  "without 
recourse"  to  another,  those  words  were  held  not  to  exempt  the  con-' 
tractor  from  liability  when  it  afterward  appeared  that  it  had  been 
previously  paid,  Carr,  J.,  saying:  "The  very  possession  of  the  bond, 
the  claiming  it  as  property,  as  something  binding  the  obligors,  pre- 
cluded the  idea  that  it  was  at  that  moment  discharged  or  satisfied; 
for  then  it  was  no  bond:  it  bound  nobody,  it  was  not  the  representa- 
tive of  money.  The  bond,  too,  was  payable  at  a  future  date;  who 

mistake  of  fact  (as  in  Marine  Nat.  Bank  v.  National  City  Bank,  59  N.  Y.  67) 
may  be  recovered  back  because  the  consideration  is  not  received;  but  an  indorser 
induces  payment  or  purchase  by  another.  He  does  not  suffer  by,  but  himself 
unites  in  the  representation;  and  for  that  reason  should  make  good  what  others, 
relying  on  his  name  have  contracted  to  receive. 

55.  Dumont  v.  WiUiamson,  18  Ohio  (N.  S.)  515. 

56.  Blething  v.  Lovering,  58  Me.  437;  Hannum  v.  Richardson,  48  Vt.  508; 
Challiss  V.  McCnun,  22  Kan.  157;  Seeley  v.  Reed,  28  Fed.  167,  citing  the  text; 
Drennan  v.  Bunn,  124  III.  184,  citing  the  text.  See  post,  §  700.  Contra,  Rayne  v. 
Dillo,  27  La.  Ann.  622. 

57.  Scarbrough  v.  City  Nat.  Bank,  157  Ala.  577,  48  So.  62, 131  Am.  St.  Rep.  71; 
Challiss  V.  McCrum,  22  Kan.  127,  approving  the  text;  Geneser  v.  Wissner,  69 
Iowa,  120,  citing  the  text.  But  "the  contract  of  indorsement  expressed  by  the 
words  'without  recourse'  is  available  only  to  the  payee  whose  individual  contract 
it  was."    Doom  et  al.  v.  Sherwyn,  20  Colo.  234,  38  Pac.  56. 


§  671  NATUEE   OF  THE   CONTRACT  743 

c^ild  have  dreamed  that  it  was  already  mere  wax  and  paper — not  a 
cent  due  on  it?"  ^  In  another  case,  where  a  party  transferred  a 
negotiable  note,  after  maturity,  pending  suit,  and  "without  recourse," 
it  was  contended,  on  the  authority  of  the  case  just  quoted,  that  it 
appearing  that  the  indorser  was  already  discharged  by  failure  in 
respect  to  notice,  and  the  maker  proving  insolvent,  the  transferrer 
was  bound  for  the  amount  of  the  note.  But  the  court  held  otherwise, 
laying  some  stress,  however,  on  the  peculiar  circumstances  of  the 
case.^^  In  Maine,  where  an  overdue  note  was  transferred  with  the 
indorsement,  "Indorser  not  holden,"  it  was  held  that  the  indorser 
was  nevertheless  liable  to  his  vendee  for  any  payment  made  on  the 
note  before  the  transfer,  or  any  set-off  existing  against  it  of  which  the 
note  gave  no  indication  and  the  vendor  no  information.^^ 

Under  Negotiable  Instrument  statute. — Under  the  warranty  on 
negotiating  an  instrument  by  a  qualified  indorsement,®^  it  has  been 
held  that  upon  an  indorsement,  "By  agreement  with  recourse  after 
all  security  has  been  exhausted,  waiving  protest,"  until  such  security 
is  exhausted,  no  cause  of  action  accrues  against  the  indorser,  and  he 
cannot  therefore  be  joined  with  the  mortgagor  as  a  defendant  in  an 
action  to  foreclose  such  mortgage,^^  and  that  an  indorsement  "with- 
out recourse"  does  not  obviate  the  liability  involved  in  the  warranty 
of  genuineness  and  of  title.®^ 

§  671.  In  the  first  place,  as  to  acceptance  and  payment. — The 

indorser  of  a  bill  contracts  to  pay  it  at  maturity,  if,  on  presentment 
for  acceptance,  it  is  not  accepted  according  to  its  purport,  and  he  is 
duly  notified  of  the  dishonor.®*  And  the  indorser  of  an  accepted  bill, 
or  of  a  note,  likewise  contracts  to  pay  it,  if  it  be  not  duly  paid  by  the 
acceptor  or  maker.®^    It  matters  not  what  may  be  the  cause  of  the 

58.  Mays  v.  Callison,  6  Leigh,  230. 

59.  Ober  v.  Goodridge,  27  Gratt.  878. 

60.  Ticonic  Bank  v.  Smiley,  27  Me.  225.  See  also  Challiss  v.  McCrum,  22 
Kan.  157. 

61.  Appendix,  sec.  65. 

62.  Smith  v.  Bradley,  16  N.  D.  306,  112  N.  W.  1062. 

63.  State  v.  Corning  State  Savings  Bank,  139  Iowa,  338,  115  N.  W.  937. 

64.  Ballingalls  v.  Gloster,  3  East,  481,  4  Esp.  268.  Lord  Ellenborough,  C.  J., 
said:  "There  is  no  distinguishing  the  case  of  an  indorser  from  that  of  the  drawer." 
Smith  V.  Johnson,  27  L.  J.  Exch.  363,  3  H.  &  N.  222;  Brown  v.  People's  Bank, 
59  Fla.  163,  52  So.  719  (as  to  a  check) ;  Chitty  on  Bills  [*241],  576. 

65.  Ogden  v.  Sanders,  12  Wheat.  313;  Mackintosh  v.  Gibbs,  81  N.  J.  L.  577, 
80  Atl.  554,  affirming  79  N.  J.  L.  40,  74  Atl.  708;  Story  on  Notes,  §  135;  Chitty  on 


744  TRANSFER  BY  INDORSEMENT  §  672 

drawer's  or  maker's  refusal.  The  indorser  contracts  to  pay  on  being 
duly  notified  that  he  refuses  to  pay.  He,  therefore,  warrants  the 
solvency  of  the  parties — or,  in  short,  warrants  that  it  will  be  paid, 
either  by  them  or  by  himself,  on  receiving  notice  of  their  failure. 

§  672.  In  the  second  place,  as  to  genuineness. — The  indorser 
contracts  that  the  bill  or  note  is  in  every  respect  genuine,  and  neither 
forged,  fictitious,  or  altered.  Undoubtedly,  and  by  universal  ad- 
mission, this  principle  applies  to  the  signatures  of  the  drawer, 
acceptor,  and  maker  of  the  bill  or  note,  who  are  the  original  parties, 
and  it  is  often  expressed  in  language  to  the  effect  that  the  indorser 
warrants  that  it  is  a  genuine  instrument.^^  This  rule,  however,  would 
not  apply  where  the  holder  procured  the  indorsement  of  a  forged  note 
with  knowledge  of  the  forgery,  and  represented  to  the  indorser  that  it 
was  genuine,  or  where  the  holder  has  received  the  paper  after  maturity 
and  without  consideration.^''  Whether  or  not  the  indorser's  engage- 
ment extends  to  the  genuineness  of  prior  indorsements  is  not  so  well 
settled.    Undoubtedly  the  indorser  admits  their  genuineness,  as  he 

Bills  (13th  Am.  ed.)  [*2411,  276.  In  the  case  of  Witherow  v.  Slayback,  158  N.  Y. 
649,  53  N.  E.  681,  70  Am.  St.  Rep.  509,  the  question  is  raised,  but  not  decided, 
whether  the  ordinary  contract  of  indorsement  credits  a  debt  when  entered  into, 
without  regard  to  the  subsequent  maturity  of  the  note,  demand  and  due  protest; 
the  court  citing  the  case  of  Barclay  v.  Weaver,  19  Pa.  St.  396,  57  Am.  Dec.  661, 
note,  to  the  effect  that  demand  and  notice  are  no  part  of  the  contract,  but  only 
steps  in  the  legal  remedy  upon  it. 

66.  Edwards  on  Bills,  188,  289;  Story  on  Bills,  §111;  Coggill  v.  American 
Exchange  Bank,  1  N.  Y.  113;  Murray  v.  Judah,  16  Cow.  484;  Mcintosh  v.  Hay- 
don,  R.  &  M.  362;  Howe  v.  Merrill,  5  Gush.  83;  Bell  v.  Dagg,  60  N.  Y.  528;  Han- 
num  V.  Richardson,  48  Vt.  508;  Condon  v.  Pearce,  43  Md.  83;  Chapman  v.  Rose, 
56  N.  Y.  137;  Misher  v.  Carpenter,  13  Hun,  604;  Cochran  v.  Atkinson,  27  Kan. 
732,  citing  the  text;  Austin,  Tomlinson  &  Webster  Mfg.  Co.  v.  Heiser  et  al.,  6 
S.  Dak.  429,  61  N.  W.  445;  Third  Nat.  Bank  v.  Merchants'  Nat.  Bank,  76  Hun, 
475,  27  N.  Y.  Supp.  1070.  But,  if  the  indorsement  be,  "for  collection,"  by  one 
other  than  the  payee,  such  indorser  does  not  guarantee  that  the  name  of  the 
drawer  is  genuine,  but  he  does  guarantee  that  the  indorsements  then  on  the  paper 
are  genuine.  First  Nat.  Bank  v.  First  Nat.  Bank,  58  Ohio  St.  207,  50  N.  E.  723, 
65  Am.  St.  Rep.  748;  Willis  v.  French,  84  Me.  583,  24  Atl.  1010,  30  Am.  St.  Rep. 
416;  Furgerson  v.  Staples,  82  Me.  159,  19  Atl.  158,  17  Am.  St.  Rep.  470;  Palmer  v. 
Courtney,  32  Nebr.  773,  49  N.  W.  754,  quoting  text;  Beattie  v.  The  National 
Bank,  174  111.  571,  51  N.  E.  602,  66  Am.  St.  Rep.  318,  quoting  text;  Meyer  v. 
Foster,  147  Cal.  166,  81  Pac.  402;  Seaboard  Nat.  Bank  v.  Bank  of  America,  100 
N.  Y.  S.  740,  51  Misc.  Rep.  103,  affirmed  103  N.  Y.  S.  1141,  118  App.  Div.  607; 
Fretwell  v.  Carter,  78  S.  C.  531,  59  S.  E.  639. 

67.  Turner  v.  Keller,  66  N.  Y.  66;  Misher  v.  Carpenter,  13  Hun,  604;  First 
Nat.  Bank  v.  Farmers'  &  Merchants'  Bank,  56  Nebr,  149,  76  N.  W.  430. 


§  672  NATURE   OF  THE   CONTRACT  745 

is  estopped  to  deny  his  title,  which  would  otherwise  be  invalid/^ 
and  notwithstanding  the  doubts  and  dissents  which  have  been  ex- 
pressed, it  is  clear  upon  principle  that  the  indorser  warrants  the 
instrument  throughout.  If  there  be  any  forged  indorsement  the  in- 
dorser cannot  recover  against  any  party  prior  to  it ;  ^^  and  the  subse- 
quent indorser  has  transferred  a  thing  to  which  he  himself  had  no 
right  or  title.  He  should  plainly  be  regarded  as  representing,  by  the 
act  of  ownership,  a  right  of  ownership,™  and  be  held  bound  accord- 
ingly. In  Bayley  on  Bills  it  is  said,  "An  indorsement  is  no  warranty 
that  prior  indorsements  are  genuine;"  ^^  but  the  case  cited  does 
not  satisfactorily  sustain  that  view,  and  the  authorities  greatly 
preponderate  against  it.'^ 

It  has  been  held  that  the  indorsement  of  one  of  two  joint  payees 

68.  Ogden  v.  Sanders,  12  Wheat.  313;  Chitty  on  Bills  [*242],  277;  Story  on 
Bills,  §§  110,  111.  Oriental  Bank  v.  Gallo,  98  N.  Y.  S.  561,  112  App.  Div.  360, 
affirmed  188  N.  Y.  610,  81  N.  E.  1170;  First  Nat.  Bank  of  Mt.  Vernon  v.  First 
Nat.  Bank  of  Lincoln,  68  Ohio  St.  43,  67  N.  E.  91.  When  an  indorsement  upon  a 
genuine  bank  check  is  forged,  or  the  name  of  the  payee  is  placed  thereon  without 
authority,  and  the  check  is  transferred  and  paid  by  a  bank  not  the  drawee,  which 
bank  in  turn  indorses  it  and  collects  it  from  the  drawee  bank,  the  drawee  is  under 
no  obHgation  to  inquire  as  to  the  genuineness  of  the  first  indorsement,  but  the 
latter  indorser  guarantees  the  genuineness  of  the  prior  indorsement.  Wellington 
Nat.  Bank  v.  Robbins,  71  Kan.  748,  81  Pac.  487,  114  Am.  St.  Rep.  523.  See  also 
Lieber  v.  Fourth  Nat.  Bank,  137  Mo.  App.  158, 117  S.  W.  672. 

69.  Chitty  on  Bills  [*260,  261],  297. 

70.  State  Bank  v.  Fearing,  15  Pick.  533;  Harris  v.  Bradley,  7  Yerg.  310;  Oliver 
V.  Andry,  7  La.  496;  Bruce  v.  Bruce,  1  Marsh.  165,  5  Taunt.  485;  Redington  v. 
Wood,  45  Cal.  406;  Cal.  Law  Times,  January,  1873,  p.  12;  1  Parsons  on  Notes 
and  Bills,  25;  2  Parsons  on  Notes  and  Bills,  588;  Story  on  Bills,  §  111;  Story  on 
Notes,  §§  135,  380;  Benjamin's  Chalmers'  Digest,  217,  218;  Dalrymple  v.  Hillen- 
brand, 2  Hun,  488,  affd.  60  N.  Y.  5;  White  v.  Continental  Nat.  Bank,  64  N.  Y. 
320.  In  an  action  brought  by  an  indorsee  upon  the  implied  undertaking  of  an 
indorser  that  the  signatures  of  all  prior  indorsers  are  genuine,  to  recover  an  amount 
which  such  indorsee  has  been  adjudged  to  pay  in  consequence  of  the  forgery  of  the 
signature  of  a  prior  indorser,  the  plaintiff  having  given  to  the  defendant  timely 
notice  of  the  pendency  of  the  suit  in  which  such  judgment  was  recovered,  and  an 
opportimity  to  defend,  such  former  judgment  is  conclusive  with  respect  to  the 
forgery.  First  Nat.  Bank  of  Mt.  Vernon  v.  First  Nat.  Bank  of  Lincoln,  68  Ohio 
St.  43,  67N.  E.91. 

71.  Bayley,  chap.  5,  p.  170  (5th  ed.,  1833),  citing  East  India  Co.  v.  Tritton, 
3  B.  &  C.  280. 

72.  Wilhams  v.  Tishomingo  Sav.  Inst.,  57  Miss.  633  (1880),  George,  C.  J., 
saying:  "The  rule  is  well  settled  that  an  indorser  warrants  the  genuineness  of  the 
prior  indorsements  on  the  bill  as  well  as  his  title  to  the  paper."  Fish  v.  First  Nat. 
Bank,  42  Mich.  204;  Cochran  v.  Atchison,  27  Kan.  728;  First  Nat.  Bank  v.  Far- 
mers' &  Mechanics'  Bank,  56  Nebr.  149,  26  N.  W.  430. 


746  TRANSFER  BY   INDORSEMENT  §  673 

does  not  warrant  the  genuineness  of  the  first,  as  in  case  of  several 
indorsements.^^ 

Under  Negoiiahle  Instrument  statute. — Under  the  statute,  an  in- 
dorser  warrants  the  genuineness  of  the  paperj'*  The  warranty  is 
applicable  to  the  condition  of  the  instrument  on  leaving  the  hands 
of  the  indorser,  and  has  no  reference  to  alterations  which  may  be 
made  subsequently,^^  and  the  fact  that  the  transferee  of  a  forged  note 
extended  payment  of  the  note  for  a  year  and  received  interest  on  the 
same  when  he  was  still  ignorant  of  the  forgery,  does  not  stop  him 
from  receiving  judgment  against  the  transferrer  on  his  warranty J^ 
It  is  to  be  noticed  that  the  warranty  declared  by  the  statute  extends 
only  to  the  subsequent  holders  in  due  course,  and  an  indorser  of  a 
check  does  not  warrant  to  the  drawee  the  genuineness  of  the  signature 
of  the  maker." 

§  673.  In  the  third  place,  as  to  validity. — The  indorser  engages 
that  the  bill  or  note  is  a  valid  and  subsisting  obligation,  binding  all 
prior  parties  according  to  their  ostensible  relations;  and  he  may  be 
held  liable,  although  the  instrument  be  entirely  null  and  void  as 
between  prior  parties  themselves;  and  also  as  between  prior  parties 
and  even  bona  fide  holders  without  notice.'^^    In  an  early  English  case, 

73.  Foster  v.  Collner,  107  Pa.  St.  310.  " 

74.  Appendix,  sees.  65,  66.  Willard  v.  Cfook,  21  App.  D.  C.  237.  Where  a 
note  was  made  to  the  order  of  a  certain  named  person,  and  the  maker  forged  the 
indorsement  of  such  person,  one  who  subsequently  indorsed  the  note  for  the  maker 
guaranteed  the  genuineness  of  the  signature  of  the  previous  indorsement,  and  that 
the  note  was  a  "  vahd  and  subsisting"  obligation.  Packard  v.  Windholz,  84  N.  Y. 
S.  666,  88  App.  Div.  365,  affirmed  180  N.  Y.  549,  73  N.  E.  1129.  In  an  action 
to  recover  the  amount  paid  upon  an  altered  check  under  a  mistake  of  fact,  it  was 
held  that  an  indorsement  signed  "  Received  payment  through  New  York  Clearing 
House,  December  3,  1906.  Indorsement  guaranteed,"  was  equivalent  to  a  guar- 
anty of  the  genuineness  of  the  whole  of  the  instrument,  including  the  indorse- 
ments excepting  only  the  signature  of  the  drawer,  and,  in  case  of  forgery,  rendered 
the  defendant  liable  prima  facie  to  refund  to  plaintiff  the  amount  received  on  the 
check,  on  the  ground  that  the  payment  had  been  made  under  a  mistake  of  fact. 
New  York  Produce  Exch.  Bank  v.  Twelfth  Ward  Bank,  119  N.  Y,  S.  988, 134  App. 
Div.  953. 

75.  First  Nat.  Bank  v.  Gridley,  98  N.  Y.  S.  445,  112  App.  Div.  398.  See  also 
Appendix,  sec.  124. 

76.  Chuseau  v.  Wagner  (La.),  52  So.  547. 

77.  Farmers'  &  Merchants'  Bank  v.  Bank  of  Rutherford,  115  Tenn.  64,  88 
S.  W.  939,  112  Am.  Rep.  817,  the  court  saying  that  the  drawee  is  not  a  holder  in 
due  course  as  defined  in  section  52,  or  a  holder  as  defined  in  section  191,  and  that 
the  drawee,  when  he  accepts  the  check,  makes  himself  the  guarantor  thereof. 

78.  Chitty  on  Bills  (13th  Am.  ed.)  [*82,  90,  95],  98,  111,  116;  Roscoe  on  Bills, 


§  674  NATUKE   OF  THE   CONTEACT  747 

where  the  suit  was  by  the  indorsee  against  the  maker  of  a  note  void 
for  gaming,  Lee,  C.  J.,  said:  "The  plaintiff  is  not  without  remedy,  for 
he  may  sue  Church  (the  indorser)  upon  his  indorsement."  ^^  And 
where  an  indorsee  of  a  note,  with  notice  of  the  failure  of  consideration 
for  the  note,  transferred  the  same  to  an  innocent  purchaser  for  value, 
and  the  maker  was  compelled  to  pay  such  innocent  purchaser,  the 
maker  may  recover  the  amount  paid  from  the  indorsee  who  assigned 
the  note  with  notice  of  its  invalidity.^" 

Under  Negotiable  Instrument  statute. — The  warranty  by  indorse- 
ment, declared  by  the  statute,  is  that  at  the  time  of  the  indorsement 
the  instrument  is  valid  and  subsisting.^^  The  warranty  runs,  by  the 
terms  of  the  statute,  to  holders  in  due  course,^^  and  the  payee  of  a  note 
who  knew  its  illegal  consideration  is  not  a  holder  in  due  course,  and 
cannot  hold  an  indorser  before  delivery  to  the  payee  upon  a  war- 
ranty.^^ 

§  674.  In  another  English  case,  in  an  action  against  the  drawer  of 
a  bill,  it  was  held  no  defense  that  it  was  drawn  and  accepted  for  a 
gaming  debt,  it  having  been  indorsed  over  by  the  drawer  for  a  valu- 
able consideration  to  a  third  person,  by  whom  the  suit  was  brought;  ^^ 

123;  Bayley  on  Bills,  chap.  12,  p.  369;  Byles  (Sharswood's  ed.)  [*135],  250;  John- 
son on  Bills,  32;  Thompson  on  Bills,  82;  1  Parsons  on  Notes  and  Bills,  218;  Ed- 
wards on  Bills,  289,  350;  Story  on  Notes,  §  193;  Story  on  Bills,  §  190;  Benjamin's 
Chalmers'  Digest,  217,  218.  See  Raih-oad  Co.  v.  Schutte,  103  U.  S.  (13  Otto) 
145;  Fish  v.  First  Nat.  Bank,  42  Mich.  404.  Not  as  to  seller  of  Municipal  bonds. 
See  Ruohs  v.  Bank,  94  Tenn.  57,  28  S.  W.  303.  If  party  receives  paper  with  void 
indorsement  of  corporation  thereon,  and  he,  knowing  the  void  character  of  such 
indorsement,  transfers  the  instrument  to  another,  such  transferrer  would  be  liable 
thereon  to  the  indorsee.  Nashville  Lumber  Co.  v.  Fourth  Nat.  Bank,  94  Tenn. 
374,  29  S.  W.  367,  45  Am.  St.  Rep.  727;  Shaw  v.  Cutwater,  77  Hun,  87,  28  N.  Y. 
Supp.  312. 

79.  Bowyer  v.  Bampton,  2  Stra.  1155  (1741). 

80.  Falke  v.  Brule,  17  Colo.  App.  499,  68  Pac.  1054.  If,  when  sued  by  the 
indorsee,  the  maker  has  attempted  without  success,  but  in  good  faith,  and  with 
reasonable  grounds,  to  show  that  the  plaintiff  was  not  in  fact  an  innocent  holder, 
so  that  he  might  make  his  defense  upon  the  merits,  his  recovery  should  include 
the  costs  and  his  attorney's  fee  in  that  action.  Bourke  v.  Spaight,  80  Kan.  387, 
102  Pac.  253. 

81.  Appendix,  sees.  65,  66.  Leonard  v.  Draper,  187  Mass.  536,  73  N.  E.  644; 
Horowitz  V.  Wollowitz,  110  N.  Y.  S.  972,  59  Misc.  Rep.  520  (as  that  a  note  is  not 
void  for  usury). 

82.  Bruck  v.  Lambeck,  118  N.  Y.  S.  494,  63  Misc.  Rep.  117. 

83.  Burk  v.  Smith  (Md.),  75  Atl.  114. 

84.  Edwards  v.  Dick,  4  B.  &  Aid.  212  (6  Eng.  C.  L.). 


748  TRANSFER   BY   INDORSEMENT  §  674 

and,  in  Pennsylvania,  that  the  indorsee  of  a  note  given  on  such  a 
consideration  may  sue  the  indorser.^^  And,  in  Virginia,  in  an  action 
against  the  maker  and  four  indorsers  of  a  note,  it  was  held  that  the 
holder  could  recover  against  the  fourth  indorser,  of  whom  he  was  the 
indorsee  for  value,  although  it  was  indorsed  for  accommodation  of 
the  maker  by  the  first  three  indorsers,  and  had  been  purchased  by  the 
fourth  at  a  usurious  rate  of  interest.^^ 

Upon  these  principles  it  has  been  decided  in  Georgia,  where  the 
Supreme  Court  has  held  valid  the  article  of  the  State  Constitution 
which  provides  that  "No  court  of  this  State  shall  try  or  give  judg- 
ment, or  enforce  any  debt,  the  consideration  of  which  was  a  slave;" 
that  the  courts  should  enforce  payment  by  the  indorser  of  a  note 
given  for  a  slave.  Brown,  C.  J.,  saying:  "The  payee  of  a  promissory 
note  given  for  a  slave,  who,  for  a  valuable  consideration,  which  was 
in  no  way  connected  with  the  slave,  indorsed  and  delivered  the  note 
to  the  plaintiff,  is  liable.  The  indorsement  is  a  new  contract,  and  the 
court  has  jurisdiction  to  enforce  the  judgment  against  him  on  that 
contract."  ^^ 

In  such  cases  the  indorsee  may  not  only  sue  the  indorser  upon  the 
paper  itself,  but  also  upon  a  count  for  money  had  and  received  .^^ 

85.  Unger  v.  Boas,  1  Harris,  601  (1850). 

86.  Moffettv.  Bickel,  21  Gratt.  283,  Moncure,  J.,  saying:  "If  there  were  any 
doubt  upon  this  question,  I  think  it  would  be  removed  by  the  case  referred  to  by 
the  learned  counsel  of  the  plaintiff  in  error,  of  Edwards  v.  Dick,  decided  by  the 
Court  of  King's  Bench  in  1822,  and  reported  m  4  B.  &  Aid.  212,  6  Eng.  C.  L.  405. 
Abbott,  C.  J.,  and  Bayley,  Holroyd,  and  Best,  JJ.,  composed  the  court,  and  were 
unanimous.  Such  a  decision  of  such  a  court  is  entitled  to  our  highest  respect. 
But  the  reasons  assigned  by  the  learned  judges  command  more  of  our  respect  in 
weighing  its  authority  than  does  their  high  judicial  character.  *  *  *  That, 
it  is  true,  was  a  case  in  which  the  question  arose  as  to  the  Statute  of  Gaming; 
while  here  the  question  arises  in  regard  to  the  Statute  of  Usury.  But  the  Statute 
of  Gaming  is  very  broad  and  sweeping  in  its  terms,  just  as  much  so  as  the  Statute 
of  Usury.  And,  indeed,  Abbott,  C.  J.,  in  his  opinion,  places  the  case  upon  the 
same  ground  as  that  of  usury,  and  says:  'There  is  no  case  upon  the  Statute  of 
Usury  where  a  drawer,  having  parted  with  a  bill  for  a  good  consideration,  can 
afterward  set  up  as  a  defense  an  antecedent  usurious  contract  between  himself 
and  the  acceptor.  For,  if  so,  a  court  of  justice  would  enable  him  to  commit 
gross  fraud  upon  an  innocent  party.' "  To  same  effect,  see  Morford  v.  Davis,  28 
N.  Y.  484;  Brown  v.  Wilcox,  7  Iowa,  414;  Frank  v.  Longstreet,  44  Ga.  185;  Bur- 
rill  V.  Smith,  7  Pick.  291. 

87.  Graham  v.  Maguire,  39  Ga.  531.  To  same  effect,  see  Succession  of  Weil, 
24  La.  Ann.  193. 

88.  Ingalls  v.  Lee,  9  Barb.  947;  Edwards  on  Bills,  289;  Gundy  v.  Marriott, 
1  '\.  &  Aid.  696  (1831). 


§  675  NATURE    OF   THE    CONTRACT  749 

But  if  the  holder  have  any  privity  in  the  illegal  consideration,  he 
cannot  hold  the  indorser.^^  It  seems  that  where  a  corporation  is 
prohibited  from  availing  itself  of  the  defense  of  usury,  an  indorser  or 
other  surety  upon  its  paper  cannot  avoid  habihty  thereon,  upon  the 
ground  of  usury;  the  prohibition  reaching  in  legal  effect  to  include 
individuals  who  become  its  guarantors,  sureties,  or  indorsers.^ 
So  holds  the  Supreme  Court  of  the  United  States.^^ 

§  675.  In  the  fourth  place,  as  to  competency  of  original  parties. — 

The  indorser  contracts  that  the  original  parties  to  the  bill  or  note 
were  competent  to  bind  themselves,  whether  as  drawer,  acceptor, 
or  maker;  for  otherwise,  although  ostensible,  they  would  not  be  real 
parties  to  it.  Therefore,  if  the  drawer,  acceptor,  or  maker  became  a 
party  under  duress,^^  or  were  an  infant,  lunatic,  or  married  woman, 
the  indorser's  contract  is  broken,^^  and  he  may  be  sued  for  recovery 
of  the  original  consideration  which  has  failed,  or  upon  the  instrument 
itself,  without  proof  of  demand  and  notice.^^  So,  if  the  instrument 
purported  to  be  signed  by  procuration,  he  engages  that  there  is  com- 
petent authority  in  the  agent.^^  Thus,  in  Massachusetts,  where  the 
note  was  executed  by  the  agent,  who,  as  also  the  payee,  was  ignorant 
that  his  principal  was  dead,  and  the  latter  indorsed  it,  he  was  held, 
Parker,  C.  J.,  saying :^^  "The  indorser  always  warrants  the  existence 
and  legality  of  the  contract  which  he  undertakes  to  assign.  The  in- 
dorsee takes  it  on  the  credit  chiefly  of  the  indorser.    Thus,  if  a  note, 

89.  Ackland  v.  Pearce,  2  Campb.  599;  Edwards  v.  Dick.  4  B.  &  Aid.  21;  Union 
Nat.  Bank  v.  Wheeler,  60  N.  Y.  612. 

90.  National  Bank  of  Pittsburg  v.  Wheeler,  60  N.  Y.  612;  Rosa  v.  Butterfield, 
33  N.  Y.  664;  Stewart  v.  Bramhall,  74  N.  Y.  85. 

91.  Hubbard  v.  Tod,  171  U.  S.  501,  19  Sup.  Ct.  Rep.  14;  Wheeler  v.  National 
Bank,  96  U.  S.  268. 

92.  Bowman  v.  Hiller,  130  Mass.  153;  Edmunds  v.  Rose,  51  N.  J.  L.  548,  18 
Atl.  748,  14  Am.  St.  Rep.  704. 

93.  Haly  v.  Lane,  2  Atk.  181.  The  Lord  Chancellor  said:  "Though  a  note 
given  by  a  wife  to  her  husband,  ia  void,  yet  if  it  is  indorsed  over  by  the  husband, 
as  between  him  and  the  indorsee,  it  is  certainly  good."  To  same  effect,  see  Robert- 
son V.  Allen,  59  Tenn.  233;  Archer  v.  Shea,  14  Hun,  493;  Ken  worthy  v.  Sawyer, 
125  Mass.  28.  In  Erwin  v.  Downs,  15  N.  Y.  575,  a  note  was  made  by  two  mar- 
ried women,  and  indorsed  by  the  defendant  for  their  accommodation.  He  was 
held  bound  to  a  bona  fide  indorsee,  although  the  latter  knew  that  the  makers  were 
married  women  when  he  took  it.    Prescott  Bank  v.  Caverly,  7  Gray,  217. 

94.  See  ante,  §  669. 

95.  Edwards  on  Bills,  289;  Story  on  Bills,  §  110. 

96.  Burrill  v.  Smith,  7  Pick.  291. 


750  TRANSFER   BY   INDORSEMENT  §  676 

void  between  promisor  and  payee,  on  account  of  usury  or  other  illegal 
consideration,  is  indorsed  bona  jide  for  valuable  consideration,  the 
indorser  must  make  it  good.  So,  if  the  indorsement  is  of  a  note  made 
by  a  minor  or  of  a /erne  covert,  and  even  if  the  name  of  the  promisor  is 
forged,  the  indorser  is  held  upon  his  contract  to  pay  the  indorsee." 

§  676.  Whether  or  not  the  indorser's  engagement  is  that  all  of 
the  antecedent  parties  are  competent  to  contract?— This  is  ques- 
tioned. It  is  thought  by  some  that  prior  indorsements  are  warranted 
to  be  by  competent  parties,  as  well  as  to  be  genuine;  ^^  while  others 
entertain  the  contrary  view.^^  The  considerations  which  conduce  to 
the  opinion  that  he  warrants  genuineness  of  prior  indorsements, 
apply  also  to  their  competency,  and  lead  us  to  the  same  conclusion 
that  it  is  warranted.  In  New  York  the  doctrine  of  this  text  has  been 
established  by  recent  decisions.  There  it  has  been  held  that  one  who 
indorses  a  note  purporting  to  be  executed  by  a  copartnership, 
impliedly  warrants  that  it  was  made  by  the  firm,  and  cannot  in  a  suit 
against  him  dispute  \i.^ 

Under  Negotiable  Instrument  statute.— The  statute  also  declares 
that  an  indorser  warrants  that  all  prior  parties  had  capacity  to  con- 
tract.^ Where  the  note  was  executed  in  the  name  of  a  corporation  by 
its  treasurer,  an  indorser  warrants  the  authority  of  the  treasurer, 
to  sign  the  note  for  the  corporation,^  and  where  several  persons  have 
indorsed  a  note,  an  uidorsement  by  one  is  a  warranty  of  the  capacity 
of  all  the  preceding  parties  to  the  contract.^ 


97.  1  Parsons  on  Notes  and  Bills,  25;  Story  on  Bills,  §  110;  Story  on  Notes, 
§  380,  and  note.    See  also  Harris  v.  Bradley,  7  Yerg.  310. 

98.  Chitty  on  Bills  (13th  Am.  ed.)  [*243]  277.  But  the  only  authorities  cited 
are  East  India  Co.  v.  Tritton,  3  B.  &  C.  280,  and  dissenting  opinion  of  Chambre,  J., 
in  Smith  v.  Mercer,  6  Taunt.  83.  The  latter  citation  is  no  authority;  and  the 
former  was  decided  on  the  ground  that  the  party  accepted  the  bill  with  knowledge 
of  the  circumstances  respecting  the  agent's  authority.  See  Story  on  Bills,  §  110, 
note  1;  2  Parsons  on  Notes  and  Bills,  588  (where  Chitty's  view  is  criticised); 
Bayley  (5th  ed.),  chap.  5,  p.  170. 

99.  Dalrymple  v.  Hillenbrand,  2  Hun,  488;  affd.  m  61  N.  Y.  5;  Turner  v.  Keller, 
66  N.  Y.  66,  but  held  in  this  case  not  to  apply  where  the  holder  had  procured  a 
subsequent  indorsement  with  knowledge  of  the  antecedent  forgery.  Glidden  v. 
Chamberlin,  167  Mass.  486,  46  N.  E.  103,  57  Am.  St.  Rep.  479,  citing  and  ap- 
proving text. 

1.  Appendix,  sees.  65,  66,  67. 

2.  Leonard  v.  Draper,  187  Mass.  536,  73  N.  E.  644. 

3.  Willard  v.  Crook,  21  App.  D.  C.  237. 


§§  6'r7-678a  NATURE    OF   THE    CONTRACT  75l 

§  677.  In  the  fifth  place,  as  to  title. — The  indorser  contracts 
that  he  has  a  lawful  title  to  the  bill  or  note,  and  a  right  to  transfer  it.^ 
If  he  has  stolen  or  found  the  instrument,  or  otherwise  acquired  pos- 
session without  title,  and  it  be  payable  to  bearer  or  indorser  in  blank, 
he  might,  before  its  maturit}'',  invest  a  bona  fide  indorsee  without 
notice  with  a  perfect  title,  although  not  himself  possessing  it;  and 
even  after  maturity,  the  bona  fide  indorsee  might  get  from  him  some 
superior  rights  to  his  own.  But  the  indorsee  might  be  involved  in 
controversy,  or  be  placed  in  the  distasteful  attitude  of  compelling 
payment  by  those  who  did  not  owe;  and  the  indorser  should  not  be 
protected  while  he  brings  mischief  upon  others.  A  forged  instrument 
carries  no  title  to  the  indorsee;  and  where  the  thief  or  finder  of  nego- 
tiable paper  payable  to  order  which  has  been  indorsed,  and  put  in 
circulation  by  the  payee,  erases  the  indorsement  and,  subsequently, 
personating  the  payee,  forges  his  signature,  and  transfers  the  paper 
to  a  bona  fide  purchaser  for  value,  no  title  passes  as  against  the  true 
owner.^ 

§  678.  Law  of  place  applicable  to  indorsement. — An  indorsement 
falls  under  the  general  rule  that  the  obligations  of  a  personal  contract 
are  to  be  determined  by  the  law  of  the  place  of  its  execution,  and, 
therefore,  an  indorser  may  become  responsible  for  a  much  higher  rate 
of  damages  and  of  interest,  upon  the  dishonor  of  a  note,  than  he  can 
recover  from  the  drawer;  ^  and  the  jurisdiction  of  the  Federal  courts 
of  the  United  States  attaches  upon  an  indorsement  as  a  distinct  con- 
tract, independently  of  the  residence  of  the  original  and  remote 
parties  to  the  instrument.^ 

§  678a.  Invalidity  as  between  indorser  and  indorsee. — The  in- 
dorsement or  assignment  of  a  bill  or  note  being  an  independent  con- 

4.  Williams  v.  Tishomingo  Sav.  Inst.,  57  Miss.  633;  Redington  v.  Wood,  Cah 
Law  Times,  January,  1873,  p.  12;  Edwards  on  Bills,  289;  Story  on  Bills,  §  111! 
Story  on  Notes,  §§  135,  380;  Cochran  v.  Atchison,  27  Kan.  728;  Andrews  v. 
Kramer  et  al.,  77  Miss.  151,  25  So.  156. 

5.  Colson  V.  Arnot,  57  N.  Y.  253;  Graves  v.  American  Exchange  Bank,  17 
N.  Y.  205;  §  903,  et  seq.;  Third  Nat.  Bank  v.  Merchants'  Nat.  Bank,  76  Hun,  475, 
27  N.  Y.  Supp.  1070;  Kemochan  v.  Mauss,  53  Ohio  St.  118,  41  N.  E.  258;  Roach 
V.  Woodall,  91  Tenn.  206,  18  S.  W.  407,  30  Am.  St.  Rep.  883,  citing  and  approv- 
ing text. 

6.  Slocum  V.  Pomeroy,  6  Cranch,  221;  Powers  v.  Lynch,  3  Mass.  77;  Kneg  v. 
Palmer  Nat.  Bank  (Ind.  App.),  95  N.  E.  613.    See  post,  §§  899,  904. 

7.  Coffee  v.  Planters'  Bank,  13  How.  183. 


752  TRANSFER   BY   INDORSEMENT  |  679 

tract,  the  circumstances  which  would  invahdate  any  other  contract 
apply  to  it  with  like  effect.  Thus,  a  war  between  the  countries  of 
which  the  indorsee  and  indorser  are  citizens,  rendering  them  alien 
enemies,  any  commercial  transaction  between  them,  such  as  drawing 
a  bill  upon,  or  making  or  indorsing  or  assigning  a  note  to,  the  other,  is 
void.^ 

In  a  Virginia  case  it  appeared  that  checks  were  drawn  by  a  bank  of 
Richmond,  Va.,  upon  a  bank  in  New  Orleans,  and  were  indorsed  in 
Petersburg,  Va.,  in  February,  1863,  while  the  late  war  between  the 
United  States  and  Confederate  States  was  in  progress,  to  a  resident 
of  Vicksburg,  Miss.  Petersburg,  Richmond,  and  Vicksburg  were  then 
in  the  Confederate  lines,  whilst  New  Orleans  was  in  the  permanent 
possession  of  the  Federal  forces.  It  was  held  that  the  indorsement 
was  illegal  and  void,  and  that  the  indorsee  could  not  recover  against 
the  indorser,  in  an  action  brought  after  the  war.^ 

§  679.  Consideration  between  indorser  and  indorsee. — There 
must  be  a  consideration  for  an  indorsement  as  between  the  immediate 
parties,  and  while  it  is  'prima  facie  evidence  in  itself  of  a  consideration, 
the  presumption  as  between  immediate  parties  may  be  rebutted.^'' 

8.  Billgerry  v.  Branch,  19  Gratt.  417,  437;  Griswold  v.  Waddington,  16  Johns. 
438;  Willison  v.  Pattison,  8  Taunt.  439  (2  Eng.  C.  L.),  1  J.  B.  Moore,  133;  Mc- 
Caughy  v.  Berg,  4  Heisk.  695.    See  ante,  §  218. 

9.  Billgerry  v.  Branch,  19  Gratt.  417,  437. 

10.  See  ante,  §  174;  First  Nat.  Bank  v.  Anderson,  141  Fed.  926,  reversing  5 
Ind.  Ter.  115,  82  S.  W.  692.  The  title  of  an  indorsee  of  a  negotiable  note  is  de- 
fective when  the  consideration  for  the  indorsement  is  unlawful,  or  where  the 
indorsement  is  procured  by  unlawful  means.  Drinkall  v.  Movins  State  Bank, 
11  N.  D.  10,  88  N.  W.  724,  57  L.  R.  A.  341,  95  Am.  St.  Rep.  693.  Extension  of 
time  for  the  payment  of  a  note  furnishes  ample  consideration  for  an  indorsement. 
Lyndon  Savings  Bank  v.  International  Co.,  78  Vt.  169,  62  Atl.  50,  112  Am.  St. 
Rep.  900.  See  also  Utica  City  Nat.  Bank  v.  Tallman,  71  N.  Y.  S.  861,  63  App. 
Div.  480,  affirmed  172  N.  Y.  642,  65  N.  E.  1123,  holding  that  where  a  widow  was 
the  devisee  of  her  husband  in  property,  which  a  note  made  by  the  husband  was 
given  in  payment  of,  indorsed  renewals  of  extensions  of  the  note  for  the  purpose 
of  preventing  a  forced  sale  of  securities  and  other  property,  her  interest  in  the 
property  formed  a  good  consideration  for  her  indorsement  of  the  renewals.  When 
a  renewal  of  a  note  was  accepted  by  the  payee  on  the  indorser  of  the  old  note 
indorsing  the  new  one,  a  contention  that  the  new  indorsement  was  without  con- 
sideration cannot  be  sustained,  though  the  indorser  was  not  then  liable  on  the  old 
note.  Nashua  Sav.  Bank  v.  Sayles,  184  Mass.  520,  69  N.  E.  309,  100  Am.  St.  Rep. 
573.  The  consideration  must  have  some  value  and  reality,  and  the  assumption 
of  a  supposed  danger  or  liability  which  has  no  foundation  in  law  or  in  fact  is  not 
a  valuable  or  sufficient  consideration.    Funk  v.  Hossack,  129  111.  App.  421,  hold- 


I  680  BY   AND   TO   WHOM    INDORSED  753 

Where  the  indorser  makes  the  indorsement  after  the  instrument  is 
delivered,  as  a  perfected  obUgation,  it  would  be  void  for  want  of 
consideration.^^ 


SECTION  II 

BY  WHOM  AND  TO  WHOM  INDORSEMENT  OR  ASSIGNMENT  MAY  BE  MADE 

§  680.  In  the  first  place,  as  to  who  may  indorse  or  transfer  nego- 
tiable paper. — Any  person  legally  competent  to  enter  into  a  con- 
tract may  be  the  indorser,  or  transferrer  by  delivery  of  negotiable 
paper.i2    jf  payable  to  the  order  of  the  payee,  he  or  his  legal  rep- 

ing  that  a  promise  to  refrain  from  putting  the  maker  of  a  note  into  bankruptcy 
the  maker  being  a  farmer,  is  not  a  suflBcient  consideration  as  against  an  indorser 
signing  the  note  some  time  after  it  was  made  and  dehvered,  as  a  farmer  could 
not  be  forced  into  involuntary  bankruptcy.  Where  the  guarantor  of  a  note  which 
the  principal  had  failed  to  pay,  by  an  agreement  with  the  payee,  executed  to  the 
payee  his  note  for  amount  of  the  note  the  payee  held  against  the  guarantor  and 
his  principal,  and  the  payee  surrendered  to  the  guarantor  the  old  note  and  in- 
dorsed the  same  to  him,  such  an  indorsement  was  wholly  without  consideration. 
Peabody  v.  Munson,  211  111.  324,  71  N.  E.  1006. 

11.  ColUerv.  Mahan,21Ind.  110. 

12.  2  Parsons  on  Notes  and  Bills,  3;  Story  on  Bills,  §  195.  In  accepting  the 
indorsement  of  a  stranger  to  the  paper,  it  is  the  acceptor's  duty  to  know  that  the 
indorsement  was  authorized.  Wickersham  Banking  Co.  v.  Nicholas,  2  Cal.  App. 
18,  82  Pac.  1 124.  Under  a  statute  authorizing  school  trustees  to  take  notes,  bonds 
and  other  negotiable  securities,  when  a  note  is  once  in  their  ownership  it  retains 
its  negotiable  qualities,  and  the  school  trustees  in  their  corporate  capacity  have 
power  to  sell  and  transfer  the  same,  and  invest  the  purchaser  with  the  legal  title 
thereto.  Scott  v.  Goode,  128  111.  App.  26,  holding  further  that  such  instruments 
can  be  transferred  by  the  trustees  only  by  their  corporate  action,  and  not  by  their 
agents  and  attorneys.  Where  a  note  was  made  by  a  corporation  under  the  name 
of  "Silberstein  &  Silver,"  of  which  Silberstein  and  Silver  were  members,  the 
mere  appearance  of  an  indorsement  "Silberstein— Silver"  on  the  back  of  the 
note,  together  with  a  statement  in  a  letter  written  by  a  bookkeeper  to  the  payee 
that  "Note  is  indorsed  by  Silberstein  and  Silver  personally,"  were  held  not  to  be 
sufficient  to  establish  a  claim  of  personal  indorsement  by  a  fair  preponderance 
of  proof,  when  Silberstein  testified  that  the  bookkeeper  was  not  authorized  to 
write  the  letter  m  that  form.  Reedy  v.  Elevator  Co.,  114  N.  Y.^  S.  785.  Where 
notes,  issued  by  a  municipal  corporation,  were  made  payable  "to  the  order  of 
J.  V.  Felker,  City  Treas.,"  and  the  same,  when  negotiated,  were  indorsed  in 
blank,  "J.  V.  Felker,  City  Treas.,"  such  signature  does  not  make  Felker  liable  on 
the  notes,  but  his  name  was  used  only  to  give  the  notes  currency.  Citizens'  Sav- 
ings Bank  v.  City  of  Newburyport,  169  Fed.  Rep.  766. 

48 


754  TKANSFER   BY   INDORSEMENT  §  681 

resentative  must  be  the  transferrer.  In  case  of  the  bankruptcy  of 
the  payee  of  a  bill  or  note,  all  his  rights  become  vested  in  the  assignee, 
who  may  transfer  it  in  his  own  name;  "  and  the  bankrupt  cannot;  ^* 
and  in  the  case  of  the  death  of  the  payee  the  like  right  devolves  upon 
his  executors  or  administrators.^^  But  if  payable  to  several  persons 
"as  executors,"  all  must  concur.^^  In  Louisiana,  where  suit  was 
brought  against  the  executors  of  Mary  C.  Moore  and  John  Moore, 
who  were  in  their  lifetime  tutrix  and  cotutor  of  D.  Magill,  to  recover 
judgment  on  two  drafts  which  said  tutrix  and  cotutor  drew  payable 
to  their  own  order,  it  was  held  that  they  were  not  personally  bound 
by  their  indorsement,  although  they  omitted  therein  to  state  their 
fiduciary  capacity.^^  When  an  assignment  of  notes  by  a  guardian 
without  an  order  of  court  is  forbidden  by  statute,  no  title  passes  to 
the  assignee  by  such  an  attempted  assignment. ^^ 

§  681.  In  the  case  of  the  marriage  of  a  woman  who  is  payee 

or  indorsee  of  a  bill  or  note,  the  property  thereof,  vests  in  her  hus- 
band, and  he  alone  can  indorse  or  transfer  it;  and  in  hke  manner, 
if  the  paper  be  made  payable  to  her  after  marriage,  her  husband 
alone  can  indorse  or  transfer  it.^^    But  this  principle  is  subject  to  the 

13.  Chitty,  227;  Story  on  Notes,  §  123;  Ex  parte  Brown,  1  Glyn  &  J.  407. 

14.  Ashurst  v.  Bank  of  Australia,  37  Eng.  L.  &  Eq.  149. 

15.  Watkins  v.  Maule,  2  Jac.  &  Walk.  237;  Rawlinson  v.  Stone,  3  Wils.  1; 
Rand  v.  Hubbard,  4  Mete.  (Mass.)  252;  Malbon  v.  Southard,  36  Me.  147;  Dwight 
V.  Newell,  15  111.  333;  Nelson  v.  StoUenwerck,  60  Ala.  140;  Shelton  v.  Carpenter, 
60  Ala.  211;  Crumrine  v.  Estate  of  Crumrine,  14  Ind.  App.  641,  43  N.  E.  322. 
Where  a  widow  became  by  right  of  survivorship  the  owner  of  a  certificate  of  de- 
posit taken  in  the  names  of  her  husband  and  herself,  and  delivered  it  indorsed  to 
the  administrator  of  her  husband's  estate  because  he  represented  to  her  that  it 
belonged  to  that  estate,  but  did  not  indorse  it  for  the  purpose  of  transferring  to 
him  any  interest  she  had,  she  is  entitled  to  the  certificate.  Brewer  v.  Bowersox, 
92  Md.  567,  48  Atl.  1060. 

16.  Johnson  V.  Mangum,  65  N.  C.  146. 

17.  Lapeyre  V.  Weeks,  28  La.  665.  The  court  said:  "We  do  not  regard  Mary  C. 
Moore  and  John  Moore  as  indorsers  of  the  drafts.  In  indorsing  the  drafts  they 
omitted  adding  their  capacity  as  tutrix  and  cotutor.  In  their  fiduciary  capacity 
the  drafts  were  not  indorsed  and  completed  by  the  drawers,  unless  we  regard  the 
signatures  of  Mary  C.  Moore  and  John  Moore  as  made  in  that  capacity.  Bills 
drawn  by  a  fiduciary  to  his  own  order  are  not  completed  unless  indorsed  in  the 
same  capacity  as  drawn.  We  regard  these  drafts  as  completed,  and  must,  there- 
fore, consider  that  Mary  C.  Moore  and  John  Moore  indorsed  them  in  the  same 
capacity  in  which  they  drew  them." 

18.  Browne  v.  Fidehty  &  Deposit  Co.,  98  Tex.  55,  80  S.  W.  593. 

19.  See  ante,  §  254;  Mason  v.  Morgan,  2  Ad.  &  El.  30  (29  Eng.  C.  L.);  Chitty, 


§§  682,  683  BY   AND   TO   WHOM   INDORSED  755 

limitation  that  the  wife  may,  with  the  consent  of  the  husband,  in- 
dorse a  bill  or  note  made  payable  to  her,  and  pass  a  good  title  to  the 
indorsee.^" 

The  law  being  based  upon  the  distinction  that  coverture  of  the 
wife  creates  a  disability  on  her  part  to  enter  into  a  contract  which 
the  assent  of  the  husband  may  remove.^^  The  indorsement  of  the 
wife,  under  such  circumstances,  is  equivalent  to  that  of  her  husband. 
Her  act  becomes  in  law  his  act,  and  the  indorsee  must  claim  through 
the  husband  by  a  title  derived  from  him.^^  If  a  woman  who  is  the 
payee  of  a  note  payable  to  her  order  assigns  it  by  delivery  and  after- 
ward marries  the  maker,  her  indorsement  after  marriage  transfers 
the  legal  title.  ^^ 

§  682.  Infant  as  indorser. — An  infant  is  not  bound  upon  his  in- 
dorsement of  a  bill  or  note,  being  incapable  of  making  a  contract; 
but  he  may,  by  his  indorsement  (which  is  voidable — not  absolutely 
void),  transfer  the  paper  to  any  subsequent  holder,  against  all  the 
parties  thereto,  except  himself.^^ 

§  683.  When  a  bill  or  note  is  payable  or  indorsed  to  a  copartner- 
ship, any  member  of  the  firm  may  transfer  it  during  the  continu- 

26;  Story  on  Notes,  §  124;  Barlow  v.  Bishop,  1  East,  433;  Conner  v.  Martin,  1 
Stra.  516;  Miles  v.  Williams,  10  Mod.  243;  Savage  v.  King,  5  Shep.  301;  Miller 
V.  Delamater,  12  Wend.  433.  Contra  in  Texas^  where  the  common  law  is  changed 
by  statute.    Kempner  v.  Comer,  73  Tex.  200. 

20.  See  ante,  §§  252,  253. 

21.  Chitty  on  BUls,  21,  200;  Stevens  v.  Beals,  10  Cush.  291;  Miller  v.  Dela- 
mater, 12  Wend.  433;  Hancock  Bank  v.  Joy,  41  Me.  568;  Reakert  v.  Sanford, 

5  Watts  &  S.  164;  Leeds  v.  Vail,  15  Pa.  St.  185;  Fredd  v.  Eves,  4  Harr.  (Del.) 
385;  Cotes  v.  Davis,  1  Campb.  485;  Prestwick  v.  Marshall,  7  Bing.  565,  4  Car. 

6  P.  594;  Prince  v.  Brunatte,  7  Bing.  N.  C.  435;  2  Bright  on  Husband  and  Wife, 
42;  Lindus  v.  Bradwell,  5  C.  B.  583;  Lord  v.  Hall,  8  C.  B.  627.  See  ante,  §§  252, 
253. 

22.  Stevens  v.  Beals,  12  Cush.  291,  and  cases  in  note,  ante.    See  also  ante, 

§§  252,  253. 

23.  Guptill  V.  Home,  63  Me.  405.  Appleton,  C.  J.;  "As  the  wife  would  have 
been  compelled  by  a  court  of  equity  to  indorse,  her  voluntary  act  is  as  eflfectual 
to  transfer  to  the  indorsee  the  right  to  sue  as  if  it  had  been  the  result  of  legal 
compulsion." 

24.  Story  on  Bills,  §  196;  Story  on  Notes,  §  124;  Bayley  on  Bills,  44;  Chitty, 
21;  2  Parsons  on  Notes  and  Bills,  3;  Nightingale  v.  Withington,  15  Mass.  272; 
Burke  v.  Allen,  29  N.  H.  106  {semhle);  Frasier  v.  Massey,  14  Ind.  382;  Hardy 
V.  Waters,  38  Me.  450;  Taylor  v.  Croker,  4  Esp.  187;  Jeune  v.  Ward,  2  Stark. 
326;  Grey  v.  Cooper,  3  Doug.  65.    See  ante,  §  227  et  seq. 


756  TKANSFER   BY   INDORSEMENT  §  684 

ance  of  the  firm,  and  indorse  it  in  the  firm  name;  ^^  and  upon  the 
death  of  a  member  of  the  firm,  the  survivor  may  indorse  it  in  his  own 
name.^^  But  the  indorsement  by  a  partner  to  his  copartner,  or  to 
another  person,  of  a  bill  or  note  payable  to  the  firm,  in  his  individual 
name,  will  not  pass  the  title  to  the  paper,  nor  enable  the  indorsee  to 
bring  a  suit  on  it  in  his  own  name.^^  It  has  been  held,  however,  that 
such  an  indorsement  would  pass  the  equitable  title.^^  And  where 
partners  individually  indorse  a  note  given  by  the  firm,  they  are  in- 
dorsers,  and  none  the  less  so  and  liable  as  such  because  they  are  also 
liable  as  members  of  the  firm  which  made  the  note.^ 

If  there  be  a  dissolution  of  the  copartnership  (otherwise  than  by 
the  death  of  a  partner),  the  survivor  cannot  indorse  in  the  firm  name 
a  bill  or  note  payable  to  the  firm;  ^°  even  though  the  surviving  partner 
had  power  to  settle  the  partnership  affairs;  ^^  but  the  contrary  had 
been  held  if  the  dissolution  were  unknown  to  the  indorsee,^^  and  the 
rule  does  not  apply  where  the  bill  or  note  of  the  firm  was  made  payable 
to  the  partner  who,  after  dissolution,  indorsed  it.^^ 

§  684.  If  several  persons,  not  partners,  are  payees  or  indorsees 

of  a  bill  or  note,  it  should  be  indorsed  by  all  of  them,^^  unless  it  be 

25.  Story  on  Notes,  §  125;  Bayley  on  Bills,  53;  Barrett  v.  Russell,  45  Vt.  43. 
It  is  within  the  authority  of  the  managing  partner  to  indorse  a  renewal  note 
before  delivery  and  thus  bind  the  firm  as  joint  makers,  when  they  were  liable  on 
the  renewal  note  as  indorsers.  Citizens'  Conunerical  &  Savings  Bank  v.  Piatt,  135 
Mich.  267,  97  N.  W.  694. 

26.  Jones  v.  Thome,  14  Mart.  463. 

27.  Estabrook  v.  Smith,  6  Gray,  570;  Robb  v.  Bailey,  13  La.  Ann.  446;  Fletcher 
V.  Dana,  4  Blackf.  377;  Desha  v.  Stewart,  6  Ala.  852;  Moore  v.  Denslow,  14  Conn. 
235;  Absolem  v.  Marks,  11  Q.  B.  19;  Russell  v.  Swan,  16  Mass.  314;  Hooker  v. 
Gallagher,  6  Fla.  351. 

28.  Alabama  Co.  v.  Brainard,  35  Ala.  476. 

29.  Faneuil  Hall  Nat.  Bank  v.  Meloon,  183  Mass.  66,  66  N.  E.  410,  97  Am.  St. 
Rep.  416. 

30.  Sanford  v.  Mickles,  4  Johns.  224.    See  ante,  §  370. 

31.  Abel  V.  Sutton,  3  Esp.  108;  Humphries  v.  Chastain,  5  Ga.  160;  Foltz 
V.  Pouree,  2  Desaus,  Eq.  40;  Parker  v.  Macomber,  18  Pick.  505.    See  ante,  §  372. 

32.  Cony  v.  Whellock,  33  Me.  366;  Lewis  v.  Reilly,  1  Q.  B.  349.  See  ante, 
§373. 

33.  Semple  v.  Seaver,  11  Cush.  314. 

34.  Brown  v.  Dickinson,  27  Gratt.  693;  Smith  v.  Whiting,  9  Mass.  334;  Sneed 
v.  Mitchell,  1  Hayw.  289;  Carvick  v.  Vickery,  2  Doug.  653.  See  Sayre  v.  Frick, 
7  Watts  &  S.  383;  Culver  v.  Leavy,  19  La.  Ann.  202,  and  post,  §§  701a,  704; 
Ryhiner  v.  Feickert,  92  111.  311;  Allen  v.  Corn  Exch.  Bank,  84  N.  Y.  S.  1001,  87 
App.  Div.  335,  quoting  text.    Where  a  negotiable  paper,  payable  on  its  face  to 


§  G85  BY   AND   TO   WHOM   INDORSED  757 

expressed  to  be  payable  to  the  order  of  either  of  them,  or  to  the  order 
of  certain  ones  of  them,  in  which  cases  their  indorsement  would 
suffice.^^  Either  one  of  the  joint  payees  may  authorize  the  other  to 
indorse  for  him,  and  an  assignment  of  his  interest  in  the  paper  from 
one  to  the  other  carries  with  it  such  authority.^^  But  there  is  no 
presumption  of  law  that  one  may  indorse  for  the  other." 

Und&r  Negotiable  Instrument  statute. — The  statute  provides  that 
where  an  instrument  is  payable  to  the  order  of  two  or  more  payees 
or  indorsers  who  are  not  partners,  all  must  indorse,  unless  the  one 
indorsing  has  authority  to  indorse  for  the  others.^^  Where  one  of 
two  payees  of  a  note  indorsed  it  in  his  own  name  and  in  the  name  of 
the  other  without  authority,  this  was  a  conversion  of  the  note  as 
between  the  other  payee  and  the  indorsee.^^ 

§  685.  A  note  payable  an  to  executor  may  be  transferred  for  a 
debt  of  the  estate.^" — If  the  instrument  be  payable  to  two  or  more 
persons  as  executors  or  administrators,  all  must  indorse;  ^^  but  it 
seems  that  in  other  cases  one  of  the  personal  representatives  might 

two  persons  jointly,  represented  money  due  to  one  individually  and  the  other 
indorsed  the  paper  individually,  and  also  in  the  name  of  the  one  to  whom  the 
money  was  due,  this  forgery  was  a  conversion  of  the  paper  as  to  both  the  indorsee 
and  indorser  as  against  the  payee  whose  name  had  been  forged.  Kaufman  v. 
State  Savings  Bank,  151  Mich.  65,  114  N.  W.  863,  18  L.  R.  A.  (N.  S.)  630,  123 
Am.  St.  Rep.  259. 

35.  Watson  v.  Evans,  1  Hurl.  &  Colt.  662  (1863);  Benjamin's  Chahners'  Digest, 
7,  134. 

36.  Russell  v.  Swan,  16  Mass.  314;  Goddard  v.  Lyman,  14  Pick.  268.  See 
also  Citizens'  Nat.  Bank  v.  Walton,  96  Va.  439,  31  S.  E.  840.    See  post,  §  701a. 

37.  2  Parsons  on  Notes  and  Bills,  5.  The  text  is  approved  in  Ryhiner  v. 
Feickert,  92  111.  305,  Scholfield,  J.,  saying:  "If  a  note  be  made  payable  to  several 
persons  not  partners,  the  transfer  can  only  be  by  a  joint  indorsement  of  all.  *  *  * 
Neither  party  being  the  agent  in  legal  contemplation  of  the  other,  he  can  no  more 
bind  the  other  by  a  sale  of  the  note  without  indorsement  than  he  can  by  a  sale 
of  the  note  with  an  indorsement.  He  has  no  power  whatever  to  dispose  of  the 
interest  of  his  copayee,  legal  or  equitable,  in  the  note,  without  the  consent  of  hia 
copayee."    Haydon  v.  Nicoletti,  18  Nev.  290,  citing  the  text. 

38.  Appendix,  sec.  41.  First  Nat.  Bank  v.  Gridley,  98  N.  Y.  S.  445,  112  App. 
Div.  398. 

39.  Kaufman  v.  State  Savings  Bank,  151  Mich.  65,  114  N.  W.  863,  18  L.  R. 
A.  (N.  S.)  630,  123  Am.  St.  Rep.  259,  the  court  saying  that  either  one  of  the  joint 
payees  may  authorize  the  other  to  indorse  for  him,  and  an  assignment  of  his 
interest  in  the  paper  from  one  to  the  other  carries  with  it  such  authority;  but 
there  is  no  presumption  of  law  that  one  may  indorse  for  the  other. 

40.  Moses  V.  Clark,  46  Ala.  226. 

41.  Smith  V.  Whiting,  9  Mass.  334. 


758  TRANSFER   BY   INDORSEMENT  §  686 

indorse/^  An  executor  or  administrator  will  be  personally  bound 
by  his  indorsement,  although  he  add  "executor"  or  "administrator" 
to  his  name,  unless  he  expressly  specify  that  recourse  is  to  be  had  only 
against  the  estate  of  the  deceased.^^  A  negotiable  note  transferred 
by  the  payee,  by  delivery  only,  may  be  indorsed  by  his  personal 
representative  with  the  same  effect  as  if  done  by  the  payee  in  his 
lifetime.^^ 

When  a  bill  or  note  is  payable  at  a  bank,  an  indorsement  by  "A. 
B.,  Pres't,"  binds  the  bank.^^  And  so  an  indorsement  by  "A.  B., 
Cashier."  ^^  If  payable  to  A.  or  order  for  the  use  of  B.,  it  can  be 
indorsed  by  A.  only,  as  the  legal  interest  is  in  him,  not  in  B.  ■ 


47 


§  686.  In  the  second  place,  as  to  whom  transfer  may  be  made. — 

The  transfer  of  a  bill  or  note  may  be  made,  of  course,  to  any  party 
who  may  legally  contract  with  the  transferrer.  It  may  also  be  made 
to  an  infant,  or  to  a  married  woman;  but  in  the  latter  case  the  interest 
will  vest  in  her  husband,  who  may  treat  it  as  payable  to  himself,  or  to 
himself  and  wife.^^  In  the  latter  case,  should  she  survive  him,  she 
may  sue  in  her  own  name.  It  may  also  be  made  to  a  trustee,  or  per- 
sonal representative,  in  which  case  it  will  operate  as  a  transfer  to  them 
personally,  although  the  trust  may  attach  to  the  proceeds  in  their 
hands."*^  The  transfer  cannot  be  made  by  the  husband  to  his  wife,^° 
except  to  act  as  his  agent  and  convey  title  to  another.^^ 

If  the  transfer  be  to  an  executor  or  trustee,  it  will  operate  as  a 
transfer  to  him  personally,  although  the  trust  may  attach  to  the  pro- 
ceeds in  his  hands.^2  If  a  principal  make  an  indorsement  in  blank  to 
his  agent,  the  latter  may  fill  it  up  to  himself  individually,  and  it  will 
be  regarded  as  between  him  and  all  other  parties,  except  his  principal, 

42.  Wheeler  v.  Wheeler,  9  Cow.  34.    See  2  Parsons  on  Notes  and  Bills,  6. 

43.  See  Beals  v.  See,  10  Barr,  56;  Seaver  v.  Phelps,  11  Pick.  304;  Serle  v.  Water- 
worth,  4  M.  &  W.  487. 

44.  Molbin  v.  Southard,  36  Me.  149;  Hersey  v.  Elliott,  67  Me.  527.  See 
Watkins  v.  Maule,  2  Jacob  &  Walker,  148. 

45.  Aiken  v.  Marine  Bank,  16  Wis.  679.  See  Leavitt  v.  Connecticut  Peat 
Co.,  6  Blatchf.  139,  and  ante,  §  394. 

46.  See  ante,  §§  392,  417. 

47.  Evans  v.  Cramlington,  2  Show.  509,  1  Show.  4. 

48.  Story  on  Notes,  §  126;  Richards  v.  Richards,  2  B.  &  Ad.  477;  Burrough 
V,  Moss,  10  B.  &  C.  558;  Philliskirk  v.  Pluckwell,  2  Maule  &  S.  393. 

49.  Ibid.;  Crumrine  v.  The  Estate  of  Crumrine,  14  Ind.  App.  641,  43  N.  E.  322. 

50.  Gay  v.  Kingslcy,  11  Allen,  345. 

51.  Slawson  v.  Loring,  5  Allen,  340.    See  ante,  §  241. 

52.  Richards  v.  Richards,  2  B.  &  Ad.  447. 


§  687  BY  AND   TO    WHOM   INDORSED  759 

as  his  own;  or  he  may  fill  it  for  his  principal,  and  act  in  his  name/^ 
The  indorsee  must,  of  course,  be  living  at  the  time  of  the  indorse- 
ment; and  if  he  be  dead,  and  the  indorsement  be  with  intention  to 
invest  his  personal  representative  with  the  legal  property  in  the 
instrument,  it  is  null  and  void.^^ 

A  promissory  note  payable  to  "J.  C,  Sh'ff"  (sheriff),  and  indorsed 
"J.  C,  Sh'ff,"  does  not  of  itself  impart  notice  to  the  indorsee  that  the 
money  was  payable  to  J.  C.  in  his  official  capacity  as  sheriff,  or  as 
trustee  for  other  parties. ^^  So  a  note  to  A.  B.,  receiver,  indorsed  by 
him  "as  receiver,"  is  yrima  facie  his  individually,  and  he  may  sue 
upon  it  in  his  own  name.^^ 

§  687.  Cashier  as  payee  and  indorser. — If  a  bill  or  note  be  made 

payable  to  a  party  as  "cashier,"  it  will  be  regarded  'prima  fade  as 
payable  to  his  bank;  and  if  so  indorsed,  as  indorsed  by  his  bank.^^ 
An  indorsement  by  the  cashier  of  a  bank  to  himself  would  be  voidable 
merely  at  the  instance  of  the  bank,  and  until  avoided  by  the  bank 
would  pass  legal  title  to  the  cashier. °^  In  cases  of  indorsement  to  a 
cashier  of  a  bank  as  cashier,  for  example,  "to  A.  B.,  Cashier,"  the 
bank  may  sue  on  it,  or  the  cashier  may  do  so  for  the  use  of  the  bank, 
or  in  his  own  name.^^  And  if  the  indorsement  be  to  the  treasurer  of 
the  United  States,  in  his  official  capacity,  it  will  be  regarded  as  to  the 
United  States  in  point  of  fact,  and  they  may  sue  upon  it  in  their 
name.^°  And  the  same  principle  applies  to  other  governmental 
officers.^^ 

53.  Clark  v.  Pigot,  1  Salk.  126;  Story  on  Bills,  §  207. 

54.  Valentine  v.  Holloman,  63  N.  C.  475. 
56.  Fletcher  v.  Schaumberg,  41  Mo.  501. 

56.  Davis  v.  Peck,  54  Barb.  425. 

57.  Bank  of  the  State  v.  Muskingum  Branch  Bank,  29  N.  Y.  619;  Collins  v. 
Johnson,  16  Ga.  458;  Bank  of  Manchester  v.  Slasen,  13  Vt.  334;  Folger  v.  Chase, 
18  Pick.  63;  Fleckner  v.  Bank  of  the  United  States,  8  Wheat.  360;  Minor  v. 
Mechanics'  Bank,  1  Pet.  46;  Wild  v.  Passamaquoddy  Bank,  3  Mason,  505;  Blair 
V.  Bank  of  Mansfield,  2  Fhp.  111.    See  ante,  §  417. 

58.  Dyer  v.  Sebrell,  135  Cal.  597,  67  Pac.  1036. 

59.  McHenry  v.  Ridgely,  3  Scam.  309;  Porter  v.  Neckervis,  4  Rand.  359; 
Fairfield  v.  Adams,  16  Pick.  381.  See  arUe,  §  417,  and  -post,  chapter  XXXVII, 
section  II,  vol.  II. 

60.  Dugan  v.  United  States,  3  Wheat.  172. 

61.  See  ante,  §  433. 


760  TRANSFER    BY    INDORSEMENT  §§  68J 

SECTION    III 
FORM   AND   VARIETIES    OF   INDORSEMENT 

§  688.  As  to  the  place  of  the  indorsement. — The  indorsement, 
as  its  derivation  and  meaning  would  indicate,  is  generally  made  by 
writing  the  transferrer's  name  on  the  back  of  the  paper,  but  it  may 
be  written — although  unusual  and  irregular — on  any  other  portion 
of  it,  even  on  the  face  and  under  the  maker's  name.®^  As  said  by 
Lord  Campbell,  C.  J.:  "It  is  quite  immaterial  whether  the  indorse- 
ment be  written  on  the  back  of  the  instrument  or  on  the  face."  ^^ 
Where  the  payee's  name  was  indorsed  in  the  usual  place  on  the  back 
of  the  note,  and  another  indorsed  it,  writing  his  name  at  the  other 
end  with  his  signature  reversed,  it  was  considered  irregular,  but 
valid  and  in  the  usual  course  of  business.^^ 

§  688a.  Formal  signature  of  indorser. — ^Writing  and  signature 
are  necessary  to  the  formal  indorsement  of  a  negotiable  instrument ; 
but  no  particular  form  of  signature  is  necessary,  any  form  adopted 
as  such  being  sufficient.^^    The  full  name  should  be  written,  but  the 

62.  Bigelow  on  Bills  and  Notes,  135;  2  Parsons  on  Notes  on  Bills,  18,  dubit 
ante;  Benjamin's  Chalmers'  Digest,  122;  Ames  on  Bills  and  notes,  vol.  I,  p. 
228;  Thompson  on  Bills,  181;  First  Nat.  Bank  of  Etowah,  Tenn.  v.  Messer,  136 
Ga.  226,  71  S.  E.  148;  Perry  v.  Bray,  68  Ga.  293;  Quin  v.  Sterne,  26  Ga.  223; 
Herring  v.  Woodhull,  29  111.  92;  Gibson  v.  Powell,  6  How.  (Miss.)  60;  Herrick  v. 
Edwards,  106  Mo.  App.  633,  81  S.  W.  466;  Haines  v.  Dubois,  30  N.  J.  L.  (1  Vroom) 
259;  Patridge  v.  Davis,  20  Vt.  449;  Rex  v.  Begg,  3  p.  Wms.  419, 1  Stra.  18.  Young 
V.  Glover,  C.  B.,  3  Jurist  (N.  S.),  637;  Armsfield  v.  Allport,  27  L.  J.  Exch.  42; 
But  see  Marion  Gravel  Road  Co.  v.  Kessinger,  66  Ind.  553.  The  fact  that  the 
payee  signed  his  name  at  the  foot  of  the  note,  along  with  the  other  makers,  does 
not  render  it  invaUd  as  an  obligation  of  the  others,  the  note  being  both  joint  and 
several.  Fisher  v.  Diehl,  94  Md.  112,  50  Atl.  432,  the  court  saying:  "If  the  note 
had  simply  been  a  joint  one,  there  is  authority  for  the  proposition  that  the  ap- 
pellee could  not  have  maintained  an  action  on  it  against  any  of  its  makers." 
But  the  note  being  both  joint  and  several  it  contained  the  individual  promise 
of  the  appellant  to  the  appellee  to  pay  the  amount  of  the  note  as  well  as  the 
joint  promise  of  all  the  makers. 

63.  Young  V.  Glover,  3  Jurist  (N.  S.),  637;  Shain  v.  Sullivan,  106  Cal.  208, 
39  Pac.  606. 

64.  Arnotv.  Symonds,  85  Pa.  St.  99.    See  §  689a. 

65.  Sheffield  v.  Johnson  County  Savings  Bank,  2  Ga.  App.  221,  58  S.  E.  386, 
holding  further  that  a  seal  is  unnecessary  to  its  sufficiency,  whether  it  be  that  of  a 
private  person  or  of  a  corporation. 


§  688b  FORM   AND   VARIETIES   OF   INDORSEMENT  761 

initials  will  suffice,^^  as  will  also  any  mark,  instead  of  the  name,  made 
to  represent  it." 

Writing  on  the  paper,  "Pay  the  contents  to  A.,"  is  a  transfer,  so 
far  as  it  authorizes  payment  to  be  made  to  A.,  but  it  does  not  render 
the  writer  liable  as  an  indorser.^^ 

It  has  been  held  that  the  figures  "  1,  2,  8,"  written  in  pencil,  was  a 
sufficient  indorsement  connected  with  evidence  tending  to  show  that 
the  party  who  placed  them  on  the  paper  intended  to  bind  himself 
as  an  indorser.^^  This  decision  is  questioned  by  Prof.  Parsons  (vol.  II, 
N.  &  B.,  17);  but  with  the  utmost  respect  for  that  eminent  jurist, 
it  seems  to  us  sound,  on  the  ground  that  it  was  intended  as  a  mark  to 
represent  the  indorser's  name7°  And  it  is  well  settled  that  any  mark 
which  is  shown  to  have  been  intended  as  the  maker's  name,  is  as 
valid  to  bind  him  as  the  name  itself.  "A  very  small  matter,"  says 
Cunningham,  in  his  Law  of  Exchange,  p.  26,  "will  amount  to  an 
acceptance;"  and  he  gives  as  an  example  the  mere  memorandum  of 
the  date  of  presentment.  The  same  may  be  said  of  an  indorsement. 
It  is  the  intention  which  gives  significance  to  the  mark. 

It  is  settled  that  the  writing  may  be  done  in  any  legible  way,  by 
pen  or  pencil.^^ 

§  688b.  Whether  party  who  writes  sale  or  assignment  over  his 
signature  is  indorser  or  mere  assignor  of  the  instrument;  peculiar 
expressions  used  in  transfers. — The  usual  and  regular  indorse- 
ment is  made  by  simply  writing  the  indorser's  name,  or  by  writing 


66.  Merchants'  Bank  v.  Spicer,  6  Wend.  443;  Palmer  v.  Stephens,  1  Den. 
471;  Bank  v.  Flanders,  6  N.  H.  239;  Rogers  v.  Colt,  6  HiU,  322;  WilUamson  v. 
Johnson,  1  B.  &  C.  146;  Corgan  v.  Frew,  39  111.  31. 

67.  George  v.  Surrey,  1  Moody  &  M.  516;  Baker  v.  Denning,  8  Ad.  &  El.  94; 
Addy  V.  Grix,  8  Ves.  504:  FUnt  v.  Flint,  6  Allen.  34;  Brown  v.  Butchers,  etc., 
Bank,  6  Hill,  443.  An  indorsement  "for  deposit  *  *  *  to  credit  of  E.  J.  Neher," 
is  sufficient  although  the  name  signed  makes  part  of  a  sentence.  Haskell  v.  Avery, 
181  Mass.  106,  63  N.  E.  15,  92  Am.  St.  Rep.  401.  Where  the  name  of  the  drawee 
of  a  draft  has  been  stamped  on  the  back  with  a  rubber  stamp  by  one  having 
authority  to  do  it  and  with  intent  to  indorse  the  instrument,  this  is  a  vahd  indorse- 
ment. Mayers  v.  McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111  Am.  St.  Rep. 
879,  holding  further  that  such  indorsement  does  not  prove  itself,  but  must  be 
established  by  proper  testimony. 

68.  Vincent  v.  Horlock,  1  Campb.  442. 

69.  Brown  v.  Butchers',  etc..  Bank,  6  Hill,  443. 

70.  Redfield  &  Bigelow's  Lead.  Gas.  110,  111. 

71.  Geary  v.  Physic,  5  B.  &  C.  234;  Brown  v.  Butchers,  etc.,  Bank,  6  Hill, 
443;  Closson  v.  Stearns,  4  Vt.  11. 


762  TRANSFER   BY   INDORSEMENT  §  688c 

also  over  it  the  direction  to  pay  to  the  indorsee  named  or  order,  or 
to  him  or  bearer.  But  sometimes  additional  expressions  are  used 
which  give  rise  to  the  contention  that  the  transfer  is  merely  by 
way  of  sale  or  assignment.  In  an  English  case  the  holder  wrote 
on  the  back  of  the  instrument:  "I  hereby  assign  this  draft  and  all 
benefit  of  the  money  secured  thereby  to  John  Grainger,  of  Bessil- 
sleigh,  in  the  County  of  Berks,  labourer;  and  order  the  within  named 
Thomas  Fox  Hitchcock  to  pay  him  the  amount  and  all  interest  in 
respect  thereof" — Hitchcock  being  the  maker  of  the  instrument, 
which  was  a  note.  Gurney,  B.,  said:  "It  amounts  to  nothing  more 
than  an  ordinary  indorsement  of  the  note,  but  it  is  in  a  very  elaborate 
form,"  ^2  Where  a  payee  of  a  note  signed  the  following  indorsement 
on  the  back  of  the  note:  "I  hereby  acknowledge  myself  a  principal 
maker  of  this  note,"  it  may  be  stricken  out  as  surplusage,  and  without 
legal  meaning  or  effect,  and  the  signature  of  the  payee  makes  him  an 
indorser.^^  In  the  case  of  a  note  payable  to  the  order  of  the  maker, 
which  is  not  negotiable  unless  indorsed  by  the  maker ,^^  it  has  been 
held  that  the  addition  of  a  statement  of  the  value  of  the  maker's  real 
and  personal  property  above  his  signature  on  the  back  of  the  note  is 
not  an  indorsement  of  such  a  note,^^  though  the  contrary  has  been 
maintained.^^ 

§  688c.  American  decisions  in  similar  cases. — A  written  agree- 
ment to  pay  a  note  "as  if  by  me  indorsed"  has  been  considered  in 
the  United  States  an  indorsement  in  the  legal  and  mercantile  sense 
of  the  term.^^  And  the  hke  effect  has  been  given  to  writings  on  the 
back  of  the  paper  over  the  transferrer's  signature  where  the  expres- 
sions were  used:  "I  hereby  assign  all  my  right  and  title  to  L.  M.;"  ^^ 
"I  assign  the  within  note  to  S.  C.;"  '^^  "For  value  received  we  assign 

72.  Richards  v.  Frankum,  9  Car.  &  P.  221  (38  Eng.  C.  L.)  (1840).  See  §  700a; 
Hall  V.  Toby,  110  Pa.  St.  318;  Maddox  v.  Duncan,  143  Mo.  613,  45  S.  W.  688, 
65  Am.  St.  Rep.  678,  note;  Jacobs  v.  Gibson,  77  Mo.  App.  244,  text  cited. 

73.  Kistnor  v.  Peters,  223  111.  607,  79  N.  E.  311,  7  L.  R.  A.  (N.  S.)  400,  114 
Am.  St.  Rep.  362. 

74.  See  ante,  §  130. 

75.  Pickering  v.  Cording,  92  Ind.  306. 

76.  Dunning  v.  Heller,  103  Pa.  St.  271. 

77.  Pinnes  v.  Ely,  4  McLean,  173. 

78.  Sears  v.  Lantz,  47  Iowa,  658;  Jacobs  v.  Gibson,  77  Mo.  App.  244,  text  cited. 

79.  Sands  v.  Wood,  21  Iowa,  263,  cited  in  Sears  v.  Lantz,  47  Iowa,  658;  David- 
son V.  Powell,  114  N.  C.  575,  19  S.  E.  601.  Under  a  statute  making  promissory 
notes  payable  "to  any  person  or  order,"  or  "to  any  person  or  assigns,"  an  indorse- 


§  68Sc  FORM   AND    VARIETIES   OF   INDORSEMENT  7G3 

the  within  note  to  A.  B.,  waiving  demand  and  notice;"^"  and  "I 
hereby  sell  and  assign  all  my  interest  in  the  within  note  to  A.  B."  *^ 
Also,  "I  sign  this  note  to  N.  H.  G.  without  recourse."  ^^  But  in 
Michigan,  where  the  payee  wrote  on  the  back  of  a  note,  "I  hereby 
transfer  my  right,  title,  and  interest  of  the  within  note  to  S,  C.  Y.," 
the  view  has  been  strongly  presented  that  such  transfer  was  not  an 
indorsement  in  the  sense  of  the  law  merchant,  but  merely  passed 
title,  not  rendering  the  assignor  liable  as  an  indorser  in  the  event  of 
due  dishonor  and  notice.^^    And  in  Kansas,  a  writing  on  the  back  of  a 

ment  by  a  payee,  that  he  "  hereby  assigns  and  transfers  the  within  note  and 

coupons  to ,"  is  the  equvalent  of  a  bank  indorsement,  and  relieves  an 

innocent  holder  from  equities  existing  between  the  makers  and  payee.  Leahy  v, 
Haworth,  141  Fed.  850,  4  L.  R.  A.  (N.  S.)  267. 

80.  Duffy  V.  O'Connor,  7  Baxt.  498.  Compare  Wood  v.  Elwood,  90  Tex.  131, 
37  S.  W.  414,  citing  text. 

81.  Shelby  v.  Judd,  24  Kan.  166.  See  also  Thorpe  v.  Mindeman,  123  Wis. 
149,  101  N.  W.  417,  68  L.  R.  A.  146,  107  Am.  St.  Rep.  1003,  as  to  an  indorsement: 
"I  hereby  sell,  transfer  and  assign  the  within  note  and  interest  coupons  thereto 
attached"  etc.  In  Gale  v.  Mayhew,  161  Mich.  96,  125  N.  W.  781,  29  L.  R.  A. 
(N.  S.)  648,  it  was  held  that  an  indorsement  on  a  negotiable  note  that  "I  hereby 
assign  my  interest  in  this  note  to"  a  certain  person,  is  not  a  legal  indorsement  but 
an  assignment. 

82.  Brotherton  v.  Street,  124  Ind.  599,  24  N.  E.  1068. 

83.  Aniba  v.  Yeomans,  39  Mich.  171.  W.  T.  Aniba,  payee  of  a  note,  sold  it 
to  S.  A.  Yeomans,  writing  on  the  back  the  following  indorsement:  "I  hereby 
transfer  my  right,  title,  and  interest  of  the  within  note  to  S.  A.  Yeomans,  June 
14,  1877,  (signed)  W.  T.  Aniba."  Yeomans  sued  Aniba  as  indorser.  Marston, 
J.,  said:  "The  indorsement  upon  a  negotiable  promissory  note  is  something  more 
than  the  mere  transfer  of  the  interest  of  the  payee  therein.  It  includes  also  the 
personal  undertaking  of  the  indorser  that  if  the  note  is  not  paid  at  maturity,  upon 
notice  of  that  fact  he  will  pay  the  same.  Indeed,  it  goes  farther  and  may  pass  a 
perfect  title  to  the  indorsee,  and  enable  him  to  recover  from  the  makers,  in  cases 
where  the  payee  could  not  have  recovered.  The  right  or  interest  passing,  there- 
fore, under  the  usual  and  customary  indorsement  is  much  greater  than  the  mere 
right,  title,  and  interest  of  the  payee,  and  where  the  transfer  as  made  only  at- 
tempts to  pass  the  title  and  interest  of  the  payee  of  the  note,  no  greater  right  or 
interest  than  he  then  held  can  pass.  The  transfer  in  this  case  gave  Yeomans  the 
same  rights  that  Aniba  then  had,  but  none  other  or  greater.  Yeomans  could 
look  to  the  makers  thereof  as  Aniba  could  have  done,  but  beyond  this  he  could 
not  go.  To  permit  him  to  fall  back  upon  Aniba,  or  to  collect  from  the  makers  in 
case  Aniba  could  not  have  collected,  would  be  giving  him  more  than  Aniba's 
right  and  interest  in  the  note.  Such  a  transfer  as  was  made  in  this  case,  it  not 
being  in  accordance  with  the  usual  and  customary  method  of  transferring  com- 
mercial paper,  would  throw  doubt  and  suspicion  upon  the  entire  transaction  and 
destroy  the  negotiable  character  of  the  paper.  No  one  dealing  in  commercial 
paper  would  be  willing  to  accept  it  afterward  with  such  an  indorsement  standing 
thereon."    Guaranty  of  payment  written  on  back  of  a  promissory  note  and  sub- 


764  TRANSFER   BY   INDORSEMENT  §  688c 

note  in  the  following  form,  "I,  J.  C.  R.,  do  hereby  assign  the  within 
note  to  C.  B.  H.;  said  assignment  is  made  without  recourse  on  me 
either  in  law  or  equity,"  was  held  an  indorsement  in  a  commercial 
sense,  cutting  off  defenses  of  the  maker.^^  The  question  arising  in 
such  cases  is  a  nice  one,  and  depends  upon  rules  of  legal  interpreta- 
tion. The  mere  signature  of  the  payee  indorsed  on  the  paper  imports 
an  executed  contract  of  assignment,  with  its  implications,  and  also 
an  executory  contract  of  conditional  liability  with  its  implications. 
The  assignment  would  be  as  complete  by  the  mere  signature  as  with 
the  words  of  assignment  written  over  it.  The  conditional  liability 
which  is  executory  is  implied  by  the  executed  contract  of  assignment, 
and  the  signature  under  it,  which  carries  the  legal  title.  And  the 
question  is:  Does  the  writing  over  a  signature  on  express  assignment 
which  the  law  imports  from  the  signature  per  se  exclude  and  negative 
the  idea  of  conditional  liability  which  the  law  also  imports  if  such 
assignment  were  not  expressed  in  full?  We  think  not.  It  is  from  the 
fact  that  a  payee  assigns  a  bill  or  negotiable  note  by  indorsement  of 
his  name  on  the  back  of  it,  that  the  law  implies  his  liability  as  an 
indorser.  His  relation  to  the  instrument  creates  the  implication,  and 
the  circumstance  that  he  sets  forth  that  relation  in  express  terms  does 
not  change  it,  for  the  maxim  applies,  Expressio  eorum  quoe  tacitcB 
insunt  nihil  operatur.  Did  the  payee  intend  merely  to  pass  the  title 
he  should  use  the  words  "without  recourse"  or  some  phrase  of  equal 
import.  His  liability  is  imphed  without  words  expressly  creating  it. 
To  be  negatived,  words  should  be  used  which  negate  the  implication. 
If  the  executed  contract  created  implications  of  several  executory 
contracts  then  the  expression  of  one  of  those  implications  might  ex- 
clude others  of  the  like  class,  by  application  of  the  maxim,  Expressio 

scribed  by  payee,  constitutes  a  transfer  of  the  title  of  the  note  to  the  person  who 
brings  it  under  such  guaranty.  National  Bank  of  Commerce  v.  Gallard,  14  Wash. 
502,  45  Pac.  35;  Hale  v.  Hitchcock,  3  Kan.  App.  23,  44  Pac.  446;  Fox  v.  Cipra, 
Kan.  App.  312,  48  Pac.  452;  Merchants'  Sav.  Bank  v.  Moore,  5  Kan.  App.  362, 
48  Pac.  455.  Compare  Stevens  v.  Hannan,  86  Mich.  305,  48  N.  W.  951,  24  Am. 
St.  Rep.  125.  Though  a  written  indorsement  on  the  back  of  a  note:  "For  value 
received  the  within  note  together  with  the  collaterals  securing  the  payment  of 
same  is  transferred  to"  a  certain  person,  destroyed  its  negotiability  under  the  law 
merchant,  yet  Rev.  Stats,  of  1905,  article  307,  providing  that  if  the  instrument 
was  in  form  negotiable  at  law,  the  form  of  the  indorsement,  whereby  the  transfer 
was  accomplished,  would  not  affect  an  innocent  holder  for  value,  places  the  indor- 
see in  the  same  position  as  if  the  assignment  was  in  blank,  Rowe  v.  Gohlman,  44 
Tex.  Civ.  App.  315,  98  S.  W.  1077  (1907). 

84.  Hatch  v.  Barrett,  34  Kan.  230,  citing  the  text. 


§§  689,  689a      FORM   AND   VARIETIES   OF   INDORSEMENT  765 

est  Urdus,  est  exclusio  alterius.  But  when  the  thing  done  creates  the 
implication  of  another  to  be  done,  we  cannot  think  that  the  mere 
expression  of  the  former  in  full,  can  be  regarded  as  excluding  its  con- 
sequence when  that  consequence  would  follow  if  the  expression  were 
omitted.^^  The  executory  contract  of  the  indorser  to  pay  in  the  event 
of  dishonor  and  notice  has  never  in  any  case  that  we  are  aware  of  been 
written  in  full.  And  if  the  language  does  not  negate  that  universally 
accepted  implication  it  should  be  remembered  that  words  are  to  be 
construed  as  strongly  as  their  sense  will  allow  against  those  using 
them;  and  the  question  resolved  accordingly. 

Under  Negotiable  Instrument  statute. — Under  the  statute,^®  while  an 
indorsement  of  the  "right,  title  and  interest"  of  the  indorser  is  a 
qualified  indorsement,  it  is  a  commercial  indorsement  and  not  a  mere 
assignment,  and  does  not,  in  law,  discredit  the  paper  or  even  bring  it 
under  suspicion.^^ 

§  689.  Handwriting  of  indorsement — The  indorser  may  write 
his  own  name,  or  he  may  authorize  any  one  to  write  it  for  him.  If 
the  name  be  in  the  handwriting  of  the  paper,  but  the  indorser  re- 
ceives notice,  is  sued,  suffers  default  and  makes  no  defense  or  denial 
until  after  the  maker  absconds,  he  carmot  deny  his  signature;  or  if  he 
does,  proof  that  he  had  assumed  other  paper  similarly  indorsed  would 
be  conclusive  against  him.*^ 

§  689a.  Indorsement  must  be  on  the  instrument. — The  indorse- 
ment must,  as  a  general  rule,  be  somewhere  on  the  paper  itself,  or 
attached  thereto,  and  unless  it  is,  the  party  cannot  be  held  liable  as 


85.  See  Adams  v.  Blethem,  66  Me.  19;  §962;  Benjamin's  Chalmers'  Di- 
gest, 121;  Bigelow  on  Bills  and  Notes,  134;  Davidson  v.  Powell,  114  N.  C. 
575,  19  S.  E.  601,  citing  text;  Markey  v.  Corey,  108  Mich.  184,  66  N.  W. 
61,  62  Am.  St.  Rep.  698,  quoting  text.  Contra,  Spencer  v.  Halpern,  62  Ark. 
595. 

86.  Appendix,  sees.  38,  65. 

87.  Evans  v.  Freemen,  142  N.  C.  61,  54  S.  E.  847,  wherein  the  court  said: 
"The  indorsee  is  supposed  to  take  it  on  the  credit  of  the  other  parties  to  the  in- 
strument, Revisal  1905,  §  2187  [Appendix  sec.  38],  though  the  indorser  may  still 
be  liable  on  certain  warranties  specified  in  the  statute.  Revisal  1905,  §  2214 
[Appendix,  sec.  65].  See  Thorpe  v.  Mindeman,  123  Wis.  149,  101  N.  W.  417, 
68  L.  R.  A.  146,  107  Am.  St.  Rep.  1003,  as  to  an  indorsement  upon  a  note:  "For 
value  received,  I  hereby  sell,  transfer  and  assign  the  within  note  and  the  interest 
coupons  thereto  attached  *  *  *  without  recourse." 

88.  Weed  v.  Carpenter,  10  Wend.  403. 


766  TRANSFER   BY    INDORSEMENT  §  690 

an  indorser,^^  but  a  promise  made  on  a  sufficient  consideration  will 
sustain  an  action  upon  its  breach.^" 

When  a  note  is  transferred  with  guaranty,  the  transfer  may  be 
good,  though  the  guaranty  be  void  under  the  Statute  of  Frauds.^^ 
The  addition  of  a  guaranty  has  been  held  not  to  impair  the  nego- 
tiability of  the  instrument.^^ 

In  Nebraska,  the  words  "For  value  received  I  hereby  guarantee 
payment  of  the  within  note,  and  waive  demand  and  notice  of  protest 
on  the  same  when  due,"  has  been  held  to  be  an  indorsement  within 
the  meaning  of  the  law  merchant.^' 

§  690.  Allonge. — It  is  not  necessary,  however,  that  the  indorse- 
ment should  be  upon  the  original  bill  or  note,  in  order  to  constitute 
it  such,  in  the  full  sense  of  the  term.  It  sometimes  happens  that  by 
rapid  circulation  from  hand  to  hand,  the  back  of  the  paper  is  com- 
pletely covered  by  indorsements;  and  in  such  cases  the  holder  may 
tack  or  paste  on  a  piece  of  paper  sufficient  to  bear  his  own  and  sub- 
sequent indorsements,  and  thereon  the  indorsements  may  be  made. 
Such  addition  to  the  original  instrument  is  called  an  allonge,  and  it 
becomes,  for  the  purposes  above  named,  incorporated  as  a  part  of  it.^^ 
Transfers  by  separate  instruments  are  hereafter  considered.^^ 

89.  Fenn  v.  Harrison,  3  T.  R.  757.  See  post,  §  748o.  And  where  at  the  time  a 
promissory  note  was  indorsed  in  blank,  another  between  the  same  parties  was 
folded  in  it,  the  indorsement  of  the  former  did  not  operate  as  an  indorsement  or 
to  more  than  an  equitable  assignment  of  the  latter,  although  such  may  have  been 
the  intent  of  the  parties.  Consequently,  a  holder  could  not  maintain  a  suit  upon 
the  latter  in  his  own  name  without  equitable  pleadings  setting  up  the  requisite 
facts.  See  National  Bank  v.  Leonard,  91  Ga.  805,  18  S.  E.  32;  May  v.  Dyer,  57 
Ark.  441,  21  S.  W.  1064. 

90.  Moxon  V.  PulUng,  4  Campb.  51;  Wilmington  Bank  v.  Houston,  1  Harr. 
227;  French  v.  Turner,  15  Ind.  59. 

91.  Crosby  v.  Roub,  16  Wis.  616. 

92.  Hatcher  v.  National  Bank,  79  Ga.  542. 

93.  Helmer  v.  Commercial  Bank  (Nebr.),  44  N.  W.  482;  Weitz  v.  Wolfe,  28  Nebr. 
500,  44  N.  W.  485;  Heard  v.  Bank,  8  Nebr.  10;  Bank  v.  Hayden,  14  Nebr.  480. 

94.  Crosby  v.  Roub,  16  Wis.  622,  626  (1863);  Folger  v.  Chase,  18  Pick.  63; 
French  v.  Turner,  15  Ind.  59;  Young  v.  Glover,  3  Jurist  (N.  S.),  637;  Osgood  v. 
Artt,  17  Fed.  575,  where  an  assignment  contained  in  a  bond,  of  a  note  referred 
to  in  the  bond,  which,  together  with  the  note  and  a  mortgage,  three  separate 
papers,  were  fastened  together  by  eyelets,  was  held  not  to  be  an  indorsement 
within  the  meaning  of  the  law  merchant.  Story  on  Notes,  §§  121,  151,  172;  Story 
on  Bills,  §§  204,  218;  Byles  on  Bills  [*145],  263;  Edwards  on  Bills,  267;  Benjamin's 
Chalmers'  Digest,  122;  Bishop  v.  Chase,  156  Mo.  158,  56  S.  W.  1080;  citing  text; 
Fountain  v.  Bookstaver,  141  111.  461,  31  N.  E.  17,  citing  text. 

95.  Post,  §§  748,  748a. 


§  691-693        FOEM   AND   VARIETIES   OF   INDORSEMENT  767 

§  691.  Secondly:  As  to  the  varieties  of  indorsement. — There  are 
various  habihties  which  may  be  engrafted  on  a  negotiable  instrument, 
evidenced  by  the  terms  of  the  indorsement  thereon.  An  indorse- 
ment may  be  (1)  in  full  or  (2)  in  blank;  it  may  be  (3)  absolute  or 
(4)  conditional;  it  may  be  (5)  restrictive;  it  may  be  (6)  without  re- 
course on  the  indorser;  and  there  may  be  (7)  joint  indorsements  of 
the  instrument,  (8)  successive  indorsements,  and  also  (9)  irregular 
indorsements. 

§  692.  (1)  In  the  first  place,  an  indorsement  in  full  is  one  which 
mentions  the  name  of  the  person  in  whose  favor  it  is  made;  and  to 
whom,  or  to  whose  order,  the  sum  is  to  be  paid.  For  instance:  "Pay 
to  B,,  or  order,"  signed  A.,  is  an  indorsement  in  full  by  A.,  the  payee 
or  holder  of  the  paper  to  B.  An  indorsement  in  full  prevents  the  bill 
or  note  from  being  indorsed  by  any  one  but  the  indorser  .^^  And  none 
but  the  special  indorsee  or  his  representative  can  sue  upon  it.^^  Where 
the  payee  wrote  on  the  back  of  a  note  which  he  transferred,  "  I  this 
day  sold  to  Catherine  M.  Adams  the  within  note,"  it  was  held  an 
indorsement  to  the  purchaser,  Peters,  J.,  saying:  "We  think  that  the 
defendant  thereby  assumed  all  the  liabilities  of  an  ordinary  indorse- 
ment of  the  note.  No  word  in  the  writing  indorsed  upon  the  note 
negatives  or  qualifies  such  an  idea.  *  *  *  The  only  restriction  is 
that  the  indorsement  is  made  special  to  Catherine  M.  Adams."  ^^ 

§  693.  (2)  In  the  second  place,  an  indorsement  in  blank  is  one 

which  does  not  mention  the  name  of  the  indorsee,  and  consists, 
generally,  simply  of  the  name  of  the  indorser  written  on  the  back 
of  the  instrument.  When  the  bill  or  note  is  indorsed  in  blank,  it 
is,  as  has  been  said,  transferable  by  mere  delivery  to  the  transferee; 
but  one  indorsed  in  full  must  be  indorsed  against  by  the  indorsee 
in  order  to  render  it  transferable  to  every  intent — for  he  who  indorses 
to  a  particular  person,  declares  his  intention  not  to  be  made  liable 
except  by  that  person's  indorsement  over.  As  to  an  indorsement  in 
blank,  it  was  said  by  Lord  Mansfield,  in  Peacock  v.  Rhodes,  2  Doug. 
633:  "I  see  no  difference  between  a  note  indorsed  in  blank  and  one 


96.  Mead  v.  Young,  4  T.  R.  28. 

97.  See  vol.  II,  §1181;  Lawrence  v.  Ftissell,  77  Pa.  St.  460;  Reamer  v. 
BeU,  79  Pa.  St.  292;  Spence  v.  Robinson,  35  W.  Va.  313,  13  S.  E.  1004,  citing 
text. 

98.  Adams  v.  Blethen,  66  Me.  19  (1876).  See  §§  688a,  698  et  seq.;  Jacobs 
V.  Gibson,  77  Mo.  App.  244,  text  cited. 


768  TRANSFER   BY    INDORSEMENT  §  694 

payable  to  bearer.    They  both  go  by  delivery,  and  possession  proves 
property  in  both  cases."  ^^ 

Under  Negotiable  Instrument  statute.— The  statute  contains  several 
provisions  with  respect  to  indorsements  in  blank,  and  declares  that 
an  instrument  is  payable  to  bearer  when  the  only  or  last  indorsement 
is  an  indorsement  in  blank.  ^  Where  notes  have  been  indorsed  in 
blank,  they  are  transferable  by  delivery,  and  one  having  them  in 
possession  is  presumably  the  owner,  and  authorized  to  transfer  a  good 
title  thereto  by  delivery  to  any  good  faith  purchaser.^  An  indorse- 
ment in  blank  is  not  nullified  by  a  subsequent  indorsement  guarantee- 
ing payment.  Such  indorsement  is  not  a  notice  of  defenses,  but 
merely  enlarges  the  responsibility  of  the  guarantor  to  that  of  an 
indorser.^  The  statute  does  not  mean  that  an  indorsement  in  blank 
converts  a  note  nonnegotiable  on  its  face  and  by  its  terms  into  a  ne- 
gotiable note.^ 

§  694.  Right  of  holder  under  blank  indorsement. — The  effect 


99.  See  Palmer  v.  Nassau  Bank,  78  111.  380;  Gaar  v.  Louisville  B.  Co.,  11 
Bush,  180;  Carter  v.  Sprague,  51  Cal.  239;  Morris  v.  Preston,  93  111.  215;  Jacoby 
V.  Ross,  12  Mo.  App.  577;  Fitzgerald  v.  Barker,  85  Mo.  19,  citing  the  text;  Belden 

V.  Hann,  61  Iowa,  41.    Indorsement  on  note  "Pay  to  the  order  of ,"  held 

to  be  equivalent  to  an  ordinary  indorsement  in  blank.  Byers  v.  The  Bellam- 
Price  Investment  Co.,  10  Colo.  App.  74,  50  Pac.  368;  Tyson  &  Ralls  v.  Weston 
Nat.  Bank,  77  Md.  412,  26  Alt.  520;  Shaw  &  Schoonover  v.  Jacobs,  89  Iowa, 
713,  55  N.  W.  333,  56  N.  W.  684,  48  Am.  St.  Rep.  411;  Bank  of  Winona  v.  Wofford, 
et  al,  71  Miss.  711,  14  So.  262. 

1.  Appendix,  sees,  9,  33,  34.  Massachusetts  Nat.  Bank  v.  Snow,  187  Mass. 
159,  72  N.  E.  959.  In  Cleveland  Co.  v.  Chittenden,  81  Conn.  667,  71  Atl.  939, 
the  court  said  that  where  the  indorsement  was  neither  restrictive,  qualifying  nor 
conditional,  it  was  absolutely  immaterial  to  the  creation  of  the  relation  between 
defendant  as  the  maker  of  the  instrument  and  the  plaintiff  as  its  holder,  to  the 
character  of  that  relation,  and  the  determination  of  the  rights  and  obligation  of 
the  parties  as  between  each  other  through  that  relation,  whether  the  channel, 
through  which  in  strict  legal  contemplation  the  holder's  ownership  was  derived, 
was  that  of  a  special  indorsement  or  a  blank  indorsement,  which  the  holder  might 
at  his  pleasure  transform  into  a  special  one,  or  whether  or  not  the  blank  indorse- 
ment had  in  fact  been  transferred  into  a  special  one.  Where  a  check  was  indorsed 
"pay  to  the  order  of"  with  a  signature  line  immediately  below,  and  a  sufficient 
blank  space  between  the  words  of  the  order  and  the  signature  to  permit  writing 
therein  the  name  of  the  holder  in  due  course,  this  amounts  to  an  indorsement  in 
blank  rendering  the  instrument  payable  to  bearer  and  negotiable  by  deUvery. 
State  v.  Hinton,  56  Ore.  428,  109  Pac.  24. 

2.  Irwin  v.  Deming,  142  Iowa,  299,  120  N.  W.  645. 

3.  Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W.  1068. 

4.  Wettlaufer  v.  Baxter,  137  Ky.  362,  125  S.  W.  741. 


§  694a  FORM   AND   VARIETIES   OF   INDORSEMENT  769 

of  an  indorsement  in  blank  by  the  payee,  through  his  attorney  in 
fact,  is  to  transfer  the  legal  title  to  the  person  to  whom  the  note,  with 
such  indorsement,  was  sold  and  delivered.^  The  receiver  of  a  nego- 
tiable instrument  indorsed  in  blank,  or  any  bona  fide  holder  of  it,  may 
write  over  it  an  indorsement  in  full  to  himself,  or  to  another,  or  any 
contract  consistent  with  the  character  of  an  indorsement;  ^  but  he 
could  not  enlarge  the  liabihty  of  the  indorser  in  blank  by  writing  over 
it  a  waiver  of  any  of  his  rights,  such  as  demand  and  notice.^  The 
indorsement  may  be  before  or  after  the  instrument  itself  is  com- 
pleted, and  while  it  is  yet  in  blank;  and  the  indorser  will  be  bound 
according  to  its  terms  when  filled  up,  the  indorsement  of  a  blank 
paper  being  considered  "a  letter  of  credit  for  an  indefinite  sum,"  ^ 

§  694a.  Successive  indorsements  in  blank. — Where  there  are 
several  indorsements  in  blank,  the  holder  may  fill  up  the  first  one 
to  himself,  or  he  may  deduce  his  title  through  all  of  them.^  He  may 
also  strike  out  any  number  of  several  indorsements.  Thus,  if  there 
were  six,  he  might  strike  out  the  fourth,  fifth,  and  sixth,  and  sue  the 

5.  McLaughlin  v.  Braddy,  63  S.  C.  433,  41  S.  E.  523,  90  Am.  St.  Rep.  681 
(as  to  an  indorsement  by  the  payee  through  his  attorney  in  fact). 

6.  See,  ante,  §  142  et  seq.,  and  post,  §§  1195,  1196;  Evans  v.  Gee,  11  Pet.  80;  Rees 
V.  Conecocheague  Bank,  5  Rand.  329;  Hance  v.  Miller,  21  111.  636;  Hunter  v. 
Hempstead,  1  Mo.  67;  Riker  v.  Crosby,  2  Pa.  St.  911;  Central  Bank  v.  Davis, 
19  Pick.  376;  Tenney  v.  Prince,  4  Pick.  385;  Condon  v.  Pearce,  43  Md.  83;  John- 
son V.  Mitchell,  50  Tex.  212;  Andrews  v.  Simms,  33  Ark.  771;  Weyerhauser  v. 
Dun,  100  N.  Y.  150;  State  Nat.  Bank  v.  Haylen,  14  Nebr.  482;  Scott  v.  Calkin,  139 
Mass.  529.  In  this  case  it  was  held  that  the  indorsee  might  write  over  the  in- 
dorsement in  blank,  "I  guarantee  payment  of  the  within  note,"  without  impairing 
the  legal  effect  of  the  indorsement.  But  in  Iowa  the  contrary  has  been  held,  upon 
the  ground  that  the  effect  of  such  indorsement  would  be  to  deprive  the  indorser 
of  his  right  to  notice  in  case  of  nonpayment.  Belden  v.  Hann,  61  Iowa,  42.  "A 
blank  indorsement  of  a  premium  note  by  an  assignee  of  the  poUcy  authorizes 
the  holder  to  write  in  'the  undersigned,  in  consideration  of  the  assent  to  the 
assignment  of  the  policy,  becomes  bound  by  the  within  contract  for  the  payment 
of  the  premium  thereon.'"  Equitable  Marine  Ins.  Co.  v.  Adams,  173  Mass.  436, 
53  N.  E.  883;  Bradford  Nat.  Bank  v.  Taylor,  75  Hun,  297,  27  N.  Y.  Supp.  96; 
Iowa  VaUey  St.  Bank  v.  Sigstad,  96  Iowa,  491,  65  N.  W.  407,  citing  the  text; 
Middleton  v.  Griffith,  57  N.  J.  L.  442,  31  Atl.  405,  51  St.  Rep.  617,  citing  text. 

7.  2  Parsons  on  Notes  and  Bills,  20;  Edwards  on  Bills,  273;  Central  Bank  v. 
Davis,  19  Pick.  376. 

8.  Violett  V.  Patton,  5  Cranch,  142;  Lord  Mansfield,  in  Russell  v.  Langstaffe, 
2  Doug.  514.    See  ante,  §  142;  post,  §§  841,  844  et  seq.;  §  1405  et  seq. 

9.  Ritchie  v.  Moore,  5  Munf.  388;  Craig  v.  Brown,  Pet.  C.  C.  171;  Ellsworth 
v.  Brewer,  11  Pick.  316;  Cole  v.  Gushing,  8  Pick.  48;  Emerson  v.  Cutts,  12  Mass. 
7,8. 

49 


770  TRANSFER   BY    INDORSEMENT  §  695 

others;  ^°  but  if  he  strikes  out  any  intermediate  one  he  releases  all 
who  indorsed  subsequently,  as  he  deprives  them  of  their  recourse 
against  him.^^  But  where  there  is  a  special  indorsement  to  a  particu- 
lar person,  it  has  been  held  that  the  holder  cannot  strike  it  out  and 
insert  his  own  name;  for,  being  payable  to  the  order  of  the  special 
indorsee,  the  law  cannot  presume  that  it  has  come  rightfully  into  the 
hands  of  the  holder  until  there  is  a  special  indorsement  to  him,  or  an 
indorsement  in  blank.  To  hold  otherwise  would  defeat  the  very 
object  of  the  special  indorsement,  which  is  to  notify  the  world  that 
it  can  only  be  transferred  to  a  stranger  by  the  actual  indorsement  of 
the  special  indorsee,  and  especially  is  it  notice  to  the  maker  not  to  pay 
to  any  one  but  the  special  indorsee.  And  if  he  pays  it  to  a  stranger 
when  it  is  without  indorsement  by  the  special  indorsee,  he  acts  at  his 
own  risk.^-  And  if  the  special  indorsee  or  his  assignee  strike  out  his 
name  in  the  special  indorsement  and  insert  his  own,  it  is  a  material 
alteration  of  the  special  indorser's  contract,  and  no  recovery  can  be 
had  against  him.^^ 

It  has  been  held,  that  if  a  holder  through  several  indorsements 
fills  up  an  earl}^  blank  indorsement  payable  to  himself,  without 
striking  out  the  subsequent  indorsements,  he  does  not  discharge 
such  subsequent  indorsers;  but  that  he  may,  after  suing  unsuccess- 
fully those  prior  to  the  one  filled  up  to  himself,  sue  the  subsequent 
indorsers,  ^''  and  this  view  has  been  recently  approved,  and  seems  to 
us  correct.  ^^ 

§  695.  In  a  Virginia  case,^^  Green,  J.,  said,  in  dehvering  the  opinion 
of  the  court:  "A  blank  indorsement  does  not  'per  se  transfer  a  title;  ^^ 
but  is  an  authority  to  the  holder,  either  to  hold  it  as  the  agent  of  the 
indorser,  or  to  claim  it  as  his  own  by  assignment,  at  his  election, 
without  any  further  act  to  be  done  by  the  assignor.    The  blank  in- 

10.  Ritchie  v.  Moore,  5  Munf .  .388. 

11.  Curry  v.  Bank  of  Mobile,  8  Port.  360. 

12.  Porter  v.  Cushraan,  19  111.  572.    See  ante,  chapter  XX,  section  I. 

13.  Grimes  v.  Piersol,  25  Ind.  246. 

14.  2  Parsons  on  Notes  and  Bills,  19;  Cole  v.  Gushing,  8  Pick.  48.  See  2 
Parsons  on  Notes  and  Bills,  19,  note,  and  the  observations  of  the  author  on  the 
case  cited. 

15.  Bank  of  British  North  America  v.  Ellis,  2  Fed.  46  (1880),  U.  S.  G.  C. 
Oregon,  in  which  case  it  was  held  that  subsequent  indorsers  for  accommodation 
were  not  discharged  by  such  filling  up  of  an  early  blank  indorsement. 

16.  Rees  v.  Conecocheague  Bank,  5  Rand.  329. 

17.  See  Clark  v.  Pigot,  1  Salk.  126;  Lucas  v.  Haynes,  1  Salk.  130. 


§§  696-697      FORM   AND   VARIETIES   OF   INDORSEMENT  771 

dorsement  is  conclusive  proof  of  the  assent  of  the  indorser  to  transfer 
the  note  to  the  holder,  if  he  elects  to  take  it  as  a  transfer.  The  assent 
and  election  of  the  holder  to  treat  the  indorsement  as  a  transfer,  is 
proved  as  well  by  suing  upon  it  in  his  own  name  as  by  writing  over 
it  an  assignment  to  himself,  and  it  is  the  assent  of  both  parties  to  the 
transfer  which  perfects  it,  and  not  the  form  in  which  that  assent  is 
evidenced." 

§  696.  Effect  of  single  indorsement  in  blank,  with  subsequent  in- 
dorsement in  full. — If  a  bill  or  note  be  once  indorsed  in  blank, 
though  afterward  indorsed  in  full,  it  will  still,  as  against  the  drawer, 
acceptor,  maker,  payee,  the  blank  indorser,  and  all  indorsers  before 
him,  be  payable  to  bearer,  though  as  against  the  special  indorser 
himself,  title  must  be  made  through  his  indorsee.  ^^ 

§  696a.  Entirety  of  blank  indorsement. — The  holder  under  a 
blank  indorsement  cannot  fill  it  up  so  as  to  make  the  note  payable 
in  part  to  one  person  and  in  part  to  another.  The  indorser's  contract 
is  single  and  entire  to  pay  the  note  to  the  party,  or  to  that  person 
named  by  him ;  and  it  is  no  part  of  his  contract  that  the  sum  shall  be 
broken  into  fragments,  and  he  obliged  to  pay  in  fractions  to  different 
persons.^^ 

§  697.  (3  and  4)  In  the  third  and  fourth  places,  as  to  absolute 
and  conditional  indorsements. — An  absolute  indorsement  is  one  by 
which  the  indorser  binds  himself  to  pay,  upon  no  other  condition 
than  the  failure  of  prior  parties  to  do  so,  and  of  due  notice  to  him 
of  such  failure  (protest  preceding  it  when  necessary,  as  in  the  case  of 
a  foreign  bill).  A  conditional  indorsement  is  one  by  which  the  in- 
dorser annexes  some  other  condition  to  his  liability.  Sometimes  the 
condition  is  precedent,  and  sometimes  subsequent.  Thus,  "Pay  to 
A.  B.,  or  order,  if  he  arrives  at  twenty-one  years  of  age,"  or,  "if  he  is 
livmg  when  it  becomes  due,"  is  an  indorsement  upon  a  condition 
precedent.  "Pay  A.  B.,  or  order,  unless,  before  payment,  I  give  you 
notice  to  the  contrary,"  is  upon  a  condition  subsequent.  The  condi- 
tion attached  to  the  indorsement  in  no  manner  affects  the  nego- 
tiability of  the  paper.-" 

18.  Smith  V.  Clarke,  Peake,  225;  Walker  v.  McDonald,  2  Exch.  527;  Haber- 
sham V.  Lehman,  63  Ga.  383;  Johnson  v.  Mitchell,  50  Tex.  212;  ante,  §  663. 

19.  Erwin  v.  Lynn,  16  Ohio  (N.  S.),  547;  ante,  §  668. 

20.  Story  on  Notes,  §  149;  Story  on  Bills,  §  217.    A  commercial  indorsement  by 


772  TRANSFER   BY    INDORSEMENT  §  698 

Where  a  bill  was  indorsed,  payable  to  the  indorsee  or  transferee 
in  a  certain  condition,  and  was  afterward  accepted  and  passed 
through  several  hands,  and  was  finally  paid  by  the  acceptor  before 
the  condition  was  satisfied,  it  was  held  that  the  acceptor  was  liable 
to  pay  the  bill  again  to  the  payee. ^^  But  it  seems  that  a  bill  cannot 
be  indorsed  with  a  condition  that  in  a  certain  event  the  indorsee 
shall  not  retain  the  power  of  indorsing  it  to  another.-' 

"The  acceptor  is  bound  to  take  notice  of  the  condition  annexed 
to  an  indorsement,  for  when  a  person  accepts  a  bill  after  a  conditional 
indorsement,  and  pays  it  to  an  indorsee  of  this  conditional  indorsee 
while  the  condition  of  the  first  indorsement  is  unfulfilled,  he  is  liable 
in  second  payment  to  the  first  indorser,  being  bound  to  look  at  the 
conditional  indorsement  as  a  limitation  ex  facie  of  the  bill,  in  the  title 
of  the  party  claiming  payment."  -^ 

§  698.  (5)  In  the  fifth  place,  as  to  restrictive  indorsements.— 
An  indorsement  may  be  so  worded  as  to  restrict  the  further  nego- 
tiabiUty  of  the  instrument;  and  it  is  then  called  a  restrictive  indorse- 
ment. Thus,  "Pay  the  contents  to  J.  S.  only,"  or  "to  J.  S.  for  my 
use,"  or  "to  order  for  my  use,"  or  "for  me,"  are  restrictive  indorse- 
ments, and  put  an  end  to  the  negotiability  of  the  paper.^*  Of  the  like 
character  is  an  indorsement,  "Credit  my  account,"  -^  or  "Pay  J.  S. 

the  payee  of  a  negotiable  promissory  note,  and  a  contemporaneous  written  agree- 
ment limiting  the  effect  of  such  indorsement,  are  to  be  construed  as  if  parts  of 
one  instrument.  New  Blue  Springs  Milling  Co.  v.  De  Witt,  65  Kan.  665,  70  Pac. 
647. 

21.  Robertson  v.  Kensington,  4  Taunt.  30;  Savage  v.  Aldren,  2  Stark.  232 

(3  Eng.  C.  L.). 

22.  Soares  v.  Clyn,  14  L.  J.  Q.  B.  313,  8  Q.  B.  24  (35  Eng.  C.  L.). 

23.  Thompson  on  Bills,  232;  United  States  Nat.  Bank  v.  Ewing,  131  N.  Y. 
506,  30  N.  E.  501,  27  Am.  St.  Rep.  615. 

24.  Power  v.  Finnie,  4  Call,  411;  Wilson  v.  Holmes,  5  Mass.  543;  Williams 
V.  Potter,  72  Ind.  354;  Edie  v.  East  India  Co.,  2  Burr.  1221;  Johnson  v.  Mitchell, 
50  Tex.  212;  Hook  v.  Pratt,  78  N.  Y.  371;  Brown  v.  Jackson,  1  Wash.  C.  C. 
512;  Ancher  v.  Bank  of  England,  Doug.  637;  Robertson  v.  Kensington,  4  Taunt. 
30;  Sigourney  v.  Lloyd,  8  B.  &  C.  622;  Snee  v.  Prescott,  1  Atk.  247.  The  following 
case  arose  in  Texas:  L.  &  M.  made  a  note  payable  "to  B.  S.  &  Co.  for  the  use  of 
E.  &  M.  S."  At  the  time  the  note  was  made  B.  S.  &  Co.  indorsed  it  in  blank  and 
delivered  it  to  the  usees,  E.  &  M.  S.,  who,  alleging  the  insolvency  of  L.  &  M., 
sued  B.  S.  &  Co.  as  original  obligors.  The  consideration  of  the  note  was  money 
used  by  the  usees.  B.  S.  &  Co.  were  held  liable  as  original  promisors  or  sureties. 
Harrison  v.  Sheirburn,  36  Tex.  73. 

25.  Lee  v.  Chillicothe  Bank,  1  Bond,  387;  First  Nat.  Bank  v.  Reno  County, 
3  Fed.  257. 


§  698a  FORM  AND    VARIETIES   OF    INDORSEMENT  773 

or  order  for  account  or  on  account  of  C.  D.,"  -^  or  "for  collection," 
or  "for  collection  and  immediate  returns."  ^^  These  and  similar 
restrictive  words  indicate  that  the  indorsee  is  merely  an  agent  to 
receive  the  money,  and  that  he  paid  no  consideration  for  the  paper, 
as  a  purchaser  would  not  intelligently  accept  such  an  indorsement. 
The  indorsee  in  such  a  case  can  only  collect  the  money;  he  cannot  sell 
or  hypothecate  the  instrument  for  his  own  benefit,  nor  can  he  hold 
the  indorser  hable  to  himself.  The  restrictive  words  of  the  indorse- 
ment give  notice  of  the  trust  engrafted  upon  it,  and  if  the  indorsee 
passes  it  off  for  his  own  debt,  or  in  any  other  manner  violative  of  the 
trust,  the  transferee  would  take  it  subject  to  the  trust.'^^  And  an 
indorsement  of  a  note  "Previous  indorsements  guaranteed"  amounts 
only  to  a  guaranty  of  the  genuineness  of  the  indorsement,  and  does 
not  render  such  an  indorser  liable  on  the  note.^^  Where  a  bill  was 
indorsed  by  A.,  "Pay  B.,  or  his  order,  for  my  use,"  and  B.  discounted 
it  with  his  bankers,  who  received  payment  of  the  acceptors,  it  was 
held  that  in  an  action  by  A.  against  the  bankers  for  money  had  and 
received,  they  were  bound  to  refund  the  amount.^°  Where  the  in- 
dorsement was,  "Pay  A.  B.,  or  order,  for  account  of  C.  D.,"  and  A.  B. 
pledged  the  paper  to  the  defendant,  who  received  the  money,  it  was 
held  that  the  form  of  the  indorsement  carried  notice  to  the  defendant 
that  A.  B.  had  no  authority  to  raise  money  on  the  bill  for  his  own 
benefit,  and  that  C.  D.  could  recover  against  him  in  an  action  of 
trover.^*  And  where  a  bill  was  indorsed,  "Pay  J.  C.  or  order  on 
account  of  B.  G.  &  S.,"  it  was  held  to  operate  as  notice  that  J.  C. 
held  the  bill  in  trust  for  B.  G.  &  S.,  and  that  neither  he  nor  his  in- 
dorsees had  any  property  in  it.'^' 

§  698a.  Indorsee  of  restrictive  indorsee.— It  follows  from  these 

26.  White  v.  National  Bank,  102  U.  S.  (12  Otto)  658;  Treuttel  v.  Barandon, 
8  Taunt.  100,  5  Moore,  543;  Blaine  v.  Bourne,  11  R.  I.  1;  Mechanics'  Bank  v. 
Valley  Packing  Co.,  4  Mo.  App.  200;  City  Bank  of  Sherman  v.  Weiss,  61  Tex. 
331. 

27.  Continental  Nat.  Bank  v.  Weems,  69  Tex.  489. 

28.  Hook  V.  Pratt,  78  N.  Y.  371;  Claflin  v.  Wilson,  51  Iowa,  15;  Fawsett  v. 
National  Life  Ins.  Co.,  97  111.  9;  First  Nat.  Bank  v.  First  Nat.  Bank,  58  Ohio 
St.  207,  50  N.  E.  723,  65  Am.  St.  Rep.  748. 

29.  Johnston  v.  Schnabaum,  86  Ark.  82,  109  S.  W.  1163,  17  L.  R.  A.  (N.  S.) 
838,  126  Am.  St.  Rep.  1082. 

30.  Sigoumey  v.  Lloyd,  8  B.  &  C.  622  (15  Eng.  C.  L.),  5  Bing.  525,  3  Y.  &  J.  220. 

31.  Treuttel  v.  Barandon,  8  Taunt.  100. 

82.  Blaine  v.  Bourne,  11  R.  I.  1;  Hook  v.  Pratt,  78  N.  Y.  371. 


774  TRANSFER   BY   INDORSEMENT  §  698b 

principles  and  decisions  that  a  person  who  takes  a  bill  or  note,  the 
circulation  of  which  beyond  the  restrictive  indorsee  has  been  re- 
strained by  a  restrictive  direction  or  indorsement,  cannot  sue  the 
drawer  or  acceptor  upon  it,  but  holds  the  bill  or  the  money  received 
by  him  as  the  trustee  of  the  restraining  party,  and  is  liable  to  refund 
the  bill,  or  money  recovered  upon  it,  to  the  party  making  the  restric- 
tive indorsement.  The  subsequent  indorsee  in  such  a  case  can  have 
no  action  on  the  bill  or  note  if  it  is  dishonored;  and  if  instead  of  pay- 
ing the  money  to  the  principal  he  chooses  to  pay  it  to  the  intermediate 
agent,  he  becomes  responsible  for  its  misapplication,  and  so  does  any 
one  who  pays  the  money  to  him.^^ 

§  698b.  The  mere  mention  of  the  consideration  in  the  indorsement, 
as,  for  instance,  ''Pay  J.  S.,  or  order,  value  in  account  with  C.  D.;"  ^^ 
or,  "Pay  the  contents  to  A.  B.,  being  part  payment  of  goods  sold  him 
by  me,"  or,  "being  in  full  of  debt  due  to  him  by  me,"  ^^  would  not 
render  the  indorsement  restrictive. 

And  this  is  to  be  observed  about  restrictive  indorsements:  that 
whenever  the  beneficial  interest  in  the  proceeds  of  the  paper,  and 
the  title  to  it,  are  united  in  one  person,  any  indorsee  from  him  is 
entitled  to  protection  as  an  innocent  purchaser  of  commercial  paper 
exonerated  from  subjection  to  the  trust. ^^ 

33.  Byles  on  Bills  (Sharswood's  ed.)  [*153].  See  also  Story  on  Bills,  §211; 
White  V.  National  Bank,  102  U.  S.  (12  Otto)  658.  The  case  of  Evans  v.  Cramling- 
ton,  Corth.  5,  2  Vent.  296,  307,  Holt,  108.  Chitty,  Jr.,  on  Bills,  174  (A.  D.  1687), 
is  not  in  accordance  with  this  doctrine,  and  the  indorsee  of  a  restrictive  payee 
recovered  against  the  drawer  of  an  accepted  bill.  But  in  Sigourney  v.  Lloyd, 
8  B.  &  C.  622  (1828),  Lord  Tenterden,  C.  J.,  said  the  only  question  which  it  was 
necessary  to  decide  in  that  case  was  whether  the  bill,  being  in  trust  only  for  the 
use  of  Calvert,  was  liable  to  be  seized  under  the  extent  against  him;  and  he  added: 
"Such  an  indorsement  ('for  my  use')  will  not  prevent  the  indorsee  from  recover- 
ing the  money  from  the  acceptor  when  the  bill  becomes  due.  If  he  pay  it  to  his 
principal,  all  will  be  well;  but  the  indorsee  must  look  to  him  for  the  application 
of  it."  And  this  may  be  regarded  as  settled  law.  See  cases  supra.  Where  a 
restrictive  indorsement  appears  upon  the  paper,  the  right  of  the  drawer  or  in- 
dorser  may  be  made  effective  against  any  holder.  Murchison  Nat.  Bank  v. 
Dunn  Oil  Mills  Co.,  150  N.  C.  718,  64  S.  E.  885. 

34.  Buckley  v.  Jackson,  L.  R.,  3  Exch.  135. 

35.  Potts  V.  Reed,  6  Esp.  57;  Story  on  Bills,  §§  213, 214. 

36.  Fawsett  v.  National  Life  Ins.  Co.,  97  111.  19  (1880).  In  this  case  a  note 
payable  to  A.  F.  Fawsett  or  order  was  indorsed  in  blank  by  him  as  security  to 
a  bank  for  a  debt  due  to  it  by  an  insurance  company  in  which  he  was  a  stock- 
holder. G.  F.  Harding  became  subsequent  holder  of  the  note,  and  wrote  over 
Fawsett's  indorsement:  "Pay  to  Second  National  Bank  of  JMonmouth  for  col- 


§  698c  FORM   AND   VARIETIES   OF   INDORSEMENT  775 

§  698c.  Other  illustrations  of  restrictive  indorsements. — An  in- 
teresting case  as  to  the  effect  of  a  restrictive  indorsement  was  re- 
cently decided  by  the  United  States  Supreme  Court,  where  a  draft 
was  drawn  by  the  Silver  Reducing  Company,  payable  "to  the  order 
of  the  Miners'  National  Bank,  Georgetown,  Colorado,  payable  at  the 
Third  National  Bank,  New  York  City."  It  was  indorsed  by  the  payee 
as  follows:  "Pay  S.  V.  White,  or  order,  for  account  Miners'  National 
Bank,  Georgetown,  Colorado," — the  indorsee  paying  full  value  minus 
the  discount.  Though  accepted,  the  draft  was  not  paid  at  maturity, 
and  thereupon  White  sued  the  indorser.  The  court  considered  that 
the  indorsement  was  restrictive,  the  plain  meaning  being  that  the 
acceptor  was  to  pay  to  the  indorsee  for  the  use  of  the  indorser;  that 
the  language  was  without  ambiguity  and  needed  no  explanation  by 
parol  evidence  or  resort  to  usage;  and  that  it  did  not  purport  to  trans- 
fer the  title  of  the  paper  or  the  ownership  of  the  money  when  re- 
ceived. Accordingly  it  was  held  that  there  could  be  no  recovery  on 
the  draft;  but  both  parties,  the  indorser  and  indorsee,  thinking  there 
was  a  valid  sale  of  the  draft,  the  money  given  for  it  had  been  paid  with- 
out consideration,  and  by  mutual  mistake,  and  the  plaintiff  might 
recover  on  the  count  in  the  declaration  for  money  paid  to  the  use  of 
the  defendant.^'  In  Missouri,  A.  being  in  debt  to  V.,  asked  him  to 
draw  a  bill  for  the  amount,  which  he,  the  drawee,  would  raise  money 
upon  and  remit  proceeds.  V.  drew  the  bill,  payable  to  order  of  the 
F.  Bank,  whose  cashier  indorsed  it,  "Pay  to  H.,  or  order,  for  collec- 
tion for  account  of  F.  Bank."  A.  on  receiving  the  bill,  by  agreement 
with  the  M.  Bank,  erased  the  indorsement;  the  M.  Bank  discounted 
the  bill,  and  A.  remitted  proceeds  to  V.  In  an  action  by  the  M.  Bank 
against  B.  it  was  held  that  the  bank  could  not  recover,  because  the 
indorsement  was  restrictive,  and  destroyed  negotiability  of  the  bill; 
because  also  the  erasure  was  made  without  V.'s  consent;  and  proof 

of  the  parol  agreement  about  the  matter  was  inadmissible.^ 

lection  for  account  of  G.  F.  Harding,  executor  of  A.  C.  Harding,  deceased.'' 
Afterward  the  Second  National  Bank  of  IMonmouth  returned  the  note  to  G.  F. 
Harding  by  indorsement  without  recourse,  and  the  latter  transferred  them  to 
the  First  National  Bank  of  Chicago  by  the  indorsement,  "George  F.  Harding, 
executor  of  the  estate  of  Abner  C.  Harding,  deceased."  Craig,  J.,  said:  "When 
the  notes  were  indorsed  by  the  Monmouth  Bank  and  returned  to  Harding,  then 
the  beneficial  interest  and  title  were  united  in  him;  and  any  person  who  might 
purchase  from  him  and  receive  the  notes  indorsed,  is  entitled  to  protection  as  an 
innocent  purchaser  of  commercial  paper." 

37.  White  V.  National  Bank,  102  U.  S.  (12  Otto)  658  (1880).    See  also  Third 
Nat.  Bank  v.  National  Bank,  102  U.  S.  (12  Otto)  663. 

38.  Mechanics'  Bank  v.  Valley  Packing  Co.,  4  Mo.  App.  200,  70  Mo.  643. 


'j'jQ  TRANSFER   BY    INDORSEMENT  §  698d 

§  698d.  Indorsement  for  collection.— An  indorsement  on  draft, 
note  or  check:  "Pay  to  any  bank  or  banker  or  order,"  is  not  such  an 
indorsement  as  to  pass  the  title  to  the  instrument;  it  merely  authorizes 
any  bank  or  banker  into  whose  hands  it  might  come  to  collect  and 
remit  the  proceeds.^^  The  words  "for  collection,"  which  are  fre- 
quently inserted  in  indorsements  of  negotiable  instruments  put  in 
bank  to  be  collected,  make  the  indorsement  restrictive;  and  the 
indorser  may  show  that  he  was  not  the  owner  of  the  paper,  and  did 
not  mean  to  transfer  title  either  to  it  or  its  proceeds  when  collected.^" 
Such  an  indorsement  merely  makes  the  indorsee  agent  for  the  in- 
dorser to  collect  the  amount  due;  ^^  but  it  has  been  held  does  not 
invest  him  with  such  title  as  to  make  him  a  proper  party  plaintiff  in 
a  suit.^^ 


39.  Johnston  v.  Schnabaum,  86  Ark.  82,  109  S.  W.  1163,  17  L.  R.  A.  (N.  S.) 
838,  126  Am.  St.  Rep.  1082;  First  Nat.  Bank  of  Minneapolis  v.  City  Nat.  Bank  of 
Holyoke,  182  Mass.  130,  65  N.  E.  24,  94  Am.  St.  Rep.  637;  Nat.  Bank  of  Rolla  v. 
First  Nat.  Bank  of  Salem,  141  Mo.  App.  719,  125  S.  W.  573;  Bank  of  Indian 
Territory  v.  First  Nat.  Bank,  109  Mo.  App.  665,  83  S.  W.  537;  Bank  of  America  v. 
Waydell,  187  N.  Y.  115,  79  N.  E.  857;  Gregory  v.  Sturgis  Nat.  Bank  (Tex.  Civ. 
App.),  71  S.  W.  66. 

40.  Sweeney  v.  Easter,  1  WaU.  166;  Peck  v.  First  Nat.  Bank,  43  Fed.  357. 
See  ante,  §  336,  note  63,  where  the  various  decisions  involving  the  construction 
and  effect  of  restrictive  indorsements  for  purposes  of  collection  are  classified. 
Northwestern  Nat.  Bank  v.  Kansas  City  Bank,  107  Mo.  402,  17  S.  W.  982; 
Kempner  v.  Jordan,  3  Tex.  Civ.  App.  129,  22  S.  W.  1001. 

41.  Rock  County  Nat.  Bank  v.  Hollister,  21  Minn.  385.  See  §  1192;  Mechanics' , 
Bank  v.  Valley  Packing  Co.,  4  Mo.  App.  200,  70  Mo.  643;  Claflin  v.  Wilson,  51 
Iowa,  15;  First  Nat.  Bank  v.  Reno  County,  3  Fed.  257;  First  Nat.  Bank  v.  First 
Nat.  Bank,  58  Ohio  St.  207,  30  N.  E.  723,  65  Am.  St.  Rep.  748  (see  comment  on 
this  case,  §  672);  Boykin  v.  Bank,  118  N.  C.  566,  24  S.  E.  357;  Bank  v.  Bank, 
119  N.  C.  307,  25  S.  E.  971;  People's  Bank  v.  The  Jefferson  County  Savings 
Bank,  106  Ala.  .524,  17  So.  728,  54  Am.  St.  Rep.  59;  Branch  v.  National  Bank, 
60  Nebr.  470,  70  N.  W.  34;  Moody  v.  National  Bank,  19  Tex.  Civ.  App.  278,  46 
S.  W.  660.  Where  a  negotiable  promissory  note  is  indorsed  for  collection,  and 
Bent  to  the  place  of  payment,  the  person  receiving  such  note,  with  such  indorse- 
ment, has  no  power  to  sell  or  transfer  the  note;  his  power  is  limited  to  collection. 
People's  &  Drovers'  Bank  v.  Craig,  63  Ohio  St.  374,  59  N.  E.  102,  52  L.  R.  A. 
872,  81  Am.  St.  Rep.  639.  An  indorsement  "for  deposit"  to  the  credit  of  the 
indorser,  though  restricted  in  the  sense  that  it  disclosed  a  trust,  did  not  prevent 
the  bank  from  passing  the  legal  title  subject  to  the  trust  to  a  bank  or  person  ulti- 
mately called  upon  to  collect.  Haskell  v.  Avery,  181  Mass.  106,  63  N.  E.  15, 
92  Am.  St.  Rep.  401. 

42.  Berney  v.  Steiner  Bros.,  108  Ala.  Ill,  19  So.  806,  54  Am.  St.  Rep.  144; 
Rock  County  Nat.  Bank  v.  Hollister,  21  Minn.  385;  Meadowcraft  et  al.  v.  Walsh, 
15  Mont.  544,  39  Pac.  914;  Isehn  v.  Rowlands,  31  Hun,  468.    It  is  so  held  in  a 


§  699  FORM    AND   VARIETIES   OF    INDORSEMENT  777 

The  negotiability  of  an  instrument  having  been  restricted,  it  may 
be  revived  by  a  subsequent  indorsement.^^ 

If  the  paper  be  originally  negotiable,  an  indorsement,  in  order  to 
be  restrictive,  must  be  made  so  by  express  words,  and  if  it  simply 
direct  payment  to  a  certain  person  by  name,  without  adding  the 
words  "or  order,"  it  will  not  be  considered  a  restrictive  indorsement 
and  payable  to  him  only.^^ 

It  has  been  held  that  an  indorsement  to  a  bank  in  unrestricted 
terms,  but  intended  merely  for  collection,  will  not  make  the  indorser 
liable  to  a  subsequent  holder  under  the  indorsement  ''for  collection."  ^^ 

§699.  An  indorsement  "for  my  use,"  or  "for  collection" — ^not 
being  an  actual  transfer  of  the  amount— may  be  recalled  at  pleasure.*^ 
All  the  presumptions  are  against  restrictions  to  negotiable  paper,  and 
unless  clearly  restrictive  the  indorsements  will  be  held  otherwise.^^ 

State  in  which  every  action  must  be  brought  in  the  name  of  the  real  party  in 
interest,  with  certain  exceptions.  Bohart  Commission  Co.  v.  Buchingham,  62 
Kan.  658,  64  Pac.  627.  But  compare  Wilson  v.  Tolson,  79  Ga.  137;  Wintennute 
V.  Torrent  (Mich.),  47  N.  W.  359;  Rossi  v.  National  Bank,  71  Mo.  App.  150; 
Midland  Nat.  Bank  v.  Roll,  60  Mo.  App.  585;  Cummings  v.  Kohn,  12  Mo.  App. 
585.  See  vost,  §  1191.  It  would  be  otherwise  if  owner  indorses  paper  in  blank 
to  bank  for  collection  and  bank,  wrongfully  assuming  to  be  the  owner,  sells  and 
disposes  of  it  to  third  person  who  has  no  knowledge  of  want  of  ownership  in  the 
bank — in  that  event  third  person  is  invested  with  good  title  and  can  retain  pro- 
ceeds as  against  the  indorser  to  the  bank.  Coors  v.  German  Nat.  Bank,  14  Colo. 
202,  23  Pac.  328.  Where  parties  drew  a  draft  in  favor  of  themselves,  and  indorsed 
it  to  a  bank  for  collection,  with  a  letter  of  advice  stating  that  if  the  bank  desired 
to  discount  the  draft  on  the  same  terms  as  it  had  a  former  one  and  to  send  check 
for  the  amount,  it  could  have  the  paper,  and  upon  the  acceptance  of  the  draft  by 
the  drawee,  the  bank  discounted  the  same  as  requested  by  the  drawers,  and  sent 
them  a  check  for  the  amount  which  they  received  under  the  proposition  to  the 
bank  to  discount  the  bill.  The  bank  thereby  became  the  holder  and  owner  of  the 
bill  as  payee  for  value,  with  full  power  to  sue  for  and  recover  in  a  proper  action, 
in  case  same  was  dishonored.  See  Payne  v.  Albany  City  Nat.  Bank,  3  Ind.  App. 
214,  28  N.  E.  432. 

43.  Holmes  v.  Hooper,  1  Bay,  160. 

44.  Leavitt  v.  Putnam,  3  N.  Y.  494;  More  v.  Manning,  1  Comyns,  311;  Story 
on  Notes,  §  142;  Story  on  Bills,  §§  19,  56;  1  Parsons  on  Notes  and  Bills,  17. 

45.  Freeman's  Nat.  Bank  v.  National  Tube  W^orks  (Mass.),  24  N.  E. 
779. 

46.  Thompson  on  Bills  (Wilson's  ed.),  184;  Marius,  72  Daugherty  v.  East- 
burn,  74  Tex.  69,  citing  the  text.  But  an  indorsement  "for  discount  and  credit 
for  myself"  has  been  held  to  pass  good  title.  Ohphant  v.  Vannest,  58  N.  J.  L. 
162,  33  Atl.  382. 

47.  Potts  V.  Read,  G  Esp.  57;  Treuttel  v.  Barandon,  8  Taunt.  100, 


778  TRANSFER    BY    INDORSEMENT  §  700 


An  indorsement  "for  collection"  made  by  the  payee  is  canceled  by  his 
subsequent  indorsement  to  another  indorsee  for  value. ^^ 

It  is  clear  that  a  parol  agreement  on  the  indorsement  of  a  promis- 
sory note  to  the  effect  that  the  transfer  should  be  without  recourse 
upon  the  indorser,  cannot  be  interposed  as  a  defense  against  a  subse- 
quent bona  fide  holder  without  notice.  Nor  would  the  case  be  varied 
by  the  fact  that  it  was  transferred  to  such  holder  by  mere  deUvery, 
and  that  he  declared  on  the  prior  indorsement  as  though  made  to 
himself.'*^ 

§  700.  (6)  In  the  sixth  place,  as  to  qualified  indorsements  or 
indorsements  without  recourse. — An  indorsement  qualified  by  the 
words  "without  recourse,"  ''sans  recours,"  or  "at  the  indorsee's 
own  risk,"  renders  the  indorser  a  mere  assignor  of  the  title  to  the 
instrument,  and  relieves  him  of  all  responsibility  for  its  payment,^" 
though  not  from  certain  liabilities  which  have  been  already  enu- 
merated.^'    Such  an  indorsement  does  not  destroy  the  negotiability 

48.  Atkins  v.  Cobb,  56  Ga.  86. 

49.  Skinner  v.  Church,  36  Iowa,  91;  Hill  v.  Shields,  81  N.  C.  250.  See  post, 
§719. 

50.  Welch  V.  Lindo,  7  Cranch  S.  C.  159;  Chitty  on  Bills  [*235],  268;  Wood's, 
Byles  on  Bills  and  Notes  [*154],  266;  Wilson  v.  Codman's  Exrs.,  3  Cranch,  192; 
Rice  V.  Stearns,  3  Mass.  225;  Upham  v.  Prince,  12  Mass.  13;  Richardson  v. 
Lincoln,  5  Mete.  (Mass.)  201;  Mott  v.  Jicks,  1  Cow.  512;  Craft  v.  Fleming, 
56  Pa.  St.  (10  Wright)  140;  Lawrence  v.  Dobyn,  30  Mo.  196;  Fitchburg  Bank 
V.  Greenwood,  2  Allen,  434;  Cady  v.  Shepard,  12  Wis.  639;  Davenport  v.  Schram, 
9  Wis.  119;  Lyon  v.  Ewing,  17  Wis.  61;  Borden  v.  Clark,  26  Mich.  410.  An 
indorsement  "without  recourse"  of  a  purchase  money  note,  in  which  title  to  the 
property  for  which  it  was  given  is  reserved  in  the  payee,  does  not  carry  with  it 
the  title  to  such  property  to  the  indorsee.  Bradley  v.  Cassels,  117  Ga.  517,  43 
S.  E.  857.  An  indorsement  without  recourse  serves  merely  to  transfer  title,  as 
in  case  of  delivery  when  payable  to  bearer,  and  it  is  competent  to  show  by  parol 
that  the  purchaser  agreed  to  take  the  paper  at  his  own  risk,  absolutely,  and  thus 
relieve  the  vendor  of  all  liabihty.  Carroll  v.  Nodine,  41  Or.  412,  69  Pac.  51,  93 
Am.  St.  Rep.  743.  See  post,  §§  717,  et  seq.  Where  a  payee  in  certain  promissory 
notes,  which  were  secured  by  a  chattel  mortgage,  sold  and  transferred  such  notes, 
together  with  the  mortgage,  and  at  the  same  time  indorsed  upon  the  back  of  the 
notes  the  following:  "By  agreement  with  recourse  after  all  security  has  been 
exhausted,  waiving  protest,"  it  was  held  that  such  conditional  indorsement 
obligated  appellant  to  pay  only  such  balance  as  might  be  due  after  the  security 
has  been  exhausted,  and  that,  until  such  security  was  exhausted,  no  cause  of 
action  accrued  against  such  indorser,  and  therefore  that  he  could  not  be  joined 
with  the  mortgagors  as  a  defendant  in  an  action  to  foreclose  such  mortgage. 
Smith  V.  Bradley  (N.  D.),  112  N.  W.  1062. 

51.  See  ante,  §  670. 


§  700a  FORM    AND    VARIETIES    OF    INDORSEMENT  779 

of  the  note,^^  nor  deprive  the  indorsee  of  his  rights  as  an  innocent 
purchaser.^'  As  said  in  Virginia,^^  by  Green,  J.:  "An  indorsement 
without  recourse  is  not  out  of  the  due  course  of  trade.  The  security 
continues  negotiable,  notwithstanding  such  an  indorsement.  Nor 
does  such  an  indorsement  indicate,  in  any  case,  that  the  parties  to  it 
are  conscious  of  any  defect  in  the  security,  or  that  the  indorsee  does 
not  take  it  on  the  credit  of  the  other  party  or  parties  to  the  note.  On 
the  contrary,  he  takes  it  solely  on  their  credit,  and  the  indorser  only 
shows  thereby  that  he  is  unwilling  to  make  himself  responsible  for  the 
payment." 

Under  Negotiable  Instrument  statute. — The  statute  declares  that  a 
qualified  indorsement,  such  as  one  adding  to  the  indorser's  signature 
the  words  "without  recourse,"  or  any  words  of  similar  import,  does 
not  impair  the  negotiable  character  of  the  instrument.^^ 

§  700a.  Some  peculiar  cases ; "  without  recourse  "  must  be  clearly 
indicated. — If  a  party  promises  to  transfer  paper  due  him  by  in- 
dorsement, he  is  prima  facie  bound  to  put  on  it  his  unrestricted 
indorsement.^^  "  I  transfer  all  my  right  and  title  to  the  within  note, 
to  be  enjoyed  in  the  same  manner  as  may  have  been  by  me,"  has  been 
held  in  effect  an  mdorsement  without  recourse.^^  The  words  "with- 
out recourse,"  written  imder  the  signature  of  one  not  the  payee,  upon 
the  back  of  a  note,  are  regarded  as  surplus  and  ineffectual.^  In  New 
York,  where  the  firm  of  Brander  &  Hubbard  discontinued  business 
save  the  adjustment  and  liquidation  of  its  affairs,  and  was  succeeded 
by  a  new  firm  of  the  same  name  wherein  Hubbard  was  a  partner,  and 
the  latter  indorsed  a  note  on  account  of  the  old  firm  as  follows, 

52.  Consterdine  v.  Moore,  65  Neb.  291,  91  N.  W.  399,  96  N.  W.  1021,  101  Am. 
St.  Rep.  620;  Coddington  Sav.  Bank  v.  Anderson,  64  Nebr.  205,  89  N.  W.  787. 

53.  Neely  v.  Black,  80  Ark.  212,  96  S.  W.  984;  American  Sav.  Bank  &  Trust 
Co.  V.  Helgesen,  64  Wash.  54,  116  Pac.  837;  Dollar  Sav.  &  Trust  Co.  v.  Crawford, 
69  W.  Va.  109,  70  S.  E.  1089. 

64.  Lomax  v.  Picot,  2  Rand.  260.  See  also  Stevenson  v.  O'Neil,  71  111.  314; 
Kelly  V.  Whitney,  45  Wis.  117. 

55.  Appendix,  sec.  38.  Evans  v.  Freeman,  142  N.  C.  61,  54  S.  E.  847;  Elgm 
City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W.  1068;  Thorpe  v.  Mindeman, 
123  Wis.  149,  101  N.  W.  417,  68  L.  R.  A.  146,  107  Am.  St.  Rep.  1003. 

56.  Goodrich  v.  Stanton,  71  Conn.  426,  42  Atl.  74. 

57.  Halley  v.  Falconer,  32  Ala.  536.  See  ante,  §§  686,  688a.  But  in  Gale  v. 
Mayhew,  161  Mich.  96,  125  N.  W.  781,  29  L.  R.  A.  (N.  S.)  648,  it  was  held  that 
the  words  "I  hereby  assign  my  interest  in  this  note"  are  not  equivalent  to  an 
indorsement  without  recourse. 

68.  Childs  V.  Wyman,  44  Me.  433;  Lowell  v.  Gage,  38  Me.  35. 


780  TRANSFER    BY    INDORSEMENT  §  701 

"Brander  &  Hubbard,  old  firm  in  liquidation,"  it  was  insisted  that 
the  form  of  the  indorsement  showed  that  it  was  made  merely  for  the 
purpose  of  transferring  title,  and  precluded  the  idea  of  any  assump- 
tion of  liability  upon  the  indorsement.  But  it  was  held  otherwise, 
Grover,  J.,  saying:  "To  relieve  one  who  indorses  paper  from  hability 
as  such,  he  must  insert  in  the  contract  itself  words  clearly  expressing 
such  an  intention."  '"^ 

Where  the  payee  of  a  note  whose  name  was  Albert  N.  Stanton,  in- 
dorsed it  as  "Albert  Stanton,  without  recourse,"  and  wrote  his  name 
a  second  time  under  the  first  signature,  as  "Albert  N.  Stanton,"  it 
was  held  ambiguous.^" 

§  701.  In  Iowa,  where  a  promissory  note  was  indorsed  by  a  sub- 
sequent holder,  as  follows,  "I,  the  undersigned,  do  agree  that  I  will 
not  sell  or  dispose  of  a  note  given  by  R.  R.  P."  (the  maker  of  the  note 
in  question),  it  was  held  that  such  indorsement  did  not  destroy  the 
negotiability  of  the  note,  nor  render  it,  in  the  hands  of  a  holder  sub- 
sequently acquiring  it,  subject  to  defenses  existing  against  it,  of 
which  he  had  no  notice,  and  Cole,  J.,  said:  "The  agreement  not  to  sell 
or  dispose  of  the  note  was  then  an  independent  agreement,  upon 
breach  of  which,  if  made  for  a  consideration,  the  obligor  might  be 
liable;  but  it  could  not  have  the  effect  to  destroy  the  negotiabiUty 
of  the  note."  " 

In  Texas,  this  case  occurred:  The  executor  of  a  decedent,  acting 
in  his  fiduciary  capacity,  bought  out  the  interest  of  the  widow  in  the 
decedent's  estate,  and,  in  part  payment  for  it,  indorsed  to  her  certain 
overdue  notes  executed  by  third  parties  to  the  decedent  in  his  life- 
time. The  indorsement  was  in  blank,  and  was  signed  "  W.  W.,  execu- 
tor of  D.  W.,"  and  it  was  made  hi  pursuance  of  a  written  contract 
between  the  parties,  which  showed  that  the  widow  entirely  released 

59.  Fassin  v,  Hubbard,  55  N.  Y.  470  (1874). 

60.  In  Goodrich  v.  Stanton,  71  Conn.  426,  42  Atl.  74,  the  court,  per  Baldwin,  J., 
said:  "The  note  being  drawn  in  favor  of  the  defendant  by  the  name  of  Albert 
Stanton,  when  it  should  have  described  him  as  Albert  N.  Stanton,  there  would 
be  nothing  unusual  in  his  indorsing  it  with  either  or  with  each  name,  and  the 
writings  on  the  back  of  the  note  might,  if  unexplained,  be  read  as  constituting 
a  single  and  qualified  indorsement.  But  these  writings  would  express  the  mean- 
ing of  the  parties  with  equal  precision,  if,  after  the  completion  of  a  qualified 
indorsement  signed  by  the  defendant  by  the  name  given  him  in  the  note,  he  had 
put  his  proper  name  upon  it,  as  a  distinct  and  separate  act,  in  order  to  create 
the  unqualified  obligation  of  an  ordinary  indorser." 

61.  Leland  v.  Parriott,  35  Iowa,  454. 


§§  701ii,  702       FORM    AND    VARIETIES    OF    INDORSEMENT  781 

her  husband's  estate,  and  did  not  stipulate  for  any  indorsement  of 
the  notes,  or  for  recourse  on  any  one  besides  the  makers  of  them. 
Held,  that,  under  the  circumstances,  neither  the  executor  individually, 
nor  the  estate  he  represented,  was  Uable  on  the  indorsement,  which 
must  be  regarded  as  nothing  more  than  a  mere  transfer  of  the  right 
of  action  on  the  notes.^^ 

§  701a.  (7)  In  the  seventh  place,  as  to  joint  indorsements. — If  a 
bill  or  note  be  made  payable  to  several  persons  not  partners,  the  trans- 
fer can  only  be  made  by  a  joint  indorsement  of  all  of  them;^^  and 
as  Chitty  says,  "If  a  bill  has  been  transferred  to  several  persons  not 
in  partnership,  the  right  to  transfer  is  in  all  collectively,  and  not  in 
any  one  individually."  ^^  Where,  however,  one  of  two  or  more  joint 
payees  or  transferees  undertake  to  transfer  the  instrument,  the  extent 
of  the  transfer  will  depend  upon  the  nature  of  his  interest.  Such 
interest  whatever  it  is  passes  to  his  indorsee  or  assignee;  but  nothing 
beyond  that,  as  against  his  coparty,  unless  indeed  there  be  some  other 
element  in  the  transaction  in  the  nature  of  fraud,  agency  or  other 
circumstance,  modifying  the  rights  of  the  parties.®^  No  action  could 
be  maintained  on  the  indorsement  of  one  of  the  joint  parties,^^  the 
interest  passing  thereby  being  equitable  merely. 

But  one  of  two  joint  payees  may  transfer  and  indorse  his  interest 
on  a  note  to  the  other .^^ 

§  702.  Forms  of  indorsements. — The  following  are  samples  of 
the  different  modes  or  forms  of  indorsements; 

1.  Indorsement  in  full  by  payee  to  a  copartnership. 

"Pay  Charles  Davis  &  Co.,  or  order. 

"Abraham  Coles." 

2.  Absolute  indorsement  in  blank  by  indorsee: 

"Charles  Dans  &  Co." 

3.  Indorsement  upon  a  condition  precedent: 

"Pay  to  Edward  Francis,  or  order,   provided  he  arrives  at  twenty-one 
years  of  age. 

"Abraham  Coles." 


62.  Wade  v.  Wade,  36  Tex.  529. 

63.  See  ante,  §  684;  post,  §  704;  also  §  668;  Story  on  Bills,  §  197;  Edwards  on 
Bills,  254. 

64.  Chitty  on  Bills  (13th  Am.  ed.)  [*201],  232. 

65.  Brown  v.  Dickinson,  27  Gratt.  693,  Staples,  J. 

66.  Caverick  v.  Vickery,  2  Doug.  652;  Bond,  Admr.  v.  Holloway,  18  Ind.  App. 
251,  47  N.  E.  838,  citing  text. 

67.  See  ante,  §  684. 


782 


TRANSFER   BY  'INDORSEMENT  §  703 


4.  Indorsement  upon  a  condition  subsequent: 

"Pay  George  Henry,  or  order,  unless  before  maturity  I  notify  you  to  the 
contrary. 


5.  Indorsement  by  an  agent: 

"Per  procuration  Edward  Francis. 


or,— 

"As  agent  for  Edward  Francis. 

6.  Restrictve  indorsement. 

"Pay  to  Kenneth  Lampkin  only. 


or,— 

"Pay  to  Kenneth  Lampkin  for  my  use. 


"Edward  Francis." 
"Isaac  Jacobs." 
"Isaac  Jacobs." 
"Isaac  Jacobs." 
"Isaac  Jacobs." 


7.  Restrictive  indorsement  for  collection: 

"Pay  to  Central  National  Bank  for  CoUection. 

"Kenneth  Lampkin.". 

8.  Indorsement  without  recourse: 

"Moses  Newcomb, 

toithotU  recourse." 

or, — 

"Moses  Newcomb,  with  intent  to  transfer  title  only,  and  not  to  incur  liability 

as  indorser."  ^ 

9.  Indorsement  in  full,  with  direction  au  besoin: 

"Pay  to  Richard  Steele,  or  order. 

"Oliver  Perry." 

"Au  besoin, 

"No.  100  Wall.  St." 

10.  Indorsement  waiving  protest: 

"Return  without  protest,"  or,  "waiving  protest. 

"Thomas  Urquhart." 

§  703.  (8)  In  the  eighth  place,  as  to  successive  indorsements.— 
When  several  persons  indorse  a  bill  or  negotiable  note  in  succession, 
the  legal  effect  is  to  subject  them  as  to  each  other  in  the  order  they 
indorse.  The  indorsement  imports  a  several  and  successive,  and  not 
a  jouit  obligation,  whether  the  mdorsements  be  made  for  accommo- 
dation or  for  value  received,  imless  there  be  an  agreement  aliunde 
different  from  that  evidenced  by  the  indorsements.  When  the  suc- 
cessive indorsements  are  for  accommodation  of  other  parties,  the 

68.  Where  a  party  indorsed  a  note  merely  to  transfer  title  and  enable  a  third 
party  to  collect  it,  omitting  the  restrictive  words  "without  recourse,"  it  was  held 
that  there  was  an  implied  contract  on  the  part  of  such  third  party  (to  whom  the 
paper  belonged)  to  reimburse  him  when  compelled  to  pay  the  note  by  an  innocent 
holder.     Abraham  v.  Mitchell,  112  Pa.  St.  232,  3  Atl.  830. 


§  703  FORM    AND    VARIETIES    OF    INDORSEMENT  783 

indorsers  for  accommodation  may  make  an  agreement  to  be  joint Ij' 
and  equally  bound,  but  whoever  asserts  such  an  agreement  must 
prove  it.  In  cases,  therefore,  in  which  no  such  agreement  is  proved, 
the  indorsers  are  not  bound  to  contribution  amongst  themselves,  but 
each  and  all  are  liable  to  those  who  succeed  them. 

This  doctrine  rests  upon  very  clear  and  satisfactory  principles. 
Each  indorser  places  his  name  upon  the  instrument,  whether  for 
accommodation  or  otherwise,  knowing  that  he  renders  himself  con- 
ditionally hable  to  every  subsequent  and  successive  indorsee;  and 
that  he  has  his  recourse  against  every  antecedent  party,  for  the  whole 
amount  which  he  may  be  obliged  to  pay.  With  such  knowledge  of 
his  liabilities  and  his  remedies  he  voluntarily  assumes  his  relation  to 
the  instrument  with  others  who  assume  a  different  relation,  accom- 
panied by  increased  or  diminished  risk  of  loss.  And  contribution 
does  not  arise  between  such  successive  indorsers  for  the  accommoda- 
tion of  another  party  by  operation  of  law,  but  only  when  established 
by  special  agreement.^^    Nor  is  there  any  liability  for  contribution 

69.  Phillips  V.  Preston,  5  How.  278;  McCarty  v.  Roots,  21  How.  432;  Rey  v. 
Simpson,  22  How.  350;  McDonald  v.  Magruder,  3  Pet.  470;  Gillespie  v.  Campbell, 
39  Fed.  724;  Moody  v.  Findley,  43  Ala.  167;  Kirkner  v.  Conklin,  40  Conn.  81; 
SjTne  V.  Brown,  19  La.  Ann.  147;  Gore  v.  Wilson,  40  Ind.  206;  Reinhart.  v.  Schall, 
69  Md.  355,  citing  the  text;  Wescott  v.  Stevens,  85  Me.  325,  27  Atl.  146;  Woohdge 
V.  Wiggin,  62  Me.  568;  Smith  v.  Merrill,  54  Me.  48;  Enterprise  Brewing  Co.  v. 
Canning,  210  Mass.  285,  96  N.  E.  673;  Clapp  v.  Rice,  13  Gray,  403;  Weston  v. 
Chamberlain,  7  Cush.  404;  Sweet  v.  McAlister,  4  Allen,  355;  Shaw  v.  Knox,  98 
]Mass.  214;  Woodward  v.  Severance,  7  Allen,  340;  Harrah  v.  Doherty,  111  Mich. 
175,  69  N.W  .  242,  citing  text;  Farwell  v.  Ensign,  66  Mich.  602;  Hillegas  v.  Ste- 
phenson, 75  Mo.  118;  McCune  v.  Belt,  45  Mo.  174;  Paul  v.  Rider,  58  N.  H.  119; 
Polhemus  v.  Prudential  Realty  Corp.,  74  N.  J.  L.  570,  67  Atl.  303;  Easterly  v. 
Barber,  66  N.  Y.  433;  Kelly  v.  Burroughs,  102  N.  Y.  95;  Da\is  v.  Morgan,  64 
N.  C.  576;  Russ  v.  Sadler,  197  Pa.  St.  51,  46  Atl.  903;  Ross  v.  Espy,  66  Pa.  St. 
481;  Crompton  v.  Spencer,  20  R.  I.  330,  38  Atl.  1002;  Sloan  v.  Gibbes,  56  S.  C. 
480,  35  S.  E.  408,  76  Am.  Ct.  Rep.  559,  citmg  text;  Chalmers  v.  McMurdo,  5 
Munf.  552  {contra),  Storall  v.  Border  Grange  Bank,  78  Va.  194,  obiter,  citing  Daniel 
V.  McRae,  2  Hawks  (N.  C),  590—;  Farmers  Bank  v.  Vanmeter,  4  Rand.  553; 
Bank  of  the  United  States  v.  Beime,  1  Gratt.  265;  Hogue  v.  Davis,  8  Gratt.  4; 
Kiel  v.  Choate,  92  Wis.  517,  67  N.  W.  431,  53  Am.  St.  Rep.  936,  citing  text. 
In  a  New  Jersey  case,  (Johnson  v.  Ramsay,  14  Vroom  [42  N.  J.  L.],  the  second 
indorser  sued  the  payee  who  was  first  indorser,  and  the  latter  pleaded  that  there 
was  an  agreement  between  them  at  the  time  of  putting  their  names  on  the  paper 
that  such  indorsement  should  constitute  a  joint  and  not  a  successive  liability. 
Held  inadmissible  on  the  ground  that  an  indorsement  is  a  written  contract  having 
a  complete  import  and  must  speak  for  itself.  No  distinct  precedent  applying  that 
principle  to  such  a  case  was  quoted,  and  the  decision  is  not  consistent  with  the 
general  tenor  of  the  authorities.    In  Givens  v.  Merchants'  Nat.  Bank,  85  111.  443, 


784  TRANSFER   BY    INDORSEMENT  §  703 

on  the  part  of  indorsers  to  a  surety  of  the  note  upon  it  when  it  came 
to  themJ"  Where  there  are  two  accommodation  indorsers  of  a  note, 
and  the  maker  provides  the  second  indorser  with  the  means  to  make 
payment,  a  trust  is  created  in  favor  of  the  first  indorser  as  well  as  the 
holder  to  have  the  fund  so  applied,  and  the  first  indorser  may  sue  to 

enforce  it/^ 

where,  after  the  payee's  name  indorsed  in  the  note,  there  were  the  names  of  two 
other  parties  indorsed  in  blank,  the  court  said  that  this,  "instead  of  raising  the 
presumption  that  the  undertaking  was  joint,  authorizes  the  presumption  that 
it  was  not  joint,  but  that  of  successive  indorsers."  To  the  same  effect  see  Hale  v, 
Danforth,  46  Wis.  555.  As  between  a  first  and  second  indorser,  the  first  indorser  is 
ultimately  liable  for  the  payment  of  the  note,  but  he  is  not  primarily  Uable  for  it  as 
between  himself  and  subsequent  indorsers,  in  the  sense  that,  as  between  a  princi- 
pal and  surety,  the  principal  is  primarily  Hable;  it  is  not  the  duty  of  the  first 
indorser,  as  between  himself  and  a  subsequent  indorser,  to  pay  in  the  first  instance. 
Bank  of  America  v.  Wilson,  186  Mass.  214,  71  N.  E.  312,  104  Am.  St.  Rep.  570. 
Where  a  note  was  indorsed  by  three  persons  before  delivery  to  the  payee  and  for 
his  accommodation,  while  they  are  joint  makers  as  to  the  holder,  yet  as  between 
themselves  they  are  liable  in  the  order  of  their  indorsement,  and  the  first  indorser 
is  Uable  for  the  whole  amount  of  the  note,  and,  in  the  absence  of  an  agreement  to 
the  contrary,  the  other  indorsers  are  not  liable  to  contribute  anything  to  him. 
Porter  v.  Huie,  94  Ark.  333, 126  S.  W.  1069,  citing  text.  See  post,  §  713a.  Where  a 
statute  provides  that  "whenever  the  principal  maker  of  any  note  shall  die,  if  the 
creditor  shall  not,  within  two  years  after  the  granting  of  letters  testamentary  or  of 
administration,  present  the  same  to  the  proper  court  for  allowance,  the  sureties 
thereon  shall  be  released  from  the  payment  thereof,"  etc.,  the  term  "principal 
maker"  refers  to  the  person  who  would  have  been  the  party  to  the  note  had  there 
been  no  sureties  or  indorsers,  and  several  indorsers  of  a  note  for  the  accommoda- 
tion of  the  principal  cannot  agree  among  themselves  by  parol  that  the  indorsers 
in  their  order  shall  successively  be  principal  makers  of  the  note  as  to  their  subse-. 
quent  indorsers  so  as  to  require  the  holder,  under  the  above  statute,  to  follow  the 
estates  of  each  in  the  order  named,  in  case  of  death,  or  lose  his  debt  or  release  the 
sureties.  Tinker  v.  Cathin,  205  III.  108,  68  N.  E.  773.  But  in  Bunker  v.  Osbom, 
132  Cal.  480,  64  Pac.  853,  it  was  held  that  when  two  indorsers  of  a  corporation 
note  jointly  indorsed  the  note,  the  presumption  arising  from  that  fact  is  that 
they  were  equally  liable,  and  as  between  themselves  liable  to  contribution.  Where 
a  note  payable  to  the  order  of  the  maker  was  signed  by  several  accommodation 
indorsers  and  then  by  the  maker  himself,  and  there  was  protest  for  nonpayment 
and  notice  of  protest,  the  possession  of  the  note  by  one  of  the  indorsers  after 
protest  and  notice  of  dishonor  justified  the  conclusion  that  he  had  performed 
his  contract  as  indorser,  with  the  holder,  by  taking  up  the  notes,  and  was  entitled 
to  call  upon  a  prior  indorser  to  pay  him.  Hill  v.  Buchanan,  71  N.  J.  L.  301,  60 
Atl.  952.  The  fact  that  in  a  series  of  renewals  of  a  note  the  order  of  the  indorse- 
ments was  changed  does  not  raise  a  presumption  that  the  indorsers  jointly  agreed 
to  guarantee  the  note.  Enterprise  Brewing  Co.  v.  Canning,  96  N.  E.  673,  210 
Mass.  285. 

70.  Armstrong  v.  Harshman,  61  Ind.  52. 

71.  Price  v.  Trusdell,  28  N.  J.  Eq.  20. 


§  703a  FORM    AND    VARIETIES   OF   INDORSEMENT  785 

Under  Negotiable  Instrument  statute. — With  respect  to  the  sections 
of  the  statute  defining  the  liabiHties  of  the  parties  and  the  require- 
ments for  presentment  for  payment/^  it  has  been  said  that  they  show 
an  intention  by  the  legislature  to  leave  the  order  of  liability  among 
those  whose  names  are  on  the  instrument  to  determination  by  any 
competent  evidence.'^ 

§  703a.  The  relations  of  the  parties,  who  become  successive  in- 
dorsers  for  the  accommodation  of  a  stranger,  to  themselves,  and  to 
the  debt  evidenced  by  the  paper,  may  have  a  bearing  upon  the  ques- 
tion of  their  liabiUty  as  between  themselves.  In  an  English  case, 
before  the  House  of  Lords  and  Privy  Council,  it  appeared  that  the 
directors  of  a  company  mutually  agreed  with  each  other  to  become 
sureties  to  a  bank  for  the  same  debts  of  the  company,  and  thereupon 
successively  indorsed  three  promissory  notes  of  the  company.  It  was 
held  that  they  were  entitled  to  contribution  inter  se,  and  were  not 
liable  to  indemnify  each  other  according  to  the  oriority  of  their 
indorsements^^ 

72.  Appendix,  sees.  110  to  148. 

73.  Haddock,  Blanchard  &  Co.  v.  Haddock,  192  N.  Y.  499,  85  N.  E.  682, 
19  L.  R.  A.  (N.  S.)  136. 

74.  McDonald  v.  Whitfield,  8  App.  Cas.  733,  36  Eng.  Rep.  34  (distinguish- 
ing Steele  v.  McKinlay,  5  App.  Cas.  754,  34  Eng.  Rep.  99),  Lord  Watson  saying: 
"In  the  present  case  the  directors  of  the  St.  Johns'  Stone  China-ware  Company, 
one  and  all  agreed  with  each  other  to  become  sureties  to  the  bank  for  the  same 
debts  of  the  company.  That  was  the  substance  of  the  agreement  to  which  they 
came  on  the  5th  of  August,  1875,  and  the  fact  that  the  machinery  which  they 
adopted  for  carrying  out  their  agreement  was  the  making  of  three  promissory 
notes  by  the  company,  payable  to  the  appellant,  and  successively  indorsed  by 
him  and  his  codirectors,  cannot  have  in  law  the  effect  of  altering  the  mutual 
relations  established  by  that  agreement,  and  of  substituting  for  them  the  liabilities 
of  proper  indorsers  of  an  ordinary  commercial  note.  *  *  *  The  respondent's 
counsel,  in  the  course  of  argument,  referred  to  the  case  of  Jansen  v.  Paxton,  28 
Up.  Can.  Com.  PI.  439,  decided  by  the  Court  of  Error  and  Appeal  in  Upper 
Canada,  and  to  three  other  decisions  of  the  Canadian  courts.  With  the  same  view 
they  cited  the  case  of  Macdonald  v.  Magruder,  3  Pet.  470,  8  Curt.  491,  decided 
in  1830  by  the  Supreme  Court  of  the  United  States.  These  authorities  were 
relied  upon  as  establishing  the  doctrine  that  where  several  persons  mutually  agree 
to  give  then-  indorsements  on  a  bill  as  securities  for  the  holder,  who  wishes  to 
discount  it,  they  must  be  held  to  have  undertaken  liability  to  each  other,  not  as 
sureties  for  the  same  debt,  and  so  jointly  hable  in  contribution,  but  as  proper 
indorsers,  hable  to  indemnify  each  other  successively,  according  to  the  priority 
of  their  indorsements,  unless  it  had  been  specially  stipulated  that  they  were  to  be 
liable  as  cosureties.  It  is  unnecessary  to  enter  mto  a  minute  criticism  of  the  caSes. 
Some  of  them  are,  in  their  circumstances,  distinguishable  from  the  present  case; 

50 


786  TRANSFER   BY    INDORSEMENT  §    704 

So  in  Maine,  where  three  persons  severally  promised  to  indorse 
a  note  made  by  the  maker  and  payable  to  his  own  order  and  signed 
it  successively  as  they  happened  to  be  found,  it  was  held  that  they 
intended  to  divide  the  risk  and  were  liable  amongst  themselves  for 
contribution.'^ 

And  where  two  officers  of  a  corporation  individually  indorsed  a 
note  of  the  corporation,  blank  as  the  payee,  before  its  discount  for  the 
benefit  of  the  corporation,  they  are  liable  as  joint  makers,  in  the 
absence  of  any  agreement  that  they  should  be  considered  indorsers, 
and  when  liable  as  joint  makers,  the  first  signer,  having  paid  the  note, 
may  recover  from  his  co-signer  half  of  the  amount  paid  on  the  note.'^ 

§  704.  Actual  date  of  indorsement;  presumptions  as  to  priority  of 
indorsers. — The  indorser  is  not  necessarily  bound  according  to 
the  actual  date  of  indorsation,  but  according  to  the  contract;  and 
if  it  appear  that  the  instrument  was  indorsed  by  one  party  with  the 
agreement  that  another  should  become  prior  indorser,  the  latter  will 

but  there  are  undoubtedly  to  be  found  in  the  opinions  of  the  learned  judges  by 
whom  they  were  decided,  dicta  which  seem  to  recognize  the  doctrine  contended 
for  by  the  respondent.  If  they  are  to  be  regarded  as  authorities  to  that  effect, 
their  Lordships  caimot  accept  these  cases  as  conclusive  of  the  law  of  England,  or 
as  precedents  which  ought  to  govern  the  decision  of  this  appeal.  The  Civil  Code 
of  Lower  Canada  (art.  2340)  enacts  that,  'in  all  matters  relating  to  bills  of  ex- 
change not  provided  for  in  the  Code,  recourse  must  be  had  to  the  laws  of  England 
in  force  on  the  30th  day  of  May,  1849.'  By  article  2346  of  the  Code,  the  same  law 
is  made  applicable  to  promissory  notes  as  to  bills  of  exchange,  in  so  far  as  regards 
the  liabiUty  of  the  parties;  and  seeing  that  the  Code  makes  no  provision  regarding 
the  question  raised  between  the  appellant  and  the  respondent,  that  question 
must,  in  the  opinion  of  their  Lordships,  be  decided  according  to  the  law  of  Eng- 
land, as  laid  down  by  the  Court  of  Common  Pleas  in  Reynolds  v.  Wheeler,  10 
C.  B.  (N.  S.)  561."  See  also  Middleton  v.  McCarter,  2  Mackey,  420;  Wescott  v. 
Stevens,  85  Me.  329,  27  Atl.  146;  Crompton  v.  Spencer,  20  R.  I.  330,  38  Atl.  1002. 

76.  Hagerthy  v.  Phillips,  83  Me.  336,  22  Atl.  223. 

76.  Keyser  v.  Warfield,  100  Md.  72,  59  Atl.  189.  Under  sections  3116  and  3117, 
Cal.  Civ.  Code,  providing  that  indorsers  impliedly  warrant  that  the  note  "is  in 
all  respects  what  it  purports  to  be"  and  "that  the  signatures  of  all  prior  parties 
are  bringing  upon  them,"  where  one  of  two  joint  indorsers  of  a  corporation  note 
has  been  compelled  to  pay  it,  he  may  recover  from  his  co-indorser  in  an  action  for 
contribution  whether  the  note  was  legally  executed  by  the  corporation  or  not, 
and  whether  the  indorsement  was  for  the  accommodation  of  the  corporation  or 
not.  Bunker  v.  Osborn,  132  Cal.  480,  64  Pac.  853.  Where  there  was  an  under- 
standing between  the  directors  of  a  corporation,  that  they  should  indorse  the  notes 
for  the  benefit  of  the  corporation,  and  it  was  intended  and  understood  that  the 
indorsements  were  to  be  joint,  and  not  several,  the  indorsers  were,  as  between 
themselves,  cosureties.    Weeks  v.  Parsons,  176  Mass.  570,  58  N.  E.  157. 


^  iOi  FORM   AND    VARIETIES   OF   INDORSEMENT  787 

be  held  responsible  first  in  point  of  contract  though  second  in  point 
of  time." 

Where  a  note  is  indorsed  by  payee  and  by  a  third  party,  the  legal 
inference  is  that  the  payee  is  prior  indorser,  but  it  may  be  proved 
otherwise  by  parol  evidenceJ^  And  if  there  be  any  mistake  by  which 
one  indorser  signs  before  another,  the  true  intention  of  the  parties 
may,  as  between  themselves,  be  shown  by  parol  evidence,  and  cor- 
rected in  equity ;  ^^  or  in  a  suit  against  the  indorser  who  appears  as 
prior,  he  may  show  that  he  signed  above  the  second  indorser  unin- 
tentionally, and  if  he  has  paid  part  of  the  amount  to  the  holder,  he 
may  recover  it  back  from  the  indorser,  apparently  second,  but  really 
prior.^° 

The  parties  will  not  be  regarded  as  successive  indorsers  where  they 
are  joint  payees  of  a  note,  and  themselves  indorse  it.  In  such  a  case 
it  matters  not  which  signs  first,  the  note  beuig  payable  only  to  their 
joint  order,  and  transferable  only  by  their  joint  act,  they  will  be  con- 
sidered joint  indorsers.^^ 

Under  Negotiable  Instrument  statute. — The  statute  provides  that, 
as  respects  one  another,  indorsers  are  liable  prima  facie  in  the  order  in 
which  they  indorse,  but  evidence  is  admissible  to  show  that  as  between 
or  among  themselves  they  have  agreed  otherwise.^^  Under  the  statute 
the  note  is  only  prima  fade  evidence  of  the  order  of  liability,  and 
parol  evidence  is  admissible,  even  between  indorsers,  to  show  that 


77.  Chalmers  v.  McMurdo,  5  Munf.  252;  Slack  v.  Kirk,  67  Pa.  St.  380;  Kiel  v. 
Choate,  92  Wis.  517,  67  N.  W.  431,  53  Am.  St.  Rep.  936,  citing  text. 

78.  Slagle  v.  Rust,  4  Gratt.  274;  Caddy  v.  Sheppard,  12  Wis.  639;  Blakeslee 
V.  Hewitt,  44  N.  W.  1105;  Lewis  v.  Monahan,  173  Mass.  122,  53  N.  E.  150.  In 
North  Carolina  held:  Where  A.  indorses  a  note  for  the  maker,  and  subsequently, 
but  before  it  was  discounted,  F.  indorsed  it  and  A.  paid  the  note,  that  was  a  co- 
surety and  the  doctrine  of  contribution  apphes  for  A.'s  benefit.  Atwater  v. 
Farthing,  118  N.  C.  388,  24  S.  E.  736. 

79.  Reinhart  v.  Schall,  69  Md.  355;  Cahal  v.  Frierson,  3  Humphr.  411;  Brock- 
way  V.  Comparree,  11  Humphr.  355.  A  third  indorser  having  indorsed  a  note  on 
the  faith  of  the  solvency  of  a  prior  indorser,  and  on  a  renewal  of  the  note  the  order 
of  the  indorsements  having  been  changed  without  the  consent  of  this  thu-d  m- 
dorser,  who  for  the  convenience  of  renewing  the  note,  left  his  blank  indorsement 
with  the  makers,  a  court  of  equity  will  reUeve  him  as  against  the  indorser  who 
should  have  preceded  him.  So  held  in  Slagle  v.  Rust,  4  Gratt.  274;  Slagle  v.  Bank 
of  VaUey,  4  Gratt.  274. 

80.  Slack  V.  Kirk,  67  Pa.  St.  380. 

81.  Lane  v.  Stacy,  8  Allen,  41.  See  Culver  v.  Leovy,  19  La.  Ann.  202,  and 
ante,  §§  70,  684;  Russ  v.  Sadler,  197  Pa.  St.  51,  46  Atl.  903. 

82.  Appendix,  sec.  68. 


788  TRANSFER    BY    INDORSEMENT  §§  705,  706 

between  themselves  they  have  agreed  as  to  the  liabiUty  otherwise 
than  as  appears  from  the  order  of  their  indorsement  upon  the  note,^^ 
though  it  is  not  necessary  that  there  shall  be  proof  of  an  actual  formal 
contract.^^  And  so,  evidence  is  admissible  to  show  that  each  has 
agreed  to  be  liable  for  the  principal  debtor  alone,  and  therefore  that 
all  indorsers  are  cosureties  with  each  other  and  liable  to  contribu- 
tion.*'' But  in  the  absence  of  any  agreement  among  accommodation 
indorsers,  the  law  fixes  their  liability  in  accordance  with  the  order  of 
the  names  on  the  paper,  and  an  indorser  who  pays  a  bill  or  note  has 
recourse  against  each  prior  indorser  for  reimbursement.*^ 

§  705.  (9)  In  the  ninth  place,  as  to  irregular  intervening  in- 
dorsements.— There  are  some  cases  of  irregular  indorsements  that 
call  for  attention.  Thus,  suppose  a  bill  be  indorsed  specially  to  A., 
and  then,  before  A.'s  indorsement,  there  appears  the  indorsement 
of  B.  In  such  a  case,  Alderson,  B.,  said:  "The  indorsement  only 
operates  as  against  the  party  making  it,  and  then  as  a  fresh  draw- 
ing."*^ Upon  such  an  indorsement  of  a  note,  the  party  cannot  be 
sued  as  a  maker.  Littledale,  J.,  said,  in  such  a  case:  "It  may  be 
correct  to  say  that  an  indorsement  of  a  bill  is  in  the  nature  of  a  new 
drawing.  But  supposing  the  indorser  of  a  bill  to  be  strictly  in  the 
situation  of  a  drawer,  it  does  not  follow  that  the  indorser  of  a  note  is 
a  maker."  It  was  hold,  therefore,  that  the  party  must  be  sued  as  an 
indorser;  but  that  a  prior  party  could  not  be  sued  at  all,  as  a  link  in 
the  chain  of  title  was  lacking.** 

§  706.  In  the  United  States  Supreme  Court  it  has  been  held  that 
where  a  promissory  note  was  payable  to  the  order  of  several  persons, 
the  name  of  one  of  whom  was  inserted  by  mistake,  or  inadvertently 
left  on  when  the  note  was  indorsed  and  delivered  by  the  real  payees, 

83.  Morgan  v.  Thompson,  72  N.  .J.  L.  244,  62  All.  410;  Wilson  v.  Hendee,  74 
N.J.  L.640,66Atl.  413. 

84.  George  v.  Bacon,  123  N.  Y.  S.  103,  138  App.  Div.  208,  holding  that  where 
there  was  an  agreement  for  equal  liability  and  one  has  actually  paid  the  note,  he  is 
entitled  to  contribution. 

86.  Harris  v.  .Jones  (N.  D.),  136  N.  W.  1080,  holding  further  that  the  burden  is 
upon  the  indorser  whose  name  appears  after  that  of  another  indorser  to  show  that 
they  were  in  fact  sureties  for  the  maker. 

86.  In  re  McCord,  174  Fed.  72. 

87.  Penny  v.  Innes,  1  Cromp.,  M.  &  R.  439,  5  Tyrw.  107.  See  Birchard  v. 
Bartlett,  14  Mass.  279. 

88.  Gwinnell  v.  Herbert,  5  Ad.  &  El.  430  (31  Eng.  C.  L.). 


§  707  INDORSEE,    MAKER,    OR   GUARANTOR  789 

one  of  whom  was  also  the  maker  of  the  note,  the  indorsee  had  a  right 
to  recover  upon  the  note,  although  the  names  of  all  the  payees  were 
not  upon  the  indorsement,  and  had  a  right  also  to  prove  the  facts  by 
evidence.^^  In  Michigan,  where  G.  made  a  note  payable  to  the  order 
of  J.,  and  while  it  was  unindorsed  by  G.  procured  M.  to  indorse  it, 
agreeing  to  procure  the  indorsement  of  G.,  the  payee,  before  nego- 
tiating it;  and  then  transferred  it  to  the  plaintiff  without  procuring 
J.'s  indorsement,  it  was  held  that  M.  was  not  bound  as  indorser.^ 


SECTION   IV 

WHETHER   OR   NOT  THE   PARTY   IS   INDORSER,    MAKER,    OR  GUARANTOR 

§  707.  When  indorsement  is  regular  and  successive. — There  is 
no  doubt  that,  if  a  note  be  made  payable  to  the  order  of  the  payee, 
and  is  indorsed  by  him,  that  his  liability  will  be  that  of  an  indorser, 
and  not  that  of  a  maker .^'  If  subsequent  to  his  name,  there  appears 
the  name  of  another  person  indorsed  upon  it,  such  person  cannot  be 
regarded  in  any  other  light  than  as  indorser,  and  no  parol  evidence 
will  be  admissible,  as  against  a  bona  fide  holder  without  notice,  to 
show  that  he  intended  to  bind  himself  in  a  different  character.  This 
view  of  the  law  rests  upon  the  fact  that  there  is  no  ambiguity  in  the 
position  of  his  name,  and  none  in  his  relation  to  subsequent  parties 
to  the  instrument.  Upon  its  face  the  instrument  evidences  that  he 
intended  to  bind  himself  as  an  indorser,  for  it  purports  to  have  been 
regularly  transferred  to  him,  by  the  payee's  indorsement,  and  by  him 
transferred,  by  his  own  indorsement,  to  the  indorsee.  And  unless  he 
has  indicated  an  intention  to  become  liable  as  a  surety  or  guarantor, 
by  some  expression  to  that  effect,  he  will  very  clearly  be  bound  as  an 

89.  Pease  v.  Dwight,  6  How.  190. 

90.  Gibson  v.  Miller,  29  Mich.  355  (1874),  Graves,  C.  J.:  "In  receiving  it 
as  it  then  was,  and  without  indorsement  by  the  payee,  he  (the  holder)  accepted 
paper  which  he  was  bound  to  know  would  be  open  in  his  hands,  when  thus  ir- 
regularly taken,  to  any  defense  of  the  nature  of  that  made  here,  which  Miller 
might  make  to  it."  See  also  Morton  v.  Preston,  18  Mich.  60;  Lancaster  Nat. 
Bank  v.  Taylor,  100  Mass.  18;  Whistler  v.  Forster,  18  C.  B.  (N.  S.)  248,  1  Am. 
Rep.  71. 

91.  Finley  v.  Green,  85  111.  535,  Breese,  J.:  "He  being  the  payee  of  the  note 
could  not  at  the  same  time  be  the  maker  and  be  bound  by  a  promise  to  pay  him- 
self." Coon  v.  Pruden,  25  Minn.  105;  Snell  v.  Northside  Mill  Co.,  89  111.  582; 
ante,  §  704;  Lilly  v.  Barker,  88  N.  C.  154,  citing  the  text. 


i^qO  transfer   by   indorsement  §§  707a,  707b 

indorser,  and  be  entitled  to  require  demand  and  notice  as  a  condition 
precedent  to  his  determinate  liability.^-  The  form  of  the  contract 
must  at  least  prima  facie  determine  its  construction.^^ 

§  707a.  Note  made  payable  to  maker's  order  or  to  bearer,  and 
indorsed.— Any  person  who  puts  his  name  on  the  back  of  a  note 
payable  to  the  order  of  the  maker  or  in  terms  to  the  bearer,  under 
the  indorsement  of  the  maker,  becomes  an  indorser  only.^^  Such  a 
case  as  this,  as  said  by  Bigelow,  J.,  in  Massachusetts,^^  in  a  case  where 
the  note  was  payable  to  and  indorsed  by  the  maker,  "does  not  fall 
within  that  anomalous  class  of  cases  where  a  third  person,  neither 
maker  nor  payee,  puts  his  name  on  the  back  of  a  note  before  its  in- 
dorsement by  the  payee,  but  is  the  ordinary  case  of  an  indorsement 
of  a  note  payable  to  bearer,  the  effect  of  which  cannot  be  varied  or 
controlled  by  parol  proof." 

§  707b.  Party  deemed  regular  indorser  when  payee  afterward  in- 
dorses before  him.— If  a  party  not  the  payee  at  the  inception  of 
the  note  puts  his  name  on  the  back  of  it,  and  the  payee  afterward 
indorse  it  over  such  party's  name,  the  latter  will  then  be  second 
indorser,  and  his  liability  cannot  be  varied  by  parol  evidence.^^  And 

92.  Roberts  v.  Masters,  40  Ind.  463;  Vore  v.  Hurst,  13  Ind.  551;  Dale  v.  Moffitt, 
22  Ind.  114;  Clapp  v.  Rice,  13  Gray,  403;  Moies  v.  Bird,  11  Mass.  436;  Howe  v. 
Merrill,  5  Gush.  80;  Rickey  v.  Dameron,  48  Mo.  61;  Heidenheimer  v.  Blumen- 
kron,  56  Tex.  312;  Morrison  Lumber  Co.  v.  Lookout  Mountain  Hotel  Go.,  92 
Tenn.  6,  20  S.  W.  292;  Pauly  v.  Murray,  110  Gal.  13,  42  Pac.  313. 

93.  Sawyer  v.  Brownell,  13  R.  I.  141;  Foley  v.  Brewing  Go.,  61  N.  J.  L.  429, 
39  Atl.  650. 

94.  Thatcher  v.  Stevens,  48  Gonn.  561;  Tinker  v.  Gatlin,  205  111.  108,  68  N.  E. 
773;  Gamden  v.  McKoy,  3  Scam.  437;  Glaflin  Go.  v.  Fiebelman  &  Go.  et  al,  44  La. 
Ann.  518, 10  So.  862,  citing  text;  Yates  v.  Goodwin,  96  Me.  90,  51  Atl.  804;  Dubois 
V.  Mason,  127  Mass.  37;  Bigelow  v.  Golton,  13  Gray,  309;  First  Nat.  Bank  v. 
Payne,  111  Mo.  291,  20  S.  W.  41;  Harnett  v.  Holdredge,  73  Nebr.  570,  103  N.  W. 
277,  119  Am.  St.  Rep.  905,  affirming  5  Nebr.  (Unof.)  114,  97  N.  W.  443  (holding 
further  that  his  liability  cannot  be  varied  by  parol);  National  Bank  v.  Dorset 
Marble  Go.,  61  Vt.  106;  See  also  post,  §  716. 

95.  Bigelow  v.  Golton,  13  Gray,  309. 

96.  Glapp  V.  Rice,  13  Gray,  403;  Dubois  v.  Mason,  127  Mass.  37;  Grensel 
V.  Hubbard,  51  Mich.  95,  47  Am.  Rep.  550;  McMoran  v.  Lange,  25  App.  Diy.  11, 
48  N.  Y.  Supp.  1000.  Where  one  indorses  a  promissory  note  before  delivery 
thereof  to  the  payee,  in  order  to  hold  such  indorser  liable,  it  is  necessary  to  allege 
in  the  pleading  that  the  indorsement  was  made  in  order  to  give  the  maker  credit 
with  the  payee,  or  as  surety  for  the  maker— a  failure  so  to  allege  is  fatal.  This 
action  was  commenced  after  the  enactment  of  the  new  Negotiable  Instruments 


§§  707c-708a        INDORSER,    MAkER,    OR   GUARANTOR  7^1 

the  like  result  is  reached  if  the  payee's  name  be  left  blank,  and  the 
holder  of  the  note  in  negotiating  it  fills  it  up  with  the  name  of  the 
party  who  has  signed  his  name  on  the  back.^^ 

§  707c.  When  note  blank  as  to  payee  is  irregularly  filled  up. — 

In  Virginia,  where  a  note  blank  as  to  payee  was  indorsed  in  blank  for 
the  maker's  acconmiodation,  and  in  that  form  negotiated  by  the 
maker  to  a  third  party,  the  bookkeeper  of  the  latter  inserted  his  (the 
holder's)  name  as  payee,  it  was  held  that  such  holder  could  recover 
against  the  accommodation  indorser.^^  And  the  like  view  has  been 
taken  in  England  in  a  similar  case.^^ 

§  708.  Irregular  indorser  of  note  styling  himself  "  backer  "  or 
"  surety." — In  New  York,  where  P.  made  a  note  payable  to  S. 
or  bearer,  with  a  view  of  borrowing  money  from  him,  and  before 
delivery  it  was  indorsed  thus,  "J.  I.  H.,  backer,  Schoharie,"  it  was 
held  that  J.  I.  H.  seemed  "to  have  added  the  word  'backer'  for  the 
purpose  of  declaring  still  more  explicitly  that  he  was  not  to  be  re- 
garded as  an  indorser."  ^  And  in  Indiana,  where  a  party  wrote  his 
name  on  the  back  of  a  note,  at  its  execution  as  ''surety"  he  was  re- 
garded as  a  joint  maker.  These  decisions  seem  to  depend  on  well- 
recognized  principles,  and  to  be  correct  in  their  conclusions. 

§  708a.  Regular  indorser  styling  himself  surety  or  guaranty.— 
If  indorsers  in  regular  order  style  themselves  sureties,  it  has  been 
held  in  New  York  that  they  do  not  divest  themselves  of  their  char- 
acter as  indorsers.  The  only  effect  of  such  designation  is  to  indicate 
the  character  in  which  they  indorse,  and  to  give  them  the  knowledge 
of  sureties  in  addition  to  their  rights  as  indorsers.  "As  indorsers 
they  could  not  be  made  liable  without  demand  and  notice;  as  sureties 

Law  (see  §  114  of  said  act),  but  the  cause  of  action  arose  prior  to  said  enactment. 
It  was  indicated  in  the  opinion,  though  not  decided,  that  it  would  be  otherwise, 
if  the  cause  of  action  had  occurred  after  the  passage  of  the  new  law. 

97.  Armstrong  v.  Harshman,  61  Ind.  52. 

98.  Frank  v.  LiUenfeld,  33  Gratt.  393. 

99.  Morriss  v.  Walker,  69  Eng.  C.  L.  588.  In  this  case  the  action  was  on  a 
negotiable  note  by  the  holder,  who  was  the  first  indorser,  against  the  second  in- 
dorser. It  was  decided  that  the  action  was  maintainable  on  the  facts  stated  in 
the  pleadings,  and  that  the  proper  form  of  pleading  in  such  a  case  is  for  the  plain- 
tiff to  declare  on  the  indorsement  by  him  to  the  defendant  as  "  without  considera- 
tion." 

1.  Seabury  v.  Hungerford,  2  Hill  (N.  Y.),  80,  Bronson,  J. 


792  TRANSFER    BY    INDORSEMENT  §  709 

they  are  entitled  to  all  the  privileges  of  that  character."  -  The  case 
of  a  regular  transfer  accompanied  by  a  guaranty  is  hereafter  con- 
sidered.^ 

§  709.  Whether  one  not  payee  writing  his  name  on  back  of 
paper  before  him  is  an  indorser. — When  a  note  is  made  payable  to 
the  order  of  the  payee,  and  the  name  of  another  appears  indorsed 
in  blank  upon  it,  and  was  then  indorsed  before  the  note  was  de- 
livered to,  or  indorsed  by,  the  payee,  a  very  different  question,  and 
one  upon  which  the  authorities  are  very  much  at  issue,  arises.  In 
such  cases  such  person  does  not  appear  upon  the  face  of  the  paper 
to  have  held,  and  to  have  transferred  the  title,  but  rather  to  have 
placed  his  name  upon  its  back  to  add  strength  and  credit  to  it,  and 
thus  render  it  more  easy  of  circulation;  and  the  inquiry  is  presented 
whether  he  intended  to  bind  himself  for  its  payment  as  a  joint  maker 
or  surety,  as  a  guarantor,  or  only  as  an  indorser,  whose  liability  can 
only  be  fixed  by  due  demand  and  notice. 

If  the  note  be  not  negotiable,  it  is  plain  that  such  party  cannot 
be  regarded  as  an  indorser,  for  the  simple  reason  that  there  is  no 
such  thing  as  an  "  indorsement,"  in  its  strict  and  proper  commercial 
sense,  of  any  other  than  negotiable  paper/ 

2.  Bradford  v.  Corey,  5  Barb.  461  (1849).  See  to  same  effect,  Kamm  v.  Hol- 
land, 2  Oreg.  59  (1863).  See  also  chapter  XLI,  on  Principal  and  Surety,  vol.  II; 
Maddox  v.  Duncan,  143  Mo.  613,  45  S.  W.  688,  65  Am.  St.  Rep.  678,  note. 

3.  See  vol.  II,  §  1781. 

4.  Watson  v.  Hurt,  6  Gratt.  644;  Hall  v.  Newcomb,  7  111.  416;  Griswold  v. , 
Slocum,  10  Barb.  402;  Orrick  v.  Colston,  7  Gratt.  189;  Commonwealth  v.  Powell, 
11  Gratt.  826;  Comparree  v.  Brockway,  11  Humphr.  358;  Fear  v.  Dunlap,  1 
Greene  (Iowa),  334;  Gorman  v.  Ketchum,  33  Wis.  427;  Pool  v.  Anderson,  116 
Ind.  95;  Vore  v.  Hurst,  13  Ind.  551;  Iron  Works  v.  Paddock,  37  Kan.  513,  citing 
the  text;  Graham  v.  Wilson,  6  Kan.  490;  Roe  v.  Hallett,  41  N.  Y.  Sup.  Ct.  (34 
Hun)  128;  McMullen  v.  Rafferty,  89  N.  Y.  458.  By  the  law  of  New  York,  one 
who  puts  his  name  on  the  back  of  a  note  before  deliverj',  is  a  mere  indorser,  and  not 
a  joint  maker  or  guarantor.  Meyer  v.  Hibsher,  47  N.  Y.  265;  Phelps  v.  Vischer, 
50  N.  Y.  69, 10  Am.  Rep.  433.  In  Tennessee  held  to  be  comaker.  Logan  v.  Ogden, 
101  Tenn.  392,  47  S.  W.  489;  Bank  v.  Lumber  Co.,  100  Tenn.  479,  47  S.  W.  85; 
Assurance  Society  v.  Edmonds,  95  Tenn.  53,  31  S.  W.  168;  Bank  of  Jamaica  v. 
Jefferson,  92  Tenn.  537,  22  S.  W.  211,  36  Am.  St.  Rep.  100.  See  note  to  Fullerton 
v.  Hill  (Kan.),  18  L.  R.  A.  33;  New  York  Security  &  Trust  Co.  v.  Storm,  81  Hun, 
33,  30  N.  Y.  Supp.  605;  Richards  v.  Warring,  1  Keyes,  576;  Cromwell  v.  Hewitt, 
40  N.  Y.  491,  100  Am.  Dec.  527.  In  Massachusetts,  it  has  been  recently  held  that 
"though  a  person  who  indorses  a  note  before  delivery  to  the  payee,  is  entitled  to 
notice  as  an  indorser  under  the  public  statutes,  he  is,  in  all  other  respects,  a  co- 
maker.    See  Brooks  v.  Stackpole,  168  Mass.  537.     In  the  State  of  Michigan 


§  710  INDORSER,    MAKER,    OR    GUARANTOR  793 

§  710.  General  admissibility  of  parol  evidence  to  ascertain  inten- 
tion as  between  immediate  parties. — When  the  note  is  negotiable 
the  question  is  by  no  means  capable  of  such  easy  and  satisfactory 
solution;  but  whatever  diversities  of  interpretation  may  be  found 
in  the  authorities  on  the  subject,  they  very  generally  concur  though 
not  with  entire  unanimity,  that,  as  between  the  immediate  parties, 
the  interpretation  ought  to  be  in  every  case  such  as  will  carry  their 
intention  into  ejffect,  and  that  their  intention  may  be  made  out  by 
parol  proof  of  the  facts  and  circumstances  which  took  place  at  the 
time  of  the  transaction.^  If  the  person  who  places  his  name  on  the 
back  of  the  note  before  the  payee  intended  at  the  time  to  be  bound 
to  the  payee  only  as  a  guarantor  of  the  maker,  he  shall  not  be  deemed 
to  be  a  joint  promisor  or  an  absolute  promisor  to  the  payee.®    If  he 

such  an  indorser  is  held  to  be  an  ordinary  promisor.  Tredway  v.  Antisdel,  86 
Mich.  82,  48  N.  W.  956.  Kingman  &  Co.  v.  Cornell,  etc.,  Co.,  150  Mo.  283,  51 
S.  W.  727;  Sylvester  Bleckley  Co.  v.  Alewine,  48  S.  C.  308;  Wade  v.  Creighton, 
25  Oreg.  455,  36  Pac.  289. 

6.  Good  V.  Martin,  95  U.  S.  (5  Otto)  95  (1877);  Rey  v.  Simpson,  22  How.  241 ; 
Boteler  v.  Dexter,  20  D.  C.  26,  26  N.  E.  151;  McKenzie  v.  Wimberly,  86  Ala.  195; 
Graves  v.  Johnson,  48  Conn.  160;  Quin  v.  Sterne,  26  Ga.  224  (1858);  Nurre  v. 
Chittenden,  56  Ind.  465;  Spencer  v.  Sloan,  108  Ind.  183,  citing  the  text;  Houck 
V.  Graham,  106  Ind.  195;  Porter  v.  Waltz,  108  Ind.  40;  Tombler  v.  Reitz,  134  Ind. 
9,  33  N.  E.  789,  citing  text;  De  Pauw  v.  Bank  of  Salem,  126  Ind.  553,  25  N.  E. 
705;  Preston  v.  Gould,  64  Iowa,  47;  Shaffer  v.  Hohenschild,  2  Kan.  App.  516, 
43  Pac.  979;  Chapeze  v.  Young,  87  Ky.  477;  Owings  v.  Baker,  54  Md.  82;  Ives  v. 
Bosley,  35  Md.  562;  Mansfield  v.  Graham,  136  Mass.  15;  Barger  v.  Farnham,  130 
Mich.  487,  90  N.  W.  281;  Richardson  v.  Foster,  73  Miss.  12,  18  So.  573,  55  Am. 
St.  Rep.  483;  Jennings  v.  Thomas,  13  Smedes  &  M.  617;  Herndon  v.  Lewis, 
175  Mo.  116,  74  S.  W.  976;  Kingman  &  Co.  v.  Cornell,  etc.,  Co.,  150  Mo.  283, 
51  S.  W.  727,  citing  text;  Herrick  v.  Edwards,  106  Mo.  App.  633,  81  S.  W.  466; 
Drexel  v.  Pusey,  57  Nebr.  30,  77  N.  W.  351;  Elliott  v.  Moreland,  69  N.  J.  L. 
216,  54  Atl.  224;  Chaddock  v.  Van  Ness,  35  N.  J.  L.  571;  Cadwallader  v.  Hirsh- 
field,  62  N.  J.  L.  752,  42  Atl.  1075;  Building  Assn.  v.  Leeds,  31  Vroom,  517; 
Haddock,  Blanchard  &  Co.  v.  Haddock,  192  N.  Y.  499,  85  N.  E.  682,  19  L.  R. 
A.  (N.  S.)  136,  affirming  103  N.  Y.  S.  584;  Witherow  v.  Slayback,  158  N.  Y.  649, 
53  N.  E.  681,  70  Am.  St.  Rep.  507,  citing  text;  Schram  v.  Werner,  85  Hun,  293,  32 
N.  Y.  Supp.  995;  Bank  v.  Pegram,  118  N.  C.  671,  citing  text;  Carohna  Sav.  Bank 
V.  Florence  Tobacco  Co.,  45  S.  C.  373,  23  S.  E.  139;  Iser  v.  Cohen,  57  Tenn.  421, 
Comparree  v.  Brockway,  11  Humphr.  358;  Williams  v.  Ogg,  42  Tex.  Civ.  App. 
558,  94  S.  W.  420;  Woodsville  Guaranty  Sav.  Bank  v.  Rogers  (Vt.),  83  Atl.  537; 
Lyndon  Sav.  Bank  v.  International  Co.,  75  Vt.  224,  54  Atl.  191;  Sylvester  v. 
Downer,  20  Vt.  355  (1848);  Allen  v.  Chambers,  13  Wash.  327;  Harmon  v.  Hale, 
1  Wash.  Ter.  422.    See  post,  §§  715,  717. 

6.  Camden  v.  McKoy,  3  Scam.  437  (1842);  Seymour  v.  Farrell,  51  Mo.  95; 
Taylor  v.  French,  2  Lea,  560;  Worden  v.  Salter,  90  111.  160.  Indorsers  upon 
a  note,  made  payable  to  a  particular  person  or  order,  and  given  for  a  debt  of 


794  TRANSFER   BY    INDORSEMENT  §§  711,  712 

intended  to  bind  himself  as  a  surety  or  joint  maker  of  the  note,  he 
will  not  be  permitted  to  claim  afterward  that  he  was  only  a  guarantor.^ 
And  if  he  intended  to  be  bound  only  as  an  indorser,  the  better  opinion 
is  that  this  also  may  be  shown  as  between  him  and  the  payee.^ 

§  711.  Grounds  for  admissibility  of  parol  evidence.— The  ground 

upon  which  parol  proof  of  intention  and  agreement  in  such  cases 
is  admitted  is,  that  the  position  of  the  name  upon  the  paper  is  one 
of  ambiguity  in  itself — that  it  is  not  a  complete  contract  as  is  the 
case  of  an  indorsement  by  the  payee,  which  imports  a  distinct  and 
certain  liability;  but  rather  evidence  of  authority  to  write  over  it  the 
contract  that  was  entered  into;  and  that  parol  proof  merely  dis- 
closes and  brings  to  light  the  terms  of  the  unwritten  contract  that  was 
made  between  the  parties.^ 

§  712.  Parol  proof  between  remote  parties. — Whether  or  not 
there  is  the  same  liberty  in  the  use  of  parol  proof  when  the  note 
has  been  passed  to  a  bona  fide  holder  for  value,  and  without  notice,  is 

maker,  are  liable  as  joint  makers,  and  without  demand,  protest,  or  notice  having 
been  made  and  given,  when  they  indorsed  note  before  delivery  and  as  additional 
security  to  the  payee,  and  it  is  admissible  to  show  by  parol  that  indorser's  lia- 
bility is  different  from  that  indicated  by  the  form  and  order  of  the  indorsements. 
Bank  of  Jamaica  v.  Jefferson,  92  Tenn.  537,  22  S.  W.  211.  In  Cadwallader  v. 
Hirshfield,  62  N.  J.  L.  749,  42  Atl.  1075,  72  Am.  St.  Rep.  671,  note,  Lippin- 
cott,  J.,  says:  "The  signature  thereon  is  not  formally  in  the  place  and  order  to  give 
rise  to  the  application  of  the  rules  of  law  governing  the  liability  of  parties  upon 
ordinary  commercial  paper.  Whilst  the  promissory  note  may  be  the  basis  of  the 
action,  no  contract  whatever  of  hability  to  the  payee  against  such  indorser  arises." 
Columbia  Finance  &  Trust  Co.  v.  Purcell,  146  Fed.  85. 

7.  Rey  v.  Simpson,  22  How.  341;  Walz  v.  Alback,  37  Md.  404.  In  Scotland, 
if  one  not  payee  indorse  a  bill  in  his  own  name,  he  is  Hable  as  a  new  acceptor; 
and  if  such  a  person  indorses  a  note,  he  is  liable  as  a  joint  maker.  Thompson  on 
Bills  (Wilson's  ed.),  174;  Raymond  v.  McNeal,  36  Kan.  172;  MetropoUtan  Bank 
V.  MuUer  et  al.,  50  La.  Ann.  1278,  24  So.  295,  69  Am.  St.  Rep.  475. 

8.  Eberhart  v.  Page,  89  111.  550;  Mammon  v.  Hartman,  51  Mo.  169.  Wag- 
ner, J.:  "When  a  party  writes  his  name  on  the  back  of  a  note,  of  which  he  is 
neither  payee  nor  indorsee,  in  the  absence  of  extrinsic  evidence,  he  is  to  be  treated 
as  the  maker  thereof.  But  parol  evidence  is  admissible  to  show  that  he  did  not 
sign  as  maker,  but  as  indorser."  Lewis  v.  Harvey,  18  Mo.  474;  Western  Boat- 
men's Benevolent  Assn.  v.  Wolff,  45  Mo.  104;  Kuntz  v.  Tempel,  48  Mo.  71. 

9.  Heidenheimer  v.  Blumenkron,  56  Tex.  312,  citing  the  text;  Witherow  v. 
Slayback,  158  N.  Y.  649,  53  N.  E.  681,  70  Am.  St.  Rep.  507,  citing  text;  Barton 
V.  American  Nat.  Bank,  8  Tex.  Civ.  App.  223,  29  S.  W.  210,  quoting  text;  King- 
man &  Co.  V.  Cornell,  etc.,  Co.,  150  Mo.  283,  51  S.  W.  729,  citing  text;  The  Kanka- 
kee Coal  Co.  V.  The  Crane  Bros.  Mfg.  Co.,  138  111.  207,  27  N.  E.  935. 


§  713  INDORSEE,    MAKER,    OR   GUARANTOR  795 

a  question  upon  which  the  authorities  are  by  no  means  so  uniform. 
Some  of  them  confine  parol  proof  to  cases  in  which  the  note  is  still 
in  the  hands  of  the  original  party  to  whom  it  was  first  delivered  as  a 
valid  instrument;  ^°  but  others  declare  that  it  is  equally  competent 
in  a  suit  by  a  bojia  fide  holder  on  the  ground  that  a  contract  is  am- 
biguous; and  that  whenever  a  written  contract  is  presented  for  con- 
struction, and  its  terms  are  ambiguous  or  indefinite,  it  is  always 
allowable  to  weigh  its  language  in  connection  with  the  surrounding 
circumstances,  in  order  to  reach  the  true  intention  of  the  parties. ^^ 
In  a  case  before  the  United  States  Supreme  Court,  where  the  question 
arose  between  a  bona  fide  indorsee  and  the  original  party  so  signing 
his  name,  the  court,  while  recognizing  "irreconcilable  conflict"  of 
the  authorities,  said:  "But  there  is  one  principle  upon  the  subject 
almost  universally  admitted  by  them  all,  and  that  is,  that  the  inter- 
pretation of  the  contract  ought  in  every  case  to  be  such  as  will  carry 
into  effect  the  intention  of  the  parties,  and  in  most  cases  it  is  admitted 
that  proof  of  the  facts  and  circumstances  which  took  place  at  the 
time  of  the  transaction  are  admissible  to  aid  in  the  interpretation  of 
the  language  employed."  ^^ 

§  713.  Presumptions  as  to  irregular  indorsements. — When  noth- 
ing appears  but  the  instrument  itself,  bearing  a  third  person's  name 
before  the  payee's,  in  a  suit  by  an  indorsee  of  the  payee,  the  question 
next  arises,  what  is  to  be  presumed  to  have  been  the  contract  and 
liability  of  such  person?  It  will  be  presumed,  in  the  first  place,  from 
the  fact  that  the  name  is  before  that  of  the  payee  in  order,  that  it 
was  placed  there  before  his  in  point  of  time,  and  was  placed  upon  the 
note  in  its  inception  with  a  view  to  strengthening  its  credit  with  the 
payee,  and  inducing  him  to  take  it ;  ^^  and  it  follows  that  it  would  be 


10.  Houston  V.  Bruner,  39  Ind.  383;  Whitehouse  v.  Hansen,  42  N.  H.  18; 
Schneider  v.  Schiffman,  20  Mo.  571. 

11.  Greenough  v.  Smead,  3  Ohio  St.  415.    See  Rey  v.  Simpson,  22  How.  341. 

12.  Good  V.  Martin,  95  U.  S.  (5  Otto)  95  (1877).  See  Cavazos  v.  Trevino, 
6  Wall.  773;  Denton  v.  Peters,  L.  R.,  5  Q.  B.  475;  Frank  v.  Lilienfeld,  23  Gratt. 
392.  In  Thatcher  v.  Stevens,  46  Conn.  561,  Pardee,  J.,  after  quoting  the  text, 
says,  that  in  the  cases  cited  the  party  had  notice  of  the  irregular  indorsement, 
and  held  that  if  the  indorsements  were  regular  in  appearance,  evidence  to  vary 
them  was  inadmissible  as  between  remote  parties.  This  view  is  clearly  correct. 
Williams  v.  Bank,  67  Tex.  607,  citing  the  tex-t;  Atkinson  v.  Bennet,  103  Ga.  508, 
30  S.  E.  599;  Kingsland  v.  Koeppe,  137  111.  344,  28  N.  E.  48. 

13.  Union  Bank  v.  Willis,  8  Mete.  (Mass.)  504;  Western  Boatmen's  Benevo- 
lent Assn.  v.  Wolff,  45  Mo.  104;  Way  v.  Butterworth,  108  Mass.  508;  CecU  v. 


796  TRANSFER   BY    INDORSEMENT  §  7i;-!a 

presumed  also  that  the  signature  was  there  placed  as  a  part  of  the 
contract,  and  for  the  same  consideration  as  the  note  itself.^'' 

§  713a.  View  presented  that  party  signing  on  back  of  note  before 
payee  is  presumably  a  joint  maker. — For  the  reason  that  a  third 
party  whose  name  is  on  the  back  of  a  note  before  that  of  the  payee 
does  not  appear  to  have  derived  title  to  the  note  by  any  indorsement 
or  assignment  to  himself,  it  is  held  by  numerous  authorities  that  he 
must  be  regarded  -prima  facie  as  a  joint  maker. ^'^    And  especially  is 

Mix,  6  Ind.  478;  Marienthal  v.  Taylor,  iJ  Minn.  147.    See  Bigelow  on  Bills  and 
Notes,  44;  and  as  to  New  York  rule,  §§  l\2,d,  713e,  and  notes. 

14.  Good  V.  Martin,  95  U.  S.  (5  Otto)  90;  Austin  v.  Boyd,  41  Mass.  64;  Syl- 
vester Bleckley  Co.  v.  Alewine,  48  S.  C.  308,  26  S.  E.  609;  Portsmouth  Sav. 
Bank  v.  Wilson,  5  App.  D.  C.  8.  Contra,  Johnston  v.  McDonald,  41  S.  C.  81,  19 
S.  E.  65. 

15.  Good  V.  Martin,  95  U.  S.  (5  Otto)  95;  Rey  v.  Simpson,  22  How.  241; 
First  Nat.  Bank  v.  Lockstitch  Fence  Co.,  24  Fed.  224;  Randle  v.  Davis  Coal  Co., 
15  App.  D.  C.  3,57;  Chandler  &  Taylor  Co.  v.  Norwood,  14  App.  D.  C.  357; 
Ross  V.  De  Campi,  140  Ala.  327,  36  So.  1003;  Scanland  v.  Porter,  64  Ark.  470, 
42  S.  W.  897;  Heise  v.  Bumpass,  40  Ark.  547;  Nathan  v.  Sloan,  34  Ark.  524; 
Kiskadden  v.  Allen,  7  Colo.  206;  Best  v.  Hoppie,  3  Colo.  139;  City  Nat.  Bank  v. 
Goodrich,  3  Colo.  137;  McCallum  v.  Driggs,  35  Fla.  277,  17  So.  407;  Melton  v. 
Brown  (Fla.),  6  So.  211;  Bradford  v.  Prescott,  85  Me.  485,  27  Atl.  461;  Stevens 
v.  Parsons,  80  Me.  353;  Childs  v.  Wyman,  44  Me.  433;  Woodman  v.  Boothy,  66 
Me.  389;  Schroeder  v.  Turner,  68  Md.  508;  Owings  v.  Baker,  54  Md.  82;  Third 
National  Bank  v.  Lange,  51  Md.  138;  Norris  v.  Despard,  38  Md.  491;  Schley  v. 
Merrit,  37  Md.  352;  Walz  v.  Alback,  37  Md.  404;  Ives  v.  Bosley,  35  Md.  262; 
Nat.  Bank  of  the  Republic  v.  Delano,  185  Mass.  424,  70  N.  E.  444;  Spaulding  v. 
Putman,  128  Mass.  363;  Woods  v.  Woods,  127  Mass.  141  (see  this  case  as  to 
Massachusetts  statute);  Hawkes  v.  Phillips,  7  Gray,  284;  Draper  v.  Weld,  13 
Gray,  580;  Union  Bank  v.  Willis,  8  Mete.  (Mass.)  504;  Sweet  v.  Woodin,  72  Mich. 
395;  Grensel  v.  Hubbard,  51  Mich.  95;  Moynahan  v.  Hanford,  42  Mich.  330; 
Herbage  v.  McEntee,  40  Mich.  337;  Sibley  v.  Muskegon  Nat.  Bank,  41  Mich. 
196;  Rothschild  v.  Grix,  31  Mich.  150;  Weatherwax  v.  Paine,  2  Mich.  555;  Fay 
V.  Jenks  (Mich.),  44  N.  W.  380;  Robinson  v.  Bartlett,  11  Minn.  410;  Peckham 
V.  Oilman,  7  Minn.  449;  McComb  v.  Thompson,  2  Minn.  139;  Holmes  v.  Preston, 
70  Miss.  153,  12  So.  202;  Polkinghorne  v.  Hendricks,  61  Miss.  366;  Semple  v. 
Turner,  65  Mo.  696;  First  Nat.  Bank  v.  Payne,  111  Mo.  291,  20  S.  W.  41,  33  Am. 
St.  Rep.  520;  Cohn  v.  Dutten,  60  Mo.  297;  Mammon  v.  Hartman,  51  Mo.  169; 
Seymour  v.  Farrell,  51  Mo.  95;  International  Bank  v.  Enderle,  133  Mo.  App. 
222,  113  S.  W.  262;  Ross  v.  Schawacker,  66  Mo.  App.  67;  Barnett  v.  Nolte,  55 
Mo.  App.  184;  Schmidt  Matting  Co.  v.  Miller,  38  Mo.  App.  251;  Cayuga  Nat. 
Bank  v.  Dunkin,  29  Mo,  App.  442;  Boyer  v.  Boogher,  11  Mo.  App.  130;  Crelle 
V.  Loxen,  7  Mo.  App.  97;  Drexel  v.  Pusey,  57  Nebr.  30,  77  N.  W.  351;  Salisbury 
v.  First  Nat.  Bank,  37  Nebr.  872,  56  N.  W.  727,  40  Am.  St.  Rep.  527;  Martin  v. 
Boyd,  11  N.  H.  385;  Fetrich  v.  Woodrow,  67  N.  H.  174,  38  Atl.  18;  Baker  v.  Rob- 
inson, 63  N.  C,  191;  Barr  v.  MitcheU,  7  Oreg.  346;  Perkms  v.  Barstow,  9  R,  I. 


§  713a  INDORSER,    MAKER,    OR    GUARANTOR  797 

it  SO  considered  when  the  third  party  signed  his  name  to  the  instru- 
ment or  on  the  back  thereof  before  its  deUvery."' 


507;  Carpenter  v.  Oaks,  10  Rich.  (S.  C.)  17;  Watson  v.  Barr,  37  S.  C.  463, 16  S.  E. 
188;  Sylvester  Bleckley  Co.  v.  Alewine,  48  S.  C.  308,  26  S.  E.  609;  Gilpin  v. 
Marley,  4  Houst.  284;  Massey  v.  Turner,  2  Houst.  79;  Beissner,  Admr.  v.  Weeks, 
21  Tex.  Civ.  App.  14,  50  S.  W.  138,  citing  text;  Kennon  v.  Bailey,  15  Tex.  Civ. 
App.  28,  38  S.  W.  377;  McGee  v.  Connor,  1  Utah,  92;  Sylvester  v.  Downer,  20  Vt. 

16.  Jones  v.  Bank  of  Pine  Bluff,  80  Ark.  285,  96  S.  W.  1060;  Edmonston  v. 
Ascough,  43  Colo.  55,  95  Pac.  313  (notwithstanding  the  word  "surety"  was  pre- 
fixed to  his  signature);  Tabor  v.  Miles,  5  Colo.  App.  127,  38  Pac.  64;  Baumeister 
V.  Kuntz,  53  Fla.  340,  42  So.  886;  Cherry  v.  Sprague,  187  Mass.  113,  72  N.  E. 
456,  67  L.  R.  A.  33,  105  Am.  St,  Rep.  381 ;  Nashua  Sav.  Bank  v.  Sagles,  184  Mass. 
520,  69  N.  E.  309,  100  Am.  St.  Rep.  573;  First  Nat.  Bank  v.  Guardian  Trust  Co., 
187'mo.  494,  86  S.  W.  109,  70  L.  R.  A.  79;  Heaton  v.  Dickson,  153  Mo.  App.  312, 
133  S.  W.  159;  Oexner  v.  Loehr,  117  Mo.  App.  698,  93  S.  W.  333;  Oxner  v.  Loehr, 
106  Mo.  App.  412,  80  S.  W.  690;  Bank  of  Spartonburg  v.  Mahon,  75  S.  C.  255, 
55  S.  E.  529;  E.  L.  Welch  Co.  v.  Gillett,  146  Wis.  61, 1.30  N.  W.  879.  And  the  same 
rule  applies  where  the  name  of  the  payee  of  the  note  is  not  inserted  therein.  Keyser 
V.  Warfield,  103  Md.  161,  63  Atl.  217.  It  has  been  so  held  though  it  was  proved 
that  they  wrote  their  names  on  the  back  of  the  note  as  sureties  for  the  maker,  and 
without  participating  in  the  consideration  for  which  the  note  was  given;  and  the 
rule  was  applied  even  though  the  words  "demand,  protest,  and  notice  of  protest 
waived"  were  written  over  such  signatures.  Camp.  v.  First  Nat.  Bank  of  Ocala, 
44  Fla.  497,  38  So.  241,  103  Am.  St.  Rep.  173.  In  Andrews  v.  Congar,  131  U.  S. 
CLXXXIIl,  26  L.  Ed.  90,  the  court  said  that  if  a  person,  not  a  party  to  a  promis- 
sory note,  writes  his  name  on  the  back  of  it  when  the  note  is  made,  the  law  in 
Illinois  regards  him  as  a  guarantor,  unless  the  contrary  is  shown  (citing  Stowell 
V.  Raymond,  83  111.  120),  but  the  law  in  Missouri  regards  him  as  prima  facie 
a  joint  maker  (citing  Schneider  v.  Schiffman,  20  Mo.  571).  An  original  promisor 
who  placed  his  name  on  a  note  before  its  delivery,  to  subserve  purposes  of  his 
own,  is  not  entitled  to  the  strict  rights  of  a  mere  indorser  or  surety.  Jones  v. 
Lynch  (Tex.  Civ.  App.),  137  S.  W.  395.  Where  one  makes  a  negotiable  note  to  a 
payee,  and  others  put  their  names  on  the  back  of  it,  and  it  is  then  delivered  to  the 
payee,  he  may  treat  them  all  as  joint  makers,  or  he  may  treat  those  putting  their 
names  on  the  back  of  the  paper  as  indorsers  or  guarantors,  at  his  election,  unless 
he  agrees  before  or  on  the  delivery  of  the  paper  to  treat  them  in  a  particular  one 
of  those  characters.  Peters  v.  Nolan  Coal  Co.,  61  W.  Va.  392,  56  S.  E.  735, 
9  L.  R.  A.  (N.  S.)  989,  the  court  saying  that  the  right  of  election  by  the  payee  in 
such  cases  is  determined  by  the  contract  made  before  or  at  the  time  of  the  making 
and  delivery  of  the  paper  to  the  payee,  unaffected  by  the  subsequent  dealings 
of  the  payee  with  the  paper;  and  such  right  extends  to  renewals  of  such  paper  by 
the  same  parties,  unless  a  new  contract  is  shown.  See  also  Golding  Sons  Co. 
v.  Cameron  Pottery  Co.,  16  W.  Va.  317,  55  S.  E.  396.  A  statute  (Pub.  St.  1882, 
chap.  77,  §  15),  Rev.  Laws,  chap.  73,  §  81,  which  requires  demand  and  notice  to 
hold  parties  signing  before  notes  were  dehvered  and  took  effect  as  building  con- 
tracts still  leaves  their  promise  that  of  joint  makers.  National  Bank  of  the  Repub- 
lic V.  Delano,  185  Mass.  424,  70  N.  E.  444. 


798  TRANSFER   BY    INDORSEMENT  §  713b 

§  713b.  View  presented   that  such  third   party  is  presumably 
surety  or  guarantor,  in  the  form  of  joint  maker. — By  some  cases  it 

355;  Woodsville  Guaranty  Sav.  Bank  v.  Rogers  (Vt.),  83  Atl.  537;  National 
Bank  v.  Dorset  Marble  Co.,  61  Vt.  106;  Woodward  v.  Foster,  18  Gratt. 
213;  Orrick  v.  Colston,  7  Gratt.  189;  Watson  v.  Hurt,  6  Gratt.  633;  Doug- 
lass V.  Scott,  8  Leigh,  43;  Banking  Co.  v.  Savings  Bank,  13  Wash.  407,  43 
Pac.  359,  942,  52  Am.  St.  Rep.  57,  and  references  to  other  cases  in  §  714;  Long 
V.  Campbell,  37  W.  Va.  665,  17  S.  E.  197,  citing  text;  Houghton  v.  Ely,  26  Wis. 
81.  This  rule  obtains  where  the  note  is  made  payable  to  some  one  other  than 
the  maker  thereof,  but  does  not  apply,  however,  where  a  note  is  made  payable 
to  the  maker  himself.  Harnett  v.  Holdrege,  5  Nebr.  (Unof.)  114,  97  N.  W.  443, 
affirmed  on  rehearing  73  Nebr.  570,  103  N.  W.  277,  119  Am.  St.  Rep.  905. 
Though  such  a  person  signed  the  note  some  weeks  after  the  principal  maker, 
yet  when  he  did  so  in  execution  of  an  agreement  had  upon  the  day  of  its  date, 
such  person  is  a  comaker  of  the  note.  Pearl  v.  Cortright,  81  Miss.  300,  33  So.  71. 
One  who  has  signed  a  note  in  pursuance  of  a  previous  agreement,  is  a  joint  maker, 
even  though  the  notes  had  taken  effect  before  he  signed.  Nat.  Bank  of  the  Re- 
public V.  Delano,  185  Mass.  424,  70  N.  E.  444.  The  fact  that  such  persons  told 
the  payee  that  they  would  "indorse"  the  note,  does  not  take  the  case  out  of  the 
rule,  for  an  agreement  to  indorse  the  note  before  delivery  to  the  payee,  in  order 
to  induce  the  payee  to  lend  money  on  the  note,  is  in  effect  an  agreement  to  be- 
come a  joint  maker  of  the  note.  Lake  v.  Little  Rock  Trust  Co.,  77  Ark.  53,  90 
S.  W.  847,  3  L.  R.  A.  (N.  S.)  1199.  The  words  "indorse"  and  "indorser"  have  a 
popular  as  well  as  a  technical  meaning,  and  their  use  in  connection  with  the  act 
of  one,  not  a  party  to  a  note,  in  putting  his  name  on  the  back  of  the  note  for  the 
purpose  of  increasing  its  commercial  value,  is  not  inconsistent  with  his  having 
signed  as  surety.  Redden  v.  Lambert,  112  La.  740,  36  So.  668.  Where  parties 
whose  relation  to  a  note  was  that  of  indorsers,  were  notified  before  and  at  the  time 
a  renewal  was  made  that  they  were  to  change  their  relation  toward  the  holder 
and  payee  of  the  note,  and  were,  as  to  him,  all  become  makers,  instead  of  indorsers 
or  guarantors,  this  was  a  new  contract  and  was  a  condition  for  a  further  extension 
of  payment,  and  under  the  new  relation  such  parties  became  makers  of  the  note. 
Tinker  v.  Catlin,  205  111.  108,  68  N.  E.  773.  In  Byers  et  al  v.  Tritch,  12  Colo. 
App.  377,  55  Pac.  622,  it  was  held  if  an  indorsement  is  made  prior  to  its  delivery 
to  the  payee,  party  assumes  position  of  joint  maker  and  is  liable  as  such  and  may 
be  sued  either  severally  or  jointly  with  the  maker.  In  National  Pemberton  Bank 
V.  Longee,  108  Mass.  371,  the  note  ran,  "We  A.  &  B.,  as  principal,  and  C.  &  P., 
as  surety,  promise  to  pay  to  the  order  of  ourselves,  etc."  It  was  signed  on  the 
face  by  A.  &  B.  only,  and  was  indorsed  by  A.,  B.,  C.  and  D,  Held,  that  D.'s 
liability  was  that  of  surety  and  joint  promisor.  In  Schneider  v.  Schiffman,  20 
Mo.  571,  the  note  was  payable  to  P.  Burg  or  order,  and  by  him  indorsed  to  plain- 
tiff. Schiffman's  name  appeared  on  the  back  before  Burg's.  The  court  said: 
"  Negotiable  paper,  it  is  said,  carries  its  own  history  upon  its  face,  so  that  nothing 
can  be  alleged  against  it,  while  it  continues  in  circulation  undishonored,  as  against 
an  innocent  purchaser,  other  than  what  is  there  apparent.  This  defendant  has 
placed  his  name  upon  the  note  in  such  a  position  as,  under  our  law,  to  impose  upon 
himself  the  obligation  of  a  maker,  and  he  is  irrevocably  bound  as  such  to  all 
who  take  the  note  for  value  and  without  notice,  upon  the  faith  of  what  they  find 


§  713b  INDORSER,    MAKER,    OR   GUARANTOR  799 

is  considered  that  for  the  reason  already  assigned  such  party  cannot 
be  regarded  as  an  indorser;  that  the  location  of  the  signature  and  the 
import  of  the  note  indicate  that  suretyship  for  the  maker  was  in- 
tended; and  that  accordingly  the  party  should  be  presumed  to  have 
undertaken  to  enter  into  the  maker's  contract  as  a  comaker,  in  the 
character  of  surety  or  guarantor, ^^  and  especially,  that  if  such  third 

upon  it,  although  it  is  otherwise  with  reference  to  those  who  are  bound  by  the 
real  transaction  between  the  parties.  It  is  no  answer  to  this  to  say  that  it  was 
the  duty  of  the  holder,  when  he  saw  the  position  of  the  defendant's  name  upon 
the  note,  to  have  inquired  into  the  matter,  and  satisfied  himself  before  he  took 
it  whether  the  party  was  to  be  considered  chargeable  as  maker,  or  only  as  indorser. 
The  policy  of  the  law  in  reference  to  negotiable  paper  requires  that  it  shall  tell 
its  own  story,  and  have  effect  in  the  hands  of  innocent  holders  for  value  accord- 
ing to  what  appears  upon  it."  In  Commonwealth  v.  Powell,  11  Gratt.  828,  Lee,  J., 
said :  "  If  a  third  party  put  his  name  in  blank  upon  the  back  of  a  negotiable  promis- 
sory note  made  payable  to  another  party,  and  to  which  he  is  a  stranger,  while 
the  same  remains  in  the  hands  of  the  maker,  he  will  be  presumed,  in  the  absence 
of  controlUng  proof  to  the  contrary,  to  have  intended  to  give  the  note  credit  and 
currency;  and  if  the  indorsement  was  at  the  time  of  the  making  of  the  note,  he 
may  be  treated  by  the  payee  as  an  original  promisor,  or  joint  maker  of  the  note. 
If  the  indorsement  were  after  the  date  of  the  note,  however  long,  the  payee  may 
treat  him  as  a  guarantor,  and  may  write  over  the  signature  a  guaranty  consistent 
with  the  nature  of  the  case.  And  the  fair  and  reasonable  if  not  necessary  infer- 
ence from  cases  which  have  occurred  in  this  court  will  bring  us  to  the  same  result." 
17.  KiUian  v.  Ashley,  24  Ark.  212;  Portsmouth  Sav.  Bank  v.  Wilson,  5  App. 
D.  C.  8;  Crosby  v.  Woodbury,  37  Colo.  1,  89  Pac.  34  (as  to  a  note  of  a  corporation 
indorsed  by  a  director,  who  was  assured  by  the  president  at  the  time  that  he  would 
protect  him  against  the  liability  assumed);  Booth  v.  Huff,  116  Ga.  8,  42  S.  E.  381, 
94  Am.  St.  Rep.  98;  Ridley  v.  Heightower,  112  Ga.  476,  37  S.  E.  733;  Eppens  v. 
Forbes,  82  Ga.  748;  James  v.  Calder,  7  Ga.  App.  707,  67  S.  E.  1125;  Connor  v. 
Hodges,  7  Ga.  App.  153,  66  S.  E.  546;  De  Clerque  v.  Campbell,  231  111.  442,  83 
N.  E.  224;  Tinker  v.  CatUn,  205  111.  108,  108  N.  E.  773;  Griffiths  v.  Herzog,  100 
111.  App.  380;  Syme  v.  Brown,  19  La.  Ann.  147;  Chorm  v.  Merrill,  9  La.  Ann.  533; 
McGuire  v.  Bosworth,  1  La.  Ann.  248;  Edgerly  v.  Lawson,  176  Mass.  551,  57 
X.  E.  1020,  51  L.  R.  A.  432;  Jackson  Bank  v.  Irons,  18  R.  I.  718,  30  Atl.  420; 
Windhorst  v.  Bergendahl,  21  S.  D.  218,  111  N.  W.  544,  130  Am.  St.  Rep.  715; 
Harding  v.  Waters,  6  Lea,  324;  Chandler  v.  Westfall,  30  Tex.  477;  Carr  v.  Row- 
land, 14  Tex.  275;  Cook  v.  South  wick,  9  Tex.  615;  Levy  v.  Wagner,  29  Tex.  Civ. 
App.  98,  69  S.  W.  112;  Roanoke  G.  &  M.  Co.  v.  Watkins,  41  W.  Va.  787,  24  S.  E. 
612.  Where  a  note  is  indorsed  by  the  payee  and  by  another  person,  the  pre- 
sumption will  be  that  the  other  person  is  a  surety,  or  an  indorser  in  the  technical 
sense,  according  to  the  order  of  the  signatures.  If  his  signature  is  above  that  of 
the  payee,  he  will  be  presumed  to  be  a  surety;  and  if  it  is  below,  he  will  be  presumed 
to  be  an  indorser.  Redden  v.  Lambert,  112  La.  74, 36  So.  668.  See  also  ante,  §  707. 
When  a  third  person  writes  his  name  on  the  back  of  a  negotiable  instrument  be- 
fore delivery  to  the  payee,  and  with  a  view  to  give  additional  credit  to  the  maker, 
it  is  open  to  the  original  parties  and  as  between  themselves  to  show  the  intent  and 


800  TRANSFER    BY    INDORSEMENT  §  713c 

party  write  his  name  on  the  back  after  delivery,  he  becomes  bound 
only  as  a  guarantor.  ^^ 

§  713c.  View  presented  that  such  third  party  is  prima  facie  only 
secondarily  liable  as  guarantor. — This  view  rests  upon  the  idea 
that  such  party  does  not  participate  in  the  consideration  of  the  note, 
and  that  his  name  in  its  situation  on  the  paper  indicates  an  intention 
to  assume  a  secondary  responsibility  of  suretyship;  and  that  as  he  is 
not  a  regular  indorser  he  must  be  deemed  a  guarantor,  and  not  a 
co-promisor.^^ 


exact  nature  of  the  obligation  assumed,  whether  as  joint  promisor  and  guarantor 
or  as  first  and  second  indorser,  etc.,  and,  in  the  absence  of  such  quahfying  testi- 
mony, the  law  will  presume  that  such  person  signed  his  name  as  co-maker,  and 
in  any  event  as  surety.  Harden  v.  Homthal,  151  N.  C.  8,  65  S.  E.  513  (1909). 
But  whether  such  party  be  a  joint  principal  or  surety,  he  does  not,  by  thus  sign- 
ing his  name,  enter  into  such  a  contract  of  indorsement  as  will  cut  him  off  from 
setting  up  against  the  payee  the  defense  that  the  note  was  founded  upon  illegal 
consideration  and,  therefore,  void.  Benson  v.  Dublin  Warehouse  Co.,  99  Ga. 
303,  25  S.  E.  645. 

18.  State  V.  Allen,  124  Mo.  App.  465,  103  S.  W.  1090;  Lyndon  Sav.  Bank  v. 
International  Co.,  75  Vt.  224,  54  Atl.  191.  While  the  presumption  is  that  signing 
on  the  back  of  a  note  to  which  he  is  a  stranger  makes  such  signer  a  maker,  yet 
if  he  sign  after  the  note  is  executed  he  is  a  guarantor.  Thompson  &  Thompson  v. 
Brown,  121  Mo.  App.  524,  97  S.  W.  242.  In  Lyndon  Sav.  Bank  v.  International 
Co.,  75  Vt.  224,  54  Atl.  191,  the  court  said  that  the  general  rule  held  by  many 
courts  is  that  where  a  promissory  note  is  indorsed  in  blank,  after  its  delivery, 
by  any  other  person  than  the  payee,  it  is  a  new  and  independent  contract  between 
the  indorser  and  the  holder,  upon  a  new  consideration  moving  between  them  and 
is  a  contract  of  guaranty,  such  courts  saying  that  he  is  not  liable  as  a  joint  maker, 
because  he  had  no  part  in  the  consideration,  and  the  payee  accepted  the  note 
without  reliance  upon  him,  the  court  holding,  however,  that  such  is  not  the  rule 
in  Vermont,  as  it  had  been  settled  there  that  one  not  before  a  party  to  a  note, 
who  signs  his  name  upon  the  back  of  it  in  blank  after  its  delivery,  is  'prima  facie 
a  maker,  and  assumes  the  same  obligations  as  if  he  wrote  his  name  upon  the  face 
of  the  instrument. 

19.  First  Nat.  Bank  v.  Babcock,  94  Cal,  96,  29  Pac.  415,  28  Am.  St.  Rep.  99; 
Gillespie  v.  Wheeler,  46  Conn.  410;  Holbrook  v.  Camp,  38  Conn.  23;  Clark  v. 
Merriam,  25  Conn.  576;  Ranson  v.  Sherwood,  26  Conn.  437;  Rhodes  v.  Seymour, 
36  Conn.  1;  Beckwith  v.  Angell,  6  Conn.  315;  Bradly  v.  Phelps,  2  Root,  325; 
The  Kankakee  Coal  Co.  v.  Crane  Bros.  Mfg.  Co.,  138  111.  207,  27  N.  E.  435; 
Kingsland  v.  Koeppe,  137  111.  344,  28  N.  E.  48;  Lincoln  v.  Hinsey,  51  111.  437; 
White  V.  Weaver,  41  111.  409;  Webster  v.  Cobb,  17  111.  459;  Klein  v.  Currier,  14 
111.  237;  Carroll  v.  Weld,  13  111.  482;  Cushman  v.  Dement,  4  Scam.  497;  Camden  v. 
McCoy,  3  Scam.  437;  Glickauf  v.  Kaufman,  73  111.  378;  Parkhurst  v.  Vail,  73  111. 
343;  Dietrich  v.  Mitchell,  43  111.  46;  Bank  v.  Nixon,  125  111.  618;  Wallace  v. 
Goold,  92  111.  19;  Stowell  v.  Raymond,  83  111.  120;  Fuller  v.  Scott,  8  Kan.  32; 


§  713d  INDORSEE,    MAKER,    OR    GUARANTOR  801 

§  713d.  View  presented  that  such  third  party  is  presumably  sec- 
ond indorser. — This  view  taken  in  a  number  of  cases  rests  upon 
the  idea  that  the  situation  of  the  name  indicates  an  intention  to  be- 
come indorser;  that,  with  the  payee's  name  before  his,  such  party 
cannot  be  deemed  a  first  indorser,  and  must  be,  therefore,  regarded 
as  a  second  indorser.-''    In  Pennsylvania  this  view  has  been  strongly 


Fullerton  v.  Hill,  48  Kan.  558,  29  Pac.  583;  Corbyn  v.  Brokmeyer,  84  Mo.  App. 
649;  Van  Doren  v.  Tjader,  1  Nev.  380;  Seymour  v.  Mickey,  15  Ohio  St.  515; 
Marshall  Nat.  Bank  v.  O'Neal,  11  Tex.  Civ.  App.  640,  34  S.  W.  344,  citing  text; 
Redfield  &  Bigelow's  Lead.  Cas.  112;  Bigelow  on  Bills  and  Notes,  45;  1  Ames  on 
Bills  and  Notes,  271.  In  Boynton  v.  Pierce,  79  111.  145,  it  was  held  that  an  in- 
dorsement in  blank  before  the  payee  is  authority  to  the  holder  to  fill  up  the  blank 
with  a  guaranty.  In  California  there  are  a  number  of  cases  which  hold  that  such 
party  is  a  guarantor.  Pierce  v.  Kennedy,  5  Cal.  138;  Geiger  v.  Clark,  13  Cal. 
579;  Riggs  v.  Waldo,  2  Cal.  485;  Crooks  v.  TuUy,  50  Cal.  673;  Jones  v.  Goodwin, 
39  Cal.  493;  Ford  v.  Henderson,  34  Cal.  673.  These  appear,  however,  to  have 
been  decisions  made  prior  to  the  adoption  of  the  Civil  Code  of  that  State  (§  3117), 
by  which  it  is  declared  that  "one  who  indorses  a  negotiable  instrument  before  it  is 
delivered  to  the  payee,  is  liable  to  the  payee  thereon  as  an  indorser."  Comment- 
ing on  the  decisions,  Ross,  J.,  giving  the  opinion  in  Fessenden  v.  Summers,  62 
Cal.  486,  points  out  the  conflict  between  them,  and  holds  that  under  section  3117 
of  the  Civil  Code,  a  person  not  a  party  to  a  note,  who  indorses  the  same  in  blank 
before  delivery,  is  to  be  regarded  not  as  a  guarantor,  but  as  an  indorser,  and  as 
such  entitled  to  notice  of  nonpayment. 

20.  Perry  v.  Friend,  57  Ark.  437,  21  S.  W.  1065,  citing  text;  Chicago  Trust, 
etc..  Bank  v.  Nordgren,  157  111.  653,  42  N.  E.  148;  De  Pauw  v.  Bank  of  Salem,  126 
Ind.  553,  25  N.  E.  705,  26  N.  E.  151;  Bronson  v.  Alexander,  43  Ind.  244;  Roberts 
V.  Masters,  40  Ind.  460;  Nurre  v.  Chittenden,  56  Ind.  465;  Dale  v.  Moffit,  22  Ind. 
113;  Drake  v.  Murkle,  21  Ind.  433;  Earle  v.  Foster,  7  Blackf.  35;  Browning  v. 
Merritt,  61  Ind.  425;  Wells  v.  Jackson,  6  Blackf.  40;  Lank  v.  Morrison,  44  Kan. 
594,  24  Pac.  1106;  Needhams  v.  Page,  3  B.  Mon.  465;  Kellogg  v.  Dunn,  1  Mete. 
(Ky.)  215;  Levi  v.  Mundell,  1  Duv.  (Ky.)  77;  Jennings  v.  Thomas,  21  Miss.  617; 
Thomas  v.  Jennings,  13  Miss.  627;  Hayden  v.  Weldon,  43  N.  J.  L.  129;  Arnott  v. 
Symonds,  85  Pa.  St.  99;  Brinkley  v.  Boyd,  9  Heisk.  149;  Rivers  v.  Thomas,  1 
Lea,  649;  Marshall  Nat.  Bank  v.  O'Neal,  11  Tex.  Civ.  App.  640,  34  S.  W.  344, 
citing  text;  King  v.  Ritchie,  18  Wis.  554;  Cady  v.  Shepard,  12  Wis.  639;  Heath  v. 
Vancott,  9  Wis.  516;  Bigelow  on  Bills  and  Notes,  45;  Ames  on  Bills  and  Notes,  vol. 
I,  p.  271.  In  Eilbert  v.  Finkbeimer,  68  Pa.  St.  247  (1871),  Sharswood,  J.,  said: 
"Nobody  ever  doubted  that  when  a  man  puts  his  name  on  the  back  of  negotiable 
paper  before  the  payee  has  indorsed  it,  he  means  to  pledge,  in  some  shape,  his 
responsibility  for  the  payment  of  it.  Kyner  v.  Shower,  1  Harr.  446.  This  court 
finally  settled,  that  in  the  absence  of  legal  evidence  of  any  different  contract,  he 
assumes  the  position  of  a  second  indorser;  and  that,  to  render  his  engagement 
binding  as  to  any  holder  of  the  note,  the  implied  condition  that  the  payee  shall 
indorse  before  him  must  be  complied  with,  so  as  to  give  him  recourse  against  Such 
payee.  Shafer  v.  The  Farmers'  &  Mechanics'  Bank,  9  P.  F.  Smith,  144.  Prior  to 
January  1,  1856,  when  the  act  of  April  26, 1855  (Pamph.  L.  308),  went  into  effect, 

51 


802  TRANSFER    BY    INDORSEMENT  §  713d 

presented  by  that  learned  jurist  and  author,  Judge  Sharswood.  And 
in  that  State  where  the  irregular  indorser  wrote  the  words  "credit 

it  could  have  been  shown  by  parol  evidence  that  the  intention  of  the  irregular 
indorser  was  to  guarantee  the  payment  of  the  note  to  the  payee.  Leech  v.  Hill, 
4  Watts,  448;  Taylor  v.  McCune,  1  Jones,  460.  The  act  of  1855,  by  providing 
that  no  action  shall  be  brought '  whereby  to  charge  the  defendant  upon  any  special 
promise  to  answer  for  the  debt  for  default  of  another,  unless  the  agreement  upon 
which  such  action  shall  be  brought,  or  some  memorandum  or  note  thereof,  shall  be 
in  writing,  and  signed  by  the  party  to  be  charged  therewith,  or  some  other  person 
by  him  authorized,'  made  parol  evidence  of  such  a  guarantee  unlawful.  Jack  v. 
Morrison,  12  Wright,  113.  But  surely,  under  the  statute,  a  memorandum  in 
writing  signed  by  the  party  is  admissible  to  show  that  the  agreement  upon  which 
the  indorsement  was  made  was  a  guaranty  that  the  note  should  be  paid  to  the 
payee;  and  not  that  the  payee  should  stand  between  the  indorser  and  ultimate 
responsibility."  In  Liszman  v.  Marx  (Pa.),  9  Atl.  477,  it  is  said  that  the  character 
of  the  "responsibility"  referred  to  in  Eilbert  v.  Finkbeimer,  supra,  is  to  be  deter- 
mined by  the  evidence  of  the  circumstances  under  which  the  indorsement  was 
made.  Fear  v.  Dunlap,  1  Greene,  335.  In  New  York,  the  earlier  cases  of  Her- 
rick  V.  Carman,  12  Johns.  159;  Campbell  v.  Butler,  14  Johns.  349,  and  others 
maintained  a  different  doctrine,  but  now  in  that  State  such  a  party  is  regarded  as 
an  indorser;  and  in  Cottrell  v.  Conklin,  4  Duer,  45,  Campbell,  J.,  said  that  they 
"stood  upon  no  ground  of  principle,  and  must  now  be  regarded  as  corrected  and 
exploded."  To  the  same  effect,  see  Spies  v.  Gilmore,  1  N.  Y.  321;  Ellis  v.  Brown, 
6  Barb.  282;  Waterbury  v.  Sinclair,  26  Barb.  455;  Phelps  v.  Vischer,  50  N.  Y.  69; 
Edwards  on  Bills,  274.  In  Hall  v.  Newcomb,  7  Hill,  416,  it  appeared  that  Peter 
Farmer  made  a  promissory  note  to  Samuel  Hall,  the  plaintiff,  payable  to  his  order, 
on  demand,  with  interest,  on  the  back  of  which  note  the  defendant  indorsed  his 
name  in  blank,  at  the  request  of  Farmer,  to  enable  him  to  get  the  money.  It  was 
held  that  he  was  to  be  regarded  as  an  indorser.  The  court  said:  "The  question 
for  our  consideration  is,  whether  a  person  who  puts  his  name  in  blank  upon  the 
back  of  a  negotiable  note,  which  is  drawn  in  a  form  that  he  may  be  charged  as 
indorser  in  the  usual  mode,  if  a  demand  is  made  and  notice  given  of  nonpayment, 
can  be  charged  as  a  general  surety,  without  such  demand  and  notice,  by  parol 
evidence  merely.  The  courts  have  gone  far  enough  in  repealing  the  statute  to 
{)revent  frauds  and  perjuries  by  introducing  parol  evidence  to  charge  a  mere  surety 
for  the  principal  debtor,  by  showing  that  his  written  agreement  means  something 
else  than  what,  upon  its  face,  it  purports  to  mean.  And  I  fully  concur  in  the 
opinion  expressed  by  Mr.  Justice  Bronson,  in  Seabury  v.  Hungerford,  2  Hill,  80, 
that  where  a  man  writes  his  name  in  blank  upon  the  back  of  a  negotiable  promis- 
sory note,  he  only  agrees  that  he  will  pay  the  note  to  the  holder,  on  receiving  due 
notice  that  the  maker,  upon  demand  made  at  the  proper  time,  has  neglected  to 
pay  it.  Mere  proof  that  he  indorsed  the  paper,  to  enable  the  maker  to  raise  money 
on  it,  does  not  change  the  nature  of  his  legal  liability  as  indorser,  where  the  note 
IS  m  the  hands  of  a  bona  fide  holder  for  a  good  consideration.  Such  was  the  whole 
effect  of  the  parol  proof  in  this  case.  And  for  the  courts  to  allow  proof  by  parol  to 
charge  a  mere  surety,  beyond  the  legal  effect  of  his  written  blank  indorsement  on 
such  paper,  would  bring  them  in  direct  conflict  with  the  provisions  of  the  Statute 
of  Frauds."     2  Rev.  Stats.  145,  §2,  subd.  2.     "Here  there  was  no  difficulty  in 


§  713e  INDORSEE,    MAKER,    OR   GUARANTOR  803 

the  drawer"  above  his  name,  they  were  held  not  to  imply  a  promise 
or  undertaking  on  his  part  to  answer  for  the  drawer,  but  merely  a 
direction  to  all  persons  dealing  with  the  instrument  to  treat  with  the 
drawer  as  the  owner,  and  that  the  person  so  signing  was  a  second  en- 
dorser, and  the  language  used  a  mere  explanation  of  the  irregular 
indorsement.^^ 

§  713e.  View  presented  that  such  third  party  is  presumably  first 
indorser;  the  rule  in  New  York. — In  New  York  the  doctrine  now 


charging  Newcomb  as  indorser  of  the  note  in  favor  of  Hall,  from  whom  it  appears 
the  maker  intended  to  get  the  $250,  to  enable  him  to  take  up  a  former  note. 
It  does  not  appear  in  this  case  whether  the  former  note  had  been  protested,  so  as 
to  charge  Newcomb  as  indorser  or  not  or  who  was  the  holder  of  that  note.  All 
that  appears  is,  that  Newcomb  knew  that  Hall  would  lend  Farmer  the  $250,  to 
enable  him  to  take  it  up,  and  that  Newcomb  indorsed  this  note  for  Farmer  as  a 
mere  accommodation  indorser,  when  the  name  of  Hall,  to  whose  order  the  note 
was  made  payable,  was  not  indorsed  thereon.  Where  a  note  is  made  payable  to  an 
individual  or  his  order,  and  is  indorsed  by  him  in  blank,  and  in  that  situation  is 
presented  to  another  person  for  his  accommodation  indorsement,  who  indorses  it 
accordingly,  the  legal  effect  of  his  indorsement  is  to  make  him  liable  in  the  charac- 
ter of  second  indorser  merely;  and  he  can,  in  no  event,  be  made  legally  liable  to  the 
first  indorser.  And  if  the  maker,  or  the  first  indorser,  or  any  other  person  into 
whose  hands  the  note  might  subsequently  come,  should,  without  the  consent 
of  the  second  indorser,  fill  up  the  first  indorsement  specially,  without  recourse, 
to  such  first  indorser,  so  as  to  deprive  the  second  indorser  of  his  remedy  over, 
in  case  he  should  be  compelled  to  pay  the  note,  it  would  be  a  gross  fraud  upon  him, 
if  not  a  forgery.  But  when  such  a  note  is  presented  to  the  accommodation  in- 
dorser, and  is  indorsed  by  him  without  having  been  previously  indorsed  by  the 
person  to  whose  order  the  same  is  made  payable,  the  latter  may,  at  the  time  he 
puts  his  indorsement  upon  it,  indorse  it  specially,  without  recourse,  to  himself, 
so  as  to  leave  the  second  indorser  liable  to  any  person  into  whose  hands  it  may 
subsequently  come  for  a  good  consideration,  and  without  any  remedy  over  against 
the  first  indorser.  Or,  if  the  object  of  the  second  indorser  was  to  enable  the 
drawer,  as  in  this  case,  to  obtain  money  from  the  payee  of  the  note,  upon  the  credit 
of  such  accommodation  indorser,  he  may  indorse  it  in  the  same  way,  without 
recourse,  and  by  such  indorsement  may  either  make  it  payable  to  the  second 
indorser  or  to  the  bearer.  And  such  original  payee  may  then,  as  the  legal  holder 
and  owner  of  the  note,  recover  thereon  against  such  second  indorser,  upon  a 
declaration  stating  such  special  indorsement  by  him,  and  subsequent  indorsement 
of  the  note  to  him  by  the  second  indorser.  Or  he  may  recover  on  the  common 
money  counts,  under  the  statute,  by  serving  a  copy  of  the  note  and  of  the  indorse- 
ments so  made  thereon,  with  his  declaration.  But  as  the  second  indorser,  if  he 
has  not  waived  notice  of  the  demand  of,  and  nonpayment  by,  the  maker,  cannot  be 
made  hable  upon  his  indorsement,  without  proof  of  such  demand  and  notice, 
the  plaintiff,  at  the  trial,  must  prove  the  same  or  he  cannot  recover." 
21.  Temple  v.  Baker,  125  Pa.  St.  640;  Neal  v.  Wilson,  79  Ga.  737. 


804  TRANSFER    BY    INDORSEMENT  §  714 

obtains  that  when  it  appears  that  the  part}^  wrote  his  name  on  the 
back  of  the  note  to  give  the  maker  credit  with  the  payee,  he  is  to  be 
deemed  a  first  indorser.^^  But  it  is  not  presumed  that  he  did  this  in 
that  State,  as  already  seen.^^  In  that  State  it  was  said  by  Church, 
C.  J.,  in  dehvering  the  opinion  of  the  court:  "  In  this  State  it  has  been 
repeatedly  held,  and  is  too  strongly  settled  by  authority  to  be  dis- 
turbed, that  a  person  making  such  an  indorsement  is  presumed  to 
have  intended  to  become  liable  as  second  indorser,  and  that  on  the 
face  of  the  paper  without  explanation  he  is  to  be  regarded  as  second 
indorser,  and  of  course  not  liable  upon  the  note  to  the  payee,  who  is 
supposed  to  be  the  first  indorser.  As  the  paper  itself  furnishes  only 
-prima  fade  evidence  of  this  intention,  it  is  competent  to  rebut  the 
presumption  by  parol  proof  that  the  indorsement  was  made  to  give 
the  maker  credit  with  the  payee.  Such,  among  others,  was  the  case 
of  Moore  v.  Cross,  19  N.  Y.  227,  where  the  indorsement  was  made  to 
enable  the  maker  to  purchase  coal  of  the  payee;  and  it  was  held  that 
the  person  making  it  was  liable  as  first  indorser,  and  that  the  payee 
could  maintain  an  action  against  him  upon  the  note,  or  if  the  payee 
transferred  it,  he  might  indorse  it  without  recourse."  ^^ 

§  714.  Comments  and  conclusions. — The  authorities  cited  show 
how  diversified  and  contradictory  are  the  views  taken  by  different 
courts  of  this  question,  and  only  through  statutory  enactments  can 
it  be  anticipated  that  any  uniformity  in  the  law  of  the  several  States 
will  ever  be  attained.  In  Massachusetts  it  is  now  provided  by  statute 
that  "  all  persons  becoming  parties  to  promissory  notes  by  a  signature 
in  blank  on  the  back  thereof  shall  be  entitled  to  notice  of  nonpayment 


22.  Moore  v.  Cross,  19  N.  Y.  227;  Coulter  v.  Richmond,  59  N.  Y.  479.  The 
same  rule  exists  in  Wisconsin.  Blakeslee  v.  Hewitt  (Wis.),  44  N.  W.  1105;  Bank 
of  Port  Jefferson  v.  Darling,  91  Hun,  236,  36  N.  Y.  Supp.  153;  Montgomery  v. 
Schenck,  82  Hun,  24,  31  N.  Y.  Supp.  42;  Jaffray  v.  Krauss,  79  Hun,  449,  29  N.  Y. 
Supp.  987. 

23.  Ante,  §  1\M,  and  notes;  Meise  v.  Doscher,  68  Hun,  557,  23  N.  Y.  Supp.  49. 

24.  Coulter  v.  Richmond,  59  N.  Y.  479  (1874).  See  also  .Jaffray  v.  Brown,  74 
N.  Y.  394;  Lynch  v.  Levy,  11  Hun,  145;  Phelps  v.  Vischer,  .50  N.  Y.  71.  See 
Paine  v.  Noelke,  53  How.  Pr.  273.  As  to  view  taken  in  Alabama,  Milton  v.  De 
Yamper,  3  Ala.  648;  Price  v.  Lavender,  38  Ala.  389;  Hooks  v.  Anderson,  58  Ala. 
238;  1  Ames  on  Bills  and  Notes,  271;  McPhillips  v.  Jones,  73  Hun,  516,  26  N.  Y. 
Supp.  101;  Hendrie  v.  Kinnear,  84  Hun,  141,  32  N.  Y.  Supp.  417;  Howard  v. 
Van  Geierson,  46  App.  Div.  77,  61  N.  Y.  Supp.  349;  Cuming  v.  Roderick,  16  App. 
Div.  339,  44  N.  Y.  Supp.  1033;  Holz  v.  Woodside  Brewing  Co.,  83  Hun,  192, 
31  N.  Y.  Supp.  397. 


§  714  INDORSER,    MAKER,    OR    GUARANTOR  805 

the  same  as  an  mdorser."  -^  And  this  is  at  least  a  step  in  the  right 
direction.  In  California  the  Civil  Code  declares:  ''One  who  indorses 
a  negotiable  instrument  before  it  is  delivered  to  the  payee  is  liable 
to  the  payee  thereon  as  an  indorser,"  which  would  render  his  liability 
that  of  first  indorser.-^  Our  o^^^l  views  are  that  the  party  who  puts 
his  name  on  the  back  of  a  negotiable  note  before  it  is  indorsed  by  the 
payee  should  be  presumed  to  be  a  first  indorser.  If  he  intended  to  be 
a  second  indorser,  he  should  have  reframed  from  putting  his  name  on 
the  note  until  it  was  first  indorsed  by  the  payee.  By  placing  it  first 
he  enables  the  payee  to  place  his  own  afterward;  and  prima  facie  the 
facts  would  seem  to  indicate  such  intention.  We  do  not  perceive  that 
there  is  anything  insuperable  to  this  view  in  the  objection  that  there 
is  no  title  in  him  to  indorse  away.  Prior  parties  could  not  be  sued 
without  the  payee's  indorsement;  but  he  being  an  indorser  can  be 
sued  by  any  one  deriving  title  imder  him,  and  the  prior  party's 
position  on  the  note  seems  to  render  his  liability  strictly  analogous 
to  that  of  the  drawer  of  a  bill  upon  the  maker  in  favor  of  the  payee; 
and  so  to  regard  him  simplifies,  as  it  seems  to  us,  a  question  which,  un- 
less such  analogy  be  followed,  is  exceedingly  complicated  and  difficult. 
It  is  almost  universally  admitted  that  evidence  is  admissible  to  show 
that  such  a  party  is  first  indorser,  and  it  would  have  been  far  better 
if  the  courts  had  generally  presumed  such  to  be  the  intention,  and 
established  a  rule  that  is  clear,  intelligible,  and  certain  in  respect  to 
so  important  a  relation  to  commercial  paper.  Parties  often  so  sign 
their  names  for  accommodation  of  the  maker,  and  are  themselves  as 
much  surprised  as  the  holders  of  the  paper  to  find  that  difficult  ques- 
tions arise  as  to  the  nature  of  their  obligation.  And  the  law  merchant 
should,  in  its  elasticity  to  fit  all  manner  of  commercial  transactions, 
recognize  customary  transactions,  and  apply  to  them  the  natural  and 
simple  presumptions  that  render  them  intelligible  and  practical. 
Strained  technical  dissertations  and  conclusions  have  so  bungled  and 
confounded  the  question  which  we  have  considered,  that  a  fresh  mind 
investigating  it  is  lost  in  labyrinths  of  suggestion  and  decision,  while 
as  we  think  an  easy  solution  may  be  found  in  adopting  the  views 
above  presented.^ 

25.  Mass.  Stats.  1874,  chap.  404;  Commercial  Bank  v.  Law,  127  Mass.  72. 

26.  Civil  Code  of  Cal.,  §3117;  Fessenden  v.  Summers,  62  Cal.  486;  Fisk  v. 
Miller,  63  Cal.  368. 

27.  Pool  V.  Anderson,  116  Ind.  95,  citing  the  text,  and  reversmg  the  Indiana 
cases;  Kealing  v.  Vansickle,  74  Ind.  529;  Houck  v.  Graham,  106  Ind.  195;  Knopf 
V.  Morel,  HI  Ind.  570.    See  MiUer  v.  Ridgely,  22  Fed.  896;  Wade  v.  Creighton, 


806  Transfer  by  indorsement  §  714 

Under  Negotiable  Indrument  statute. — The  conflict  of  authority  on 
the  effect  of  a  person  placing  his  signature  upon  an  instrument  other- 
wise than  as  maker,  drawer,  or  acceptor,  or  one,  not  otherwise  a 
party  to  an  instrument,  placing  thereon  his  signature  in  blank  before 
delivery,  is  settled  in  those  states  which  have  adopted  the  statute.^ 
Such  person,  under  the  statute,  is  subject  to  the  liability  of  an  in- 
dorser  in  favor  of  the  payee  and  subsequent  parties,  in  the  absence 
of  a  showing  that  he  intended  to  be  bound  in  some  other  capacity. ^^ 

25  Oreg.  455,  36  Pac.  289,  quoting  from  and  approving  the  text.  The  numerous 
cases  on  the  question  of  the  nature  of  the  UabiUty  of  a  stranger  who  indorses 
commercial  paper  before  deUvery  are  brought  together  and  analyzed  in  a  note  to 
Fullerton  v.  Hill  (Kan.),  18  Law.  Rep.  Annot.  33;  Donohoe  Banking  Co.  v. 
Savings  Bank,  13  Wash.  407,  43  Pac.  259,  942,  52  Am.  St.  Rep.  57,  citing  the  text; 
Roanoke  G.  &  M.  Co.  v.  Watkins,  41  W.  Va.  787,  24  S.  E.  612,  text  cited;  Atkin- 
son V.  Bennett,  103  Ga.  508,  30  S.  E.  599. 

28.  Appendix,  sees.  63,  64. 

29.  American  Trust  Co.  v.  Canevin,  184  Fed.  657;  Baumeister  v.  Kuntz,  53 
Fla.  340,  42  So.  886;  Bank  of  Montpeher  v.  Montpelier  Lumber  Co.,  16  Idaho, 
730,  102  Pac.  685;  First  Nat.  Bank  of  Bickel,  143  Ky.  754,  137  S.  W.  79;  Bamford 
v.  Boynton,  200  Mass.  560,  86  N.  E.  900;  Toole  v.  Crafts,  193  Mass.  110,  78  N.  E. 
775,  118  Am.  St.  Rep.  455;  Thorpe  v.  White,  188  Mass.  333,  74  N.  E.  592;  Walker 
V.  Dunham,  135  Mo.  App.  396,  115  S.  W.  1086;  Perry  Co.  v.  Taylor  Bros.,  148 
N.  C.  362,  62  S.  E.  423;  Rockfield  v.  First  Nat.  Bank,  77  Ohio  St.  311,  83  N.  E. 
393,  14  L.  R.  A.  (N.  S.)  842;  Gibbs  v.  Guaraglia,  75  N.  J.  L.  168,  67  Atl.  81; 
Wilson  V.  Hendee,  74  N.  J.  L.  640,  66  Atl.  413;  Roessle  v.  Lancaster,  114  N.  Y.  S. 
387,  130  App.  Div.  1;  Farquhar  &  Co.  v.  Higham,  16  N.  D.  106,  112  N.  W.  557; 
Lumbermen's  Nat.  Bank  of  Portland  v.  Campbell  (Or.),  121  Pac.  427;  here 
Alldred's  Estate,  79  Atl.  141,  229  Pa.  St.  627;  Deahy  v.  Choquet,  28  R.  I.  338,  67 
Atl.  421,  14  L.  R.  A.  (N.  S.)  847;  Pharr  v.  Stevens  (Tenn.),  139  S.  W.  730.  See 
Haddock,  Blanchard  &  Co.  v.  Haddock,  192  N.  Y.  499,  85  N.  E.  682,  holding 
further,  under  section  63  of  the  statute,  that  one  who,  before  maturity,  indorses 
notes  and  bills  in  blank  for  the  accommodation  of  the  maker  of  the  notes  and 
acceptor  of  the  bills,  and  for  the  purpose  of  giving  such  maker  and  acceptor  credit, 
is  an  indorser  of  such  instrument  within  this  definition.  See  also  Kohn  v.  Con- 
solidation Butter  &  Egg  Co.,  63  N.  Y.  S.  265,  30  Misc.  725.  In  Quimby  v.  Var- 
num,  190  Mass.  211, 76  N.  E.  671,  it  was  held,  as  to  one  who  signed  a  note  in  blank 
on  the  back  before  delivery  to  the  payee,  that  section  121  of  the  statute  does  not 
apply;  that  section  is  intended  to  apply  where  the  person  secondarily  Uable  can 
trace  his  title  on  the  face  of  the  note  and  its  indorsements  through  the  prior  parties 
to  the  party  whom  he  seeks  to  hold,  and  when  such  an  indorser  paid  the  note  he 
had  an  action  against  the  maker,  but  the  action  was  not  on  the  note,  as  he  paid 
and  extmguished  it.  In  Com  v.  Levj-,  97  App.  Div.  48,  89  N,  Y.  S.  658,  the  court 
said  that  before  section  64  (1)  was  enacted,  a  third  party  could  not  be  charged  as 
an  indorser  of  a  promissory  note  before  delivery  unless  the  complaint  alleged  that 
the  indorsement  was  made  in  order  to  give  the  maker  credit  with  the  payee,  or 
that  the  party  indorsed  the  note  as  surety  for  the  maker;  that  the  omission  of  such 
an  allegation  was  held  to  be  a  fatal  defect  in  an  action  to  charge  such  an  indorser, 


§71-4  INDORSEE,    MAKER,    OR    GUARANTOR  807 

Section  64  deals  only  with  the  liability  of  an  irregular  indorser  to  the 
payee  and  subsequent  parties,  and  does  not  define  the  rights  and  lia- 
bilities of  several  such  indorsers  as  between  themselves,^*^  To  take 
advantage  of  the  statute  it  must  be  proved  that  the  instrument  was 
so  indorsed  before  its  delivery,  and  the  burden  of  proof  as  to  this  fact 
is  upon  the  plaintiff.^^  It  has  been  held  that,  as  the  statute  fixes  the 
status  of  a  party  to  a  negotiable  instrument  as  being  that  of  an  in- 
dorser, parol  evidence  is  not  admissible  to  vary  such  status,^^  but 
the  contrary  has  also  been  held,^^  though  under  the  latter  rule  the 
intention  to  be  bound  otherwise  than  as  an  indorser  is  not  to  be  in- 
ferred from  conduct,  or  from  language  that  is  equivocal,  much  less 
from  that  which  is  consistent  with  an  intent  to  assume  only  the 


and  that  the  necessity  of  an  averment  to  that  effect  appears  no  longer  to  exist, 
however,  in  view  of  the  plain  language  of  this  section,  which  seems  to  require 
nothing  more  than  the  simple  fact  of  the  indorsement  to  render  the  defendant 
prima  facie  Uable  in  such  case.  It  is  immaterial  whether  the  signature  of  an  in- 
dorser is  actually  indorsed  upon  the  note  before  or  after  it  comes  to  the  possession 
of  the  payee,  if  it  is  a  part  of  the  agreement  that  the  note  shall  be  so  mdorsed  to  be 
acceptable.  Dowvey  v.  O'Keefe,  26  R.  I.  571,  59  Atl.  929.  One  who,  after 
signing  his  firm  name  to  a  note  and  before  delivery,  placed  his  name  on  the  back 
of  the  note,  added  to  his  liability  of  maker  as  a  partner  his  several  and  distinct 
individual  liabihty  as  an  indorser,  making  himself  hable  after  due  notice  of  dis- 
honor, and  thereby  also  guaranteeing  the  signature  on  the  face  of  the  note.  Na- 
tional Exch.  Bank  v.  Lubrano,  29  R.  I.  64,  68  Atl.  944. 

30.  Wilson  V.  Hendee,  74  N.  J.  L.  640,  66  Atl.  413  (the  rights  of  several  in- 
dorsers as  between  themselves  are  set  forth  in  section  68  of  the  statute).  Persons 
who  simply  indorsed  a  note  in  blank  on  the  back  before  it  was  discounted  at  the 
bank  were  joint  indorsers.  Williams  v.  Paintsville  Nat.  Bank,  137  S.  W.  535, 
143  Ky.  781. 

31.  Bender  v.  Bahr  Trucking  Co.,  129  N.  Y.  S.  737, 144  App.  Div.  742. 

32.  Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886;  Bradley  v.  Brown,  149  111. 
App.  297;  Neosho  Milling  Co.  v.  Farmers  Co-op.  Warehouse  Stock  Co.  (La.), 
58  So.  825;  Far  Rockaway  Bank  v.  Morton,  186  N.  Y.  484,  79  N.  E.  706.  In 
First  Nat.  Bank  v.  Bickel,  143  Ky.  754,  137  S.  W.  790,  the  court  said  that  it  may 
be  shown  by  parol  evidence  under  section  64  whether  a  person  is  an  accommoda- 
tion indorser  or  not,  and  it  may  be  shown  under  section  68  a^  between  indorsers 
what  their  habihty  is,  but  this  principle  cannot  be  extended  so  as  to  impose  upon 
the  indorser  a  different  obUgation  than  the  law  ascribes  to  the  writing  which  he 

33.  Merchants'  Bank  v.  Busby  (Tenn.),  113  S.  W.  390,  the  court  saying  that 
the  real  contract  can  be  shown  as  fully  as  it  could  before  the  passage  of  the  Nego- 
tiable Instrument  Act,  and,  as  between  the  immediate  parties,  it  is  not  necessary- 
that  the  indorsement  should  be  accompanied  by  appropriate  words  m  writmg, 
showing  an  intention  to  be  bound  in  some  other  capacity,  and  that  as  to  innocent 
holders  for  value,  the  rule  would  be  otherwise,  and  the  statute  would  apply. 


808  TRANSFER    BY    INDORSEMENT  §711;! 

secondary  liability  of  an  indorser  and  not  the  primary  liability  of 
a  maker. ^^ 

Under  the  provision  of  the  statute  that  if  the  instrument  is  payable 
to  the  order  of  a  third  person  the  party  placing  thereon  his  signature 
in  blank  before  delivery  is  liable  as  indorser,  when  such  person  has 
signed  for  the  accommodation  of  the  maker  and  before  the  payee  in- 
dorsed, defenses  as  to  legality  or  consideration  are  open  to  him  as 
they  would  be  in  a  suit  against  the  maker. •'^' 

§  714a.  English  cases. — In  England  such  an  irregular  mdorse- 
ment  of  a  bill  is  considered  to  render  the  party  liai)le  as  a  new  drawer, ^^ 
but  as  said  by  Littledale,  J.,  "Supposing  the  indorser  of  a  bill  to  be 
strictly  in  the  situation  of  a  drawer,  it  does  not  follow  that  the  indorser 
of  a  note  is  a  maker,"  and  it  was  accordingly  held  that  an  irregular 
indorser  before  the  payee  could  not  be  held  as  a  maker,  but  must  be 
sued  on  his  collateral  undertaking.^^  A  learned  writer  (Prof. 
Ames),'^^  commenting  on  the  English  cases,  says:  "In  England  it 
would  seem  that  the  anomalous  indorser  is  not  liable  in  any  capacity, 
not  as  indorser,^^  nor  as  guarantor,^''  or  as  maker."  ^^  This  result 
he  justly  styles  deplorable,  but  considers  it  less  open  to  criticism  than 
the  arbitrary  presumption  that  such  party  assumed  a  primary  liabil- 
ity; and  we  believe  that  confusion  Avill  continue  until  the  views  which 
we  diffidently  submit  are  taken  and  the  irregular  indorser  is  regarded 
in  the  light  of  a  drawer  and  as  first  indorser :  a  view  which  we  have  seen 
already  obtains  in  New  York  in  some  cases,  and  which  deserves 
further  extension. 

34.  McDonald  v.  Luckenbach,  170  Fed.  434,  holding  that  when  the  officer 
and  a  director  of  a  corporation  indorsed  a  corporate  note,  their  liability  is  that  of 
indorsers  and  not  makers,  in  the  absence  of  any  evidence  that  it  was  understood 
that  they  were  to  be  bound  in  some  other  capacity. 

36.  Leonard  v.  Draper,  187  Mass.  536,  73  N.  E.  644. 

36.  Penny  v.  Innes,  1  Cromp.,  M.  &  R.  439;  Miller  v.  Ridgely,  22  Fed.  896, 
citing  the  text. 

37.  Gwinnell  v.  Herbert,  5  Ad.  &  El.  436.  See  on  this  question  Wilders  v. 
Stevens,  15  M.  &  W.  208  (a  bill);  Lecaan  v.  Kukman,  6  Jurist  (N.  S.),  17  (a  note); 
Mathews  v.  Bloxsome,  33  L.  J.  R.  209  (a  bill). 

38.  Ames  on  Bills  and  Notes,  vol.  II,  p.  839. 

39.  Lecaan  v.  Kukman,  6  Jurist  (N.  S.),  17;  1  Ames  on  Bills  and  Notes,  242. 

40.  Lecaan  v.  Kukman,  6  Jurist  (N.  S.),  17,  Byles,  J.,  saying:  "He  is  not  liable 
at  common  law  as  a  surety  because  of  the  Statute  of  Frauds,  and  he  is  not  liable 
by  the  law  merchant  because  he  has  not  followed  the  law  merchant."  1  Ames  on 
Bills  and  Notes,  243, 

41.  Gwinnell  v.  Herbert,  5  Ad.  &  El.  436;  1  Ames  on  Bills  and  Notes,  236. 


§  715  INDORSER,    MAKER,    OR    GUARANTOR  809 

§  715.  Effect  of  parol  evidence ;  what  determines  the  character  of 
party's  liability. — What  parol  evidence  determines  the  liability  of 
the  person  signing  before  the  payee  is  also  a  matter  upon  which 
opinion  is  diverse.  Many  authorities  take  the  ground  that  when  it 
appears  that  the  note  was  intended  for  the  payee,  or  that  the  name 
was  placed  upon  the  back  of  the  note  before  its  delivery  to  the  payee, 
that  circumstance  fixes  the  liability  contracted  as  that  of  joint 
maker,^2  ^nd  excludes  further  inquiry.  But  this  does  not  seem  to  us 
sufficient.''^  Others  regard  that  circumstance  as  only  determining 
that  he  cannot  be  regarded  as  an  indorser,  because  he  could  not  have 
had  title  to  the  note  as  indorsee,  and  as  leaving  it  open  for  further 
inquiry  whether  he  intended  to  be  a  joint  maker  or  a  guarantor."*^ 
in  some  cases  it  is  held  that  he  will  be  presumed  to  have  signed  for 
the  payee's  accommodation.^^     In  Kentucky  it  has  been  held  that 

42.  Good  V.  Martin,  95  U.  S.  (5  Otto)  94;  Randle  v.  Davia  Coal  Co.,  15  App. 
D.  C.  357;  Chandler  &  Taylor  Co.  v.  Norwood,  14  App.  D.  C.  357;  Bigelow  v. 
Colton,  13  Gray,  309;  Lake  v.  Stetson,  13  Gray,  310;  Essex  Co.  v.  Edmunds,  12 
Gray,  273;  Pearson  v.  Stoddard,  9  Gray,  199;  Chaddock  v.  Van  Ness,  35  N.  J.  L. 
518;  Conn.  v.  Powell,  11  Gratt.  828;  See  §  713a,  note.  In  Way  v.  Butterworth, 
108  Mass.  512,  Ames,  J.,  said:  "If  A.  F.  Butterworth  signed  his  name  upon  the 
back  of  the  note  at  the  time  when  it  was  made,  or  at  any  time  before  it  was  de- 
livered as  a  valid  and  binding  contract  to  Manuel,  he  must  be  considered  as  an 
original  promisor,  and  parol  evidence  would  not  be  admissible  to  show  that  such 
was  not  his  real  contract.  Union  Bank  v.  Willis,  8  Mete.  (Mass.)  504;  Brown  v. 
Butler,  99  Mass.  179.  In  favor  of  a  bona  fide  holder,  it  is  presumed  that  the  prom- 
ise of  such  an  indorser  was  made  at  the  same  time  with  the  note.  This,  however, 
is  not  a  conclusive  presumption.  This  defendant  would  have  a  right  to  show  that 
the  fact  was  otherwise,  and  that  his  contract  was  not  made  until  after  the  note 
had  taken  effect  as  a  binding  contract;  and  if  he  should  succeed  in  proving  it  to 
be  so,  he  might  either  not  be  chargeable  at  all,  or  chargeable  as  surety  or  guaran- 
tor, according  to  the  facts  proved.  Wright  v.  Morse,  9  Gray,  337.  If  he  placed 
his  name  in  blank  upon  the  back  of  the  note  after  it  was  given,  he  could  not  be 
held  as  an  original  promisor.  Mecorney  v.  Stanley,  8  Cush.  85;  Courtney  v.  Doyle, 
10  AUen,  122.  Upon  the  report,  we  cannot  say  that  there  was  no  evidence  to 
rebut  the  presumption  that  his  name  was  placed  there  as  a  part  of  the  original 
transaction.  It  was  wholly  a  question  of  fact,  to  be  decided  by  the  jury.  It  was, 
therefore,  a  mistake  on  the  part  of  the  court  to  rule  that,  as  a  matter  of  law,  the 
defendant  was  hable  as  a  joint  promisor,  and  that  the  plaintiff  was  entitled  to  a 
verdict  on  that  ground  against  this  defendant.  Rey  v.  Simpson,  22  How.  341. 
Under  the  declaration,  there  is  no  occasion  to  consider  whether  he  could  be  held 
liable  as  a  guarantor."  .„    .,^   o  i.     -j 

43.  Price  v.  Lavender,  33  Ala.  390;  Hall  v.  Newcomb,  7  Hill,  416;  Schneider 
V.  Schiffman,  20  Mo.  571;  Irish  v.  Cutter,  31  Me.  536;  Kealing  v.  Vansickle.  74 
Ind.  529,  citing  the  text. 

44.  Greenough  v.  Smead,  3  Ohio  St.  415  (1854). 

45.  Barto  v.  Schenck,  4  Casey,  447;  SchoUenberger  v.  Nehf,  4  Caaey,  189. 


glO  TRANSFER    BY    INDORSEMENT  §  715 

proof  of  intention  is  confined  to  the  question  whether  the  party  de- 
signed to  be  guarantor  or  indorser.^^ 

Others  consider  that  if  the  note  was  not  intended  for  the  payee, 
that  then  such  party  shall  be  regarded  as  an  indorser.''^ 

If  the  name  were  signed  subsequent  to  the  making  of  the  note,  and 
as  an  independent  transaction,  the  signer,  it  has  been  held,  is  a  guar- 
antor/^ And  this  is  the  settled  doctrine  of  the  United  States  Supreme 
Court;  but  with  the  qualification  that  if  the  note  were  intended  for 
discount,  and  he  put  his  name  on  the  back  of  it  with  the  understand- 
ing of  all  the  parties  that  his  indorsement  would  be  inoperative  until  it 
was  indorsed  by  the  payee,  he  would  then  be  liable  only  as  a  second 
indorser  in  the  commercial  sense,  and  as  such  would  clearly  be  en- 
titled to  the  privileges  which  belong  to  such  indorsers.'*'^  If  the  note 
be  overdue  at  the  time  the  third  party  puts  his  name  upon  it,  it  has 
been  held  that  he  would  then  be  held  as  guarantor.^" 


46.  Kellogg  V.  Dunn,  2  Mete.  (Ky.)  21.5.  See  also  Holz  v.  Woodside  Brewing 
Co.,  83  Hun,  192,  31  N.  Y.  Supp.  397;  Roanoke  G.  &  M.  Co.  v.  Watkins,  41  W. 
Va.  787,  24  S.  E.  612. 

47.  Greenough  v.  Smead,  3  Ohio  St.  415. 

48.  Good  V.  Martin,  95  U.  S.  (5  Otto)  95  (1877);  Benthall  v.  Judkins,  13  Mete. 
(Mass.)  265;  Irish  v.  Cutter,  31  Me.  536.  In  Rey  v.  Simpson,  22  How.  241,  the 
United  States  Supreme  Court  said:  "  When  a  promissory  note,  made  payable  to  a 
particular  person  or  order,  as  in  this  case,  is  first  indorsed  by  a  third  person,  such 
third  person  is  held  to  be  an  original  promisor,  guarantor,  or  indorser,  according 
to  the  nature  of  the  transaction,  and  the  understanding  of  the  parties  at  the  time 
the  transaction  took  place. 

"I.  If  he  put  his  name  at  the  back  of  the  note  at  the  time  it  was  made,  as 
surety  for  the  maker  and  for  his  accommodation,  to  give  him  credit  with  the 
payee,  or  if  he  participated  in  the  consideration  for  which  the  note  was  given, 
he  must  be  considered  as  a  joint  maker  of  the  note. 

"II.  On  the  other  hand,  if  his  indorsement  was  subsequent  to  the  making 
of  the  note,  and  he  put  his  name  there  at  the  request  of  the  maker,  pursuant 
to  a  contract  with  the  payee  for  further  indulgence  or  forbearance,  he  can  only 
be  held  as  a  guarantor. 

"III.  But  if  the  note  was  intended  for  discount,  and  he  put  his  name  on  the 
back  of  it  with  the  understanding  of  all  the  parties  that  his  indorsement  would 
be  inoperative  until  it  was  indorsed  by  the  payee,  he  would  then  be  Hable  only 
as  a  second  indorser  in  the  commercial  sense,  and  as  such  would  be  clearly  entitled 
to  the  privileges  which  belong  to  such  indorsers."  Adams  v.  Huggins,  73  Mo. 
.\pp.  140;  Kinsel  v.  Wieland,  38  Colo.  296,  88  Pac.  153. 

49.  Rey  v.  Simpson,  22  How.  241. 

50.  Rivers  v.  Thomas,  1  Lea,  649.  But  see  Rodocanachi  v.  Buttrick,  125 
Maes.  134,  where  such  party  was  held  under  the  circumstances  an  original  prom- 
isor. 


§  716  INDORSEE,    MAKER,    OR    GUARANTOR  811 

§  716.  When  the  note  is  sued  upon  by  the  payee  it  is  held  that  the 
idea  of  the  party  before  him  being  bound  as  an  indorser  is  excluded.*^ 
But  this  doctrine  does  not  seem  to  us  correct.  The  indorsement,  it 
is  true,  is  an  irregular  one;  but  it  is  quite  similar  to  a  bill  drawn  by 
the  indorser  on  the  maker,  and  to  follow  that  analogy  in  all  regards 
seems  to  us  the  simplest  and  most  reasonable  solution  of  the  question. 
And  there  are  a  number  of  cases  which  regard  such  a  party's  liability 
as  prima  facie  that  of  an  indorser.^^  Where  a  note  is  payable  to  the 
maker's  own  order,  it  can  have  no  validity  until  it  is  indorsed  by  him, 
and  in  such  a  case  the  party  signing  his  name  on  the  note  while  it  is 
unindorsed  by  the  payee  is  presumed  to  contemplate  that  the  payee 
is  to  sign  before  him,  and  that  when  the  note  takes  effect  he  will 
himself  appear  as  second  indorser.  All  persons  taking  such  a  note 
are  apprised  of  the  apparent  obligations  of  the  parties,  and  if  they 
rely  on  any  other,  they  must  ascertain  and  prove  them.^^ 

If  any  person  whose  name  is  upon  a  negotiable  instrument  describes 
himself  as  surety,  guarantor,  or  indorser,  he  will  thus  notify  all  persons 
who  may  come  into  possession  of  it,  of  the  character  in  which  he 
binds  himself,  and  as  it  is  a  written  contract,  no  parol  evidence  will  be 
permitted  to  qualify  or  vary  it.^'* 

If  a  note  in  the  maker's  hands  payable  to  his  own  order  be  indorsed 
for  his  accommodation,  and  he  substitute  the  indorser's  name  as 
payee,  it  is  a  material  alteration. ^^ 


51.  Quin  V.  Sterne,  26  Ga.  223;  Brinkley  v.  Boyd,  9  Heisk.  149;  Carpenter  v. 
McLaughlin,  12  R.  I.  270;  Mathewson  v.  Sprague,  1  R.  I.  8;  Perkins  v.  Barstow, 
6  R.  I.  595;  Manufacturers'  Bank  v.  FoUett,  11  R.  I.  92. 

52.  Price  v.  Lavender,  38  Ala.  390;  Wells  v.  Jackson,  6  Blackf.  43;  Vore  v. 
Hurst,  13  Ind.  554;  Sill  v.  Leslie,  16  Ind.  236;  Dale  v.  Moffit,  22  Ind.  114;  Roberts 
V.  Masters,  40  Ind.  462;  Comparree  v.  Brockway,  11  Humphr.  358;  Clonston  v. 
Barbiere,  4  Sneed,  338;  Jennings  v.  Thomas,  13  Smedes  &  M.  617;  Kamm  v. 
Holland,  2  Oreg.  59;  Comett  v.  Hafer  (Kan.),  22  Pac.  1015. 

53.  Kayser  v.  Hull,  85  111.  513;  Blatchford  v.  Milliken,  35  111.  434.  See  ante, 
§  707a. 

54.  Tinker  v.  McCauley,  3  Mich.  188  (overruling  Higgins  v.  Watson,  1  Mich. 
428);  Whitehouse  v.  Hanson,  42  N.  H.  9. 

66.  Stoddard  v.  Penniman,  108  Mass.  366. 


812  TRANSFER   BY    INDORSEMENT  §  717 


SECTION   V 

HOW  FAR  PAROL  EVIDENCE  IS  APPLICABLE  TO  ASCERTAINED 
INDORSEMENTS 

§  717.  It  is  a  general  principle  of  law  that  parol  evidence  is  inad- 
missible to  contradict  or  vary  the  terms  of  a  valid  written  contract,^® 
but  while  it  is  conceded  on  all  sides  to  be  applicable  to  all  contracts 
written  out  in  full,  it  has  been  considered  by  some  authorities  not  to 
extend  to  those  which  are  raised  from  implication  by  operation  of 
law— such  as  indorsements  in  blank.^'    And  this  latter  view  has  been 


66.  Greenleaf  on  Evidence,  §§277,  281,  282;  Armour  Bros.  v.  RUey  County 
Bank,  30  Kan.  165,  citing  the  text. 

67.  Doom  et  al.  v.  Sherwin,  20  Colo.  234,  38  Pac.  56;  McCallum  v.  Driggs, 
35  Fla.  285,  17  So.  470,  approving  text;  Patten  v.  Pearson,  57  Me.  428;  Patten 
V.  Pearson,  56  Me.  39;  Kling  v.  Kehoe,  58  N.  J.  L.  529,  33  Atl.  946;  Johnson  v. 
Martinus,  4  Halst.  144  (but  see  Chaddock  v.  Van  Ness,  35  N.  J.  L.  521,  and 
Johnson  v.  Ramsey,  42  N.  J.  L.  (14  Vroom)  where  Johnson  v.  Martinus  is  criti- 
cised and  overruled);  Jaster  v.  Currie,  69  Nebr.  4,  94  N.  W.  995,  reversed  on 
other  grounds  198  U.  S.  144,  25  Sup.  Ct.  614,  49  L.  Ed.  988;  United  States  Nat. 
Bank  v.  Geer,  55  Nebr.  462,  75  N.  W.  1088,  70  Am.  St.  Rep.  390;  Smith  v.  Morrill, 
54  Me.  48;  Corbett  v.  Fetzer,  47  Nebr.  269,  66  N.  W.  417;  True  v.  Bullard,  45 
Nebr.  409,  63  N.  W.  824;  Commissioners  of  Iredell  v.  Wasson,  82  N.  C.  308; 
Hill  V.  Shields,  81  N.  C.  250  (but  as  between  remote  parties,  see  ante,  S.  699) ; 
Mendenhall  v.  Davis,  72  N.  C.  150;  Davis  v.  Morgan,  64  N.  C.  381;  Breneman  v. 
Furness,  90  Pa.  St.  186;  Susquehanna  Bank  v.  Evans,  4  Wash.  C.  C.  480;  2  Par- 
sons on  Notes  and  Bills,  519.  In  Roads  v.  Webb,  91  Me.  414,  40  Atl.  128,  the  Su- 
preme Court  said :  "  Where  a  note  negotiable  on  its  face  is  indorsed  in  blank  by  the 
payee,  the  law  implies  an  agreement  by  the  payee,  in  case  the  note  is  not  paid  at 
maturity,  on  proper  demand  and  notice  that  the  indorser  will  pay  it  to  the  holder. 
But  the  implied  contract  is  only  prima  facie.  It  may  be  rebutted.  In  a  suit  by 
the  indorsee  against  the  indorser,  the  latter  may  show  that  the  understanding  and 
agreement  between  the  parties  was  that  the  indorser  should  not  be  holden.  The 
law  does  not  imply  a  contract  where  an  express  one  has  been  made.  He  may 
prove  the  express  contract  by  parol  evidence,  or  it  may  satisfactorily  appear  from 
the  transaction  itself."  In  Ross  v.  Espy,  66  Pa.  St.  487,  Agnew,  J.,  said:  "The 
i'ontract  of  indorsement  is  one  implied  by  law  for  the  blank  indorsement,  and  can 
be  qualified  by  express  proof  of  a  different  agreement  between  the  parties,  and  is 
not  subject  to  the  rule  which  excludes  proof  to  alter  or  vary  the  terms  of  an 
express  agreement."  In  Goodrich  v.  Stanton,  71  Conn.  418,  42  Atl.  47,  the 
defendant  first  indorsed  a  note  over  to  Goodrich  "without  recourse" —  Goodrich 
refused  to  accept  the  note  with  such  an  indorsement,  and  thereupon  Stanton 
wrote  his  name  again,  immediately  under  his  first  indorsement,  and  it  was  held 
in  a  suit  by  Goodrich  against  Stanton  that  parol  evidence  was  admissible  to 
explain  the  exact  nature  of  Stanton's  undertaking.    In  the  case  of  Fisk  v.  Reser, 


§  717  HOW    FAR    PAROL    EVIDENCE    IS    APPLICABLE  813 

adopted  by  Byles,  in  his  treatise  on  Bills,  upon  the  authority  of  an 
English  ease,  which  does  not  fully  bear  out  his  interpretation  of  it.^^ 
It  is  true  that  there  are  some  ambiguous  positions  in  which  parties' 
names  appear  on  the  back  of  negotiable  instruments,  which  justify 
the  introduction  of  parol  evidence  to  ascertain  whether  or  not  they 
are  indorsers.  But  when  it  appears  from  an  inspection  of  the  paper 
that  the  party  is  an  indorser,  there  seems  to  us  no  just  ground  for  the 
distinction  taken  between  the  implied  contract  arising  from  his  mere 
name  thereon  written  and  contracts  written  out  in  extenso.  The  in- 
dorsement seldom  consists  of  anything  more  than  the  indorser's 
signature;  but  if  the  agreement  imported  by  that  signature  were 
written  over  it  in  full,  the  undertaking  of  the  indorser  would  not  be 
more  clearly  defined  than  it  is  by  the  signature  itself.  Its  presence 
and  position  upon  the  instrument  are  as  plain  a  manifestation  of  the 


19  Colo.  88,  34  Pac.  572,  it  was  held:  "Parol  proof  is  admissible  to  show  the  cir- 
cumstances under  which  persons  other  than  the  payee,  and  apparently  not  other- 
wise connected  with  a  promissory  note,  have  indorsed  the  same."  In  the  following 
cases  it  was  held  that  parol  evidence  is  admissible  to  show  that  an  indorsement  was 
made  simply  to  pass  title  and  not  to  create  liability  in  the  indorser.  Bryan  v. 
Windsor,  99  Ga.  176,  25  S.  E.  268.  Mendenhall  v.  Davis,  72  N.  C.  150.  See  post, 
§  720a,  note  18.  In  Utica  City  Nat.  Bank  v.  Tallman,  71  N.  Y.  S.  861,  63  App. 
Div.  480,  affirmed  172  N.  Y.  642,  65  N.  E.  1123,  it  was  held  that  parol  evidence 
may  be  received  to  show  a  conditional  indorsement  and  delivery  of  a  note,  as 
that  the  indorsee  will  not  be  held  personally  liable,  on  the  principle  that,  as  be- 
tween the  original  parties,  a  conditional  delivery,  as  well  as  a  want  of  considera- 
tion may  be  proved  by  parol.  It  was  so  held  in  True  v.  Bullard,  45  Nebr.  409,  63 
N.  W.  824,  as  between  the  parties.  But  in  Franklin  v.  Browning,  117  Fed.  226,  it 
was  held  that  the  indorser  cannot  show  a  parol  agreement  that  he  should  not 
be  liable  upon  his  indorsements  unless  plaintiff  had  diligently  protected  an  alleged 
lien  and  neglected  no  means  of  collecting  the  notes  through  such  lien. 

58.  Pike  v.  Street,  1  Moody  &  M.  226  (22  Eng.  C.  L.).  In  Byles  on  Bills 
(Sharswood's  ed.)  1*147],  267,  it  is  said:  "The  contract  between  indorser  and 
indorsee  does  not  consist  exclusively  of  the  writing  popularly  called  an  indorse- 
ment. The  contract  consists  partly  of  the  written  indorsement,  partly  of  the 
delivery  of  the  bill  to  the  indorsee,  and  may  also  consist  partly  of  the  mutual  under- 
standing and  intention  with  which  the  delivery  was  made  by  the  indorser,  and 
received  by  the  indorsee.  That  intention  may  be  collected  from  the  words  of  the 
parties  to  the  contract,  either  spoken  or  written,  from  the  usage  of  the  place,  or 
of  the  trade  from  the  course  of  dealing  between  the  parties  or  from  their  relative 
situation."  Kidson  v.  Dilworth,  5  Price,  564;  Castrique  v.  Battigieg,  10  Moore 
P.  C.  C.  94.  See  Bruce  v.  Wright,  3  Hun,  548,  where  it  is  held  that  an  agreement 
of  an  indorsee  not  to  sue  his  indorser  is  admissible  in  evidence,  and  is  a  good 
defense,  and  that  the  contract  between  indorser  and  indorsee  consists  partly  in 
the  written  indorsement,  partly  in  the  delivery  of  the  paper  to  the  indorsee,  and 
partly  of  the  actual  understanding  and  intention  with  which  delivery  was  made. 


gl4  TRANSFER   BY   INDORSEMENT  §  718 

intention  of  the  party  as  if  it  were  set  forth  in  express  words,  and 
parol  evidence  should  not  be  admitted  to  vary  or  contradict  it.^^ 

§  718.  For,  in  fact,  though  there  be  nothing  but  the  indorser's 
signature,  the  indorser's  contract  is  as  fully  expressed  as  that  of 
the  drawer  of  a  bill  payable  to  bearer.  He  is  a  new  drawer  on  the 
drawee,  if  it  be  a  bill;  a  drawer  on  the  maker,  if  it  be  a  note;  and  the 
instrument  itself,  with  his  name  signed  as  indorser,  constitutes  his 
written  contract,  from  which  he  can  only  be  absolved  by  failure  of 
demand  or  notice,  or  other  delinquency  of  the  holder.  The  following 
general  view  may,  therefore,  be  stated,  to  wit:  that  in  an  action  by 
immediate  indorsee  against  an  indorser,  no  evidence  is  admissible 
that  would  not  be  admissible  in  a  suit  by  a  party  in  privity  with  the 
drawer  against  him.^°  We  have  never  seen  this  rule  laid  down  in 
these  words,  and  the  cases  exhibit  a  painful  contrariety  of  opinion. 

59.  Citizens'  Bank  v.  Jones,  121  Cal.  30,  53  Pac.  354;  Torbert  v.  Montague, 
38  Colo.  325,  87  Pac.  1145;  Hately  v.  Pike,  162  111.  241,  44  N.  E.  441,  53  Am. 
St.  Rep.  304,  quoting  text;  Kingsland  v.  Koeppe,  137  111.  344,  28  N.  E.  48; 
Johnson  v.  Glover,  121  111.  286;  Moorman  v.  Wood,  117  Ind.  148;  Aurora 
Nat.  Bank  v.  Dils,  18  Ind.  App.  319,  48  N.  E.  19;  Cross  v.  Hollister,  47 
Kan.  652,  28  Pac.  693;  Doolittle  v.  Ferry,  20  Kan.  230;  Holmes  v.  First 
Nat.  Bank,  38  Nebr.  326,  56  N.  W.  1011,  41  Am.  St.  Rep.  733;  Washington 
Sav.  Bank  v.  Ferguson,  43  App.  Div.  74,  59  N.  Y.  S.  295;  Farr  v.  Ricker,  46 
Ohio,  265;  Smith  v.  Caro,  9  Oreg.  280;  Barringer  v.  Wilson,  97  Tex.  583,  80 
S.  W.  994.  The  contract  created  by  indorsement  and  delivery  is  a  contract 
in  writing,  and  is  not  open  to  contradiction  or  susceptible  of  annulment,  by 
a  separate  contemporaneous  agreement,  though  likewise  in  writing  unless,  at 
least,  the  terms  of  the  latter  plainly  disclose  that  the  parties  so  intended.  Crilly 
V.  Gallice,  148  Fed.  835.  In  an  action  against  the  indorser  of  a  note,  the  indorser 
cannot  show  that  when  he  indorsed  the  note  he  did  so  because  a  third  person  had 
told  him  that  the  plaintiff  had  requested  his  indorsement  as  an  accommodation  to 
them,  when  there  is  nothing  to  show  that  such  third  person  was  acting  for  the 
plaintiff.  Ott  v.  Seward,  221  Pa.  St.  630,  70  Atl.  882.  In  United  States  Wringer 
Co.  V.  Cooney,  214  III.  520, 73  N.  E.  803,  it  was  held  that  the  fact  that  the  payee 
of  a  note  indorsed  a  check  in  blank  which  recited,  as  drawn,  that  it  was  in  pay- 
ment of  such  note,  the  payee  may  testify  to  the  facts  and  conditions  under  which 
the  check  was  received  by  him  and  indorsed.  In  Randle  v.  Davis  Coal  Co.,  15 
App.  D.  C.  357,  the  court  said  that  there  is  a  well  drawn  distinction  between 
the  case  where  an  instrument  has  been  made  or  indorsed  and  delivered  on  con- 
dition which  has  not  been  fulfilled,  and  the  case  where  such  instrument  has  been 
deUvered  without  such  condition.  The  admission  of  parol  evidence  is  not  to 
show  any  modification,  contradiction,  or  alteration  of  the  written  agreement,  but 
that  it  never  became  operative,  and  that  its  obligation  never  commenced. 

60.  Approved  in  Doolittle  v.  Ferry,  20  Kan.  230,  Brewer,  J.;  McPherson  v. 
Weston  (Cal.),  24  Pac.  734,  citing  the  text. 


§  719  HOW    FAR    PAROL    EVIDENCE    IS    APPLICABLE  815 

But  it  goes  toward  reconciling  many  which  have  been  deemed  at 
variance,  and  embodies  the  true  principle,  as  we  conceive,  of  the  sub- 
ject. Many  cases  speak  of  an  indorsement  in  blank  as  only  an  im- 
plied contract.  This  misconception  often  gives  rise  to  error.  It  is 
expressed  in  the  body  of  the  instrument,  and  in  the  case  of  a  bill  the 
only  difference  between  drawer  and  indorser,  as  a  general  rule,  is  that 
the  drawer  is  an  originating  drawer,  signing  usually  on  the  face,  and 
the  indorser,  a  transferring  drawer,  signing  on  the  back. 

§  719.  Instances  of  exclusion  of  parol  evidence  between  indorser 
and  indorsee. — Accordingly,  the  indorser  cannot  show  by  parol 
evidence  against  his  indorsee  that  it  was  agreed  that  he  should  not 
be  Uable,  and  that  his  indorsement  was  "without  recourse"  on  him.*^ 
If  so  intended,  it  should  be  so  expressed,  and  a  drawer  might  as  well 
offer  evidence  that  the  holder  agreed  to  look  only  to  the  drawee.  Nor 
could  he  show  that  his  liability,  according  to  agreement,  was  to  be 
that  of  a  guarantor,^-  or  a  surety ,^'^  or  a  maker ,^^  or  that  his  signature 

61.  Martin  v.  Cole,  104  U.  S.  30,  26  L.  Ed.  647;  affirming  Martin  v.  Cole, 
3  Colo.  113,  and  approving  text;  Brown  v.  Spofford,  95  U.  S.  (.5  Otto)  483;  Bank 
of  the  United  States  v.  Dunn,  6  Pet.  .51 ;  Randle  v.  Davis  Coal  Co.,  15  App.  D.  C. 
357;  Preston  v.  Ellington,  74  .\la.  133;  Day  v.  Thompson,  65  Ala.  269;  Charles 
V.  Denis,  42  Wis.  56;  Dunn  v.  Ghost,  5  Colo.  134,  citing  the  text;  Dale  v.  Gear, 
38  Conn.  15,  39  Conn.  89;  Courtney  v.  Hogan,  93  111.  101;  Skelton  v.  Dustin,  92 
III.  49;  Jones  v.  Albee,  70  111.  37;  Lee  v.  PUe,  37  Ind.  107;  Campbell  v.  Robins, 
29  Ind.  271;  Wilson  v.  Black,  6  Blackf.  509;  Odam  v.  Beard,  1  Black.  191;  Geneser 
V.  Winser,  69  Iowa,  119;  Harrison  v.  McKim,  18  Iowa,  485;  Doolittle  v.  Ferr\-, 
20  Kan.  230;  Crocker  v.  Getchell,  23  Me.  392;  Knoblauch  v.  Foglesong,  38  Minn. 
352;  CoUom  v.  Bixby,  33  Minn.  50;  Lewis  v.  Dunlap,  72  Mo.  178;  Rodney  v. 
Wilson,  67  Mo.  123;  Barry  v.  Morse,  3  N.  H.  132;  Bank  of  Albion  v.  Smith,  27 

62.  Hamburger  v.  Miller,  48  Md.  327  (semble);  Howe  v.  Merrill,  5  Cush.  80; 
Dibble  v.  Duncan,  2  McLean,  353;  Fuller  v.  McDonald,  8  Greenl.  213.  Contra, 
Taylor  v.  French,  2  Lea,  257;  Newell  v.  Williams,  5  Sneed,  209,  McKinney,  J.: 
"There  is  no  question  but  that  an  indorser  in  blank  may  by  his  agreement  en- 
large or  vary  the  liability  created  by  law."  Kingsland  v.  Koeppe,  137  111.  344, 
28  N.  E.  48.  In  Bradley  v.  Brown,  146  111.  App.  297,  the  court  said  that  while 
parol  evidence  may  be  competent  to  show  that  an  indorsement  was  not  intended 
as  a  contract  of  guaranty,  yet  such  evidence  is  not  competent  to  show  that  the 
contract  in  question  was  not  absolute  but  conditional. 

63.  Hauer  v.  Patterson,  84  Pa.  St.  275;  Barnard  v.  Guslin,  23  Minn.  194. 

64.  Finley  v.  Green,  85  111.  536.  In  Culberton  v.  Wilcox,  11  Wash.  522,  39 
Pac.  954,  held,  that  parol  evidence  is  admissible  for  the  purpose  of  showing  that 
one  who  appears  upon  the  face  of  a  note  as  a  maker  is  in  fact  a  surety,  and  also 
for  the  purpose  of  showing  knowledge  of  the  holder  that  such  signer  was  merely 
a  surety.    Tacoma  Mill  Co.  v.  Sherwood,  11  Wash.  492,  39  Pac.  977. 


816  TRANSFER   BY    INDORSEMENT  §  719 

was  written  under  that  of  the  payee,  merely  in  order  to  identify 
him;  ^^  nor  that  it  was  stipulated  that  he  was  to  be  liable  only  when 
certain  estates  were  sold;  ^^  nor  that  the  paper  was  only  to  be  nego- 
tiated at  a  certain  bank;^'  nor  that  it  was  to  be  renewed  for  two 
months;  ^^  nor  that  the  liability  was  otherwise  conditional  or  different 
from  what  the  indorsement  imported  .^^ 

Under  Negotiable  Instrument  statute. — Under  the  provision  as  to 
the  warranty  of  an  indorsement,™  it  has  been  held  that  upon  an 
unqualified  indorsement,  the  indorser  cannot  be  allowed  to  prove  by 
parol  an  agreement  that  he  should  be  fully  advised  by  the  plaintiff 
as  to  the  conduct  of  the  maker  of  the  note  regarding  payment  of 
instalments,  and  as  affecting  the  value  of  the  mortgage  security ,^^ 
but  under  another  section  of  the  statute  it  has  been  held  that  where 
a  note  was  signed  as  an  indorser  in  the  name  of  a  trustee  of  a  religious 
congregation,  parol  evidence  may  be  received  to  show  whether  the 
indorsement  was  understood  between  him  and  the  payee  to  be  an 
indorsement  in  his  representative  capacity  pledging  only  the  credit 
of  the  property  which  he  held  in  trust,  and  if  so  whether  an  indorsee 
of  the  payee  accepted  the  note  with  notice  of  that  factJ'^ 

Barb.  489;  Cresap  v.  Manor,  63  Tex.  488,  citing  the  text;  Wizig  v.  Beisert  (Tex. 
Civ.  App.),  120  S.  W.  954;  Woodward  v.  Foster,  18  Gratt.  205;  Eaton  v.  McMa- 
hon,  42  Wis.  487  (disapproving  obiter  dictum  in  Murdock  v.  Aradt,  1  Pin.  70); 
Hoare  v.  Graham,  3  Campb.  57;  Fuller  v.  McDonald,  8  Greenl.  213;  Benjamin's 
Chalmers'  Digest,  63;  Abbott's  Trial  Evidence,  415.  See  ante,  §§  699,  717.  In 
Skinner  v.  Church,  36  Iowa,  91,  held  such  evidence  is  admissible  between  immedi- 
ate parties,  but  not  others.  In  Georgia,  held  under  the  Code  admissible  as  between 
immediate  parties:  Lynch  v.  Goldsmith,  64  Ga.  42.  Held  admissible  in  Pennsyl- 
vania. Cake  V.  Pottsville  Bank,  116  Pa.  St.  264.  An  indorser  of  a  note  may  show 
that  the  holder  agreed  that  he  would  release  the  indorser  from  Uability  if  the 
indorser  would  surrender  to  the  maker  certain  security  held  by  the  indorser. 
Hirsch  v.  Kaufman  (R.  I.),  81  Atl.  66. 

65.  Prescott  Bank  v.  Caverly,  7  Gray,  217;  Stack  v.  Beach,  74  Ind.  571; 
Thompson  v.  McKee,  5  Dak.  Ter.  175. 

66.  Free  v.  Hawkins,  8  Taunt.  92,  Holt's  Rep.  550,  1  Moore,  535. 

67.  Stubbs  V.  Goodall,  4  Ga.  106. 

68.  Hoare  v.  Graham,  3  Campb.  57;  United  States  Nat.  Bank  v.  Geer,  55 
Nebr.  462,  75  N.  W.  1088,  70  Am.  St.  Rep.  390. 

69.  Smythe  v.  Scott,  106  Ind.  248,  citing  the  text;  Finley  v.  Green,  85  111. 
535;  Brewer  v.  Boynton,  71  Mich.  255;  Kulenkamp  v.  Groff,  71  Mich.  676;  United 
States  Wind  Engine  &  Pump  Co.  v.  Simonton,  84  Wis.  545,  54  N.  W.  1021. 

70.  Appendix,  sec.  66. 

71.  Hopkins  v.  Merrill,  79  Conn.  626,  66  Atl.  174. 

72.  American  Trust  Co.  v.  Canevin,  184  Fed.  657,  the  court  saying  that  it 
appeared  that  the  trustee  had  authority  to  bind  the  property. 


§§  719a-720a     HOW    FAR   PAROL   EVIDENCE    IS   APPLICABLE         817 

§  719a.  Whether  contemporaneous  waiver  of  demand  and  notice 
may  be  shown  by  parol  evidence. — It  has  also  been  held  that  it  can- 
not be  shown  that  the  indorser  agreed  at  the  time  of  indorsement  to 
be  absolutely  liable  without  demand  and  notice;  ^^  but  we  concur  with 
the  authorities  which  sustain  his  freedom  to  waive  his  right  to  demand 
and  notice  at  any  time.^^  He  merely  relieves  the  indorsee  of  the 
ordinary  duties  of  diligence;  of  the  necessity  of  certain  acts  to  be  done 
in  future,  which  only  impliedly  are  required,  and  which  cease  to  be 
exacted  by  diligence  when  waived  in  advance.  A  written  agreement 
making  the  indorsement  "without  recourse"  might  be  shown,  as 
between  the  parties;  ^^  and  also  a  written  agreement  to  exhaust  the 
mortgage  before  proceeding  against  the  indorser .'^^ 

§  720.  What  parol  evidence  is  admissible  between  indorser  and 
indorsee. — The  language  of  the  rule  implies  its  limitation,  for  it 
does  not  extend  to  exclude  evidence  offered  to  show  want  or  failure 
of  consideration,  or  to  impeach  the  original  or  present  validity  of 
the  indorsement  on  the  ground  of  fraudJ^  There  are  three  classes 
of  cases  in  which  evidence  for  this  purpose  is  admissible,  and  it  will 
be  seen  that  it  does  not  contradict  or  vary  the  contract  imported  by 
the  indorsement,  but  impeaches  it  as  a  valid  indorsement  to  the 
extent  claimed  by  the  indorsee. 

§  720a.  Evidence  as  to  consideration. — ^Thus,  firstly,  it  may  be 
shown  that  the  indorsement  was  without  consideration,  as  for  in- 
stance that  it  was  for  the  indorsee's  accommodation,^^  or  merely  to 

73.  Bank  of  Albion  v.  Smith,  27  Barb.  489;  Barry  v.  Morse,  3  N.  H.  132. 
See  Free  v.  Hawkins,  3  Campb.  57,  which  is  quoted  for  this  doctrine,  but  is  not 
clearly  in  support  of  it,  by  any  means.  Story  on  Notes,  §  148;  2  Parsons  on  Notes 
and  Bills,  520,  note.    See  §  1093. 

74.  See  chapter  on  Excuses  for  Want  of  Presentment  and  Notice,  vol.  II,  §  1903. 
76.  Davis  v.  Brown,  94  U.  S.  (4  Otto)  423. 

76.  Planters'  Bank  v.  Houser,  57  Ga.  140. 

77.  Kirkham  v.  Boston,  67  111.  599;  Kulenkamp  v.  Groflf,  71  Mich.  676. 

78.  Breneman  v.  Furniss,  90  Pa.  St.  186;  Hamburger  v.  Miller,  48  Md.  325; 
Martin  v.  Marshall  (Vt.),  13  Atl.  420.  In  Lovejoy  v.  Citizens'  Bank,  23  Kan. 
331,  the  president  of  a  bank  was  payee  of  note  held  officially  in  transaction  for 
the  bank;  and  he,  in  accordance  with  custom  of  the  business,  indorsed  it,  without 
any  understanding,  agreement,  or  design  to  be  bound.  Held,  that  facts  might  be 
shown,  and  that  indorsement  was  without  consideration.  Woodward  v.  Foster, 
18  Gratt.  205,  Joynes,  J.,  saying:  "When  the  legal  import  of  a  contract  is  clear 
and  definite,  the  intention  of  the  parties  is  for  all  substantial  purposes  as  dis- 
tinctly and  as  fully  expressed  as  if  they  had  written  out  in  words  what  the  law 

52 


818  TRANSFER    BY    INDORSEMENT  §  720a 

transfer  the  legal  title  to  the  indorsee,  he  being  in  fact  the  owner 
of  the  paper;  ^®  or  that  it  was  indorsed  for  collection,  where  the  form 
of  indorsement  does  not  show  that  fact,  ^^  or  that  it  was  indorsed 


implies.  It  is  immaterial  how  much  or  how  little  is  expressed  in  words  if  the  law 
attaches  to  what  is  expressed  a  clear  and  definite  import.  Though  the  writing 
consists  only  of  a  signature,  as  in  the  case  of  an  indorsement  in  blank,  yet,  where 
the  law  attaches  to  it  a  clear,  unequivocal,  and  definite  import,  the  contract  im- 
ported by  it  can  no  more  be  varied  or  contradicted  by  evidence  of  a  contempo- 
raneous parol  agreement  than  if  the  whole  contract  had  been  fully  written  out  in 
words.  The  mischiefs  of  admitting  parol  evidence  would  be  the  same,  in  such 
cases,  as  if  the  terms  implied  by  law  had  been  expressed.  *  *  *  In  Pike  v.  Street, 
1  Moody  &  M.  226  (22  Eng.  C.  L.  299),  tried  before  Lord  Tenterden  at  Nisi 
Priiis,  the  action  was  brought  by  the  indorsee  of  a  bill  of  exchange  against  his 
immediate  indorser.  The  defense  was,  that  though  the  plaintiff  gave  value  to  the 
defendant,  it  was  upon  a  verbal  agreement  that  he  should  sue  the  acceptor  only, 
and  that  he  should  not  sue  the  defendant  as  indorser.  Lord  Tenterden  held  that 
such  an  agreement,  if  proved,  would  be  a  good  bar  to  the  action.  This  case  was 
cited  by  counsel  in  Foster  v.  Jolly,  1  Cromp.,  M.  &  R.  703,  as  an  authority  to  show 
that  evidence  of  a  contemporaneous  parol  agreement  might  be  given  to  vary  the 
written  contract  of  an  indorser.  But  Parke,  B.,  said  that  that  case  fell  within  the 
cases  in  which  the  consideration  is  contradicted;  the  evidence  went  to  show  that 
there  was  no  consideration  as  between  the  plaintiff  and  the  defendant.  TMiether 
this  observation  was  or  was  not  justified  by  the  facts  of  the  case,  it  indicates  the 
ground  upon  which  alone,  in  the  opinion  of  a  judge  of  the  greatest  learning  and 
eminence,  the  opinion  of  Lord  Tenterden  can  be  sustained."  Case  v.  Spaulding, 
24  Conn.  578;  Dale  v.  Gear,  38  Conn.  15;  Smith  v.  Carter,  25  Wis.  283;  Denton  v. 
Peters,  L.  R.,  5  Q.  B.  475;  Chaddock  v.  Van  Ness,  35  N.  J.  L.  520;  Lewis  v.  Dun- 
lap,  72  Mo.  178,  Sheedy  v.  Streeter,  70  Mo.  679. 

79.  Johnston  v.  Schnabaum,  86  Ark.  82,  109  S.  W.  1163,  17  L.  R.  A.  (N.  S.) 
838,  126  Am.  St.  Rep.  1082;  Abrahams  v.  Mitchell,  112  Pa.  St.  232;  Galceran  v. 
Noble,  66  Ga.  367.  See  ante,  §  717,  note  98.  TVTiere  a  cashier  of  a  bank,  acting  as 
the  agent  of  a  depositor  in  making  a  loan  of  money,  took  a  note  from  the  borrower 
payable  to  the  order  of  the  bank  and  forthwith  indorsed  and  delivered  it  to  the 
depositor,  such  indorsement  was  only  a  means  of  transferring  the  legal  title  to  the 
lender,  was  only  for  the  accommodation  of  the  lender,  and  can  afford  no  right  of 
recovery  against  the  bank.  First  Nat.  Bank  of  Duncan  v.  Anderson,  141  Fed. 
926,  reversing  5  Ind.  Ter.  115,  82  S.  W.  692.  In  an  action  against  an  indorser,  he 
may  be  allowed  to  testify  that  the  indorsement  was  not  made  to  transfer  title 
to  the  note  but  for  the  surrender  and  cancellation  of  the  note,  as  such  evidence  does 
not  contradict  or  vary  the  terms  nor  add  new  terms.  Bradley  v.  Bush.  11  Cal. 
App.  287,  104  Pac.  845.  An  indorser  may  show  that  he  indorsed  under  an  under- 
standing, made  at  the  time,  that  this  was  done  merely  to  pass  title  to  the  indorsee 
and  not  as  a  sale  of  the  note  and  a  guaranty  of  its  payment,  when  the  indorser  was 
not  interested  in  the  note  and  there  was  an  element  of  fraud  in  procuring  the  indorse- 
ment.  First  Nat.  Bank  v.  Remman,  93  Ark.  376, 125  S.  W.  443. 

80.  Goette  v.  Sutton,  128  Ga.  179,  57  S.  E.  308;  Hudson  v.  Wolcott,  39  Ohio 
St.  618;  McGuire  v.  AUen,  108  Mo.  403,  IS  S.  VV.  282. 


§  721  HOW    FAR    PAROL    EVIDENCE    IS    APPLICABLE  819 

merely  to  perfect  an  arrangement  between  the  maker  and  indorsee.*^ 
And  where  several  and  successive  indorsers  agreed  to  be  liable  as 
joint  indorsers,  and  cosureties,  an  extension  of  this  principle  would 
admit  the  facts  to  be  shown,  as  they  reveal  the  extent  and  nature  of 
the  consideration.^^ 

§  721.  Evidence  of  special  trust. — Secondly,  it  might  be  shown 
that  the  indorsement  was  upon  trust  for  some  special  purpose,^^ 
as  from  a  principal  to  an  agent,  to  enable  him  to  use  the  instrument 
or  the  money  in  a  particular  way;^^  or  for  collection  merely;  ^^  or 
as  an  escrow  upon  an  express  condition  that  has  not  been  complied 
with.^^  In  such  cases  the  indorsement  is  really  without  a  legal  con- 
sideration; and  the  evidence  does  not  vary  its  effect  as  to  a  third 
person,  but  only  discloses  relations  of  trust  which  might  be  shown 
against  the  drawer  of  a  bill,  or  other  party  with  whom  the  holder  is 
in  privity.  Indeed,  such  evidence  is  competent  even  between  parties 
to  deeds  absolute  on  their  face.    In  Louisiana,  where  a  creditor  at 

81.  National  Bank  v.  Brush,  10  Biss.  (C.  Ct.)  188. 

82.  Ante,  §  703;  Wharton  on  Evidence,  §§  1059,  1060;  Mansfield  v.  Edwards, 
136  Mass.  15;  Sloan  v.  Gibbes,  56  S.  C.  480,  35  S.  E.  408,  76  Am.  St.  Rep.  559, 
citing  text. 

83.  Titcomb  v.  Powers  (Me.),  80  Atl.  851. 

84.  Pollock  V.  Bradbury,  8  Moore  P.  C.  227;  Dale  v.  Gear,  38  Conn.  15;  Chad- 
dock  V.  Van  Ness,  35  N.  J.  L.  520;  Scammon  v.  Adams,  11  111.  578;  Bell  v.  Lord 
Ingestre,  12  Q.  B.  317  (64  Eng.  C.  L.);  Adams  v.  Jones,  12  Ad.  &  El.  455;  Ham- 
burger V.  Miller,  48  Md.  325.  (As  to  rule  in  Georgia  under  Code,  see  Hardy  v. 
White,  60  Ga.  455.)  Avery  v.  Miller,  86  Ala.  499,  citing  the  text;  McCathem  v. 
Bell,  93  Ga.  290,  20  S.  E.  315;  McGuire  v.  Allen,  108  Mo.  403,  18  S.  W.  282,  citing 
the  text. 

85.  Johnson  v.  Schnabaum,  86  Ark.  82,  109  S.  W.  1163,  17  L.  R.  A.  (N.  S.) 
838,  126  Am.  St.  Rep.  1082,  quoting  text;  Lawrence  v.  Stonington  Bank,  6  Conn. 
521;  Dale  v.  Gear,  38  Conn.  15,  39  Conn.  89;  Smith  v.  Childress,  27  Ark.  328; 
Ricketts  v.  Pendleton,  14  Md.  320;  Hill  v.  Ely,  5  Serg.  &  R.  363;  Manley  v. 
Boycot,  2  El.  &  Bl.  46  (75  Eng.  C.  L.).  See  also  McWhirt  v.  McKee,  6  Kan.  412; 
Hamburger  v.  Miller,  48  Md.  325;  Lewis  v.  Dunlap,  72  Mo.  178.  See  Martin  v. 
Cole,  3  Colo.  114,  Stone,  J.,  saying  that  the  offer  to  prove  an  indorsement  in  blank 
was  "for  collection,"  for  the  indorser's  benefit,  was  "an  attempt  to  make  a  general 
indorsement  a  restrictive  indorsement."  This  is  to  be  distinguished  from  an 
indorsement  for  collection  for  benefit  of  indorser;  and  in  the  last  edition  of  this 
work  the  purport  of  this  case  seems  to  have  been  misunderstood  by  the  author. 
See  ante,  §  719,  and  note;  Whitney  v.  Spearman,  50  Nebr.  617,  70  N.  W.  240. 

86.  Chaddock  v.  Van  Ness,  35  N.  J.  L.  520;  Ricketts  v.  Pendleton,  14  Md. 
320;  Goggerty  v.  Cuthbert,  2  B.  &  P.  N.  R.  170;  Wallis  v.  Little,  14  C.  B.  369; 
Bell  V.  Lord  Ingestre,  12  Q.  B.  317  (64  Eng.  C.  L.  );  Robinson  v.  Little,  9  Q.  B. 
202  isemble). 


g20  TRANSFER   BY    INDORSENEENT  §  722 

maturity  of  a  note  wrote  his  name  upon  it  as  a  receipt,  it  was  held 
admissible  to  show  the  fact  as  between  immediate  parties;  ^^  and  the 
apparent  indorsement  being  without  consideration,  this  decision 
is  within  the  views  of  the  text.  It  might  also  be  shown  that  the  in- 
dorsement was  made  as  collateral  security  for  a  debt,  the  evidence 
going  to  show  the  nature  and  extent  of  the  consideration.^^  It  has 
been  held  that  it  carmot  be  shown  by  parol  evidence  that  an  indorse- 
ment "for  collection"  was  absolute,  its  very  terms  importing  the 
restriction.^^ 

§  722.  Evidence  of  fraudulent  representation.— TMrdZ?/,  it  may 
be  shown  that  there  were  representations  made  at  the  time  of  the 
indorsement,  which  were  rehed  on  by  the  indorser,  and  which,  if 
his  liability  were  enforced,  would  operate  as  a  fraud  upon  him.^o  In 
Pennsylvania,  where  defendant  purchased  coffee  of  plaintiff,  upon  an 
agreement  that  the  latter  should  receive  certain  notes  in  payment, 
without  defendant  assuming  any  responsibility,  the  latter  handed 
plaintiff  the  notes,  when  he  said,  *'  Hill,  you  must  indorse  those  notes." 
Defendant  repUed,  "That  is  not  our  understanding."  The  plaintiff 
rejoined,  "They  are  made  payable  to  you;  how  Asill  you  convey  them 
to  me?  You  must  indorse  them,  in  order  that  I  may  collect  them." 
Defendant  then  said,  "I  indorse  them;  but,  remember,  I  am  not  to 
be  held  responsible  for  their  payment."  The  court  said:  "The  evi- 
dence went  to  prove  a  direct  fraud  in  obtaining  the  indorsements, 
or  their  perversion  to  a  use  never  intended — a  fraudulent  purpose."  ^^ 

87.  Cole  V.  Smith,  29  La.  Ann.  551;  Corbett  v.  Fetzer,  47  Nebr.  269,  66  N.  W. 
417. 

88.  Hazzard  V.  Duke,  64  Ind.  220.    See  §  820  e/ se?. 

89.  Smith  v.  Bayer,  46  Oreg.  143,  79  Pac.  497,  114  Am.  St.  Rep.  858;  Third 
Nat.  Bank  v.  Clark,  23  Minn.  263;  Rock  County  Nat.  Bank  v.  Hollister,  21 
Minn.  385. 

90.  Kirkham  v.  Boston,  67  111.  599;  Hamburger  v.  Miller,  48  Md.  325;  Lewis 
V.  Dunlap,  72  Mo.  178;  McPherson  v.  Weston  (Cal.),  24  Pac.  734,  citing  the  text. 
In  an  action  brought  against  an  indorser  of  a  note,  the  indorsee  may  show  that  his 
indorsement  and  sale  of  the  note  were  procured  for  part  only  of  its  value  by  the 
indorsee  under  fraudulent  representations  that  the  maker  was  insolvent  and  that 
the  defendant  would  not  be  liable  on  his  indorsement.  Nethercutt  v.  Hopkins, 
38  Wash.  577,  80  Pac.  798. 

91.  Hill  V.  Ely,  5  Serg.  &  R.  363;  Breneman  v.  Furniss,  90  Pa.  St.  186;  Kirk- 
ham V.  Boston,  67  111.  599;  Hudson  v.  Wolcott,  39  Ohio  St.  618;  Shaw  v.  Stein, 
44  N.  W.  419.  In  New  York  it  has  been  held  that  if  there  be  a  written  or  verbal 
agreement  not  to  sue  the  indorser,  it  may  be  shown.  Bruce  v.  Wright,  3  Hun, 
548;  Benton  v.  Martin,  52  N.  Y.  570;  Wilcox  v.  Tenant,  13  Tex.  Civ.  App.  220, 

I  35  S.  W.  865;  Allin  v.  WiUiams,  97  Cal.  403,  32  Pac.  441. 


§  723  HOW    FAR    PAROL    EVIDENCE    IS    APPLICABLE  821 

This  case  is  distinguished  from  those  in  which  a  mere  agreement  that 
the  indorser  shall  not  be  responsible  is  offered  to  be  shown,  no  cir- 
cumstances which  would  otherwise  render  the  transactions  fraudulent 
or  showing  a  secret  trust,  appearing.^^  So,  evidence  has  been  held 
admissible  to  show  that  the  indorsement  was  made  on  the  indorsee's 
assurance  that  it  was  merely  as  a  receipt.^^  And  in  a  case  (going  too 
far,  as  we  think)  it  has  been  held  that  one  of  two  accommodation 
indorsers  might  show  that  only  one  was  to  be  liable,  and  his  own 
indorsement  was  required  merely  for  formal  compliance  with  a  rule 
of  the  bank.^^ 

§  723.  The  cases  prohibiting  the  introduction  of  parol  evidence 
to  vary  the  contract  implied  in  an  indorsement  are  in  direct  conflict 
with  others;  but  there  is  no  conflict  between  them  and  the  cases 
which  permit  such  evidence  in  order  to  ascertain  the  circumstances 
under  which  the  indorsement  was  made,  and  whether  or  not  it  was 
accompanied  by  a  transfer  in  the  usual  course  of  business.  It  would 
be  useless  to  attempt  to  reconcile  the  authorities  on  the  subject;  but 
the  true  line  of  distinction  which  should  be  observed  is  this:  when  it 
appears  that  the  indorsement  was  accompanied  by  a  transfer  for 
value,  and  is  unimpeached  by  fraud,  it  imports  a  distinct  liability, 
which  cannot  be  varied;  but  when  several  indorse  for  accommodation, 
or  the  indorsement  was  made  for  any  of  the  peculiar  purposes  which 
we  have  already  described,  extrinsic  evidence  is  admissible  to  show 
them. 

A  parol  agreement  between  the  first  and  second  indorser  of  a  note 
by  which  the  latter  undertakes  to  pay  the  note,  provided  the  former 
would  deliver  him  goods  to  the  amount  so  paid,  would  be  valid;  and 
is  not  within  the  Statute  of  Frauds  as  an  undertaking  to  answer  the 
debt,  default,  or  miscarriage  of  another.^^ 

92.  Dale  v.  Gear,  38  Conn.  15,  is  a  very  able  and  instructive  case  on  this  ques- 
tion, and  takes  this  distinction.  In  a  note  in  the  Law  Register,  Judge  Redfield 
criticises  it  as  "thin"  and  untenable  (Law  Reg.,  Jan.,  1873,  p.  21).  It  is  nice, 
undoubtedly,  and  difficult,  perhaps,  in  some  cases  to  apply;  but,  if  not  recognized, 
the  departure  should  be  in  ruling  out  such  evidence  altogether  (see  s.  c,  39  Conn. 
30). 

93.  Morris  v.  Faurot,  21  Ohio  (N.  S.),  155;  Keeler  v.  Commercial  Prmtmg 
Co.,  16  Wash.  526,  48  Pac.  239. 

94.  Rockhill  v.  Moore,  1  Pa.  L.  J.  392. 

96.  Sanders  v.  Gillespie,  59  N.  Y.  250  (1874). 


822  TRANSFER   BY    INDORSEMENT  §§  724,  724a 

SECTION   VI 

THE   TIME   AND    DATE    OF   TRANSFER 

§  724.  As  to  time  of  transfer. — Negotiable  paper,  whether  made 
for  accommodation  or  otherwise,  may  be  transferred  by  indorsement 
or  by  delivery  (as  the  case  may  be)  either  before  it  has  fallen  due  or 
afterward .^^  Negotiable  paper  does  not  lose  its  negotiable  character 
in  the  sense  of  assignability  by  being  dishonored  for  nonpayment  or 
nonacceptance.^^ 

§  724a.  After  maturity  negotiable  paper  circulates,  but  transferee 
only  acquires  the  right  and  title  of  the  transferrer. — After  matu- 
rity negotiable  paper  still  passes  from  hand  to  hand  ad  infinitum 
until  paid.  Moreover,  the  indorser,  after  maturity,  writes  in  the 
same  form,  and  is  bound  only  upon  the  same  condition  of  demand 
upon  the  drawer  and  notice  of  nonpayment  as  any  other  indorser. 
The  paper  retains  its  commercial  attributes,  and  circulates  as  such 
in  the  community;  but  there  is  this  vital  distinction  between  the 
rights  of  a  transferee  who  received  the  paper  before,  and  of  one  who 
received  it  after  maturity.  The  transferee  of  negotiable  paper  to 
whom  it  is  transferred  after  maturity,  acquires  nothing  but  the  actual 
right  and  title  of  the  transferrer;  ^*    and  takes  it  charged  with  notice 

96.  Gardner  v.  Beacon  Trust  Co.,  190  Mass.  27,  76  N.  E.  455,  2  L.  R.  A. 
(N.  S.)  767,  112  Am.  St.  Rep.  303;  Capwell  v.  Machon,  21  R.  I.  520,  45  Atl. 
259;  Dehers  v.  Harriott,  1  Show.  163;  Mitford  v.  Walcott,  Ld.  Raym.  575; 
Charles  v.  Mursden,  1  Taunt.  224;  Graves  v.  Kay,  3  B.  &  Ad.  313;  Stein  v. 
Yglesias,  3  Dowl.  252.  The  fact  of  its  being  an  accommodation  bill  does  not 
prevent  its  being  negotiable  when  overdue.  2  Rob.  Pr.  (new  ed.)  252;  Thompson 
on  Bills  (Wilson's  ed.),  178;  Cooper  v.  The  German  Nat.  Bank  of  Denver  et  al., 
9  Colo.  App.  169,  47  Pac.  1041,  citing  text.  If  the  paper  thus  indorsed  be  nonne- 
gotiable,  the  purchaser  should  at  once  notify  the  maker  of  the  change  of  owner- 
ship, otherwise  he  will  not  be  protected  from  defenses  afterward  acquired  by  the 
maker.    See  Cox  v.  Bank  of  Westfield,  18  Ind.  App.  248,  47  N.  E.  841. 

97.  Davis  v.  Miller,  14  Gratt.  1;  Brown  v.  Hull,  33  Gratt.  28;  Baxter  v.  Little, 
6  Mete.  (Mass.)  7;  Britton  v.  Bishop,  11  Vt.  70;  Leavitt  v.  Putnam,  3  N.  Y. 
494;  Powers  v.  Neeson,  19  Mo.  190;  Long  v.  Crawford,  18  Md.  320;  McSherry 
v.  Brooks,  46  Md.  118;  Morgner  v.  Bigelow,  3  Mo.  App.  592;  National  Bank  v. 
Texas,  20  Wall.  72;  Thompson  v.  Perrine,  106  U.  S.  589. 

98.  Ames  on  Bills  and  Notes,  vol.  I,  p.  773;  Morgan  v.  United  States,  113  U.  S. 
500;  Texas  v.  Hardenburg,  10  Wall.  68;  Smith  v.  Foley,  6  Wall.  492;  Murray  v. 
Lardener,  2  Wall.  110;  The  John  W.  Cannon,  24  Fed.  392;  Williamson  v.  Doby,  36 


§  724a  THE    TIME    AND    DATE    OF    TRANSFER  823 

of  and  subject  to  any  defenses  which  could  have  been  urged  against 
it  had  it  remained  in  the  hands  of  the  payee;  ^^  and  the  Hke  rule 


Ark.  689;  Eames  v.  Roiser,  101  Cal.  260,  35  Pac.  873;  Graves  v.  Mining  Co., 
81  Cal.  327;  Chase  v.  Whitmore,  63  Cal.  545;  Templeton  v.  Poole,  59  Cal.  286; 
Simpson  v.  Hall,  47  Conn.  418;  King  v.  Mecklenburg,  43  Colo.  316,  95  Pac.  951; 
Thomas  v.  Kinsey,  8  Ga.  421;  Scott  v.  First  Nat.  Bank,  71  Ind.  319;  Aultman  & 
Co.  V.  Teeple,  98  Iowa,  186,  67  N.  W.  236;  Carlton  v.  Smith  (Ky.),  110  S.  W. 
873;  Power  v.  Hambrick  (Ky.),  74  S.  W.  660;  Wade  v.  Foster  (Ky.),  71  S.  W.  443; 
Clark  V.  Deaderick,  31  Md.  148;  Barker  v.  Valentine,  10  Gray,  341;  FUnt  v. 
Flint,  6  Allen,  34;  Merrick  v.  Butler,  2  Lans.  103;  Booher  v.  Allen,  153  Mo.  613, 
55  S.  W.  238;  Turner  v.  Hoyle,  95  Mo.  345,  citing  the  text;  Julian  v.  Calkins,  85 
Mo.  202;  Ford  v.  Phillips,  83  Mo.  530,  citing  the  text;  Livermore  v.  Blood,  40 
Mo.  48;  Langford  v.  Varner,  65  Mo.  App.  370;  Griffith  v.  Conway,  45  Mo.  App. 
574;  Henley  v.  Holzer,  19  Mo.  App.  248,  citing  the  text;  Brainard  v.  Reavis, 
2  Mo.  App.  490;  Koehler  v.  Dodge,  31  Nebr.  328,  47  N.  W.  913;  Owen  v.  Evans, 
134  N.  Y.  514,  31  N.  E.  999;  Griffin  v.  Hasty,  94  N.  C.  440;  Fields  v.  Tunston, 
1  Coldw.  40;  Texas  Banking  Co.  v.  Turnley,  61  Tex.  372,  citing  the  text;  Diamond 
V.  Harris,  33  Tex.  634;  Darling  v.  Osborne,  51  Vt.  130;  Noyes  v.  Landon  (Vt.), 
10  Atl.  342;  Arents  v.  Commonwealth,  18  Gratt.  750;  Davis  v.  Miller,  14  Gratt.  1; 
Murray  v.  Reed,  17  Wash.  1,  48  Pac.  343;  Ashurst  v.  Royal  Bank,  27  Law  Times, 
168.  This  rule  applies  to  all  forms  of  negotiable  instruments,  including  municipal 
bonds  payable  at  a  designated  time,  but  redeemable  at  an  earlier  period  at  the 
pleasure  of  the  obligor.  Such  instruments  (e.  g.,  what  are  known  as  United 
States  5-20  coupon  bonds)  will  be  deemed  to  have  matured  upon  the  day  fixed 
for  this  payment  in  the  "call"  made  by  the  proper  official  in  pursuance  of  legis- 
lative authority.  After  that  date  they  are  subject  to  all  defenses  which  may  be 
set  up  against  overdue  commercial  paper.  Van  Hoffman  v.  United  States,  18 
Ct.  of  Claims,  386.  A  purchaser  of  a  note  after  maturity  takes  no  better  title 
than  his  transferrer  had,  and  when  the  payee  of  a  note  indorsed  it  in  blank  and 
delivered  it  to  a  certain  person  for  collection,  a  purchaser  from  such  a  holder 
after  maturity  took  it  subject  to  the  equity  or  right  the  payee  and  indorser  had  in 
it.  Mayfield  Grocer  Co.  v.  Andrew  Price  &  Co.,  43  Tex.  Civ.  App.  391,  95  S.  W. 
31  (1906).  In  California  it  has  been  held  that  the  contract  of  one  who  indorses 
a  promissory  note  after  it  falls  due,  and,  as  additional  security  to  prevent  legal 
proceedings  from  being  taken  against  the  payee  and  indorser,  is  that  of  a  guarantor, 
and  even  if  based  on  a  valid  consideration,  is  defective,  unless  the  writing  expres.-! 
the  consideration.  Crooks  v.  TuUy,  50  Cal.  254.  But  the  case  is  very  different 
where  the  owner  of  an  overdue  note  transfers  it,  under  circumstances  which  enable 
his  transferee  to  deal  with  it,  though  obtained  by  fraud,  as  if  he  were  the  true 
owner,  and  when  an  innocent  purchaser  for  value  takes  it  from  such  transferee 
before  the  transfer  has  been  avoided;  in  such  case  no  equity  attaches  to  the  note 
in  favor  of  the  true  owner  as  against  the  innocent  purchaser  for  value,  since  it  was 
by  his  own  act  that  the  perpetrator  of  the  fraud  was  enabled  to  commit  it.  Gardner 
V.  Beacon  Trust  Co.,  190  Mass.  27,  76  N.  E.  455,  2  L.  R.  A.  (N.  S.)  767,  112  Am. 
St.  Rep.  303. 

99.  Morgan  v.  Bean,  100  111.  App.  114;  Brown  v.  Smedley,  136  Mich.  65, 
98  N.  W.  856;  Williams  v.  Baker,  100  Mo.  App.  284,  73  S.  W.  339;  May  v.  First 


g24  TRANSFER   BY    INDORSEMENT  §  725 

applies  to  the  transferee  who  takes  the  paper  after  a  refusal  to  accept 
by  the  drawee,  provided  he  had  notice  of  such  refusal.^  In  other 
words,  the  transferee  of  negotiable  paper  refused  acceptance  (with 
notice  thereof),  or  overdue,  takes  it  subject  to  all  the  equities  with 
which  it  was  incumbered  in  the  hands  of  the  party  from  whom  he 
received  it;  for  it  comes,  to  use  Lord  Ellenborough's  words,  ''dis- 
graced to  him."  Thus,  if  he  took  it  from  a  thief,  or  finder,^  or  from 
a  bankrupt  incapacitated  by  law  to  make  the  transfer,^  he  could  not 
recover  on  it,  inasmuch  as  the  thief,  finder,  or  bankrupt  could  not. 
So,  if  it  were  without  consideration  in  the  hands  of  the  transferee,'* 
or  had  been  paid,  he  could  not  recover.^  It  is  competent  against  the 
transferee  after  maturity  to  show  any  equities  attaching  to  the  paper 
itself,  but  not  to  show  by  parol  evidence  that  it  was  not  to  be  nego- 
tiated, or  not  sued  on  until  a  certain  event,  for  this  would  be  to  con- 
tradict the  written  contract  by  mere  parol.^ 

Where  several  notes  are  secured  by  mortgage,  and  the  indorsee 
receives  one  overdue,  he  is  not  thereby  affected  with  equities  as  to 
the  other.^ 

§  725.  Defenses  to  which  the  indorsee  of  overdue  paper  is  not 
subjected;  (1)  not  subject  to  set-off;  nor  to  (2)  subsequent  equity.— 

The  modern  English  doctrine  is  that  the  indorsee  of  an  overdue  bill 
or*  note  takes  it  subject  to  equities  arising  out  of  the  transaction  in 
which  the  instrument  was  executed,  and  existing  at  the  time 
of  the  transfer,  and  not  to  a  set-off  arising  out  of  collateral 
matters;  in  other  words,  he  takes  the  paper  subject  to  its  existing 
equities.    This  doctrine  was  settled  in  England  by  the  case  of  Bur- 


Nat.  Bank,  74  Nebr.  251,  104  N.  W.  184;  Linsday  v.  Button,  217  Pa.  148,  66  Atl. 
250;  Edwards  v.  White,  (Tex.  Civ.  App.)  120  S.  W.  914. 

1.  O'Keefe  v.  Dunn,  6  Taunt.  305  (1  Eng.  C.  L.),  5  Maule  &  S.  282;  White- 
head V.  Walker,  11  L.  &  J.  Exch.  168,  9  M.  &  W.  506;  Bartlett  v.  Benson,  14 
M.  &  W.  733. 

2.  Byles  on  Bills  (Sharswood's  ed.)  [*161,  162],  284;  Averill  v.  Second  Nat. 
Bank,  19  D.  C.  246;  Seay  v.  Fennell,  15  Tex.  Civ.  App.  261,  39  S.  W.  181;  Reed 
V.  Stapp,  3  C.  C.  A.  244,  52  Fed.  641. 

3.  Ashurst  v.  Royal  Bank,  27  Law  Times,  168  (1856). 

4.  McSherry  v.  Brooks,  46  Md.  118. 
6.  Halsey  v.  Lange,  28  La.  Ann.  248. 

6.  McSherry  v.  Brooks,  46  Md.  118;  Rockwell  v.  Wilder,  4  Mete.  (Mass.) 
562. 

7.  Boss  V.  Hewitt,  15  Wis.  260;  Kelly  v.  Staed,  136  Mo.  430,  37  S.  W.  1110, 
58  Am.  St.  Rep.  648,  citing  text. 


§  72o  THE    TIME    AND    DATE    OF    TRANSFER  825 

rough  V.  Moss/  and  has  been  uniformly  followed,^  and  has  been  held 
to  apply  even  though  the  indorsee  had  notice,  gave  no  consideration, 
and  took  the  paper  on  purpose  to  defeat  the  set-off.  ^°  As  an  indorsee 
takes  subject  only  to  equities  which  existed  between  the  maker  and 
the  payee  of  the  note,  or  as  to  any  inherent  disqualifications  in  the 
note,  he  does  not  take  subject  to  such  equities  as  existed  between  the 
maker  and  any  intermediate  holder, ^^  as  between  intermediate  par- 
ties,^^  or  to  such  as  may  arise  after  the  transfer.^^ 

The  doctrine  of  Burrough  v.  Moss  has  been  followed  in  most  of 
the  United  States  in  which  the  question  has  been  presented,  as  re- 
marked in  Virginia,  and  may  be  considered  a  fixed  principle  of  com- 
mercial law.^^ 

8.  10  B.  &  C.  558  (21  Eng.  C.  L.  128)  (1830);  Chitty,  Jr.,  1481. 

9.  Stein  v.  Yglesias,  1  Cromp.,  M.  &  R.  565,  3  Dowl.  252  (1834);  White- 
head V.  Walker,  9  M.  &  W.  506  (1842);  Oulds  v.  Harrison,  10  Exch.  572  (1854), 
34  L.  J.  Exch.  66;  Holmes  v.  Kidd,  3  Hurlst.  &  N.  891  (1858);  Edwards  on  BUls, 
259;  Chitty  on  Bills  (13th  Am.  ed.)  [*220],  251;  Ames  on  Bills  and  Notes,  vol.  I, 
p.  775;  Benjamin's  Chalmers'  Digest,  139;  First  Nat.  Bank  v.  Wood,  128  N.  Y. 
35,  27  N.  E.  1020;  First  Nat.  Bank  v.  The  Security  Nat.  Bank,  34  Nebr.  71, 
51  N.  W.  305,  33  Am.  St.  Rep.  618;  Hyde  v.  Hazel,  43  Mo.  App.  668;  Crawford 
V.  Johnson,  87  Mo.  App.  478,  citing  text;  Murchison  v.  Nies  (Kan.),  123  Pac.  750. 

10.  Byles  on  Bills  (Sharswood's  ed.)  [*283],  286;  Oulds  v.  Harrison,  10  Exch. 
572,  24  L.  J.  Exch.  66;  Ames  on  Bills  and  Notes,  vol.  I,  p.  766;  Hauessler  v. 
Greene,  8  Mo.  App.  454.  A  purchaser  of  a  note  after  maturity,  given  for  the  pur- 
chase price  of  land,  takes  it  subject  to  the  right  the  maker  would  have  had  to  set 
off  an  amount  he  has  had  to  pay  to  reheve  his  purchase  of  the  land  from  a  pre- 
existing hen.  Wolf  v.  Shelton,  159  Ind.  531,  65  N.  E.  582.  Where  a  note  waa  long 
past  due  when  it  was  purchased  from  the  assignee  of  an  insolvent  bank,  the  maker 
is  entitled  to  off-set  so  much  of  his  deposit  account  as  would  have  been  sufficient 
to  constitute  payment.  Little  v.  Sturgis,  127  Iowa,  298,  103  N.  W.  205.  In 
Butler  V.  MitcheU,  128  Ga.  432,  57  S.  E.  654,  it  was  held  that,  as  against  a  holder 
who  has  received  the  note  after  dishonor,  the  maker  may  set  off,  to  the  extent  of 
the  amount  due  on  the  note,  any  sum  which  may  be  due  from  the  payee  to  the 
maker  which  is  in  any  way  connected  with  the  debt  sued  on  or  the  transaction 
out  of  which  it  sprung. 

11.  Reardan  v.  Cockrell,  54  Wash.  400,  103  Pac.  457.  The  drawer  of  a  check 
cannot  defend  on  the  ground  that  the  check  was  stale  and  dishonored  at  the  time 
it  was  assigned.    Caldwell  v.  Dismuskes,  111  Mo.  App.  570,  86  S.  W.  270. 

12.  Wolford  v.  Rusk,  145  lU.  App.  405. 

13.  Fields  v.  Tanston,  1  Coldw.  40;  Baxter  v.  Little,  6  Mete.  (Mass.)  7;  Hey- 
wood  v.  Steams,  39  Cal.  58;  GutwilUg  v.  Stumes,  47  Wis.  428;  Davis  v.  Noll, 
38  W.  Va.  66,  17  S.  E.  791,  45  Am.  St.  Rep.  841,  note,  citing  text. 

14.  Eversole  v.  MauU,  50  Md.  96;  Hauessler  v.  Greene,  8  Mo.  App.  451; 
Simpson  v.  Hall,  47  Conn.  418;  Davis  v.  Miller,  14  Gratt.  8;  also  1  Rob.  Pr. 
(new  ed.)  252;  Annon  v.  Houck,  4  Gill,  332;  Hughes  v.  Large,  2  Barr,  103;  Epler 
v.  Frank,  8  Barr,  468;  Clay  v.  Cottrell,  6  Harris,  413;  Britton  v.  Bishop,  11  Vt. 


326  TRANSFER   BY    INDORSEMENT  §  725a 

§  725a.  Defenses  to  which  the  indorsee  of  overdue  paper  is  sub- 
jected.— The  indorsee  of  overdue  paper  takes  it  as  a  holder  with 
notice  that  it  is  subject  to  some  defense,  for  he  takes  it  at  a  time  when 
in  due  course  it  should  have  been  paid.  He  is,  therefore,  subject  to 
the  defense — (1)  That  it  was  affected  in  its  inception  with  some  in- 
herent vice,  as,  for  instance,  fraud,  illegality,  or  duress;  i-'  or  (2)  that 
the  consideration  failed,  or  that  payment  had  been  made,  or  that 
there  had  been  accord  and  satisfaction  at  the  time  of  the  indorsement, 
or  that  there  was  some  equitable  defense  arising  out  of  the  transac- 
tion, in  which  the  paper  was  given,  which  disabled  his  indorser  in 
whole  or  in  part  to  recover. ^^  Any  of  these  defenses  is  called  an  equity 
attaching  to  the  instrument.^" 


70;  Armstrong  v.  Noble,  55  Vt.  429;  Haley  v.  Congdon,  56  Vt.  67;  Noyes  v.  Lan- 
don,  59  Vt.  569;  Barlow  v.  Scott,  12  Iowa,  63;  Bates  v.  Kemp,  12  Iowa,  99; 
Way  V.  Lamb,  15  Iowa,  79;  Whittaker  v.  Kuhn,  52  Iowa,  315;  Richards  v.  Daily, 
34  Iowa,  427;  Arnot  v.  Woodburn,  35  Mo.  99;  Gullett  v.  Hoy,  15  Mo.  399;  Byles 
on  Bills  (Sharswood's  ed.)  [*263],  286;  Flint  v.  Flint,  6  Allen,  34;  Trafford  v.  Hall, 
7  R.  I.  104;  Wilkinson  v.  Jeffers,  30  Ga.  153;  Elliott  v.  Dcason,  64  Ga.  63;  Barker 
V.  Valentine,  10  Gray,  341;  Baxter  v.  Little,  6  Mete.  (Mass.)  7;  Woods  v.  Viozca, 
26  La.  Ann.  716.  In  New  York,  the  doctrine  of  the  text  does  not  obtain.  See 
Edwards  on  Bills,  260;  Driggs  v.  Rockwell,  11  Wend.  504.  And  there  are  other 
States  in  which  offsets  stand  on  the  same  footing  as  equities.  Odiorne  v.  Woodman, 
39  N.  H.  544;  Davis  v.  Neligh,  7  Nebr.  78.  Now  in  Iowa,  by  statute,  a  set-off 
or  counterclaim  arising  out  of  independent  matters,  is  admissible,  if  existing 
before  notice  of  transfer.  Denning  v.  Gibson,  53  Iowa,  517.  In  Minnesota  an 
overdue  note  or  bill  is  put  on  the  same  footing  as  any  other  chose  in  action,  and 
if  assigned  after  due  a  set-off  to  the  amount  of  the  bill  or  note  may  be  pleaded. 
La  Due  V.  First  Nat.  Bank,  31  Minn.  33;  Tuttle  v.  Wilson,  33  Minn.  423;  Edney 
V.  Willis,  23  Nebr.  56;  Hunleth  v.  Leahy,  146  Mo.  408,  48  S.  W.  459. 

15.  Renwick  v.  Williams,  2  Md.  356;  Eversole  v.  Maull,  50  Md.  103;  Bissell 
v.  Gowdy,  31  Conn.  47;  Coghlan  v.  May,  17  Cal.  515;  Cavenah  v.  Somerville, 
Dallam's  Decisions  (Texas),  534;  McLain  v.  Lohr,  25  111.  507;  Capps  v.  Gorham, 
14  111.  198;  Green  v.  Lonthain,  49  Ind.  139;  Thomas  v.  Kinsey,  8  Ga.  421;  Kurtz 
v.  Holbrook,  13  Iowa,  562;  Schuster  v.  Marden,  34  Iowa,  181;  Bates  v.  Kemp, 
12  Iowa,  99;  Barlow  v.  Scott,  12  Iowa,  63;  Southard  v.  Porter,  43  N.  H.  379. 

16.  Boehm  v.  Sterling,  7  T.  R.  423;  Brown  v.  Turner,  7  T.  R.  630;  Taylor  v. 
Mather,  3  T.  R.  83;  Lazarus  v.  Cowie,  3  Q.  B.  359  (43  Eng.  C.  L.);  Snyder  v. 
Riley,  6  Barr.  164;  Wroxon  v.  Macoboy,  6  Victorian  R.  350;  Elgin  v.  Hill,  27 
Cal.  372;  Gordon  v.  W^ansey,  21  Cal.  77;  Stafford  v.  Fargo,  35  111.  481;  Bryan  v. 
Promm,  1  111.  33;  Stoy  v.  Bledsoe,  31  Ind.  App.  643,  68  N.  E.  907;  Freittenberg  v. 
Rubel,  123  Iowa,  154,  98  N.  W.  624;  Stern  v.  Germania  Nat.  Bank,  34  La.  Ann. 
1120;  Davis  v.  Bradley,  26  La.  Ann.  555;  Butler  v,  Munson,  18  La.  Ann.  363; 

17.  Sturtevant  v.  Ford,  4  M.  &  G.  101;  Deuters  v.  Townsend,  5  Best  &  S.  613; 
Fox  v.  Hartford  R.  Co.,  70  Conn.  1,  38  Atl.  871,  quoting  text;  Hunleth  v.  Leahy, 
146  Mo.  408,  48  S.  W.  459. 


§  726  THE    TIME    AND    DATE    OF    TRANSFER  827 

§  726.  Whether  accommodation  character  of  instrument  is  an 
equity  attaching  to  it  after  maturity. — The  general  rule,  that  the 
purchaser  of  overdue  paper  can  stand  in  no  better  position  than  his 
transferrer,  does  not  apply  so  far  as  to  invalidate  bills  and  notes 
drawn,  indorsed,  or  accepted  for  accommodation,  overdue  at  the 
time  they  are  negotiated  or  transferred,  it  being  considered  that 
parties  to  accommodation  papef  hold  themselves  out  to  the  public, 
by  their  signatures,  to  be  bound  to  every  person  who  shall  take  the 
same  for  value,  the  same  as  if  it  were  paid  to  themselves.^*  And  the 
fact  that  the  purchaser  knew  that  the  paper  was  so  drawn,  indorsed, 
or  accepted  for  accommodation,  does  not  weaken  his  position.  ^^  This 
principle  is  well  established  in  England,^"  and  it  is  to  be  regretted 

WTiitwell  V.  Crehore,  8  La.  540;  Sawyer  v.  Hoovey,  5  La.  Ann.  153;  Stevens  v. 
Hannan,  88  Mich.  13,  49  N.  W.  874;  Kellogg  v.  Schnaake,  56  Mo.  136;  Shipp  v. 
Stacker,  8  Mo.  145;  Griffith  v.  Conway,  45  Mo.  App.  574;  Quimby  v.  Stoddard, 
67  N.  H.  287,  35  Atl.  1106;  Tucker  v.  Michaels,  112  N.  Y.  S.  1044;  McElwee 
Mfg.  Co.  V.  Trowbridge,  62  Hun.  471,  17  N.  Y.  S.  3;  Freeman  v.  Bailey,  50  S.  C, 
241,  27  S.  E.  686;  Diamond  v.  Harris,  33  Tex.  634.  A  person  who  purchases  from 
an  attorney  at  law  holding  in  his  possession  a  past  due  mortgage  note,  executed 
by  the  maker,  to  his  own  order,  and  by  him  indorsed,  which  has  been  paid  by 
the  maker,  without  ascertaining  what  right  the  attorney  has  in  respect  to  the  note, 
does  so  at  his  risk;  and,  if  he  had  no  right  to  extend  payment  of  the  note  or  to  sell 
it,  the  purchaser  takes  it  subject  to  the  equities.  State  ex  rel.  Legier  v.  Sutherland, 
111  La.  381,  35  So.  608.  See  also  Thiel  v.  Butker,  125  La.  473,  51  So.  500,  28 
L.  R.  A.  (N.  S.)  1065,  wherein  the  court  said  that  the  principle  that  one  must 
suffer  the  loss  who  places  it  in  the  power  of  the  wrongdoer  to  commit  a  wrong  has 
no  application,  and  that  the  strict  rule  of  the  commercial  law  must  be  adopted. 
A  purchaser  of  a  note  past  due  takes  it  subject  to  an  agreement  made  by  the  payee 
to  accept  an  amount  less  than  the  face  value  of  the  note  in  full  payment  thereof, 
and  a  previous  tender  of  such  amount  to  the  payee.  Hall  v.  Coats,  2  Ga.  App.  202, 
58  S.  E.  365. 

18.  Charles  v.  Marsden,  1  Taunt.  224;  Carruthers  v.  West,  11  Q.  B.  143  (63 
Eng.  C.  L.);  Stein  v.  Yglesias,  3  Dowl.  252;  Byles  on  Bills  (Sharswood's  ed.) 
[*262],  285;  Sturtevant  v.  Ford,  4  M.  &  G.  101,  Tindal,  C.  J.:  "I  do  not  see  much 
force  in  the  argument  that  the  circumstance  of  the  bill  being  overdue  when  it  is 
indorsed  puts  the  indorsee  in  the  same  position  as  the  indorser,  who  in  the  case  of  a 
bill  drawn  for  his  accommodation  cannot  sue  at  all."  Black  v.  Tarbell,  89  Wis. 
390,  61  N.  W.  1106. 

19.  Charles  v.  Marsden,  1  Taunt.  224,  Lawrence,  J.:  "Would  there  be  any 
objection  if,  with  the  knowledge  of  the  circumstance  that  this  is  an  accommo- 
dation bill,  some  person  should  advance  money  upon  it  before  it  was  due?  Then 
what  is  the  objection  to  his  furnishing  the  money  on  it  after  it  was  due?  For 
there  is  no  reason  why  a  bill  may  not  be  negotiated  after  it  is  due,  unless  there  was 
an  affreemmt  for  the  purpose  of  restraining  it."  Hodges  v.  Nash,  141  111.  391,  31 
N.  E.  151. 

20.  See  cases  cited  in  preceding  notes. 


,S28  TRANSFER    BY    INDORSEMENT  §  726 

that  the  decisions  in  the  United  States  do  not  uniformly  follow  the 
English  rule. 

In  the  United  States  a  number  of  cases  follow  the  English  rule,"^ 
but  in  others  it  is  presumed  that  the  accommodating  party  intended 
to  lend  his  credit  only  until  the  maturity  of  the  paper,  and  did  not 
contemplate  its  subsequent  negotiation;  and  it  is  accordingly  held 
that  prima  facie  he  is  entitled  to  defend  against  an  indorsee  after 
maturity.^^  If  there  was  an  agreement,  express  or  implied,  not  to 
negotiate  an  accommodation  bill  after  maturity,  the  weight  of  author- 
ity is  justly  to  the  effect  that  such  agreement  would  constitute  an 
equity  attaching  to  it  upon  its  transfer  after  maturity;  -^  but  in  an 
English  case,  demurrer  was  sustained  to  a  plea  that  it  was  agreed 
by  the  parties  that  the  paper  should  not  be  negotiated  after  ma- 


21.  Mersick  v.  Alderman,  77  Conn.  634,  60  Atl.  109.  Naef  v.  Potter,  226  111. 
628,  80  N.  E.  1084,  11  L.  R.  A.  (N.  S.)  1034;  Miller  v.  Larned,  103  111.  562;  Brey- 
fogle  V.  Addison,  120  111.  App.  520;  First  Nat.  Bank  v.  Grant,  71  Me.  374;  Dunn  v. 
Weston,  71  Me.  270;  Brown  v.  Mott,  7  Johns.  (N.  Y.)  361  (subsequently  over- 
ruled); Powell  V.  Waters,  17  Johns.  176;  Grandon  v.  Leroy,  2  Paige,  509;  Marling 
V.  Jones,  138  Wis.  82,  119  N.  W^  931,  131  Am.  vSt.  Rep.  996.  Harrington  v.  Dorr, 
3  Rob.  275,  the  court  saying:  "A  party  who  lends  his  note  without  limitation 
as  to  the  time  of  its  use,  cannot,  therefore,  be  presumed  in  law  to  have  limited 
such  time  to  that  before  maturity."  Unless  it  is  shown  to  have  been  misappro- 
priated or  diverted.  Mersick  v.  Alderman,  77  Conn.  634,  60  Atl.  109.  See  post, 
§  792.  In  Redfield  and  Bigelow's  Leading  Cases,  217,  it  is  said:  "The  indorser 
(for  accommodation)  is  equally  bound,  whether  the  transfer  is  made  before  or 
after  the  paper  falls  due,  or  whether  the  purchaser  knew  the  indorsement  was 
made  for  accommodation  or  not.  To  hold  otherwise  would  be  to  encourage  fraud, 
and  to  reheve  the  party  from  the  very  responsibility  which  he  expected  to  meet, 
and  which,  upon  every  principle  of  justice  and  fair  dealing,  he  should  be  com- 
pelled to  abide  by."  Story  on  Bills,  §  191.  The  law  recognizes  the  right  of  the 
accommodation  party  to  impose  any  restrictions,  conditions,  or  limitations  upon 
the  paper  that  he  sees  proper;  unless  such  restrictions  are  written  into  the  note 
or  otherwise  brought  to  the  knowledge  of  the  transferee  at  the  time  or  before  the 
paper  is  passed  to  him,  such  restrictions,  limitations,  or  conditions  will  be  no 
defense,  and  the  fact  that  the  paper  may  be  past  due  at  the  time  will  not 
charge  the  transferee  with  notice  of  mere  parol  restrictions.  Naef  v.  Potter, 
226  111.  628,  80  N.  E.  1084,  11  L.  R.  A.  (N.  S.)  1034,  affirming  127  III.  App. 
106. 

22.  Chester  v.  Dorr,  41  N.  Y.  279  (overruling  Brown  v.  Mott,  7  Johns.  361); 
Cominsky  v.  Coleman,  114  N.  Y.  S.  875;  Battle  v.  Weems,  44  Ala.  105.  Carrol 
v.  Peters,  1  McGloin,  88;  Hoffman  v.  Foster,  43  Pa.  St.  137;  Bowery  v.  Hastings, 
12  Casey,  285;  Bacon  v.  Harris,  10  Atl.  649,  citing  the  text.  See  Sears  v.  Moore, 
171  Mass.  514,  .50  N.  E.  1027. 

23.  Charles  v.  Marsden,  1  Taunt.  224  {semble);  Parr  v.  Jewell,  16  C.  B. 
684;  Benjamin's  Chalmers'  Digest,  139. 


§  726a  THE    TIME    AND    DATE    OF   TRANSFER  829 

turity,  knowledge  of  the  purchaser  of  such  agreement  not  being 
averred.  ^^ 

If  an  accommodation  bill  has  been  paid  at  maturity,  it  is  like  the 
payment  of  any  other  bill — a  discharge.  It  is  then  spent,  and  the 
indorsee  after  maturity  cannot  recover  against  any  accommodating 
party,  a  defense  being  established  which  goes  to  the  merits  of  the 
case.-'^ 

Under  Negotiable  Instrument  statute. — Notwithstanding  the  pro- 
vision that  in  the  hands  of  any  holder  other  than  a  holder  in  due 
course,  a  negotiable  instrument  is  subject  to  the  same  defenses  as 
if  it  were  nonnegotiable,-^  it  has  been  held  that  the  mere  fact  that  an 
accommodation  note  was  transferred  by  the  party  accommodated 
after  maturity  to  a  holder  for  value  does  not  permit  the  accommoda- 
tion maker  to  defeat  recovery  at  the  suit  of  the  holder  for  value  merely 
upon  the  ground  that  the  note  was  an  accommodation  note  and  witli- 
out  consideration  moving  to  the  accommodation  maker.-^ 

§  726a.  Indorsee  of  overdue  paper  may  recover  if  his  indorser 
could. — A  transferee  can  generally  get  as  good  a  title  as  his  triuis- 

24.  Carruthers  v.  West,  11  Q.  B.  143  (63  Eng.  C.  L.).  See  remarks  on  this 
case  in  Benjamin's  Chalmers'  Digest,  139,  note. 

25.  Lazarus  v.  Cowie,  3  Q.  B.  459  (43  Eng.  C.  L.);  Parr  v.  Jewell,  16  C.  B. 
684  (81  Eng.  C.  L.);  Wroxon  v.  Macoboy,  6  Vict.  350;  Blenn  v.  Lyford,  70 
Me.  149;  Wait  v.  McKee  (Ark.),  128  S.  W.  1028.  Where  an  accommodation  note 
has  returned  to  the  hands  of  the  accommodation  payee  and  indorser,  one  who  takes 
the  note  with  knowledge  of  this  condition,  stands  in  no  better  position.  Baker 
V.  Union  Trust  Co.,  129  Mich.  581,  89  N.  W.  345. 

26.  Appendix,  sec.  58. 

27.  Mersick  v.  Alderman,  77  Conn.  634,  60  Atl.  109;  Marling  v.  Jones,  138 
Wis.  82,  119  N.  W.  931,  131  Am.  St.  Rep.  996.  It  is  to  be  noticed,  however, 
that  the  decisions  in  these  cases  are  limited  to  holding  that  the  defense  of  want 
of  consideration  cannot  be  shown  by  the  accommodation  maker  when  the  instru- 
ment was  negotiable  after  maturity.  This  would  seen  to  be  a  sound  rule  in  view 
of  the  fact  that  the  want  of  consideration  is  the  pecuhar  incident  to  the  relation 
of  the  accommodation  maker  to  the  paper,  but  there  is  no  decision  as  to  the  right 
of  such  party  to  set  up  other  defenses  when  the  paper  has  been  negotiable  for  the 
first  time  after  maturity.  In  the  Marling  v.  Jones  case,  swpra,  the  court  said: 
"  No  doubt  there  exists  a  class  of  defenses  in  favor  of  the  accommodation  maker 
of  negotiable  paper  which  may  not  be  urged  in  cases  where  the  note  is  fair  on  its 
face  and  negotiable  in  due  course  before  due  to  a  purchaser  for  value,  without 
notice  of  knowledge  of  any  infirmity,  but  which  might  be  urged  in  favor  of  the 
accommodation  maker  if  the  note  were  overdue  when  negotiated,  but  the  fact 
that  the  accommodation  maker  received  no  consideration  is  not  one  of  these 
defenses,  so  long  as  the  note  was  negotiated  by  his  express  or  implied  authority." 


g30  TRANSFER   BY   INDORSEMENT  §  726b 

ferrer  possesses,  and  it  is,  therefore,  a  settled  principle  that  if  the 
party  who  transferred  the  instrument  to  the  holder  acquired  the 
note  before  maturity,  and  was  himself  unaffected  by  any  infirmity 
in  it,  the  holder  acquires  as  good  a  title  as  he  held,  although  it  were 
overdue  and  dishonored  at  the  time  of  transfer.^s  Thus,  it  has  been 
held  that  in  an  action  by  a  second  indorsee  of  a  bill  given  for  a  smug- 
gling debt,  he  could  recover  against  the  acceptor,  although  he  took  it 
overdue,  his  indorser  having  acquired  it  bona  fide,  without  notice 
before  it  fell  due.^^ 

§  726b.  Equities  of  third  persons. — The  indorsee  of  overdue  ne- 
gotiable paper  is  not  subject,  it  has  been  held,  to  equities  which  may 
have  intervened  between  remote  indorsers  and  indorsees,  but  only 
to  those  which  exist,  at  the  time  of  indorsement  to  him,  between  the 
principal  parties  and  the  original  holder,  and  between  himself  and 
his  own  indorser.=*°  But  if  there  be  an  equity  attaching  directly  to 
the  bill  or  note  itself,  it  has  been  held  in  England  that  it  may  be 
asserted  against  an  indorsee  after  maturity  by  a  third  party  who 
claimed  the  right  to  follow  the  bill.^^  And  if  the  equity  be  a  claim  of 
some  right  to  the  instrument  directly  attached  to  it,  we  perceive  no 


28.  Woodman  v.  Churchill,  52  Me.  58;  Roberts  v.  Lane,  64  Me.  108;  Riege 
V.  Cunningham,  9  Phila.  (Pa.)  177;  Bissell  v.  Gowdy,  31  Conn.  48;  Wilson  v. 
Mechanics'  Sav.  Bank,  45  Pa.  St.  494;  Bassett  v.  Avery,  15  Ohio  St.  299;  Peabody 
V.  Rees,  18  Iowa,  171;  Richert  v.  Koerner,  54  111.  306;  Bradley  v.  Marshall,  54 
111.  173;  Lock  v.  Tulford,  52  111.  166;  Howell  v.  Crane,  12  La.  Ann.  126;  Smith 
V.  Hiscock,  14  Me.  449;  Thompson  v.  Shepherd,  12  Mete.  (Mass.)  311;  Bank  of 
Sonoma  Co.  v.  Gove,  63  Cal.  355,  citing  the  text;  Eckhert  v.  Ellis,  26  Hun,  663, 
citing  the  text;  Lewis  v.  Long  (N.  C),  9  S.  E.  637,  citing  the  text;  Chitty  on  Bills 
(13th  Am.  ed.),  250;  Fairclough  v.  Pavia,  9  Exch.  690;  Weems  v.  Shaughnessy, 
70  Hun.  175,  24  N.  Y.  Supp.  271;  Koehler  v.  Dodge,  31  Nebr.  328,  47  N.  W.  913, 
28  Am.  St.  Rep.  518;  Langford  v.  Varner,  65  Mo.  App.  370;  Crawford  v.  Johnson, 
87  Mo.  App.  478,  citing  text;  Donnerberg  v.  Oppenheimer,  15  Wash.  290,  46 
Pac.  254,  citing  the  text.  Where  the  second  indorsee,  suing  on  a  note,  had  no- 
tice of  fraud  in  the  inception  of  the  note,  the  bvu-den  is  upon  him  to  show  that 
his  indorser  was  a  good-faith  holder,  and  that  the  defense  could  not  be  made 
against  him.    Hill  v.  Ward,  45  Ind.  App.  458,  91  N.  E.  38,  quoting  text. 

29.  Chalmers  v.  Lanion,  1  Campb.  383.    See  §§  782,  786,  803. 

30.  Hill  V.  Shields,  81  N.  C.  250;  Hunleth  v.  Leahy,  146  Mo.  408,  48  S.  W. 
459;  Y.  M.  C.  A.  Gymnasium  Co.  v.  Bank,  179  111.  599,  54  N.  E.  297,  70  Am. 
St.  Rep.  135,  citing  text. 

31.  In  re  European  Bank,  Ex  parte  Oriental  Commercial  Bank,  L.  R.,  5  Chan. 
App.  358;  Ames  on  Bills  and  Notes,  vol.  I,  891;  Benjamin's  Chalmers'  Digest, 
140. 


§§  727,  728  THE    TIME    AND    DATE    OF    TRANSFER  831 

good  reason  whj^  it  may  not  be  asserted  against  an  indorsee  after 
maturity  by  any  party  whatsoever. ^^ 

§727.  If  a  party  indorses  a  bill  or  note  "without  recourse,"  and 
should  reacquire  it  after  maturity,  his  ownership  not  arising  out  of, 
or  being  referable  to,  his  previous  indorsement,  would  stand  on  no 
higher  ground  than  that  of  any  other  party  acquiring  after  maturity, 
and  equities  could  be  pleaded  against  him.^^  In  the  absence  of  special 
circumstances  equity  will  not  compel  the  surrender  of  a  past-due  note, 
on  the  ground  that  it  was  paid,  but  not  taken  up,  the  maker  having 
an  available  defense,  that  of  payment,  as  against  any  one  who  might 
thereafter  acquire  it."''"*  But  special  circumstances  might  exist  auth- 
orizing its  interference  to  compel  surrender  of  the  paper.^^ 

§  728.  Presumption  as  to  the  date  and  place  of  indorsement. — 

If  the  indorsement  of  a  bill  or  note  be  undated,  it  will  be  presumed, 
when  the  paper  is  in  the  hands  of  a  third  party,  to  have  been  made  at 
the  time  of  execution,  or  at  least  before  maturity  and  dishonor.'"' 

32.  But  see  contra,  Crosby  v.  Tanner,  40  Iowa,  136;  Hibernian  Bank  v.  Ever- 
man,  52  Miss.  500;  Duke  v.  Clark,  58  Miss.  466.  Compare  Warren  v.  Haight, 
65  N.  Y.  171;  Kemohan  v.  Durham,  48  Ohio  St.  1,  26  N.  E.  982,  quoting  with 
approval  the  text;  Bishop  v.  Chase,  156  Mo.  158,  56  S.  W.  1080,  citing  text; 
Zeis  V.  Potter,  44  C.  C.  A.  665,  105  Fed.  671,  quoting  text. 

33.  Calhoun  v.  Albin,  48  Mo.  304;  Koehler  v.  Dodge,  31  Nebr.  328,  47  N. 
W.  913,  28  Am.  St.  Rep.  518. 

34.  Fowler  v.  Palmer,  62  N.  Y.  533.    See  Allerton  v.  Belden,  49  N.  Y.  373. 
36.  McHenry  v.  Hazard,  45  N.  Y.  583. 

36.  See  §  784  et  seq.;  Good  v.  Martin,  95  U.  S.  (5  Otto)  94;  New  Orleans,  etc., 
V.  Montgomery,  95  U.  S.  (5  Otto)  18;  Collins  v.  Gilbert,  94  U.  S.  (4  Otto)  763; 
Bank  of  British  North  America  v.  Ellis,  6  Sawy.  98,  citing  the  text;  Cropley  v. 
Eyster,  9  App.  D.  C.  373;  Murto  v.  Lemon,  19  Colo.  App.  314,  75  Pac.  160; 
Mining  Co.  v.  Bank,  10  Colo.  App.  351;  Parr  v.  Erickson,  115  Ga.  873,  42  S.  E. 
840;  Dickerson  v.  Burke,  25  Ga.  225;  Nagle  v.  Schnadt,  239  111.  595,  88  N.  E.  178; 
Cook  V.  Norwood,  106  111.  558;  Smith  v.  Nevlin,  89  111.  193;  Depuy  v.  Schuyler, 
45  111.  506;  Stewart  v.  Smith,  28  111.  307;  Freehold  Bank  v.  Kennedy  &  Wright 
Co.,  148  111.  App.  310;  Mann  v.  Merchants'  Loan  &  Trust  Co.,  100  111.  App. 
224;  Johnston  v.  Loar,  145  111.  App.  443;  Rodriguez  v.  Merriam,  133  111.  App. 
372;  WTiite  v.  Weaver,  41  111.  409;  Mobley  v.  Ryan,  14  111.  51;  Snyder  v.  Oatman, 
16  Ind.  265;  Rosenthal  v.  Rambo,  28  Ind.  App.  265,  62  N.  E.  637;  Alexander 
Springfield,  2  Mete.  (Ky.)  534;  Frazer's  Admr.  v.  Frazer,  13  Bush,  400;  New  Or- 
leans Canal  v.  Templeton,  20  La.  Ann.  75;  Webster  v.  Calden,  56  Me.  204; 
Hopkins  v.  Kent,  17  Md.  387;  McDoweU  v.  Goldsmith,  6  Md.  319;  Webster  v. 
Lee,  5  Mass.  334;  Noxon  v.  De  Wolf,  10  Gray,  346;  New  Albany  Woolen  Mills 
V.  Myers,  43  Mo.  App.  124,  citing  text;  Haslach  v.  Wolf,  73  Nebr.  658, 103  N.  W. 
317;  Pinkerton  v.  Bailey,  8  Wend.  600;  Hendericks  v.  Judah,  1  Johns.  319;  Bar- 


832  TRANSFER   BY   ASSIGNMENT  §  728 

It  is  difficult  to  see  how  a  more  definite  presumption  than  that  the 
indorsement  was  before  maturity  can  be  sustained,  and  this  seems 
to  be  all  that  is  necessary  to  the  protection  of  commercial  paper." 
As  said  in  Ranger  v.  Carey,  1  Mete.  (Mass.)  369,  ''A  negotiable  note 
being  offered  in  evidence  duly  indorsed,  the  legal  presumption  is  that 
such  indorsement  was  made  at  the  date  of  the  note,  or  at  least  an- 
tecedently to  its  becoming  due;  and  if  the  defendant  would  avail 
himself  of  any  defense  that  would  be  open  to  him  only  in  case  the 
note  were  negotiated  after  it  was  dishonored,  it  is  incumbent  on  him 
to  show  that  the  indorsement  was  in  fact  made  after  the  note  was 
overdue." 

If  any  question  should  arise,  however,  in  which  the  date  of  the  in- 
dorsement during  some  period  of  the  currency  of  the  instrument  was 
put  in  issue,  the  presumption,  according  to  the  authorities,  would 
fix  the  date  at  the  time  of  the  execution,  there  being  no  evidence  to 
the  contrary. 

An  indorsement  will  also  be  presumed  to  have  been  made  at  the 
place  where  the  bill  or  note  is  dated.^^  When  the  date  of  the  indorse- 
ment is  shown  to  have  been  subsequent  to  the  execution  of  the  paper, 
it  cannot  relate  back  thereto.  It  can  only  take  effect  from  the  time 
it  is  made,  and  must  be  governed  by  the  laws  then  in  force.^^ 
rick  V.  Austin,  21  Barb.  241;  Bumham  v.  Wood,  8  N.  H.  334;  Evans  v.  Freeman, 
142  N.  C.  61,  54  S.  E.  847;  Johnson  v.  Josey,  34  Tex.  533;  Rhode  v.  Alley,  27 
Tex.  443;  Watson  v.  Flannagan,  14  Tex.  354;  Smith  v.  Clopton,  4  Tex.  109;  Le- 
land  V.  Famham,  25  Vt.  553;  Mason  v.  Noonan,  7  Wis.  609;  Cripps  v.  Davis,  12 
M.  &  W.  165;  Lewis  v.  Lady  Parker,  4  Ad.  &  El.  838  (31  Eng.  C.  L.);  Parkin  v. 
Moon,  7  Car.  &  P.  408  (32  Eng.  C.  L.) ;  In  Arkansas  it  is  held  otherwise.  Ruddell 
v.  Landers,  25  Ark.  238;  Clendennin  v.  Southerland,  31  Ark.  20.  Such  presump- 
tion obtains  when  the  note  has  been  introduced  under  the  common  counts  as 
though  it  had  been  introduced  in  evidence  under  a  special  count  declaring  upon 
the  note.  Newton  v.  Clarke,  235  111.  530,  85  N.  E.  747.  When  a  person's  name 
appears  first  and  above  all  other  names  indorsed  on  a  note,  this  fact,  while  not 
conclusive,  is  strong  presumptive  evidence  that  he  indorsed  before  the  others 
and  before  the  note  was  delivered.  De  Clerque  v.  Campbell,  231  111.  442,  83 
N.  E.  224.  Where  notes  and  trust  deeds  were  executed  and  a  quitclaim  deed  was 
executed  a  year  and  a  half  thereafter,  the  notes  being  payable  to  the  order  of  the 
maker,  it  must  be  presumed  that  the  notes  were  negotiated  and  in  the  hands  of  an 
innocent  holder  prior  to  the  execution  of  the  quitclaim  deed.  Roach  v.  Sanborn 
Land  Co.,  135  Wis.  354,  115  N.  W.  1102  (1908). 

37.  2  Parsons  on  Notes  and  Bills,  9,  10;  Bumham  v.  Wood,  8  N.  H.  334; 
Parkin  v.  Moon,  7  Car.  &  P.  408;  Lewis  v.  Parker,  4  Ad.  &  El.  838;  Smith  v. 
Nevlin,  89  111.  193. 

38.  Maxwell  v.  Vansant,  56  111.  58. 

39.  Brown  v.  Hull,  33  Gratt.  30.  See  ante,  §  728;  Eyennann  v.  Piron,  151 
Mo.  107,  52  S.  W.  229. 


§  728  .THE    TIME    AND    DATE    OF    TRANSFER  833 

A  bill  or  note  becomes  merged  in  a  judgment,  and  cannot  be  in- 
dorsed or  assigned  afterward/"  but  it  may  be  transferred,  as  we  think, 
pending  suit.^^  It  has  been  held,  upon  the  same  principle,  that  the 
assignment  of  a  note  after  it  has  been  allowed  as  a  claim  against  an 
estate,  transfers  nothing  to  the  assignee.  ^^  In  chapter  XXIV,  section 
IV,  the  rights  of  the  holder  who  acquires  overdue  paper,  and  when  it 
is  deemed  overdue,  are  more  fully  treated.^^ 

Under  Negotiable  Instrument  statute. — The  statute  declares  that 
except  where  the  contrary  appears,  every  indorsement  is  presumed 
prima  facie  to  have  been  made  at  the  place  where  the  instrument  is 
dated,"^*  and  it  has  been  held  thereunder  that  where  a  note  was  ex- 
ecuted by  a  husband  and  made  payable  in  New  York,  and  was  in- 
dorsed in  New  Jersey  by  the  wife  of  the  maker,  in  which  state  in- 
dorsement by  a  married  woman  is  invalid,  the  indorsement  would  be 
governed  by  the  law  of  New  York  when  there  was  nothing  on  the  note 
to  show  that  it  was  indorsed  in  New  Jersey  and  the  indorsee  had  no 
notice  of  the  fact.'*^ 


40.  Wooten  v.  Maullsby,  69  N.  C.  462. 

41.  See  §  1199;  Ober  v.  Goodridge,  27  Gratt.  888. 

42.  Brown  v.  Darrah,  95  Ind.  86,  citing  the  text. 

43.  §782e<seg. 

44.  Appendix,  sec.  46. 

45.  Chemical  Nat.  Bank  of  New  York  v.  KeUogg,  183  N.  Y.  92,  75  N.  E.  1103, 
2  L.  R.  A.  (N.  S.)  299,  111  Am.  St.  Rep.  717, 


53 


CHAPTER  XXII 

TRANSFER  OF  BILLS  AND  NOTES  BY  ASSIGNMENT 

§  729.  As  to  transfer  of  negotiable  instruments  by  assignment.— 
The  term  "assignment"  is  usually  applied  to  denote  the  transfer  of 
bonds  and  notes  not  negotiable,  and  also  the  transfer  of  instru- 
ments which  are  negotiable,  without  indorsement.  If  the  bill  or 
note  be  payable  to  bearer  in  express  terms  upon  its  face,  or  has  be- 
come in  legal  effect  payable  to  bearer  by  being  indorsed  in  blank, 
it  is  then  transferable  by  delivery;  and  the  assignment  by  mere 
delivery  is  in  accordance  with  the  custom  of  merchants.^    If  the  bill 


1.  See  ante,  §  10a  and  §  663.  "A  note,"  says  Judge  Story,  in  Bullard  v.  Bell, 
1  Mason,  243,  "payable  to  bearer,  is  often  said  to  be  assignable  by  delivery;  but 
in  correct  language  there  is  no  assignment  in  the  case.  It  passes  by  mere  delivery, 
and  the  holder  never  makes  title  by  or  through  any  assignment,  but  claims  merely 
as  bearer.  The  note  is  an  original  promise  by  the  maker  to  pay  any  person  who 
shall  become  the  bearer;  it  is,  therefore,  payable  to  any  person  who  successively 
holds  the  note  bona  fide,  not  by  virtue  of  an  assignment  of  the  promise,  but  by 
an  original  and  direct  promise  moving  from  the  maker  to  the  bearer."  Thompson 
V.  Perrine,  106  U.  S.  593;  Bank  of  Kentucky  v.  Wister,  2  Pet.  318;  Thompson  v. 
Lee  Co.,  3  Wall.  327;  Bushnell  v.  Kennedy,  9  WaU.  387;  City  of  Lexington  v. 
Butler,  14  Wall.  282;  Cooper  v.  Town  of  Thompson,  13  Blatchf.  434;  Coe  v. 
Cayuga  Lake  R.  Co.,  19  Blatchf.  522.  The  courts  treat  notes  payable  to  bearer 
as  if  there  were  a  direct  line  of  contract  between  the  maker  and  the  holder,  by 
whatever  successive  stages  of  transfer  he  may  have  derived  it.  And  it  is  correct  to 
hold  that  the  maker  is  in  direct  contract  with  him,  provided  he  has  become  the 
bearer  bona  fide.  He  need  not  trace  title  through  his  predecessors,  as  possession 
is  presumptive  evidence  of  his  right.  But,  nevertheless,  the  remote  bearer  is 
not  in  privity  with  the  maker  so  as  to  open  equities,  and  it  is  because  he  is  in 
fact  an  assignee  that  equities  are  excluded,  and  that  his  assignor  in  certain  cases, 
though  not  a  party  to  the  paper,  may  be  liable  to  refund  the  consideration  paid 
for  it.  It  is,  therefore,  accurate  and  correct  to  speak  of  assignment  by  delivery 
of  instruments  payable  to  bearer.  Bressee  v.  Crumpton,  121  N.  C.  122,  28  S.  C. 
351,  citing  text;  Bank  of  Paris  v.  Pearson,  66  Ark.  310,  50  S.  W.  692;  Buehler 
v.  McCormick,  169  111.  269,  48  N.  E.  287;  May  v.  Dyer,  57  Ark.  441,  21  S.  W.  1064; 
Haug  V.  Riley,  101  Ga.  372,  29  S.  E.  44,  quoting  and  approving  text;  South  & 
Lane  v.  People's  Nat.  Bank,  4  Ga.  App.  92,  60  S.  E.  1987;  Harper  v.  Peoples, 
(Ga.  App.)  74  S.  E.  1008;  Phoenix  Nat.  Bank  v.  Saucier  (Miss.),  59  So.  91.  A 
statute  requiring  "grants,  assignments,  or  transfers  of  any  trust  or  confidence" 

834 


§  730  LIABILITY    OF    ASSIGNOR    OF    LEGAL   TITLE  835 

or  note  be  payable  to  the  order  of  a  particular  person,  it  may  be 
transferred  by  him  without  indorsement.^  But  in  such  case  the 
assignment  is  not  in  the  usual  course  of  business,  in  accordance  with 
mercantile  custom,  only  the  equitable  title  passing  to  the  assignee. 
We  shall,  therefore,  distinguish  the  two  classes  of  assignors  by  the 
terms:  I.  Assignors  of  the  legal  title;  and,  II.  Assignors  of  the  equitable 
title. 

SECTION   I 

LIABILITY  OF  THE  ASSIGNOR  OF  THE  LEGAL  TITLE  TO  BILLS  AND  NOTES 

§  730.  As  to  the  liability  of  the  assignor  of  the  legal  title  to 
negotiable  instruments. — Although  not  a  party  to  the  bill  or  note, 
the  assignor  of  the  legal  title  to  bills  and  notes  payable  in  terms  to 
bearer,  or  indorsed  in  blank,  incurs  certain  responsibilities,  not  so 
numerous,  but  equally  as  binding  as  the  responsibilities  of  an  in- 
dorser.  He  warrants  by  implication,  unless  otherwise  agreed,  that 
its  face  is  a  true  description  of  its  character,  both  in  respect  (1)  to  its 
genuineness;  (2)  to  its  validity  and  legal  operation;  (3)  to  the  com- 
petency of  the  parties;  and  also  (4)  that  he  is  a  lawful  holder,  having 
a  valid  title  and  a  right  to  transfer  it,  and  (5)  that  he  had  no  knowl- 
edge of  any  facts  which  prove  the  paper,  if  originally  valid,  to  be 
worthless,  either  by  the  insolvency  of  the  principal,  or  by  having  been 
paid,  or  otherwise  by  having  become  void  and  defunct.^ 

to  be  in  writing  does  not  include  the  assignment  of  a  promissory  note  and  the 
security  for  its  payment.    Klaus  v.  Moore,  77  Miss.  701,  27  So.  612. 

2.  First  Nat.  Bank  v.  Moore,  137  Fed.  505;  Barnard  State  Bank  v.  Fesler, 
89  Mo.  App.  217.  Under  a  statute  of  Texas,  though  the  transfer  be  not  evidenced 
by  a  writing,  it  is  placed  upon  the  same  footing  as  a  transfer  by  indorsement. 
National  Bank  of  Commerce  v.  Kenney,  98  Tex.  293,  83  S.  W.  368;  Singletary  v. 
Goeman  (Tex.  Civ.  App.),  123  S.  W.  436;  Third  Nat.  Bank  of  Springfield,  Mass. 
V.  Nat.  Bank  of  Commerce  (Tex.  Civ.  App.),  139  S.  W.  665;  Hall  v.  Tyson  & 
First  Nat.  Bank  (Tex.  Civ.  App.),  115  S.  W.  293. 

3.  Brown  v.  Summers,  91  Ind.  152,  citing  the  text;  Binford  v.  Binford,  105 
Ind.  45,  citing  the  text;  McCurdy  v.  Bowes,  88  Ind.  583,  citing  the  text;  Davidson 
v.  Powell,  114  N.  C.  575,  19  S.  E.  601,  citing  text;  Gordon  v.  Irvine,  105  Ga.  144, 
32  S.  E.  151;  Earnest  v.  Barrett,  6  Ind.  App.  371,  33  N.  E.  635.  The  assignment 
of  a  promissory  note  to  one  who  knew  that  it  has  passed  into  judgment  indorsed 
"assigned  with  recourse"  does  not  make  the  assignor  a  guarantor  of  the  payment 
of  the  note;  the  words  "with  recourse,"  read  into  the  assignment  of  the  judgment, 
create  no  liabiUty  other  or  different  from  that  of  an  assignor.  Redden  v.  First 
Nat.  Bank,  66  Kan.  747,  71  Pac.  578.    In  Clusseau  v.  Wagner,  126  La.  375,  52 


836  TRANSFER   BY   ASSIGNMENT  §§  731,  731a 

§  731.  In  the  first  place,  as  to  the  genuineness  of  the  bill  or  note. 

—It  is  well  settled  that  the  transferrer  by  delivery  of  the  bill  or 
note  is  liable  for  failure  of  consideration,  if  it  turn  out  that  it  was 
fictitious,  or  originally  forged  or  subsequently  altered  either  in  the 
signatures,  or  in  the  amount.''  As  said  in  Rhode  Island  by  Ames, 
C.  J.:  ^  "If  the  signatures  or  either  of  them  be  forged,  what  he  sells 
is  not  what  upon  its  face  it  purports  to  be,  and  what,  therefore,  he 
affirms  and  thus  warrants  it  to  be;  and  he  is  liable  to  the  vendee  for 
what  he  has  received  from  him  for  it,  on  the  ground  of  failure  of 
consideration."  And  again,  as  said  in  Kansas:  "If  one  buys  bread 
he  does  not  expect  a  stone;  if  he  bargains  for  fish  he  is  not  satisfied 
with  a  serpent."  ^ 

§  731a.  English  cases. — The  view  taken  in  the  English  cases  ac- 
cords with  the  prevailing  doctrine  in  the  United  States.  Where  the 
defendant  sold  the  plaintiff  a  navy  bill  purporting  to  be  for  £1,800, 
and  it  turned  out  that  it  had  been  altered  to  that  amount  from  £800, 
which  real  sum  the  British  Government  paid,  it  was  held  that  the 
plaintiff  could  recover  the  balance  for  which  it  was  altered  from  his 
vendor^    And  when  there  has  been  a  forgery  in  the  signatures,  it 


So.  547,  it  was  held  that  the  action  of  a  transferee  of  a  promissory  note  in  accept- 
ing interest  at  the  date  of  the  maturity  of  the  note  and  extending  it  for  a  year, 
did  not  prejudice  his  right  to  recover  judgment  against  his  transferrer  on  his 
warranty,  the  transferrer  holding  no  rights  against  which  he  should  have  been 
safeguarded. 

4.  Bell  V.  Dagg,  60  N.  Y.  530;  Whitney  v.  National  Bank,  45  N.  Y.  305; 
Ross  V.  Terry,  63  N.  Y.  613;  People's  Bank  v.  Bogart,  81  N.  Y.  101;  Challiss 
V.  McCrum,  22  Kan.  157;  Bankhead  v.  Owen,  60  Ala.  475;  Hussey  v.  Sibley, 
66  Me.  192;  Hurst  v.  Chambers,  12  Bush,  155;  Allen  v.  Clark,  49  Vt.  390;  Giffert 
v.  West,  37  Wis.  116;  Bartsch  v.  Attwater,  4  Conn.  419;  Lyons  v.  Miller,  6  Gratt. 
439  (1849);  Merriam  v.  Wolcott,  3  Allen,  258;  Bell  v.  Cafferty,  21  Ind.  411; 
Cabot  Bank  v.  Morton,  4  Gray,  158;  Worthington  v.  Cowles,  112  Mass.  30; 
Coolidge  v.  Brigham,  1  Mete.  (Mass.)  547,  5  Mete.  (Mass.)  68;  Barton  v.  Trent, 
3  Head,  167;  Snyder  v.  Reno,  36  Iowa,  329;  Markle  v.  Hatfield,  2  Johns.  455; 
Swanzey  v.  Parker,  50  Pa.  St.  441;  Edwards  on  Bills  and  Notes,  291;  Redfield 
&  Bigelow's  Lead.  Cas.  669;  Bigelow  on  Bills  and  Notes,  168;  Benjamin's  Chal- 
mers' Digest,  223;  Bigelow  on  Estoppel,  446;  Chitty  on  Bills  (13th  Am.  ed.), 
[*245],  279;  Byles  on  Bills  (Sharswood's  ed.)  [*157],  278;  Story  on  Notes,  §  118; 
Bayley,  179;  Story  on  Bills,  §  111;  Strauss  v.  Hensey,  7  App.  D.  C.  289,  citing  with 
approval  the  text;  Jordan  v.  Harrison,  46  Mo.  App.  172. 

5.  Aldrich  v.  Jackson,  5  R.  I.  218.  See  Lyons  v.  Miller,  6  Gratt.  440;  ante, 
§284. 

6.  Smith  V.  McNair,  19  Kan.  330,  Horton,  C.  J. 

7.  Jones  v.  Ryde,  1  Marsh.  157,  5  Taunt.  488  (1814);  Chitty,  Jr.,  906. 


§  731b  LIABILITY   OF   ASSIGNOR   OF   LEGAL   TITLE  837 

matters  not  that  some  are  genuine.  Where  the  bill  was  sold  on  which 
all  the  signatures  were  forged  but  that  of  the  last  indorser,  it  was 
sought  to  distinguish  the  case  from  the  one  just  quoted,  on  the  ground 
that  as  the  last  indorser  was  bound,  the  bill  was  of  some  value.  But 
it  was  held  that  the  seller  of  a  bill  offers  it  as  an  instrument  drawn, 
accepted,  and  indorsed  according  to  its  purport.^ 

§  731b.  Distinction  taken  in  some  cases  between  assignment  by 
delivery  for  debt  due  or  then  created  and  mere  sale  by  delivery. — 

It  is  generally  conceded  that  when  an  innocent  holder  of  negotiable 
paper  parts  with  it  by  delivery,  without  indorsement,  in  payment 
of  a  debt  due,  or  then  created,  as,  for  example,  in  payment  for  goods 
then  purchased,  or  by  way  of  discount  for  money  then  loaned  by  a 
bank,  banker,  or  individual,  and  the  paper  proves  to  have  been 
forged,  the  debt  or  loan,  not  being  paid  by  it,  may  be  recovered,  and 
that  in  such  cases  there  is  a  warranty  implied  by  law  that  the  paper 
is  genuine,  as  there  is  that  coin  or  bank  notes,  used  for  like  purposes, 
are  genuine.^  But  it  is  maintained  by  some  authorities  that  when 
no  debt  is  due  or  created  at  the  time,  and  the  paper  is  sold  as  other 
goods  and  effects  are,  the  purchaser  cannot  recover  from  the  seller 
the  purchase  money,  if  the  paper  turn  out  to  be  forged;  that  there 
is  in  such  case  no  implied  warranty  of  the  genuineness  of  the  paper; 
that  the  law  respecting  the  sale  of  goods  is  applicable;  and  that  the 
only  implied  warranty  is  that  the  seller  owns  or  is  lawfully  entitled 
to  dispose  of  the  paper  or  goods.*"  But  this  distinction  has  been 
justly  deemed  unsound,  and  in  Massachusetts,  where  it  once  obtained, 
it  has  been  overruled.  ^^  And  in  Maine,  where  it  also  at  one  time 
obtained,  it  has  been  said  that  it  is,  "to  say  the  least,  somewhat 
shadowy."  ^^      In   Maryland  it   yet   remains  an   isolated   judicial 

8.  Gurney  v.  Womersley,  4  El.  &  Bl.  133,  24  L.  J.  Q.  B.  46.  In  accord  see 
Hurst  V.  Chambers,  12  Bush,  155;  Merriam  v.  Wolcott,  3  Allen,  258;  Allen  v. 
Clark,  49  Vt.  390. 

9.  Baxter  v.  Duren,  29  Me.  434;  Fisher  v.  Rieman,  12  Md.  511;  Fuller  v. 
Smith,  1  Car.  &  P.  197;  Jones  v.  Ryde,  5  Taunt.  488;  Coolidge  v.  Brigham,  1 
Mete.  (Mass.)  547;  Cabot  Bank  v.  Morton,  4  Gray,  156  (1855);  Camidge  v. 
Allenby,  6  B  &  C.  373  (1827),  Littledale,  J.:  "If  they  (bills)  were  forged,  then 
they  were  not  what  they  purported  to  be." 

10.  Baxter  v.  Duren,  29  Me.  434  (1849);  MiUiken  v.  Chalmers,  76  Me.  293; 
Ellis  V.  Wild,  6  Mass.  321  (1809). 

11.  Merriam  v.  Wolcott,  3  Allen,  258  (1861);  Worthington  v.  Cowles,  112 
Mass.  30  (1873). 

12.  Hussey  v.  Sibley,  66  Me.  192  (1866),  Danforth,  J.,  saying:  "Thus,  from 


838  TRANSFER   BY   ASSIGNMENT  §  732 

error, ^^  The  result  of  such  a  distinction  would  be  this:  if  a  broker  dis- 
counted a  bill  or  note  transferable  by  delivery  for  the  holder,  such 
holder  would  be  bound  to  refund  to  him  the  money  if  it  turned  out  to 
be  forged;  but  if  such  broker  sold  the  bill  or  note  to  a  third  party 
without  indorsing  it,  such  third  party  would  have  no  recourse  against 
him.  This  distinction  would  indeed  seem  shadowy,  and  rather  a  play 
upon  terms  than  a  regard  for  the  substance  of  things.  And  the  better 
and  prevailing  opinion  is  that  if  any  party  sells  paper  purporting  to 
bear  certain  names,  and  it  turns  out  that  one  or  more  of  such  names 
is  forged,  the  purchaser  does  not  get  the  thing  he  contracted  for,  and 
the  seller  is  bound  to  refund  the  money  paid  him.*^  And  it  matters 
not  as  to  this  principle  that  the  paper  is  not  negotiable, ^^  for  it  is  a 
principle  applicable  to  all  sales  of  personal  property  that  the  goods 
delivered  shall  answer  to  the  description  by  which  they  are  sold.^*^ 
In  Wisconsin  it  is  considered  that  unless  the  negotiation  upon 
the  sale  or  transfer  of  the  paper  by  assignment  is  so  framed  as  to 
exclude  such  warranty — and  especially  where  it  is  so  sold  or  trans- 
ferred for  a  full  and  fair  price — the  transferrer  will  be  deemed  to 
warrant  the  genuineness  of  the  preceding  indorsement  upon  it.^^ 
"But  it  is  equally  certain  that  the  contract  of  sale  may  be  made  in 
such  form  as  to  exclude  the  warranty  of  genuineness,  which  would 
be  implied  by  law  in  case  of  a  contract  silent  upon  that  subject."  ^^ 

§  732.  In  the  second  place,  as  to  the  validity  and  legal  operation. 

— If  the  bill  or  note  is  not  a  valid  subsisting  obligation,  binding  in 
the  weight  of  authority  it  would  appear  that  the  distinction  noticed  in  ElHs  v. 
Wild,  6  Mass.  321,  and  Baxter  v.  Duren,  29  Me.  434,  is,  to  say  the  least,  somewhat 
shadowy,  and  that  whether  the  plaintiff  took  the  order  as  payment  or  as  a  pur- 
chaser, the  defendant  must  be  held  to  some  responsibility  as  to  its  validity;  in 
short,  that  he,  as  seller,  warrants  the  order  to  be  what  it  purports,  a  genuine  order, 
and  whether  that  want  of  genuineness  results  from  forgery  or  an  absence  of  au- 
thority on  the  part  of  the  drawers  or  acceptors,  or,  as  in  this  case,  both,  must  be 
immaterial." 

13.  Fisher  v.  Rieman,  12  Md.  511  (cited  in  Redfield  &  Bigelow's  Lead.  Cas. 
669),  overruling  Rieman  v.  Fisher,  as  decided  by  the  Superior  Court  at  Baltimore, 
and  reported  in  4  Am.  Law  Reg.  433,  which  took  the  correct  and  prevailing  view. 
The  cases  cited  in  12  Md.,  in  support  of  the  decisions,  are  misapphed,  not  being 
cases  of  forgeries. 

14.  Ante,  §§  731,  731a. 

15.  Hussey  v.  Sibley,  66  Me.  192. 

16.  Benjamin's  Chalmers'  Digest,  224;  Benjamin  on  Sales,  442,  447. 

17.  Giffert  v.  West,  37  Wis.  115. 

18.  Bell  v.  Dagg,  60  N.  Y.  530;  Ross  v.  Terry,  63  N.  Y.  615;  Huston  v.  Tyler, 
140  Mo.  252,  36  S.  W.  654,  41  S.  W.  795. 


§  733  LIABILITY    OF    ASSIGNOR    OF    LEGAL   TITLE  839 

law  according  to  its  purport,  the  transferrer  is  liable,  because  the 
article  is  not  that  which  it  was  held  out  to  be.^^  Thus  where  a  bill 
dated  as  at  Sierra  Leone,  and  drawn  upon  London,  was  sold  without 
indorsement;  and  it  turned  out  afterward  that  it  was  really  drawn 
within  the  kingdom  of  Great  Britain,  and  was,  therefore,  an  inland 
bill,  and  void  because  without  a  stamp,  which  a  foreign  bill  did  not 
require — it  was  held  that  the  assignee  could  recover  back  the  price 
paid  of  the  assignor,  the  consideration  having  failed.  Lord  Campbell, 
C.  J.,  and  Coleridge  and  Wightman,  JJ.,  agreed,  and  Coleridge,  J., 
said :  ^°  "  The  vendor  was  not  bound  to  see  that  he  sold  a  bill  of  good 
quality,  or  to  answer  for  the  insolvency  of  the  parties"  (who  had 
become  bankrupt) ;  "but  the  vendee  is  still  entitled  to  have  an  article 
answering  the  description  of  that  which  he  bought.  Here  he  bought 
as  a  foreign  bill  what  turns  out  not  to  be  a  foreign  bill,  and,  therefore, 
valueless.  Common  justice  requires  that  he  should  have  back  the 
price."  Lord  Campbell,  C.  J.,  said:  "This  is  not  a  case  in  which  an 
article  answering  the  description  by  which  it  is  sold  has  a  latent  de- 
fect, but  one  in  which  the  article  is  not  of  the  kind  which  was  sold. 
I  think,  therefore,  that  the  money  paid  for  it  may  be  recovered,  as 
paid  in  mistake  of  facts." 

§  733.  So,  where  the  defendant  sold  as  Guatemala  bonds,  in  1836, 
bonds  which  had  been  repudiated  by  the  Government  of  that  State  in 
1829,  because  unstamped,  and  which  were  valueless,  it  was  held  that 
the  price  should  be  refunded,  Tindal,  C.  J.,  saying,  that  the  contract 
was  for  real  Guatemala  bonds,  and  that  the  case  was  just  as  if  the 
contract  had  been  to  sell  foreign  coin,  and  the  defendant  had  delivered 
counters  instead.  And  that  "it  is  not  a  question  of  warranty,  but 
whether  the  defendant  has  not  delivered  something  which,  though 
resembhng  the  article  contracted  to  be  sold,  is  of  no  value."  ^^ 

So  where  the  holder  of  a  note  transferred  it  without  indorsement, 
and  it  was  void  for  usury  as  between  original  parties.-^  "In  this  case," 
said  Comstock,  J.,  "the  defendant  held  a  promissory  note  which  was 

19.  Bell  V.  Dagg,  60  N.  Y.  530;  Littauer  v.  Goldman,  8  Hun,  231;  Fuke  v. 
Smith,  7  Abb.  (N.  S.)  106;  Ross  v.  Terry,  63  N.  Y.  614;  Kurd  v.  Hall,  12  Wis. 
112.  But  see  Littauer  v.  Goldman,  72  N.  Y.  506,  and  §  733a.  In  Wisconsin  this 
warranty  is  held  to  include  the  fact  of  nonpayment  of  the  note.  Daskam  v. 
Ullman,  74  Wis.  476,  citing  Giffert  v.  West,  supra. 

20.  Gompertz  v.  Bartlett,  2  El.  &  Bl.  854  (1853). 

21.  Young  V.  Cole,  3  Bing.  N.  C.  724. 

22.  Delaware  Bank  v.  Jervis,  20  N.  Y.  228;  Webb  v.  Odell,  49  N.  Y.  583; 
Littauer  v.  Goldman,  9  Hun,  232  (1876);  ChaUiss  v.  McCrum,  22  Kan.  157. 


840  TRANSFER   BY   ASSIGNMENT  §  733a 

void,  which  he  had  himself  taken  in  violation  of  the  Statutes  of  Usury, 
When  he  sold  the  note  to  the  plaintiffs,  and  received  the  cash  therefor, 
by  that  verj^  act  he  affirmed,  in  judgment  of  law,  that  the  instrument 
was  sustained,  so  far  at  least  as  he  had  been  connected  with  its  ori- 
gin." ^^  In  another  case,  Davis,  P.  J.,  says:  "There  is  an  imphed 
warranty  that  the  note  is  what  it  purports  to  be, — a  legal,  valid 
instrument.  It  is  nothing  unless  it  be  this."  ^"^  So,  though  a  certificate 
of  deposit  be  void  as  between  the  original  parties,  because  constituting 
a  transaction  between  alien  enemies,  yet  the  assignor  thereof  is 
bound.^^  In  Wisconsin,  where  a  note  was  held  void  for  usury,  and 
the  indorsement  also  void  for  usury,  a  transferee  by  delivery  sued  a 
prior  transferee  by  delivery,  who  had  transferred  it  to  the  seller;  and 
the  court  held  that  the  implied  warranty  of  the  seller  by  delivery 
extended  to  "the  capacity  of  the  contracting  parties  to  make  the 
contract,  and  their  liability  upon  it  as  valid  and  binding  in  law  ac- 
cording to  the  purport  of  the  instrument  on  its  face,  and  as  the  same 
is  presented  by  the  seller  to  the  purchaser."  ^^  In  such  cases  the 
transferee  can  recover  not  only  the  amount  paid  for  the  paper,  with 
interest,  but  also  his  costs  of  suit  against  prior  parties,  if  the  defendant 
was  notified  of  the  pendency  of  suit,  and  the  defense  made.^^ 

§  733a.  In  New  York  the  Court  of  Appeals,  overruling  decisions 
of  the  lower  courts,  has  held,  in  opposition  to  the  text,  that  the  trans- 
ferrer by  mere  delivery  of  a  note  void  for  usury  is  not  bound  to  the 
transferee,  unless  at  the  time  of  transfer  he  knew  of  the  illegality 
affecting  its  validity,  or  unless  there  was  some  engagement  rendering 
him  responsible,  other  than  that  alleged  to  be  implied  by  the  transfer 
itself.-^  In  the  opinion  of  the  court  a  scienter  is  necessary  to  establish 
an  implied  warranty;  and  where  the  article  sold  has  some  latent 
defect  unknown  to  the  seller,  the  doctrine  of  caveat  emptor  applies; 
and  the  fault  is  with  the  person  who  fails  to  exact  a  warranty,  and 
makes  a  bad  bargain.  The  law  of  commercial  paper  as  laid  down  for 
a  century  or  more,  as  the  court  considered,  excepts  two  cases  only  as 
coming  within  the  doctrine  of  implied  warranty,  viz. :  a  warranty  of 

23.  Delaware  Bank  v.  Jervis,  20  N.  Y.  228. 

24.  Littauer  v.  Goldman,  9  Hun,  231  (1876),  overruled  in  72  N.  Y.  506  (1878). 

25.  Morrison  v.  Lovell,  4  W.  Va.  350  (1870). 

26.  Giffert  v.  West,  33  Wis.  618  (1873).  See  also  Giffert  v.  West,  37  Wis. 
115;  Hurd  v.  Hall,  12  Wis.  112;  Costigan  v.  Hawkins,  22  Wis.  81;  Lawton  v. 
Howe,  14  Wis.  241. 

27.  Littauerv.  Goldman,  9  Hun,  231. 

28.  Littauer  v.  Goldman,  72  N.  Y.  506  (1878). 


§  733a  LIABILITY   OF   ASSIGNOR   OF   LEGAL   TITLE  841 

title  and  a  warranty  of  genuineness.  And  there  is  not,  said  Miller,  J., 
"a  single  case  reported  in  the  books  in  favor  of  the  doctrine  that 
where  a  promissory  note  is  infected  wdth  usury,  and  that  fact  is 
unknown  to  the  party  who  transferred  it,  that  it  is  an  implied  war- 
ranty of  the  vahdity  of  the  note."  ^ 

It  is  undoubtedly  true  that  nearly  all  of  the  cases  cited  in  support 
of  the  text  were  cases  in  which  the  transferrer  was  himself  in  privity 
with  the  illegality  impeaching  the  paper;  but  this  act  was  not  generally 
made  the  ratio  decidendi,  and  there  is  at  least  one  case  directly  in. 
point,^°  and  numerous  opinions  of  law  writers  and  judges. 

The  error  in  the  theory  adopted  by  the  Court  of  Appeals  of  New 
York  we  think  is  this:  It  likens  the  unknown  illegality  of  the  paper 
sold,  to  a  latent  defect  in  an  article  sold  to  which  the  doctrine  of 
caveat  emptor  apphes.  The  analogy  does  not  hold.  Unknown  in- 
solvency of  a  party  to  the  instrument  is  the  correlative  to  the  defect 
in  an  article  sold — a  latent  vice  affecting  its  quality  and  value.  But 
when  the  instrument  is  null  and  void — in  fact,  no  instrument  at  all 
in  legal  existence — it  does  not  respond  to  the  description  which  its 
face  imports.  It  is  the  mere  semblance  of  a  bill  or  note,  not  one  in 
truth — and  no  one  can  acquire  any  legal  title  to  it.  We  speak,  of 
course,  of  those  instruments  which  are  void  by  statute  in  all  hands 
whatsoever.  The  doctrine  in  regard  to  personal  property  is  generally 
stated  to  be,  that  there  is  "an  implied  warranty  in  every  sale  that  the 
thing  sold  is  that  for  which  it  is  sold,"  ^^  and  the  term  ''warranty"  is 
generally  used  by  the  courts  in  describing  the  engagement  of  the 
transferrer  of  negotiable  paper  as  to  its  genuineness,  validity,  and 
title.  But  Mr.  Benjamin,  in  his  work  on  Sales,  has  pointed  out  that 
when  the  vendor  sells  an  article  by  description  it  is  a  condition  prece- 
dent to  his  right  of  action  (for  the  price),  that  the  thing  which  he 
offers  to  deliver,  or  has  delivered,  should  answer  the  description;  and 
not  a  case  in  which  the  term  "warranty"  is  accurately  used.^^  And 
quoting  Lord  Abinger,  he  says:  "As  if  a  man  offers  to  buy  peas  of 
another,  and  he  sends  him  beans,  he  does  not  perform  his  contract, 
but  that  is  not  a  warranty;  there  is  no  warranty  that  he  should  sell 
him  peas;  the  contract  is  to  sell  peas,  and  if  he  sell  him  anything  else 
in  their  stead,  it  is  a  nonperformance  of  the  contract."  ^^    This  is  clear 

29.  Littauer  v.  Goldman,  72  N.  Y.  506  (1878). 

SO.  See  Giffert  v.  West,  33  Wis.  618;  ante,  §  733. 

31.  ThraU  v.  Newell,  19  Vt.  206. 

32.  Benjamin  on  Sales  (1st  ed.),  442,  447,  book  IV,  part  1,  title  Conditions; 
Myer  v.  Jacobs,  163  ti .  S.  410,  where  the  text  is  approvingly  cited. 

33.  Chantor  v.  Hopkins,  4  M.  &  W.  399.    See  ante,  §§  732,  733. 


842  TRANSFER   BY   ASSIGNMENT  §  734 

reasoning;  and  while  we  have  followed  the  current  expression  of  the 
courts  in  the  text,  we  are  convinced  that  the  correct  view  is  that  which 
regards  all  sales  of  forged  and  void  paper  as  sales  by  misdescription 
on  the  part  of  the  vendor  and  through  mistake  on  the  part  of  the 
vendee.  And  in  all  such  cases  the  article  not  corresponding  to  the 
description  advertised  by  the  terms  of  its  face,  the  transferee,  we 
think,  is  entitled  to  recover  back  the  consideration  paid.^^  Forged 
paper  is  void;  and  any  paper  so  denounced  as  void  by  statute  is 
equally  so.  The  vendee  gets  nothing  on  sales  of  either  class  of  paper ; 
and  every  reason  that  authorizes  his  recovery  when  it  is  void  for 
forgery,  applies  when  it  is  void  for  any  other  cause  which  disables 
him  from  enforcing  it  against  those  apparently  bound. 

§  734.  In  the  third  place,  as  to  competency  of  parties. — If  a 

prior  party  be  not  competent  to  contract,  the  paper  is  not  in  fact  his 
bill,  note,  or  indorsement,  as  the  case  may  be,  and  the  transferrer, 
for  reasons  already  stated,  is  bound.  Thus,  if  the  drawer,  or  acceptor 
or  prior  indorser,  be  an  infant,  lunatic,  married  woman,  or  otherwise 
be  under  incapacity  to  contract,  the  transaction  lacks  the  considera- 
tion agreed  upon  as  existing,  and  the  transferee  may  recover  back  the 
money  paid.^^  In  Massachusetts,  where  the  defendant,  knowing 
that  one  Swan  was  an  infant,  put  in  circulation  a  note  with  his  blank 
indorsement  upon  it,  he  was  held  bound,  and  Shaw,  C.  J.,  said: 
"  Whoever  takes  a  negotiable  note  is  understood  to  ascertain  for  himself 
the  ability  of  the  contracting  parties;  but  he  has  then  got  to  believe, 
without  inquiring,  that  he  has  the  legal  obligation  of  the  contracting 
parties  appearing  on  the  bill  or  note.  Unexplained,  the  purchaser  of 
such  a  note  has  a  right  to  beheve,  upon  the  faith  of  the  security  itself, 
that  it  is  indorsed  by  one  capable  of  binding  himself  by  the  contract 
which  an  indorsement  bj--  law  imports.  It  is  an  averment  to  that 
effect  on  the  part  of  him  who  procures  such  an  indorsement  and  puts 
the  note  bearing  it  into  circulation."  ^^  On  the  principle  stated  in  the 
text,  it  was  held  in  Maine  that  the  transferrer  was  bound  where  a 
town  order  was  transferred  in  payment  of  a  debt,  and  it  turned  out 

34.  Ante,  §  731  et  seq. 

35.  2  Parsons  on  Notes  and  Bills,  39,  where  it  is  said:  "There  is  an  implied 
warranty  that  the  parties  to  the  paper  are  under  no  incapacity  to  contract,  as 
from  infancy,  marriage,  or  other  disability,"  citing  Lobdell  v.  Baker,  3  Mete. 
(Mass.)  472,  and  Thrall  v.  Newell,  19  Vt.  202.  See  also  Giffert  v.  West,  37  Wis. 
11.5;  Baldwin  v.  Van  Deusen,  37  N.  Y.  487. 

36.  LobdeU  v.  Baker,  3  Mete.  (Mass.)  472  (1842),  1  Mete.  (Mass.)  547. 


§  734a  LIABILITY   OF   ASSIGNOR   OF   LEGAL   TITLE  843 

to  be  worthless  on  account  of  the  incapacity  of  the  drawers  and 
acceptors  to  draw  or  accept  for  the  town.^^  And  so  in  Vermont,  where 
there  was  a  written  assignment  apart  from  the  note,  it  was  considered 
that  the  assignor  warranted  the  surety  of  the  maker,  on  the  ground 
that  "there  is  an  imphed  warranty  in  every  sale  that  the  thing  sold 
is  that  for  which  it  is  sold."  ^^ 

§  734a.  In  the  Supreme  Court  of  the  United  States  the  following 
case  recently  arose.  The  Legislature  of  Kansas  passed  two  acts  under 
which  the  city  of  Topeka  was  authorized  to  issue  bonds  for  certain 
purposes,  which  were  afterward  held  to  be  private  purposes,  and  the 
bonds  were  consequently  invalid.^^  Some  of  these  coupon  bonds  were 
sold  by  the  First  National  Bank  of  Topeka,  and  default  being  made 
in  payment  of  interest,  suit  was  brought  against  the  receiver  of  the 
bank  to  recover  back  the  amount  paid  for  the  invalid  bonds,  on  the 
ground  of  failure  of  consideration.  The  Supreme  Court  held  that  the 
seller  was  not  bound  by  any  implied  warranty  of  the  bonds,^  and 

37.  Hussey  v.  Sebley,  66  Me.  192  (1876). 

38.  Thrall  v.  Newell,  19  Vt.  208  (1847). 

39.  See  Loan  Association  v.  Topeka,  20  Wall.  655. 

40.  Otis  V.  Cullum,  92  U.  S.  (2  Otto)  448  (1875),  Swayne,  J.,  saying:  "In 
Lambert  v.  Heath,  15  M.  &  W.  486,  the  defendant  bought  for  the  plaintiff  certain 
•certificates  of  Kentish-Coast  Railway  scrip,'— and  received  from  him  the  money 
for  them.  Subsequently  the  directors  repudiated  the  scrip  upon  the  ground  that 
it  had  been  issued  by  the  secretary  without  authority.  The  enterprise  to  which 
it  related  was  abandoned.  The  action,  which  was  for  money  had  and  received, 
was  thereupon  brought  to  recover  back  what  had  been  paid  for  the  scrip.  The 
court  put  it  to  the  jury  to  say  whether  the  scrip  bought  was  'real  Kentish  Railway 
scrip.'  A  verdict  was  found  for  the  plaintiff  upon  this  issue.  A  new  trial  was 
moved  for,  the  defendant  insisting  the  court  had  misdirected  the  jury.  After 
hearing  the  argument,  the  court  said:  'The  question  is  simply  this:— was  what 
the  parties  bought  in  the  market  Kentish-Coast  Railway  scrip?  It  appears  that 
it  was  signed  by  the  secretary  of  the  company,  and  if  this  was  the  only  Kentish- 
Coast  Railway  scrip  in  the  market,  as  appears  to  have  been  the  case,  and  one 
person  chooses  to  sell  and  another  to  buy,  that  then  the  latter  has  got  all  that  he 
has  contracted  to  buy.  That  was  the  question  for  the  jury;  but  it  was  not  so  left 
to  them.  The  rule  must,  therefore,  be  absolute  for  a  new  trial.'  The  judges  were 
unanimous.  Here  also  the  plaintiffs  in  error  got  exactly  what  they  intended  to 
buy  and  did  buy.  They  took  no  guaranty.  They  are  seeking  to  recover  as  it 
were  upon  one  while  none  exists.  They  are  not  clothed  with  the  rights  which  such 
a  stipulation  would  have  given  them.  Not  having  taken  it  they  cannot  have  the 
benefit  of  it.  The  bank  cannot  be  charged  with  a  liability  which  it  did  not  assume. 
Such  securities  throng  the  channels  of  commerce  which  they  are  made  to  seek, 
and  where  they  find  their  market.  They  pass  from  hand  to  hand  like  bank  notes. 
The  seller  is  hable  ex  delicto  for  bad  faith;  and  ex  contractu,  there  is  an  implied 


§44  TRANSFER   BY   ASSIGNMENT  §  734a 

maintained  doctrines  in  conflict  with  those  which  had  been  conceived 
apphcable  to  the  question.  It  is  quite  clear  from  the  decisions  quoted 
in  the  text  that  the  transferrer  of  a  bill  or  note  by  delivery  is  bound, 
if  it  be  invalid  by  reason  of  the  incompetency  of  anterior  parties,  or 
by  reason  of  any  contract  between  them  which  prevents  the  transferee 
from  enforcing  it  against  them.  The  court,  without  commenting  on 
that  doctrine,  evidently  regards  it  as  not  to  be  extended  to  public 
securities,  in  so  far  as  the  competency  of  the  corporation  to  issue 
them  is  concerned. 

In  a  more  recent  case  that  tribunal,  considering  a  Louisiana  con- 
tract of  sale  where  both  parties  contemplated  the  purchase  and 
delivery  of  lawful  obligations  of  the  State,  and  both  regarded  bonds 
delivered  as  such,  it  was  held  that  warranty  under  the  civil  law  which 
controlled  in  Louisiana  was  liable  in  the  contract;  and  further  that 
under  the  given  law  the  obligation  of  the  State  is  not  restricted  to 
mere  questions  of  forgery,  but  depends  upon  whether  he  has  delivered 
what  he  contracted  to  sell.  Accordingly,  the  seller  was  required  to 
refund  the  consideration  paid  him  for  bonds  which  had  never  been 
lawfully  put  in  circulation  and  were  absolutely  void.'*^ 

In  a  recent  Nebraska  case  the  seller  of  supposed  York  county 
warrants  was  held  liable  to  refund  the  consideration,  such  warrants 
having  been  issued  without  authority  of  law;  and  the  case  was  dis- 
tinguished from  Otis  v.  Cullum,  on  the  ground  that  certain  other  real 
York  county  warrants  were  supposed  to  be  the  subject  of  sale.'*^    The 

warranty  on  his  part  that  they  belong  to  him,  and  that  they  are  not  forgeriesi 
When  there  is  no  express  stipulation,  there  is  no  habiUty  beyond  this.  If  the 
buyer  desires  special  protection,  he  must  take  a  guaranty.  He  can  dictate  his 
terms  and  refuse  to  buy  unless  it  be  given.  If  not  taken  he  cannot  occupy  the 
vantage-ground  upon  which  it  would  have  placed  him.  It  would  be  unreasonably 
harsh  to  hold  all  those  through  whose  hands  such  instruments  may  have  passed, 
liable  according  to  the  principles  which  the  plaintiff  in  error  insists  shall  be  appUed 
in  this  case.  Judgment  affirmed."  Sutro  v.  Rhodes,  92  Cal.  117,  28  Pac.  98; 
Meyer  v.  Richards,  46  Fed.  727. 

41.  Meyer  v.  Richards,  163  U.  S.  386,  16  Sup.  Ct.  Rep.  1148,  White,  J.,  dis- 
senting; Otis  V.  Cullum,  92  U.  S.  448. 

42.  Rogers  v.  Walsh,  12  Nebr.  28,  Lake,  J.,  saying:  "From  the  facts  alleged, 
there  can  be  no  doubt  that  the  purchase  was  made  with  the  full  beUef  on  her  part, 
and  probably  on  the  part  of  the  defendants,  that  what  was  obtained  by  it  were  the 
genuine  warrants  of  York  county.  Such  being  the  case,  but  for  the  seeming 
confidence  of  defendants'  counsel  in  the  strength  of  their  position,  we  would  not 
suppose  a  doubt  could  have  existed  that  there  was  an  entire  want  of  consideration 
for  the  payment  of  the  money,  and  that  the  plaintiff  was  entitled  to  a  return  of 
the  price  paid  for  what  had  proved  to  be  wholly  worthless.  The  defense  here 
made  rests  chiefly  upon  the  authority  of  two  cases  cited,  one  English  and  the  other 


§§  735,  736      LIABILITY   OF   ASSIGNOR   OF   LEGAL  TITLE  845 

distinction  is  a  clear  one,  and  the  decisions  of  the  Supreme  Court 
limited  to  the  facts  of  the  case  before  it,  is  not  irreconcilable  with 
the  general  principles  stated  in  the  text. 

§  735.  In  the  fourth  place,  as  to  title  and  right  to  transfer. — 

If  the  transferrer  had  no  lawful  title  to  the  instrument,  the  transfer 
of  it  as  his  property  is  a  fraud  both  upon  the  owner  and  upon  the 
transferee.  ^^  And  the  transferee,  if  unable  to  recover  against  the 
owner,  might  sue  the  transferrer  for  the  consideration  paid. 

And,  indeed,  we  preceive  no  good  reason  why  the  transferee  might 
not,  on  discovering  the  fraud,  return  the  bill  or  note  to  the  true  owner, 
and  recover  back  the  consideration  from  the  transferrer,  for  no  man 
can  take  advantage  of  his  own  wrong. 

But  in  most  cases  he  would  likely  be  indisposed  to  do  this,  as  he 
would,  if  himself  a  bona  fide  transferee  without  notice,  acquire  a 
better  title  than  his  transferrer,  and  be  thus  enabled  to  hold  the  paper 
against  the  true  owner. 

§  736.  In  the  fifth  place,  as  to  knowledge  respecting  the  bill  or 
note. — If  the  transferrer  knew  that  there  was  a  defense  to  the 
recovery  upon  the  bill  or  note,  or  that  the  amount  could  not  be 
realized  because  of  insolvency  of  the  parties  to  it,  his  suppression 
of  such  knowledge  would  be  a  fraud  upon  the  transferee,  and  the 

American,  viz.:  Lambert  v.  Heath,  15  M.  &  W.  484,  and  Otis  v.  CuUum,  92  U.  S. 
(2  Otto)  447.  But  the  facts  of  those  cases  were  so  different  in  character  from  the 
one  at  bar  that  the  governing  principle  in  them  is  inapphcable  here.  In  those  cases 
the  purchasers  actually  obtained  just  what  they  had  contracted  to  buy,  and  the 
decisions  were  put  upon  that  ground  alone,  there  being  no  express  warranty. 
Here,  however,  the  purchase  was  of  the  warrants  of  York  county,  while  in  fact 
what  were  received  as  such  were  not  the  warrants  of  that  county  at  all,  but  only 
things  in  then:  similitude.  Having  been  issued  by  the  commissioners  without 
authority  of  law,  they  can  no  more  be  considered  the  obligations  of  that  county 
than  if  signed  by  any  other  of  her  citizens.  They  are  merely  valueless  pieces  of 
paper  resembling  York  county  warrants,  nothing  more.  The  principle  that 
should  govern  here  was  applied  in  the  case  of  Young  v.  Cole,  32  Eng.  C.  L.  334, 
and  cited  in  Benjamin  on  Sales,  §  607." 

43.  Baxter  v.  Duren,  29  Me.  434.  See  Story  on  Notes,  §  118.  In  2  Parsons 
on  Notes  and  Bills,  187,  this  doctrine  is  denied.  "Why,"  says  the  learned  author, 
"should  this  be  so  (that  is,  a  warranty  of  title),  when  an  honest  transferee  need 
give  no  such  warranty?  For,  as  we  have  seen,  property  follows  possession;  and 
the  mere  possession  of  the  transferrer  is  enough  to  give  a  perfect  title  to  the 
honest  taker  of  the  paper,  negotiable  by  dehvery  only.  We  hold  that  the  doc- 
trine of  implied  warranty  in  sales  is  applicable  to  the  sale  of  bills  and  notes  only 
to  the  extent  that  one  who  sells  indorsed  notes  warrants  the  indorsement  genuine." 


846  TRANSFER   BY   ASSIGNMENT  §§  736a,  737 

latter  may  hold  him  responsible.*''  A  plain  case  illustrating  this 
doctrine  would  arise  where  the  assignor  after  maturity  had  received 
payment  before  making  the  assignment/^  And  if,  knowing  the  paper 
to  be  worthless,  he  represents  it  to  be  good,  his  fraud  is  all  the  greater, 
and  the  transferee  may  recover  against  him.*^ 

In  Massachusetts,  where  the  notes  of  a  third  person  were  passed 
off  by  a  purchaser  of  goods  to  the  vendor  in  payment,  with  fraudu- 
lent assurance  that  they  were  valid,  and  that  the  maker  was  solvent, 
and  they  were  made  by  an  insolvent  without  consideration,  it  was 
held  that  the  vendor  might  disregard  them  altogether,  and  sue  the 
purchaser  for  the  value  of  the  goods. *^ 

§  736a.  No  implied  warranty  that  paper  was  not  made  for  ac- 
commodation.— There  is  no  implied  warranty  or  representation  on 
the  part  of  the  transferrer  of  a  bill  or  note,  valid  in  the  hands  of  the 
indorsee,  that  it  was  drawn  against  funds,  or  that  it  is  not  accommo- 
dation paper,  for  accommodation  notes  and  acceptances  are  not 
unusual  commercial  transactions,  and  this  must  be  well  understood 
among  commercial  men.^ 

§  737.  Whether  or  not  he  warrants  solvency  of  the  principal. — 

The  transferrer  of  a  bill  or  note  without  indorsement  is  clearly  not 
liable  on  the  bill  or  note;  but  there  is  conflict  of  authority  upon  the 
question  whether  or  not  he  is  bound  to  refund  the  consideration,  if 
it  should  happen  without  his  knowledge  that  at  the  time  of  the  trans- 
fer the  maker  or  principal  party  to  the  bill  or  note  was  insolvent,  and 
the  instrument  in  fact  worthless. 

It  is  contended  by  some  of  the  text-writers,  and  has  been  decided 
in  a  number  of  cases,  that  the  loss  under  such  circumstances  should 


44.  People's  Bank  v.  Bogart,  81  N.  Y.  106;  Littauer  v.  Goldman,  72  N.  Y. 
506;  Fenn  v.  Harrison,  3  T.  R.  759;  Popley  v.  Ashley,  6  Mod.  147,  Holt,  121; 
Camidge  v.  AUenby,  6  B.  &  C.  373;  Story  on  Bills,  §  225;  2  Parsons  on  Notes 
and  Bills,  41;  Story  on  Notes,  §  118.  See  post,  §§  739,  1269;  Gordon  v.  Irvine, 
105  Ga.  144,  31  S.  E.  151. 

45.  Maupinv.  Compton,  3  Bibb,  215;  Howell  v.  Wilson,  3.  Blackf.  418. 

46.  Kennedy  v.  O'Conner,  35  Ga.  199.    See  post,  §  1269. 

47.  Bridge  v.  Batchelder,  9  Allen,  394. 

48.  People's  Bank  v.  Bogart,  81  N.  Y.  107  (1880);  In  re  Hammond,  6  De  Gex, 
M.  &  G.  699,  Lord  Justice  Knight-Bruce  saying:  "Now  I  do  not  think  that  the 
mere  circumstance  of  a  man  parting  with  a  bill,  without  saying  this  is  an  accommo- 
dation bill,  amounts  to  an  implied  representation  that  it  is  not  an  accommodation 
bill."    See  §§  165,  187,  790,  794. 


§  737  LIABILITY    OF   ASSIGNOR    OF    LEGAL   TITLE  847 

fall  upon  the  party  who  held  the  bill  or  note  at  the  time  the  insol- 
vency occurred;  ^^  while  others  maintain,  and,  as  we  think,  with 
correctness,  that  the  loss  should  fall  upon  the  party  holding  the  bill 
or  note  at  the  time  when  the  insolvency  was  made  known  to  him.^" 
After  acquiring  knowledge  of  the  insolvency  of  the  principal  party, 
it  would  be  a  fraud  to  conceal  it  when  transferring  the  bill  or  note; 
but  until  it  is  known  to  them  the  transferrer  and  transferee  mutually 
take  the  chances  as  to  its  value. ^^ 


49.  Roberts  v.  Fisher,  43  N.  Y.  159;  Lightbody  v.  Ontario  Bank,  11  Wend. 
1,  13  Wend.  107;  Harley  v.  Thornton,  2  Hill  (S.  C),  509;  Fogg  v.  Sawyer,  9 
N.  H.  365;  Wainwright  v.  Webster,  11  Vt.  576;  Thomas  v.  Todd,  6  Hill  (N.  Y.), 
340;  Townsends  v.  Bank  of  Racine,  7  Wis.  185;  Westfall  v.  Braley,  10  Ohio  St. 
188;  Story  on  Notes,  §  119;  Story  on  Bills  (Bennett's  ed.),  §  225.  See  chapter 
L,  on  Bank  Notes,  section  III,  vol.  II. 

60.  Edmonds  v.  Diggers,  1  Gratt.  359;  Young  v.  Adams,  6  Mass.  182;  Scruggs 
V.  Cass,  8  Yerg.  175;  Lowry  v.  Murrell,  2  Port.  282;  Bayard  v.  Shunk,  1  Watts 
&  S.  92;  Corbet  v.  Bank  of  Smyrna,  2  Harr.  (Del.)  235;  Ware  v.  Street,  2  Head, 
609;  Barton  v.  Trent,  3  Head,  167;  Hecht  v.  Batcheller,  147  Mass.  339;  Milliken 
V.  Chapman,  75  Me.  306,  46  Am.  Rep.  394,  citing  the  text.  See  Story  on  Bills, 
§225;  Thompson  on  Bills  (Wilson's  ed.)  187,  188.  In  Chitty  on  Bills  [*247], 
281,  it  is  said:  "When  a  transfer  by  delivery  without  indorsement  is  made,  merely 
by  way  of  sale  of  the  bill,  as  sometimes  occurs,  or  exchange  of  it  for  other  bills, 
or  by  way  of  discount,  and  not  as  security  for  money  lent,  or  where  the  assignee 
expressly  agrees  to  take  it  in  payment,  and  to  run  all  risks,  he  has  in  general  no 
right  of  action  whatever  against  the  assignor  in  case  the  bill  turns  out  to  be  of 
no  value.  But  there  can  be  no  doubt  that  if  a  man  assign  a  bill  for  any  sufficient 
consideration,  knowing  it  to  be  of  no  value,  and  the  assignee  be  not  aware  of  the 
fact,  the  former  would,  in  all  cases,  be  compellable  to  repay  the  money  he  had 
received."  In  Byles  on  Bills  (Sharswood's  ed.)  [*154],  275,  it  is  said:  "It  is  con- 
ceived to  be  the  general  rule  of  the  English  law  and  the  fair  result  of  the  English 
authorities,  that  the  transferrer  is  not  even  Uable  to  refund  the  consideration, 
if  the  bill  or  note  so  transferred  by  delivery  without  indorsement  turn  out  to  be 
of  no  value,  by  reason  of  the  failure  of  other  parties  to  it.  For  the  taking  to  market 
of  a  bill  or  note  payable  to  bearer  without  indorsing  it,  is  privia  facie,  a  sale  of 
the  bill.  And  there  is  no  unpUed  guarantee  of  the  solvency  of  the  maker,  or  of 
any  other  party."  Judge  Sharswood,  concurring  with  the  text  of  Byles  on  Bills, 
says  m  his  note  (5th  Am.  ed.),  p.  275,  "It  is  conceived  that  the  confusion  has 
arisen  from  neglecting  to  distinguish  between  the  abstract  question  of  law  and 
question  of  fact  in  the  particular  case."  See  Redfield  &  Bigelow's  Lead.  Cas.  634; 
and  chapter  L,  on  Bank  Notes,  section  III,  vol.  II;  Roads  v.  Webb,  91  Me.  414, 
40  Atl.  128,  64  Am.  St.  Rep.  246. 

51.  Ante,  §  736;  post,  §  739.  A  transaction,  by  which  a  person  purchased  a 
note  of  another,  and  gave  his  note  for  the  purchase  price,  his  own  note  being 
simply  the  evidence  of  his  promise  to  pay  his  own  debt,  is  not  within  the  rule. 
German  Nat.  Bank  of  Ripon  v.  Princeton  State  Bank,  128  Wis.  60,  107  N.  W. 
454,  6  L.  R.  A.  (N.  S.)  556. 


848  TRANSFER   BY   ASSIGNMENT  §§  738,  739 

The  transferrer  declines  to  bind  himself  as  a  party  by  declining 
to  indorse.  The  transferee  impliedly  relies  on  the  bill  or  note  itself, 
by  not  requiring  an  indorsement.  And  if  thus,  both  being  innocent, 
a  loss  by  insolvency  arises,  there  seems  to  us  no  more  reasonable  rule 
than  to  let  it  rest  where  it  falls.  These,  at  least,  would  be  the  pre- 
sumptions of  law,  whether  the  transfer  was  by  way  of  sale  of  the  bill 
or  note,  or  an  exchange,  or  discount;  but  there  being  no  wri'tten  con- 
tract, any  special  agreement  might  be  given  in  evidence  to  rebut 
them.^2  And  it  has  been  said  that  there  is  an  exception  of  the  general 
rule  when  the  bill  or  note  is  transferred  in  payment  of  a  precedent 
debt,  of  which  we  shall  presently  speak. 

There  is  no  fraud  in  the  transferrer  when  he  assigns  the  bill  or  note 
without  being  aware  that  the  principal  is  insolvent,  and  there  is  no 
failure  of  consideration,  for  the  consideration  is  the  principal's  prom- 
ise to  pay.  The  value  of  that  promise  must  be  judged  of  by  the  trans- 
feree when  he  acquires  it. 

§  738.  The  doctrine  of  the  text  was  well  expressed,  in  Rhode  Island, 
in  a  case  arising  out  of  the  barter  of  cotton  for  the  notes  of  third 
persons,  which  were  taken  without  indorsement,  Ames,  C.  J.,  say- 
ing: ^^  "The  well-known  common-law  principle,  applicable  alike  to 
sales  and  exchanges  of  personal  things,  is,  that  fraud  or  warranty  is 
necessary  to  render  the  exchanger  or  vendor  liable,  in  any  form,  for  a 
defect  in  the  quality  of  the  thing  sold  or  exchanged.  Applying  this 
principle  to  the  sale  or  exchange  of  the  note  of  a  third  person,  trans- 
ferred by  indorsement  without  recourse,  or  by  delivery  merely,  the 
vendee  or  person  taking  it  in  exchange  takes  the  risk  of  the  past  or 
future  insolvency  of  the  maker  or  other  party  to  it;  unless,  indeed, 
in  case  of  past  insolvency,  the  vendor  or  exchanger  is  guilty  of  the 
fraud  of  passing  it  off  with  knowledge  of  that  fact." 

§  739.  English  doctrine. — In  England  the  doctrine  to  this  effect 
is  well  settled,  and  when  the  transfer  is  without  indorsement,  whether 
it  be  a  sale  of  the  bill  or  note,  or  an  exchange  or  by  way  of  discount, 
or  where  the  assignee  agrees  expressly  to  take  it  in  pajnnent,  he  can 
neither  recover  against  the  assignor  upon  the  bill,  or  recover  back 
the  amount  given  for  it,  on  account  of  failure  in  the  consideration; 

52.  Monroe  v.  Hoff,  5  Den.  360. 

53.  Bicknall  v.  Waterman,  5  R.  I.  43.  See  also  Burgess  v.  Chapin,  5  R.  I. 
225;  Beckwith  v.  Farnum,  5  R.  I.  230;  Aldrich  v.  Jackson,  5  R.  I.  218;  Roads 
V.  Webb,  91  Me.  414,  40  Atl.  128,  64  Am.  St.  Rep.  246. 


§§  739a,  740     LIABILITY   OF   ASSIGNOR   OF   LEGAL   TITLE  849 

unless,  indeed,  the  assignor  knew  the  bill  or  note  to  be  that  of  an  in- 
solvent when  he  assigned  it.  Thus,  it  has  been  said  by  Lord  Ken- 
yon:  ^^  "It  is  extremely  clear  that  if  the  holder  of  a  bill  sent  it  to 
market  without  indorsing  his  name  upon  it,  neither  morality  nor  the 
laws  of  this  country  will  compel  him  to  refund  the  money  for  which 
he  sold  it,  if  he  did  not  know  at  the  time  he  sold  it  that  it  was  not  a 
good  bill.  If  he  knew  the  bill  to  be  bad,  it  would  be  like  sending  out  a 
counter  into  circulation  to  impose  upon  the  world,  instead  of  the  cur- 
rent coin."  And,  in  another  case,  where  the  party  discounted  bills 
with  a  banker  and  received  in  part  of  the  discount  other  bills,  without 
the  banker's  indorsement,  and  they  turned  out  to  be  bad,  the  same 
high  authority  said:  ^^  "Having  taken  them  without  indorsement,  he 
has  taken  the  risk  on  himself.  The  bankers  were  the  holders  of  the 
bills,  and  by  not  indorsing  them,  have  refused  to  pledge  their  credit 
to  their  validity,  and  the  transferee  must  be  taken  to  have  received 
them  on  their  own  credit  only." 

§  739a.  Oral  warranty  of  solvency  and  guaranty  of  payment.— 

But  where  the  transfer  by  delivery  is  for  a  valuable  consideration  the 
transferrer  may  orally  warrant  the  solvency  of  the  parties  and  guar- 
antee the  payment  of  the  paper.^^  If  he  promises  orally  that  the 
paper  is  good  and  will  be  paid  at  maturity,  the  promise  is  not  within 
the  Statute  of  Frauds,  and  the  promisor  is  liable  thereon  in  case  of 
nonpayment.  The  promise  is  regarded  as  that  of  the  transferrer  to 
pay  for  the  consideration  had,  if  parties  to  the  paper  do  not  pay,  and 
not  as  a  promise  to  answer  for  the  default  of  another." 

§  740.  Assignment  of  bill  or  note  for  antecedent  debt. — When 

the  bill  or  note  of  a  third  party  is  transferred  without  indorsement, 
in  payment  of  an  antecedent  debt,  it  has  been  held  that,  if  dishonored, 
the  prior  debt  revives,  because  the  instrument  was  given  as  money, 

54.  Fenn  v.  Harrison,  3  T.  R.  759. 

55.  FydeU  v.  Clark,  1  Esp.  447.  See  also  Emly  v.  Lye,  15  East,  7;  Bank  of 
England  v.  Newman,  1  Ld.  Raym.  442;  Gordon  v.  Irvine,  105  Ga.  144,  31  S.  E. 
151. 

56.  Smith  v.  Corege,  14  S.  W.  93,  citing  the  text. 

57.  Milks  V.  Rich,  80  N.  Y.  268;  Johnson  v.  Gilbert,  4  ffiU  (N.  Y.),  178;  Dabner 
V.  Blackney,  38  Barb.  432;  Cardell  v.  McNiel,  21  N.  Y.  336;  Bruce  v.  Burr,  67 
N.  Y.  237.  See  post,  §  1763.  King  v.  Summitt,  73  Ind.  312.  See  Union  Nat. 
Bank  v.  First  Nat.  Bank,  45  Ohio  St.  236;  Evans  v.  Stuhrberg,  6  Law.  Rep. 
Annot.,  §  501;  Brookhne  Nat.  Bank  v.  Moers,  19  App.  Div.  155,  45  N.  Y.  Supp. 
997. 

54 


850  TRANSFER   BY   ASSIGNMENT  §  740a 

and  did  not  produce  it.^^  But  this  distinction  does  not  seem  to  us 
tenable.  The  transferrer,  by  not  indorsing,  has  dechned  to  warrant 
that  it  will  produce  money,  and  the  transferee  has  consented  to  take 
the  security  instead  of  money,  and  without  such  warranty.^^  Still, 
this  is  to  be  observed:  The  law  presumes,  in  the  absence  of  proof, 
that  the  instrument  was  passed  as  conditional  payment  only,  in 
which  case  the  pre-existing  debt  is  only  suspended  during  its  cur- 
rency, and  revives  on  its  dishonor;  ^°  but  if  there  was  an  express  con- 
tract, or  circumstances  implying  a  contract,  on  the  part  of  the  cred- 
itor, to  accept  the  stranger's  paper  in  absolute  payment,  then  he 
would  be  held  to  his  bargain,  although  it  threw  upon  him  an  entire 
loss — the  burden  of  proof  to  this  effect  being  upon  the  transferrer.®^ 
The  transferrer  by  delivery  is  not  entitled  in  such  cases  to  notice  of 
dishonor;  but  if  there  is  unreasonable  delay  in  informing  him  of  it, 
he  may  show  in  defense  any  injury  he  has  sustained  by  the  actual 
laches  of  the  creditor.®^ 

§  740a.  Liability  of  a  broker  or  other  agent  transferring  nego- 
tiable paper  by  delivery;  whether  he  warrants  its  genuineness. — 

It  is  quite  clear  that  if  a  broker  or  other  agent  transfer  paper  by 
delivery  without  disclosing  who  his  principal  is,  he  is  himself  to  be 
regarded  as  a  principal  in  the  transaction,  although  the  party  dealing 
with  him  may  have  known  that  he  was  the  broker  and  agent  for  some 
person.®^  And  this  doctrine  has  been  applied  to  compel  a  broker  to 
refund  money  paid  for  a  note  sold  by  him  to  the  plaintiff,  atlhough  he 
had  paid  over  the  money  to  his  principal,  and  although  he  sold  the 


58.  Camidge  v.  AUenby,  6  B.  &  C.  373.  See  chapter  L,  on  Bank  Notes,  section 
III,  vol  II;  2  Parsons  on  Notes  and  Bills,  104,  note,  156,  note  m;  also  chapter 
XXXIX,  vol.  II. 

69.  In  Timniins  v.  Gibbins,  18  Q.  P.  722  (14  Eng.  L.  &  Eq.  64),  Lord  Camp- 
bell said:  "I  feel  great  difficulty  in  seeing  any  distinction  between  payment  for 
goods  sold  at  the  time,  and  payment  for  them  at  a  future  day.  In  both  cases  it  is 
a  transaction  of  buying  and  selling;  and  even  where  the  money  is  paid  over  the 
counter,  there  must  be  some  interval  during  which  the  buyer  was  debtor."  Dennia 
v.  WilUams,  40  Ala.  633.    See  chapter  XXXIX,  vol.  II. 

60.  Marsh  v.  Peddcr,  4  Campb.  257;  Taylor  v.  Briggs,  Moody  &  M,  28;  Robin- 
son v.  Read,  9  B.  &  C.  449.    See  chapter  XXXIX,  vol.  II. 

61.  Eagle  Bank  v.  Smith,  5  Conn.  71;  Frederick  Institute  v.  Michael,  81 
Md.  487,  32  Atl.  189,  340. 

62.  2  Parsons  on  Notes  and  Bills,  184. 

63.  Cabot  Bank  v.  Morton,  4  Gray,  156,  Shaw,  C.  J.;  Hamhn  v.  Abell,  120 
Mo.  88,  25  S.  W.  516. 


§  740a  LIABILITY    OF   ASSIGNOR   OF   LEGAL   TITLE  851 

note  for  a  sum  less  than  its  face.^^  There  is  no  doubt  also  that  an  ex- 
press warranty  that  a  note  is  genuine  will  bind  the  agent  of  the  seller 
personally,  if  it  appears  that  such  was  his  intention;  ^^  and  that  if 
there  be  an  express  exclusion  or  exemption  from  liability  for  genuine- 
ness he  will  not  be  bound.^^ 

When  a  broker  or  other  agent  sells  negotiable  paper,  and  is  known 
to  be  the  agent  of  a  certain  principal,  and  it  turns  out  that  such  paper 
is  forged  as  to  one  or  more  of  the  ostensible  parties,  a  more  difficult 
question  arises  as  to  the  agent's  liability.  But  its  solution  is  to  be 
found  in  the  inquiry:  did  the  buyer  understand  that  he  was  buying 
from  the  agent  or  from  the  principal — was  the  transaction  intended 
to  be  between  the  principal  and  the  buyer,  or  between  the  agent  and 
the  buyer?  ^^    If  the  agent  sells  in  his  own  name  it  is  immaterial 

64.  Merriam  v.  Walcott,  3  Allen,  258. 

65.  Wilder  v.  Cowles,  100  Mass.  487;  Story  on  Agency,  §  269;  Bailey  v.  Tal- 
breath  Bros.,  100  Tenn.  599,  47  S.  W.  84,  holds  that  the  agent  assumes  no  personal 
liability  in  the  absence  of  an  express  warranty  of  the  genuineness  of  the  note. 
Hamlin  v.  Abell,  120  Mo.  88,  25  S.  W.  516. 

66.  Bell  V.  Dagg,  60  N.  Y.  530;  ante,  §  7316. 

67.  Worthington  v.  Cowles,  112  Mass.  30  (1873).  Action  of  contract  upon 
the  implied  warranty  of  the  genuineness  of  the  signature  to  a  note  sold  by  de- 
fendant to  plaintiff,  Morton,  J.:  "The  plaintiff  claimed  that  in  the  purchase  of 
the  note  he  dealt  solely  with  the  defendants,  and  upon  their  credit.  The  defend- 
ants claimed  that  they  were  acting  as  agents  of  Hanson  in  the  transaction,  and 
that  their  principal  was  disclosed  to  the  plaintiff.  Upon  those  points  the  evidence 
was  conflicting.  The  defendants  ask  the  court  to  rule  '  that  if  the  defendants  were 
in  fact  agents  for  Hanson,  and  disclosed  their  agency  to  the  plaintiff,  or  the  plain- 
tiff knew  it,  or  had  reasonable  cause  to  know  it,  the  defendants  would  not  be  li- 
able.' Considered  as  an  abstract  proposition  of  law,  this  is  too  broad.  It  omits 
the  necessary  element  that,  in  the  dealing  or  transaction  in  question,  they  were 
acting  as  such  agents.  It  may  be  true  that  the  defendants  were  agents  of  Han- 
son, and  known  to  be  such  by  the  plaintiff,  and  yet,  if  in  the  purchase  of  this  note, 
it  was  understood  by  the  parties  that  the  plaintiff  was  dealing  with  and  upon  the 
credit  of  the  defendants,  they  would  be  liable.  An  agent  may  deal  so  as  to  bind 
himself  personally;  it  is  always  a  question  of  the  intention  and  understanding  of 
the  parties.  The  presiding  judge  properly  refused  to  give  the  instructions  in  the 
form  requested  by  the  defendants.  Instead  thereof,  he  ruled  in  substance  that  the 
question  was:  From  whom  did  the  plaintiff  understand  that  he  was  buying  the 
note —  from  the  brokers  or  from  Hanson?  and  that  if  such  a  state  of  facts  occurred, 
that  the  plaintiff  understood,  or  ought  to  have  understood,  as  a  man  of  reasonable 
intelligence,  that  he  was  dealing  with  Hanson,  the  defendants  would  not  be  liable. 
These  instructions  were  correct  as  apphed  to  the  facts  of  the  case  *  *  *  Unless 
from  their  (defendants')  disclosures  or  other  sources  the  plaintiff  understood, 
or  ought,  as  a  reasonable  man,  to  have  understood,  that  he  was  dealing  with 
Hanson,  he  had  a  right  to  assume  that  he  was  dealing  with  the  defendants  as 
principals."    Huston  v.  Tyler,  140  Mo.  252,  36  S.  W.  654,  41  S.  W.  795. 


852  TRANSFER   BY   ASSIGNMENT  §  74l 

whether  he  discloses  his  principal  or  not,  in  so  far  as  his  own  liability- 
is  affected;  for  it  is  a  general  principle  that  evidence  is  inadmissible 
to  discharge  a  party  contracting  in  his  own  name  (unless  it  be  by 
adoption  the  name  used  by  another),  although  it  is  admissible  to 
charge  an  undisclosed  principal  .^^  And  if  the  contract  of  sale  be  in 
writing,  and  in  the  name  of  the  agent,  he  will  be  liable  as  a  principal 
in  the  transaction,  and  parol  evidence  will  be  inadmissible  to  discharge 
him,  although  it  would  be  admissible  to  charge  his  principal  if  he 
were  in  fact  an  agent.^^ 


SECTION  II 

LIABILITY  OF  THE  MAKER   ON   ASSIGNMENT  OF  THE  EQUITABLE  TITLE 

BY   DELIVERY 

§  741.  We  have  already  seen  that  where  a  bill  or  note  payable  "to 
order"  is  transferred  without  indorsement,  the  transferee  does  not 
acquire  the  legal,  but  only  the  equitable,  titled"    The  holder  under 

.  68.  Ewell's  Evans'  Agency,  410  [*  305];  Smith's  Lead.  Cas.,  vol.  II,  369  [*224]; 
Lyons  v.  Miller,  6  Gratt.  439,  Baldwin,  J.  (semble).  See  as  to  Exceptions  Ewell's 
Evans'  Agency,  416  [*309];  Equitable  Marine  Ins.  Co.  v.  Adams,  173  Mass. 
436,  53  N.  E.  883;  Shuey  v.  Adair,  18  Wash.  188,  51  Pac.  388,  63  Am.  St.  Rep. 
879. 

69.  Story  on  Agency,  §§  155,  160,  269,  270;  Smith's  Lead.  Cas.,  vol.  II,  369 
[*224];  Benjamin  on  Sales,  164.  See  Magee  v.  Atkinson,  2  M.  &  W.  440;  Jones 
v.  Littledale,  6  Ad.  &  El.  486;  Trueman  v.  Loder,  11  Ad.  &  El.  587;  Higgins  v. 
Senior,  8  M.  &  W.  834.  "The  distinction  to  be  kept  in  mind  is,  that  while  parol 
evidence  cannot  be  received  to  discharge  a  party,  it  may  be  received  when  its  effect 
is  to  show  that  another  party,  namely,  the  principal,  is  also  bound,"  Wharton  on 
Evidence,  vol.  II,  §  951. 

70.  Ante,  chapter  XXI,  §  664a;  First  Nat.  Bank  v.  Moore,  137  Fed.  505;  May 
V.  Dyer,  57  Ark.  441,  21  S.  W.  1064;  citing  text;  Haug  v.  Riley,  Admr.,  101  Ga. 
372,  29  S.  E.  44,  quoting  and  approving  text;  Haines  v.  Thompson,  129  111.  App. 
436;  Schoepfer  v.  Tommack,  97  111  App.  562;  Gray  Tie  &  Lumber  Co.  v.  Farmers' 
Bank,  109  Ky.  694,  60  S.  W.  537.  When  the  transfer  of  a  note  is  for  a  valuable 
consideration,  and  the  indorsement  is  omitted  through  mistake  or  fraud,  a  good 
title  will  pass,  in  equity,  by  mere  deUvery.  Union  Brewing  Co.  v.  Interstate 
Bank  &  Trust  Co.,  240  III.  454,  88  N.  E.  997.  Where  a  note,  after  maturity,  is 
delivered  by  the  owner  to  a  person  for  the  purpose  of  securing  a  loan  thereon, 
with  no  intention  to  pass  title  to  the  note  except  upon  condition  that  a  loan  thereon 
should  be  secured,  upon  failure  to  secure  a  loan  title  to  the  note  failed  to  pass. 
Pierpont  v.  Johnson,  104  111.  App.  27.  A  check  can  be  transferred  without  a 
written  assignment  thereof  so  as  to  make  the  transferee  the  true  owner  thereof. 
Maloney  v.  State,  91  Ark.  485,  121  S.  W.  728,  134  Am.  St.  Rep.  83. 


§  741  LIABILITY   OF   ASSIGNOR   OF   EQUITABLE   TITLE  853 

such  a  transfer  must  aver  and  prove  the  assignment,  for  the  mere 
possession  of  the  instrument  unindorsed  is  not  evidence  of  ownership, 
and  its  exhibition  in  a  suit  not  sufficient  ground  of  recoveryJ^  And 
he  can  only  stand  in  the  shoes  of  his  assignor,  and  recover  subject  to 
such  defenses  as  were  available  against  him,  although  he  took  it  in 
good  faith  for  value/^    Therefore,  if  the  party  who  transfers  a  note 

71.  Hull  V.  Conover,  35  Ind.  372;  Prescott  v.  Hull,  17  Johns.  284;  Van  Eman 
V.  Stanchfield,  10  Minn.  255;  Beard  v.  First  Nat.  Bank,  39  Minn.  546;  Gano  v. 
McCarthy,  79  Ky.  409;  Currie  v.  Boroman,  25  Oreg.  365,  35  Pac.  848;  Bank  v. 
Durfee,  118  Mo.  431,  24  S.  W.  133,  40  Am.  St.  Rep.  396;  Hair  v.  Edwards,  104 
Mo.  App.  213,  77  S.  W.  1089;  Horner  v.  Amick,  64  W.  Va.  172,  61  S.  E.  40.  See 
chapter  XX,  on  Presentment  for  Payment,  section  1,  §  573  et  seq.,  and  also  §§  812, 
1181s.  In  an  action  by  an  assignee  of  a  note,  the  maker  cannot  raise  the  question 
whether  the  plaintiff  is  the  owner  and  holder  of  the  note,  outside  of  any  right  of 
Bet-off  or  counterclaim  which  maker  may  have.  Lodge  v.  Lewis,  32  Wash.  191, 
72  Pac.  1009.  The  measure  of  the  maker's  right  to  enforce  proof  of  assignment  or 
to  question  the  validity  of  the  assignment  of  a  nonnegotiable  promissory  note  is 
whether  he  is  protected  from  further  Utigation  or  liability  in  connection  with  it. 
Bartlett  Estate  Co.  v.  Eraser,  11  Cal.  App.  373,  105  Pac.  130. 

72.  Webster  v.  Carter  (Ark.),  138  S.  W.  1006;  Gumaer  v.  Sowers,  31  Colo. 
164,  71  Pac.  1103;  Simpson  v.  Hall,  47  Conn.  418;  Foreman  v.  Beckwith,  73  Ind. 
515;  Hecker  v.  Boylan,  126  Iowa,  162,  101  N.  W.  755;  Calvin  v.  Sterrett,  41  Kan. 
218;  Gilbert  v.  Nelson,  5  Kan.  App.  528,  48  Pac.  207;  Warren  v.  Gruwell,  5  Kan. 
App.  523,  48  Pac.  205;  Harrigan  v.  Advance  Thresher  Co.  (Ky.),  81  S.  W.  261; 
Gray  Tie  &  Lumber  Co.  v.  Farmers'  Bank,  109  Ky.  694,  60  S.  W.  537;  Allum  v. 
Perry,  68  Me.  232;  Haskell  v.  Mitchell,  53  Me.  468;  Lancaster  Nat.  Bank  v.  Tay- 
lor, 100  Mass.  18;  Spining  v.  SulUvan,  48  Mich.  8;  Matteson  v.  Morris,  40  Mich. 
55;  Weber  v.  Orten,  91  Mo.  677;  Boeka  v.  Nuella,  28  Mo.  181;  Sells  v.  Tootle,  160 
Mo.  593,  61  S.  W.  579;  Cornish  v.  Woolverton,  32  Mont.  456,  81  Pac.  4,  108  Am. 
St.  Rep.  598;  Hedges  v.  Sealy,  9  Barb.  218;  Pitkin  v.  Clayton,  41  App.  Div.  363, 
58  N.  Y.  Supp.  483;  Fitch  v.  McDowell,  80  Hun,  207,  30  N.  Y.  Supp.  31;  Johnson 
County  Savings  Bank  v.  Scoggin  Drug  Co.,  152  N.  C.  142,  67  N.  E.  253;  Davis 
v.  Sitting,  65  Tex.  5;  State  v.  McClellan,  82  Vt.  361,  73  Atl.  993,  23  L.  R.  A.  (N. 
S.)  1063;  Gross  v.  Bennington,  52  Wash.  417,  100  Pac.  846;  Huntington  v.  Lom- 
bard, 22  Wash.  202,  60  Pac.  414;  Billingsley  v.  Clelland,  41  W.  Va.  234,  23  S.  E. 
812;  Terry  v.  Allis,  6  Wis.  478;  Bank  of  Chadron  v.  Anderson,  6  Wyo.  520,  48 
Pac.  197.  See  §  781a.  In  Osgood  v.  Artt,  17  Fed.  575,  the  transferee  attempted 
to  cut  out  the  maker's  defenses  by  procuring  an  indorsement  from  his  transferrer 
after  notice  of  the  defenses,  but  without  success.  Also  in  Goshen  Nat.  Bank  v. 
Bingham  (N.  Y.),  23  N.  E.  180,  although  the  failure  to  indorse  was  by  mistake. 
The  assignee  of  purchase-money  notes  given  by  the  vendee  takes  subject  to 
judgments  of  record  against  the  vendor  at  the  time  of  the  assignment.  First 
Nat.  Bank  of  Falls  City,  65  Nebr.  340,  91  N.  W.  404.  Where  reliance  is  placed 
upon  the  apparent  authority  of  an  agent  to  bind  the  principal  by  giving  notes, 
the  assignee  of  such  notes,  even  though  they  were  received  before  maturity,  would 
occupy  no  better  position  than  the  payee,  for  if  the  payee  was  not  authorized 
to  take  the  notes,  he  could  not  confer  authority  upon  his  assignee  to  collect  them. 
Alton  Mfg.  Co.  V.  Garrett  BibUcal  Inst.,  243  111.  298,  90  N.  E.  704. 


g54  TRANSFER   BY   ASSIGNMENT  §  741 

payable  to  the  order  of  another,  but  unindorsed  by  him  to  whose  order 
it  is  payable,  and  it  turn  out  that  the  transferrer  had  no  title,  the  trans- 
feree could  not  recover,  there  being  no  equitable  right  to  which  he 
can  claim  succession/^  In  such  a  case  in  Indiana  it  was  said  by 
Blackford,  J,:  ''Whether  the  property  in  this  note  could  pass  without 
indorsement  under  any  circumstances  need  not  be  considered.  Sup- 
posing it  could,  the  transfer  in  such  case  must  be  governed,  not  by 
commercial  law,  but  by  the  rules  which  govern  the  sale  of  ordinary 
goods  out  of  market  overt."  ^^  It  is  quite  well  settled  that  delivery 
of  such  an  instrument  may  operate  as  an  assignment,^^  but  the 
assignee  would  have  to  sue  in  the  name  of  the  assignor,  unless  per- 
mitted by  statute  to  sue  in  his  own.^^  The  bona  fide  holder  by  assign- 
ment, while  not  protected  against  existing  defenses,  is  protected 
against  all  defenses  subsequently  arising,"  and  after  notice  to  the 
maker  of  the  assignment;  ^^  and  an  express  promise  of  the  maker  to 
pay  the  assurances  to  the  assignee  that  the  notes  were  all  right  would 
destroy  even  such  prior  equities,  much  more  any  arising  after  notice 
of  the  assignment.^^ 

73.  Myers  v.  Friend,  1  Rand.  13.    See  ante,  §  441. 

74.  Elliott  V.  Armstrong,  2  Blackf.  212. 

75.  Jones  v.  Witter,  13  Mass.  304;  Blesse  v.  Blackburn,  31  Mo.  App.  267. 

76.  Pease  v.  Hirst,  10  B.  &  C.  125,  5  Man.  &  R.  88;  Edwards  v.  Wagner,  121 
Cal.  376;  53  Pac.  821,  text  cited;  Gumaer  v.  Sowers,  31  Colo.  164,  71  Pac.  1104, 
Smalley  v.  Wight,  44  Me.  442;  Amherst  Academy  v.  Cowls,  6  Pick.  427;  Grand 
Gulf  Bank  v.  Wood,  12  Smedes  &  M.  482;  Wheeler  v.  Wheeler,  9  Cow.  34;  John- 
son County  Savings  Bank  v.  Scoggin  Drug  Co.,  152  N.  C.  142,  67  N.  E.  253; 
Elmore  v.  Rugely  (Tex.  Civ.  App.),  107  S.  W.  151.  The  holder  of  a  paper  trans- 
ferred by  assignment  can  enforce  his  right  by  a  suit  in  equity  in  his  own  name  or 
by  a  suit  at  law  in  the  name  of  the  payee.  State  of  McClellan,  82  Vt.  361,  73 
Atl.  993,  23  L.  R.  A.  (N.  S.)  1063. 

77.  Beard  v.  Dedolph,  29  Wis.  142  (1871);  State  v.  Stebbins,  132  Mo.  332, 
33  S.  W.  1147,  citing  text;  Sackett  v.  Montgomery,  57  Nebr.  424,  77  N.  W. 
1083,  73  Am.  St.  Rep.  522;  Gaylord  v.  Nebraska  Sav.,  etc..  Bank,  54  Nebr.  104, 
74  N.  W.  415,  69  Am.  St.  Rep.  705.  But  compare  Kampmann  v.  McCormick, 
24  Tex.  Civ.  App.  462,  59  S.  W.  832. 

78.  Huber  v.  Egner  (Ky.),  61  S.  W.  353,  holding  that  the  maker  of  a  note  may 
set  up  a  counterclaim  or  set-ofT  against  the  payee,  as  against  the  assignee  of  the 
note,  where  the  right  to  the  counterclaim  arose  before  notice  of  the  maker  of  the 
assignment.  It  is  no  defense  to  an  action  by  an  assignee  of  a  note  given  for  the 
purchase  of  land  that  the  payee  removed  timber  from  and  committed  trespass 
upon  the  land,  unless  it  is  shown  that  these  acts  were  committed  before  the  assign- 
ment of  the  note  and  that  the  payee  was  insolvent,  or  before  the  maker  had  notice 
of  the  assignment.    Carlton  v.  Smith  (Ky.),  110  S.  W.  873. 

79.  Isaac  Eberly  Co.  v.  Gibson,  107  Va.  315,  58  S.  E.  591. 


§  742  LIABILITY    OF    ASSIGNOR   OF   EQUITABLE    TITLE  855 

§  742.  Transfer  by  assignment  of  nonnegotiable  instruments; 
notice  of  assignment  to  debtor. — These  principles  apply  to  bills 
and  notes  which  are  not  drawn  payable  to  bearer,  or  to  order,  and 
are  not  negotiable.  The  party  who  becomes  transferee  of  such  in- 
struments takes  only  the  right  and  title  of  his  transferrer — can  sue 
only  in  the  name  of  such  transferrer — and  is  subject  to  all  offsets, 
equities,  and  other  defenses,^"  which  might  have  been  pleaded  against 
him  up  to  the  time  when  the  debtor  first  receives  notice  of  the  assign- 
ment.^^   It  is  binding  upon  the  maker  after  notice,^-  and  as  soon  as  a 

80.  Union  Collection  Co.  v.  Buckman,  150  Cal.  159,  88  Pac.  708,  9  L.  R.  A. 
(N.  S.)  568,  119  Am.  St.  Rep.  164;  Rosenthal  v.  Rambo,  165  Ind.  584,  76  N.  E. 
404,  3  L.  R.  A.  (N.  S.)  678;  First  Nat.  Bank  of  Petersburg  v.  Beach,  34  Ind.  App. 
80,  72  N.  E.  287;  Kimpton  v.  Studebaker  Bros.  Co.,  14  Idaho,  552,  94  Pac.  1039, 
125  Am.  St.  Rep.  185;  Union  Bank  v.  Trust  Co.  of  Henderson  v.  Ford  (Ky.), 
101  S.  W.  347;  Johnson  v.  Acme  Harvesting  Mach.  Co.,  24  Okl.  468,  103  Pac. 
638;  Citizens'  Bank  of  Wakita  v.  Garnett,  21  Okl.  200,  95  Pac.  755;  Dickerson 
V.  Higgins,  15  Okla.  588,  82  Pac.  649;  Cotton  v.  John  Deere  Plow  Co.,  14  Okl. 
605,  78  Pac.  321;  Gilley  v.  Harrell,  118  Tenn.  115,  101  S.  W.  424.  Under  section 
3442,  Comp.  Laws,  providing  that  "a  nonnegotiable  written  contract  for  the 
payment  of  money  or  personal  property  may  be  transferred  by  indorsement,  in 
like  manner  with  negotiable  instruments.  Such  indorsement  shall  transfer  all  the 
rights  of  the  assignor  under  the  instrument  to  the  assignee  subject  to  all  equities 
and  defenses  existing  in  favor  of  the  maker  at  the  time  of  the  indorsement," 
the  maker  of  such  a  note  cannot  set  up  a  right  of  action  for  a  breach  of  a  con- 
tract against  the  payee  occurring  three  years  after  the  execution  of  the  note 
and  of  its  assignment.  State  Bank  of  Fillmore  v.  Hayes,  16  S.  D.  365,  92  N.  W. 
1068.  While  Civ.  Code  1895,  §  3682,  declares  that  any  contract  in  writing  for  the 
payment  of  money  is  negotiable  by  indorsement  or  written  assignment  in  the 
same  manner  as  bills  of  exchange  and  promissory  notes,  its  effect  is  not  to  render 
such  paper  a  negotiable  instrument  so  as  to  come  within  the  operation  of  §  3694, 
prescribing  defenses  that  may  be  set  up  by  the  maker  of  a  negotiable  note  against 
a  holder  who  received  the  same  before  due.  Mackin  v.  Ballock,  133  Ga.  555,  66 
S.  E.  265. 

81.  Peyton  v.  Planters'  Compress  Co.,  63  Miss.  410;  Shufeldt  v.  GiUilan,  124 
111.  461;  Bank  of  Stockton  v.  Jones,  65  Cal.  437;  Etheredge  v.  Parker,  76  Va. 
247;  Merrell  v.  Springer,  24  N.  E.  258;  Fitch  v.  McDowell,  80  Hun,  207,  30 
N.  Y.  Supp.  31.  A  transfer  of  a  nonnegotiable  note  may  be  by  oral  assignment 
followed  by  delivery.  See  Hill  v.  Alexander,  2  Kan.  App.  251,  41  Pac.  1066; 
Emley  v.  Perrine,  56  N.  J.  L.  474,  33  Atl.  951,  citing  text;  Ablowich  v.  Greenville 
Nat.  Bank,  22  Tex.  Civ.  App.  272,  54  S.  W.  794;  Billingsley  v.  Clelland,  41  W.  Va. 
234,  23  S.  E.  812;  Prim  v.  Mcintosh,  43  W.  Va.  790,  28  S.  E.  742;  Emley  v. 
Perrine,  58  N.  J.  L.  472,  33  Atl.  951,  citing  text;  Union  Nat.  Bank  v.  Hines,  177 
111.  417,  53  N.  E.  83;  Randall  Co.  v.  Glendenning,  19  Okl.  475,  92  Pac.  158; 
Lowry  v.  Danforth,  95  Mo.  App.  441,  69  S.  W.  39;  Barker  v.  Barth,  192  111.  460, 
61  N.  E.  388. 

82.  Rosenthal  v.  Rambo,  28  Ind.  App.  265,  62  N.  E.  637;  Johnson  v.  Hibbard, 
27  Utah,  342,  75  Pac.  737. 


g56  TRANSFER    BY    ASSIGNMENT  §  743 

transferee  receives  such  an  instrument,  he  should,  therefore,  notify 
the  debtor,  in  order  to  protect  himself.^^  He  need  not,  however, 
exhibit  the  security  to  the  debtor  or  offer  him  other  evidence  than  his 
own  information  of  the  assignment:  for,  although  the  debtor  may  re- 
quire evidence  of  the  assignment  before  he  makes  payment  to  the 
assignee,  the  notice  is  a  mere  measure  of  precaution  to  put  him  upon 
inquiry .^^  If  the  debtor  finds  the  original  creditor  still  retaining  the 
evidence  of  the  debt,  he  may  still  make  payment  to  him;  but  if  he 
cannot  produce  it,  there  would  be  the  best  reason  to  believe  the  notice 
of  the  assignment.*^  Where  the  assignee  sues  in  the  assignor's  name, 
the  defendant  may  set  off  a  debt  due  from  the  assignee  to  him,  in 
like  manner  as  if  the  suit  had  been  brought  in  his  own  name.*^ 

§  743.  Bills  and  notes  which  are  not  payable  to  bearer,  or  to  order, 
cannot  be  so  transferred,  either  by  indorsement  or  delivery,  so  as  to 
substitute  the  transferee  for  the  transferrer,  and  enable  the  former 
to  sue  in  his  own  name,  unless  he  be  empowered  to  do  so  by  statute^ 
Anciently,  transfers  of  all  choses  in  action,  which  term  includes  bills 
and  notes,  were  forbidden  by  the  common  law,  but  courts  of  equity 
have  long  since  disregarded  the  rule,  and  in  that  forum  all  assignees 
of  choses  in  action  are  permitted  to  enforce  their  rights  in  their  own 
name.**  It  is  otherwise  in  courts  of  law,  where  the  assignee  (unless 
permitted  by  statute)  can  only  sue  in  the  name  of  the  assignor,  or 
of  his  executor  or  administrator,  according  to  the  ancient  rule,  when 
the  assignor  is  dead.*^    But  the  doctrine  of  equitable  assignments  has 

83.  After  such  notice  the  debtor  will  not  be  protected  in  any  payment  he 
may  make  to  the  transferrer  (Goldstein  v.  Winkleson,  28  Mo.  App.  437);  or  in 
any  set-off  he  may  acquire  against  him.  Wood  v.  Brush,  72  Cal.  224;  Banister 
V.  Kenton,  46  Mo.  App.  462. 

84.  Davenport  v.  Woodbridge,  8  Greenl.  17. 

85.  Ibid.;  Bartlett  v.  Eddy,  49  Mo.  App.  32. 

86.  Corser  v.  Craig,  1  Wash.  C.  C.  424. 

87.  Tassell  v.  Lewis,  1  Ld.  Raym.  743;  Hill  v.  Lewis,  1  Salk.  132;  Backus 
V.  Danforth,  10  Conn.  297;  White  v.  Heylman,  34  Pa.  St.  142;  ante,  §  741. 

88.  Coles  V.  Jones,  2  Vern.  692;  Wright  v.  Wright,  1  Ves.  Sr.  411;  Hughes 
V.  Nelson,  29  N.  J.  Eq.  549  (1878).  In  this  case  the  transferrer  contracted  to 
indorse,  but  omitted  to  do  so.  Defeated  in  suit  at  law,  the  transferee  sued  in 
equity.  Judgment  against  him  at  law  was  held  no  bar  to  the  suit  in  equity,  and 
Vice-Chancellor  Van  Fleet  said:  "The  delivery  of  the  note  under  the  circumstances 
stated,  constituted  the  complainant  an  indorsee  in  equity,  with  all  the  rights  of 
a  bona  fide  holder  for  value  before  maturity.  *  *  *  Equity  looks  upon  that  as 
done  which  ought  to  have  been  done." 

89.  Skinner  v.  Somes,  14  Mass.  107;  Amherst  Academy  v.  Cowls,  6  Pick.  427. 


§§  744,  745     LIABILITY   OF   ASSIGNOR   OF   EQUITABLE   TITLE       857 

been  constantly  extending  to  meet  the  conveniences  of  trade  and  busi- 
ness; and  it  has  long  been  settled  that  the  assignee  of  a  chose  in  action 
may  sue  in  a  court  of  law  in  the  name  of  his  assignors,  and  recover, 
subject,  however,  to  such  defenses  as  were  available  against  the 
assignor  at  the  time  the  debtor  received  notice  of  the  assignment.^ 

§  744.  Assignment  by  delivery,  and  failure  to  execute  an  agreed 
indorsement. — If  the  transferee  delivers  a  bill  without  indorsing 
it,  where  it  was  upon  good  consideration,  agreed  or  understood  that 
it  should  be  indorsed  by  him,  and  afterward  he  refused  to  indorse, 
he  may  be  sued  for  damages  for  breach  of  contract.^^  And  he,  or 
his  personal  representative,  may  be  compelled  by  bill  in  equity  to 
indorse.^2  But  the  transferee,  by  delivery  under  such  circumstances, 
has  no  right  to  sign  his  transferrer's  name  as  indorser.^^ 

Under  Negotiable  Instrument  statute. — While  the  statute  states 
how  negotiation  may  be  completed,^'*  yet  it  expressly  declares  that 
mere  delivery  of  an  instrument  payable  to  order  vests  title  in  the 
transferee  and  also  carries  with  it  the  right  to  compel  the  indorse- 
ment of  the  transferrer.^^ 

§  745.  Whether  indorsement  when  made  relates  back  to  time 
when  it  was  agreed  to  be  made. — It  has  been  thought  that  where  an 
assignment  of  a  note  or  bill  payable  to  order  has  been  made  for  a 
valuable  consideration,  an  indorsement  thereof,  whenever  made, 
will  relate  back  to  the  time  of  assignment,  and  operate  as  if  then 
made.^^  This  doctrine  may  be,  and  doubtless  is,  true  when  the  in- 
dorsement at  the  time  of  the  assignment  was  agreed  upon  and  in- 
tended to  be  made,  but  omitted  by  mistake,  accident,  negligence, 
or  fraud.^^    But  beyond  this  it  cannot  go.    If  the  instrument  be  pay- 

90.  Gibson  v.  Cooke,  20  Pick.  15. 

91.  Rose  V.  Sims,  1  B.  &  Ad.  521  (20  Eng.  C.  L.). 

92.  Watkins  v.  Maule,  2  Jac.  &  Walk.  242;  RoUeston  v.  Hibbert,  3  T.  R. 
411;  Ex  -parte  Greening,  13  Ves.  206;  Byles  [*150],  270;  1  Parsons  on  Notes 
and  Bills,  279;  Hughes  v.  Nelson,  29  N.  J.  Eq.  549;  Story  on  Notes,  §  120;  1 
Story's  Eq.  Jur.,  §§  99,  729;  McCann  v.  Randall  (Mass.),  17  N.  E.  477,  citing 
the  text. 

93.  Rose  V.  Sims,  m-pra;  Harrop  v.  Fisher,  30  L.  J.  C.  P.  283;  Byles  [*150], 
270;  Story  on  Bills,  §  201. 

94.  Appendix,  sees.  30,  31. 

95.  Appendix,  sees.  30,  31.     Swenson  v.  Stoltz,  36  Wash.  318,  78  Pac.  999. 

96.  Baker  v.  Arnold,  3  Cai.  283  (1805),  Livingston,  J.;  1  Parsons  on  Notes 
and  Bills,  279. 

97.  Southard  v.  Porter,  43  N.  H.  380  (1861).    The  party  had  notice  of  the 


g58  TRANSFER   BY   ASSIGNMENT  §  746 

able  to  order,  an  assignment  is  not  in  the  usual  course  of  business. 
It  transfers  the  equitable,  but  not  the  legal,  title;  and  an  indorsement 
after  maturity,  or  after  notice  of  a  defense,  cannot  effectuate  an  an- 
terior imperfect  transaction,  and  exclude  equitable  defenses  which 
had  become  available.^^  In  Wisconsin  it  is  held  that  a  post  indorse- 
ment relates  back  to  deUvery  in  respect  to  any  equity  outside  of  the 
note  itself.^^ 

In  Maine  it  has  been  held  that  where  an  assignment  is  made  before 
maturity,  a  contemporaneous  promise  of  the  payee  to  indorse,  if  not 
complied  with  until  after  maturity,  will  not  avoid  the  defense  of  want 
of  consideration,  made  by  the  maker  against  the  indorsee.^ 

§  746.  In  respect  to  set-off  a  different  principle  appUes.  An  in- 
dorsement at  any  time  before  suit  brought,  whether  before  or  after 

defense  at  the  time  of  the  indorsement,  but  not  at  time  of  assignment.  But 
see  Haskell  v.  Mitchell,  53  Me.  468.  In  Watkins  v.  Maule,  2  Jac.  &  Walk.  237, 
it  is  said  by  Lord  Eldon:  "When  a  note  is  handed  over  for  a  valuable  considera- 
tion the  indorsement  is  a  mere  form,  the  transfer  for  consideration  is  the  substance ; 
it  creates  an  equitable  right  and  entitles  the  party  to  call  for  the  form."  Hughes 
V.  Nelson,  29  N.  J.  Eq.  549.  Quoting  the  text,  the  court,  in  Schoepfer  v.  Tom- 
mack,  97  111  App.  562,  said:  "We  are  inclined,  however,  to  the  opinion  that  the 
doctrine  should  not  be  so  hmited,  unless  it  be  said  that  there  is  an  impUed  agree- 
ment and  intention  to  indorse  the  paper  where,  as  here,  nothing  was  said,  and 
there  was  a  bona  fide  sale  for  a  valuable  consideration." 

98.  McCormick  v.  Sawyer,  108  Me.  405,  81  Atl.  482;  Lancaster  Nat.  Bank 
V.  Taylor,  100  Mass.  24  (1868);  Clark  v.  WTiitaker,  50  N.  H.  474;  Southard  v. 
Porter,  43  N.  H.  380;  Whistler  v.  Forster,  14  J.  Scott  (N.  S.)  (108  Eng.  C.  L.) 
254  (1863).  Erie,  C.  J.:  "Griffiths,  at  the  time  he  so  handed  the  bill  over  to 
the  plaintiff,  omitted  to  indorse  it.  Under  these  circumstances  the  condition  of 
things  was  this,  that  the  plaintiff  had  at  that  time  the  same  rights  as  if  an 
ordinary  chattel  had  passed  to  him  by  an  equitable  assignment;  he  would  have 
all  the  rights  which  Griffiths  could  convey  to  him.  Now,  Griffiths  having  de- 
frauded the  defendant  of  the  bill,  he  could  pass  no  right  by  merely  handing  over 
the  bill  to  another.  According  to  the  law  merchant  the  title  to  a  negotiable  in- 
strument passes  by  indorsement  and  delivery.  A  title  so  acquired  is  good  against 
all  the  world,  provided  the  instrument  is  taken  for  value  and  without  notice  of 
any  fraud.  The  plaintiff's  title,  under  the  equitable  assignment  here,  therefore, 
was  to  be  rendered  valid  by  indorsement;  but,  at  the  time  he  obtained  the  in- 
dorsement, he  had  notice  that  the  biU  had  been  fraudulently  obtained  by  Griffiths 
from  the  defendant,  and  that  Griffiths  had  no  right  to  make  the  indorsement. 
Assuming,  therefore,  that  there  may  be  confficting  equities  between  the  plaintiff 
and  the  defendant,  I  think  the  right  should  prevail  according  to  the  rules  of  law, 
and  that  the  plaintiff  had  no  title  as  transferee  of  the  bill  at  all."  Pavey  v.  Stauffer, 
45  La.  Ann.  353,  12  So.  512. 

99.  Beard  v.  Dedolph,  29  Wis.  136. 

1.  Haskell  y.  Mitchell,  53  Me.  468  (1866) 


§§  747,  748     LIABILITY    OF    ASSIGNOR   OF    EQUITABLE    TITLE        859 

maturity,  cuts  out  the  right  of  the  maker  or  acceptor  to  plead  it,  for  a 
set-off  is  not  an  equity.^ 

§  747.  A  second  assignee  who  gives  immediate  notice  of  his  assign- 
ment will  be  protected  against  a  prior  one  who  failed  to  give  notice,^  or 
who  is  guilty  of  any  neglect  or  fraud  which  enables  the  assignor  to 
make  a  second  assignment  to  a  bona  fide  assignee.^ 

The  assignee  may  sue  the  debtor  in  his  own  name,  when  the  assignor 
has  discharged  him,  and  the  debtor,  in  consideration  thereof  and  of 
the  assignment,  has  promised  the  assignee  to  pay  the  debt  to  him.^ 
And  the  debtor,  after  making  such  promise  to  pay  the  assignee,  could 
not  make  defenses  available  against  the  assignor  which  he  did  not 
reserve  in  his  promise  to  the  assignee.^ 

§  748.  Equitable  assignment. — There  is  a  peculiar  kind  of  as- 
signment which  remains  yet  to  be  noticed.  It  is  an  assignment  which 
arises  not  from  the  direct  act  of  the  person  from  whom  the  beneficial 
interest  in  the  thing  assigned  passes;  but  is  effected  by  operation  of 
law,  and  is  called  equitable  assigimient. 

The  assignment  of  any  particular  claim  is  considered  an  equitable 
assignment  of  all  securities  held  by  the  assignor  to  assure  it.  Thus 
the  assignment  of  a  debt  by  whatever  form  of  transfer,  carries  with 
it  any  bill  or  note  by  which  it  is  secured;  ^  and  the  converse  of  the 
proposition  is  equally  true,  that  the  transfer  by  indorsement  or  assign- 
ment of  a  bill  or  note  carries  with  it  all  securities  for  its  payment,^ 

2.  Ranger  v.  Carey,  1  Mete.  (Mass.)  369  (1840).  Contra,  Odiorne  v.  Woodman, 
39  N.  H.  544  (1859).  The  case  of  Ranger  v.  Carey  is  often  quoted  in  support  of 
the  doctrine  that  indorsement  relates  back  to  the  assignment;  but  the  contrary 
is  expressly  decided  in  Lancaster  Nat.  Bank  v.  Taylor,  100  Mass.  24,  and  that 
case  is  there  explained. 

3.  Judson  V.  Corcoran,  17  How.  612. 

4.  Maykin  v.  Kirby,  4  Rich.  Eq.  105. 

5.  Tatlock  V.  Harris,  3  T.  R.  174;  Weston  v.  Barker,  12  Johns.  276;  Doty  v. 
Wilson;  14  Johns.  378;  Murry  v.  Todd,  12  Mass.  281;  Currier  v.  Hodgdon,  3  N.  H. 
82;  Myers  v.  York,  etc.,  R.  Co.,  43  Me.  232;  McGahan  &  Co.  v.  Lockett,  54 
S.  C.  364,  32  S.  E.  429,  71  Am.  St.  Rep.  796. 

6.  Wiggin  V.  Damrell,  4  N.  H.  69;  Thompson  v.  Emery,  7  Fost.  269. 

7.  Marston  v.  Allen,  8  M.  &  W.  494;  Adams  v.  Jones,  12  Ad.  &  El.  455;  Hayes 
V.  Caulfield,  5  Q.  B.  81;  Smith  v.  Brunk,  14  Colo.  75,  23  Pac.  325;  Ross-Meehan 
Brake,  Shoe  Foundry  Co.  v.  Pascagoula  Ice  Co.  et  al,  72  Miss.  608,  18  So.  364. 

8.  Freeman's  Bank  v.  Ruckman,  16  Gratt.  129.  See  post,  §  834;  Mechanics' 
Building  Assn.,  29  La.  Ann.  549;  Cross  v.  Moffat,  11  Colo.  210;  Kernohan  v. 
MansB,  53  Ohio  St.  118,  41  N.  E.  258;  Hussey  v.  Hill,  120  N.  C.  312,  26  S.  E.  919, 


860  TRANSFER   BY   ASSIGNMENT  §  748a 

whether  they  exist  by  way  of  mortgage,  deed  of  trust,  or  otherwise.^ 
A  renewal  note  has  the  benefit  of  any  security  for  the  payment  of 
the  original,  whether  by  way  of  mortgage,  deed  of  trust,  or  otherwise, 
and  the  holder  may  enforce  it,^"  whether  the  renewal  be  for  the  whole 
or  for  part  of  the  original  in  the  absence  of  any  agreement  to  the  con- 
trary. ^^ 

§  748a.  Assignment  by  separate  paper. — Negotiable  instru- 
ments may  also  be  assigned  by  a  separate  and  distinct  paper,  although 
not  delivered,  as  by  deed  or  mortgage,  conveying  them  specifically, 
or  all  "choses  in  action;"  ^^  but  it  has  been  held  that  such  an  assign- 

58  Am.  St.  Rep.  789.  Held  in  this  case,  that  the  assignment  of  a  note  with 
mortgage  securing  it,  does  not  carry  with  it  the  power  of  sale  contained  in  the 
mortgage. 

9.  See  post,  §§  834,  1282;  De  Bruhl  v.  Maas,  54  Tex.  464;  Martin  v.  O'Ban- 
non,  35  Ark.  68;  Garrett  v.  WilUams,  31  Ark.  240;  Citizens'  Bank  v.  Ferry, 
32  La.  Ann,  120;  Kerhane  v.  Smith,  97  111.  159;  Dunn  v.  Snell,  15  Mass.  485; 
Titcomb  v.  Thomas,  5  Greenl.  282;  Jones  v.  Witter,  13  Mass.  282;  Waller  v. 
Tate,  4  B.  Mon.  529;  Miller  v.  Ord,  2  Binn.  382;  Fox  v.  Foster,  4  Pa.  St.  119; 
Croft  V.  Bunster,  9  Wis.  503;  Potter  v.  Stransky,  48  Wis.  244;  Johnson  v.  Car- 
penter, 7  Minn.  183;  Holmes  v.  McGintry,  44  Miss.  94;  Kelley  v.  Whitney,  45 
Wis.  110;  Walker  v.  Kee,  14  S.  C.  144;  Hall  v.  Mobile  &  M.  R.  Co.,  58  Ala.  10; 
Murray  v.  Jones,  50  Ga.  118;  Fisher  v.  Otis,  3  Chand.  83;  Dodge  v.  Bank,  1  Mc- 
Arthur,  420;  Robinson  v.  Campbell,  60  Ka.  60,  55  Pac.  276. 

10.  Gleason  v.  Wright,  55  Miss.  247;  Union  Nat.  Bank  v.  Slocomb,  34  La. 
Ann.  927;  Wilhams  v.  National  Bank  of  Baltimore,  72  Md.  441,  20  Atl.  191. 
See  §  835a.  The  acceptance  of  a  renewal  note  will  not  discharge  a  lien  accompany- 
ing the  renewal  note  unless  it  clearly  appears  that  discharge  was  intended.  Beall 
V.  Hudson  County  Water  Co.,  185  Fed.  179.  The  rights  of  the  assignee  of  purchase 
money  notes  given  by  the  vendee  under  a  bond  for  a  deed,  as  against  a  mortgagee 
or  purchaser  in  good  faith,  are  to  be  determined  by  the  recording  acts  of  the  State 
rather  than  by  the  law  of  negotiable  instruments;  and  if  the  assignee  fails  to  pro- 
cure from  the  vendor,  and  record,  an  assignment  of  the  notes  to  him,  a  subsequent 
purchaser  or  incumbrancer  of  the  vendor,  without  notice  of  the  assignee's 
rights,  will  be  protected.  First  Nat.  Bank  of  Fall  City  v.  Edgar,  65  Nebr.  340, 
91  N.  W.  404. 

11.  Dayton  Nat.  Bank  v.  Merchants'  Nat.  Bank,  37  Ohio  St.  217;  Commercial 
Bank  V.  Davy,  81  Hun,  200,  30  N.  Y.  Supp.  718;  Hawkms,  Receiver,  v.  Fourth 
Nat.  Bank  of  New  York,  150  Ind.  117,  49  N,  E.  957,  citing  the  text;  Savings  & 
Loan  Society  v.  Burnett,  106  Cal.  514,  39  Pac.  922,  citing  text. 

12.  McGee  v.  Riddlesgarber,  39  Mo.  365;  Grand  Gulf  Bank  v.  Wood,  12 
Smedes  &  M.  482;  Ducarse  v.  Keyser,  28  La.  419;  Adams  v.  Robinson,  69  Ga. 
627;  Planters,'  etc.,  Ins.  Co.  v.  Tunstall,  72  Ala.  142;  Hays  v.  Plumber,  126 
Cal.  107,  58  Pac.  447,  77  Am.  St.  Rep.  153;  Brannock  v.  Magoon,  141  Mo.  App. 
316,  125  S.  W.  535.  A  letter,  containing  nothing  more  than  a  promise  to  turn 
notes  over  to  the  person  addressed  at  some  future  time,  and  with  nothing  in  it 


§  748a        LIABILITY   OF   ASSIGNOR   OF   EQUITABLE   TITLE  861 

ment  carries  only  the  equitable  and  not  the  legal  title."  For  such 
mode  of  transfer  separates  the  evidence  of  ownership  from  the  paper 
itself. ^^  The  deed,  or  other  instrument  by  which  the  assignment  is 
made,  operates  as  a  constructive  delivery  of  the  paper,  and  the  trans- 
ferrer holds  it  as  agent  of  the  transferee.  ^^  Where  a  person  who  has 
made  a  voluntary  assignment  for  the  benefit  of  creditors,  retains 
certain  promissory  notes  which  passed  by  the  assignment,  he  may  be 
sued  by  the  assignee  in  trover  for  their  conversion.  ^^  If  a  party,  to 
induce  another  to  discount  a  note  of  a  third  party,  gives  a  written 
obligation,  "to  be  holden  precisely  the  same  as  if  I  had  indorsed  said 
note,"  he  is  entitled  to  it  upon  making  payment,  and  has  the  same 
rights  as  an  indorser  would  have  on  taking  it  up.^^ 


to  indicate  that  an  assignment  of  the  notes  was  by  its  terms  then  and  there  in- 
tended, is  not  sufficient  to  show  an  assignment.  Strickland  &  Co.  v.  Lesesne  & 
Ladd,  160  Ala.  213,  49  So.  233. 

13.  Franklin  v.  Twogood,  18  Iowa,  517;  French  v.  Turner,  15  Ind.  62;  Grand 
Gulf  Bank  v.  Wood,  12  Smedes  &  M.  482;  Barrett  v.  Hinckley,  124  111.  40;  Condon 
V.  Barnum  (Iowa),  106  N.  W.  514;  Sathre  v.  Rolfe,  31  Mont.  85,  77  Pac.  431; 
Huntington  v.  Lombard,  22  Wash.  202,  60  Pac.  414. 

14.  Hopkirk  v.  Page,  2  Brock.  41,  Marshall,  C.  J.;  Milenoy  v.  Keen,  89  111. 
395.    See  ante,  §  689. 

15.  Byles  on  Bills  (Sharswood's  ed.)  [*143],  260,  note  1. 

16.  Burrows  v.  Keays,  37  Mich.  431. 

17.  Bishop  V.  Rowe,  71  Me.  263. 


CHAPTER  XXIII 

THE  SALE  AND  DISCOUNT  OF  BILLS  AND  NOTES,  AND  THE 
AMOUNT   OF  RECOVERY 


SECTION   I 

THE   VALIDITY    OF   THE   ORIGINAL   NEGOTIATION 

§  749.  When  suit  is  brought  upon  a  negotiable  instrument  by  the 
payee,  or  indorsee,  or  by  an  assignee  without  indorsement  where  it  is 
payable  to  bearer,  he  is  presumed  to  have  paid  therefor  its  full  face 
value,  and  is,  therefore,  prima  facie  entitled  to  recover  the  whole 
amount  of  all  the  parties  bound  to  him  for  its  payment.^  But  suppose 
the  indorsee,  where  such  an  instrument  is  payable  to  order,  or  the 
assignee  by  delivery,  where  it  is  payable  to  bearer,  has  paid  his  im- 
mediate transferrer  less  than  its  face  value,  there  are  then  several 
important  questions  presented.  The  first  is,  is  the  transaction  of  such 
a  character  as  to  constitute  the  instrument  usurious  in  its  inception? 
Second,  if  there  be  no  usury,  what  is  the  amount  of  recovery  as  against 
the  maker  or  acceptor?  Third,  is  the  contract  of  transfer  usurious 
as  between  the  parties  thereto?  And  fourth,  what  is  the  amount  of 
recovery  against  the  indorser? 

§  750.  Is  transaction  usurious? — In  the  first  place,  is  the  trans- 
action of  such  a  character  as  to  render  the  instrument  usurious  in 
its  inception?  There  is  no  doubt  that  if  a  note  be  executed  by  A.  to 
B.  for  a  valuable  consideration,  that  B.  may  sell  it  to  C.  for  any 
amount,  and  that  C,  regardless  of  the  amount  he  pays  for  it,  may 
recover  its  full  face  value  of  the  maker.  ^    And  where  B.  transfers  the 

1.  Lee  V.  Pile,  37  Ind.  107;  Youse  v.  McCreary,  2  Blackf.  246;  Duncan  & 
Sherman  v.  Gilbert,  20  N.  J.  L.  (5  Dutch.)  521;  Allaire  v.  Hartshorne,  1  Zabr. 
673;  Barmby  v.  Wolfe,  44  Nebr.  77,  62  N.  W.  318. 

2.  Nichols  V.  Pearson,  7  Pet.  109;  Coming  v.  Pond,  29  Hun,  129,  distinguish- 
ing Powell  V.  Waters,  Sweet  v.  Chapman,  and  Hall  v.  Wilson,  infra;  Freeman 
V.  Britten,  2  Harr.  209;  Newman  v.  Williams,  29  Miss.  222;  Cowles  v.  McVickar, 
3  Wis.  (Smith)  731. 

862 


§  751  VALIDITY    OF    ORIGINAL    NEGOTIATION  863 

note  without  indorsement  (or  by  indorsement  without  recourse), 
the  transaction  is  clearly  the  mere  sale  or  assignment  of  a  debt  due 
to  him,  which  he  has  as  much  right  to  sell  as  he  has  to  dispose  of  any 
other  species  of  property.^  But  if  A.  had  made  his  note  to  B.  for  B.'s 
accommodation,  and  C,  knowing  the  fact,  were  to  purchase  it  from 
B.,  the  transaction  would  wear  a  different  complexion.  In  such  a 
case  B.  does  not  sell  an  article  of  which  he  himself  possesses  full 
ownership.  And  if  the  amount  paid  for  it  by  C.  is  at  a  greater  rate  of 
discount  than  allowed  by  law,  the  contract  is  usurious,  as  it  is  really 
a  loan  of  money  by  C.  upon  the  undertaking  of  A.  to  pay  him  back 
a  sum  so  far  greater  that  it  exceeds  the  rate  of  interest  which  C.  may 
legally  receive  upon  his  advancement.'* 

§  751.  General  rule  as  to  usury  in  negotiation  of  the  instrument. 

— Hence  this  rule  may  be  laid  down:  if  no  party  prior  to  the  holder 
could  himself  bring  an  action  upon  the  note,  and  the  holder  knew  that 
fact  at  the  time  he  received  it,  then  no  prior  party  owned,  or  seemed 
to  own  it,  and  the  holder  who  is  the  first  owner  must  be  taken  to 
have  loaned  the  money  to  the  maker.  And  consequently,  if  the  con- 
sideration paid  for  it  amounts  to  usury,  such  holder  cannot  recover 
at  all.^  Many  authorities  go  further  than  this,  and  declare  that  al- 
though the  holder  when  he  took  the  note  did  not  know  that  no  prior 
party  could  sue  upon  it,  that,  nevertheless,  if  such  were  the  fact,  he 
must  be  held  to  have  loaned  the  money  to  the  maker;  and  that  if  the 
sum  to  be  paid  amount  to  more  than  the  legal  rate  of  interest  on  the 
amount  paid,  the  holder  can  have  no  recovery  against  the  maker.^ 

3.  Ibid. 

4.  WMtworth  v.  Adams,  5  Rand.  333  (1827);  Overton  v.  Hardin,  6  Coldw. 
378;  Freeport  Bank  v.  Hagemeyer,  91  Hun,  194,  36  N.  Y.  Supp.  214;  Joy  v. 
Diefendorf,  130  N.  Y.  6,  28  N.  E.  602,  27  Am.  St.  Rep.  484. 

5.  Whitworth  v.  Adams,  5  Rand.  333  (1829);  Veazie  Bank  v.  Paulk,  40  Me. 
109  (1855);  Richardson  v.  Scobee,  10  B.  Mon.  12  (1849);  May  v.  Campbell, 
7  Humphr.  450  (1846);  Capital  City  Ins.  Co.  v.  Quinn,  73  Ala.  562,  citing  the 
text;  Central  Trust  Co.  v.  Burton,  74  Wis.  332.  Payee  can  abandon  the  usurious 
note  and  maintain  suit  against  the  maker  upon  the  original  consideration,  but  mere 
indorsee  of  the  usurious  note  cannot  maintain  suit  upon  the  original  consideration. 
Stewart  v.  Lathrop  Mfg.  Co.,  95  Tenn.  497,  32  S.  W.  464;  Haffner  v.  Brownell, 
82  Iowa,  104,  47  N.  E.  979;  Planters'  &  Merchants'  Bank  v.  Goetter,  Weil  &  Co., 
108  Ala.  408,  19  So.  54. 

6.  Sweet  v.  Chapman,  7  Hun,  576  (1876);  Munn  v.  Commission  Co.,  15  Johns. 
53  (1818),  bill  of  exchange;  Powell  v.  Waters,  17  Johns.  177  (1819);  affd.  in  8 
Cow.  669  (1826),  promissory  note;  Williams  v.  Storms,  2  Duer,  52  (1853),  a  note; 
CatUn  V.  Gunter,  11  N.  Y.  368  (1854),  a  note;  Hall  v.  Wilson,  16  Barb.  548  (1853), 


gQ4  SALE    OF    BILLS    AND    NOTES  §  752 

§  752.  View  taken  in  New  York.— In  New  York  this  view  has 
been  taken  in  numerous  cases,  it  being  said  that  the  note,  "to  be  the 
subject  of  such  sale,  must  have  a  pre-existing  vitality.  Its  breath  of 
life  cannot  be  imparted  through  a  usurious  transaction."  ^  But  it  is 
there  also  held  that  usury  ui  the  inception  of  a  note  is  no  defense  to 
the  maker  against  the  accommodation  payor  and  indorser  who  takes 
up  the  note  after  protest  with  no  notice  of  the  usury .^  The  question 
of  the  inception  of  the  paper  and  the  time  it  took  place  is  a  question 
of  fact,  and,  if  evidence  be  conflicting,  should  be  submitted  to  the 

jury.^ 

It  has  been  also  held  in  New  York  that  the  principle  does  not  apply 
where  a  note  has  been  obtained  by  fraud  by  the  payee  from  the  maker, 
and  has  been  actually  delivered  to  him  as  and  for  a  valid  security,^" 


a  note;  Bossange  v.  Ross,  29  Barb.  576  (1859),  a  note;  Clark  v.  Loomis,  5  Duer, 
468  (1858),  a  note;  Eastman  v.  Shaw,  65  N.  Y.  522;  Belden  v.  Lamb,  17  Conn.  452 
(1846),  a  note;  Holeman  v.  Hobson,  8  Humphr.  129,  130  (1847),  a  note;  Overton 
V.  Hardin,  6  Coldw.  378,  a  note;  Corcoran  v.  Powers,  6  Ohio  St.  19  (1856),  bill  of 
exchange;  Bock  v.  Lauman,  24  Pa.  St.  448  (1855),  bill  of  exchange;  Van  Schaack 
V.  Stafford,  12  Pick.  565  (1832),  a  note;  Saltmarsh  v.  Planters,  etc.,  Bank,  14 
Ala.  668  (1848),  bill  of  exchange;  Simpson  v.  Fullenwider,  12  Ired.  Law,  335 
(1851),  a  note;  Fleming  v.  MulUgan,  2  McCord,  173  (1822),  a  note.  See  §  758; 
Union  Bank  v.  Gilbert,  83  Hun,  417,  31  N.  Y.  Supp.  945,  citing  Swartwout  v. 
Payne,  19  Johns.  294,  10  Am.  Dec.  228;  Freeport  Bank  v.  Hagemeyer,  91  Hun, 
194,  36  N.  Y.  Supp.  214;  The  Salmon  Falls  Bank  v.  Leyser,  116  Mo.  51,  22  S.  W. 
504.  In  Nebraska,  held,  that  where  usury  appears  in  a  transaction,  the  burden  is 
on  the  holder  of  the  instrument  to  show  that  he  is  a  bona  fide  holder  for  value 
and  acquu-ed  same  before  maturity.  Suiter  v.  National  Nank,  35  Nebr.  373,  53 
N.  W.  205. 

7.  Powell  V.  Waters,  8  Cow.  669,  affirming  same  case  in  17  Johns.  176;  Cassebeer 
V.  Kalbfleisch,  11  Hun,  120;  Zabriskie  v.  Spielman,  46  N.  J.  L.  34.  But  it  has  been 
held  in  Georgia,  that  where  the  lender  of  money  neither  charges  nor  receives  any 
more  than  the  legal  rate  of  interest,  the  fact  that  the  money  was,  with  his  knowl- 
edge, borrowed  for  the  purpose  of  paying  a  debt  infected  with  usury  due  by  the 
borrower  to  a  third  person,  does  not  make  the  loan  usurious.  See  Thompson  v. 
First  Nat.  Bank  of  Dawson,  99  Ga.  651,  26  S.  E.  79. 

8.  Cassebeer  v.  Kalbfleisch,  11  Hun,  123. 

9.  Sweet  v.  Chapman,  7  Hun,  577. 

10.  Harger  v.  Wilson,  63  Barb.  237  (1872).  The  note  was  obtained  from  the 
maker  by  the  payee  on  fraudulent  representations  on  the  sale  of  a  worthless 
patent  right.  It  was  for  $1,000,  and  was  sold  for  $900  to  the  holder,  the  rate  of 
discount  amounting  to  26  per  cent,  interest.  It  was  held  not  usury,  as  the  note 
was  delivered  as  a  valid  security.  It  has  Ukewise  been  held  in  New  York,  where 
the  defense  of  usury  is  interposed  to  an  action  on  a  promissory  note,  the  fact 
that  the  note  was  made  payable  to  a  third  party,  an  alleged  creditor  of  the  party  to 
the  usurious  agreement  to  whom  it  was  delivered,  does  not  estop  the  maker 


§  753  VALIDITY   OF   ORIGINAL   NEGOTIATION  865 

but  that  it  would  apply  where  there  was  no  delivery  by  the  maker, 
but  an  obtaining  of  possession,  and  putting  of  it  in  circulation  by 
fraudulent  means.  ^^  These  decisions  are  exceedingly  refining  in  the 
distinctions  taken,  and  the  better  opinion,  it  seems  to  us,  is,  that  in 
all  cases,  if  the  holder  at  the  time  he  received  the  note  did  not  know 
the  fact  that  it  was  not  a  valid  subsisting  security,  there  is  no  inten- 
tion of  borrowing  and  lending,  which  is  necessary  to  create  usury; 
and  the  holder  may  recover  upon  it  as  against  the  maker.  ^^  And  to 
hold  otherwise,  it  has  been  well  said,  "would  reverse  the  general  and 
sound  principle  of  law  and  justice,  that  whenever  one  of  two  persons 
must  suffer  by  the  act  of  a  third,  he  who  has  enabled  that  third  person 
to  occasion  the  loss  must  sustain  it  himself."  " 

Under  Negotiable  Intsrument  statute. — It  has  been  held  that  the 
rule  of  law  that  the  sale  of  accommodation  paper  is  merely  a  loan  of 
money,  the  purchaser  bemg  the  lender  and  the  seller  the  borrower, 
has  not  been  changed  or  affected  by  the  statute." 

§  753.  If  a  note  is  ofifered  for  discount  by  the  maker,  it  is  plainly 
usurious,  as  between  him  and  the  party  to  whom  it  is  delivered,  if 
the  discount  from  its  face  value  were  greater  than  that  allowed  upon 
a  loan;  and  if  it  be  already  indorsed,  its  presence  in  the  maker's  hands 
is  evidence  that  the  indorsement  was  for  accommodation,  and  that 
it  is  not  a  valid  security  which  may  be  the  subject  of  sale.^^    An 

thereof,  having  knowledge  of  such  facts,  from  setting  up  the  usury.    See  Gold- 
man V.  UMmann,  16  App.  Div.  324,  44  N.  Y.  Supp.  636. 

11.  Hall  V.  Wilson,  16  Barb.  548  (1853).  In  this  case  the  note  for  $120  payable 
to  bearer  was  never  delivered,  but  was  stolen  from  the  maker's  desk  by  a  laborer, 
and  sold  to  Bigelow  for  $115.  It  was  held  that  the  latter  could  not  recover,  as 
the  transaction  constituted  a  loan,  the  note  having  no  existence  as  such  until  it 
came  into  the  hands  of  Bigelow  upon  a  consideration  that  amounted  to  usurious 
interest.  In  Iowa,  it  is  held  that  the  fact  that  the  bo7ia  fide  holder  of  a  promissory 
note,  obtained  originally  by  fraud  and  without  consideration,  purchased  it  for  a 
considerably  less  amount  than  its  face,  will  not  affect  or  limit  his  right  of  recovery. 
Lay  V.  Wissman,  36  Iowa,  305. 

12.  Whitworth  v.  Adams,  5  Rand.  333;  Taylor  v.  Bruce,  Gilmer  (Va.),  42; 
Brummel  v.  Enders,  18  Gratt.  873;  Gimmi  v.  CuUen,  20  Gratt.  439;  Bailey  v. 
Hill,  77  Va.  497;  Gaul  v.  Willis,  26  Pa.  St.  259;  Davis  v.  Marvine,  160  N.  Y. 
269,  54  N.  E.  704;  Henry  v.  Sansom,  2  Tex.  Civ.  App.  150,  21  S.  W.  69. 

13.  Coalter,  J.,  in  WTiitworth  v.  Adams,  supra. 

14.  Appendix,  sec.  29.    Strickland  v.  Henry,  73  N.  Y.  S.  12,  66  App.  Div.  23. 

15.  Whitworth  V.  Adams,  5  Rand.  411,  Cabell,  J.;  Wallace  v.  Branch  Bank, 
1  Ala.  565;  Overton  v.  Hardin,  6  Coldw.  376;  Hendrie  v.  Berkowitz,  37  Cal. 
113.  See  also  Fielden  v.  Lahens,  2  Abb.  App.  Ill;  The  Sahnon  Falls  Bank  v. 
Leyser,  116  Mo.  51,  22  S.  W.  504. 

55 


866  SALE    OF   BILLS   AND    NOTES  §  753a 

accepted  bill  offered  for  sale  by  the  acceptor  would  stand  upon  the 
same  footing,  as  the  acceptor  is  the  party  primarily  bound  for  its 
payment,  and  could  not  himself  sue  any  party  to  it.^^  It  is  also  clear 
that  if  the  payee  of  a  bill  or  note  whose  name  appears  indorsed  thereon 
prior  to  other  indorsers,  offers  it  for  discount,  the  subsequent  in- 
dorsers  must  be  taken  to  have  indorsed  for  such  prior  indorser's  ac- 
commodation, and  that  it  would  be  usurious  if  the  party  discounting 
it  deducted  more  than  legal  discount  as  between  him  and  the  indorsers 
for  accommodation,  of  whose  character  the  nature  of  the  transaction 
gives  notice. ^^  Whether  or  not  the  same  rule  would  apply  where  a  bill 
is  offered  for  discount  by  the  drawer  is  a  question  upon  which  the 
authorities  differ,  some  taking  the  view  that  the  transaction  would  be 
a  usurious  loan,^^  others  that  it  would  be  a  mere  sale  of  a  debt  due 
the  drawer  by  the  drawee  or  acceptor. ^^  The  latter  opinion  seems 
to  us  correct,  for  reasons  elsewhere  stated.^** 

§  753a.  Purchaser  must  assume  apparent  relations  of  parties  to 
be  real. — An  individual  negotiating  for  the  purchase  of  a  bill  or 
note  from  one  having  it  in  possession,  and  whose  name  is  upon  it, 
must  assume  that  the  title  of  the  holder,  as  well  as  the  liability  of  all 
prior  parties,  is  precisely  that  indicated  by  the  paper  itself."^  Where 
the  maker  of  a  note  places  it  in  the  hands  of  a  broker  to  be  sold,  with- 
out any  restrictions  as  to  the  manner  in  which  such  sale  is  to  be  made, 

16.  Carlisle  v.  Hill,  16  Ala.  405;  Saltmarsh  v.  Planters,  etc.,  Bank,  14  Ala. 
668.    See  Witte  v.  Williams,  8  Rich.  304. 

17.  Mauldin  v.  Branch  Bank,  2  Ala.  513.  The  fact  that  the  payee  upon  the 
sale  of  a  negotiable  note  becomes  by  indorsement  liable  for  its  payment  does  not 
characterize  the  transaction  as  a  loan  to  him.  Gate  City  Nat.  Bank  v.  Thrall, 
116  P.  487,  85  Kan.  394. 

18.  Lowes  V.  Mazaredo,  1  Stark.  385  (3  Eng.  C.  L.);  Comyn  on  Usury,  181. 
See  on  this  subject,  King  v.  Ridge,  4  Price,  50,  copied  in  Appendix,  5  Rand. 
617;  Whitworth  v.  Adams,  5  Rand.  333;  Noble  v.  Walker,  17  Ala.  456. 

19.  Lloyd  V.  Keach,  2  Conn.  175;  Hamilton  v.  Brennan,  90  Hun,  340,  35 
N.  Y.  Supp.  805.    See  Steen  v.  Stretch,  50  Nebr.  572,  70  N.  W.  48. 

20.  See  §§  767,  768. 

21.  Central  Bank  v.  Hammett,  50  N.  Y.  158;  Hoge  v.  Lansing,  35  N.  Y.  136. 
See  also  post,  §§  781,  812;  Simms  v.  Bank  of  Alma,  32  Nebr.  607,  49  N.  W.  332. 
A  negotiable  note  in  the  hands  of  an  agent,  indorsed  in  blank  by  the  principal, 
cannot  be  regarded  by  a  stranger,  having  notice  of  the  agency,  as  both  prima  facie 
proof  of  title  in  the  agent  and  a  power  of  attorney,  conferring  upon  the  agent 
all  the  power  and  authority  that  are  incident  to  ownership,  but  he  may  deal  with 
the  agent  as  such,  and  rely  upon  the  note  as  conferring  apparent  authority  to  sell 
it  and  receive  payment  on  behalf  of  the  principal.  Merchants'  &  Manufacturers' 
Nat.  Bank  v.  Ohio  Val.  F.  Co.,  57  W.  Va.  625,  50  S.  E.  880,  70  L.  R.  A.  312. 


§§  753b,  754  AMOUNT   OF  RECOVERY  867 

he  is  bound  by  the  broker's  representations  to  a  bona  fide  purchaser 
that  it  is  good  business  paper,  and  he  cannot  maintain  suit  against 
such  purchaser  to  have  the  note  canceled  on  the  ground  that  it  never 
had  legal  inception  until  it  came  into  the  hands  of  such  purchaser, 
by  whom  it  was  discounted  at  a  greater  rate  than  allowed  by  law.^^ 

§  753b.  Title  in  case  of  sale  passes  without  delivery. — By  the 

common  law,  a  contract  for  the  sale  of  specific  ascertained  goods 
vests  the  property  therein  immediately  in  the  buyer,  and  a  right 
to  the  price  in  the  seller,  unless  it  can  be  shown  that  such  was  not 
the  intention  of  the  parties;  and  title  passes  without  delivery. ^^ 
This  principle  is  applicable  to  the  sale  of  bills  and  notes;  and  where 
the  payee  of  a  note  had  made  a  contract  to  sell  it  to  one  Parks,  and 
the  plaintiff  was  aware  of  the  fact  when  he  purchased  the  note,  it  was 
held  that,  by  the  agreement  made,  title  passed  to  Parks,  and  that  the 
plaintiff  was  not  a  bona  fide  holder,  and  could  not  recover.^^ 


SECTION   II 

AMOUNT  OF  RECOVERY  AGAINST  MAKER  OR  ACCEPTOR 

§  754.  In  the  second  place,  as  to  the  amount  of  recovery  against 
the  maker  or  acceptor,  we  have  seen  already  that  the  holder  may 
recover  the  full  amount  if  the  note  was  made,  or  bill  accepted,  upon 
a  valuable  consideration.  And  even  if  there  was  no  consideration, 
as  between  the  original  parties,  but  a  mere  becoming  a  party  for 
accommodation,  the  holder,  although  he  knew  the  fact,  could  re- 
cover the  whole  amount,  provided  he  paid  full  value. -^  But  if  he  paid 
less  than  full  value,  it  is  a  matter  of  dispute  whether  or  not  he  is 
limited,  in  his  recovery,  against  the  maker,  to  the  amount  advanced. 

22.  Ahem  v.  Goodspeed,  9  Hun,  265. 

23.  Benjamin  on  Sales  (2d  ed.),  226. 

24.  Sheldon  v.  Parker,  3  Hun,  499. 

25.  Charles  v.  Marsden,  1  Taunt.  224.  And  construing  the  Revised  Statutes 
of  the  United  States,  section  5197,  which  authorizes  national  banks  to  charge 
interest  at  the  rate  allowed  by  the  State  in  which  such  banks  are  located,  the 
charge  of  10  per  cent,  cannot  be  legalized  by  custom  of  banks  which  permits  it, 
and  the  action  provided  by  section  5198  of  the  Revised  Statutes  allowing  the 
recovery  back  of  usurious  interest  apphes  only  to  cases  in  which  such  interest 
has  been  actually  paid.    Talbott  v.  First  Nat.  Bank,  106  Iowa,  361,  76  N.  W.  726. 


368  SALE   OF  BILLS   AND   NOTES  §§  755,  756 

§  755.  English  authorities. — The  view  taken  in  England  on  this 
subject  has  been  stated  by  Mr.  Chitty  as  follows:  "With  respect  to 
the  principal  money,  or  that  sum  which  is  payable  on  the  face  of  the 
bill  or  note,  many  instances  occur  in  which,  although  the  plaintiff 
may  not  have  given  full  value  for  the  bill,  etc.,  he  may,  nevertheless, 
recover  the  whole  sum,  holding  the  overplus  beyond  his  own  demand 
as  trustee  for  some  other  party  to  the  bill,  etc.,  entitled  to  receive 
such  overplus.  Thus,  if  a  bill  is  drawn  in  the  regular  course  of  bus- 
iness, as  for  money  really  due  from  the  drawee  to  the  drawer,  in  such 
case,  in  order  to  avoid  several  actions,  an  indorsee,  although  he  has 
not  given  the  full  value  of  the  bill,  may  recover  the  whole  sum  pay- 
able, and  be  the  holder  of  the  overplus  as  a  trustee  for  the  indor- 
ser.  *  *  *  This  rule,  permitting  the  holder  of  a  bill  to  recover 
more  than  is  due  to  himself,  only  applies  where  there  is  some  other 
person  entitled  to  receive  from  the  defendant  the  overplus  of  what  is 
due  to  the  plaintiff,  and  if  there  be  no  such  person,  the  plaintiff  will 
be  permitted  only  to  recover  what  is  due  to  himself."  ^^  And  he  is 
certainly  sustained  by  judicial  authority;  but  the  cases  are  in  a  state 
of  confusion,  without  following  clearly  defined  principles. 

§  756.  In  the  Court  of  King's  Bench,  where  it  appeared  that  the 
bill  for  £86  was  for  accommodation  as  between  the  drawer  and 
acceptor,  and  was  indorsed  by  the  payee  to  another  for  £29,  and  the 
indorsee,  who  knew  the  circumstances,  brought  suit  against  the 
accommodation  drawer,  it  was  held  that  he  could  only  recover  the 
£29  paid.^^  So  where  the  bill  for  £415  was  accepted  for  the  drawer's 
accommodation,  and  indorsed  by  him  to  the  plaintiff  for  £265,  the 
plaintiff's  assignees,  it  was  held,  could  only  recover  £265  from  the 
accommodation  acceptor.^^ 

26.  Chitty  on  Bills  (13th  Am.  ed.)  [*677],  757. 

27.  Wiffen  v.  Roberts,  1  Esp.  261  (1795),  Lord  Kenyon,  C.  J.,  saying:  "Where 
a  bill  of  exchange  is  given  for  money  really  due  from  the  drawee  to  the  drawer,  or 
is  drawn  in  the  regular  course  of  business,  in  such  case  the  indorsee,  though  he 
has  not  given  to  the  indorser  the  full  amount  of  the  bill,  yet  he  may  recover  the 
whole,  and  be  the  holder  of  the  overplus  above  the  sum  he  has  really  paid  to  the 
use  of  the  indorsee;  but  where  the  bill  is  an  accommodation  one,  and  that  known 
to  the  indorsee,  and  he  pays  but  part  of  the  amount,  in  such  case  he  can  only 
recover  the  sum  he  has  actually  paid  for  the  bill;  and  if  the  plaintiff  in  this  case 
was  entitled  to  recover,  he  could  only  do  it  to  the  amount  of  £29,  the  sum  he  really 
paid  for  it." 

28.  Jones  v.  Hibbert,  2  Stark.  271  (1817).  See  Barber  v.  Backhouse,  Peake's 
Cases,  61. 


§  757  AMOUNT  OF  RECOVERY  869 

It  has  been  observed,  however,  in  respect  to  the  nisi  prius  decision 
of  Lord  Kenyon  referred  to  in  the  notes,  that  he  proceeded  upon  the 
fact,  probably  proved  in  the  cause,  that  the  bill  was  not  sold  out  and 
out  to  the  plaintiff,  but  was  only  pledged  as  a  security  for  the  money 
advanced;  and  that  the  case  of  a  deposit  or  transfer  of  a  bill  for  the 
security  of  money  advanced  upon  its  credit,  and  not  for  its  absolute 
purchase,  is  the  only  case  in  which  the  holder  can  be  trustee  for  the 
indorser  for  a  part  of  the  bill,  unless  he  has  repaid  to  the  holder,  on 
account  of  the  bill,  a  part  of  its  amount.^  And  this  is,  we  think, 
clearly  a  correct  view  of  the  law. 

§  757.  Authorities  in  the  United  States.— In  the  United  States, 
the  authorities  are  directly  at  war.  But  the  true  doctrine,  as  it  seems 
to  us,  is,  that  the  party  paying  less  than  its  face  value  for  paper  made, 
accepted,  drawn,  or  indorsed  for  accommodation,  and  not  knowing 
the  fact  at  the  time  of  purchase,  is  entitled  to  recover  the  full  amount 
against  the  accommodation  parties,  because  they  have  deliberately 
and  intentionally  put  forth  themselves  to  be  treated  as  being  bound 
in  the  manner  indicated.^"  But  the  view  has  been  taken  in  a  number 
of  cases  that  he  is  only  a  bona  fide  holder  to  the  extent  of  the  consider- 
ation paid  by  himself  or  a  prior  party,  and  can  recover  that  only 
against  the  accommodation  party.^^  And  even  if  he  knew  they  were 
accommodation  parties  at  the  time  of  purchase,  it  would  make  no 
difference,  provided  the  party  he  purchased  it  from  was  a  bona  fide 
holder,  who  could  himself  enforce  it,^^  or  was  a  subsequent  holder 
to  the  parties  between  whom  the  accommodation  existed,  and  ap- 
peared to  the  purchaser  to  be  himself  a  bona  fide  holder,  and  not  an 
agent  for  any  of  the  parties  to  the  accommodation.^^  It  will  be 
observed  that  if  the  purchaser  of  a  bill  accepted,  or  note  made  for 

29.  Whitworth  v.  Adams,  5  Rand.  377  (1827),  Green,  J.,  dissenting  on  main 
point  decided,  but  not  on  this  proposition. 

30.  Moore  v.  Baird,  30  Pa.  St.  138;  Gaul  v.  Willis,  26  Pa.  St.  259;  Dunn  v. 
Ghost,  5  Colo.  139,  citing  the  text;  Bissell  v.  Dickerson,  64  Conn.  61,  29  Atl. 
226;  Benton  v.  German- Am.  Nat.  Bank,  122  Mo.  332,  26  S.  W.  975. 

31.  Holcomb  v.  Wyckoff,  35  N.  J.  L.  (6  Vroom)  37  (1870);  Allaire  v.  Hart- 
shorne,  1  Zabr.  665;  Stoddard  v.  Kimball,  6  Cash.  469;  Story  on  Bills  (Bennett's 
ed.),  §  188;  Berkeley  v.  Tinsley,  88  Va.  1005,  14  S.  E.  842,  citing  text  in  a  case 
where  the  paper  had  been  used  as  collateral  security,  and  the  amount  secured  was 
held  the  limit  of  recovery,  the  holder  having  acquired  the  paper  with  notice  that 
the  accommodation  indorser  had  withdrawn.    See  §  832a. 

32.  Holcomb  v.  Wyckoff,  35  N.  J.  L.  37. 

33.  Whitworth  v.  Adams,  5  Rand.  333;  Gimmi  v.  CuUen,  20  Gratt.  439. 


g70  SALE    OF   BILLS   AND   NOTES  §  758 

accommodation,  gives  for  it  an  amount  less  than  the  discount  allowed 
by  law,  he  will  come  within  the  provision  of  the  statutes  against 
usury,  provided  he  knew  its  accommodation  character.^^  Where  no 
question  of  usury  arises,  and  there  is  no  question  of  fraud,  we  think 
that  it  matters  not  what  the  purchaser  p^ys,  and  that  he  may  re- 
cover the  whole  amount  against  anterior  parties,  accommodation 
or  otherwise. 

§  758.  Amount  of  recovery  when  bill  or  note  has  inception  in 
fraud. — When  the  execution  of  the  bill  or  note  has  been  induced 
by  fraud,  a  different  rule,  according  to  a  number  of  authorities, 
would  apply.  The  bona  fide  holder  of  it  for  value,  and  without  notice, 
is  undoubtedly  entitled  to  be  protected  against  a  loss  which  would 
befall  him  if  the  party  defrauded  were  permitted  to  set  up  the  defense 
of  fraud  on  the  part  of  the  payee  against  him,  as  we  have  already  seen. 
But  it  does  not,  therefore  (as  has  been  considered),  follow  that  he  may 
recover  of  such  party  the  whole  amount,  when  he  has  paid  a  less  sum. 
For  his  protection  and  security  against  loss,  it  is  only  necessary  that 
he  should  be  paid  back  the  amount  which  he  was  induced  to  give  for 
the  instrument  by  its  appearance  of  validity,  and,  therefore,  such 
amount  is  the  limit  of  his  recovery  against  the  drawer  or  maker  who 
was  defrauded  into  the  execution  of  the  instrument. ^^  Thus,  in  New 
York,  where  the  payee  obtained  a  note  for  $1,000  by  fraud,  for  a 
worthless  patent  right,  and  sold  it  to  the  plaintiff  for  $900  two  days 
afterward,  it  was  held  that  only  $900  could  be  recovered  against  the 
maker.  ^^ 


34.  See  ante,  §751. 

35.  Scherer  &  Co.  v.  Everest,  168  Fed.  822  (under  Iowa  statute);  Holcomb 
V.  Wyckoff,  35  N.  J.  L.  38;  Bank  v.  McNair,  116  N.  C.  550,  21  S.  E.  389,  citing 
the  text;  Sperlin  v.  Peninsular  Loan  &  Discount  Co.  (Tex.  Civ.  App.),  103  S.  W. 
232.  Story  on  Bills,  §  188.  Plaintiff  was  the  holder  and  owner  of  a  promissory 
note  for  $2,600,  bearing  interest,  executed  by  the  maker  to  her  own  order,  and 
indorsed  by  her  in  blank,  and  secured  by  special  mortgage  on  the  maker's 
property.  She  left  this  note  on  deposit  with  a  notary  public,  fearing  it  might  be 
destroyed  by  fire  at  her  own  residence.  The  notary  sold,  transferred,  and  delivered 
the  same  before  maturity,  for  $2,000,  to  a  third  person,  mentioning  at  the  time  that 
"it  came  from  the  plaintiff  ";  that  it  had  been  reduced  to  $2,000  by  partial  pay- 
ment of  $600  upon  it;  it  was  held  that  the  purchaser  having  bought  the  note  as 
one  for  $2,000,  bearing  interest,  his  rights  must  be  limited  accordingly,  and  that 
when  the  mortgage  property  was  sold  and  the  full  principal  and  interest  realized, 
the  plaintiff  was  entitled  to  the  balance.  Theard  v.  Gueringer,  115  La.  242,  38 
So.  979. 

36.  Harger  v.  Wilson,  63  Barb.  237  (1872),  Talcott,  J.:  "A  majority  of  the 


§  758  AMOUNT  OF   RECOVERY  871 

And  in  the  same  State  where  the  payee  obtained  a  note  from  the 
maker  by  false  and  fraudulent  representations  made  on  the  sale  of  a 
patent  right,  and  passed  it  to  the  holder  with  another  note  for  a 
span  of  horses,  worth  but  half  as  much  as  the  amount  of  the  note,  it 
was  held  that  the  value  of  the  consideration  only  could  be  recovered 
against  the  maker.^''    Again,  where  a  note  for  $10,000  was  left  at  the 

court  think  that  the  bona  fide  holder  of  a  note  thus  fraudulently  obtained  has 
no  equity  as  against  the  party  defrauded,  beyond  the  amount  of  the  advances 
he  has  made  upon  the  faith  of  the  note." 

37.  Huff  V.  Wagner,  63  Barb.  230  (1872),  Talcott,  J.,  saying  in  the  course 
of  his  opinion:  "The  plaintiff  had  a  verdict  under  the  instruction  of  the  court 
that  he  was  a  bona  fide  holder,  and  was  entitled  to  recover  on  the  note,  notwith- 
standing the  fraud  practiced  by  Ferguson  in  obtaining  the  note.  The  Special 
Term  granted  a  new  trial  upon  the  exception  to  the  ruling  as  to  the  admission 
of  the  evidence,  and  upon  the  principle  that  a  bona  fide  holder  of  commercial 
paper,  to  which,  as  between  maker  and  payee,  there  is  a  good  defense,  is  entitled 
to  be  protected  only  to  the  extent  of  the  value  which  he  has  paid.  This,  I  think, 
is  correct.  The  protection  of  the  holder  for  value  in  such  cases,  as  in  other  cases, 
where  the  law  protects  bona  fide  purchasers  against  latent  claims,  is  founded  upon 
the  idea  of  protecting  such  bona  fide  purchaser  for  value  against  any  possible 
loss.  And  this  is  the  precise  reason  why  a  bona  fide  holder  of  such  paper,  which 
has  been  transferred  to  him  to  secure  an  antecedent  debt,  cannot  recover  against 
the  party  who  has  been  defrauded,  namely,  that  he  has  lost  nothing  by  his  re- 
Uance  upon  the  face  of  the  paper.  These  principles  are  discussed  and  laid  down 
in  a  very  elaborate  opinion  of  the  late  chancellor,  delivered  in  the  Court  of  Errors, 
in  the  leading  case  of  Stalker  v.  McDonald,  6  Hill,  93,  in  which  he  expressly  holds 
that,  if  the  holder  of  such  paper  has  paid  but  a  part  of  the  consideration  or  value 
of  the  property,  he  is  only  entitled  to  be  considered  as  a  bona  fide  purchaser  pro 
tanto,  and  refers  with  approbation  to  the  case  of  Edwards  v.  Jones,  7  Car.  &  P. 
633,  in  which,  in  an  action  on  a  note  for  £100,  the  consideration  of  which  was 
impeached  by  a  plea,  the  plaintiff  replied  that  it  was  indorsed  to  him  for  the 
consideration  of  £49.  And  he  was  only  permitted  to  recover  the  £49  advanced. 
(Author's  note,  see  §  827,  and  notes.)  The  proposition  sought  to  be  maintained 
by  the  counsel  for  the  appellant  in  this  case,  namely,  that  whatever  may  have 
been  the  consideration  of  the  transfer  of  a  negotiable  note,  if  it  was  a  valuable 
one,  the  holder  without  notice  of  the  invalidity  of  the  note  may  recover  the  entire 
face  thereof,  without  reference  to  the  amount  paid  by  him  for  it,  would  produce 
most  unjust  and  startling  results.  It  would  enable  the  holder  of  a  stolen  note 
for  $1,000  to  recover  the  entire  amount  thereof  from  the  maker,  from  whom  it  had 
been  stolen,  although  the  holder  had  purchased  the  same  without  notice  for  only 
$100— a  result  revolting  to  common  sense,  and  going  far  beyond  affording  that 
protection  which  public  policy  requires  should  be  extended  to  parties  who  pur- 
chase negotiable  paper  for  value.  I  see  no  reason  for  any  distinction  between  the 
case  of  a  purchaser  for  money,  and  one  where  the  note  is  exchanged  for  property. 
If  such  a  distinction  could  be  made,  the  maker  of  the  note  could  have  no  protec- 
tion. Such  notes  would  be  then  used  in  the  purchase  of  property,  as  in  this  case, 
instead  of  sold  for  money.    The  purchaser  is  fully  protected  against  loss  by  being 


872  SALE    OF   BILLS   AND   NOTES  §  758 

payee's  place  of  business,  in  contemplation  of  a  settlement  between 
him  and  the  maker,  but  was  not  delivered  to  the  payee  or  to  any  one 
for  his  use,  and  no  settlement  was  effected,  and  the  note  was  taken 
by  the  payee  and  indorsed  by  him  to  the  plaintiff  for  the  sum  of 
$1,500,  it  was  held  that  the  latter's  recovery  against  the  maker  was 
limited  to  the  sum  paid,  with  interest.  Daniels,  J.,  quoting  numerous 
authorities,  said:  "Accordingly,  it  has  been  held  that  the  indorser  of 
commercial  paper,  not  valid  as  a  legal  obligation  in  the  hands  of  the 
payee  negotiating,  must  be  restricted  in  his  recovery  to  the  value  with 
interest  advanced  by  the  payee  upon  the  faith  of  it.  These  author- 
ities fully  sustain  that  proposition,  and  they  are  in  no  sense  in  conflict 
with  the  rule  that  allows  a  recovery  for  the  full  amount  of  paper  im- 
properly negotiated  when  an  adequate  consideration  has  been  ad- 
vanced in  good  faith  upon  it.  The  paper  derives  its  vitality  wholly 
from  the  circumstance  that  it  has  been  obtained  for  value  without 
notice  by  an  innocent  purchaser.  For  his  protection  it  is  maintained 
in  his  hands  as  a  legal  obligation.  The  object  of  the  law  is  to  save  him 
from  loss;  and  to  do  that  a  recovery  of  the  amount  he  may  have  ad- 
vanced is  all  that  can  be  required.  To  go  beyond  it  would  be  in- 
equitable and  unjust  to  the  party,  after  that,  equally  entitled  to  be  pro- 
tected from  unnecessary  loss."  ^^  But  in  the  same  State  it  has  been 
also  held  that  if  there  was  no  intent  to  deliver  the  paper,  and  in  fact 
no  delivery,  and  the  holder  should  acquire  it  from  the  payee  at  a  price 
less  than  the  discount  allowed  by  law,  the  transaction  would  be  usuri- 
ous, and  the  holder  could  not  recover  at  all.^^    Wliere  some  legal 

enabled  to  recover  the  full  value  of  the  property  parted  with  on  the  purchase." 
Moore  v.  Ryder,  65  N.  Y.  443. 

38,  Todd  V.  Shelbourne,  8  Hun,  512  (1876);  Commercial  Bank  v.  MacDougall 
Co.,  8  App.  Div.  1,  40  N.  Y.  Supp.  189.  But  it  has  been  held  in  New  York  that 
if  the  note  be  diverted  from  its  original  purpose,  the  bona  fide  holder  can  only 
recover  what  he  actually  paid  for  the  note.  See  First  Nat.  Bank  of  Springfield 
V.  Haulenbeek,  65  Hun,  54,  19  N.  Y.  Supp.  567. 

39.  Hall  V.  Wilson,  16  Barb.  548  (1873);  ante,  §751;  Eastman  v.  Shaw,  65 
N.  Y.  522.  In  this  case  the  defendant  signed  a  note  and  put  it  in  the  hands  of 
the  payee  to  show  to  others  as  evidence  that  he  would  contribute  that  amount 
to  a  certain  proposed  enterprise.  The  company  to  carry  it  on  was  never  formed 
as  proposed,  and  the  payee  sold  the  note  at  a  discount  greater  than  legal  interest. 
In  an  action  by  the  holder  against  the  maker,  it  was  held  that  the  note  had  no 
inception  until  the  sale,  and  was  usurious  and  void;  and,  therefore,  that  the 
hold(>r  could  recover  nothing.  Dwight,  C,  said:  "These  authorities  serve  to 
show  that  the  rule  that  a  note  must  have  had  an  inception,  to  make  it  the  subject 
of  sale,  is  not  confined  to  the  case  of  accommodation  paper,  but  extends  to  all 
cases  where  the  paper,  though  in  the  similitude  of  a  note,  has  no  existence  aa 


§  758  AMOUNT   OF  RECOVERY  873 

consideration  exists  in  the  inception  of  the  paper,  it  seems  that  in 
New  York  the  bona  fide  holder  may  recover  the  full  amount,  no 
matter  what  amount  he  may  give  for  it.''"  This  seems  to  us  the  true 
distinction  in  such  cases.  If  the  paper  is  issued  in  fraud  without  con- 
sideration, the  bona  fide  purchaser  should  be  limited  in  recovery  to 
the  amount  paid  with  interest. ^^  But  if  there  was  an  original  valid 
consideration,  or  the  paper  was  issued  fairly  and  intentionally  without 
consideration,  then  he  is  entitled  to  recover  the  whole  amount  regard- 
less of  the  amount  he  pays.'*^ 

between  the  immediate  parties  to  it.  This  point  is  well  shown  by  the  case  of 
Marvin  v.  McCullum,  20  Johns.  288.  *  *  *  On  this  ground  it  appears  to  me  that 
the  case  of  Hall  v.  Wilson,  16  Barb.  548,  was  correctly  decided.  *  *  *  It  is  not 
necessary  in  reaching  this  conclusion  to  disagree  with  such  cases  as  Howe  v.  Potter, 
61  Barb.  356,  and  Harger  v.  Wilson,  63  Barb.  237.  In  each  of  these  cases  the 
transaction  had  all  the  elements  of  a  contract.  In  Harger  v.  Wilson  the  maker 
of  the  note  intentionally  issued  the  note  and  put  it  in  circulation,  though  induced 
to  do  so  by  the  fraud  of  the  payee.  Here  was  a  valid  contract,  though  in  its  nature 
defeasible.  The  payee  could  have  brought  an  action  on  the  note,  though  the 
fraud  might  have  been  urged  as  a  defense.  It  was  properly  held  that  the  note  had 
an  inception  in  the  hands  of  the  payee.  Such  a  case  is  plainly  no  authority,  foe 
the  decision  of  one  where  the  defense  is,  that  the  note  never  took  effect  at  all, 
because  there  was  no  intent  to  dehver,  and  in  fact  no  dehvery." 

40.  Howe  V.  Potter,  61  Barb.  357  (1872).  In  this  case  nothing  is  said  as  to 
the  amount  reserved  by  the  holder,  but  it  appears  to  have  been  a  full  recovery 
upon  the  draft.  As  to  the  rule  m  Tennessee,  see  Coliger  v.  Francis,  58  Tenn.  423; 
post,  §  778,  note;  and  Holman  v.  Holson,  8  Humphr.  107;  Petty  v.  Hmman, 
2  Humphr.  102. 

41.  Holcomb  v.  Wyckoff,  35  N.  J.  L.  38  (1870),  Depue,  J.,  saying:  "The 
case  now  before  the  court  cannot  be  distinguished  from  Allaire  v.  Hartshome 
upon  any  principle  founded  on  reason  or  justice.  In  both  cases  the  notes 
were  void  in  the  hands  of  the  original  parties,  and  the  only  vitality  they 
possessed  was  that  which  they  acquired  from  the  consideration  for  which  they 
were  transferred.  In  the  one  case  a  portion  of  the  sum  mentioned  in  the  note 
being  a  trust  for  the  payee,  as  to  whom  the  note  was  void,  it  was  manifest  that 
for  so  much  the  plaintiff  ought  not  to  recover;  in  the  other  case,  the  note  being 
equally  void,  the  plaintiff  has  no  equity  to  recover,  beyond  what  will  be  indemnity 
for  the  money  prepaid  for  it." 

42.  See  Daniels  v.  Wilson,  21  Muin,  530  (1875),  In  this  case  a  note  for  $280.79, 
with  accumulated  interest,  was  sold  by  indorsement  to  the  holder  for  $150.  It 
was  without  consideration.  Berry,  J,,  said:  "The  famihar  general  rule  is  that 
an  indorsee  of  negotiable  paper,  for  value,  before  maturity,  without  notice  of  any 
infirmity,  takes  it  clear  of  all  equities  and  defenses  between  antecedent  parties, 
and  is,  of  course,  entitled  to  full  amount  of  the  same,  according  to  its  tenor.  When 
the  originial  consideration  of  the  paper  is  illegal  or  fraudulent,  or  it  is  taken  as 
collateral  security,  and  perhaps  in  some  other  instances,  an  exception  to  this  rule 
has  been  recognized,  so  as  to  restrict  the  right  of  recovery  to  the  consideration 
actually  paid  by  the  indorsee,  or  to  the  amount  of  the  debt  to  which  the  paper 


g74  SALE    OF   BILLS   AND   NOTES  §  758a 

§  758a.  Conflicting  authorities. — There  are  authorities  which 
conflict  with  the  doctrine  of  the  text,  and  there  is  no  doubt  that  some 
of  those  cited  in  support  of  it,  by  the  courts  which  adopt  it  as  sound 
law,  are  not  strictly  applicable  as  precedents.  They  are  cases  in 
which  the  holder  took  the  paper  invalid  between  original  parties  as 
security  for  a  debt,  and  would  hold  the  residue  after  discharging  it  as  a 
trustee  for  the  transferrer;  and  in  such  cases  it  has  been  properly  held 
that  as  the  transferrer  could  not  himself  recover,  there  could  be  no 
recovery  as  a  trustee  for  his  benefit,  and,  therefore,  no  recovery 
beyond  the  amount  due  the  plaintiff.*^ 

While  we  reject  these  cases  as  authoritative  in  support  of  the  text, 
yet  its  conclusions  seem  to  rest  upon  broad  principles  of  equity,  and 
to  extend  a  just  and  sufficient  protection  to  purchasers  of  commercial 
paper  while  not  too  rigorously  pursuing  those  who  have  been  in- 
nocently defrauded  into  its  execution. 

In  Iowa,  the  contrary  doctrine  has  been  distinctly  held  in  a  case 
where  a  note  for  $150  obtained  by  fraud  was  indorsed  to  a  purchaser 
for  $80.  Day,  J.,  saying:  "The  defense  that  a  note  has  been  obtained 
fraudulently,  or  without  consideration,  does  not  avail  against  a  bona 
fide  holder.  If,  however,  the  recovery  of  such  holder  may  be  limited 
to  the  amount  paid,  it  is  apparent  that  the  defense  does  not  avail, 
for  without  such  defense  he  would  recover  the  amount  evidenced 
by  the  note."  ^*  And  the  like  view  seems  to  have  obtained  in  other 
cases,  though  the  question  as  to  the  limitation  of  the  amount  of  re- 
covery was  not  particularly  presented,  but  rather  assumed  not  to 
exist,  if  there  could  be  any  recovery  at  all.'^^ 

is  collateral.  The  defendant  contends  for  a  like  exception  in  this  case,  in  which  it 
appears  that  the  note  was  without  consideration,  and  the  plaintiff  purchased  it 
for  less  than  its  face.  But  in  our  opinion  no  such  exception  is  admissible  upon 
principle."  Farber  v.  National  Forge  &  Iron  Co.,  140  Ind.  54,  39  N.  E.  249, 
citing  the  text;  Holmes  v.  Gardner,  50  Ohio,  167,  33  N.  E.  644. 

43.  Allaire  v.  Hartshorne,  1  Zabr.  663.  See  §  832;  Barnby  v.  Wolfe,  44  Nebr. 
77,  62  N.  W.  318. 

44.  Lay  v.  Wissman,  36  Iowa,  305  (1873).  See  article  in  Alb.  L.  J.,  vol.  XVIII, 
No.  13,  Sept.  28,  1878,  p.  247;  Vinton  v.  Peck,  14  Mich.  296  (1866),  Camp- 
bell, J.:  "The  maker  of  a  note  has  no  concern  with  the  amount  paid  for  it  by  a 
bona  fide  holder." 

45.  Bailey  v.  Smith,  14  Ohio  St.  396  (1863);  Mathews  v.  Rutherford,  7  La. 
Ann.  225,  quoted  for  this  doctrine,  was  a  case  of  accommodation  paper,  and 
not  of  paper  obtained  by  fraud.  Bissell  v.  Dickerson,  64  Conn.  73,  29  Atl.  226, 
holds  that  accommodation  paper  must  be  treated  in  hands  of  a  bona  fide  holder 
like  business  paper  although  it  be  obtained  through  the  accommodation  maker 
by  fraud;  and  that  the  full  amount  with  interest  is  recoverable  although  the 


§§  758b-759  AMOUNT  OF  RECOVERY  875 

§  758b.  Doctrine  of  United  States  Supreme  Court  as  to  amount  of 
recovery. — When  there  is  no  infirmity  or  defense  between  original 
parties  to  a  negotiable  instrument,  a  purchaser  can  recover  from  the 
maker  the  whole  amount  irrespective  of  what  he  may  have  paid 
therefor.  ^^ 

The  United  States  Supreme  Court  has  expressed  itself  in  favor 
of  the  doctrine  that  the  purchaser  of  a  negotiable  security  before 
maturity,  in  cases  where  he  is  not  personally  chargeable  with  fraud, 
is  entitled  to  recover  its  full  amount  against  its  maker,  though  he  may 
have  paid  less  than  its  par  value,  whatever  may  have  been  its  original 
infirmity,  ^^  and  this  view  seems  to  be  the  settled  conclusion  of  that 
tribunal.^ 

§  758c.  When  notice  of  fraud  is  received  after  part  payment. — 

If  the  purchaser  has  paid  only  part  of  the  amount  agreed  upon  for 
the  paper,  and  the  contract  remains  unexecuted  as  to  the  residue, 
when  he  receives  notice  of  fraud  in  the  inception  of  the  paper,  it  is 
clear  that  he  can  then  recover  only  the  amount  which  he  had  paid 
before  such  notice  was  received.  As  to  what  he  pays  after  such  notice 
he  is  not  a  purchaser  in  good  faith.^^  And  if  a  portion  of  the  contract 
be  entirely  unexecuted  when  he  receives  notice  of  the  fraud,  he  can 
recover  nothing. ^° 

§  759.  When  there  is  usury  established  as  between  indorser  and 
indorsee  of  a  bill  or  note,  the  indorsee  cannot  sustain  action  against 
the  indorser,  because  the  contract  is  void.  But  it  is  held  by  some 
authorities  that  he  may  sue  prior  parties,  tracing  title  through  his 
indorser,  because,  in  so  far  as  it  transfers  title,  it  is  an  executed  con- 
tract; and  as  a  party  claiming  a  stolen  horse  could  recover  him  from 
the  thief,  although  in  proving  it  to  be  his  property  it  appears  that  he 

holder  paid  less  for  it.  See  Belden  v.  Lamb,  17  Conn.  73;  Rowland  v.  Fowler, 
47  Conn.  74,  36  Am.  Rep.  51. 

46.  Wade  v.  Chicago,  etc.,  R.  Co.,  149  U.  S.  327,  13  Sup.  Ct.  Rep.  892. 

47.  Cromwell  V.  County  of  Sac,  96  U.  S.  (6  Otto)  60  (1877);  Bank  v.  Davis, 
114  N.  C.  343,  19  S.  E.  280,  41  Am.  St.  Rep.  795,  citing  and  approving  text; 
Rotan  V.  Maedgen,  24  Tex.  Civ.  App.  558. 

48.  Raikoad  Companies  v.  Schutte,  103  U.  S.  118,  145,  Waite,  C.  J.  (1880). 

49.  Dresser  v.  Mo.,  etc.,  R.  Co.,  93  U.  S.  (3  Otto)  95;  Habbard  v.  Chapin, 
2  Allen,  328;  Lay  v.  Wissman,  36  Iowa,  309;  Wade  v.  Chicuo,  etc.,  R.  Co.,  149 
U.  S.  327, 13  Sup.  Ct.  Rep.  892;  Campbell  v.  Brown,  100  Tenn.  245,  48  S.  W.  970, 
citing  text. 

60.  CrandeU  v.  Vickery,  45  Barb.  156;  §  789o. 


876  SALE  Of  bills  and  notes  §  759a 

acquired  title  under  a  usurious  bargain,  so  the  holder  may  prove  his 
right  to  recover  the  amount  due  from  those  not  implicated  in  the 
usury.^^  By  other  authorities  the  doctrine  is  denied;  but  it  seems  to 
us  sound,  though  the  views  expressed  against  it  are  weighty.^^ 

§  759a.  Amount  of  recovery  under  usurious  contract. — When  a 
contract  is  rendered  void  either  in  toto,  or  pro  tanto,  on  account  of 
usury,  the  extent  of  the  forfeiture  is  determined  by  statute  on  that 
subject.  At  common  law,  it  is  not  usury  for  a  note  to  provide  for 
payment  of  interest  at  a  greater  rate  than  that  provided  by  law,  if 
the  debt  is  not  paid  at  maturity;  but,  the  Legislatures  of  many  of 
the  States  have  enacted  what  is  called  usury  laws,  with  varying  pro- 
visions as  to  the  penalty  for  usurious  interest.  Some  of  them  provide 
for  a  forfeiture  of  the  entire  principal;  some  for  a  portion  of  the  prin- 
cipal; others  for  the  entire  interest,  and  still  others  for  a  forfeiture 
of  the  usurious  interest,  and  sometimes  with  additional  penalties. 
It  is  obviously  necessary,  therefore,  that  the  statute  law  should  be 
examined  and  consulted  before  passing  upon  this  question  in  any 
particular  jurisdiction.  By  section  5189  of  the  Revised  Statutes  of 
the  United  States,  it  is  provided  that  if  a  national  bank  knowingly 
charges  usurious  interest,  all  interest  is  forfeited,  and  the  borrower 
may  recover  double  the  amount  of  interest  actually  paid  if  suit  is 
brought  within  two  years.  This  section  of  the  United  States  Revised 
Statutes  has  been  construed  as  meaning  that  the  borrower  may  re- 
cover double  the  amount  of  the  excessive  interest  charged;  ^^  but 

51.  Armstrong  v.  Gibson,  31  Wis.  66  (1872);  Collier  v.  Nevill,  3  Dev.  31; 
Knights  V.  Putman,  3  Pick.  185,  Wilde,  J.:  "It  is  manifest  that  the  maker  of  a 
note  is  not  affected  by  a  usurious  agreement  between  the  indorser  and  indorsee. 
He  is  liable  on  his  contract,  and  it  is  immaterial  to  him  whether  the  action  be 
brought  in  the  name  of  the  indorser,  or  that  of  the  indorsee.  But  I  hold  further 
that  the  transfer  of  a  note  on  a  usurious  consideration  is  neither  void  nor  voidable. 
So  far  as  the  indorsement  operates  as  a  transfer  of  the  note,  it  is  an  executed  con- 
tract, and  the  statute  against  usury  is  not  applicable.  It  only  applies  to  the  im- 
plied promise  or  guaranty  of  the  indorser,  which,  being  an  executory  contract, 
may  be  avoided.  But  in  no  case  can  an  executed  contract  be  set  aside  on  the  plea 
of  usury.  It  is  not,  however,  necessary  to  insist  on  this  distinction  for  the  purpose 
of  sustaining  the  present  verdict.  It  is  sufficient  for  this  purpose  that  the  transfer 
is  voidable  only,  and  that  it  is  not  competent  for  the  defendant,  he  not  being  a 
party  to  the  transfer,  to  avoid  it."  Connor  v.  Donnell,  55  Tex.  173,  citing  the 
text.     See  post,  §  764,  notes. 

52.  Lloyd  v,  Keach,  2  Conn,  175;  Nichols  v.  Pearson,  7  Pet.  103.  See  Wal- 
lace, Admr.  v.  Lipps,  Admr.,  47  W.  Va.  339. 

53.  Norfolk  Nat.  Bank  v.  Schwenk,  46  Nebr.  381,  64  N.  W.  1073. 


§  760  AMOUNT   OF   RECOVERY  877 

there  are  decisions  in  Texas  that  support  the  view  that  the  borrower 
is  not  restricted  to  a  recovery  of  double  the  excess,  but  may  recover 
double  the  interest,  both  legal  and  illegal,  actually  paid.^^ 

§  760.  Right  to  trace  title  through  usurious  indorsements.— The 

authorities  also  differ  upon  the  question  whether  or  not  a  subsequent 
indorsee,  who  is  not  a  party  to  the  usury,  may  recover  against  parties 
prior  to  it,  tracing  title  through  the  indorser  who  was  a  party  to  it. 
The  difficulty  may  be  avoided  by  such  subsequent  indorsee  striking 
out  the  usurious  indorsement,  and  all  subsequent  indorsements, 
where  there  is  an  indorsement  in  blank  prior  to  the  usury,  imder 
which  he  might  then  deduce  title  and  enforce  payment. ^^  But  this 
may  not  be  practicable,  or  not  desirable;  and  the  better  opinion,  as  it 
seems  to  us,  is,  that  the  holder  without  notice  may  sue  and  recover 
against  all  the  parties  save  the  indorser,  from  whom  the  usury  was 
exacted.  As  to  him,  in  so  far  as  his  contract  is  an  assurance  for  the 
payment  of  money,  it  cannot  be  enforced.  But,  nevertheless,  in  so 
far  as  it  evidences  the  fact  that  he  has  transferred  the  legal  title,  it 
seems  to  us  that  the  indorsement  would  be  sustained  as  valid  for  that 
purpose,  upon  the  ground  that  the  object  and  spirit  of  the  statute 
would  be  subserved,  and  no  violence  done  to  its  letter  fairly  inter- 
preted. The  objection  to  this  view  lies  in  the  difficulty  in  distin- 
guishing a  note  usurious  as  between  the  maker  and  payee,  from  an 
indorsement  usurious  as  between  the  indorser  and  indorsee.  In  the 
first  case,  the  note  would  be  void  in  the  hands  even  of  an  innocent 
holder;  and  some  of  the  authorities  have  held  that  as  the  indorsement 
would  in  like  manner  be  void,  no  title  could  be  traced  through  it, 
and  no  recovery  had  against  the  indorser.  That  no  recovery  could  be 
had  against  him  we  concede;  but  if  the  indorsement  be  declared  so 
far  void  that  title  could  not  be  traced  through  it,  it  would  throw  the 
forfeiture  Qf  the  debt,  not  upon  the  usurer,  as  the  law  throws  it,  but 
upon  the  innocent  holder;  and  to  construe  the  statute  to  contemplate 
and  design  such  a  result  would  reverse  the  rule  that  courts  should 
construe  statutes  so  as  to  favor  the  remedy.  The  instrument  being 
valid  in  its  inception,  stands  on  the  same  footing  as  a  chattel,  which 
the  holder  may  sell  at  any  price;  and  if  operated  with,  like  a  horse  or 
goods,  under  a  usurious  contract,  a  subsequent  purchaser  without 

54.  Boemer  v.  Traders'  Nat.  Bank,  90  Tex.  443,  39  S.  W.  285;  Smith  v,  Chilton, 
90  Tex.  447,  39  S.  W.  287;  Colgin  v.  City  Nat.  Bank,  16  Tex.  Civ.  App.  346, 
40  S.  W.  634. 

55.  Story  on  Notes,  §  190;  2  Parsons  on  Notes  and  Bills,  431. 


g7S  SALE    OF   BILLS   AND   NOTES  §  761 

notice  would  be  protected,  at  least  so  far  as  the  title  is  concerned,  upon 
the  principle  that  the  wrongdoer  will  not  be  heard  to  deny  rights  ac- 
quired under  executed  contracts  to  which  he  is  a  party,  although 
when  void  he  might  be  permitted,  on  grounds  of  public  policy,  to 
resist  their  enforcement  so  far  as  they  are  executory.  If  this  be  not 
true,  the  legal  debtor  would  be  exonerated  from  the  debt,  and  the 
usurer  escape  punishment,  while  the  innocent  holder  alone  would 
suffer.  No  such  result  can  have  been  contemplated.  The  title  having 
actually  passed  from  the  indorser,  we  think  he  could  be  no  more  heard 
to  controvert  it  against  an  innocent  party,  than  he  would  be  to  re- 
cover back  money  paid  under  a  usurious  bargain,  or  to  recover  in 
trover  the  instrument  itself.'^^  The  opposite  view  has  been  taken 
by  the  United  States  Supreme  Court,  and  is  concurred  in  by  other 
authorities." 

So  where  a  bill  was  given  by  defendant  to  plaintiff  in  consideration 
of  his  entering  into  a  copartnership  with  him,  and  the  contract  was 
broken,  it  was  held  that  he  could  not  recover  the  whole  amount,  but 
only,  as  Lord  Kenyon,  C.  J.,  said,  "  the  damages  which  he  had  al- 
ready sustained  by  nonperformance  of  the  contract."  ^^ 

§  761.  When,  however,  there  has  been  a  novation  of  the  debt,  the 
case  is  different.  Thus,  where  the  indorsee  gave  $900  for  a  note  of 
$1,000,  indorsed  first  by  its  vendor,  and  then  by  L.  &  K.,  who  in- 
dorsed it  for  accommodation  of  the  vendor,  at  the  indorsee's  instance 
and  when  the  note  matured,  the  indorsee  accepted  two  notes  of  the 

56.  Parr  v.  Eliason,  1  East,  92  (1800);  Daniel  v.  Cartony,  1  Esp.  275  (1795). 
[But  these  cases  have  been  overruled.  See  Lowes  v.  Mazaredo,  1  Stark.  385 
(1816);  Chapman  v.  Black,  2  B.  &  Aid.  588  (1819).]  Whitworth  v.  Adams,  5 
Rand.  395,  396,  Coalter,  J.  But  see  Whitworth  v.  Adams,  5  Rand.  419,  Cabell, 
J.;  Braman  v.  Hess,  13  Johns.  52;  Munn  v.  Commission  Co.,  15  Johns.  44;  Bush 
v.  Livingston,  1  Caines'  Cases  in  Error,  66;  Foltz  v.  Mey,  1  Bay,  486;  King  v. 
Johnson,  3  McCord,  365;  Harick  v.  Jones,  4  McCord,  402.  See  post,  §  764,  and 
notes. 

57.  Nichols  v.  Pearson,  7  Pet.  103;  Lloyd  v.  Scott,  4  Pet.  205;  Gaither  v. 
Farmers',  etc..  Bank,  1  Pet.  43,  Johnson,  J.:  "Suppose  a  note  given  to  a  woman 
who  marries,  and  then  indorses  it  without  her  husband's  authority,  such  an 
indorsement  would  be  void,  and  the  indorsee  could  not  recover,  yet  the  husband 
and  wife  could  recover."  Lloyd  v.  Keach,  2  Conn.  175;  Lowes  v.  Mazaredo,  1 
Stark.  385;  Chapman  v.  Black,  2  B.  &  Aid.  588;  Whitworth  v.  Adams,  5  Rand. 
419,  420,  Cabell,  J.  (And  see  also  opinions  of  Carr  &  Greene,  JJ.,  who  dissented  on 
general  grounds  from  the  judgment  of  the  court.  On  this  point,  see  also  same  case, 
pp.  395-396,  Coalter,  J.,  contra);  Story  on  Notes,  §  190. 

58.  Ledger  v.  Ewer,  Peake's  Cases,  217. 


§§  762,  762a  VALIDITY   OF   TRANSFER  879 

vendor  for  $400  and  $600  respectively,  indorsed  for  the  vendor's 
accommodation  by  L.  &  K.,  and  surrendered  up  the  note  for  $1,000, 
it  was  held  that  he  could  recover  the  whole  amount  of  L.  &  K.,  though 
he  knew  they  were  accommodation  indorsers.^^ 

Under  Negotiable  Instrument  statute. — The  statute  declares  that 
a  holder  in  due  course  holds  the  instrument  free  from  any  defect  of 
title  of  prior  parties,  and  free  from  defenses  available  to  prior  parties 
among  themselves,  and  may  enforce  payment  of  the  instrument  for 
full  amount  thereof.®"  The  statute  settles  the  conflict  of  authority 
discussed  in  the  preceding  sections  as  to  the  amount  of  recovery  not 
only  when  defenses  of  want  or  failure  of  consideration  are  set  up,®^ 
but  also  when  the  instrument  had  its  inception  in  fraud.®^ 


SECTION  III 

VALIDITY  OF  TRANSFER  AND  AMOUNT  OF  RECOVERY  AGAINST 
TRANSFERRER 

§  762.  The  third  question,  whether  or  not  there  is  usury  upon  the 
transfer  of  the  instrument;  and  the  fourth  question,  what  is  the 
amount  of  recovery  against  the  indorser,  if  there  be  no  usury— remain 
to  be  considered,  and  may  be  better  presented  in  connection  with 
each  other. 

§  762a.  Mere  sale,  without  indorsement,  at  any  price,  unobjec- 
tionable.— It  is  quite  clear,  and  universally  conceded,  that,  if  the 
transferrer  does  not  indorse  the  instrument,  the  mere  selling  of  it  at 
any  price  is  unobjectionable,  as  the  transferrer  does  not  bind  him- 
self for  the  repayment  of  the  amount  paid  him  in  any  event.®^    And 

69.  Ingalls  v.  Lee,  9  Barb.  647.  Novation  means  the  substitution  of  one 
debtor  by  mutual  agreement  for  another,  and  there  must,  therefore,  be  a  new 
agreement  between  all  the  parties  which  takes  the  place  of  the  old  debt.  See 
Horn  V.  McKinney,  5  Ind.  App.  348,  32  N.  E.  334;  Wallace,  Admr.  v.  Lipps, 
Admr.,  47  W.  Va.  339. 

60.  Appendix,  sec.  57. 

61.  Choteau  Trust  &  Banking  Co.  v.  Smith,  133  Ky.  418,  118  S.  W.  279; 
Becker  v.  Hart,  120  N.  Y.  S.  270;  McNamara  v.  Jose,  28  Wash.  461,  68  Pac.  903. 

62.  Johnson  County  Savings  Bank  v.  Walker,  82  Conn.  24,  72  Atl.  579;  Lassas 
V.  McCarty,  47  Or.  474,  84  Pac.  76;  Jefferson  Bank  v.  Chapman-White-Lyons 
Co.,  122  Tenn.  415,  123  S.  W.  641. 

63.  See  ante,  §  751. 


gSO  SALE    OF   BILLS   AND   NOTES  §  763 

the  same  principle  would  apply  if  there  were  an  indorsement  "  with- 
out recourse."  ^^  And  if  the  holder  received  the  instrument  from  an 
agent  of  the  indorsee,  not  knowing  the  fact  of  his  agency,  there  would 
then  be  no  usury,  as  the  apparent  owner  does  not  himself  indorse  it; 
but  appears  as  the  mere  seller  of  a  security  valid  in  his  hands,  without 
warranting  anything  but  its  genuineness.^^  It  is  also  quite  clear  that 
the  transfer  of  a  bill  or  note  by  delivery,  or  by  indorsement,  may  be  a 
feature  of  a  usurious  contract,  as,  for  instance,  where  a  note  is  in- 
dorsed as  collateral  security  for  a  usurious  loan  of  money,  in  which 
case  it  is  not  the  indorsement  'per  se  which  constitutes  usury,  but  its 
entering  into  a  usurious  transaction  as  a  component  part  thereof.^^ 
But  when  there  is  an  indorsement  of  a  bill  or  note  upon  its  transfer  for 
an  amount  less  than  the  legal  rate  of  discount  upon  an  advancement 
of  money,  its  effect  per  se  gives  rise  to  a  disputation  in  which  many 
views  have  been  presented. 

§  763.  View  presented  that  transaction  between  indorser  and  in- 
dorsee is  usurious  and  that  no  party  can  be  sued. — The  first  view 
is,  that  as  between  indorser  and  indorsee  the  contract  is  usurious, 
and  that  the  indorsee,  who  is  a  party  to  the  usury,  cannot  sue  his 
indorser,  or  any  prior  party,  because  he  holds  the  instrument  under 
a  contract  absolutely  void.^^  Every  indorser  of  a  bill  or  note,  it  is 
said,  is  in  law  a  new  drawer;  and  that  as  the  drawer  of  a  bill,  who  dis- 
counts it  at  less  than  the  rate  allowed  by  law,  binds  himself  for  re- 
payment of  the  amount,  and  in  fact  procures  a  loan  upon  the  faith 

64.  Freeman  v.  Britton,  2  Harr.  191;  Durant  v.  Banta,  3  Dutch.  630.  But 
see  Ruffin  v.  Armstrong,  2  Hawks,  411. 

65.  Whitworth  v.  Adams,  5  Rand.  333;  Gaul  v.  Willis,  26  Pa.  St.  261;  Tay- 
lor V.  Bruce,  Gilmer  (Va.),  42;  Gimmi  v.  Cullen,  20  Gratt.  439;  Cook  v.  Forker, 
193  Pa.  St.  461,  44  Atl.  560,  74  Am.  St.  Rep.  699. 

66.  Levy  v.  Gadsby,  3  Cranch,  180.  Where,  upon  a  usurious  negotiation  for  a 
loan  in  reference  to  a  pre-existing  debt,  the  note  was  indorsed  to  the  plaintiff, 
and  thus  came  within  the  description  of  "an  insurance  for  forbearance."  See 
also  Gaither  v.  Farmers'  etc.,  Bank,  1  Pet.  37;  Nichols  v.  Pearson,  7  Pet.  108; 
Newman  v.  Wilhams,  29  Miss.  212. 

67.  Whitworth  v.  Adams,  5  Rand.  419  (1827).  Cabell,  J.,  said:  "If  the  note 
had  passed  from  the  payee  to  the  person  who  paid  the  money  on  a  contract  of 
indorsement,  by  which  the  payee  received  for  the  bill  less  than  its  nominal  amount, 
deducting  legal  interest,  I  should  be  decidedly  of  opinion  that  the  indorsement  was 
usurious  and  void,  on  the  ground  mentioned  by  Bailey,  J.,  in  Lowes  v.  Mazaredo, 
1  Stark.  385;  Conyn  on  Usury,  181,  that  'every  indorsement  is  considered  in 
law  as  a  new  drawing.' "  Freeman  v.  Britton,  2  Harr.  191,  overruled  in  Durant  v. 
Banta,  3  Dutch.  624. 


§§  76oa,  764  VALIDITY   OF   TRANSFER  881 

of  the  bill  as  security,  such  discount  by  the  drawer  is  usurious;  ®^  and 
so,  in  like  manner,  the  indorsement  of  a  bill  or  note  for  a  less  amount 
than  the  legal  rate  of  discount  is  usurious.^^ 

§  763a.  If  the  statute  which  denounces  usury  does  not  declare 
the  usurious  contract  void,  the  Supreme  Court  of  the  United  States 
has  considered,  on  grounds  which  seem  just  and  tenable,  that  the 
views  given  in  the  foregoing  section  would  not  apply;  and  where 
usurious  interest  was  paid  in  advance  to  a  national  bank,  and  a 
collateral  indorsed  to  it,  the  bank  was  held  entitled  to  recover  on 
the  note,  although  under  the  National  Banking  Act  the  debtor  is 
entitled  in  cases  of  usury  to  sue  for  and  recover  twice  the  amount  of 
interest  paid.^° 

§  764.  View  presented  that  transaction  between  indorser  and 
indorsee  is  usurious,  but  that  prior  parties  may  be  sued. — The 

second  view  is,  that  although,  as  between  indorser  and  indorsee,  the 
transaction  is  usurious,^  ^  and  the  contract  of  the  former,  so  far  as  it 
binds  him  to  repay  the  money,  is  void;  yet  that  so  far  as  it  has  been 
executed  by  a  transfer  of  the  title,  and  right  to  sue  prior  parties,  the 
courts  should  respect  it,  and  enforce  a  recovery  against  them  for 
the  full  amount^- 

68.  Lowes  v.  Mazaredo,  1  Stark.  385  (2  Eng.  C.  L.);  Comyn  on  Usury,  181; 
King  V.  Ridge,  4  Price,  50  (1817),  copied  in  Appendix,  5  Rand.  617;  Whitworth  v. 
Adams,  5  Rand.  419;  Saltmarsh  v.  Planters,  etc..  Bank,  14  Ala.  668;  Noble  v. 
Walker,  17  Ala.  456. 

69.  This  doctrine  is  denied  in  Lloyd  v.  Keach,  2  Conn.  175.    See  post,  §  767. 

70.  Gates  v.  National  Bank,  100  U.  S.  (10  Otto)  249. 

71.  Ballinger  v.  Edwards,  4  Ired.  Eq.  449  (1847);  Ray  v.  McMillan,  2  Jones 
Law,  227  (1854);  Bynum  v.  Rogers,  4  Jones  Law,  399  (1859);  McElwee  v.  Collins, 
4  Dev.  &  Bat.  210  (1839).  Daniel,  J.,  said:  "There  is  a  distinction  between 
taking  a  bill  and  advancing  money  on  it,  with  an  indorsement  or  guaranty,  and 
one  without.  The  last  is  a  purchase,  and  may  be  for  less  than  the  real  value;  the 
other  is  a  loan,  and  within  the  operation  of  Statute  of  Usury."  Friend  v.  Duryee, 
17  Fla.  118  isemble). 

72.  Collier  v.  Nevill,  3  Dev.  31.  Ruffin,  J.,  said:  "The  discounting  of  a  bill  or 
bond  and  taking  the  general  indorsement  of  the  holder  does  ex  vi  termini  con- 
stitute a  loan;  and  if  the  rate  of  discount  exceed  that  fixed  by  statute,  it  is  a 
usurious  loan.  *  *  *  But  upon  the  strength  of  the  authorities,  and  the  opinion 
heretofore  generally  received  by  the  country  at  large  and  the  profession,  the  court 
feels  constrained  to  decide  that  the  defendants  cannot  avail  themselves  of  any 
intermediate  illegality.  The  bond  was  available  between  the  obligor  and  obligees. 
The  former  is  not  privy  to  the  usurious  agreement  between  the  latter  and  the 
present  holder."     See  also  Littell  v.  Hord,  Hard.  232;  Cowles  v.  McVickar,  3 

56 


882  SALE    OF   BILLS   AND    NOTES  §§  765,  766 

§  765.  View  presented  that  transaction  is  not  usurious,  but  that 
prior  parties  only  may  be  sued. — The  third  view  is  that  it  is  not 
usurious,  because  such  indorsement  shall  be  held  to  have  been  made 
for  the  purpose  of  transfer  merely;  and  that  although  he  thus  makes 
himself  liable  to  all  the  world  but  the  purchaser,  it  is,  as  between  them, 
a  simple  indorsement  for  the  accommodation  of  the  purchaser.  And 
such  purchaser,  while  he  cannot  recover  at  all  against  the  indorser, 
may  recover  the  whole  amount  of  the  maker,  acceptor,  and  prior 
parties.^^ 

§  766.  View  that  transaction  is  not  usurious,  but  that  recovery 
against  indorser  is  limited. — The  fourth  view  is  that  it  is  not  usu- 
rious, because  although  the  indorsee,  who  is  regarded  in  the  light  of  a 
purchaser,  and  not  as  a  lender,  may  recover  against  the  maker, 
acceptor,^*  or  other  prior  parties,^^  the  whole  amount,  as  against  the 
indorser  who  is  the  seller,  he  can  only  recover  the  amount  paid  with 
legal  interest/^    And  so  as  against  any  party,  in  whatever  form  he 

Wis.  725;  Armstrong  v.  Gibson,  31  Wis.  61;  Importers,  etc..  Bank  v.  Littell,  47 
N.  J.  L.  234;  Connor  v.  Donnell,  55  Tex.  173,  citing  the  text. 

73.  Whitworth  v.  Adams,  5  Rand.  388,  Coalter,  J.  (not  concmred  in  on  this 
point  by  the  other  judges).  Cowles  v.  McVickar,  3  Wis.  (Smith)  731,  does  not 
decide  this,  as  seems  to  have  been  thought  by  Prof.  Parsons,  vol.  II,  Notes  and 
Bills,  428,  but  merely  that  the  indorsement  may  be  only  to  pass  the  title,  where 
the  transaction  was  by  agreement  a  mere  sale  of  the  note. 

74.  Munn  v.  Commission  Co.,  15  Johns.  44  (1818),  Spencer,  J.:  "The  drawer 
and  acceptor  in  a  suit  by  the  indorsee  have  nothing  to  do  with  the  consideration 
paid  for  the  bill  by  such  indorsee  to  the  drawer.  They  are  bound  to  pay  the  bill; 
but  as  respects  the  payee  and  first  indorsee,  if  he  be  sued  by  his  immediate  in- 
dorsee, it  will  be  competent  for  him  to  show  the  real  consideration  paid;  and  if  it 
be  less  than  the  face  of  the  bill  and  the  legal  interest  for  the  time  the  bill  had  to 
run,  then  he  can  claim  to  have  the  difference  deducted."  Ingalls  v.  Lee,  9  Barb. 
650;  Cobb  v.  Titus,  13  Barb.  47;  Cram  v.  Hendricks,  7  Wend.  569. 

76.  Ingalls  v.  Lee,  9  Barb.  651,  Parker,  J.:  "It  is  now  settled  that  an  indorsee, 
who  buys  a  note  at  less  than  its  face,  can  recover  against  the  indorser  no  more 
than  the  sum  for  which  he  bought  the  note,  with  interest;  though  he  may  recover 
the  full  amount  of  the  note  against  the  maker.  Whether  the  rule  thus  hmiting  the 
recovery  would  apply  to  third  persons  who  indorse  for  the  accommodation  of  the 
payee,  and  who  are  not  parties  to  the  transfer,  has  not  been  decided.  *  *  *  I 
think  the  rule  referred  to  applies  only  as  between  the  parties  to  the  sale,  and  rests 
upon  the  consideration  of  recovering  back  the  consideration  paid."  Belden  v. 
Lamb,  17  Conn.  453. 

76.  Brown  v.  Mott,  7  Johns.  360  (1811);  Braman  v.  Hess,  13  Johns.  52  (1816); 
Ingalls  V.  Lee,  9  Barb.  647;  Cobb  v.  Titus,  13  Barb.  47;  Cram  v.  Kendricks,  7 
Wend.  569;  Huff  v.  Wagner,  63  Barb.  215;  Harger  v.  Wilson,  63  Barb.  237;  Lane 
V.  Steward,  20  Me.  104;  Farmer  v.  Sewall,  16  Me.  456;  French  v.  Grindle,  15  Me. 


,y 


§§  767-768  VALIDITY    OF   TRANSFER  §83 

may  bind  himself,  upon  the  transfer  the  assignee  can  only  recover 
back  the  consideration  paidJ^ 

§  767.  View  that  transaction  is  not  usurious,  and  that  full  amount 
is  recoverable  against  all  parties. — The  fifth  view  is  that  it  is  not 
usurious,  for  the  reason  that  the  contract  between  indorser  and  in- 
dorsee is  at  best  but  a  conditional  or  provisional  contract,  the  in- 
dorser not  being  bound  save  upon  the  condition  of  due  presentment 
and  notice,  and  being  regarded  in  the  Hght  of  a  guarantor  against 
the  insolvency  of  the  promisor;  and  that  the  validity  of  the  trans- 
action turns  upon  the  inquiry,  was  it  an  imaffected  sale  of  the  instru- 
ment, or  merely  a  color  for  a  loan?  ^^  And  further,  that  if  a  bona  fide 
sale,  the  indorsee  may  recover  the  full  amount  of  all  the  parties.^^ 

§  767a.  If  a  note  be  purchased  at  a  judicial  sale  of  the  effects  of  the 
holder,  the  purchaser,  although  paying  much  less  than  its  nominal 
amount,  may  recover  the  full  amount  against  an  indorser  for  accom- 
modation of  the  maker.^" 

§  768.  Comments  on  conflicting  views,  and  conclusion  deduced. — 

Our  own  views  coincide  with  that  last  presented,  although  the  author- 
ities to  the  contrary  are  weighty  and  numerous.  The  statutes  against 
usury  confine  themselves  to  the  interdiction  of  excessive  interest  for 

163;  Brock  v.  Thompson,  1  Bailey  Law,  329;  Noble  v.  Walker,  32  Ala.  456; 
Hutchins  v.  McCann,  7  Port.  99;  Coge  v.  Palmer,  16  Cal.  158;  Stevenson  v.  Unke- 
fer,  14  111.  105;  McCrady  v.  Jones,  44  S.  C.  407,  22  S.  E.  414.  In  the  last  case  it 
was  held  that  upon  suit  by  an  indorser  against  a  prior  indorser,  the  plaintiff's 
cause  of  action  is  for  money  paid  which  defendant  ought  to  have  paid,  and  not 
technically  on  the  note  itself,  and  that,  therefore,  the  plaintiff  could  recover 
only  the  amount  actually  paid  with  interest  at  the  legal  rate  only,  and  not  at  a 
higher  rate  stipulated  in  the  note  to  be  paid  after  maturity. 

77.  Cobb  V.  Titus,  13  Barb.  47;  Mazuzan  v.  Mead,  21  Wend.  285. 

78.  Lloyd  v.  Reach,  2  Conn.  175  (1817),  in  which  it  was  held  that  the  drawer 
may  discount  bills,  or  the  indorser  bills  or  notes  at  any  price,  and  that  it  will 
only  be  usurious  when  a  shift  to  evade  the  statutes.  Nichols  v.  Pearson,  7  Pet. 
109.  But  the  court  expressly  declined  to  decide  whether  the  whole  amount  might 
be  recovered.  State  Bank  v.  Coquillard,  6  Ind.  232;  Newman  v.  Williams,  29 
Miss.  223;  Gaul  v.  Willis,  26  Pa.  St.  261;  Moore  v.  Baird,  30  Pa.  St.  139;  Roark 
V.  Turner,  29  Ga.  458. 

79.  National  Bank  of  Michigan  v.  Green,  33  Iowa,  141  (1871);  Durant  v. 
Banta,  3  Dutch.  624  (1858),  overruling  Freeman  v.  Britton,  2  Harr.  191  (1839); 
Roark  v.  Turner,  29  Ga.  458;  Cook  v.  Forker,  193  Pa.  St.  461,  44  Atl.  560,  74 
Am.  St.  Rep.  699. 

80.  McVeigh  v.  Allen,  29  Gratt.  588. 


884  SALE    OF   BILLS   AND   NOTES  §  768 

the  "loan  or  forbearance  of  money."  And  while  the  indorsement  of  a 
bill  or  note  for  less  than  its  face  value  may  often  be  used  as  a  part  of 
the  shift  to  evade  the  law,  it  does  not  seem  to  us  to  import  per  se 
either  a  direct  usurious  loan  or  a  screen  to  hide  it.  No  direct  or  im- 
perative obligation  to  return  the  amount  or  any  part  thereof  is  en- 
tered into  by  the  indorser.  And  it  does  not  seem  to  us  to  come  within 
the  meaning  of  the  terms  usually  employed,  which  declare  void  "all 
contracts  or  assurances  made  directly  or  indirectly  for  the  loan  or 
forbearance  of  money,"  as  it  does  not  indirectly  bind  the  indorser  for 
repayment  of  a  loan  by  means  of  any  shift  or  device.  It  only  binds 
him  directly  to  pay  the  full  amount  of  a  debt  for  which  another  is 
primarily  bound,  and  for  which  he  himself  can  only  become  bound  by 
strictest  diligence  on  the  part  of  the  holder  in  making  presentment 
and  giving  notice.  Loans  of  money  to  be  returned  with  excessive 
interest  are  plainly  contradistinguished  from  amounts  paid  for 
securities  which  are  transferred  in  the  usual  course  of  business  by 
indorsement;  and  as  the  statutes  against  usury  are  to  be  strictly  con- 
strued, they  do  not  seem  to  us  to  have  contemplated  commercial 
transactions  of  this  kind,  which  partake  rather  of  the  nature  of  sales 
accompanied  by  a  peculiar  and  conditional  warranty.  Prof.  Parsons 
has  expressed  a  similar  opinion,  in  which  he  compares  the  indorse- 
ment to  a  sale  of  a  chattel  with  warranty  of  its  value  at  a  certain 
future  time.^^  The  same  reasons  which  induce  these  conclusions 
respecting  an  indorsement  for  less  than  the  legal  rate  of  discount  from 
the  face  value  of  the  paper,  would  apply  where  the  drawer  of  a  bill 
parts  with  it  for  less  than  the  legal  rate  of  discount.  The  debt  due ' 
him  by  the  drawee  or  acceptor  is  his  property,  and  that  property  he 
may  sell  for  any  price.  And  the  fact  that  he  warrants  its  value  "at  a 
certain  future  time,"  does  not,  as  it  seems  to  us,  impart  to  the  trans- 
action the  nature  of  a  loan.  The  drawer  does  not  borrow  the  money, 
engaging  to  repay  it  with  illegal  interest,  but  simply  sells  a  debt  due 
to  him  by  another,  engaging  that,  if  that  other  does  not  pay  it,  and 
peculiar  acts  of  diligence  are  observed  by  the  purchaser,  he  will  make 
the  debt  good.  The  responsibility,  trouble,  and  expense  of  pursuing 
the  drawee  or  acceptor  first,  is  an  independent  and  often  a  most  im- 
portant consideration;  and  where  such  additional  consideration 
enters  into  the  negotiation,  it  is  sufficient  to  prevent  it  from  being 
usurious,^^ 

81.  2  Parsons  on  Notes  and  Bills,  429,  430. 

82.  Soe  on  this  subject,  ante,  §  763a,  and  Oates  v.  National  Bank,  100  U.  S. 
(10  Otto)  250. 


CHAPTER  XXIV 

NATURE  AND  RIGHTS  OF  A  BONA  FIDE  HOLDER  OR  PURCHASER 

§  769.  It  is  a  general  principle  of  the  law  merchant  that,  as  between 
the  immediate  parties  to  a  negotiable  instrument — parties  between 
whom  there  is  a  privity — the  consideration  may  be  inquired  into; 
and  that  as  to  them  the  only  superiority  of  a  bill  or  note  over  other 
unsealed  evidences  of  debt  is,  that  it  prima  fade  imports  a  considera- 
tion.^ We  propose  herein  to  consider  the  relations  of  the  purchaser 
or  holder  of  the  instrument,  who  has  acquired  the  instrument  from 
or  through  an  original  party,  and  to  show  when,  and  under  what 
circumstances,  he  may  be  affected  by  fraud  or  illegality  in,  or  failure 
of,  the  original  consideration. 

§  769a.  The  term  "  purchaser  "  or  "  holder  " ;  principles  of  evi- 
dence affecting  the  right  to  recover. — By  "purchaser"  and  "holder" 
of  a  negotiable  instrument  -  is  included  any  one  who  has  acquired 

1.  See  ante,  §  161  et  seq.,  and  §  174  et  seq.  A  promissory  note  must  contain  words 
of  negotiability,  in  order  to  entitle  the  transferee  thereof  to  the  rights  accorded 
by  the  law  to  bona  fide  purchasers  of  negotiable  paper.  Barrow  v.  Blasingame, 
1  Ga.  App.  358,  57  S.  E.  926.  One  cannot,  by  causing  a  promissory  note,  for 
which  he  himself  is  to  furnish  the  consideration,  to  be  made  payable  to  another 
person,  and  by  having  the  latter  to  indorse  it,  become  that  bona  fide  transferee  for 
value  to  whom  the  law  accords  rights  superior  to  those  of  ordinary  promisees. 
Empire  Mut.  Annuity  &  Life  Ins.  Co.  v.  Avery,  3  Ga.  App.  97,  59  S.  E.  324. 

2.  It  was  recently  held  in  Massachusetts  that  the  defense  that  a  note  was 
purchased  by  a  national  bank  in  violation  of  the  National  Banking  Act,  could 
not  be  availed  of  by  the  parties;  that  if  ultra  vires  for  the  bank  to  purchase,  it 
was,  nevertheless,  not  one  of  those  things  which  it  lay  in  the  mouth  of  the  parties 
to  the  note  to  object.  National  Pemberton  Bank  v.  Porter,  125  Mass.  333  (1878) ; 
Bankers'  Magazine,  Jan.,  1879,  p.  563;  Cent.  Law.  Jour.,  Oct.  25,  1878,  vol.  VII, 
No.  17,  p.  324,  Lord,  J.,  saying:  "In  this  commonwealth  the  only  questions 
which  are  involved  are:  First.  Has  the  plamtiff  legal  capacity  to  sue?  Second.  Is 
the  plaintiff  the  holder  of  the  negotiable  note  declared  on?  "  See  Wroten,  Assignee 
v.  Armat,  31  Gratt.  228;  National  Bank  v.  Matthews,  98  U.  S.  (8  Otto)  621.  If  a 
national  bank  which  is  authorized  by  the  terms  of  notes  in  its  possession  to  sell 
them,  purchases  them  itself,  it  is  liable  for  conversion,  even  though  it  is  not  withm 
the  powers  of  the  bank  to  sell  them  aa  the  owner's  agent.    First  Nat.  Bank  v. 

885 


ggg  RIGHTS   OF   A   BONA   FIDE   HOLDER  §  769 

it  in  good  faith  for  a  valuable  consideration,  from  one  capable  of 
transferring  it,  and  the  following  propositions  may  be  considered 
as  settled  principles  of  commercial  law— principles  which  have  been, 
for  the  most  part,  reiterated  by  the  Supreme  Court  of  the  United 
States,  and  prevail  throughout  the  Union: 

First.  That  the  purchaser  or  holder  of  a  negotiable  instrument, 
who  has  taken  it  (1)  bona  fide,  (2)  for  a  valuable  consideration,  (3) 
in  the  ordinary  course  of  business,  (4)  when  it  was  not  overdue,  (5) 
without  notice  of  its  dishonor,  and  (6)  without  notice  of  facts  which 
impeach  its  validity  as  between  antecedent  parties,  has  a  title  un- 
affected by  those  facts,  and  may  recover  on  the  instrument,  although 
it  may  be  without  any  legal  validity  as  between  the  antecedent 
parti es,2  as,  for  example,  though  it  was  without  consideration  origi- 

Anderson,  172  U.  S.  573,  19  Sup.  Ct.  Rep.  284.  In  Michigan,  it  has  been  held  that 
a  bona  fide  holder  of  a  note  as  collateral  security  for  an  existing  debt  comes  within 
the  same  principle.  First  Nat.  Bank  v.  Shue,  119  Mich.  560,  78  N.  W.  647. 
It  is  immaterial  to  an  indorser,  having  no  legal  defense,  whether  the  subsequent 
transfers  of  a  note  were  made  in  good  faith;  for  a  valuable  consideration,  and 
before  maturity,  or  not.  Meyer  v.  Foster,  147  Cal.  166,  81  Pac.  402.  Where  a 
bank  had  purchased  a  note,  its  status  as  a  bona  fide  holder  was  not  affected  by  the 
fact  that  the  maker  was  notified  that  the  bank  held  the  note  "for  collection." 
Bank  of  Baraboo  v.  Laird  (Wis.),  136  N.  W.  603. 

3.  Melton  v.  Pensacola  Bank  &  Trust  Co.,  190  Fed.  126,  111  C.  C.  A.  166; 
Doane  v.  King  (Minn.),  30  Fed.  106;  Woodall  v.  People's  Nat.  Bank,  153  Ala. 
756,  45  So.  194;  Johnson  v.  Hanover  Nat.  Bank  (Ala.),  6  So.  909;  Hogg  v.  Thur- 
man  (Ark.),  117  S.  W.  1070;  Cagle  v.  Lane,  49  Ark.  467;  Oliver  v.  Miller, 
130  Ga.  72,  60  S.  E.  254;  Venable  v.  Lippold,  102  Ga.  208,  29  S.  E.  181;  Taylor 
et  al.  V.  Cribb,  100  Ga.  94,  26  S.  E.  468;  Jenkins  v.  Jones,  108  Ga.  556,  34  S.  E. 
149;  Mann  v.  Merchants'  Loan  &  Trust  Co.,  100  111.  App.  224;  McCauley  v. 
Murdock,  97  Ind.  230;  Lane  v.  Schlemmer  (Ind.),  15  N.  E.  454;  Scotten  v. 
Randolph,  96  Ind.  581;  Kniss  v.  Holbrook,  16  Ind.  App.  229,  44  N.  E.  563,  934; 
Harris  v.  Pate  (Ind.  Ter.),  104  S.  W.  812;  Pavey  v.  Stauffer,  45  La.  Ann. 
353,  12  So.  512;  Cochrane  v.  Dickerson,  40  La.  Ann.  127;  Bank  v.  Trudeau,  38 
La.  Ann.  898;  Flower  v.  Noble,  38  La.  Ann.  939;  State  Nat.  Bank  v.  Flathers,  45 
La.  Ann.  75, 12  So.  243,  40  Am.  St.  Rep.  216;  Bamum  v.  Phenix  County,  60  Mich. 
388;  Gage  v.  Averill,  57  Mo.  App.  Ill;  First  Nat.  Bank  v.  Pennington,  57  Nebr. 
404,  77  N.  W.  1084,  text  cited;  Stedman  v.  Rochester  Loan  &  Banking  Co.,  42 
Nebr.  641,  60  N.  W.  890;  Dobbins  v.  Oberman,  17  Nebr.  163;  Breen  v.  Bickford, 
60  N.  H.  159;  First  Nat.  Bank  v.  Dean  et  al,  137  N.  Y.  110,  32  N.  E.  1108,  citing 
text;  Flour  City  Nat.  Bank  v.  Traders'  Nat.  Bank,  42  N.  Y.  S.  C.  246;  Kitchen  v. 
Loudenback,  48  Ohio  St.  177,  26  N.  E.  979,  29  Am.  St.  Rep.  540;  People's  Nat. 
Bank  v.  Hazard,  231  Pa.  St.  552,  80  Atl.  1094;  Trauck  v.  Hill  (Pa.),  13  Atl.  937; 
Citizens'  Trust  &  Savings  Bank  v.  Stackhouse  (S.  C),  74  S.  E.  977;  Lynchburg 
Nat.  Bank  v.  Scott,  91  Va.  654,  22  S.  E.  487,  50  Am.  St.  Rep.  860,  approving 
text;  Hutchins  v.  Langley,  27  App.  Cas.  (D.  C),  234.  See  also  ante,  §  198.  With- 
out notice  that  it  was  tainted  with  usury.    American  Savings  Bank  &  Trust  Co.  v. 


§  769  RIGHTS   OF   A   BONA   FIDE    HOLDER  887 

nally,^  or  that  the  consideration  has  failed/  or  was  subsequently  re- 

Helgesen,  64  Wash.  54,  116  Pac.  837.  Where  notes  were  conditionally  delivered 
to  the  payee,  the  maker  cannot  be  heard  to  say,  as  against  an  innocent  purchaser, 
that  the  notes  were  never  executed  because  not  delivered  to  the  payee.  Goodwin 
&  McFarland  v.  Burton  (Tex.  Civ.  App.),  118  S.  W.  587.  The  rule  that  mort- 
gages and  trust  deeds  are  not  assignable  so  as  to  vest  the  title  freed  from  any 
defense  which  the  maker  has  against  the  original  mortgagee  or  grantee,  has  no 
application  to  the  rights  of  an  innocent  holder  of  negotiable  promissory  notes  to 
secure  which  such  mortgage  or  trust  deed  is  executed;  the  legal  right  to  proceed 
upon  the  notes  and  have  a  judgment  at  law  is  independent  of  any  lien  created  by 
mortgage  or  trust  deed.  ZoUman  v.  Jackson  Trust  &  Savings  Bank,  238  111.  290, 
87  N.  E.  297.  Where  post  dated  checks  were  deposited  in  a  bank  to  the  credit  of  a 
certain  person  in  the  usual  course  of  business,  and  the  bank  took  them  in  good 
faith  before  they  were  overdue,  and  paid  full  value  for  them,  and  had  no  notice  of 
any  alleged  equities  between  the  drawer  and  the  person  for  whom  they  were 
deposited,  the  checks  were  unaffected  in  the  hands  of  the  bank  by  the  equities. 
Symonds  v.  Riley,  188  Mass.  470,  74  N.  E.  926.  If  a  party  make  a  contract  in 
such  a  manner  as  is  authorized  by  law,  he  has  a  right  to  object  to  being  bound  by 
any  other;  and  so,  a  bona  fide  holder  before  maturity  is  allowed  to  receive  the 
genuine  contract,  discharged  from  any  equities  attaching  to  the  contract  itself,  as 
between  the  original  parties,  but  he  cannot  get  a  contract  where  none  was  made. 
Max  Simons  &  Co.  v.  McDowell,  125  Ga.  203,  53  S.  E.  1031,  as  to  sureties  on  a 
note  which  had  been  altered,  the  court  holding  that  a  change  in  the  terms  of  the 
contract  releases  the  surety  from  liability  as  against  any  person. 

4.  See  ante,  §  165  et  seq.,  and  post,  §  810  et  seq.;  Gee  v.  Saunders,  66  Tex.  333; 
Mader  v.  Cool,  14  Ind.  App.  299,  42  N.  E.  945,  56  Am.  St.  Rep.  304;  Ellison  v. 
Simmons,  6  Pen.  (Del.),  200,  65  Atl.  591;  Parr  v.  Erickson,  115  Ga.  873,  42 
S.  E.  240;  Saul  v.  Southern  Seating,  etc.,  Co.,  6  Ga.  App.  843,  65  S.  E.  1065;  Jeffer- 
son Bank  v.  Merchants'  Refrigerating  Co.,  236  Mo.  407,  139  S.  W.  545. 

5.  Bothell  V.  Fletcher  &  Strobaugh,  94  Ark.  100,  125  S.  W.  645;  Reynolds  v. 
Roth,  61  Ark.  317,  33  S.  W.  105;  Parsons  v.  Parsons,  17  Colo.  App.  154,  67  Pac. 
345;  Morgan  v.  Cedar  Rapids  Nat.  Bank,  7  Ga.  App.  699,  67  S.  E.  1048;  Simmons 
v.  Council,  5  Ga.  App.  386,  63  S.  E.  238;  Midland  Steel  Co.  v.  Citizens'  Nat. 
Bank,  34  Ind.  App.  107,  72  N.  E.  290;  Cover  v.  Myers,  75  Md.  406,  23  Atl.  850, 
32  Am.  St.  Rep.  394;  Grace  Methodist  Episcopal  Church  v.  Rickards,  16  Mont. 
70,  40  Pac.  73;  Tradesman's  Nat.  Bank  v.  Curtis,  167  N.  Y.  194,  60  N.  E.  429,  52 
L.  R.  A.  430;  Steward  v.  Commonwealth  Nat.  Bank  (Okl.),  119  Pac.  216;  Brown 
v.  Feldwert,  46  or  363,  80  Pac.  414;  McLaughlin  v.  Braddy,  63  S.  C.  433,  41  S.  E. 
523,  90  Am.  St.  Rep.  681;  McCormick  v.  Kampman,  102  Tex.  215,  115  S.  W.  24; 
Gee  v.  Saunders,  supra;  Smith  Bros.  v.  Flanders  (Tex.  Civ.  App.),  122  S.  W.  80. 
Where  the  consideration  of  a  negotiable  promissory  note  was  certain  services  to  be 
performed  by  the  payee  to  the  maker,  failure  of  performance  of  the  services  was 
no  defense  to  an  action  on  the  note  brought  by  a  purchaser  thereof  for  value  and 
before  its  maturity,  though  he  knew  of  the  consideration,  but  not  of  its  failure, 
when  he  purchased.  Wilensky  v.  Morrison,  122  Ga.  664,  50  S.  E.  472.  Where  the 
plaintiff's  right  of  recovery  depends  upon  the  nonpayment  of  a  promissory  note 
when  due,  which  note  is  secured  by  a  chattel  mortgage  on  the  property  in  ques- 
tion, and  the  plaintiff  is  an  indorsee  of  the  note,  and  assignee  of  the  mortgage,  the 


RIGHTS   OF   A   BONA   FIDE   HOLDER  §  769 

leased  ^  or  paid/  and  even  though  it  was  originally  obtained  by  fraud, 
theft,  or  robbery.^ 

defendant  may  prove  an  entire  or  partial  failure  of  the  consideration  of  the  note, 
(1)  if  the  note  was  transferred  after  maturity;  or  (2)  if  the  plaintiff  had  notice  of 
the  defense  before  the  transfer  of  the  note.  Dewey  v.  Bobbitt,  79  Kan.  505,  100 
Pac.  77. 

6.  Schoet  V.  Houghlin,  50  Cal.  528;  Palmer  v.  Marshall,  60  111.  289;  Cover  v. 
Myers,  75  Md.  406,  23  Atl.  850,  32  Am.  St.  Rep.  394. 

7.  Swall  V.  Clarke,  51  Cal.  227;  Ward  v.  Howard,  88  N.  Y.  74.  Or  that  a  note 
was  the  property  of  a  trust  estate,  when  the  trust  did  not  appear  upon  the  face  of 
the  note.  See  BarroU  v.  Foreman,  86  Md.  675,  39  Atl.  273.  See  also  Barroll  v. 
Foreman,  88  Md.  188,  40  Atl.  883;  Fogg  v.  School  District,  75  Mo.  App.  159, 
text  cited. 

8.  See  chapter  on  Consideration,  §  165  et  seq;  Brown  v.  Spofford,  95  U.  S. 
(5  Otto)  481;  Goodman  v.  Simonds,  20  How.  343;  Seymour  v.  Malcom,  etc., 
Lumber  Co.,  7  C.  C.  A.  593,  58  Fed.  957;  Bothell  v.  Fletcher  &  Stobaugh,  94 
Ark.  100,  125  S.  W.  648;  King  v.  Mecklenburg,  17  Colo.  App.  312,  68  Pac.  984; 
Van  Windisch  v.  Klaus,  46  Conn.  433;  Journal  Printing  Co.  v.  Maxwell,  1  Penne- 
will,  511,  43  Atl.  615;  Grooms  v.  Olliff  &  Co.,  93  Ga.  789,  20  S.  E.  655;  Keenan  v. 
Blue,  240  111.  177,  88  N.  E.  553;  Gumbel  &  Co.  v.  Ryan,  118  La.  606,  43  So.  251; 
Ogden  V.  Marchaud,  29  La.  61;  Taylor  v.  Bowles,  28  La.  295;  Burrill  v.  Parsons, 
71  Me.  282;  Hobart  v.  Penny,  70  Me.  248;  Cover  v.  Myers,  75  Md.  406,  23  Atl. 
850,  32  Am.  St.  Rep.  394;  Robertson  v.  Coleman,  141  Mass.  231;  Kinyon  v. 
Wohlford,  17  Minn.  240;  Bank  of  Newton  v.  Simmons  (Miss.),  49  So.  616;  Reeves 
V.  Letts,  143  Mo.  App.  196,  128  S.  W.  246;  National  Bank  of  Rolla  v.  Romine, 
136  Mo.  App.  57,  117  S.  W.  104;  Franklin  Savings  Bank  v.  Heusman,  1  Mo. 
App.  336;  First  Nat.  Bank  v.  American  Exch.  Nat.  Bank,  170  N.  Y.  88,  62  N.  E. 
1908;  Belden  v.  Burke,  147  N.  Y.  542,  42  N.  E.  261;  Central  Bank  v.  Hammett, 
50  N.  Y.  159;  Belmont  Branch  Bank  v.  Hoge,  35  N.  Y.  65;  First  Nat.  Bank  v. 
American  Exch.  Nat.  Bank,  49  App.  Div.  349,  63  N.  Y.  S.  58;  Johnson  v.  Way, 
27  Ohio  St.  374;  Wisegarver  v.  Yinger  (Tex.  Civ.  App.),  128  S.  W.  1190,  denying 
rehearing  in  (Tex.  Civ.  App.),  122  S.  W.  925;  Hames  v.  Stroud  (Tex.  Civ.  App.), 
112  S.  W.  775;  Scandinavian  American  Bank  v.  Johnson,  63  Wash.  187,  115  Pac. 
102.  A  warehouseman  cannot  show  that  a  receipt  was  issued  by  mistake  as  against 
a  bona  fide  purchaser  (Star  Compress  &  Warehouse  Co.  v.  Meridian  Cotton  Co., 
87  Miss.  228,  39  So.  417),  nor  that  it  was  issued  in  fraud.  Farmer  v.  Etheridge 
(Ky.),  69  S.  W.  761.  The  rights  of  a  bona  fide  indorser  for  accommodation,  of  a 
note  obtained  by  fraud,  are  not  affected  by  the  fact  that  he  pays  the  note  after 
notice  of  the  fraud,  since  that  is  what  the  law  compels  him  to  do.  He  stands  upon 
the  footing  of  a  bona  fide  holder  without  notice.  Beckwith  v.  Webber,  44  N.  W. 
331.  But  otherwise  if  he  were  a  party  to  the  fraud.  Erie  Boot  &  Shoe  Co.  v. 
Eichenlaub  (Pa.),  17  Atl.  889.  In  Mississippi,  the  law  merchant  is  changed  by  the 
statute  so  far  as  to  allow  the  promisor  to  make  any  defense  existing  before  notice 
of  assignment  against  a  remote  holder  by  indorsement  before  maturity  which  he 
could  have  made  against  the  payee.  Etheridge  v.  Gallagher,  55  Miss.  458.  In 
Clark  V.  Tanner,  100  Ky.  275,  38  S.  W.  11,  it  was  held  that  the  notes  sued  on, 
being  under  the  laws  of  Tennessee  where  the  contract  was  made  upon  the  footing 
of  an  inland  bill  of  exchange,  and  having  been  before  maturity  for  a  valuable 


§  769  RIGHTS   OF   A   BONA   FIDE   HOLDER  889 

Second.  That  the  possession  of  a  negotiable  instrument  payable  to 
bearer,  indorsed  in  blank,  or  specially  indorsed  to  the  holder,  carries 
title  with  it  to  the  holder.  The  possession  and  title  are  one  and  in- 
separable.^ "An  individual  negotiating  for  the  purchase  of  a  bill  or 
note  from  one  havmg  it  in  possession  and  whose  name  is  upon  it,  must 
assume  that  the  title  of  the  holder  as  well  as  the  liability  of  all  prior 
parties  is  precisely  that  indicated  by  the  paper  itself."  ^° 

Third.  That  the  burden  of  proof  lies  on  the  person  who  assails  the 
right  claimed  by  the  party  in  possession. ^^ 

Fourth.  That  suspicion  of  defeat  of  title  or  knowledge  of  circum- 
stances which  would  excite  such  suspicion  in  the  mind  of  a  prudent 
man,  or  gross  negligence  on  the  part  of  the  taker  at  the  time  of  the 
transfer,  will  not  defeat  his  title. 

But  these  propositions  are  subject  to  the  following  limitations  or 
qualifications:  First.  That  when  it  was  shown  by  the  defendant  that 
the  instrument  originated  in  fraud  or  illegality,  the  burden  of  proof 
will  be  shifted  to  the  holder,  and  he  must  then  show  that  he  is  a  bona 
fide  holder  for  value.  ^^  Second.  Wlien  it  is  shown  that  the  instrument 
was  given  for  a  consideration  which  by  statute  is  declared  void,  the 
original  taint  follows  it,  and  it  is  void  in  the  hands  of  every  holder, 
however  innocent. ^^  And  Third.  That  no  party  can  enforce  a  nego- 
tiable instrument  if  it  be  not  genuine,  or  if  it  be  executed  by  a  party 
incapable  of  entering  into  the  contract  in  which  it  was  given.  ^* 

Let  us  consider  now  these  principles  in  their  order.  In  some  re- 
consideration transferred  to  appellant  without  notice  of  any  fraud,  are  not  af- 
fected by  any  fraud  as  between  the  original  parties.  Where  notes  procured  by 
fraud  never  became  bills  of  exchange,  the  maker  can  present  the  defense  that 
they  were  so  procured  as  against  a  bona  fide  purchaser  of  the  notes,  unless  by  some 
act  he  has  estopped  himself  to  make  such  defense  subsequent  to  the  original 
execution  and  delivery  thereof  to  the  purchaser.  Deppen  v.  German-American 
Title  Co.  (Ky.),  70  S.  W.  868,  rehearing  refused  (Ky.),  72  S.  W.  768. 

9.  See  post,  §  812;  Texas  Banking  Co.  v.  Turnley,  61  Tex.  369,  citing  the  text; 
Allen  V.  Harris,  79  Mo.  App.  490,  text  cited. 

10.  Auten  v.  United  States  Nat.  Bank,  174  U.  S.  144,  19  Sup.  Ct.  Rep.  628. 

11.  See  post,  §  1503;  Johnson  v.  Cobb,  100  Ga.  139,  28  S.  E.  72.  Held,  in  this 
case  that  the  title  of  the  holder  of  a  promissory  note  cannot  be  inquired  into 
unless  it  appears  that  the  inquiry  would  in  some  way  protect  the  defendant  or 
let  in  some  meritorious  defense. 

12.  See  ante,  §  166;  Knowlton  v.  Schultz,  6  N.  Dak.  417,  71  N.  W.  550;  Wilson 
V.  Pauly,  18  C.  C.  A.  475,  72  Fed.  129;  Le  Tourneux  v.  GiUiss,  1  Cal.  App.  546,  82 
Pac.  627;  Tamlyn  v.  Peterson,  15  N.  D.  488,  107  N.  W.  1081. 

13.  See  ante,  §  197;  post,  §  807.  Hurlburt  &  Sons  v.  Straub,  54  W.  Va.  303,  46 
S.  E.  163. 

14.  Post,  §  807. 


ggO  RIGHTS   OF   A   BONA   FIDE   HOLDER  §  770 

spects  they  are  so  interwoven  with  each  other  that  it  is  impossible  to 
sever  and  disconnect  them.  But  we  will  endeavor  to  present  as 
nearly  as  practicable,  under  separate  heads,  the  several  elements 
which  must  combine  to  panoply  with  the  full  protection  of  the  law 
the  party  who  acquires  a  negotiable  instrument.  And  first  we  will 
endeavor  more  particularly  to  define  who  is  a  bona  fide  purchaser  or 
holder  for  value. 

Under  Negotiable  Instrument  statute.— VndeT  the  provisions  of  the 
statute,  ^^  one  who  is  a  bona  fide  holder  for  value  in  due  course,  is  not 
affected  by  defense  available  to  prior  parties  among  themselves  of 
want  or  failure  of  consideration,^^  fraud, ^^  invalidity, ^^  usury, ^^  or  of 
nondelivery.  ^° 


SECTION   I 

BONA   FIDES  AND   GROSS   NEGLIGENCE 

§  770.  In  the  first  place,  the  holder,  in  order  to  be  entitled  to  pro- 
tection against  offsets  and  equities  and  defenses  based  upon  frauds, 
pleaded  by  prior  parties,  must  have  acquired  the  paper  in  good  faith 

15.  Appendix,  sees.  16,  23,  28,  52-57,  66.  By  the  definition  established  in  the 
act,  a  "holder"  of  a  negotiable  instrument  payable  to  order,  must  be  a  holder  by 
indorsement.  Mayers  v.  McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111  Am.  St. 
Rep.  879. 

16.  National  Bank  of  Commerce  in  St.  Louis  v.  Morris,  156  Mo.  App.  43,  135 
S.  W.  1008. 

17.  White  V.  Dodge,  187  Mass.  449,  73  N.  E.  549.  One  who  purchased  a  draft 
for  value  and  without  notice  of  any  infirmity  in  the  title  to  the  instrument  in  the 
person  who  procured  its  issue,  has  good  title  and  can  recover  against  the  drawer 
without  regard  to  the  nature  of  the  fraud  by  which  its  issuance  was  procured. 
Jamieson  &  McFarland  v.  Heim,  43  Wash.  153,  86  Pac.  165.  Where  a  check  was 
issued  through  fraud  on  the  maker,  an  innocent  holder  for  value  may  recover 
thereon  upon  proof  of  the  maker's  signature,  as  the  maker  is  estopped  from  deny- 
ing the  existence  of  the  payee  or  his  capacity  to  indorse.  Boles  v.  Harding,  201 
Mass.  103,  87  N.  E.  481. 

18.  Melton  v.  Pensacola  Bank  &  Trust  Co.,  190  Fed.  126. 

19.  Wood  V.  Babbitt,  149  Fed.  818;  Klar  v.  Kostink,  119  N.  Y.  S.  683,  65  Misc. 
199;  Broadway  Trust  Co.  v.  Manheim,  95  N.  Y.  S.  93,  47  Misc.  415.  The  defense 
of  usury  is  available  in  an  action  by  a  state  bank's  receiver  of  notes  purchased  by 
it  from  the  holder,  with  knowledge  that  the  notes  were  void,  as  between  the  orig- 
inal parties,  because  usurious  interest  was  included  therein.  Schlesinger  v.  Leh- 
maier,  191  N.  Y.  69,  83  N.  E.  657,  16  L.  R.  A.  (N.  S.),  626,  123  Am.  Rep.  591. 

20.  Greeser  v.  Sugarman,  76  N.  Y.  S.  922,  37  Misc.  799. 


§  771  BONA   PIDES   AND    GROSS   NEGLIGENCE  891 

from  his  predecessor.  "Fraud  cuts  down  everything,"  ^^  and  al- 
though the  holder  may  pay  value,  yet,  if  his  acquisition  of  the  paper 
be  in  any  respect  fraudulent — as  where  it  is  made  or  transferred  to 
give  him  preference  over  other  parties  to  a  compromise  of  creditors — 
he  cannot  claim  the  position  of  a  bona  fide  holder.^^  In  pleading, 
mala  fides  must  be  distinctly  alleged,  and  an  allegation  that  the 
party  is  not  the  bona  fide  holder  is  not  sufficient.  ^^  It  is  the  bona  fides 
of  the  holder  alone  that  is  to  be  considered,  not  that  of  his  transferrer, 
and  the  fact  that  the  payee  had  an  interest  to  part  with  the  paper,  is 
not  a  circumstance  which  affects  the  rights  of  his  indorsee.^^ 

§  771.  Early  English  rule  as  to  bona  fides. — The  earlier  English 
authorities  regarded  the  bona  fides  of  the  acquisition  of  a  negotiable 
instrument  as  the  crucial  test  by  which  it  was  determined  whether  or 
not  the  party  so  acquiring  it  by  purchase  or  discount  was  entitled  to 
stand  upon  a  better  footing  than  his  transferrer,  and  be  entitled  to 
full  protection  against  equitable  or  other  defenses  which  would  other- 
wise have  been  valid  against  him.  In  a  case  before  Lord  Kenyon, 
where  it  appeared  that  a  bill  had  been  lost,  and  advertised  in  the  news- 
papers, and  had  been  discounted  for  one  who  found  it,  and  fraud- 
ulently offered  it,  it  was  contended  that  the  banker  could  not  recover 
without  using  due  diligence  in  inquiring  into  the  circumstances  as  well 
respecting  the  bill  as  of  the  person  who  offered  to  discount  it.  But 
Lord  Kenyon  said:  ^^  "I  think  the  point  in  this  case  has  been  settled 
by  the  case  of  Miller  v.  Race,  in  Burrow.  If  there  was  any  fraud  in 
the  transaction,  or  if  a  bona  fide  consideration  had  not  been  paid  for 
the  bill  by  the  plaintiffs,  to  be  sure  they  could  not  recover;  but  to 
adopt  the  principle  of  the  defense  to  the  full  extent  stated  would  be 
at  once  to  paralyze  the  circulation  of  all  the  paper  in  the  country 
and  with  it  all  its  commerce.  The  circumstance  of  the  bill  having 
been  lost,  might  have  been  material,  if  they  could  bring  knowledge 
of  that  fact  home  to  the  plaintiffs.  The  plaintiffs  might  or  might  not 
have  seen  the  advertisement,  and  it  would  be  going  great  lengths  to 

21.  Rogers  v.  Hadley,  32  L.  J.  Exch.  248;  Hammill  v.  First  Nat.  Bank,  14 
Colo.  1,  22  Pac.  1094. 

22.  See  chapter  VII,  on  Consideration,  ante,  §  193;  Brook  v.  Teague,  52  Kan. 
119,  34  Pac.  347;  Bunzel  v.  Maas  &  Schwarz,  116  Ala.  68,  22  So.  568;  Anderson  & 
Co.  V.  Stapel,  80  Mo.  App.  115. 

23.  Uther  v.  Rich,  10  Ad.  &  El.  784. 

24.  Helmer  v.  Krolick,  36  Mich.  373;  Farthing  v.  Dark,  111  N.  C.  243,  16 
S.  E.  337,  citing  text. 

26.  Lawson  v.  Weston,  4  Esp.  56  (1801). 


892  RIGHTS   OF   A   BONA   FIDE    HOLDER  §§  772,  773 

say  that  a  banker  was  bound  to  make  inquiry  concerning  every  bill 
brought  to  him  to  discount;  it  would  apply  as  well  to  a  bill  for  £10 
as  for  £10,000."  ^e 

§  772.  Change  of  rule  in  England;  "  suspicious  circumstances." — 
For  a  long  period  this  doctrine  remained  the  undoubted  law  of  Eng- 
land, until,  in  the  case  of  Gill  v.  Cubitt,  Lord  Chief  Justice  Abbott 
(Lord  Tenterden)  laid  down  the  principle  that,  although  the  holder 
had  given  value  for  the  bill  or  note,  yet,  if  he  took  it  under  circum- 
stances which  ought  to  have  excited  the  suspicions  of  a  prudent  and 
careful  man,  he  could  not  recover;  and  while  professing  "unfeigned 
reverence"  for  Lord  Kenyon,  from  whom  the  previously  accepted 
view  had  emanated,  he  declared  that  he  could  not  regard  it  as  the 
correct  one.^' 

§  773.  This  cautious  ruling  (as  observed  by  Read,  J.,  in  a  well- 
considered  case  in  Pennsylvania),^^  although  carped  at  and  quarreled 
with,  remained  the  law  for  ten  years,  when,  as  it  seems,  the  discredit 
of  Bank  of  England  bills  on  the  European  continent,  and  the  com- 
plaints of  the  mercantile  community,  led  to  a  modification  of  the 
doctrine  of  Chief  Justice  Abbott.  And  Lord  Dermian,  C.  J.,  told 
the  jury,  in  a  case  where  it  was  contended  that  the  plaintiff  had  not 
used  due  caution,  and  had  taken  the  bill  under  circumstances  that 
ought  to  have  excited  the  suspicions  of  a  prudent  man,  to  find  for 
the  plaintiff,  if  they  thought  that  he  had  not  been  guilty  of  gross 
negligence.  ^^ 

26.  See  Miller  v.  Race,  1  Burr.  452;  Skinner  v.  Raynor,  95  Iowa,  536,  64  N.  W. 
601. 

27.  Gill  V.  Cubitt,  3  B.  &  C.  466  (1824),  Bayley  and  Holroyd,  JJ.,  concur- 
ring; Strange  v.  Wigney,  6  Bing.  677  (19  Eng.  C.  L.)  (1830);  Snow  v.  Peacock, 
2  Car.  &  P.  215  (1825);  Beckwith  v.  Corrall,  2  Car.  &  P.  259  (1826). 

28.  See  Phelan  v.  Moss,  67  Pa.  St.  63  (1870).  Lord  Campbell  says  in  his 
"Lives  of  the  Chief  Justices,"  vol.  Ill,  p.  310  (quoted  in  2  Parsons  on  Notes  and 
Bills,  273),  that  Lord  Tenterden's  rule  died  with  its  author.  "It  was  soon  much 
carped  at;  some  judges  said  that  fraud  and  gross  negligence  were  terms  known 
to  the  law,  but  of  'the  circumstances  which  ought  to  excite  suspicion,  there  was 
no  definition  in  Coke  or  in  Cowell;'  and  the  complaint  of  bill  brokers  resounded 
from  the  Royal  Exchange  to  Westminster  Hall,  that  they  could  no  longer  carry 
on  their  trade  with  comfort  or  safety." 

29.  Crook  v.  Jadis,  5  B.  &  Ad.  909  (27  Eng.  C.  L.)  (1834),  Lord  Denman, 
Ch.  J.:  "I  used  the  expression  gross  negligence  advisedly,  because  I  thought 
nothing  less  ought  to  have  prevented  the  plaintiff  from  recovery  on  the  bill." 
Littledale,  J. :    "There  must  be  gross  negligence,  at  least,  in  a  case  like  the  present, 


§  774  BONA   FIDES   AND   GROSS   NEGLIGENCE  89^ 

§  774.  Restoration  of  early  rule  in  England. — Gross  negligence 
was  thus  established  as  the  test  of  the  holder's  right  to  recover.  But 
it  did  not  long  remain  so.  For,  two  years  later,  the  Court  of  King's 
Bench,  which  seems  to  have  been  impatient  under  the  restriction 
which  even  that  test  imposed  on  the  circulation  of  negotiable  instru- 
ments, decided  that,  while  gross  negligence  might  be  evidence  tending 
to  show  mala  fides,  and  as  such  admissible,  it  did  not  in  itself  amount 
to  proof  of  mala  fides,  and  was  not  sufficient  to  deprive  the  holder  of 
his  right  to  recover.^"  Thus  the  bona  fides  of  the  purchaser  or  holder 
is  resorted  to  as  the  test  of  his  right  to  recover,  and,  after  a  wide  de- 
parture, the  law  re-established  upon  the  original  basis  established  by 
Lord  Kenyon.  And  Lord  Denman,  C.  J.,  said:  "The  question  I 
offered  to  submit  to  the  jury  was  whether  the  plaintiff  had  been 
guilty  of  gross  negligence  or  not.  I  believe  we  are  all  of  opinion  that 
gross  negligence  only  would  not  be  a  sufficient  answer  where  the  party 
has  given  consideration  for  the  bill.  Gross  negligence  may  be  evidence 
of  mala  fides,  but  it  is  not  the  same  thing.  We  have  shaken  off  the 
last  remnant  of  the  contrary  doctrine.  Where  the  bill  has  passed 
to  the  plaintiff  without  any  proof  of  bad  faith  in  him,  there  is  no 
objection  to  his  title." 

The  rule  thus  finally  re-established  in  England  has  been  followed 
and  approved  there  in  subsequent  cases,^^  and  has  met  with  the 
approbation  of  most  all  of  the  writers  on  negotiable  instruments,  on 
the  ground  that  it  relieves  them  of  the  clog  which  the  contrary  doc- 
trine imposes  on  their  negotiability,  and  presents  at  once  the  clear 
and  intelligible  question  of  bona  fides  for  the  consideration  of  the  jury; 
whereas,  to  leave  it  to  a  jury  to  determine  as  to  the  degree  of  caution 
which  a  prudent  man  must  exercise  on  taking  such  an  instrument, 
would  lead  to  much  perplexity  and  to  frequent  injustice.^^ 

to  deprive  a  party  of  his  right  to  recover  on  a  bill  of  exchange."  Taunton,  J.: 
"I  think  the  case  was  properly  submitted  to  the  jury.  I  cannot  estimate  the 
degree  of  care  which  a  prudent  man  should  take.  The  question  put  by  the  Lord 
Chief  Justice,  whether  the  plaintiff  was  guilty  of  gross  negligence,  was  more 
definite  and  appropriate."  Patteson,  J.:  "I  never  could  understand  what  is 
meant  by  a  party's  taking  a  bill  under  circumstances  which  ought  to  have  excited 
the  suspicion  of  a  prudent  man."    Backhouse  v.  Harrison,  5  B.  &  Ad.  1098  (1834). 

30.  Goodman  v.  Harvey,  4  Ad.  &  El.  870  (1836). 

31.  Raphael  v.  Bank  of  England,  33  Eng.  L.  &  Eq.  278  (1855);  Arbouin  v. 
Anderson,  1  Ad.  &  El.  (N.  S.)  498  (1841);  Uther  v.  Rich,  10  Ad.  &  El.  784  (1839); 
Easeley  v.  Crockford,  10  Bing.  243  (25  Eng.  C.  L.  116)  (1833);  McCarty  &  Co. 
v.  Louisville  Banking  Co.,  100  Ky.  4,  37  S.  W.  144;  Owsley  &  Co.  v.  Louisville 
Banking  Co.,  100  Ky.  4,  37  S.  W.  144. 

32.  Story  on  Notes,  §§  197,  382;  Story  on  Bills,  §  416;  Edwards  on  Bills,  506; 


894  RIGHTS   OF   A   BONA   FlDli   HOLDER  §  775 

§  775.  American  authorities. — In  the  United  States  the  de- 
cisions of  the  courts  have  varied,  some  following  the  rule  declared 
in  Gill  V.  Cubitt,^^  but  by  far  the  greater  number  concurring  in  the 
principle  which  has  been  finally  established  as  the  law  of  England.''^ 

2  Parsons  on  Notes  and  Bills,  277-279.  See  preface  of  Chitty  &  Hulme  to  Chitty 
on  Bills;  Bunzel  v.  Mass  &  Schwarz,  116  Ala.  68,  22  So,  568;  Marshall  Nat.  Bank 
V.  O'Neal,  11  Tex.  Civ.  App.  640,  34  S.  W.  344,  citing  text;  Atlas  Nat.  Bank  v. 
Holm,  19  C.  C.  A.  94,  71  Fed.  489. 

33.  Simmons  Nat.  Bank  v.  Dilley  Foundry  Co.  (Ark.),  130  S.  W.  162;  Hamilton 
V.  Marks,  52  Mo.  81  (overruled),  Adams,  J.,  saying:  "We  think  the  old  doctrine 
the  better  rule,  and  is  supported  by  the  weight  of  authority  and  reason,  both  in 
England  and  America" ;  Hall  v.  Hale,  8  Conn.  336  (overruled) ;  Russell  v.  Hadduck, 

3  Gilm.  233  (overruled);  McConnell  v.  Hodson,  2  Gilm.  640;  Adkins  v.  Blake, 
2  J.  J.  Marsh.  40;  Lapice  v.  Clifton,  17  La.  152;  Nicholson  v.  Patton,  13  La. 
(O.  S.)  216;  Varin  v.  Hobson,  8  La.  50;  Marsh  v.  Small,  3  La.  Ann.  402;  Lanfear 
V.  Blosman,  1  La.  Ann.  148;  Ayer  v.  Hutchins,  4  Mass.  370  (overruled);  Cone 
V.  Baldwin,  12  Pick.  545;  Buckner  v.  Jones,  1  Mo.  App.  538;  Edwards  v.  Thomas, 
12  Pick.  545;  Buckner  v.  Jones,  1  Mo.  App.  538;  Edwards  v.  Thomas,  2  Mo.  App. 
283  (overruled) ;  Wiggins  v.  Bush,  12  Johns.  306  (overruled) ;  Holbrock  v.  Mix,  1 
E.  D.  Smith,  154;  Pringle  v.  Phillips,  5  Sandf.  157  (now  overruled,  see  below); 
Beltzhoover  v.  Blackstock,  3  Watts,  20  (now  overruled);  Union  Nat.  Bank 
of  Columbus,  Ohio  v.  Mailloux  (S.  D.),  132  N.  W.  168;  Rochford  v.  Barrett, 
22  S.  D.  83,  115  N.  W.  522;  Mee  v.  Carlson,  22  S.  D.  365,  117  N.  W.  1033;  Hunt 
V.  Sanford,  6  Yerg.  387;  Ryland  v.  Brown,  2  Head,  273;  Merrill  v.  Duncan,  7 
Heisk.  164;  Pierson  v.  Huntington,  82  Vt.  482,  74  Atl.  88,  29  L.  R.  A.  (N.  S.) 
695,  137  Am.  St.  Rep.  1029;  Limeric  Bank  v.  Adams,  70  Vt.  132,  40  Atl.  166; 
Capital  Savings  Bank  &  Trust  Co.  v.  Montpelier  Savings  Bank  &  Trust  Co., 
77  Vt.  189,  59  Atl.  827;  Bromley  v.  Hawley,  60  Vt.  46,  12  Atl.  220;  Hill  v.  Murray, 
56  Vt.  170;  Savings  Bank  v.  National  Bank,  53  Vt.  82;  Gould  v.  Stevens,  43  Vt. 
125,  5  Am.  St.  Rep.  265;  Roth  v.  Colvin,  32  Vt.  125;  Sanford  v.  Norton,  14  Vt. 
234.  In  Johnson  County  Sav.  Bank  v.  Rapp,  47  Wash.  30,  91  Pac.  382,  it  was  held 
that  in  an  action  by  a  bank  on  indorsed  drafts,  which  had  been  accepted  on  a 
purchase  of  goods  which  proved  utterly  worthless,  the  acceptor  may  show  a 
similar  transaction  with  the  bank  as  tending  to  show  knowledge  on  the  part  of 
the  bank  of  the  character  of  the  paper  they  were  purchasing.  Where  the  cir- 
cumstances show  that  the  purchaser  refrained  from  making  inquiry  lest  he  should 
thereby  become  acquainted  with  the  transaction,  out  of  which  the  note  origi- 
nated, he  cannot  occupy  the  position  of  a  holder  in  good  faith  without  notice. 
State  Bank  of  Greentown  v.  Lawrence  (Ind.),  96  N.  E.  947.  Under  a  statute 
(Civil  Code  1910,  §  4291)  declaring  that  "any  circumstances  which  would  place 
a  prudent  man  upon  his  guard,  in  purchasing  negotiable  paper,  shall  be  sufficient 
to  constitute  notice  to  a  purchaser  of  such  paper  before  it  is  due,"  the  character 
and  sufficiency  of  the  circumstances  in  a  particular  case  which  should  place  a 
prudent  man  on  his  guard  are  to  be  determined  as  questions  of  fact  by  the  jury, 
and  not  by  the  judge  as  questions  of  law.    Park  v.  Buxton  (Ga.  App.),  73  S.  E.  557. 

34.  Swift  V.  Smith,  102  U.  S.  (12  Otto)  444;  Shaw  v.  Railroad  Co.,  101  U.  S. 
(11  Otto)  564;  Murry  v.  Lardner,  2  Wall.  110;  Swift  v.  Tyson,  16  Pet.  1;  Goodman 


§  775  BONA   FIDES   AND    GROSS   NEGLIGENCE  895 

Chancellor  Kent,  in  his  Commentaries,  embodies  the  views  taken  in 
Gill  V.  Cubitt;  but  at  that  time  the  present  prevailing  doctrine  had 

V.  Simonds,  20  How.  367;  Bank  of  Pittsburg  v.  Neal,  22  How.  96;  Reilly  v. 
McKinnon,  159  Fed.  78;  Union  Nat.  Bank  v.  Neill,  149  Fed.  711,  10  L.  R.  A. 
(N.  S.)  426;  First  Nat.  Bank  of  Council  Bluffs  v.  Moore,  148  Fed.  953;  National 
Salt  Co.  V,  Ingraham,  143  Fed.  805;  Bank  of  Sherman  v.  Apperson,  4  Fed.  25; 
Sinkler  v.  Siljan,  136  Cal.  356,  68  Pac.  1024;  Meyer  v.  Lovdal,  6  Cal.  App.  369, 
92  Pac.  322;  Merchants'  Bank  v.  McClelland,  9  Colo.  610;  Credit  Co.  v.  Howe 
Mach.  Co.,  54  Conn.  357;  Rowland  v.  Fowler,  47  Conn.  347;  Craft's  Appeal, 
42  Conn.  146  (but  see  Skidmore  v.  Clark,  47  Conn.  20,  as  to  purchaser's  suspicion 
being  evidence  of  knowledge  of  fraud.  Brush  v.  Scribner,  11  Conn.  388;  Morrison 
V.  Hart,  122  Ga.  660,  50  S.  E.  471;  Mathews  v.  Poythress,  4  Ga.  287;  Third  Na- 
tional Bank  of  Columbus  v.  Poe,  5  Ga.  App.  113,  62  S.  E.  826;  Walden  v.  Downing 
Co.,  4  Ga.  App.  534,  61  S.  E.  1127  (but  as  to  Georgia,  see  effect  of  statute  re- 
ferred to  in  preceding  note).  Winter  v.  Hutchins,  20  Idaho  749,  119  Pac.  883; 
Vaughn  v.  Johnson,  20  Idaho  669,  119  Pac.  879,  37  L.  R.  A.  (N.  S.)  816;  Park 
V.  Brandt,  20  Idaho  660,  119  Pac.  877;  Kavanagh  v.  Bank  of  America,  239  111. 
404,  88  N.  E.  171;  Bradwell  v.  Pryor,  221  111.  602,  77  N.  E.  1115;  Spreeves  v. 
Allen,  79  111.  553;  Comstock  v.  Hannah,  76  111.  530;  First  Nat.  Bank  of  Litch- 
field V.  Cox,  140  111.  App.  98;  Howell  v.  Merchants'  T.  &  S.  Co.,  134  111.  App. 
467;  NorUn  v.  Becker,  138  111.  App.  488;  Fidler  v.  Paxton,  101  111.  App.  107; 
Dewey  v.  Merritt,  106  111.  App.  156;  Batesville  Bank  v.  Lehner,  43  Ind.  App. 
457,  87  N.  E.  990;  Harris  v.  Pate,  7  Ind.  Ter.  493, 104  S.  W.  812;  Voss  v.  Chamber- 
lain, 139  Iowa  569,  117  N.  W.  269,  19  L.  R.  A.  106,  130  Am.  St.  Rep.  331;  Mont- 
rose Sav.  Bank  v.  Claussen,  137  Iowa  73,  114  N.  W.  547;  Lehman  v.  Press,  106 
Iowa,  389,  76  N.  E.  818;  Richards  v.  Munroe,  85  Iowa,  359,  52  N.  W.  339,  39 
Am.  St.  Rep.  301;  Pond  v.  Waterloo  Ag.  Works,  50  Iowa,  600;  Lane  v.  Evans, 
49  Iowa,  156;  Lake  v.  Reed,  29  Iowa,  258;  Gage  v.  Sharp,  24  Iowa,  19;  Youle  v. 
Fosha,  76  Kan.  20,  90  Pac.  1090;  Fox  v.  Bank,  30  Kan.  446,  citing  the  text; 
McCarty  &  Co.  v.  Louisville  Banking  Co.,  100  Ky.  4;  Owsley  &  Co.  v.  Louisville 
Banking  Co.,  100  Ky.  4,  37  S.  W.  144;  Wing  v.  Ford,  89  Me.  140;  Breckinridge 
V.  Lewis,  84  Me.  349;  Kellogg  v.  Curtis,  69  Me.  212;  Farrell  v.  Lovett,  68  Me. 
326;  Ebert  v.  Gitt,  95  Md.  186,  52  Atl.  900;  Citizens'  Nat.  Bank  v.  Hooper,  47 
Md.  88;  Maitland  v.  Citizens'  Nat.  Bank,  40  Md.  540;  Commercial,  etc.,  Nat. 
Bank  v.  First  Nat.  Bank,  30  Md.  11;  EUicot  v.  Martin,  6  Md.  509;  Clark  v.  Rob- 
erts, 206  Mass.  235,  92  N.  E.  461;  Savage  v.  Goldsmith,  181  Mass.  420,  63  N.  W. 
918;  Stimson  v.  Whitney,  130  Mass.  591;  Carroll  v.  Hayward,  124  Mass.  120; 
Freeman's  Nat.  Bank  v.  Savery,  127  Mass.  75;  Smith  v.  Livingston,  111  Mass. 
342;  Spooner  V.  Holmes,  102  Mass.  503;  Wyer  v.  Dorchester,  etc.,  Bank,  11  Cush. 
51;  Worcester  County  Bank  v.  Dorchester,  etc..  Bank,  10  Cush.  488;  Hakes 
v.  Thayer,  165  Mich.  476,  131  N.  W.  174;  Detroit  Nat.  Bank  v.  Union  Trust  Co., 
158  Mich.  557,  123  N.  W.  28;  Armstrong  v.  Stearns,  156  Mich.  597,  121  N.  W. 
312;  Custard  v.  Hodge,  155  Mich.  361,  119  N.  W.  583;  Davis  v.  Seeley,  71  Mich. 
210;  Rosenstein  v.  Berman,  116  Minn.  231,  133  N.  W.  792;  Park  v.  Winsor, 
115  Minn.  356,  132  N.  W.  264;  Robbins  v.  Swimburne  Printing  Co.,  91  Minn.  491, 
98  N.  W.  331,  867;  Gale  v.  Brimingham,  64  Minn.  555,  67  N.  W.  659;  Merchants' 
Nat.  Bank  v.  Hanson,  33  Minn.  40;  Brogess  Investment  Co.  v.  Vett,  142  Mo. 
560,  44  S.  W.  754,  64  Am.  St.  Rep.  567;  Mayes  v.  Robinson,  93  Mo.  121; 


SQQ  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  775 

not  been  re-established,  and  it  is  to  be  supposed  that  he  merely  in- 
corporated in  his  text  the  then  existing  decisions  of  the  English 

Edwards  v.  Thomas,  66  Mo.  483,  overruling  former  decisions;  Bank  of  Ozark 
V.  Tuttle,  144  Mo.  App.  294,  127  S.  W.  918;  Jobes  v.  Wilson,  140  Mo.  App.  281, 
124  S.  W.  548;  Reeves  v.  Letts,  143  Mo.  App.  196,  128  S.  W.  246;  Bank  of  Ozark 
V.  Hanks,  142  Mo.  App.  110,  125  S.  W.  221;  First  Nat.  Bank  v.  Leeper,  121  Mo. 
App.  688,  97  S.  W.  636;  Stewart  &  Co.  v.  Andes,  110  Mo.  App.  243,  84  S.  W.  1134; 
Bank  of  Indian  Territory  v.  First  Nat.  Bank,  109  Mo.  App.  665,  83  S.  W.  537; 
Creston  Nat.  Bank  v.  Salmon,  117  Mo.  App.  506,  93  S.  W.  288;  Wilson  v.  Paddler, 
92  Mo.  App.  335;  First  State  Bank  of  Corwith  v.  Hammond,  104  Mo.  App.  403, 
79  S.  W.  493;  Franklin  Sav.  Inst.  v.  Heinsman,  1  Mo.  App.  339;  Harrington  v. 
Butte  &  Boston  Min.  Co.,  33  Mont.  83,  83  Pac.  467,  114  Am.  St.  Rep.  330;  First 
State  Bank  of  Pleasant  Dale  v.  Borchers,  83  Nebr.  530,  120  N.  W.  142;  Norwood 
v.  Bank  of  Commerce  of  Lincoln,  77  Nebr.  205, 109  N.  W.  152;  Canon  v.  Farmers' 
Bank  of  Cook,  3  Nebr.  (Unof.)  348,  91  N.  W.  585;  Hallock  v.  Young,  72  N.  H. 
416,  57  Atl.  236;  Hamilton  v.  Vought,  34  N.  J.  L.  (5  Vroom)  190;  National  Bank 
of  the  Republic  v.  Young  (N.  J.),  5  Cent.  115,  citing  the  text;  Perth  Amboy 
Mut.  Loan,  H.  &  B.  Assn.  v.  Chapman,  81  N.  Y.  S.  38,  80  App.  Div.  556, 
affirmed  178  N.  Y.  558,  70  N.  E.  1104;  Second  Nat.  Bank  v.  Weston,  172  N.  Y. 
250,  64  N.  E.  949;  Jarvis  v.  Manhattan  Beach  Co.,  148  N.  Y.  652,  43  N.  E.  68, 
51  Am.  St.  Rep.  727;  Gottberg  v.  United  States  Nat.  Bank,  131  N.  Y.  595,  30 
N.  E.  41;  Seybel  v.  National  Currency  Bank,  54  N.  Y.  288;  Belmont  v.  Hoge,  35 
N.  Y.  67;  Birdsall  v.  Russell,  29  N.  Y.  249;  Welsh  v.  Sage,  47  N.  Y.  147;  Thomp- 
son V.  St.  Nicholas'  Nat.  Bank  (N.  Y.),  21  N.  E.  59;  Mabie  v.  Johnson,  15  N.  Y. 
Sup.  Ct.  (8  Hun.)  309;  Magee  v.  Badger,  34  N.  Y.  247;  Siegel  v.  Oehl,  110  N.  Y.  S. 
916;  McCammon  v.  Shanyz,  63  N.  Y.  S.  611,  49  App.  Div.  460;  Hall  v.  Wilson, 
16  Barb.  548.     See  New  York  authorities  cited  in  notes  to  §  775;  Peetsch  v. 
Sommers,  31  App.  Div.  255,  53  N.  Y.  Supp.  438;  Cunningham  v.  Scott,  90  Hun, 
410,  35  N.  Y.  Supp.  881;  Farmers'  and  Merchants'  Bank  v.  Germania  Life  Ins. 
Co.^  150  N.  C.  770,  64  S.  E.  902;  Setzer  v.  Deal,  135  N.  C.  428,  47  S.  E.  466; 
Walters  v.  Rock,  18  N.  D.  45,  115  N.  W.  511;  Johnson  v.  Way,  27  Ohio  St.  374; 
Matlock  v.  Scheuerman,  51  Ore.  49,  93  Pac.  823,  17  L.  R.  A.  (N.  S.)  747;  Mc- 
Sparran  v.  Neely,  91  Pa.  St.  17;  Phelan  v.  Moss,  67  Pa.  St.  62;  Leatherman  v. 
Hecksher  (Pa.),  12  Atl.  485;  Walker  v.  Kee,  14  S.  C.  142;  Witt  v.  WilUams,  8 
S.  C.  290;  First  Nat.  Bank  v.  Anderson,  28  S.  C.  143;  Grenaur  v.  Wheeler,  6 
Tex.  526;  Cochran  v.  Priddy,  49  Tex.  Civ.  App.  39,  107  S.  W.  616;  Frank  v. 
Lilienfield,  33  Gratt.  390;  Davis  v.  Miller,  14  Gratt.  5  (semble);  First  Nat.  Bank 
v.  Johns,  22  W.  Va.  535;  Merchants'  &  Manufacturers'  Nat.  Bank  v.  Ohio  Valley 
Furniture  Co.,  57  W.  Va.  625,  50  S.  E.  880,  70  L.  R.  A.  312;  Kelley  v.  Whitney, 
45  Wis.  110.    Actual  notice  or  facts  showing  bad  faith  may  be  shown  by  circum- 
stantial as  well  as  by  direct  evidence.    Citizens'  Trust  &  Savings  Bank  v.  Stack- 
house  (S.  C),  74  S.  E.  977.    In  Pennington  County  Bank  v.  First  State  Bank, 
110  Minn.  263,  125  N.  W.  119,  26  L.  R.  A.  (N.  S.)  849,  136  Am.  St.  Rep.  496, 
wherein  a  defense  of  forgery  was  set  up,  the  court  said  that  the  term  "good  faith" 
means,  not  only  honesty  of  intention,  but  the  absence  of  suspicious  circumstances, 
or  if  suspicious  circumstances  exist,  then  such  inquiry  as  will  satisfy  a  prudent 
man  of  the  validity  of  the  transaction,  but  held  that  the  fact  that  a  bank  takes  ne- 
gotiable paper  from  a  stranger  and  puts  it  off,  either  as  owner  or  for  collection, 


§  775  BONA   FIDES   AND    GROSS   NEGLIGENCE  897 

courts.^^  But  both  upon  principle  and  authority,  it  is  safe  to  say- 
that  the  experience  of  the  commercial  world,  and  of  the  courts  before 
which  the  doctrines  here  discussed  have  so  often  passed  in  review, 
have  satisfied  jurists,  as  well  as  men  of  business,  that  the  interests  of 
commerce  are  best  subserved  by  the  hberal  view  which  promotes  the 
circulation  of  negotiable  instruments;  and  that  the  bona  fides  of  the 
transaction  should  be  the  decisive  test  of  the  holder's  rights.^^    It  is 


does  not  justify  a  finding  that  the  defendant  was  not  a  bona  fide  holder  of  the 
check. 

35.  3  Kent  Comm.  103,  104. 

36.  The  admirable  remarks  of  Chief  Justice  Beasley,  of  New  Jersey,  in  Hamilton 
V.  Vought,  34  N.  J.  L.  187,  are  eminently  worthy  of  quotation:  "From  this  brief 
review  of  the  cases,  I  think  it  may  be  safely  said  that  the  doctrine  introduced  by 
Lord  Tenterden  stands,  at  the  present  moment,  marked  with  the  disapproval  of 
the  highest  judicial  authority.  Nor  does  such  disapproval  rest  upon  merely 
speculative  grounds.  That  doctrine  was  put  in  practice  for  a  course  of  years,  and 
it  was  thus,  from  experience,  found  to  be  inconsistent  with  true  commercial  pohcy. 
Its  defect— a  great  defect,  as  I  think— was,  that  it  provided  nothing  like  a  criterion 
on  which  a  verdict  was  to  be  based.  The  rule  was,  that  to  defeat  the  note,  cir- 
cumstances must  be  shown  of  so  suspicious  a  character  that  they  would  put  a 
man  of  ordinary  prudence  on  inquiry;  and  by  force  of  such  a  rule  it  is  obvious 
every  case  possessed  of  unusual  incidents  would,  of  necessity,  pass  under  the 
uncontrolled  discretion  of  a  jury.  An  incident  of  the  transaction  from  which  any 
suspicion  could  arise  was  sufficient  to  take  the  case  out  of  the  control  of  the  court. 
There  was  no  judicial  standard  by  which  suspicious  circumstances  could  be 
measured  before  committing  them  to  the  jury.  And  it  is  precisely  this  want 
which  the  modern  rule  supplies.  When  mala  fides  is  the  point  of  inquiry,  sus- 
picious circumstances  must  be  of  a  substantial  character,  and  if  such  circumstances 
do  not  appear,  the  court  can  arrest  the  inquiry.  Under  the  former  practice, 
circumstances  of  slight  suspicion  would  take  the  case  to  the  jury;  under  the  present 
rule,  the  circumstances  must  be  strong,  so  that  bad  faith  can  be  reasonably  m- 
ferred.  Thus  the  subject  has  passed  from  the  indefinite  to  the  comparatively 
definite;  from  the  intangible  to  the  comparatively  tangible.  From  a  mere  matter 
of  fact,  the  question,  to  some  extent,  has  become  one  of  law.  I  cannot  doubt, 
when  we  recollect  that  inquiries  of  this  nature  always  attend  that  class  of  cases 
where  judgments  are  sought  against  innocent  and  unfortunate  parties,  that  the 
change  is  most  beneficial.  All  experience  has  shown  how  hard  it  is  to  prevent 
juries  from  seizing  on  the  slightest  circumstance,  to  avoid  giving  a  verdict  against 
the  maker  of  a  note  which  had  been  obtained  by  fraud  or  theft.  To  preserve  the 
negotiability  of  commercial  paper  and  guard  the  interests  of  trade,  it  is  absolutely 
necessary  that  large  power  should  be  placed  in  the  judicial  hand  when  the  question 
arises  as  to  what  facts  are  sufficient  to  defeat  the  claim  of  the  holder  of  a  note  or 
bill  which  has  been  taken  before  maturity,  and  for  which  value  has  been  paid. 
It  is  only  in  this  mode  that  the  requisite  stability  in  transactions  of  this  kind  can 
be  retained."  The  American  Exch.  Nat.  Bank  v.  New  York  Belting  &  Packing 
Co  148  N  Y  698,  43  N.  E.  168;  Knox  v.  Eden  Musee  Co.,  148  N.  Y.  454,  4- 
N.  E.  988;  Canajoharie  Nat.  Bank  v.  Diefendorf,  123  N.  Y.  202,  25  N.  E.  402; 

57 


898  RIGHTS    OF   A   BONA   FIDE   HOLDER  §  776 

not  the  duty  of  parties  about  to  purchase  negotiable  paper  to  make 
any  inquiries  not  required  by  good  faith,  as  to  possible  defenses  of 
which  they  have  no  notice,  either  from  the  face  of  the  paper,  or  facts 
communicated  at  the  time.^^ 

§  776.  A  case  before  the  United  States  Supreme  Court  in  1864, 
fully  illustrates  the  doctrine  of  the  text,  and  shows  the  gradual  growth 
of  the  principle.  In  that  case  it  appeared  that  Lardner,  who  did 
business  in  Philadelphia,  owned  certain  negotiable  coupon  bonds  of  the 
Camden  &  Amboy  R.  R.  Co.;  and  that  on  the  night  of  the  23d  of 
February,  1859,  they  were  stolen  from  his  office  in  Philadelphia,  and 
on  the  next  day  negotiated  to  Murray,  a  broker  in  New  York,  for 
value.  Lardner  sued  in  detinue  to  recover  the  bonds,  in  the  United 
States  Circuit  Court  for  the  Southern  District  of  New  York,  and 
obtained  judgment.  To  the  instructions  of  the  court  that  the  burden 
of  proof  rested  on  the  defendant  to  show  that  he  received  the  paper 
without  notice  of  the  theft,  and  that  it  was  for  the  jury  to  say  whether 
there  were  such  circumstances  in  the  negotiation  as  would  warrant 
the  inference  that  there  was  ground  of  suspicion,  Murray  excepted, 
and  the  Supreme  Court  sustained  his  exception.  Mr.  Justice  Swayne, 
who  delivered  the  opinion,  disapproved  Gill  v.  Cubitt,  3  B.  &  C.  466, 
and  quoted  with  approval  Goodman  v.  Harvey,  4  Ad.  &  El.  870,  in 
which  Lord  Denham  said:  "I  believe  we  are  all  of  opinion  that  gross 
negligence  only  would  not  be  a  sufficient  answer  where  the  party  has 
given  a  consideration  for  the  bill.  Gross  negligence  may  be  evidence 
of  mala  fides,  but  is  not  the  same  thing.  We  have  shaken  off  the  last, 
remnant  of  the  contrary  doctrine.    Where  the  bill  has  passed  to  the 

Vosburgh  v.  Diefendorf,  119  N.  Y.  357,  23  N.  E.  801,  16  Am.  St.  Rep.  836;  Jarvis 
V.  Manhattan  Beach  Co.,  148  N.  Y.  652,  43  N.  E.  68,  51  Am.  St.  Rep.  727;  Cheever 
V.  P.  S.  &  L.  E.  R.  Co.,  160  N.  Y.  59,  44  N.  E.  701,  55  Am.  St.  Rep.  646;  First 
Nat.  Bank  v.  Weston,  88  Hun,  29,  34  N.  Y.  Supp.  558,  quoting  with  approval 
the  text;  Kitchen  v.  Loudenback,  48  Ohio  St.  177,  26  N.  E.  979. 

37.  Murray  v.  Beckwith,  81  111.  43;  Houry  v.  Eppinger,  34  Mich.  29;  Min- 
ing Co.  V.  Bank,  10  Colo.  App.  339,  50  Pac.  1055;  Kinkell  v.  Harper,  7  Colo. 
App.  45,  42  Pac.  173;  Second  Nat.  Bank  v.  Weston,  161  N.  Y.  520,  55  N.  E. 
1080,  76  Am.  St.  Rep.  283;  Thompson  v.  Love,  61  Ark.  81,  32  S.  W.  65,  citing 
text;  Marshall  Nat.  Bank  v.  O'Neal,  11  Tex.  Civ.  App.  640,  34  S.  W.  344,  citing 
text;  Buchanan  v.  Wren,  10  Tex.  Civ.  App.  560,  30  S.  W.  1077,  citing  text.  Contra, 
see  Comings  v.  Leedy,  114  Mo.  454,  21  S.  W.  804;  Rotan  v.  Maedgen,  24  Tex. 
Civ.  App.  558;  Lamson  v.  Beard,  36  C.  C.  A.  56,  94  Fed.  30.  See  Breneman  v. 
Mayer,  24  Tex.  Civ.  App.  164;  Borgess  Investment  Co.  v.  Vett,  142  Mo.  560,  44 
S.  W.  754,  64  Am.  St.  Rep.  567;  Fogg  v.  School  District,  75  Mo.  App.  159;  Atlas 
Nat.  Bank  v.  Holm,  19  C.  C.  A.  94,  71  Fed.  489,  citing  text. 


§  776  BONA   FIDES   AND    GROSS   NEGLIGENCE  899 

plaintiff  without  any  proof  of  bad  faith  in  him,  there  is  no  objection 
to  his  title."  And  considering  that  the  good  faith  of  Murray  in  the 
transaction  had  not  been  impeached,  decided  in  his  favor.^®  The 
same  doctrine  has  been  applied  to  coupons  of  United  States  bonds. ^^ 
Under  Negotiable  Instrument  statute. — The  statute  declares  that 
"To  constitute  notice  of  an  infirmity  in  the  instrument  or  defect  in 
the  title  of  the  person  negotiating  the  same,  the  person  to  whom  it 
is  negotiated  must  have  had  actual  knowledge  of  the  infirmity  or 
defect,  or  knowledge  of  such  facts  that  his  action  in  taking  the  in- 
strument amounted  to  bad  faith."  ""^  It  thus  appears  that  the  major- 
ity rule  referred  to  in  the  foregoing  discussion  that  there  must  have 
been  actual  notice  or  bad  faith,  has  been  codified  in  those  states  which 
have  enacted  the  statute.^^    According  to  that  rule,  and  under  the 

38.  Murray  v.  Lardner,  2  Wall.  710.     See  chapter  XLVII,  on  Coupon  Bonds, 
section  III,  vol.  II;  and  Collins  v.  Gilbert,  94  U.  S.  (4  Otto)  757. 

39.  Spooner  v.  Holmes,  102  Mass.  503;  Seybel  v.  National  Currency  Bank,  54 
N.  Y.  288. 

40.  Appendix,  sec.  56.    See  also  sees.  52  and  55. 

41.  Hutchins  v.  Langley,  27  App.  (D.  C.)  234,  the  court  saying  that  bad  faith 
implies  guilty  knowledge  or  wilful  ignorance;  Taylor  v.  American  Nat.  Bank  of 
Pensacola  (Fla.),  57  So.  679;  Arnd  v.  Aylesworth,  145  Iowa,  185,  123  N.  W.  1000; 
McKnight  V.  Parsons,  136  Iowa,  390,  113  N.  W.  858,  125  Am.  St.  Rep.  265;  Peo- 
ple's Bank  of  Minneapolis  v.  Reid,  86  Kan.  245,  120  Pac.  339;  Bothwell  v.  Corum, 
135  Ky.  766,  123  S.  W.  291;  Fillebrown  v.  Haywood,  190  Mass.  472,  77  N.  E.  45, 
holding  that  where  a  check  was  signed  by  a  person  as  treasurer  of  a  corporation, 
the  holder  would  receive  it  under  a  presumption  that  it  was  lawfully  issued; 
Massachusetts  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E.  959;  St.  Charles 
Savings  Bank  v.  Edwards  (Mo.),  147  S.  W.  978;  Link  v.  Jackson,  158  Mo.  App. 
63,  139  S.  W.  588,  holding  that  it  is  not  necessary  that  there  should  have  been 
specific  knowledge  of  the  infirmity;  Reeves  v.  Letts,  143  Mo.  App.  196,  128  S.  W. 
246-  Piper  v.  Neylon,  88  Nebr.  253,  129  N.  W.  277;  Benton  v.  Sikyta,  84  Nebr. 
808  122  N.  W.  61;  Rice  v.  Barrington,  75  N.  J.  L.  806,  70  Atl.  169;  Aldrich  v. 
Pec'kham,  74  N.  J.  L.  711,  68  Atl.  345;  Ward  v.  City  Trust  Co.,  102  N.  Y.  S.  50, 
117  App.  Div.  130;  Matlock  v.  Sheuerman,  51  Oreg.  49,  93  Pac.  823,  17  L.  R.  A. 
(N  S  )  747;  First  Nat.  Bank  of  Elgin,  111.  v.  Russell  (Tenn.),  139  S.  W.  734; 
Unaka  Nat.  Bank  v.  Butler,  113  Tenn.  574,  83  S.  W.  655;  City  Nat.  Bank  of 
Roanoke  v.  Hundley  (Va.),  70  S.  E.  494;  Scandinavian  American  Bank  v.  John- 
ston,  63  Wash.  187,  115  Pac.  102;  Keene  v.  Behan,  40  Wash.  505,  82  Pac.  8S4. 
The  fact  that  the  purchaser  of  a  note  knew  that  the  payee  was  an  msurance  agent 
and  that  the  note  was  given  in  whole  or  in  part  in  payment  for  an  msurance 
premium,  does  not  fix  the  purchaser  with  notice  that  a  rebate  had  been  allowed  to 
the  insured  in  violation  of  an  anti-rebate  insurance  law.  Gray  v.  Boyle,  55  V\  ash 
578  104  Pac.  828.  Where  a  check  payable  to  the  payee  or  order,  has  been  in- 
dorsed by  the  payee  in  blank  before  it  was  lost,  one  who  purchases  the  check 
in  due  course  of  business  for  value  and  without  notice  of  any  defect  in  the  title 
of  the  holder  from  whom  he  received  it,  acquires  a  perfect  title,  and  the  payee 


900  RIGHTS    OF   A   BONA   FIDE    HOLDER  §  776 

statute,  mere  suspicion  of  defect  of  title  or  knowledge  of  circum- 
stances which  would  excite  suspicion  in  the  mind  of  a  prudent  man, 
or  even  gross  negligence  on  the  part  of  the  taker  of  the  instrument  at 
the  time  of  the  transfer,  will  not  defeat  his  title. ^^  While  neither 
gross  negligence,  nor  knowledge  of  suspicious  circumstances,  of  itself 

cannot  recover  the  amount  from  the  bank  as  when  the  check  has  been  paid  to  such 
bona  fide  holder,  though  the  purchaser  may  have  been  negligent  in  failing  to 
require  identification  of  the  person  from  whom  the  check  was  purchased.  Unaka 
National  Bank  v.  Butler,  113  Tenn.  574,  83  S.  W.  655.  Where  a  bank  purchased 
from  another  bank  notes  which  proved  to  have  been  forged,  there  was  no  notice 
of  irregularity  of  the  paper  by  the  fact  that  the  numbers  on  the  notes  were  irregu- 
lar, the  numbers  of  the  later  being  smaller  than  those  of  an  earlier  date  and  others 
bearing  numbers  of  great  disparity,  and  that  there  was  a  marked  similarity  be- 
tween the  signatures  attached  to  the  forged  paper,  when  the  notes  were  received  at 
different  times  and  the  officers  of  the  purchasing  bank  knew  nothing  of  the  signa- 
tures of  the  persons  whose  names  purported  to  be  attached  to  the  notes  nor  of  the 
other  bank's  system  of  numbering  the  same.  State  v.  Corning  State  Savings 
Bank,  139  Iowa,  338,  115  N.  W.  937.  Knowledge  by  a  bank  of  any  lack  of  author- 
ity on  the  part  of  a  person  to  dispose  of  municipal  bonds  cannot  be  inferred  from 
the  fact  that  he  signed  them  as  mayor,  and  such  knowledge  on  the  part  of  the 
bank  afforded  no  ground  for  holding  that  its  action  in  taking  the  bonds  amounted 
to  bad  faith;  notwithstanding  that  such  person  executed  them  in  his  official 
capacity,  he  had  a  right  to  become  a  purchaser  of  such  securities,  and  a  bank 
loaning  money  to  such  person  on  such  bonds,  may  become  a  holder  in  due  course. 
Borough  of  Montvale  v.  People's  Bank,  74  N.  J.  L.  464,  67  Atl.  67.  The  facts 
that  a  certificate  of  deposit  issued  by  one  bank  to  another  bank  bore  8  per  cent, 
interest,  which  is  unusual  in  banking  transactions,  and  that  it  is  also  unusual  for 
a  bank  to  transfer  a  certificate  of  deposit  instead  of  presenting  it  for  payment, 
have  no  tendency  to  indicate  bad  faith  on  the  part  of  a  purchaser  of  the  certificate, 
and  notice  that  it  was  not  transferred  in  the  usual  course  of  business  to  the  bank 
from  which  he  purchased  it.  Johnson  v.  Buffalo  Center  State  Bank,  134  Iowa, 
731,  112  N.  W.  165.  Where  certificates  of  deposit  were  drawn  payable  to  one  as 
"trustee  of  F.,"  and  indorsed  in  that  form,  the  word  "trustee"  in  such  an  indorse- 
ment is  express  notice  to  a  purchaser  that  there  is  a  cestui  que  trust  or  beneficiary, 
or  in  other  words  is  actual  knowledge  to  the  purchaser  within  the  meaning  of  the 
statute.  Ford  v.  H.  C.  Brown  &  Co.,  114  Tenn.  467,  88  S.  W.  1036,  1  L.  R.  A. 
(N.  S.)  188. 

42.  Hutchins  v.  Langley,  27  App.  (D.  C.)  234;  Valley  Sav.  Bank  v.  Mercer, 
97  Md.  458,  55  Atl.  435;  Rice  v.  Barrington,  75  N.  J.  L.  806,  70  Atl.  169;  Aldrich 
v.  Peckham,  74  N.  J.  L.  711,  68  Atl.  345;  Benton  v.  Sikyta,  84  Nebr.  808,  122 
N.  W.  61;  Scandinavian  American  Bank  v.  Johnston,  63  Wash.  187,  115  Pac.  102. 
The  fact  that  the  cashier  of  a  bank  at  the  time  discounted  a  note,  may  have  known 
that  the  payee  was  engaged  in  the  manufactiu-e  of  stoves  in  one  state  and  that 
the  maker  was  a  corporation  engaged  in  the  wholesale  drug  business  in  another 
state,  would  not  be  sufficient,  under  the  statute,  to  fix  the  bank  with  knowledge 
of  any  defect  in  the  note,  or  raise  implication  of  bad  faith  in  purchasing  it.  Jeffer- 
Bon  Bank  v.  Chapman-White-Lyons  Co.,  122  Tenn.  415,  123  S.  W.  641. 


§§  776a,  777  WHAT   IS   MEANT   BY    VALUABLE    CONSIDERATION   901 

constitutes  bad  faith  as  matter  of  law,  it  is  evidence  from  which  bad 
faith  may  be  inferred,  and  such  facts  when  proven  may  be  con- 
sidered by  a  jury  in  arriving  at  the  ultimate  fact  of  good  or  bad  faith." 
What  constitutes  this  actual  knowledge  of  bad  faith,  under  the 
statute,  has  been  the  subject  of  judicial  discussion.  Bad  faith  in 
taking  commercial  paper,  it  has  been  said,  does  not  necessarily  in- 
volve furtive  motives.^^  It  may  be  shown  by  a  wilful  disregard  of 
and  refusal  to  learn  the  facts  when  available  and  at  hand,^^  and  if  a 
purchaser  of  a  note  for  value  before  maturity  has  notice  of  facts 
tending  to  show  defenses  to  the  same,  he  cannot  purposely  refrain 
from  making  inquiries  as  to  the  inception  of  the  paper,  and  at  the 
same  time  claim  to  be  a  bona  fide  purchaser.'*^ 

§  776a.  Right  of  defrauded  party  to  recover  damages.— The 
party  who  has  been  defrauded  into  the  execution  of  a  note  may  re- 
cover damages  of  the  payee  to  whom  he  has  delivered  it.  If  the  note 
at  the  time  of  trial  be  overdue,  the  damages  would  be  nominal  only, 
as  it  would  then  be  open  to  defenses  even  if  transferred  thereafter 
to  a  bona  fide  holder;  but  if  not  due,  it  might  bind  the  maker  for  the 
full  amount  in  such  a  holder's  hands,  and  the  damages  awarded 
should  be  the  face  value  of  the  note.*^ 


SECTION  II 

WHAT   IS   MEANT   BY   VALUABLE    CONSIDERATION 

§  777.  In  the  second  place  he  must  have  acquired  the  instrument 


43.  Link  V.  Jackson,  158  Mo.  App.  63,  139  S.  W.  588.  If  the  facts  shown  have 
any  fair  tendency  to  show  bad  faith,  the  question  remains  one  of  fact  and  not  of 
law,  and  this  is  especially  the  case  where  the  evidence  of  fraud  is  sufficient  to  put 
the  burden  of  good  faith  on  the  holder.  McKnight  v.  Parsons,  136  Iowa,  390,  113 
N  W  858,  125  Am.  St.  Rep.  265.  Where  there  is  circumstantial  evidence  tending 
to  show  that  the  plaintiff  had  knowledge  of  the  business  in  which  the  original 
payees  of  the  note  were  engaged,  and  of  the  circumstances  under  which  the  note, 
and  others  which  he  purchased  at  the  time  were  given,  the  question  whether  the 
plaintiff  was  a  holder  in  due  course  may  be  submitted  to  the  jury.  Kipp  v.  bmith, 
137  Wis.  234,  118  N.  W.  848. 

44.  Ward  v.  City  Trust  Co.,  192  N.  Y.  61,  84  N.  E.  585. 

45.  In  re  Hopper-Morgan  Co.,  156  Fed.  525. 

46.  Walters  v.  Rock,  18  N.  D.  45,  115  N.  W.  511.  See  also  Iowa  Nat.  Bank  v. 
Carter,  144  Iowa,  715, 123  N.  W.  237. 

47.  Thayer  v.  Manley,  8  Hun,  551  (1876);  Cannon  v.  Moore,  17  Mo.  App.  101. 


902  EIGHTS   OF   A   BONA   FIDE   HOLDER  §  777 

for  a  valuable  consideration.^  In  some  cases  it  is  said  that  the  holder 
must  have  parted  with  "full  value,"  sometimes  "fair  value,"  and 
sometimes  the  expression  "for  value"  is  used. 

In  New  York  it  has  been  said  that  "the  consideration  for  the  trans- 
fer must  be  full  and  fair  as  well  as  valuable,"  ^^  while  in  another  case 
it  is  said  that  "when  a  parting  with  value  is  proved,  the  amount  of 
the  consideration  is  not  otherwise  important  than  as  bearing  on  the 
question  of  actual  or  constructive  notice."  ^°  This  latter  view  seems 
to  us  the  correct  one.  The  owner  of  a  bill  or  note  has  as  much  right 
to  sell  it  as  he  has  to  sell  his  horse.  The  prior  parties,  by  making  it 
negotiable,  have  warranted  the  right  of  the  payee  or  indorsee  to  make 
title  to  another. 

And  if  he  does  so  at  any  price,  the  holder  acquires  full  rights  and 


48.  See  as  to  consideration  of  Negotiable  Instruments,  vol.  I,  §§  160  to  207, 
inclusive.  A  purchaser  of  commercial  paper  is  a  holder  for  value  and  in  due  course 
of  trade,  when  he  "has  given  for  his  note  his  money,  goods,  or  credit,  at  the  time 
of  receiving  it,  or  has  on  account  of  it  sustained  some  loss,  or  incurred  some 
liability."  Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W.  1068  (1907). 
Where  in  an  action  on  a  note  brought  by  the  transferee,  the  maker  denies  that  the 
plaintiff  was  a  bona  fide  innocent  purchaser  for  value  of  the  note,  and  sets  up  that 
the  plaintiff  did  not  pay  a  valuable  consideration  therefor,  but  is  permitting  him- 
self to  be  used  by  the  payee  for  the  purpose  of  shielding  the  payee  from  the  conse- 
quences of  a  legal  fraud,  the  defenses  asserted  are  open  and  available  to  the  maker. 
Pidcock  V.  Merchants'  Nat.  Bank,  7  Ga.  App.  303,  66  S.  E.  973.  Where  the  holder 
of  a  promissory  note  received  it  as  a  part  of  an  advance  payment  on  a  contract 
which  obligated  him  to  drill  oil  wells  for  the  indorser,  and  he  expends  large  sums 
of  money  in  preparation  for  such  work,  he  will  be  regarded  as  a  purchaser  for 
value.  Youle  v.  Fosha,  76  Kan.  20,  90  Pac.  1090  (1907).  If  an  agent  who  is 
authorized  to  sell  and  collect  takes  from  the  purchaser  a  negotiable  note  payable 
to  himself,  and  before  it  is  due,  and  without  consideration  indorses  it  over  to  his 
principal,  the  principal  takes  it  subject  to  the  conditions,  made  within  the  scope  of 
the  agent's  employment,  affecting  its  execution.  Such  assignment  will  not  defeat 
the  maker's  equities.  Buckeye  Saw  Mfg.  Co.  v.  Rutherford,  65  W.  Va.  395,  64 
S.  E.  444  (1909). 

49.  Goldsmid  v.  Lewis  County  Bank,  12  Barb.  410. 

50.  Gould  V.  Segee,  5  Duer,  370,  Duer,  J.  (1856);  Oppenheimer  v.  Bank,  97 
Tenn.  19,  56  Am.  St.  Rep.  778;  National  Bank  v.  McNair,  116  N.  C.  551.  It 
has  also  been  held  in  New  York  that  one  who  accepts,  in  full  payment  of  in- 
debtedness, part  of  which  is  based  upon  contract,  and  part  in  tort,  notes  made 
by  one  of  the  debtors  and  indorsed  by  three  other  parties,  and  thereby  rehnquishes 
valuable  remedies  against  the  original  debtors,  is  a  bona  fide  holder  for  value. 
See  Chapman  v.  Ogden,  37  App.  Div.  355,  56  N.  Y.  Supp.  73;  Callahan  v.  Crow, 
91  Hun,  346,  36  N.  Y.  Supp.  225.  In  the  last  case  held  that  a  vaUd  promissory 
note  may  be  purchased  of  the  payee  at  any  price,  or  even  if  given  to  the  holder 
by  the  payee,  the  former  may  enforce  it  for  its  full  amount. 


§  777        WHAT   IS   MEANT   BY   VALUABLE    CONSIDERATION  903 

interests  in  the  instrument,  as  against  all  parties,  unless  he  had  notice 
of  defects,  or  wilfully  abstained  from  inquiry  under  circumstances 
which  justify  the  imputation  of  bad  faith. 

One  to  whom  a  note  has  been  loaned  is  not  a  purchaser  for  value, 
acquires  no  equities  superior  to  those  of  the  lender,  and  stands  upon 
no  better  footing  than  a  mere  donee,^^  nor  is  a  broker  who  has  re- 
ceived notes  for  the  purpose  of  sale  a  bona  fide  holder  for  value.^^ 

Under  Negotiable  Instrument  statute. — The  statute  defines  a  holder 
in  due  course  as  one  who,  beside  other  conditions,  has  taken  the 
instrument  for  value.°^  A  holder  of  a  note  cannot  be  said  to  be  a 
holder  for  value  when  the  actual  value  transferred  was  apparently 
so  disproportionate  that  it  is  impossible  to  avoid  the  conclusion  that 
the  claim  to  have  paid  value  is  little  more  than  a  pretense.^"*  The 
question  of  value  is  considered  generally  in  determining  the  question 
whether  the  holder  has  purchased  the  instrument  in  good  faith,  and 
it  has  been  held  that  one  who  has  purchased  a  note  for  about  fifty 
per  cent,  of  its  face  value  may  recover  its  full  value,  as  that  fact  alone 
is  no  evidence  of  bad  faith,  ^^  though  a  purchase  of  an  unquestionably 

61.  King  V.  Nichols,  138  Mass.  20;  Kitchen  v.  Loudenback,  48  Ohio  St.  177, 
26  N.  E.  979,  29  Am.  St.  Rep.  540;  Bowman  v.  Metzger,  27  Oreg.  23,  39  Pac.  3. 
In  the  last  case  it  was  held  that  a  purchaser  for  a  valuable  consideration  before 
maturity,  of  a  negotiable  promissory  note,  is  not,  as  a  matter  of  law,  affected  bj- 
notice  of  facts  calculated  to  arouse  suspicion  as  to  the  transaction  in  which  the 
note  was  given.  The  single  question  involved  is  whether  he  acted  in  good  faith, 
and  to  aid  in  determining  that  question  his  knowledge,  or  lack  of  knowledge,  of 
suspicious  circumstances  may  be  shown. 

52.  American  Valley  Co.  v.  Wyman,  92  Mo.  App.  294. 

53.  Appendix,  sec.  52. 

54.  In  re  Hill,  187  Fed.  214,  so  held  as  to  notes  executed  by  a  bankrupt,  aggre- 
gating $34,800,  and  transferred  for  $300  in  cash,  a  note  for  $200  which  was  after- 
wards paid,  and  mining  stock  having  a  par  value  of  $11,000,  but  no  market  value. 

55.  McNamara  v.  Jose,  28  Wash.  461,  68  Pac.  903,  wherein  the  court  said  that 
unless  the  consideration  be  merely  nominal,  or  so  grossly  inadequate  as  to  lead  to 
the  conclusion  that  the  purchase  is  made  for  the  purpose  of  speculating  upon 
the  chance  of  collection,  it  is  not  of  itself  sufficient  to  justify  a  finding  of  bad 
faith;  Bothwell  v.  Corum,  135  Ky.  766,  123  S.  W.  291,  as  to  a  payment  of  90  per 
cent,  net  for  the  drafts;  all  other  matters  being  regular,  the  purchaser  took  free 
from  any  defect  of  title  of  prior  parties,  and  free  from  defenses.  The  fact  that  a 
person  purchased  a  second  note  and  mortgage  in  the  sum  of  $1,500  for  $1,000,  does 
not  impart  notice  of  its  infirmity,  when  the  property  was  incumbered  by  a  prior 
mortgage  of  $3,500.  Lassaa  v.  McCarty,  47  Oreg.  474,  84  Pac.  76,  wherein  the 
court  said:  "If  it  be  assumed,  however,  that  notice  of  any  invalidity  in  the  giving 
of  a  promissory  note  could  be  implied  from  a  purchase  thereof  at  a  discount,  the 
defendant  should  have  introduced  evidence  tending  to  show  that  the  security  was 


904  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  777a 

good  note,  having  less  than  six  weeks  to  run,  for  but  a  httle  more 
than  half  its  face  value  has  been  considered  sufficient  to  require  a 
submission  of  the  case  to  the  jury  of  the  question  of  the  bona  fides  of 
the  purchaser,  ^^ 

Under  another  section  of  the  statute  declaring  that  where  value  has 
at  any  time, been  given  for  the  instrument,  the  holder  is  deemed  a 
holder  for  value  in  respect  to  all  parties  who  became  such  prior  to 
that  time,^^  it  has  been  held  that  the  fact  that  there  may  have  been 
an  indorsement  without  consideration  is  immaterial  when  there  had 
been  a  prior  indorsement  for  value  before  maturity.^^ 

§  777a.  When  price  paid  conveys  notice  of  fraud. — The  price 
at  which  the  paper  is  offered  may  amount  prima  facie  to  notice,  and 
create  the  presumption  of  bad  faith  in  the  purchaser. ^^    If  a  person 

ample  for  the  payment  of  the  entire  debt  evidenced  by  the  instrument  thus 
assigned." 

56.  Becker  v.  Hart,  120  N.  Y.  S.  270. 

57.  Appendix,  sec.  26. 

58.  Rogers  v.  Morton,  95  N.  Y.  S.  49,  46  Misc.  494.  See  also  post,  §§  802a, 
et  seq. 

59.  Hogg  V.  Thurman,  90  Ark.  93,  117  S.  W.  1070,  wherein  the  court  said  that 
any  substantial  consideration  is  sufficient,  but  it  must  be  more  than  simply  a 
nominal  consideration.  Under  a  statute  declaring  that  good  faith  consists  in  an 
honest  intention  to  abstain  from  taking  any  unconscientious  advantage  of  another, 
even  through  the  forms  of  technicahties  of  law,  together  with  an  absence  of  all 
information  or  belief  of  facts  which  would  render  the  transaction  unconscientious, 
it  was  held  that  where  a  certificate  of  deposit  for  $695  was  obtained  from  the  payee 
by  means  of  fraud,  and  without  consideration,  by  professional  gamblers,  and  was  ' 
by  them  sold  to  another  for  the  sum  of  $50,  such  purchaser  was  not  a  bona  fide 
purchaser  in  view  of  the  price  paid  for  the  certificate  and  of  the  circumstance  that 
he  was  so  intimately  acquainted  with  the  gamblers  that  he  became  their  bail  when 
arrested,  upon  a  charge  of  having  defrauded  the  payee  of  the  certificate,  within 
two  days  after  he  received  the  certificate.  Dunn  v.  National  Bank  of  Canton, 
15  S.  D.  454,  90  N.  W.  1045.  The  payment  of  $1,900  for  a  $2,000  note  is  not  such 
a  discount  as  to  impart  notice  of  a  defect  in  the  title  to  the  note.  Wells  v.  Duffy 
(Wash.),  124  P.  907.  The  facts  that  a  note  was  for  $1,250,  that  a  purchaser  may 
have  had  reason  to  believe  that  one  of  the  indorsers  was  solvent,  and  that  the 
payee  was  willing  to  take  and  did  take  $800  for  the  note,  did  not  charge  the  pur- 
chaser with  knowledge  that  the  note  was  executed  for  the  purpose  of  enabling  the 
payee  to  raise  an  amount  less  than  the  face  value  on  the  note.  Wright  Investment 
Co.  V.  Friscoe  Realty  Co.,  178  Mo.  72,  77  S.  W.  296.  On  the  question  whether  the 
sum  paid  on  a  note  was  so  disproportionate  to  the  amount  of  the  note  itself  as  to 
raise  a  presumption  that  there  was  want  of  good  faith  in  the  purchase,  the  usual 
rates  of  discount  at  the  same  place  may  be  considered  but  evidence  should  not  be 
received  of  the  rates  of  discount  at  banks  in  other  places  of  the  same  county. 
Canon  v.  Farmers'  Bank  of  Cook,  3  Nebr.  (Unof),  348,  91  N.  W.  585. 


§  778       WHAT   IS   MEANT   BY   VALUABLE    CONSIDERATION  905 

were  to  offer  a  fine  horse  for  sale  for  five  cents,  the  very  nature  of  the 
offer  would  warn  the  purchaser  that  he  acted  at  his  peril.  And  so  if 
the  amount  which  the  holder  offers  to  take  for  a  negotiable  instru- 
ment is  totally  insignificant  as  compared  to  its  face  value,  it  might  be 
under  the  circumstances  implied  notice  that  there  was  something 
wrong  about  it;  and  if  he  took  it  without  inquiry,  he  should  not  be 
protected.  There  is  no  conflict  between  this  view  and  the  cases 
which  hold  that  gross  negligence  will  not  of  itself  be  sufficient  to  im- 
peach the  holder's  or  purchaser's  title.  This  is  not  merely  gross 
negligence,  but  may  be  regarded  as  wilful  or  fraudulent  blindness, 
and  abstinence  from  inquiry,  so  great  as  to  amount  to  evidence  of 
bad  faith.  For  it  is  the  obvious  suggestion  of  reason  that  a  bona  fide 
owner  would  not  throw  away  his  property  for  a  mere  song,  and  that 
the  purchaser  acted  in  bad  faith  when  he  acquired  it  for  compar- 
atively nothing.^" 

§  778.  Where  the  plaintiff,  knowing  that  the  maker  was  able  to  pay, 
bought  his  note  for  $300  from  a  third  party,  paying  only  $5,  and  the 
note  had  been  executed  without  consideration,  it  was  held  that  the 
mere  nominal  price  charged  him  with  constructive  notice  of  the  de- 
fect." So,  also,  where  the  purchaser  acquired  the  note  in  consider- 
ation of  a  mere  nominal  sum,  and  a  promise  to  pay  a  further  sum  equal 
to  one-half  of  what  might  be  realized  from  the  note.^^  Lj^e  decisions 
have  been  rendered  where  the  plaintiff  bought  a  note  for  $333.33, 
paying  only  $125;^^  and  where  the  plaintiff  purchased  a  $300  note 
for  $50;  ^^  but  the  grounds  of  decision  in  the  latter  case  were  simply 

60.  Johnson  v.  Butler,  31  La.  Ann.  776,  approving  text;  Smith  v.  Jansen,  12 
Nebr.  125;  Richmond  v.  Diefendorf,  51  Hun,  538;  Cunningham  v.  Scott,  90 
Hun,  410,  35  N.  Y.  Supp.  881. 

61.  Dewitt  V.  Perkins,  22  Wis.  (1868),  Dixon,  C.  J.:  "The  buying  of  a  note 
against  a  solvent  maker,  the  purchaser  knowing  him  to  be  such,  for  a  mere  nommal 
consideration,  is  very  strong,  if  not  conclusive,  evidence  of  mala  fides.  It  is  con- 
structive notice  of  the  invalidity  of  the  note  in  the  hands  of  the  seller,  such  as  to 
put  the  purchaser  upon  inquiry,  which  if  he  fails  to  make  he  acts  at  his  peril. 
See  also  Lay  v.  Wissman,  36  Iowa,  305. 

62.  Proctor  v.  Cole  (Ind.),  2  West.  Rep.  624. 

63.  Hunt  v.  Sandford,  6  Yerg.  387  (1834). 

64.  Gould  v.  Stevens,  43  Vt.  125  (1870).  In  Cohger  v.  Francis,  58  Tenn. 
423  the  holder  paid  $355  for  an  overdue  note  for  $1,650  to  a  party  m  embarrassed 
cu-c'umstances;  the  purchaser  had  means  of  ascertaining  approximate  value  of  the 
note.  It  was  held  that  while  there  was  no  proof  of  fraud,  the  circumstances  were 
suspicious,  and  the  holder  was  restricted  in  his  recovery  against  the  indorsers 
estate  to  the  amount  paid  with  interest.    See  also  Petty  v.  Hinman,  2  Humphr. 


906  RIGHTS   OF   A   BONA   FIDE    HOLDER  §§  779,  779a 

that  there  was  gross  negligence,  which  alone  is  not  now  deemed  a  suffi- 
cient defense. 

§  779.  Line  of  demarcation  between  negligence  and  notice. — It 

is  difficult,  indeed  impossible,  to  lay  down  the  exact  line  of  demar- 
cation and  state  what  proportion  the  amount  paid  must  bear  to  the 
face  of  the  paper  in  order  to  charge  the  purchaser  prima  facie  with 
notice,  or  raise  the  presumption  of  bad  faith  on  his  part.  But,  in  gen- 
eral terms,  it  may  be  said  that  the  consideration  should  be  so  utterly 
trifling  as  to  bear  upon  its  face  the  impress  of  fraud  to  leave  open  no 
reasonable  conjecture  but  that  the  purchaser  must  have  known, 
from  the  very  nature  of  the  facts,  that  they  could  not  have  originated 
from  any  but  a  corrupt  source.^^  The  known  solvency  of  prior  parties 
would  of  course  strengthen  the  argument  of  implied  notice  and  bad 
faith  wherever  they  were  alleged.  If  the  amount  paid  for  the  paper 
were  not  so  insignificant  as,  per  se,  to  charge  the  transferee  with  notice, 
it  might  still  be  so  inadequate  as  to  be  a  pregnant  fact  to  be  given  due 
consideration  in  connection  with  others,  in  determining  whether  he 
should  be  so  chargeable  or  not.*'^  As  said  in  Rhode  Island  by  Potter, 
J.:  "The  fact  that  the  plaintiff  purchased  the  note  for  a  sum  much 
below  its  face,  even  if  he  did  not  know  of  any  equities  between  the 
original  parties,  might  be  a  circumstance  tending  to  show  that  he  had 
wilfully  shut  his  eyes  to  the  means  of  knowing  the  facts."  ^ 

§  779a.  In  Pennsylvania  the  sale  of  a  $250  note  of  a  maker  known 
to  be  solvent,  by  a  stranger  to  the  plaintiff,  for  $100,  was  considered 
legitimate,  and  to  constitute  the  purchaser  a  bona  fide  holder  without 


102;  Holman  v.  Hobson,  8  Humphr.  107.    In  Anten  v.  Gruner,  90  111.  300,  it  was 
held  that  sale  of  note  at  unusually  large  discount  puts  holder  on  inquiry. 

65.  See  post,  §§  795,  796.  In  Bank  of  Monongahela  Valley  v.  Weston,  172 
N.  Y.  259,  64  N.  E.  946,  it  was  held  that  a  purchase  of  a  note  at  a  discount  of 
7  per  cent.,  when  the  legal  rate  was  6  per  cent.,  was  not  evidence  of  bad  faith. 
See  also  Second  Nat.  Bank  v.  Weston,  172  N.  Y.  250,  64  N.  E.  949.  In  Canajo- 
harie  Nat.  Bank  v.  Diefendorf,  123  N.  Y.  202,  25  N.  E.  402,  the  fact  that  notes 
of  a  responsible  maker  were  purchased  at  a  discount  of  from  15  to  18  per  cent,  was 
part  of  the  evidence  putting  the  indorsee  on  notice,  and  in  Vosburgh  v.  Diefen- 
dorf, 119  N.  Y,  357,  23  N.  E.  801,  16  Am.  St.  Rep.  836,  a  note  was  purchased  for 
half  its  face  value,  and  this  with  other  facts  raising  an  inference  of  bad  faith  was 
submitted  to  the  jury. 

66.  Chouteau  v.  Allen,  70  Mo.  341;  Hodson  v.  The  Eugene  Glass  Co.,  156 
111.  397,  40  N.  E.  971,  citing  text. 

67.  Millard  v.  Barton,  13  R.  I.  610. 


§  779b     WHAT   IS   MEANT   BY   VALUABLE    CONSIDERATION  907 

notice;^  and  so  in  Ohio,  the  purchase  of  a  note  for  $2,500,  secured 
by  mortgage,  for  just  half  the  amount  ($1,250),  was  viewed  in  the 
same  hght.^^  In  Nebraska  the  holder  paid  $50  for  a  $100  note,  and 
testified  that  he  did  not  regard  the  note  as  good;  and  the  court  held 
that  his  title  was  unimpeached.'^ 

§  779b.  The  apparent  purchase  must  have  been  a  purchase  in  fact 
and  not  a  mere  bookkeeping  entry. — Mere  discount  and  credit  do 
not  of  themselves  constitute  a  bona  fide  purchaser  for  value.  To 
occupy  that  position  the  holder  must  actually  have  parted  with 
something  of  value  for  the  note.  Thus,  where  a  bank  discounted  a 
note  for  a  company,  and  credited  it  with  the  amount,  the  credit,  on 
account  of  other  deposits,  subsequently  increasing,  so  that  at  the 
time  of  suit  on  the  note  the  bank  had  actually  paid  nothing  for  it, 
it  was  held  not  a  purchaser  for  value,  and  that  its  remedy  was  to 
tender  the  note  back  to  the  company,  and  cancel  the  credit.^^    This 


68.  Phelan  v.  Moss,  67  Pa.  St.  59  (1871),  overruling  Beltzhoover  v.  Black- 
stock,  3  Watts,  20. 

69.  Bailey  v.  Smith,  14  Ohio  St.  402,  Ranney,  J.,  saying:  "There  is  very  httle 
difficulty  in  saying  that  the  rule  does  not  require  the  full  face  of  the  paper  to  be 
paid.  No  decision  to  that  effect  has  ever  been  made,  and  the  strongest  expressions 
customarily  used  do  not  import  anything  more  than  that  the  holder  must  have 
given  for  the  paper  what  it  was  reasonably  and  fairly  worth.  To  hold  otherwise 
would  be  to  deprive  all  paper,  for  any  cause  not  worth  its  face,  of  one  of  the  most 
essential  and  valuable  incidents  of  negotiability,  and  most  effectually  to  stop  its 
circulation.  A  moment's  reflection  will  satisfy  any  one  how  deeply  and  disas- 
trously such  a  holding  would  affect  the  business  and  commerce  of  the  country." 
See  post,  §§  795,  796. 

70.  Cannon  v.  Canfield,  11  Nebr.  506  (1881). 

71.  Manufacturers'  Nat.  Bank  v.  Newell,  71  Wis.  312.  The  bank  and  the 
company  were  identified  with  each  other  in  interests,  and  the  indorsement  of  notes 
to  the  former  by  the  latter  wears  the  aspect  of  a  contrivance  for  cutting  off  de- 
fenses of  the  maker.  Lancaster  County  Nat.  Bank  v.  Huver,  114  Pa.  St.  216; 
Dougherty  v.  Cent.  Nat.  Bank,  93  Pa.  St.  227;  Dresser  v.  M.  &  I.  R.  Co.,  93 
U.  S.  92;  Clark  Nat.  Bank  v.  Bank  of  Albion,  52  Barb.  592;  Mann  v.  National 
Bank  30  Kan.  412;  Fox  v.  Bank,  30  Kan.  444;  Drilling  v.  First  Nat.  Bank  (Kan.), 

23  Pac.  94;  Dykman  v.  Northbridge,  80  Hun,  258,  30  N.  Y.  Supp.  164.  But  the 
surrender  by  the  bank  of  an  obligation  then  valid  against  maker  and  mdorser  of  a 
new  note,  would  constitute  the  bank  a  bona  fide  holder  of  the  new  note.  Dykman 
V.  Northbridge,  1  App.  Div.  26,  36  N.  Y.  Supp.  962;  Victor  v.  Bauer,  70  Hun,  246, 

24  N.  Y.  Supp.  428;  Bank  v.  Looney,  99  Tenn.  278,  42  S.  W.  149,  63  Am.  St. 
Rep.  830;  Drovers'  Nat.  Bank  v.  Blue,  110  Mich,  31,  67  N.  W.  1105,  64  Am.  St. 
Rep.  327,  citing  text.  See  also  Bank  v.  Coal  Co.,  110  Mich.  447,  68  N.  W.  232; 
Warman  v.  First  Nat.  Bank.  185  111.  60,  57  N.  E.  6;  Milmo  Nat.  Bank  v.  Cobbs 


908  RIGHTS   OF   A   BONA   FIDE   HOLDER  §§  779b 

rule  obtains  if  the  depositor  was  not  indebted  to  the  bank  in  a  sum 
greater  than  or  as  great  as  the  amount  of  the  credit/^  or  so  long  as 
no  part  of  the  deposit  is  drawn  out  before  receiving  notice  of  the 
infirmity  or  the  balance  of  the  account  exceeds  the  amount  of  the 
proceeds  of  the  discount;  ^^  and  it  is  immaterial,  in  that  event,  that 
subsequently  the  depositor,  who  kept  his  account  at  the  bank,  had 
deposits  equal  to  or  exceeding  the  amount  of  the  notes.^*  But  it  has 
been  held  that  where  the  purchaser  of  a  note  had  money  on  deposit 
with  the  transferrer,  and  the  value  of  the  note  was  credited  against 
this  deposit  and  charged  by  the  transferrer  to  the  purchaser,  he  was 
a  purchaser  for  valueJ^ 

Under  Negotiable  Instrument  statute.— Under  several  provisions  of 
the  statute,^*^  it  is  held  that  merely  giving  the  transferrer  credit  does 
not  constitute  the  transferee  a  holder  in  due  courseJ^  Thus,  when  a 
bank  simply  discounts  a  note  and  credits  the  amount  thereof  on  the 
indorser's  account,  without  paying  to  him  any  value  for  it,  such 
bank  is  not  a  purchaser  for  value  or  a  holder  in  due  course  as  defined 
by  the  statute,'^*  but  where  a  bank  discounted  a  note  and  placed  it  to 
the  credit  of  the  payee,  who  drew  checks  upon  his  account,  the  bal- 
ances on  which  varied  from  time  to  time  and  were  at  times  over- 
drawn, and  the  depositor  had  drawn  the  whole  amount  of  the  note 
before  the  bank  had  any  notice  of  any  defenses  to  the  note,  the  bank 
became  a  holder  in  due  course  and  in  good  faith  and  for  valueJ^    And 


(Tex.  Civ.  App.),  115  S.  W.  345;  Union  Nat.  Bank  of  Columbus,  Ohio  v.  Mailoux 
(S.  D.),  132  N.  W.  168. 

72.  City  Deposit  Bank  v.  Green,  130  Iowa,  384,  106  N.  W.  942. 

73.  Alabama  Grocery  Co.  v.  First  Nat.  Bank,  158  Ala.  143,  48  So.  340,  132 
Am.  St.  Rep.  18;  City  Deposit  Bank  v.  Green,  130  Iowa,  384,  106  N.  W.  942; 
First  Nat.  Bank  v.  Pearsall,  110  Minn.  333,  125  N.  W.  506,  136  Am.  St.  Rep.  496; 
Union  Nat.  Bank  v.  Windsor,  101  Minn.  470,  112  N.  W.  999,  118  Am.  St.  Rep. 
641;  Sperlin  v.  Peninsular  Loan  &  Discount  Co.  (Tex.  Civ.  App.),  103  S.  W.  232. 

74.  Fredonia  Nat.  Bank  v.  Tommel,  131  Mich.  674,  92  N.  W.  348. 

75.  Griswold,  Hallette  &  Persons  v.  Davis,  125  Tenn.  223,  141  S.  W.  205. 

76.  Appendix,  sees.  25,  28,  52,  54,  57. 

77.  Albany  County  Bank  v.  People's  Co-operative  Ice  Co.,  86  N.  Y.  S.  773,  92 
App.  Div.  47,  holding  that  the  maker  can  set  up  defense  of  failure  of  consideration. 

78.  Albany  County  Bank  v.  People's  Co-operative  Ice  Co.,  86  N.  Y.  S.  772,  92 
App.  Div.  47. 

79.  Northfield  Nat.  Bank  v.  Arndt,  132  Wis.  383,  112  N.  W.  451,  12  L.  R.  A. 
(N.  S.)  82.  If  a  bank  discounted  a  note  and  obtained  credit  in  favor  of  the  seller 
of  the  note  in  a  solvent  bank  for  the  amount  of  the  paper  it  discounted,  that 
would  be  a  sufficient  consideration  to  constitute  the  purchaser  a  holder  for  value. 
Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W.  1068. 


§  779b      WHAT   IS   MEANT   BY   VALUABLE    CONSIDERATION  909 

the  mere  crediting  to  a  depositor's  account,  on  the  books  of  a  bank,  of 
the  amount  of  a  note  or  of  a  check  drawn  upon  another  bank,  where 
the  depositor's  account  continues  to  be  sufl&cient  to  pay  the  check 
in  case  it  is  dishonored,  does  not  constitute  the  bank  a  holder  in  due 
course,^°  though  if  the  bank  assumes  a  legal  obligation  to  another  on 
the  faith  of  the  deposit  or  credit,  it  becomes  thereby  a  purchaser  for 
value.^^  The  question  whether  a  bank  becomes  a  holder  in  due  course 
or  for  value  when  part  of  the  deposit  has  been  withdrawn  or  only 
when  the  deposit  has  been  exhausted,  is  a  matter  about  which  there 
is  some  confusion  in  the  authorities.  In  Wisconsin,  under  the  statute, 
the  court  said  that  the  bank  is  not  a  holder  in  due  course  except  to 
the  extent  of  the  money  actually  drawn  and  charged  against  such 
credit,^^  and  in  Kentucky  it  has  been  held  that  where  a  bank  received 
a  check  and  pays  part  of  the  amount  and  deposits  the  balance,  it  is  a 
holder  in  due  course.^^  It  has  been  held,  however,  that  the  transfer 
of  negotiable  paper  to  a  bank  in  consideration  of  credit  upon  its  books, 
which  credit  is  not  absorbed  by  an  antecedent  indebtedness  or  ex- 
hausted by  subsequent  withdrawals,  is  not  a  purchase  in  the  ordinary 
sense  of  that  term.^^ 


80.  Citizens'  State  Bank  v.  Cowles,  180  N.  Y.  346,  73  N.  E.  33,  105  Am.  St. 
Rep.  765. 

81.  Montrose  Savings  Bank  v.  Claussen,  137  Iowa,  73,  114  N.  W.  547.  Where 
the  debtor  of  a  bank  became  the  second  indorser  of  a  note  to  the  bank,  and,  upon 
receiving  the  note,  the  bank  extended  the  time  of  the  payment  of  the  debt,  appHed 
the  proceeds  as  a  credit  to  the  debtor's  account,  and  reUnquished  bills  of  lading 
pledged  as  collateral,  the  bank  was  a  holder  for  the  value.  AUentown  Nat.  Bank 
V.  Clay  Product  Supply  Co.,  217  Pa.  128,  66  Atl.  252.  When  on  the  day  of  dis- 
count the  bank  held  a  note  of  the  depositor  due  on  that  day,  charged  to  the 
depositor's  account,  and  the  account  was  made  good  at  that  time  by  the  applica- 
tion of  the  proceeds  from  the  discount  of  the  note,  this  transaction  made  the  bank 
a  holder  for  value.  Wallabout  Bank  v.  Peyton,  108  N.  Y.  S.  42,  123  App.  Div. 
727. 

82.  Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  92.  A  bank  purchasing  a  note 
from  a  depositor  placed  the  amount  paid  therefor  to  his  credit  on  account  subject 
to  check;  the  balance  on  such  account  varied  and  at  times  it  was  overdrawn  before 
the  maturity  of  the  note,  and  the  bank  did  not  know  of  any  defense  to  the  note 
until  after  its  maturity.  It  was  held  that  the  fact  that  at  various  times  after- 
wards, including  the  date  of  maturity  of  the  note,  the  amount  of  the  credit  to  the 
seller  exceeded  the  amount  due  on  the  note  did  not  prevent  the  bank  from  being  a 
bona  fide  holder  for  value.  Northfield  Nat.  Bank  v.  Arnt,  132  Wis.  383, 112  N.  W. 
451,  12  L.  R.  A.  (N.  S.)  82. 

83.  Choteau  Trust  &  Banking  Co.  v.  Smith,  133  Ky.  418,  118  S.  W.  279. 

84.  McKnight  v.  Parsons,  136  Iowa,  390,  113  N.  W.  858,  22  L.  R.  A.  (N.  S.) 
718,  125  Am.  St.  Rep.  265. 


910  RIGHTS   OF   A   BONA   FIDE    HOLDER  §  780 

SECTION  III 

THE    ORDINARY    OR   USUAL   COURSE   OF   BUSINESS 

§  780.  In,  the  third  place,  the  holder  must  have  acquired  the  paper 
in  the  ordinary  or  usual  course  of  business,  by  which  phrase  is  meant 
to  describe  a  transfer  according  to  the  usages  and  customs  of  com- 
mercial transactions.^^  Whether  or  not  a  transfer  in  payment  of  pre- 
existing debt  is  of  this  character,  was  for  a  long  time  questioned;  but 
the  doctrine  is  now  settled  that  it  is.^^    And  when  the  paper  is  trans- 

85.  Kinkel  v.  Harper,  7  Colo.  App.  45,  42  Pac.  173;  Kellogg  v.  Curtis,  69  Me. 
212;  Graham  v.  Smith,  155  Mich.  65,  118  N.  W.  726;  Mindlin  v.  Appelbaum,  114 
N.  Y.  S.  908,  62  Misc.  Rep.  300;  Murchison  Nat.  Bank  v.  Dunn  Oil  Mills  Co., 
150  N.  C.  718,  64  S.  E.  885;  Kipp  v.  Smith,  137  Wis.  234,  118  N.  W.  848.  In 
Elias  V.  Finnegan,  37  Minn.  145,  the  indorsement  of  a  negotiable  note  making  it 
payable  to  the  order  of  A.,  who  had  no  personal  interest  in  the  transaction,  for 
the  benefit  of  B.,  was  held  not  to  be  in  the  usual  course  of  business  so  as  to  ex- 
clude defenses  of  the  maker  against  the  payee.  Post,  §  819.  Where  an  agent  who 
holds  a  person's  money  for  investment  obtained  a  note  indorsed  in  blank  and  ex- 
hibited to  such  person  as  having  been  theretofore  purchased  with  his  money,  such 
person  is  not  a  bona  fide  holder  thereof  when  the  agent  knew  that  the  ownership 
was  in  another.  Bettanier  v.  Smith,  129  Iowa,  597,  105  N.  W.  999,  5  L.  R.  A. 
(N.  S.)  628.  Where  an  agent  was  employed  to  obtain  orders  for  machinery,  and 
a  note  was  executed  in  payment  thereof  by  a  third  person  to  the  purchaser  of  the 
machinery  or  bearer  upon  certain  conditions,  and  the  note  was  sent  to  the  princi- 
pal who  delivered  the  machinery  to  the  payee  of  the  note,  such  principal  is  not 
an  indorsee  in  due  course  as  the  agent  should  in  the  exercise  of  ordinary  care  have 
communicated  his  knowledge  of  the  conditions  to  his  principal.  New  Birdsall 
Co.  v.  Stordalen,  21  S.  D.  26,  109  N.  W.  516  (1906).  Though  the  payee  of  a 
note  in  his  lifetime  only  indorsed  the  note  to  a  certain  person  and  intended  to 
give  it  to  him,  the  title  to  the  note  after  his  death  passed  to  his  administrator, 
and  could  only  be  transferred  by  operation  of  law,  and  a  purchaser  from  such 
indorsee,  to  whom  delivery  had  not  been  made  by  the  payee,  having  purchased 
with  knowledge  of  the  title  to  the  notes,  has  not  the  rights  of  an  innocent  pur- 
chaser. Burchett  v.  Fink,  139  Mo.  App.  381,  123  S.  W.  74.  Where  a  commission 
company  assigns  and  guarantees  the  payment  at  maturity  of  accommodation  notes 
to  a  bank,  and  an  officer  of  the  commission  company  who  is  not  a  guarantor  of 
the  notes,  but  who  has  theretofore  given  a  written  undertaking  to  the  bank 
indemnifying  the  bank  for  any  debts  of  the  company  thereafter  contracted  to  an 
amount  much  larger  than  the  amount  of  the  notes,  pays  after  maturity  a  balance 
due  upon  the  notes,  and  receives  the  notes  from  the  bank,  he  does  not  thereby 
become  a  purchaser  of  the  notes  for  value  in  the  usual  course  of  business. 
Rockefeller  v.  Ringle,  77  Kan.  515,  94  Pac.  810,  15  L.  R.  A.  (N.  S.)  737. 

86.  See  chapter  VII,  on  Consideration,  ante,  §  184;  Merchants'  Bank  v.  Mc- 
Clelland, 9  Colo.  611;  Jones  v.  Wisen,  50  Nebr.  244,  69  N.  W.  762. 


§  781  ORDINARY    COURSE    OF    BUSINESS  911 

ferred  as  collateral  security  for  a  contemporaneous  or  pre-existing 
debt,  there  are  many  variations  of  the  question,  and  many  views 
taken,  as  to  whether  or  not  it  is  in  the  usual  course  of  business  for  a 
valuable  consideration,  according  to  the  mercantile  use  of  those 
terms  .^^ 

§  781.  Transfers  which  are  not  in  usual  course  of  business. — 

There  are  some  transfers,  however,  in  which  the  legal  or  equitable 
title  to  the  instrument  passes,  but  which  are  not  in  the  usual  course 
of  business. 

Thus,  a  receiver  appointed  by  a  court,  and  who  comes  in  possession 
of  a  bill  or  note  of  a  litigant  by  operation  of  law  acquires  no  better 
title  than  such  litigant  possessed,  for,  as  said  in  New  York,  "he  ac- 
quires title  by  legal  process,  and  not  in  the  regular  course  of  dealing 
in  commercial  paper."  ^^  The  like  decision  was  rendered  in  Connect- 
icut, in  respect  to  the  receivers  of  assets  of  a  bank,  for  the  benefit  of 
its  creditors.^^  So  the  assignment  of  a  bill  or  note  by  operation  of  a 
bankrupt  or  insolvent  law,  is  an  instance  out  of  the  usual  course  of 
commercial  business.^"  So  also  is  a  transfer  by  the  payee  or  holder  to 
a  trustee  for  the  benefit  of  creditors.^^    Under  statute  in  the  State  of 


87.  See  chapter  XXV,  section  I,  §  820  et  seq. 

88.  Biggs  V.  Merrill,  58  Barb.  379.  See  also  Huchins  v.  Langley,  27  App. 
Cas.  (D.  C.)  234.    As  to  assignments,  see  ante,  chapter  XXII, 

89.  Litchfield  Bank  v.  Peck,  29  Conn.  384. 

90.  Billings  v.  Collins,  44  Me.  271. 

91.  Roberts  v.  Hall,  37  Conn.  205.  A.  obtained  a  note  from  B.  by  fraud, 
and  transferred  it  to  C.  as  trustee  for  certain  creditors  in  part,  and  the  balance 
for  A.'s  wife.  The  creditors  accepted  the  transfer,  and  directed  the  trustee  to 
bring  suit.  B.  had  demanded  the  note  back  before  the  transfer,  and  pleaded 
fraud  against  the  trustee.  It  was  held  not  a  transfer  in  the  usual  course  of 
business,  and  the  defense  was  allowed,  Carpenter,  J.,  saying:  That  commercial 
paper  may  be  properly  used  as  security  for  a  pre-existing  debt,  "The  purpose 
for  which  the  paper  was  used  is  exceptional  and  unusual.  We  apprehend  that 
cases  like  this  are  rarely  to  be  met  with  in  business  circles.  Let  us  examme  it 
more  carefully.  A  man  has  a  piece  of  negotiable  paper,  with  which  he  wishes 
to  pay  or  secure  certain  debts.  If  there  is  but  one  debt,  he  can  transfer  it  directly 
to  the  creditor,  and  the  law  protects  the  transaction.  This  is  according  to  the 
usual  course  of  business.  But  if  he  transfers  it  to  a  friend,  to  hold  till  due,  and 
then  collect  it,  and  with  its  avails  pay  the  creditor,  that  is  unusual  and  suspicious 
upon  its  face,  and  requires  explanation.  Unless  some  good  reason  can  be  shown 
for  such  a  proceeding,  the  law  ought  not  to  protect  it.  But  it  is  said  there  were 
several  creditors,  which,  it  is  claimed,  sufficiently  explains  the  fact,  that  the 
security  was  effected  through  the  intervention  of  a  trustee.  Let  us  test  this 
position.    If  the  paper  is  right  and  free  from  defects,  why  not  sell  it  in  the  market, 


912  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  781 

Iowa,  it  has  been  held,  that  an  indorsement  of  a  note  by  the  sheriff, 
who  had  levied  upon  it,  had  the  same  effect  as  if  made  by  the  holder 
himself.^2  But  if  the  note  levied  on  were  not  the  property  of  the 
debtor,  neither  the  purchaser  nor  any  one  claiming  under  him  could 
acquire  a  title  by  its  sale  under  execution .^^ 

Under  Negotiable  Instrument  stofwte.— Under  the  statutory  defini- 

or  get  it  discounted,  and  with  its  avails  pay  the  debts  at  once?  Or,  if  the  debts 
are  not  to  be  paid  until  the  paper  is  due  and  collected,  why  not  retain  it  in  his 
own  hands  until  due,  and  if  necessary  sue  and  collect  it  in  his  own  name?  Such 
a  course  would  be  natural  and  usual.  But  what  honest  reason  can  be  suggested, 
why  it  should  be  transferred  to  a  third  party,  who  has  no  interest  in  the  matter, 
to  be  sued  in  his  name?  Such  a  course  is  unusual,  and  not  in  the  course  of  trade. 
The  transaction  at  once  suggests  the  idea  that  there  is  some  equity  in  favor  of 
the  maker,  inherent  in  the  note  itself,  and  which  can  be  made  available  against 
the  payee,  and  which  the  payee  is  seeking  to  avoid!  *  *  *  The  fact  that  a  part 
of  this  money  was  payable  to  the  wife  of  Yale  (the  payee),  is  worthy  of  notice, 
also,  in  this  branch  of  the  case.  To  that  extent,  as  we  have  already  seen,  the 
plaintiff  was  the  agent  of  Yale.  *  *  *  The  fact  that  Yale  himself  is  still  inter- 
ested in  this  note,  either  in  his  own  right  or  the  right  of  his  wife,  should  suggest 
to  all  parties  concerned  an  inquiry  as  to  the  reason  and  occasion  of  this  convey- 
ance." 

92.  Earhart  v.  Gant,  32  Iowa,  481,  Cole,  J.,  saying:  "The  note  was  pay- 
able to  John  Walker,  but  was  then,  or  afterward  became,  the  property  of 
Isaac  Walker,  against  whom  John  Morford  had  a  judgment.  Under  execution 
issued  thereon,  John  Walker,  still  holding  the  note,  was  garnished;  and  such  legal 
proceedings  were  had  as  that  the  note  was  indorsed  by  the  sheriff  to  John  Morford, 
pursuant  to  order  of  the  court,  Morford  agreeing  to  take  the  same  at  its  face. 
It  is  now  and  here  claimed,  by  appellee's  counsel,  that  such  transfer  did  not  oper-, 
ate  as  an  indorsement  under  the  law  merchant  by  the  payee,  to  transfer  the  note 
discharged  of  its  infirmity.  Our  statute  says  (Rev.,  §  3272) :  '  Bank  bills  and  other 
things  in  action  may  be  levied  upon  and  sold,  or  appropriated  as  hereinafter 
provided,  and  assignments  thereon  by  the  officer  shall  have  the  same  effect  as 
if  made  by  the  defendant,  and  may  be  treated  as  so  made.'  And  it  is  further 
provided,  by  section  3222,  that  money,  promissory  notes,  etc.,  may  be  appro- 
priated without  being  advertised  or  sold,  if  the  plaintiff  will  receive  them  at  their 
par  value.  The  precise  point  made  is,  that  the  transfer  by  the  officer  is  to  have 
the  same  effect  as  if  made  by  the  defendant,  and  that  Isaac  Walker,  and  not  John 
Walker,  was  the  execution  defendant.  We  think  this  too  narrow  a  construction 
to  place  upon  the  statute,  which  is  surely  a  remedial  one.  In  our  view,  the  gar- 
nishee, holding  such  paper,  and  having  legal  title  in  himself,  may  properly  be 
said  to  be  the  defendant,  at  least  in  the  garnishment  proceedings.  A  fair  con- 
struction of  the  sections,  when  their  purpose  is  considered,  will  make  the  defend- 
ant include  not  only  the  execution  defendant,  but  also  the  garnishee  defendant. 
The  indorsement  by  the  officer  is  to  have  the  same  effect  as  if  made  by  the  de- 
fendant in  the  garnishment.  Such  an  indorsement  will,  therefore,  have  the  same 
effect  in  this  case  as  an  indorsement  by  the  legal  holder  under  the  law  merchant." 
93.  McCormick  v.  Williams,  54  Iowa,  50. 


§§  781a,  781b  ORDINARY   COURSE    OF   BUSINESS  913 

tions  of  a  holder  in  due  course,^^  it  has  been  held  that  a  trustee  under 
a  deed  of  trust  to  secure  all  the  creditors  of  the  grantor  is  such  a 
holder,  and  that  the  statute  has  probably  changed  the  rule  under  the 
law  merchant  in  this  respect.^^ 

§  781a.  Who  cannot  ostensibly  transfer  a  good  title. — A  bill  or 
note  in  the  hands  of  one  not  the  payee,  and  unindorsed  where  it  is 
not  payable  to  the  payee  or  bearer,  would  be  open  to  defenses  in 
the  hands  of  the  transferee,  for  such  possession  and  transfer  are  not 
in  the  usual  course  of  business.^^  A  bill  in  the  hands  of  the  drawer 
and  payable  to  his  order,  might  be  properly  acquired  from  him,  and 
the  holder  under  his  indorsement  would  be  protected  against  defenses, 
for  the  acceotor  is  the  primary  debtor,  and  the  drawer  the  original 
creditor.^^ 

§  781b.  Whether  acceptor  of  bill  indorsed  in  blank  can  transfer  a 
good  title  before  maturity. — Whether  or  not  a  bill  in  the  hands  of 
the  acceptor  before  maturity  could  be  acquired  from  him  under  an 
indorsement  in  blank  by  the  payee,  so  as  to  protect  the  indorsee  from 
defenses  available  between  anterior  parties,  is  a  disputed  question. 
In  New  York  it  has  been  held  that  it  cannot,  on  the  ground  that  the 
presumption  m  such  a  case  is  that  the  acceptor  either  holds  it  for 
acceptance,  or  after  payment,  in  either  of  which  cases  he  would  have 
no  authority  to  negotiate  it.^^    In  England  it  has  been  held  that  the 

94.  Appendix,  sees.  52,  53. 

95.  Trustees  of  American  Bank  v.  McComb,  105  Va.  473,  54  S.  E.  14,  the 
court  saying  that  where  the  act  defines  generally  who  shall  be  holders  in  due  course, 
and  makes  an  express  exception  of  a  certain  class,  who  would  otherwise  be  em- 
braced, as  in  section  53,  the  exception  negatives  the  idea  that  any  other  class  wa^ 
to  be  excepted,  in  accordance  with  maxim  "Expressio  unius  est  exdusio  alterius." 

96.  Gibson  v.  Miller,  29  Mich.  355;  Mills  v.  Porter,  2  Hun.  524.  So  held  in 
Texas,  of  an  indorsement  and  transfer  by  the  husband  of  a  note  payable  to  the 
wife.  Kempner  v.  Comer,  73  Tex.  201,  citing  the  text;  Durein  v.  Moeser,  36 
Kan.  443;  Quigley  v.  Mexico  Southern  Bank,  80  Mo.  295,  citing  the  text;  Lyon, 
Potter  &  Co.  V.  First  Nat.  Bank,  29  C.  C.  A.  45,  85  Fed.  120,  text  cited.  See 
ante,  §§  573,  741,  and  post,  §§  812,  1181a. 

97.  Merritt  v.  Duncan,  7  Heisk.  156.    See  post,  §  812. 

98.  See  ante,  §753,  and  post,  §812;  Central  Bank  v.  Hammett,  50  N.  Y. 
158  (1872).  In  this  case,  Balch  &  Co.,  being  indebted  to  defendants,  gave  them 
an  acceptance  upon  a  draft  drawn  by  them  and  made  payable  to  order  of  B.  & 
Co.  Failing  to  get  it  discounted,  they  returned  the  bill  to  B.  &  Co.,  who  gave 
them  another  acceptance.  Instead  of  canceling  the  first  draft  as  instructed, 
Balch  &  Co.  negotiated  it  to  the  Central  Bank,  before  maturity.  Held,  that  the 
Central  Bank  could  not  recover  against  the  drawers.    No  notice  is  taken  in  the 

58 


914  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  781b 

party  acquiring  the  bill  for  value  under  such  circumstances  is  entitled 
to  protection  as  a  bona  fide  holder  without  notice,  on  the  ground  that 
he  has  a  right  to  presume  that  the  bill  has  been  drawn  for  accommo- 
dation of  the  acceptor,  and  Lord  Abinger,  C.  B.,  in  giving  judgment 
to  this  effect,  has  forcibly  expressed  this  view,  which  seems  to  us 
correct.®^ 

Under  Negotiable  Instrument  statute. — Several  provisions  of  the 
statute  define  "a  holder  in  due  course,"  ^  and  several  cases  have  ap- 
plied the  statutory  definitions  to  one  who  takes  an  instrument  be- 
fore maturity,  for  value,  and  in  good  faith  and  without  notice  of  any 
infirmity  or  defect  of  title."    And  taking  a  note  as  collateral  security 

opinion  of  the  court,  of  the  case  of  Morley  v.  Culverwell,  7  M.  &  W.  174  (1840), 
where  the  contrary  doctrine  is  held,  and  has  been  well  expounded  by  Lord  Abinger. 
Central  Bank  v.  Hammett,  50  N.  Y.  686  (1872),  the  court  saying:  "The  possession 
of  a  bill  or  note  payable  to  bearer,  or  indorsed  in  blank  by  one  not  a  party  to  the 
instrument,  is  presumptive  evidence  of  ownership.  But  a  possession  of  such  an 
instrument  by  a  party  to  it  only  authorizes  a  presumption  of  such  rights  and  ob- 
ligations of  the  several  parties  as  are  indicated  by  the  paper  itself.  The  actual 
relations  to  each  other  of  the  several  parties  to  the  instrument  are  presumed  to 
be  precisely  such  as  the  law  declares,  in  the  absence  of  any  special  circumstances 
to  take  the  instrument  out  of  the  general  rule,  and  vary  the  liabilities  of  the  parties 
as  between  each  other.  An  individual  negotiating  for  the  purchase  of  a  bill 
or  note  from  one  having  it  in  possession,  and  whose  name  appears  upon  it,  must 
assume  that  the  title  of  the  holder,  as  well  as  the  liability  of  all  the  parties,  is 
precisely  that  indicated  by  the  instrument;  that  is,  he  cannot  assume  that  the 
person  in  possession  has  any  other  or  different  rights,  or  that  the  liability  of  the 
parties  is  other  or  different  from  that  which  the  law  would  imply  from  the  form 
and  character  of  the  instrument." 

99.  Morley  v.  Culverwell,  7  M.  &  W.  174  (1840),  Lord  Abinger,  C.  B.,  say- 
ing: "Suppose  mutual  accommodation  acceptances  to  be  given,  and  to  be  ex- 
changed before  they  have  been  negotiated,  the  names  remaining  on  them: — 
the  parties  may  circulate  them  so  as  to  give  a  title  to  a  bona  fide  holder,  before 
they  become  due;  and  wherein  does  this  case  differ  from  that?  Therefore  a  bill 
is  not  properly  paid  and  satisfied  according  to  its  tenor  unless  it  be  paid  when  it  is 
due;  and  consequently  if  it  be  satisfied  before  it  is  due,  by  an  arrangement  between 
the  drawer  and  acceptor,  that  does  not  prevent  the  acceptor  from  negotiating  it, 
or  an  innocent  indorsee  for  value  from  recovering  upon  it."  To  the  same  effect 
see  the  case  of  Witte  v.  Williams,  8  Rich.  304;  and  opinion  of  Moses,  C.  J.,  which 
disapproves  of  the  conclusion  in  Central  Bank  v.  Hammett,  50  N.  Y.  158.  In  the 
first  edition  of  this  work  the  author  stated  the  law  upon  the  authority  of  the  New 
York  decision  as  therein  laid  down.  Examination  of  the  English  authorities,  and 
of  the  South  Carolina  case,  has  satisfied  him  of  the  error,  and  that  the  English 
view  is  correct. 

1.  Appendix,  sees.  27,  52-59. 

2.  Buzzell  v.  Tobin,  201  Mass.  1,  86  N.  E.  923;  Christian  Feigenspan  v.  Mc- 
Donald, 201  Mass.  341,  87  N.  E.  624;  Massachusetts  Nat.  Bank  v.  Snow,  187 


§  782  THE    PHRASE    "BEFORE    MATURITY"  915 

under  the  above  circumstances  makes  the  transferee  a  holder  in  due 
course,^  but  one  was  not  a  holder  in  due  course,  it  has  been  held,  who 
received  a  check  from  the  payee  as  a  loan,  and  not  for  an  antecedent 
debt,  and  returned  it  to  the  payee  when  its  payment  was  stopped.^ 


SECTION  IV 

THE  PHRASE  "BEFORE  MATURITY" 

§  782.  In  the  fourth  place,  the  holder,  in  order  to  acquire  a  better 
right  and  title  to  the  paper  than  his  transferrer,  must  become  pos- 
sessed of  it  before  it  is  overdue.  For  if  it  were  already  paid  by  the 
maker  or  acceptor,  and  had  been  left  outstanding,  it  would  be  already 
discharged,  and  they  would  not  be  bound  to  pay  it  again  to  any  one 
who  acquired  it  after  the  period  when  payment  was  due.  And  if  it 
were  not  paid  at  maturity,  it  is  then  considered  as  dishonored;  and, 
although  still  transferable,  in  like  manner  and  form  as  before,  yet  the 
fact  of  its  dishonor,  which  is  apparent  from  its  face,  is  equivalent  to 
notice  to  the  holder  that  he  takes  it  subject  to  its  infirmities,  and 
can  acquire  no  better  title  than  his  transferrer.^    The  doctrine  ap- 


Mass.  159,  72  N.  E.  959;  Goetting  v.  Day,  87  N.  Y.  S.  510;  Park  v.  Exum,  156 
N.  C.  228,  72  S.  E.  309;  Hull  v.  Angus  (Oreg.),  118  Pac.  284;  Scandinavian  Ameri- 
can Bank  v.  Johnston,  63  Wash.  187,  115  Pac.  102;  Hodge  v.  Smith,  130  Wis.  326, 
110  N.  W.  192.  Where  an  owner  of  property  gave  a  check  to  a  contractor  to  pay 
off  his  men  and  upon  the  supposition  that  the  architect  had  given  a  certificate  for 
the  work,  and  stopped  payment  of  the  check  upon  finding  that  the  certificate  had 
not  been  given,  a  person  who  cashed  the  check  for  the  payee  was  a  holder  in  due 
course  though  the  payee  failed  to  pay  the  men  and  abandoned  his  work  upon  the 
building  about  the  same  time.  Siegmeister  v.  Lispenard  Realty  Co.,  107  N.  Y.  S. 
158. 

3.  American  Nat.  Bank  v.  J.  S.  Minor  &  Son,  135  S.  W.  278,  142  Ky.  792; 
Wilkins  v.  Usher,  123  Ky.  696,  97  S.  W.  37;  Brown  v.  James,  80  Nebr.  475,  114 
N.  W.  591.  See  also  Jett  v.  Standafer,  137  S.  W.  513,  143  Ky.  787,  as  to  one 
receiving  a  note  from  the  payee  thereof  in  consideration  of  his  becoming  his 
surety  of  the  payee,  under  an  agreement  that  the  note  shall  be  his  unless  the  payee 
pays  his  debt. 

4.  Rosenthal  v.  Parson,  110  N.  Y.  S.  223. 

5.  Morgan  v.  United  States,  113  U.  S.  500;  Harrell  v.  Broxton,  78  Ga.  129; 
Money  v.  Ricketts,  62  Miss.  209;  Texas  Banking  Co.  v.  Turnley,  61  Tex.  370, 
citing  the  text;  Speck  v.  Pullman  Car  Co.,  121  111.  57;  Towner  v.  McClelland, 
110  111.  549;  Simons  v.  Morris,  53  Mich.  155;  Church  v.  Clapp,  47  Mich.  257; 
Wood  V.  McKean,  64  Iowa,  18,  citing  the  text;  Haywood  v.  Seeber,  61  Iowa, 
574;  Clute  v.  Frazier,  58  Iowa,  268;  Edney  v.  Willis,  23  Nebr.  56;  Woodsum  v. 


916  RIGHTS   OF   A   BONA   FIDE   HOLDER  §  782 

plicable  to  this  subject  has  been  admirably  stated  by  Chief  Justice 
Shaw,  who  says:  "Where  a  negotiable  note  is  found  in  circulation 
after  it  is  due,  it  carries  suspicion  on  the  face  of  it.  The  question  in- 
stantly arises,  why  is  it  in  circulation?  why  is  it  not  paid?  Here  is 
something  wrong.  Therefore,  although  it  does  not  give  the  indorsee 
notice  of  any.  specific  matter  of  defense,  such  as  set-off,  payment, 
or  fraudulent  acquisition,  yet  it  puts  him  on  inquiry;  he  takes  only 
such  title  as  the  indorser  himself  has,  and  subject  to  any  defense 
which  might  be  made  if  the  suit  were  brought  by  the  indorser."  ^  But 
there  is  this  limitation  to  this  doctrine:  that  if  the  holder  acquired 
the  paper  after  maturity,  from  one  who  became  a  bona  fide  holder  for 
value  and  without  notice  before  maturity,  he  is  then  protected  by 
the  strength  of  his  transferrer's  title.^ 

Cole,  69  Cal.  142;  Hays  v.  Kingston,  16  Atl.  745;  Osborn  v.  McClelland  (Ohio), 
1  West.  Rep.  227,  citing  the  text;  James  v.  Yaeger  (Cal.),  24  Atl.  104;  Texas 
V.  Hardenberg,  10  Wall.  58;  Davis  v.  Miller,  14  Gratt.  1;  Arents  v.  Common- 
wealth, 18  Gratt.  750;  Marsh  v.  Marshall,  53  Pa.  St.  396;  Kellogg  v.  Schnaake, 
56  Mo.  137;  Kittle  v.  De  Lamater,  3  Nebr.  325;  Goodson  v.  Johnson,  35  Tex. 
622;  Henderson  v.  Case,  31  La.  Ann.  215;  Greenwell  v.  Haydon,  78  Ky.  333; 
Hinckley  v.  Union  P.  R.  Co.,  129  Mass.  61;  Callahan  v.  Crow,  91  Hun,  346,  36 
N.  Y.  Supp.  225;  McElwee  Mfg.  Co.  v.  Trowbridge,  62  Hun,  471,  17  N.  Y.  Supp. 
3;  British-American  Mortgage  Co.  v.  Smith,  45  S.  C.  83,  22  S.  E.  747;  Quimby  v. 
Stoddard,  67  N.  H.  287,  35  Atl.  1106;  Emerson  v.  Crocker,  5  N.  H.  159;  Farnham 
V.  Fox,  66  N.  H.  673;  The  Stockton  Sav.  &  Loan  Society  v.  Giddings,  96  Cal. 
84,  30  Pac.  1016,  31  Am.  St.  Rep.  181;  Vandagrift  v.  Bates  County  Inv.  Co.,  144 
Mo.  App.  77,  128  S.  W.  1007;  King  v.  Mecklenburg,  17  Colo.  App.  312,  68  Pac. 
984.  See  ante,  §  724  and  as  to  the  effect  of  the  Negotiable  Instrument  statute,  see 
ante,  under  §  726.  The  phrase  "in  due  course  of  business"  requires  indorsement 
before  maturity.  Cochran  v.  Stein  (Minn.),  136  N.  W.  1037.  An  indorsee  of  a 
note  before  maturity  with  notice  of  payment  to  a  third  person  pursuant  to  an 
order  of  the  payee  may  transfer  the  note  to  an  innocent  purchaser  for  value  before 
maturity,  who  may  enforce  the  note  notwithstanding  such  payment.  Snead  v. 
Barclift,  2  Ala.  App.  297,  56  So.  592.  Where  an  agent,  often  owner  of  a  note,  made 
an  agreement  with  the  maker  extending  the  time  of  payment,  without  the  con- 
sent of  the  owner,  the  time  of  payment  was  not  extended,  and  a  transferee  of  the 
note  took  it  after  maturity.  Merchant  Loan  &  Trust  Co.  v.  Welter,  205  111.  647, 
68  N.  E.  1082. 

6.  Fisher  v.  Leland,  4  Cush.  456;  Owen  v.  Evans,  134  N.  Y.  514,  31  N.  E. 
999;  Anderson  &  Co.  v.  Stapel,  80  Mo.  App.  115. 

7.  See  ante,  §  726,  and  post,  §§  786,  803,  805;  Barker  v.  Lichtenberger,  41  Nebr. 
751,  60  N.  W.  79.  Where  a  negotiable  promissory  note  has  been,  before  maturity, 
duly  indorsed  and  delivered  in  escrow,  with  the  contract  of  its  purchaser  to  con- 
vey in  consideration  of  it  certain  land,  and  proceedings  were  necessary  to  enable 
the  purchaser  of  the  note  to  convey  the  land  and  carry  out  the  contract  for  which 
the  note  was  taken,  the  fact  that  such  proceedings  were  not  completed,  and  the 
contract  not  fulfilled,  and  the  note  not  delivered  by  the  depositary  to  the  pur- 


§  783  THE    PHRASE    "  BEFORE    MATURITY"  9l7 

The  indorsement  and  delivery,  when  made  have  no  retroactive 
force,  and  the  rights  of  the  indorsee  are  to  be  determined  by  the  facts 
existing  at  the  time  of  the  indorsement  and  deUvery,  and  though  the 
instrument  may  have  been  purchased  and  the  money  paid  therefor 
prior  thereto,  if  the  indorsement  and  delivery  occur  after  maturity, 
the  indorsee  is  a  purchaser  after  maturity.^ 

Under  Negotiable  Instrument  statute. — Under  the  statutory  defini- 
tion of  a  holder  in  due  course,^  where  a  note,  dated  Sept.  21st,  was 
payable  one  day  after  date,  or  Sept.  22nd,  it  was  not  overdue  at 
any  time  on  the  22d,  and  a  purchase  of  the  note  on  that  day  was 
made  before  the  note  was  overdue.^*^ 

§  783.  When  instruments  payable  on  sight  or  on  demand  deemed 
overdue. — It  is  said  by  Professor  Parsons  in  respect  to  bills  on 
sight,  and  bills  or  notes  payable  on  demand:  "A  reasonable  time 
must  elapse  before  mere  nonpayment  dishonors  the  bill  or  note. 
What  this  time  is,  has  not  been  and  cannot  be  fixed  by  any  definite 
and  precise  rule.  One  day's  delay  of  paper  on  demand  certainly 
would  not  dishonor  it;  five  years  certainly  would.  And  in  each  case, 
how  many  days,  or  weeks,  or  months  are  requisite  for  this  effect, 
must  depend  upon  the  test,  whether  so  long  a  time  has  elapsed,  that 
it  must  be  inferred  from  the  particular  circumstances  and  the  general 
conduct  of  business  men,  both  of  which  should  be  considered,  that 
the  paper  in  question  must  have  been  intended  to  be  paid  within 
this  period,  and  if  not  paid,  must  have  been  refused."  ^^  And  again 

chaser  until  after  it  matured,  will  not  deprive  the  buyer  of  the  rights  of  a  bona 
fide  purchaser  before  maturity,  where  he  had  completed  the  transaction  m  ig- 
norance of  any  defense.    Cummingham  v.  Holmes,  66  Nebr.  723,  92  N.  W.  1023. 

8.  Dazey  v.  Jeffers,  127  111.  App.  307;  Wright  v.  Mississippi  Valley  Trust  Co.. 
144  Mo.  App.  640,  129  S.  W.  407. 

9.  Appendix,  sec.  52. 

10.  Wilkins  V.  Usher,  123  Ky.  696,  97  S.  W.  37. 

11.  1  Parsons  on  Notes  and  Bills,  263,  264.  See  further  on  this  subject,  Kerby 
V  Wade  (Ark.),  142  S.  W.  1121;  Jersey  City  Sav.  Bank  v.  Jersey  City  Bank,  48 
N  J.  L.  513;  Mitchell  v.  Catchings,  23  Fed.  710,  citing  the  text.  In  this  case  it 
was  held  that  a  lapse  of  twenty-three  days  was  insufficient  to  dishonor  the  paper. 
In  Paine  v.  Central  Vt.  R.  Co.,  14  Fed.  270,  four  months  held  sufficient.  Bull  v. 
First  Nat.  Bank  of  Kasson,  14  Fed.  613.  In  La  Due  v.  First  Nat.  Bank  of  Kasson, 
31  Minn.  33,  a  bank  draft  payable  on  demand  was  drawn  by  a  Minnesota  bank 
on  a  New  York  bank,  and  was,  after  outstanding  four  months  and  twenty-three 
days,  indorsed  to  the  holder.  The  court  held  that  it  was  to  be  regarded  as  over- 
due and  that  the  indorsee  took  it  subject  to  equities  (and  to  offsets  under  the 
Minnesota  statute),  and  Mitchell,  J.,  giving  the  opinion,  said:  "The  only  ques- 


918  RIGHTS   OF   A   BONA    FIDE    HOLDER  §  783 

the  same  learned  author  observes:  "If  the  paper  be  demanded  and 
refused  within  that  period  before  the  termination  of  which  there  is 

tion  left,  then,  is  whether  this  draft  was  'overdue'  when  Edison  indorsed  it  to 
Jordan  on  the  8th  March,  1882,  four  months  and  twenty-three  days  after  its 
date.  In  the  case  of  a  bill,  note,  or  check,  payable  on  demand,  no  exact  date  is 
fixed  in  the  instrument.  The  general  rule  is  that  it  must  be  presented  for  pay- 
ment within  a  reasonable  time,  having  in  view  ordinary  business  usages,  and  the 
purposes  which  paper  of  that  class  is  intended  to  subserve.  The  term  'overdue,' 
as  applied  to  a  demand  bill  of  exchange,  is  used  in  different  connections,  in  each 
of  which  it  has  a  different  meaning;  and  the  failure  to  keep  these  distinctions  in 
mind  has  perhaps  led  to  some  misapprehensions  regarding  the  present  case. 
Sometimes  it  is  used  in  reference  to  a  right  of  action  against  a  drawer  or  indorser. 
In  that  connection  a  bill  is  not  overdue  until  presented  to  the  drawee  for  payment, 
and  payment  refused.  Sometimes  the  term  is  used  in  considering  whether  an 
indorser  has  been  released  by  a  failure  of  the  holder  to  present  the  bill  for  pay- 
ment, and  to  give  the  indorser  notice  of  its  dishonor  within  a  reasonable  time. 
Again,  the  term  is  applied  to  a  bill  which  has  come  into  the  hands  of  an  indorsee  so 
long  after  its  issue  as  to  charge  him  with  notice  of  its  dishonor,  and  thus  subject 
it  in  his  hands  to  the  defenses  which  the  drawer  had  against  it  in  the  hands  of  the 
assignor.  It  is  in  this  last  connection  that  the  term  'overdue'  is  considered  in  the 
present  case.  That  in  this  case  a  bill  may  be  said  to  be  overdue,  although  it  has 
never  been  in  fact  presented  to  the  drawee  for  payment,  is  recognized  everywhere 
throughout  the  books,  and  will  be  apparent,  we  think,  on  a  moment's  reflection. 
Suppose  a  draft  has  been  held  by  the  payee  five  years,  without  ever  having  been 
presented  to  the  drawee  for  payment,  and  is  then  indorsed  to  another  party.  It 
would  not  be  due  so  as  to  give  a  right  of  action  against  the  drawer,  because  his 
contract  is  only  to  pay  in  case  it  is  not  paid  by  the  drawee  on  presentation.  But 
there  would  be  no  doubt  that  it  would  be  overdue  or  dishonored,  so  as  to  charge 
it  in  the  hands  of  the  indorsee  with  any  defenses  which  the  drawer  had  against  it 
in  the  hands  of  the  payee,  although  when  he  took  it  it  had  never  been  presented 
for  payment.  The  retention  of  a  demand  draft  so  long  a  time  without  present- 
ment, when  no  defense  exists  against  it,  is  so  unusual  and  contrary  to  business 
usages  that  this  circumstance  could  be  held  to  charge  the  indorsee  with  notice 
when  he  purchased  the  draft  that  it  was  dishonored.  The  lapse  of  time  would  in 
such  case  be  so  great  as  to  put  a  purchaser  upon  inquiry  as  to  the  reason  why  it 
was  still  outstanding  and  unpaid.  The  cases  are  almost  innumerable  in  which  it 
has  been  held  that  paper  payable  on  demand  had  been  outstanding  so  long  when 
transferred  as  to  be  deemed  overdue  and  dishonored,  so  as  to  subject  it,  in  the 
hands  of  the  purchaser,  to  any  defenses  which  the  maker  or  drawer  had  against  it 
in  the  hands  of  the  payee;  and  in  none  of  these  cases  is  the  question  whether  or 
not  the  paper  had  been,  before  the  transfer,  presented  for  payment  to  the  maker  or 
drawee,  referred  to  as  at  all  material.  Down  v.  Hailing,  4  B.  &  C.  330;  First  Nat. 
Bank  v.  Needham,  29  Iowa,  249;  Cowing  v.  Altman,  71  N.  Y.  435;  Sylvester  v. 
Crapo,  15  Pick.  92;  Ranger  v.  Carey,  1  Mete.  (Mass.)  369;  Herrick  v.  Wolverton, 
41  N.  Y,  581;  Story  on  Promissory  Notes,  §  207,  and  note;  Thompson  v.  Hale,  6 
Pick.  258;  American  Bank  v.  Jenness,  2  Mete.  (Mass.)  288;  Carlton  v.  Bailey,  27 
N.  H.  230;  Parker  v.  Tuttle,  44  Me.  459;  Nevins  v.  Townsend,  6  Conn.  5;  Camp  v. 
Scott,  14  Vt.  387;  Morey  v.  Wakefield,  41  Vt.  24.    That  in  determining  whether 


§  783  THE    PHRASE    " BEFORE   MATURITY"  919 

no  presumption  of  dishonor,  a  taker  after  such  demand,  and  within 
that  period,  having  no  notice  or  knowledge  of  the  demand  or  refusal, 
cannot  be  affected  by  it.  For  example,  suppose  a  note  on  demand  so 
circumstanced  that  the  court  would  say  the  lapse  of  one  month  is 
not  sufficient  to  dishonor  it,  and  the  lapse  of  two  months  is  sufficient, 
and  a  transferee  takes  it  on  the  twenty-fifth  day  without  notice  or 
knowledge  that  on  the  twenty-fourth  day  it  had  been  demanded 
and  refused.  We  should  say  that  the  law  would  allow  him  the  right 
of  presuming  nondishonor  during  the  whole  of  that  month,  and  would 
protect  his  rights  accordingly,"  ^^  And  it  has  been  held  that  where  a 
large  amount  had  been  paid  on  the  note,  and  the  last  payment  was 
but  a  few  days  before  its  purchase,  the  facts  were  not  such  as  to  raise 

an  indorsee  took  a  demand  note  or  bill  as  dishonored  and  overdue  paper,  subject 
to  all  equities  or  defenses,  the  test  is  the  length  of  time  it  has  been  outstanding, 
and  not  whether  it  has  in  fact  been  presented  for  payment,  may  be  illustrated  in 
another  way.  Suppose  a  draft  had  in  fact  been  presented  for  payment,  and  pay- 
ment refused,  on  the  very  day  it  was  issued,  it  would  then  be  overdue  as  to  the 
drawer  so  that  an  action  would  lie  then  against  him.  But  suppose,  immediately 
after  such  presentation,  and  on  the  same  day,  the  holder  should  indorse  the  draft 
to  another,  who  took  it  in  good  faith,  for  value,  without  notice  of  this  actual 
dishonor;  clearly  such  indorsee  would  not  take  it  as  overdue  paper,  subject  to  the 
equities  or  defenses  against  it  in  the  hands  of  the  former  holder,  because  a  reason- 
able time  for  its  presentation  not  having  expired,  there  was  nothing  to  put  him 
upon  inquiry,  or  to  charge  him  with  notice  of  such  equities.  Himmelman  v. 
Hotaling,  40  Cal.  111.  In  fact,  in  determining  whether  an  indorsee  takes  such 
paper  as  overdue  paper,  subject  to  such  defenses  or  equities,  the  question  of  actual 
demand  and  dishonor  does  not  enter  into  the  discussion.  The  point  of  inquiry  is, 
had  the  paper  been  outstanding  so  long  after  its  date  as  to  put  the  purchaser  upon 
inquiry,  and  charge  him  with  notice  that  there  is  some  defense  to  it?  In  view  of 
the  well  known  fact  that  bills  of  exchange  are  not  always  transmitted  immediately 
for  payment,  but  first  pass  through  the  hands  of  several  intermediate  holders 
in  the  ordinary  course  of  business,  and  in  other  cases  are  purchased  by  travelers 
to  be  carried  with  them  instead  of  currency  or  coin,  to  be  negotiated  as  occasion 
may  require,  we  are  not  disposed  to  lay  down  any  narrow  rule  on  this  subject. 
But  in  this  case  we  think  that  the  fact  that  this  draft  was,  without  any  explana- 
tion of  the  reason,  found  outstanding  nearly  five  months  after  its  date,  fully 
justified  the  trial  court  in  holding  it  overdue  and  dishonored  when  Jordan  took 
it,  so  as  to  charge  it  in  his  hands,  or  the  hands  of  those  who  held  under  him,  with 
any  defense  or  set-off  which  the  drawer  had  against  it  in  the  hands  of  Edison." 
12.  1  Parsons  on  Notes  and  Bills,  270.  See  also  Bartrum  v.  Caddy,  9  Ad. 
&  El.  275-278;  Cripps  v.  Davis,  12  M.  &  W.  159,  165.  The  fact,  standing  alone, 
that  a  note  payable  on  demand  was  purchased  18  months  after  its  date,  would 
have  made  the  note  overdue,  but  when  the  note  was  kept  aUve  by  continuous 
payments  of  monthly  interest  to  the  original  payee  and  to  the  purchaser  after 
he  took  the  note,  it  cannot  be  considered  as  overdue  at  the  time  of  transfer. 
McLean  v.  Bryer,  24  R.  I.  599,  54  Atl.  373. 


920  RIGHTS   OF   A   BONA   FIDE   HOLDER  §§  783a,  784 

a  reasonable  presumption  that  the  note,  at  the  time  of  its  purchase, 
was  a  dishonored  note.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statutory  defini- 
tion of  a  holder  in  due  course/"*  as  between  the  maker  and  indorsee 
of  a  demand  note,  the  latter  is  deemed  to  be  a  holder  in  due  course 
if  it  has  come  into  his  hands  for  value  in  the  ordinary  course  of  busi- 
ness within  a  reasonable  time  after  its  date,  and  it  has  been  held  that 
such  a  note  must  be  considered  to  have  been  overdue  when  at  the 
time  of  the  transfer  the  principal  sum  named  had  been  nearly  fully 
paid,  and  the  transferee  had  notice  that  there  was  a  dispute  whether 
there  was  a  balance  due  on  the  note.^^  And  the  statutory  declara- 
tion that  where  an  instrument  payable  on  demand  is  negotiated  an 
unreasonable  length  of  time  after  its  issue,  the  holder  is  not  deemed 
a  holder  in  due  course  ^^  repeals  a  statute  under  which  a  note  payable 
on  demand  was  open  to  the  same  defenses  in  the  hands  of  an  indorsee 
as  if  the  action  had  been  brought  by  the  promisee.  ^^ 

§  783a.  Cancellation  of  paid  paper. — It  is  important  that  bills 
and  notes,  especially  those  not  payable  at  a  fixed  day,  should  be 
destroyed  when  paid,  or  so  marked  by  writing  or  stamped  words  as 
to  show  payment;  for  otherwise,  as  their  payment  would  not  appear 
from  their  face,  the  parties  might  be  held  hable,  were  they  reissued, 
to  a  bona  fide  purchaser  without  notice.  ^^ 

§  784.  Presumption  that  bill  or  note  is  acquired  before  maturity. 

— There  is  always  a  presumption  when  the  payee's  or  an  indorser's 
name  is  indorsed  upon  the  bill  or  note,  that  it  was  done  before  its 
maturity;  and  likewise  the  presumption  that  the  holder  acquired  the 
instrument  before  maturity,  whether  the  legal  title  be  transferable 
by  indorsement,  or  by  delivery  merely.  ^^    Proof  that  a  note  was  in 

13.  First  Nat.  Bank  v.  Mineral  Farm  Consol.  Min.  Co.,  17  Colo.  App.  452, 
68  Pac.  981. 

14.  Appendix,  sec.  52. 

15.  Brophy  Grocery  Co.  v.  Wilson,  45  Mont.  489,  124  P.  510. 

16.  Appendix,  sec.  53. 

17.  Gordon  v.  Levine,  197  Mass.  263,  83  N.  E.  861,  15  L.  R.  A.  (N.  S.)  243, 
125  Am.  St.  Rep.  361. 

18.  District  of  Columbia  v.  Cornell,  130  U.  S.  655,  9  Sup.  Ct.  Rep.  694. 

19.  See  ante,  §  728;  New  Orleans,  etc.  v.  Montgomery,  95  U.  S.  (5  Otto)  16 
(1877);  Whitney  Nat.  Bank  v.  Cannon,  52  La.  Ann.  1484,  27  So.  948,  citing  text; 
New  Albany  Woolen  Mills  v.  Myers,  43  Mo.  App.  124,  citing  text;  Crawford  v. 
Johnson,  87  Mo.  App.  478,  citing  text;  Jones  v.  Evans,  6  Cal.  App.  88,  91  Pac. 
532;  King  v.  Mecklenburg,  17  Colo.  App.  312,  68  Pac.  984. 


I  784a  THE    PHRASE    "BEFORE    MATURITY"  921 

the  possession  of  the  original  holder  a  short  wliile  prior  to  maturity 
does  not  carry  the  burden  resting  on  the  defendant  of  showing  that 
an  undated  indorsement  was  made  after  maturity.-*^  Indeed  the  law 
will  presume  in  favor  of  the  holder,  according  to  many  authorities, 
that  the  indorsement  or  assignment  was  of  even  date  with  the  instru- 
ment itself;  ^^  but  it  can  rarely  be  the  case  that  any  stronger  or  more 
definite  presumption  will  be  needed  than  that  he  acquired  it  before 
maturity,  as  he  is  then  protected  against  defenses  available  to  his 
transferrer.  We  can  conceive,  however,  of  cases  in  which  the  further 
presumption  that  the  transfer  was  of  even  date  might  be  desirable 
to  the  holder — as  where  it  were  proved  that  at  a  certain  time  after 
date  of  the  paper  he  had  notice  of  a  defect  which  would  prevent  his 
better  title,  if  it  were  not  then  established.  And  where  the  time  of  a 
payment  of  a  note  had  been  extended  and  the  extension  indorsed 
thereon,  and  there  was  nothing  on  the  face  of  the  note  to  indicate  that 
it  had  been  dishonored,  but  on  the  contrary  it  appeared  therefrom 
that  by  reason  of  the  extension  of  time  it  had  not  matured  when  it 
was  purchased,  the  purchaser  was  an  innocent  purchaser  before 
maturity.^2  Where,  however,  the  drawer  of  a  bill  of  exchange  sets 
up  fraudulent  representations  by  the  original  payee,  by  which  the 
drawer  was  induced  to  sign  the  bills  or  drafts,  this  presents  a  good 
defense,  and  the  burden  of  proof  is  cast  on  a  purchaser  to  show  that 
the  bills  were  purchased  by  him  before  maturity,  and  for  a  valuable 
consideration.^^ 

§  784a.  Strength  of  presumption  as  to  date  of  acquisition.— But 

the  presumption  as  to  the  time  of  acquiring  the  instrument  is  not 
a  strong  one.  The  indorsement  is  almost  invariably  without  date, 
and  without  witnesses.  The  transfer  by  delivery  merely,  leaves  no 
footprint  upon  the  paper  by  which  the  time  can  be  traced.  And  the 
presumption  in  favor  of  the  holder  as  to  the  time  of  transfer  being 
without  any  written  corroborative  testimony,  is  of  the  slightest  na 
ture,  and  open  to  be  blown  away  by  the  slightest  breath  of  suspicion." 

20.  Baskins  v.  Valdosta  Bank  &  Trust  Co.,  5  Ga.  App.  600,  63  S.  E.  648.  See 
Cropley  v.  Eyster,  9  App.  D.  C.  373,  holding  that  the  fact  that  the  note  was  in  the 
actual  custody  and  control  of  the  indorser  on  the  day  of  maturity  was  sufficient 
to  overcome  the  presumption. 

21.  See  ante,  §  728;  Whitney  Nat.  Bank  v.  Cannon,  52  La.  Ann.  1484,  27  bo. 
948,  citing  text. 

22.  Conkhn  v.  Young,  141  Iowa,  676,  120  N.  W.  353. 

23.  Woodall  V.  People's  Nat.  Bank,  153  Ala.  756,  45  So.  194.    See  also  post,  §  815. 

24.  Gibson,  J.,  in  Snyder  v.  Riley,  6  Barr,  164;  Hill  v.  Kraft,  29  Pa.  St.  186; 


24 


922  RIGHTS   OF   A   BONA    FIDE   HOLDER  §§  785,  786 

§  785.  The  presumption  that  the  holder  of  a  note  acquired  it  be- 
fore maturity  has  been  held  not  to  apply  where  the  note  is  payable 
in  so  short  a  time  as  one  day  after  date,  on  the  ground,  as  stated, 
that  the  time  to  run  is  so  short  that  it  is  not  probable  that  it  would  be 
put  into  circulation  before  maturity — at  least,  not  sufficiently  so  as 
to  raise  a  presumption  in  favor  of  the  holder;  that  such  paper  is  rather 
evidence  of  a  debt  than  a  promise  made  with  expectation  of  payment 
at  the  time  named,  and  does  not  belong  to  the  class  of  paper  intended 
for  negotiation  and  circulation  for  commercial  purposes.^^  But 
this  departure  from  the  general  principle,  which  relieves  the  holder 
from  nothing  but  the  burden  of  proof,  is  not  sanctioned  by  the  law 
merchant;  and,  although  the  time  is  brief,  the  execution  of  a  nego- 
tiable instrument  payable  at  so  brief  a  period  is  in  itself  evidence  of 
a  need  of  money  for  the  period  named.  And  we  know  of  no  reason 
why  a  party  may  not  use  negotiable  instruments  for  a  short  loan  as 
well  as  a  long  one. 

§  786.  Rule  as  to  accommodation  paper,  acquired  overdue. — 

While  it  is  the  general  rule  that  if  the  paper  be  overdue  at  the  time 
of  the  transfer  that  circumstance  of  itself  is  notice,  and  he  can  ac- 
quire no  better  title  than  his  indorser;  yet,  the  fact  that  the  paper 
was  executed  for  accommodation  without  consideration,  and  that 
the  indorsee  knew  it,  is  no  defense  even  when  the  paper  was  over- 
due at  the  time  of  the  indorsement,  it  being  considered  that  parties  to 
accommodation  paper  hold  themselves  out  to  the  public  by  their 
signatures  to  be  bound  to  every  person  who  shall  take  the  same  for' 
value,  to  the  same  extent  as  if  paid  to  him  personally. ^^    If  the  holder 

Hatch  V.  Calvert,  15  W.  Va.  97;  Henry  v.  Sneed,  99  Mo.  423,  citing  the  text; 
Osborn  v.  McClelland  (Ohio),  1  West.  Rep.  227. 

25.  Beall  v.  Leverett,  32  Ga.  104,  Lyon,  J. 

26.  This  doctrine  seems  just,  and  is  sustained  by  numerous  authorities,  though 
not  without  conflict.  Favoring  it,  see  Story  on  Notes,  §  194;  Story  on  Bills 
(Bennett's  ed.),  §§  188,  191;  2  Rob.  Pr.  (new  ed.)  253;  Byles  on  Bills  (Sharswood's 
ed.),  285;  Dunn  v.  Weston,  71  Me.  270;  First  Nat.  Bank  v.  Grant,  71  Me.  374; 
Harrington  v.  Dorr,  3  Rob.  283;  Davis  v.  Miller,  14  Gratt.  6;  Sturtevant  v.  Ford, 
4  M.  &  G.  101,  4  Scott,  608;  Charles  v.  Marsden,  1  Taunt.  224;  Lazarus  v.  Cowie, 
3  Q.  B.  459  (43  Eng.  C.  L.);  Caruthers  v.  West,  11  Ad.  &  El.  144.  In  Redfield 
&  Bigelow's  Lead.  Cas.,  216,  217,  it  is  said:  "To  hold  otherwise  would  be  to  en- 
courage fraud,  and  to  relieve  the  party  from  the  very  responsibility  which  he 
expected  to  meet,  and  which,  upon  every  principle  of  justice  and  fair  dealing, 
he  should  be  compelled  to  abide  by."  See  ante,  §§  726,  782;  Seyfert  v.  Edison, 
45  N.  J.  L.  393;  Maflfatt  v.  Greene,  149  Mo.  48,  50  S.  W.  809,  text  cited;  Hodges 
V.  Nash,  141  111.  391,  31  N.  E.  151. 


§787  THE    PHRASE    "BEFORE    MATURITY*'  923 

received  the  paper  after  maturity  from  an  indorser  who  took  it  bona 
fide  before  maturity,  there  is  no  question  as  to  his  right  to  recover;  " 
but  if  he  takes  it  after  maturity  from  the  party  for  whose  accommo- 
dation it  was  made,  indorsed,  or  accepted,  there  is  conflict  of  decision 
on  the  subject;  -^  but  the  doctrine  of  the  text  is  sustained  by  the 
highest  authority.-^ 

§  787.  Rule  when  instalment  of  principal  or  interest  is  overdue. 

— If  the  note  be  payable  by  instalments  it  is  dishonored  when  the 
first  instalment  becomes  overdue  and  unpaid,  and  he  who  takes  it 
afterward  takes  it  subject  to  all  equities  between  the  original  par- 
ties, ^°  though  it  has  been  held  that  where  a  note  is  payable  one-tenth 
annually,  and  the  interest  semi-annually,  in  the  absence  of  express 
stipulations  to  the  contrary,  the  entire  note  does  not  become  due 
and  payable  upon  default  in  the  payment  of  any  of  its  instalments.^^ 
Whether  or  not  the  same  rule  applies  when  there  is  an  instalment  of 
interest  overdue  and  unpaid  is  a  controverted  matter.  The  weight 
of  authority  is  to  the  effect  that  the  bona  fide  purchaser  for  value  of 
negotiable  paper  is  within  the  protection  of  the  law  merchant,  al- 
though interest  is  overdue  and  unpaid  at  the  time  of  the  purchase,  in- 
terest being  a  mere  incident  of  the  debt,  and  the  holder  losing  no  right 
as  against  the  parties,  whether  makers  or  indorsers,  by  failure  to  de- 
mand it.^2    And  so,  under  the  rule  that  a  provision  in  a  note  that 

27.  Howell  V.  Crane,  12  La.  Ann.  126;  Riegel  v.  Cunningham,  9  Phila.  (Pa.) 
177;  Story  on  BUls,  §  188.    See  ante,  §§  726-782;  post,  §§  803-805. 

28.  Chester  v.  Dorr,  41  N.  Y.  279;  Coghlin  v.  May,  17  Cal.  506;  Simons  v. 
Morris,  53  Mich.  155. 

29.  See  ante,  §  726,  and  notes. 

30.  Vinton  v.  King,  4  Allen,  562;  Field  v.  Tibbetts,  57  Me.  359;  Hart  v.  Stick- 
ney,  41  Wis.  630;  McCorkle  v.  Miller,  64  Mo.  App.  153,  citing  text;  Vette  v.  La 
Barge,  64  Mo.  App.  179;  Norwood  v.  Leeves  (Tex.  Civ.  App.),  115  S.  W.  53. 

31.  Hinton  v.  Jones,  136  N.  C.  53,  48  S.  E.  546.  A  provision  in  an  instalment 
note:  "Any  instalment  past  due  to  draw  6  per  cent,  interest  per  annum.  If 
not  paid  within  ten  days  after  due,  the  whole  note  to  become  due  on  the  option 
of  holder,"  does  not  make  the  note  ipso  facto  become  due  when  the  first  instal- 
ment becomes  past  due,  but  it  requires  affirmative  action  on  the  part  of  the  holder. 
Sheffield  v.  Johnson  County  Savings  Bank,  2  Ga.  App.  221,  58  S.  E.  386. 

32.  Kelley  v.  Whitney,  45  Wis.  110  (1878),  overruling  Hart  v.  Stickney,  41 
Wis.  630  (1877),  and  reaffirming  Boss  v.  Hewitt,  15  Wis.  260  (1862).  See  post, 
§  1506,  and  cases  cited,  30  Am.  Rep.  702,  703;  Bigelow  on  Bills  and  Notes  (2d 
ed.)  445;  Cooper  v.  Hocking  Valley  Nat.  Bank,  21  Ind.  App.  358,  50  N.  E.  775, 
69  Am.  St.  Rep.  365;  Farmers'  &  Merchants'  Bank  v.  Daiker  (Iowa),  133  N.  W. 
705.  In  National  Bank  of  North  America  v.  Kirby,  108  Mass.  497,  the  court, 
referring  to  the  contention  that  when  an  instalment  of  interest  is  overdue  the 


924  RIGHTS   OF   A   BONA   FIDE   HOLDER  §  787 

default  in  the  payment  of  interest  should  cause  the  whole  note  to  be- 
come immediately  due  is  not  self-executory,  it  has  been  held  that  such 
a  provision  does  not  make  the  note  dishonored  when  at  the  time  it 
was  indorsed  a  payment  of  interest  was  past  due.^^  This  seems  to  be 
the  correct  rule,  though  the  contrary  view  is  not  without  some  weighty 
consideration  to  support  it.^'*  Where  more  than  one  note  is  executed 
upon  the  same  consideration,  they  are  not  all  to  be  regarded  as  dis- 
honored when  one  is  overdue  and  unpaid  ^^  unless  the  notes  them- 
selves, or  the  security  of  the  notes,  stipulate  that  the  failure  to  pay 
any  one  of  the  notes  when  due  will  mature  the  others,  in  which  case, 
when  one  or  more  of  the  notes  are  past  due,  a  purchaser  of  the  other 

or  others  is  not  an  innocent  purchaser.^^ 

note  is  dishonored,  said:  "While  nonpayment  of  interest  is  not  to  be  allowed  the 
effect  here  claimed  for  it,  it  is  still  a  fact  proper  to  be  considered  by  the  jury, 
in  connection  with  other  circumstances,  on  the  question  whether  the  holder  is 
entitled  to  the  position  of  one  who  has  taken  in  good  faith  and  without  actual 
or  constructive  notice  of  existing  defenses."  In  Guckian  v.  Newbold,  22  R.  I. 
279,  47  Atl.  543,  with  respect  to  a  demand  note  on  which  the  interest  was  pay- 
able annually,  it  was  held  that  the  nonpayment  of  annual  interest  renders  a 
note  overdue,  and  therefore  subject  to  the  equities  between  the  original  parties. 
But  in  Guckian  v.  Newbold,  23  R.  I.  553,  594,  51  Atl.  210,  citing  the  text,  the 
court  explained  the  Guckian  v.  Newbold  case,  supra,  and  said  that  where  a  de- 
mand note  had  run  so  long,  with  no  apparent  reason  for  delay,  and  when,  in 
addition,  the  note  provided  for  interest,  which  most  men  expect  to  receive  at 
least  once  a  year,  and  the  payment  of  which  would  have  recognized  the  obliga- 
tion, but  none  was  paid,  the  note  must  be  taken  as  overdue. 

33.  Gillette  v.  Hodge,  170  Fed.  313.  The  liability  arising  under  the  provision 
of  a  note  that  in  the  event  of  default  being  made  in  the  payment  of  any  instal- 
ment of  interest  when  due  "then  the  whole  sum  of  principal  and  interest  shall 
become  immediately  due  and  payable  at  the  option  of  the  holder  of  this  note," 
does  not  arise  until  the  holder  exercises  the  option  given  to  him,  and  the  holder 
has  a  reasonable  time  in  which  to  determine  whether  or  not  he  will  exercise  his 
option  and  declare  the  principal  of  the  note  at  once  due  and  payable;  and  when 
the  option  was  exercised  within  a  reasonable  time,  the  liability  of  an  indorser 
was  fixed  when  he  was  given  notice  of  dishonor  on  the  day  the  option  was  exercised. 
Kinsel  v.  Ballou,  151  Cal.  754,  91  Pac.  620.  In  Hodge  v.  Wallace,  129  Wis.  84, 
108  N.  W.  212,  116  Am.  St.  Rep.  938,  it  was  held  that  where  a  note  contained  a 
stipulation  that  "  if  any  payment  or  part  payment  *  *  *  or  any  interest"  thereon, 
should  "become  due  and  unpaid,  such  delinquency"  should  "cause  the  whole 
note  to  immediately  become  due  and  collectible,"  a  purchaser  of  such  note  after 
delinquency  was  not  a  purchaser  before  maturity,  at  this  stipulation  did  not 
leave  it  optional  or  permissive  with  the  payee, 

34.  Merchants  Nat.  Bank  v.  Brisch,  154  Mo.  App.  631,  136  S.  W.  28;  Newell 
V.  Gregg,  51  Barb.  263.    See  authorities  cited,  §  1506a. 

35.  Patterson  v.  Wright,  64  Wis.  291;  Boss  v.  Hewitt,  15  Wis.  260. 

36.  Rowe  V.  Scott  (S.  D.),  132  N.  W.  695;  Lybrand  v.  Fuller,  30  Tex.  Civ. 
App.  116,  69  S.  W.  1005.     Compare  Crilly  v.  GaUice,  148  Fed.  835. 


§§  7S7a,  7SS  "PURCHASER  WITHOUT   NOTICE"  925 

Under  Negotiable  Instrument  statute. — It  has  been  held  that  where 
four  notes  were  executed  at  the  same  time,  upon  the  same  considera- 
tion, maturing  at  different  times,  the  notes  providing  that  a  failure 
to  pay  interest  as  it  became  due  should  mature  both  principal  and 
interest  at  the  option  of  the  holder,  a  purchaser  of  the  notes  after  the 
maturity  of  the  first  note,  upon  which  indorsements  of  payments 
had  been  made,  was  a  bona  fide  purchaser  of  the  three  notes  not  due 
at  the  time  of  the  purchase.^^ 

§  787a.  Transfer  on  last  day  of  grace. — A  purchaser  of  a  ne- 
gotiable instrument,  before  the  close  of  business  hours,  on  the  last 
day  of  grace,  and  before  its  dishonor,  has  been  held,  and,  as  we  think, 
correctly,  to  be  fully  protected  as  having  received  it  while  current;  ^^ 
but  a  contrary  view  has  been  taken  in  Massachusetts.^*  The  effect 
of  a  purchase  pending  suit  is  hereafter  considered.  ^° 


SECTION  V 

WHAT   IS   MEANT   BY    "PURCHASER   WITHOUT   NOTICE" 

§  788.  In  the  fifth  place,  the  holder  must  have  acquired  the  paper 
without  notice  of  its  dishonor.  Sometimes  a  bill  payable  at  so  many 
days  after  sight,  or  after  a  certain  event,  is  presented  for  acceptance, 
and  dishonored  before  the  time  of  payment  by  nonacceptance;  and 
in  such  cases,  the  party  acquiring  it  with  notice  of  such  dishonor 
stands  upon  the  same  footing  as  one  who  acquires  it  after  maturity, 
and  is  chargeable  in  like  manner  with  constructive  notice  of  any  flaw 
in  the  right  or  title  of  his  transferrer.''^  Sometimes  the  instrument 
bears  upon  its  face  the  marks  of  its  dishonor  for  nonacceptance,  and 

37.  Appendix,  sec.  56.  Spencer  v.  Alki  Point  Transp.  Co.,  53  Wash.  77,  101 
Pac.  509. 

38.  Crosby  v.  Grant,  36  N.  H.  273;  Continental  Nat.  Bank  v.  Townsend,  87 
N.  Y.  10;  Osborne  v.  Moncure,  3  Wend.  170;  Hopping  v.  Quin,  12  Wend.  517; 
Cayuga  County  Bank  v.  Hunt,  2  Hill,  635;  Bosch  v.  Cassing,  64  Iowa,  314; 
Fox  V.  Bank,  30  Kan.  442,  citing  the  text;  Haug  v.  Riley,  Admr.,  101  Ga.  372, 
29  S.  E.  44,  approving  text;  Holton  &  Winn  v.  Hubbard  &  Co.  et  al,  49  La. 
Ann.  715,  22  So.  401. 

39.  Pine  v.  Smith,  11  Gray,  38.  It  did  not  appear  in  this  case  whether  or  not 
the  transfer  was  during  business  hours,  nor  did  the  court  seem  to  attach  any  im- 
portance to  the  inquiry. 

40.  See  §  1199,  vol.  II. 

41.  Crossly  v.  Ham,  13  East,  498. 


926  RIGHTS    OF   A    BONA    FIDE    HOLDER  §  789 

in  such  cases  it  bears,  as  has  been  said,  "a  death  wound  apparent  on 
it."  ^2  If  it  has  been  dishonored  for  nonpayment  when  payable  on 
demand  or  at  sight,  the  Hke  rule  applies;  but  it  is  only  when  the  bill 
or  note  is  payable  at  a  day  certain  that  the  purchaser  can  perceive, 
by  the  very  fact  that  it  is  overdue,  that  it  has  been  dishonored.  The 
United  States  Supreme  Court  has  observed  on  this  subject  that  "a 
person  who  takes  a  bill  which,  upon  the  face  of  it,  was  dishonored, 
cannot  be  allowed  to  claim  the  privileges  which  belong  to  a  bona  fide 
holder.  If  he  chooses  to  receive  it  under  the  circumstances,  he  takes 
it  with  all  the  infirmities  belonging  to  it,  and  is  in  no  better  condition 
than  the  person  from  whom  he  received  it."  ^^  And  the  doctrine  was 
enforced  in  another  case,  where,  in  speaking  of  a  promissory  note 
so  marked  as  to  show  for  whose  benefit  it  was  to  be  discounted,  and 
that  discount  had  been  refused,  the  same  tribunal  held  that  all  those 
dealing  in  paper  ''with  such  marks  on  its  face  must  be  presumed  to 
have  knowledge  of  what  it  imported. 


J>  44 


§  789.  Notice  of  fraud,  defect  of  title,  and  illegality.— In  the 

sixth  place,  in  order  to  stand  upon  a  better  footing  than  his  trans- 
ferrer, the  holder  must  acquire  the  instrument  without  notice  of 
fraud,  defect  of  title,  illegality  or  want  of  consideration,  or  other 
fact  which  impeaches  its  validity  in  his  transferrer's  hands;  and  the 
word  "notice"  in  this  connection  signifies  the  same  as  knowledge.''^ 
Knowledge  of  fraud,  defect  of  title  or  illegality,  or  want  of  considera- 
tion impeaches  the  bona  fides  of  the  holder,  or  at  least  destroys  the 
superiority  of  his  title,  and  leaves  him  in  the  shoes  of  the  transferrer.^^ 

42.  Goodman  v.  Harvey,  4  Ad.  &  El.  870;  Byles  [*  160],  283. 

43.  Angle  v.  Northwestern,  etc.,  Ins.  Co.,  92  U.  S.  (2  Otto)  341-342;  Andrews  v. 
Pond,  13  Pet.  65;  District  of  Columbia  v.  Cornell,  130  U.  S.  661. 

44.  Fowler  v.  Brantly,  14  Pet.  318;  Angle  v.  Northwestern,  etc.,  Ins.  Co., 
92  U.  S.  (2  Otto)  342;  Swift  v.  Smith,  102  U.  S.  (12  Otto)  445. 

45.  Merchants'  Nat.  Bank  v.  Norris,  163  Ala.  481,  51  So.  15;  Bothell  v.  Fletcher 
&  Stobaugh,  94  Ark.  100,  125  S.  W.  645;  Standard  Cement  Co.  v.  Winham  Nat. 
Bank,  71  Conn.  684,  42  Atl.  1006;  Laschinsky  v.  Margolis,  114  N.  Y.  S.  296,  129 
App.  Div.  529.  Where  a  wife  sold  property  to  her  son,  who  executed  in  part 
payment  thereof  a  note  payable  to  himself  and  indorsed  it  in  blank,  and  the  hus- 
band had  possession  of  the  note,  a  person  holding  from  the  husband  would  take 
without  any  equity  which  would  raise  a  presumption  of  bad  faith.  Clark  v. 
Whitaker,  117  La.  298,  41  So.  580. 

46.  Hanauery  v.  Doane,  12  Wall.  342;  Sherrer  v.  Enterprise  Banking  Co.,  160 
Ala.  329,  49  So.  779  (that  one  of  the  signers  was  a  mere  surety);  Braly  v.  Henry, 
71  Cal.  481,  60  Am.  Rep.  544;  Standard  Cement  Co.  v.  Windham  Nat.  Bank,  71 
Conn.  668,  42  Atl.  1006;  Johnston  v.  Loar,  145  111.  App.  443;  Fudge  v.  Marquell, 


§  789  "purchaser  without  notice"  927 

And  any  fraud  upon  the  transferrer  incapacitates  the  transferee,  or 
one  acquiring  from  him  with  notice,  from  recovering  against  the 
transferrer.  ^'^ 

Injunction  lies  to  restrain  the  negotiation  of  a  bill  or  note  to  the 
inception  of  which  the  defense  is  fraud.^^ 

Under  Negotiable  Instrument  statute. — The  statute,  in  several  pro- 

164  Ind.  447,  72  N.  E.  565,  rehearing  denied  73  N.  E.  895  (as  to  a  material  altera- 
tion); Hale  Admr.  v.  Aldaffer,  5  Kan.  App.  40,  47  Pac.  320,  52  Pac.  194;  In  re 
Estate  of  Littell,  50  La.  Ann.  299,  23  So.  314;  Crampton  v.  Perkins,  65  Md.  24; 
McNamara  v.  Gargett,  68  Mich.  454;  Mace  v.  Kennedy,  68  Mich.  389;  Fisher  v. 
Leland,  4  Cush.  456;  Johnson  County  Sav.  Bank  v.  Redfern,  141  Mo.  App.  386, 
125  S.  W.  224;  Bank  of  Chilhcothe  v.  Ornsdorff,  126  Mo.  App.  654,  105  S.  W.  664; 
Bank  v.  Edholm,  25  Nebr.  742;  Joy  v.  Diefendorf,  130  N.  Y.  6,  28  N.  E.  602,  27 
Am.  St.  Rep.  484;  Skilding  v.  Warren,  15  Johns.  270;  Kasson  v.  Smith,  8  Wend. 
437;  Johnson  County  Savings  Bank  v.  Chase,  151  N.  C.  108,  65  S.  E.  745;  Farth- 
ing V.  Dark,  111  N.  C.  243,  16  S.  E.  337,  citing  text;  First  Nat.  Bank  of  Bellefonte 
V.  Rogers,  198  Pa.  St.  627,  48  Atl.  686;  Harrisburg  Bank  v.  Meyer,  6  Serg.  &  R. 
537;  Hickson  v.  Early,  62  S.  C.  42,  39  S.  E.  782;  Bank  of  Spearfish  v.  Graham,  16 
S.  D.  49,  91  N.  W.  340;  Ryland  v.  Brown,  2  Head,  270;  Smith  v.  Traders'  Nat. 
Bank,  74  Tex.  458;  Meade  v.  Sandidge,  9  Tex.  Civ.  App.  360,  30  S.  W.  245; 
Norvell  v.  Hudgins,  4  Munf.  496;  Merchants'  &  Manufacturers'  Nat.  Bank  v. 
Ohio  Valley  Furniture  Co.,  57  W.  Va.  625,  50  S.  E.  880,  70  L.  R.  A.  312.  An  agent 
having  in  his  possession  paper  belonging  to  his  principal,  indorsed  in  blank  or  in 
such  other  form  as  to  permit  transfer  of  title  thereto  by  mere  delivery,  may  be 
regarded,  by  strangers  having  no  notice  of  the  agency  or  the  capacity  in  which 
such  paper  is  held,  as  the  owner  thereof,  and  dealt  with  accordingly  in  respect  to 
it;  but  one  who  has  destroyed  his  'prima  facie  title  to  negotiable  paper,  arising  from 
the  fact  of  possession,  by  admitting  that  he  has  no  title,  cannot  restore  it  by  a 
mere  verbal  claim  that  he  has  since  obtained  title  or  the  right  to  discount  the 
paper  for  his  own  benefit,  as  a  purchaser  who  is  put  on  inquiry  by  sufficient  knowl- 
edge cannot  rely  upon  information  imparted  by  one  whose  interest  it  is  to  deceive 
him.  Merchants'  &  Manufacturers'  Nat.  Bank  v.  Ohio  Valley  Furniture  Co.,  57 
W.  Va.  625,  50  S.  E.  880,  70  L.  R.  A.  312.  But  notice  of  such  infirmity  traced  to 
the  holder  will  not  suffice  the  maker  if  the  holder  take  the  note  at  the  solicitation 
of  the  maker  and  upon  his  promise  to  secure  and  pay  the  same— maker  would  be 
estopped  from  denying  his  habihty.  Shipley  v.  Reasoner,  87  Iowa,  555,  54  N.  W. 
470.  Where  there  was  no  evidence,  or  offer  to  introduce  evidence,  to  show  notice 
to  the  holder,  or  reasonable  ground  for  suspicion  upon  his  part,  that  the  purpose 
of  the  payee  in  negotiating  the  note  was  to  defraud  creditors,  it  was  not  erroneous 
to  exclude  testimony  to  the  effect  that  the  payee  had  expressed  an  intention  to 
transfer  the  note  in  order  to  avoid  payment  of  debts.  Oliver  v.  MiUer,  130  Ga.  72, 
60  S.  E.  254. 

47.  Lenheim  v.  Fay,  27  Mich.  70;  Bergmann  v.  Salmon,  79  Hun,  456,  29  N.  Y. 
Supp.  968.  (See  comment  on  this  case  in  notes  to  §  815.)  Sprinkle  v.  Taylor, 
1  Ind.  App.  74,  27  N.  E.  122;  Brook  v.  Teague,  52  Kan.  119,  34  Pac.  347;  Wilson 
v.  Pauly,  18  C.  C.  A.  475,  72  Fed.  129. 

48.  Dickenson  v.  Bankers,  etc.,  Co.,  93  Va.  498,  25  S.  E.  548. 


928  RIGHTS    OF   A    BONA    FIDE    HOLDER  §  789 

visions,  defines  the  rights  of  a  holder  in  due  course  with  respect  to 
acquiring  paper  without  notice  of  cHshonor  or  of  infirmity  or  defect 
of  title.^^  For  one  thing,  it  prescribes  that  a  holder  in  due  course  is 
one  who  has  taken  an  instrument  that  is  complete  and  regular  on  its 
face.^°  And  so,  where,  upon  a  note  partly  printed  and  partly  written, 
the  words  "Payable  with  interest"  are  in  the  same  hand-writing  as 
are  the  other  written  portions  of  the  note,  except  the  maker's  name, 
and  the  words  were  not  interlined  but  written  on  a  blank  space  after 
the  words  "value  received"  and  where  they  should  appropriately 
appear,  there  was  nothing  upon  the  face  of  the  note  to  show  that  it 
had  been  altered  or  to  awaken  suspicion,^^  and  a  note  given  in  pay- 
ment for  lightning  rods  erected  upon  the  maker's  building,  without 
containing  a  red  ink  declaration  of  its  consideration  upon  its  face, 
as  required  by  statute,  is  good  against  the  maker  in  the  hands  of  an 
innocent  purchaser  for  value. ^^  One  who  took  notes  without  knowl- 
edge of  fraud  or  of  the  breach  of  a  collateral  contract  between  the 
original  parties  is  a  holder  in  due  course, ^^  and  a  negotiable  promissory 
note,  void  in  the  hands  of  the  payee  because  it  is  a  foreign  corporation 
doing  business  in  the  state  without  having  complied  with  the  laws, 
may  be  enforced  by  a  bona  fide  purchaser  and  indorsee  for  value, 

49.  Appendix,  sees.  52,  54,  55,  56,  57. 

50.  The  fact  that  at  the  time  of  the  transfer  of  a  check  the  payee  remarked  that 
the  maker  had  asked  him  to  wait  two  or  three  days  for  presentation  of  the  check 
did  not  disclose  to  the  transferee  that  the  instrument  did  not  represent  on  its  face 
all  of  the  contract  between  the  parties  and  did  not  render  it  indefinite  as  to  time  of 
payment;  such  a  request  was  not  binding  on  the  payee  and  did  not  vary  the  ternis 
of  the  writing.  Matlock  v.  Scheuerman,  51  Oreg.  49,  93  Pac.  823,  17  L.  R.  A. 
(N.  S.)  747.  A  material  man  who  sold  materials  to  a  contractor  for  several  jobs 
and  kept  separate  accounts  for  each  job,  and  received  from  the  contractor  checks 
drawn  by  owner  payable  to  the  contractor  "on  contract"  was  not  a  "holder  in 
due  course,"  and  he  could  not,  without  notice  to  the  owner,  divert  the  proceeds  of 
the  checks,  and  charge  him  with  a  lien  for  the  amount  diverted.  Hughes  &  Co. 
v.  Flint,  61  Wash.  460,  112  Pac.  633. 

51.  Trustees  of  American  Bank  v.  McComb,  105  Va.  473,  54  S.  E.  14. 

52.  Arnd  v.  Sjoblom,  131  Wis.  642,  111  N.  W.  666,  10  L.  R.  A.  (N.  S.)  842. 

53.  Black  v.  First  Nat.  Bank,  96  Md.  399,  54  Atl.  88.  When  a  corporation 
opens  an  account  with  a  banking  institution,  it  confers  upon  that  institution  the 
power  to  determine  whether  any  check  drawn  upon  the  account  conforms  to  the 
contract  between  the  depositor  and  the  depositary,  and  when  it  makes  a  mistake  in 
the  determination  of  such  a  question,  the  depositary  may  be  hable  to  the  deposi- 
tor; but  the  depositor  cannot  recover  back  the  money  paid  on  such  check  to  a 
third  person  who  has  received  it  in  good  faith  relying  on  the  representation  of  the 
deposit  bank  that  the  check  was  all  right  and  has  subsequently  parted  with  the 
money.  Havana  Cent.  R.  Co.  v.  Knickerbocker  Trust  Co.,  198  N.  Y.  422,  92 
N.  E.  12. 


§  789a  '^  PURCHASER   WITHOUT   NOTICE  "  929 

before  maturity,  without  notice  of  the  facts  rendering  it  void  in  the 
hands  of  the  payee.^^  But  a  holder  cannot  claim  the  rights  of  a  bona 
fide  holder  or  of  a  holder  in  due  course  when  he  had  notice  that  the 
one  from  whom  he  received  the  paper  was  not  the  owner  and  had 
the  right  to  use  it  as  collateral  merely.  ^^ 

§  789a.  Time  of  notice. — The  notice  affecting  the  holder  must 
exist  at  the  time  he  acquires  the  paper,  for  then  his  relation  to  it 
is  fixed;  and  subsequent  notice  does  not  affect  his  title  or  right  to 
transfer  it,^  unless  he  is  so  situated  that  he  can  protect  the  maker 
without  injury  to  himself.^^  If  notice  of  fraud  be  communicated  to  the 
holder  before  he  pays  for  the  paper,  although  the  contract  has  been 
entered  into,  he  cannot  stand  upon  the  footing  of  a  bona  fide  holder 
without  notice, ^^  and  if  he  has  paid  a  part  of  the  amount  agreed  upon 
when  he  receives  notice  of  fraud,  he  will  only  be  protected  to  that 
extent,  and  no  more,^®  and  so,  it  has  also  been  held  that  where  an  in- 

54.  National  Bank  of  Commerce  v.  Pick,  13  N.  D.  74,  99  N.  W.  63,  holding 
that  in  a  statute  providing  that  every  contract  made  by  or  on  behalf  of  any 
corporation,  association,  or  joint-stock  company  doing  business  in  the  state  with- 
out having  complied  with  the  statute  requiring  domestication,  shall  be  wholly 
void  on  behalf  of  such  corporation,  association,  or  joint-stock  company  and  its 
assigns,  the  word  "assigns"  does  not  include  the  indorsee  of  negotiable  paper  who 
takes  the  same  before  maturity,  for  value,  and  without  notice  of  defenses  thereto. 

55.  In  re  Hopper-Morgan  Co.,  156  Fed.  525. 

56.  Bank  of  Luverne  v.  Birmingham  Fertilizer  Co.,  143  Ala.  153,  39  So.  126; 
Hogg  V.  Thurman  (Ark.),  117  S.  W.  1070;  Heard  v.  Shedden,  113  Ga.  162,  38 
S.  E.  387;  MacRitchie  v.  Johnson,  49  Kan.  321,  30  Pac.  477;  Hillard  v.  Taylor, 
114  La.  883,  38  So.  594;  Madison  County  Bank  v.  Graham,  74  Mo.  App.  251; 
Perkins  v.  White,  36  Ohio  St.  530;  Meade  v.  Sandidge,  9  Tex.  Civ.  App.  360,  30 
S.  W.  245.  Where  neither  the  principal  nor  his  agent  through  whom  a  note  was 
purchased  had  any  notice  that  the  note  was  without  consideration  as  to  one  of  the 
makers,  the  fact  that  the  agent  discovered  this  in  the  negotiation  for  a  renewal  of 
the  note  would  not  affect  the  rights  of  the  principal  as  his  rights  were  fixed  by  the 
original  transaction.    Coyne  v.  Anderson's  Exrs.  (Ky.),  73  S.  W.  753. 

57.  Youle  V.  Fosha,  76  Kan.  20,  90  Pac.  1090  (1907).  Where  an  indorsee, 
after  learning  of  the  dishonor  of  and  want  of  consideration  for  a  note,  has  funds  of 
the  indorser  in  his  hands  sufficient  to  satisfy  the  note,  he  cannot  recover  of  the 
maker.    State  Bank  v.  J.  Blakey  &  Co.,  35  Tex.  Civ.  App.  87,  79  S.  W.  331. 

58.  Walters  v.  Rock,  18  N.  D.  45,  115  N.  W.  511;  Crandell  v.  Vickery,  45  Barb. 
156;  Davis  v.  Wait,  12  Oreg.  425.  A  bona  fide  holder,  against  whom  the  defense 
of  fraud  or  mistake  cannot  be  availed  of,  must  take  it  in  good  faith,  for  a  valuable 
consideration,  in  the  usual  course  of  business,  before  maturity,  and  without  notice, 
at  the  time  of  the  transfer  or  before  payment  therefor,  of  an  existing  defense. 
Bank  of  Monette  v.  Hale  (Ark.),  149  S.  W.  845. 

59.  Dresser  v.  Missouri,  etc.,  R.  Co.,  93  U.  S.  (3  Otto)  93.    See  ante,  §§  757, 

59 


930  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  790 

dorsee  had  in  his  hands  funds  of  a  nonresident  payee  sufficient  to  pay 
the  note  after  notice  of  fraud,  the  indorsee  cannot  recover  from  the 
maker.^°  Actual  notice  of  the  defect  is  not  required,  where  the  evi- 
dence of  the  infirmity  consists  of  matters  apparent  on  the  face  of  the 
instrument.    This  question  is  subsequently  considered.®^ 

Under  Negotiable  Instrument  statute. — To  constitute  a  holder  in  due 
course  there  must  have  been  an  actual  payment,  and  when  the  full 
amount  agreed  to  be  paid  has  not  been  paid  before  notice  of  infirmity, 
the  purchaser  becomes  a  holder  in  due  course  only  to  the  amount 
theretofore  paid.®^ 

§  790.  Notice  of  accommodation  paper. — It  is  to  be  observed, 
however,  that  knowledge  of  the  mere  want  of  consideration  as  be- 
tween the  original  parties  will  not  alone  prevent  the  purchaser  from 
becoming  a  bona  fide  holder  and  occupying  a  better  position  than  his 
transferrer.  Accommodation  paper  is  daily  placed  in  market  for 
discount  or  sale,  and  an  indorsee  or  purchaser  who  knows  that  a  V)ill 
or  note  still  current  was  drawn,  made,  accepted,  or  indorsed  without 
consideration  is  as  much  entitled  to  recover  as  if  he  had  been  ignorant 
of  the  fact,®^  and  even  where  he  acquires  it  overdue.®^    And  if  any  one 

758c.  See  a  learned  discussion  of  this  question  in  Weaver  v.  Barden,  49  N.  Y. 
286;  Richards  v.  Munroe,  85  Iowa,  359,  52  N.  W.  339,  39  Am.  St.  Rep.  301. 

60.  Union  Nat.  Bank  v.  Menefee  (Tex.  Civ.  App.),  134  S.  W.  822. 

61.  §§  795,  795a,  7956,  1408. 

62.  Appendix,  sec.  54.    Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  192. 

63.  Charles  v.  Marsden,  1  Taunt.  224;  Bank  of  Ireland  v.  Beresford,  6  Dow. 
237;  Earle  v.  Enos,  130  Fed.  467;  Levy  &  Cohn  Mule  Co.  v.  Kauffman,  114  Fed. 
170;  Greenway  v.  William,  etc.,  Co.,  29  C.  C.  A.  330,  85  Fed.  536;  Isreal  v.  Gale, 
23  C.  C.  A.  274,  77  Fed.  532,  citing  text;  Armstrong  v.  Scott,  36  Fed.  63;  Marks  v. 
First  Nat.  Bank,  79  Ala.  550;  Gilman  v.  New  Orleans  R.  Co.,  72  Ala.  577;  First 
Nat.  Bank  v.  Dawson,  78  Ala.  71,  citing  the  text;  Hamiter  v.  Brown,  88  Ark.  97, 
113  S.  W.  1014;  City  Electric  Street  Ry.  Co.  v.  First  Nat.  Bank,  65  Ark.  543,  47 
S.  W.  855;  Bissell  v.  Dickerson,  64  Conn.  73,  29  Atl.  226;  Hodges  v.  Nash,  141 
111.  391,  31  N.  E.  151;  Miller  v.  Lamed,  103  111.  570;  Cronise  v.  Kellogg,  20  111.  11; 
German- American  Sav.  Bank  v.  Hanna,  124  Iowa,  394,  100  N.  W.  57;  Bankers' 
Iowa  State  Bank  v.  Mason  Hand  Lathe  Co.,  121  Iowa,  570,  90  N.  W.  612, 97  N.  W. 
70;  Jones  v.  Berryhill,  25  Iowa,  289;  In  re  Estate  of  Littell,  50  La.  Ann.  299,  23 
So.  314;  Mathias  v.  Kirsh,  87  Me.  524,  33  Atl.  19;  Beacon  Trust  Co.  v.  Robbins, 
173  Mass.  261,  53  N.  E.  868;  Indian  Head  Nat.  Bank  v.  Clark,  166  Mass.  27,  43 
N.  E.  912;  First  Nat.  Bank  of  Grafton  v.  Babbidge,  160  Mass.  563,  36  N.  E.  462, 
Thatcher  v.  West  River  Nat.  Bank,  19  Mich.  196;  Maffatt  v.  Greene,  149  Mo.  48; 

64.  See  ante,  §§  726,  782,  786;  post,  §§  803,  805;  Talmage  &  Co.  v.  MUIikin 
&  Meigs,  119  Ala.  40,  24  So.  843. 


§  790  ''purchaser  without  notice'*  931 

purchase  accommodation  paper  with  knowledge  that  the  terms  and 
conditions  on  which  the  accommodation  was  given  have  been  violated, 
he  is  not  a  bona  fide  holder  as  against  the  party  who  lent  his  name  for 
accommodation.®^  The  defense  must  not  only  show  that  the  paper 
was  diverted  from  its  purpose,  but  also  that  such  diversion  was  known 
to  the  holder  when  he  received  it,  misapplication  not  being  such  fraud 
as  shifts  the  burden  of  proof.^® 

50  S.  W.  809;  Citizens'  Bank  v.  Fredrickson,  83  Nebr.  755,  120  N.  W.  462;  Baker 
V.  Union  Stock  Yards  Nat.  Bank,  63  Nebr.  301,  89  N.  W.  269,  93  Am.  St.  Rep. 
484;  Grant  v.  Ellicott,  7  Wend.  227;  Powell  v.  Waters,  17  Johns.  176;  Mentross  v. 
Clark,  2  Sandf.  115;  Grandin  v.  Leroy,  2  Paige,  509;  Fitch  v.  McDowell,  80  Hun, 
207,  30  N.  Y.  Supp.  31;  Pryor  v.  Storke,  37  App.  Div.  364,  56  N.  Y.  Supp.  94; 
National  Bank  v.  White,  19  App.  Div.  390,  46  N.  Y.  Supp.  555;  Stephens  v. 
Monongahela  Nat.  Bank,  87  Pa.  St.  163;  Charleston  Savings  Inst.  v.  Farmers' 
&  Merchants'  Bank,  73  S.  C.  545,  54  S.  E.  216;  King  v.  Parks,  26  Tex.  Civ.  App. 
95,  63  S.  W.  900;  Marling  v.  Jones,  138  Wis.  82,  119  N.  W.  931,  131  Am.  St.  Rep. 
996;  Weill  v.  Trosclair,  7  So.  232.  In  Thatcher  v.  West  River  Nat.  Bank,  19  Mich. 
202,  Christiancy,  J.,  said:  "The  want  of  consideration,  and  the  assurance  of 
Sprague  that  the  note  would  be  taken  care  of,  do  not  affect  the  right  of  the  bank 
as  indorsee,  though  taking  it  with  notice.  Mere  accommodation  paper  is  generally 
at  least,  without  consideration,  and  such  assurances,  express  or  implied,  are  al- 
ways given  or  relied  upon  when  such  accommodation  paper  is  given.  Such  facts 
might  constitute  a  good  defense  as  against  the  party  for  whose  accommodation 
it  is  given,  but  to  allow  them  to  defeat  a  recovery  by  an  indorsee  who  advances 
money  upon  it — when  that  is  the  purpose  for  which  it  is  given — would  defeat  the 
purpose  for  which  such  paper  is  made,  and  render  the  transaction  absurd."  But 
if  the  purchaser  took  with  notice  that  the  accommodated  party  received  no  con- 
sideration, he  cannot  recover  from  the  accommodation  party.  Greenville  v. 
Ormand,  51  S.  C.  58,  28  S.  E.  50,  64  Am.  St.  Rep.  663. 

65.  Small  v.  Smith,  1  Den.  583;  Thompson  v.  Posten,  1  Duv.  415;  Daggett 
V.  Whiting,  35  Conn.  372;  Fetters  v.  Muncie  Nat.  Bank,  34  Ind.  251;  Hicker- 
son  V.  Raiguell,  2  Heisk.  329;  Evans  v.  Kymer,  1  B.  &  Ad.  528;  Roberts  v.  Eden, 
1  Bos.  &  P.  398;  Buchanan  v.  Findley,  9  B.  &  C.  738;  Key  v.  Flint,  8  Taunt.  21; 
Hidden  v.  Bishop,  5  R.  I.  29;  Benjamin  v.  Rogers,  126  N.  Y.  60,  26  N.  E.  970; 
National  Bank  v.  Flanagan,  129  Mo.  178,  31  S.  W.  773,  citing  text. 

66.  Stoddard  v.  Kimball,  6  Cush.  469;  Robertson  v.  Williams,  5  Munf.  331; 
Gray  v.  Bank  of  Kentucky,  29  Pa.  St.  365;  Clark  v.  Thayer,  105  Mass.  216; 
Mohawk  Bank  v.  Corey,  1  Hill,  513;  Dunn  v.  Weston,  7  Me.  270.  See  post, 
§  814;  Arnold  v.  Lane,  71  Conn.  61,  40  Atl.  921;  Bank  v.  Hunt,  124  N.  C.  171,  32 
S.  E.  546;  Lookout  Bank  v.  Aull,  93  Tenn.  645,  27  S.  W.  1014,  42  Am.  St.  Rep. 
934;  Peters  v.  Gay,  9  Wash.  383,  37  Pac.  325;  Union  Square  Bank  v.  Hellerson, 
90  Hun,  262,  35  N.  Y.  Supp.  871;  Bunzel  v.  Maas  &  Schwarz,  116  Ala.  68,  22  So. 
568;  Farley  Nat.  Bank  v.  Henderson,  118  Ala.  441,  24  So.  428,  citing  text;  Isaacs 
V.  Cohn,  10  App.  Div.  216,  41  N.  Y.  Supp.  779;  Kuch  v.  Cornett,  79  Mo.  App. 
574,  text  cited.  Yeomans  v.  Lane,  101  111.  App.  228.  Where  a  note,  made  payable 
to  the  president  of  a  corporation,  was  indorsed  for  the  accommodation  of  the 
corporation,  a  bank  advancing  money  thereon  was  not  responsible  for  misappro- 


932  RIGHTS   OF   A   BONA   FIDE    HOLDER  §  791 

Under  Negotiable  Instrument  statute. — Under  the  express  provisions 
of  the  statute,  an  accommodation  party  is  liable  on  the  mstrument  to 
a  holder  for  value,  notwithstanding  such  holder  at  the  time  of  taking 
the  instrument  knew  him  to  be  only  an  accommodation  party." 

§  791.  The  rule  in  New  York  is  different,  and  there  it  is  held 
that  a  diversion  is  such  fraud  as  to  shift  the  burden  of  proof  upon 
the  holder .^^    But  the  principle  of  the  text  is,  we  think,  in  conformity 

priation  of  the  money  by  the  president  when  it  had  no  notice  of  his  intention  to 
divert  the  funds  to  a  wrongful  purpose;  nor  is  it  a  matter  of  any  moment  that, 
instead  of  paying  the  president  money  in  hand,  the  bank,  at  his  request,  gave  him 
credit  for  it  on  the  books  of  the  bank,  as  this  was  in  effect  the  same  thing  as  pay- 
ment. Klein  v.  German  Nat.  Bank,  69  Ark.  140,  61  S.  W.  572,  86  Am.  St.  Rep. 
183. 

67.  Appendix,  sec.  29.  See  also  sees.  56  to  59.  Willard  v.  Crook,  21  App.  D. 
C.  237;  Edward  Knapp  &  Co.  v.  Tidewater  Coal  Co.  (Conn.),  81  Atl.  1063;  Black 
v.  First  Nat.  Bank,  96  Md.  399,  54  Atl.  88;  English  v.  Schlesinger,  105  N.  Y.  S. 
989,  55  Misc.  584;  Weiss  v.  Rieser,  114  N.  Y.  S.  983,  62  Misc.  292;  National  Bank 
of  Newport  v.  H.  P.  Snyder  Mfg.  Co.,  102  N.  Y.  S.  478,  117  App.  Div.  370; 
Packard  v.  Windholz,  84  N.  Y.  S.  666,  88  App.  Div.  365,  affirmed  180  N.  Y.  549, 
73  N.  E.  1129;  White  v.  Savage,  48  Oreg.  604,  87  Pac.  1040;  Lumbermen's  Nat. 
Bank  of  Portland  v.  Campbell,  (Oreg.)  121  Pac.  427;  Bradley  Engineering  &  Mfg. 
Co.  V.  Heyburn,  56  Wash.  628,  106  Pac.  170. 

68.  Farmers'  &  Citizens'  Nat.  Bank  v.  Noxon,  45  N.  Y.  762;  Grocers'  Bank 
V.  Penfield,  7  Hun,  279.  See  Moore  v.  Ryder,  65  N.  Y.  439;  Edwards  on  Bills, 
319,  321.  In  Warden  v.  Howell,  9  Wend.  170,  the  note  was  indorsed  for  accom- 
modation of  the  maker,  to  be  used  in  renewal  of  a  former  note  due  at  a  bank.  It 
was  transferred  by  the  maker  as  collateral  security  for  another  debt,  which  nego- 
tiation is  held,  in  New  York,  not  to  constitute  the  creditor  a  bona  fide  holder  for 
value.  Sutherland,  J.,  said:  "Where  a  note  has  effected  the  substantial  purpose 
for  which  it  was  designed  by  the  parties,  an  accommodation  indorser  cannot 
object  that  it  was  effected  in  the  precise  manner  contemplated  at  the  time  of  its 
creation.  *  *  *  But  where  a  note  has  been  diverted  from  its  original  destination, 
and  fraudulently  put  in  circulation  by  the  maker  or  his  agent,  the  holder  cannot 
recover  upon  it  against  an  accommodation  indorser,  without  showng  that  he 
received  it  in  good  faith,  in  the  ordinary  course  of  trade,  and  paid  for  it  a  valuable 
consideration."  Spencer  v.  Ballou,  18  N.  Y.  331;  Schepp  v.  Carpenter,  51  N.  Y. 
604;  Comstock  v.  Hier,  73  N.  Y.  270;  Ayers  v.  Doying,  17  Jones  &  S.  630.  But 
see  §  792,  and  Brooks  v.  Hey,  23  Hun,  372;  American  Exch.  Nat.  Bank  v.  New 
York  Belting  &  Packing  Co.,  148  N.  Y.  698,  43  N.  E.  168;  Blair  v.  Hagemeyer,  26 
App.  Div.  219,  49  N.  Y.  Supp.  965.  But  if  it  appears  from  the  entire  testimony 
that  there  is  not  sufficient  evidence  that  the  defendant  had  notice  of  the  diversion, 
plaintiff  cannot  recover.  See  Union  Square  Bank  v.  Hellerson,  90  Hun,  262,  35 
N.  Y.  Supp.  871;  American  Exch.  Nat.  Bank  v.  New  York  Belting  Co.,  74  Hun, 
446,  26  N.  Y.  Supp.  822,  citing  text.  But  it  has  likewise  been  held  in  New  York 
that  the  burden  of  showing  that  the  use  of  the  note  was  diverted  is  upon  the 
defendant.    Isaacs  v.  Cohn,  10  App.  Div.  216,  41  N.  Y.  Supp.  779;  First  Nat. 


§  792  '^ PURCHASER   WITHOUT   NOTICE*^  033 

with  the  current  and  weight  of  authority  and  the  true  theory  of  the 
law  merchant.  The  fraud  which  shifts  the  burden  of  proof  must  be 
in  the  consideration,  or  representations  used  in  obtaining  the  execu- 
tion of  the  instrument,  and  not  an  after  breach  of  trust  in  diverting 
it  from  the  uses  for  which  it  was  intended. 

§  792.  What  amounts  to  diversion  of  accommodation  paper. — It 

is  immaterial  that  paper  executed  or  indorsed  for  accommodation 
is  not  used  in  precise  conformity  with  agreement,  when  it  does  not 
appear  that  the  accommodation  party  had  any  interest  m  the  man- 
ner in  which  the  paper  was  to  be  applied.  No  change  m  the  mere 
mode  or  plan  of  raising  the  money,  though  not  applied  to  the  pur- 
pose intended  by  the  accommodation  party,  will  constitute  a  mis- 
appropriation. In  order  to  constitute  a  misappropriation,  there 
must  be  a  fraudulent  diversion  from  the  original  object  and  de- 
sign; and  it  is  now  well  settled  that  where  a  note  is  indorsed  for  the 
accommodation  of  the  maker,  to  be  discounted  at  a  particular  bank, 
it  is  no  fraudulent  misappropriation  of  the  note,  if  it  is  discounted  at 
another  bank,  or  used  in  the  payment  of  a  debt  or  otherwise  for  the 
credit  of  the  maker .'^^  If  the  note  has  effected  the  substantial  purpose 
for  which  it  was  designed  by  the  parties,  an  accommodation  maker  or 
indorser  cannot  object  that  the  acconmiodation  was  not  effected  in  the 
precise  manner  contemplated,  where  there  is  no  fraud,  and  the  in- 
terest of  the  indorser  is  not  prejudiced.^" 


Bank  of  Springfield  v.  Haulenbeek,  65  Hun,  54,  19  N.  Y.  Supp.  567.  See  notes 
upon  this  case,  §§  819  and  855a.  But  the  rights  of  a  holder  of  a  wrongfully  di- 
verted negotiable  paper,  acquired  by  him  for  value,  before  due,  cannot  be  de- 
feated without  proof  of  actual  knowledge  of  the  defects  in  title,  or  bad  faith  on  his 
part  evidenced  by  circumstances.  Cheever  v.  Pittsburg,  etc.,  R.  Co.,  150  N.  Y. 
59,  44  N.  E.  701,  55  Am.  St.  Rep.  646;  United  States  Nat.  Bank  v.  Ewing,  131 
N.  Y.  506,  30  N.  E.  501,  27  Am.  St.  Rep.  615;  Union  Trust  Co.  v.  McClellan,  40 
W.  Va.  405,  21  S.  E.  1025. 

69.  Frank  v.  Quast,  86  Ky.  652,  citing  the  text;  Morris  v.  Morton,  14  Nebr. 
360;  Evans  v.  Speer  Hardware  Co.,  65  Ark.  204,  45  S.  W.  370,  67  Am.  St.  Rep. 
919,  citing  text;  Hefferlin  v.  Krieger  et  al.,  19  Mont.  123,  47  Pac.  638;  American 
Exch.  Nat.  Bank  v.  Ulm,  21  Mont.  440,  54  Pac.  563,  approving  text. 

70.  Duncan  &  Sherman  v.  Gilbert,  29  N.  J.  L.  (5  Dutch.)  521;  Jackson  v. 
First  Nat.  Bank,  42  N.  J.  L.  (13  Vroom)  178;  Briggs  v.  Boyd,  37  Vt.  538;  Purchase 
v.  Mattison,  6  Duer,  87;  Wardell  v.  Howell,  9  Wend.  170.  See  Schepp  v.  Car- 
penter, 51  N.  Y.  604;  Reed  v.  Trentman,  53  Ind.  438.  But  see  United  States 
Nat.  Bank  v.  Ewing,  131  N.  Y.  506,  30  N.  E.  501,  27  Am.  St.  Rep.  615;  Hay  v. 
Jaeckle,  90  Hun,  114,  35  N.  Y.  Supp.  650,  quoting  with  approval  the  text;  Fariey 
Nat.  Bank  v.  Henderson,  118  Ala.  441,  24  So.  428,  citing  text. 


934  RIGHTS   OF   A   BONA   FIDE   HOLDER  §§  793,  793a 

§  793.  Thus,  where  a  bill  was  indorsed  for  accommodation,  for 
the  purpose  of  enabling  the  maker  to  get  the  note  discounted  at  a 
particular  bank,  and  the  maker  used  it  to  take  up  notes  on  another 
bank,  the  court  said:  "Within  the  proper  legal  sense  of  the  term, 
there  has  been  no  diversion  of  the  note  from  the  purpose  for  which 
it  was  made  and  indorsed.  The  indorsers  lent  their  names  for  the 
purpose  of  giving  the  maker  credit,  generally,  and  without  any 
concern  with  the  use  which  should  be  made  of  that  credit."  ^^  Nor 
would  it  be  a  misappropriation  to  discount  a  note  with  a  private 
person  that  was  intended  to  be  discounted  at  a  particular  bank,  the 
proceeds  being  applied  to  the  purpose  intended.^^  If  the  note  be 
made  for  general  accommodation  without  restriction  as  to  its  use, 
the  party  accommodated  may  use  it  in  any  way  beneficial  to  himself, 
provided  such  use  be  legal,  and  it  will  not  matter  that  he  fails  to  apply 
the  proceeds  according  to  a  prior  agreement,  for  otherwise  there  could 
be  no  recovery  on  accommodation  paper.'^ 

§  793a.  Use  of  accommodation  paper  to  pay  pre-existing  debts, 
and  as  collateral  security. — And  so  where  a  bill  was  indorsed  for  ac- 
commodation, to  enable  one  to  raise  money,  and  he  applied  it  to 
the  payment  of  a  pre-existing  debt,  it  was  held  immaterial,  Dow- 
ney, J.,  saying:  "The  accommodation  party  must  have  some  in- 
terest in  the  application  of  the  money,  otherwise  he  is  not  in  con- 
dition to  contend  successfully  that  there  has  been  a  misapplication 
of  it,  or  of  the  security  on  which  it  was  to  be  raised."  ^^  It  has  been 
said,  in  Pennsylvania,  by  Black,  C.  J.:  "The  maker  of  an  accommo- 
dation note  cannot  set  up  the  want  of  consideration  as  a  defense 
against  it  in  the  hands  of  a  third  person,  though  it  be  there  as  col- 

71.  Mohawk  Bank  v.  Corey,  1  Hill,  513;  Hay  v.  Jaeckle,  90  Hun,  114,  35  N.  Y. 
Supp.  650;  Russ  v.  Sadler,  197  Pa.  St.  51,  46  Atl.  903. 

72.  Powell  V.  Walters,  17  Johns.  176;  Bank  of  Chenango  v.  Hyde,  4  Cow. 
567;  Parker  v.  Sutton  (N.  C),  9  S.  E.  283;  Parker  v.  McDoweU,  95  N.  C.  245, 
citing  the  text;  Proctor  v.  Whitcomb,  137  Mass.  303. 

73.  Brooks  v.  Hey,  23  Hun,  372;  Meeker  v.  Shanks,  112  Ind.  212,  citing  the 
text;  Morelands,  Assignee  v.  Citizens'  Sav.  Bank,  97  Ky.  211,  30  S.  W.  637, 
citing  the  text,  quoting  with  approval  the  text;  American  Exch.  Nat.  Bank  v. 
Ulm,  21  Mont.  440,  54  Pac.  563. 

74.  Quinn  v.  Hard,  43  Vt.  375;  Fetters  v.  Muncie  Nat.  Bank,  34  Ind.  254. 
See  Schepp  v.  Carpenter,  51  N.  Y.  602;  Jackson  v.  First  Nat.  Bank,  42  N.  J. 
L.  (13  Vroom)  178.  But  it  has  been  held  otherwise  where  the  paper  was  made 
payable  to  the  party  to  whom  it  was  to  be  discounted,  and  was  passed  to  another 
for  a  pre-existing  debt.  Farme'-s',  etc.,  Bank  v.  Hathaway,  36  Vt.  539;  Carter 
et  al.  V.  Odom,  121  Ala.  162,  25  So.  774. 


§  793a  ''purchaser  without  notice"  935 

lateral  security  merely.  He  who  chooses  to  put  himself  in  the  front 
of  a  negotiable  mstrument,  for  the  benefit  of  his  friend,  must  abide 
the  consequence,  and  has  no  more  right  to  complain  if  his  friend  ac- 
commodates himself  by  pledging  it  for  an  old  debt,  than  if  he  had  used 
it  in  any  other  way."  ^^  In  accordance  with  these  principles,  an 
acconmiodation  indorser  cannot  complain  that  a  creditor  of  the 
holder,  with  whom  the  latter  has  deposited  as  collateral  security  for 
his  own  debt,  has  sold  the  note  to  a  bona  fide  purchaser  for  value,  in 
violation  of  the  rights  of  the  payee  and  depositor;  for  if  the  payee 
could  pledge  the  note  as  collateral  security  the  subsequent  sale  does 
not  increase  the  indorser's  liability .^^  And  it  may  be  considered  as 
settled  that  the  use  of  accommodation  paper  as  collateral  security  is 
a  legitimate  and  proper  use,  within  the  fair  contemplation  of  the 
parties;  and  that  unless  the  transferee,  in  addition  to  knowing  that  it 
is  accommodation  paper,  knows  also  that  such  use  is  restricted,  he 
can  recover  upon  it.^^  In  Iowa,  D  &  R.  executed  a  note  to  J.  or 
bearer.  The  note  was  joint,  but  D.  was  in  fact  a  surety.  The  under- 
standing was  that  R.  was  to  negotiate  the  note  to  J.  for  a  yoke  of 
cattle,  and  execute  a  chattel  mortgage  to  D.  to  indemnify  him.    R., 

75.  Lord  v.  Ocean  Bank,  20  Pa.  St.  384;  Hart  v.  United  States  Trust  Co., 
118  Pa.  St.  568;  Cozens  v.  Middleton,  118  Pa.  St.  632;  Miller  v.  Larned,  103  111. 
579;  Dunn  v.  Weston,  71  Me.  270;  Jackson  v.  First  Nat.  Bank,  42  N.  J.  L.  (13 
Vroom)  178.  See  also  Kimbro  v.  Lytle,  10  Yerg.  417.  In  Ruthland  Bank  v.  Buck, 
5  Wend.  66,  it  appeared  that  a  person  signed  a  note  as  surety  for  accommodation 
of  other  parties,  the  note  to  be  discounted  at  a  certain  bank.  The  bank  refused 
to  discount  it,  and  it  was  passed  off  by  the  principals  as  collateral  for  the  payment 
of  a  judgment.  Held,  no  misappropriation.  But  see  Merchants'  Nat.  Bank  v. 
Comstock,  55  N.  Y.  24.  In  Alabama  a  different  rule  from  that  stated  by  Black, 
C.  J.,  supra,  prevails:  the  holder  of  such  paper,  taking  it  for  a  pre-existing  debt,  is 
subject  to  the  defense  of  want  of  consideration  or  other  equities  between  the  par- 
ties. Boykin  v.  Bank  of  Mobile,  72  Ala.  262,  47  Am.  Rep.  411;  Union  Square 
Bank  v.  Hellerson,  90  Hun,  262,  35  N.  Y.  Supp.  871;  American  Exch.  Nat.  Bank 
V.  Ulm,  21  Mont.  440,  54  Pac.  563.  Contra,  Merrill  v.  First  Nat.  Bank,  94  Cal.  59, 
29  Pac.  242. 

76.  Dawson  v.  Goodyear,  43  Conn.  548;  St.  Louis  Nat.  Bank  v.  Flanagan, 
129  Mo.  178,  31  S.  W.  773,  citing  text.  Compare  Union  Trust  Co.  v.  McClellan, 
40  W.  Ya.  405,  21  S.  E.  1025. 

77.  Dunn  v.  Western,  71  Me.  270;  DeZeng  v.  Fj'fe,  1  Bosw.  336;  Robbins  v. 
Richardson,  2  Bbsw.  253;  Pitts  v.  Foglesong,  37  Ohio  St.  681;  Cont.  Nat.  Bank 
V.  Townsend,  87  N.  Y.  8.  Wliere  the  accommodation  payee  of  a  note  deUvered 
it  to  a  bank  as  collateral  security  for  the  payment  of  an  existing  debt,  the  pay- 
ment of  such  indebtedness  by  the  payee  reUeved  the  maker  from  all  liabihty  upon 
the  note,  any  indebtedness  of  the  payee  which  was  contracted,  as  well  as  any 
extension  of  credit  given,  after  the  maturity  of  the  note,  in  no  way  bound  the 
maker.    Riverside  Bank  v.  Jones,  78  N.  Y.  S.  325,  75  App.  Div.  531. 


936  RIGHTS   OF   A   BONA    FIDE    HOLDER  §  794 

instead,  traded  the  note  to  L.  for  a  yoke  of  cattle,  the  latter  knowing 
that  the  note  was  designed  to  be  negotiated  to  J.  for  a  yoke  of  cattle, 
and  suspecting  D.  was  a  surety,  but  having  no  knowledge  that  he 
was  to  have  the  chattel  mortgage.  It  was  held  that  D.  was  liable  to 
R.  on  the  noteJ* 

Under  Negotiable  Instrument  statute. — Under  the  statute  ^^  it  has 
been  held  that  where  accommodation  paper  has  been  received  in 
payment  of  or  security  for  an  antecedent  debt,  the  holder  may  re- 
cover thereon,^"  and  that  the  rule  that  accommodation  makers  or 
indorsers  of  negotiable  paper  are  not  liable  to  a  holder  thereof,  where 
the  same  had  been  fraudulently  diverted  from  the  purpose  for  which 
it  was  made  or  the  indorsement  given,  and  the  holder  had  received  it 
solely  as  collateral  security  for  an  antecedent  debt,  has  not  been 
changed  by  the  above  statute.^^  But  when  a  person  indorsed  a  note 
to  enable  the  payee  to  get  it  discounted  and  thereby  raise  cash  out  of 
which  the  payee  would  pay  a  debt  due  the  indorscr,  it  has  been  held 
that  such  person  was  an  accommodation  indorser  notwithstanding 
the  language  of  the  statute.*^ 

§  794.  Where,  however,  the  note  is  designed  to  be  discounted  for 
the  purpose  of  taking  up  other  paper  of  the  person  giving  the  accom- 
modation, or  was  otherwise  intended  for  his  benefit,  the  failure  to  have 
it  discounted  would  be  a  misappropriation,^^  and  if  the  bank  refused 
to  discount  it,  the  holder  should  return  it  to  the  accommodation 
maker  or  indorser.^^  And  if  the  holder  misappropriates  the  paper  he 
will  be  bound  to  reimburse  to  the  party  whose  name  is  misused  any 
resulting  loss.^^  When  there  is  a  full  consideration  for  acceptance 
of  a  bill,  it  matters  not  whether  it  be  applied  according  to  original 
agreement,  or  to  another  purpose.^^ 


78.  Laub  v.  Rudd,  37  Iowa,  618. 

79.  Appendix,  sees.  25,  29. 

80.  Neal  v.  Scherber,  93  N.  E.  628,  207  Mass.  323;  English  v.  Schlesinger, 
105  N.  Y.  S.  989,  55  Misc.  584. 

81.  Sutherland  v.  Mead,  80  N.  Y.  S.  504,  80  App.  Div.  103. 

82.  Morris  County  Brick  Co.  v.  Austin  (N.  J.),  75  Atl.  550,  the  court  saying 
that  the  words  "value  therefor"  mean  value  for  the  negotiable  instrument,  not 
value  for  the  loan  of  the  name. 

83.  Warden  v.  Howell,  9  Wend.  170;  Moore  v.  Ryder,  65  N.  Y.  440. 

84.  Kasson  v.  Smith,  8  Wend.  437;  Denniston  v.  Bacon,  10  Johns.  198. 

85.  Comstock  v.  Hier,  73  N.  Y.  269. 

86.  Moore  v.  Ward,  1  Hilt.  337. 


§§  795,  795a  '^PURCHASER   WITHOUT   notice"  937 

§  795.  Express  notice. — It  is  quite  certain  that  if  the  notice  or 
knowledge  of  the  transferrer's  defective  title  be  express,  it  will 
destroy  the  purchaser's  better  position;  for  if  he  is  actually  informed 
of  the  infirmity — as  when  he  is  told  by  the  maker  that  it  is  without 
consideration,  and  that  it  will  not  be  paid — he  errs  willingly  if  he 
perseveres  in  negotiating  for  the  paper,  and  has  no  claim  whatever 
for  peculiar  protection.^^ 

§  795a.  Implied  or  constructive  notice  from  appearance  of  the 
paper. — Express  notice  is  not  indispensable.  There  may  be  evi- 
dence of  the  infirmity  in  the  paper  apparent  on  its  face,  or  such 
indications  as  to  put  the  purchaser  upon  inquiry .^^    And  in  such  cases 

87.  See  ante,  §  789a;  Norvill  v.  Hudgins,  4  Munf.  496;  Dogan  v.  Dubois,  2 
Rich.  Eq.  85;  Gilman  v.  New  Orleans  R.  Co.,  72  Ala.  581,  citing  the  text;  In  re 
Hopper-Morgan  Co.,  156  Fed.  525  (as  to  indorsement  as  collateral  merely). 
A  purchaser  of  a  note  before  maturity,  which  had  been  signed  by  several  makers, 
is  not  a  bona  fide  purchaser  when  he  was  informed  by  one  of  several  of  the  makers 
claiming  credits  that  such  credits  had  not  been  made  though  he  was  later  in- 
formed by  another  of  the  signers  but  not  one  of  those  claiming  credits  that  the 
matter  had  been  adjusted.  Bank  of  Chillicothe  v.  Oronsdorflf,  126  Mo.  App. 
654,  105  S.  W.  664.  Where  one  to  whom  a  note  was  payable  on  its  face,  was  in 
fact  the  joint  owner  with  another,  and  he  so  informed  a  purchaser  of  the  note,  and 
though  the  payee  informs  the  purchaser  of  his  interest  that  a  certain  person,  in- 
debted to  the  purchaser,  is  the  owner  of  the  other  half  of  the  note,  the  purchaser 
takes  it  at  his  peril  and  if  such  other  half  of  the  note  in  fact  belongs  to  another 
person,  he  must  recognize  such  person's  right  to  the  property.  Kersey  v.  Fuquay 
(Tex.  Civ.  App.),  75  S.  W.  56.  If  a  bank  gave  a  railroad  company  a  recommenda- 
tion with  which  it  went  to  persons  to  obtain  signatures  to  notes  given  in  con- 
sideration of  the  construction  of  a  certain  railroad,  knowing  at  the  time  this 
recommendation  was  given  that  the  railroad  company  would  not  be  able  to  carry 
out  its  contracts,  the  bank  had  notice  of  the  infirmity  in  the  instruments,  and 
would  not  be  a  bona  fide  purchaser.  Gross  v.  Bennington,  52  Wash.  417,  100 
Pac.  846.  As  against  the  bona  fide  purchaser  for  value  of  a  negotiable  instrument, 
a  married  woman  signing  thereon  as  apparent  maker  will  not  be  allowed  to  show 
that  she  was  a  surety  for  the  purpose  of  invalidating  the  contract  under  section 
2488  of  the  Civil  Code,  which  prohibits  a  married  woman  from  binding  her  sepa- 
rate estate  by  any  contract  of  suretyship;  but  she  will  be  permitted  to  show  that 
she  was  a  surety  for  the  purpose  of  defending  against  the  enforcement  of  the 
contract  on  the  ground  that  the  holder  of  the  instrument  after  notice  of  the 
true  relationship  thereto  did  such  an  act  to  her  prejudice  aa  in  law  will  discharge 
her.    Smith  v.  First  Nat.  Bank,  5  Ga.  App.  113,  62  S.  E.  826. 

88.  Davis  Machine  Co.  v.  Best,  105  N.  Y.  59;  Prins  v.  South  Branch  Lumber 
Co.,  20  111.  App.  236;  Smith  v.  Munch,  21  111.  App.  323;  Hamilton  v.  Wilson, 
67  Ga.  498;  Newman  v.  Tilhnan  et  at,  71  Miss.  26,  15  So.  798;  Westinghouse  v. 
German  Nat.  Bank,  188  Pa.  St.  630,  44  Atl.  734;  Wilson  v.  National  Fowler 
Bank,  47  Ind.  App.  689,  95  N.  E.  269.    The  fact  that  a  note  was  transferred  just 


938  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  795a 

constructive  notice  is  held  sufficient  upon  the  ground  that  when  a 
party  is  about  to  perform  an  act  which  he  has  reason  to  believe  may 
affect  the  rights  of  third  persons  an  inquiry  as  to  the  facts  is  a  moral 
duty,  and  diligence  an  act  of  justice.^^  In  Connecticut  the  unusual 
character  of  the  instrument — its  being  written  on  tracing  paper, 
coupled  with  suspicious  circumstances  in  the  negotiation — was  held 
to  authorize  inquiry  of  a  broker  "whether  a  banker  or  a  broker 
would  discount  a  note  of  that  character  without  a  wilful  failure  to 
inquire  into  the  circumstances  under  which  it  was  obtained,"  with  a 
view  to  impeaching  the  good  faith  of  the  transaction .^°  And  so  in 
New  York,  an  unsigned  blank  left  for  signature  was  held  to  affect 
the  purchaser  with  notice  of  the  defect.^^  A  line  drawn  over  the 
words  '^or  order"  and  a  memorandum  written  on  the  paper,  "this 
note  is  not  negotiable,"  would  of  course  notify  the  purchaser.^^ 

before  maturity,  and  that  it  bore  interest  on  its  face  at  the  rate  of  6  per  cent, 
per  month,  instead  of  per  annum,  which  fact  escaped  the  notice  of  the  transferee 
until  the  time  of  the  trial,  was  not  sufficient  to  put  him  upon  inquiry  as  to  equities 
between  the  maker  and  the  payee.  Woolf  v.  Clarke,  17  Cal.  App.  696,  121  Pac. 
407.  That  a  note  was  that  of  a  farmer,  and  that  it  was  taken  up  by  an  agent  in 
his  own  name,  and  that  the  revenue  stamp  was  canceled  by  another  than  the 
maker,  whose  initials  were  used,  did  not  put  the  assignee  on  notice  of  any  defenses 
of  the  maker.  Martindale  v.  Stotter,  80  Kan.  87, 101  Pac.  629.  Where  a  guardian 
opened  an  account  in  his  name  as  guardian,  and  deposited  and  drew  on  such 
account  moneys  of  a  corporation  of  which  he  was  manager,  and  gave  to  a  creditor 
of  the  corporation  a  check  signed  by  him  as  "Guardian,"  this  gave  the  payee 
notice  that  presumptively  the  funds  being  paid  to  him  were  not  those  of  the  cor- 
poration or  his  own,  and  put  the  payee  on  inquiry  to  ascertain  the  maker's  au- 
thority to  apply  the  money  in  payment  of  the  company's  debt.  Cohnfeld  v, 
Tanenbaum,  176  N.  Y.  126,  68  N.  E.  141,  98  Am.  St.  Rep.  653. 

89.  Angle  v.  Northwestern,  etc.,  Ins.  Co.,  92  U.  S.  (2  Otto)  342.  See  vol.  II, 
§  1408.  A  negotiable  note  is  payable  on  its  face  to  a  payee,  with  the  word  "at- 
torney" suffixed  to  his  name;  and  he  indorses  it  to  a  party,  suffixing  to  his  own 
name  the  word  "attorney,"  in  his  signature  to  the  indorsement.  The  note  is 
owned  by  the  payee  and  the  other  parties.  The  word  "attorney"  indicates  an 
interest  in  such  other  parties,  and  puts  the  purchaser  upon  inquiry  as  to  their 
rights,  and  the  right  of  the  payee  to  sell  the  note.  Hazeltine  v.  Keenan,  54  W.  Va. 
600,  46  S.  E.  609,  102  Am.  St.  Rep.  953,  quoting  text. 

90.  Rowland  v.  Fowler,  47  Conn.  347. 

91.  Davis  Machine  Co.  v.  Best,  supra. 

92.  Prins  v.  So.  Branch  Lumber  Co.,  supra.  In  Tennessee,  held,  that  the  un- 
explained initials"  C.  I.  P.,"  afterward  ascertained  to  mean  "Chapin  Iron  Proc- 
ess "  (a  patent)  and  written  on  the  face  of  the  note,  do  not  convey  notice  to  an 
innocent  indorsee  of  the  note  before  maturity  for  value  and  in  due  course  of  trade, 
that  it  was  given  in  purchase  of  a  patent,  so  as  to  let  in  defenses  against  such 
indorsee.  Bank  v.  Stockell,  92  Tenn.  252,  21  S.  W.  523;  Dymock  v.  Missouri, 
etc.,  Ry.  Co.,  54  Mo.  App.  400. 


§  795a  PURCHASER   WITHOUT   NOTICE  939 

The  doctrine  of  notice  is  applied  to  the  case  of  a  note  payable  to  a 
certain  person  as  "Trustee,"  and  indorsed  in  the  same  style  by  the 
trustee,  who  sold  the  note  and  appropriated  the  proceeds,®^  and  when 
an  instrument  is  indorsed  as  "Trustee,"  a  purchaser  is  put  upon 
notice  that  others  than  the  trustees  are  the  legal  owners  of  the  note.^^ 
A  purchaser  of  notes  of  a  receiver  signed  in  his  name  and  as  "Re- 
ceiver," and  indorsed  by  him  personally,  took  them  with  construc- 
tive notice  of  the  receiver's  want  of  authority  to  issue  them,  and 
the  company  is  not  liable  on  the  notes,^^  and  a  certificate  of  deposit 
to  "C,  guardian,"  is  notice  that  it  is  trust  property,  putting  one 
receiving  it  on  inquiry .^^  And  so,  a  purchaser  of  negotiable  paper 
made  by  a  married  woman  must  take  notice  of  the  coverture  of  the 
maker .^^  If  the  note  be  payable  to  an  agent,  and  be  left  by  the  prin- 
cipal in  his  possession,  the  authority  to  transfer  it  by  indorsement 
follows,  and  the  purchaser  will  not  be  put  upon  inquiry  as  to  the 
bona  fides  of  his  conduct  in  selling  the  note.^^ 

93.  BarroU  v.  Foreman,  88  Md.  188,  39  Atl.  273;  Third  Nat.  Bank  v.  Lange, 
51  Md.  138;  Shaw  v.  Spencer,  100  Mass.  382,  the  case  of  a  stock  certificate; 
McBain  v.  Seligman,  58  Mich.  294;  Payne  v.  First  Nat.  Bank,  43  Mo.  App.  377; 
Hanover  Nat.  Bank  v.  American  Dock  &  Trust  Co.,  75  Hun,  55,  26  N.  Y.  Supp. 
1055;  Cheever  v.  Pittsburgh,  S.  &  L.  E.  R.  Co.,  72  Hun,  380,  25  N.  Y.  Supp. 
449;  Isham  v.  Post,  71  Hun,  184,  23  N.  Y.  Supp.  211,  1168.  See  comment  upon 
the  decision  of  the  court  in  the  case,  §  271.  Contra,  Mayer  v.  Columbia  Sav. 
Bank,  86  Mo.  App.  108.  See,  ante,  §  271.  In  Mayor  of  New  York  v.  Sands,  39 
Hun,  520,  the  purchaser  was  held  to  have  participated  in  a  breach  of  oflBcial 
trust  committed  by  a  municipal  officer  in  transferring  paper  appearing  on  its 
face  to  be  public  property.  But  if  the  trust  character  of  the  obHgation  does  not 
appear  upon  the  face  of  the  instrument,  and  there  is  no  notice  to  the  purchaser, 
the  title  acquired  would  be  good.  BarroU  v.  Foreman,  86  Md.  675.  In  West- 
moreland v.  Foster,  60  Ala.  448,  such  expression  ia  regarded  as  mere  descriptio 
personoe.    See,  ante,  §  271. 

94.  Chicago  Title  &  Trust  Co.  v.  Brugger,  196  111.  96,  63  N.  E.  637;  Henshaw 
V.  State  Bank,  239  111.  515,  88  N.  E.  214,  130  Am.  St.  Rep.  241. 

95.  ZieUan  v.  Baltimore  Plate  Ice  Co.,  115  Md.  658,  81  Atl.  22. 

96.  United  States  FideUty  &  Guaranty  Co.  v.  Adoue  &  Lobit  (Tex.),  137 
S.  W.  648,  reversing  judgment,  128  S.  W.  636;  rehearing  denied,  138  S.  W.  383. 

97.  Northwall  Co.  v.  Osgood,  80  Nebr.  764,  115  N.  W.  308;  Haas  v.  American 
Nat.  Bank,  42  Tex.  Civ.  App.  167,  94  S.  W.  439. 

98.  Wells  V.  Sutton,  85  Ind.  70.  But  if  agent  or  trustee  has  power  or  authority 
to  execute  a  negotiable  note,  the  fact  that  the  purchaser  thereof  knew  of  the  trust 
relations  and  the  specific  purpose  for  which  the  note  was  negotiated,  would  not 
charge  him  with  notice  of  misappropriation  of  the  proceeds  derived  therefrom, 
when  it  appears  that  the  said  purchaser  in  no  way  participated  in  diversion  or 
misappropriation,  and  he  would  be  entitled  to  protection  as  a  bona  fide  holder 
for  value,  without  notice.    See  Arnau  v.  First  Nat.  Bank  of  Florida,  30  Fla.  398; 


040  RIGHTS   OF   A    BONA   FIDE    HOLDER  §  795a 

It  has  been  held  that  where  a  purchaser  takes  the  paper  from  a 
person  who  is  the  payee  and  first  indorser,  and  the  subsequent  in- 
dorsements of  other  parties  appear  thereon,  he  will  be  charged  with 
notice  of  the  fact  that  such  subsequent  indorsers  do  not  further 
occupy  that  relation  to  the  first  indorser;  and  he  is  thereby  put 
upon  inquiry  as  to  the  circumstances  under  which  such  paper  re- 
turned to  the  first  indorser's  possession.  In  such  case,  the  first 
indorser  occupies  his  original  position,  namely,  that  of  surety  to, 
and  not  for,  a  subsequent  indorser.^^ 

Where  a  purchaser  of  a  note  had  notice  from  the  recitals  contained 
therein  that  it  was  the  property  of  another  and  that  it  was  held  by 
the  holder  as  collateral  to  secure  a  loan  made  to  the  owner,  such 
purchaser  has  no  right  to  presume  from  such  possession  that  the 
holder  had  a  right  to  negotiate  the  note,  and  must  account  to  the 
owner  for  the  note,  subject  to  the  payment  to  him  of  the  amount  of 
the  loan  secured  by  the  note.^ 

The  fact  that  a  note  was  presented  for  discount  by  the  maker  has 
l)een  held  notice  to  the  discounter  that  an  indorsement  thereon  was 

Shattuck  V.  Eldridge,  173  Mass.  165,  53  N.  E.  377;  Citizens'  Bank  v.  Loenhart, 
126  Ind.  206,  25  N.  E.  1099;  Galloway  v.  Glesson,  61  Mo.  App.  21.  Where  an 
agent  was  authorized  to  indorse  checks  payable  to  his  principal  for  deposit  to 
the  credit  of  his  principle,  and  the  agent  took  the  checks  of  customers  payable 
to  his  employer  and  deposited  them  as  margins  in  his  own  speculative  stock 
account  in  his  personal  broker's  office,  he  was  not  proceeding  within  the  actual 
or  apparent  scope  of  his  employment,  to  the  knowledge  of  the  broker.  Salen 
V.  Bank  of  State  of  New  York,  97  N.  Y.  S.  361,  110  App.  Div.  636. 

99.  Adrian  v.  McCaskill  (N.  C),  9  S.  E.  284;  -post,  §  1202.  Possession  by  the 
payee  of  a  promissory  note  indorsed  to  a  third  party  may  constitute  -prima  fade 
evidence  of  title  in  the  payee,  in  the  absence  of  circumstances  reasonably  tending 
to  show  otherwise;  but  where  the  name  of  the  indorsee  has  been  erased,  and  the 
evidence  is  conclusive  that  the  erasure  was  a  forgery,  and  the  claim  of  ownership 
by  the  payee  is  open  to  question,  then  it  is  the  duty  of  prospective  purchasers  to 
make  reasonable  inquiry  concerning  the  title.  MinneapoUs  Threshing  Mach.  Co. 
v.  Gih-uth,  109  Minn.  23,  122  N.  W.  466.  Where  indorsers  of  a  note,  who  were 
the  original  payees,  have  returned  the  note  to  the  maker  upon  canceling  a  trade 
between  them,  a  purchaser  of  the  note  from  the  maker  has  no  rights  against  the 
indorsers.  Upon  the  face  of  the  paper,  the  maker  was  liable  to  the  indorsers  and 
could  make  no  demand  against  them.  Downing  v.  Neeley  &  Stephens  (Tex. 
Civ.  App.),  129  S.  W.  1192,  the  court  saying  further  that  the  holder  could  only 
recover  against  the  indorsers  if  they  were  accommodation  indorsers,  but  it  was 
not  so  in  this  case. 

1.  Sill  V.  Pate,  230  111.  39,  82  N.  E.  356.  gee  also  Hamilton  Nat.  Bank  v. 
Upton,  91  N.  Y.  S.  475,  100  App.  Div.  105,  holding  that  taking  a  note  as  collateral 
security  from  a  note  broker,  does  not  show  the  bank  officials  acted  in  bad  faith,  or 
with  any  sort  of  notice  that  the  broker  was  using  the  note  unlawfully. 


§  795b  ''purchaser  without  notice'^  041 

for  accommodation. 2  An  indorsement  "for  collection"  leaves  a  note 
open  to  all  defenses  which  could  have  been  made  if  the  note  had  re- 
mained in  the  hands  of  the  indorser,^  but  the  mere  fact  that  a  note  is 
indorsed  "without  recourse"  does  not  deprive  the  indorsee  of  the 
position  of  a  holder  in  due  course.^ 

Under  Negotiable  Instrument  statute. — Under  the  statute/  it  has 
been  held  that  where  a  line  was  drawn  through  the  words  on  a  note 
stating  the  place  at  which  it  was  made  payable,  and  another  place  of 
payment  was  written  in  the  note,  after  its  execution  and  delivery,  an 
assignee  took  the  paper  subject  to  all  defenses  that  might  be  made 
against  it  in  the  hands  of  the  original  payee,^  but  an  indorsement 
"without  recourse"  is  not  sufficient  to  put  the  purchaser  upon  notice, 
and  destroy  the  negotiability  of  the  instrument/ 

§  795b.  Constructive  notice  from  extrinsic  circumstances. — The 

circumstances  of  the  transaction  may  be  of  such  a  character  as  to 
intimate  strongly  a  defect  in  the  title,  and  if  they  are  such  as  to  invite 
inquiry  they  will  suffice,  provided  the  jury  think  that  abstinence  from 
inquiry  arose  from  a  belief  or  suspicion  that  inquiry  would  disclose 
a  vice  in  the  paper .^    Then  indeed  his  bona  fides  would  be  impeached. 


2.  National  Park  Bank  v.  Remsen,  43  Fed.  226. 

3.  Second  Bank  of  Baltimore  v.  Bank  of  Alama  (Ark.),  138  S.  W.  472;  Mer- 
chants' Nat.  Bank  v.  Hanson,  33  Minn.  43;  Norfolk  Nat.  Bank  v.  Nenow,  50 
Nebr.  429,  69  N.  W.  936;  Smith  v.  Bayer,  46  Oreg.  143,  79  Pac.  497,  114  Am.  St. 
Rep.  858. 

4.  Bank  of  Sampson  v.  Hatcher,  151  N.  C.  359,  66  S.  E.  308,  134  Am.  St.  Rep. 
989  (under  the  rule  that  there  must  have  been  actual  notice  or  bad  faith).  In 
Mee  V.  Carlson,  22  S.  D.  365,  117  N.  W.  1033,  29  L.  R.  A.  (N.  S.)  351,  however, 
under  the  rule  of  the  prudent  man,  it  was  held  that  the  fact  that  the  payee  in- 
dorsed the  note  "without  recourse"  is  a  circumstance  calculated  to  arouse  sus- 
picion in  the  mind  of  a  prudent  person. 

6.  Appendix,  sec.  124. 

6.  MitcheU  v.  Reed  (Ky.),  106  S.  W.  833. 

7.  Appendix,  sec.  38.  Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548, 108  S.  W. 
1068;  Leavitt  v.  Thurston  (Utah),  113  Pac.  77. 

8.  See  ante,  §  777  et  seq.;  Hulbert  v.  Douglas,  94  N.  C.  122;  Bank  at  Hamburg 
V.  Flynn,  38  Fed.  798;  Bank  v.  Rider,  58  N.  H.  512;  Ormsbee  v.  Howe,  54  Vt. 
182;  Schmueckle  v.  Waters,  125  Ind.  265,  25  N.  E.  281;  Merrill  v.  Hole,  85  Iowa, 
66,  52  N.  W.  4;  Newman  v.  Tilman  ei  al,  71  Miss.  26,  13  So.  934;  Hays,  Execu- 
trix V.  Lapeyre  et  al,  48  La.  Ann.  749,  19  So.  821;  Norfolk  Nat.  Bank  v.  Nenow, 
50  Nebr.  429,  69  N.  W.  936;  First  Nat.  Bank  of  Cameron  v.  Stanley,  46  Mo.  App. 
440;  Bowman  v.  Metzger,  27  Oreg.  23,  39  Pac.  3,  44  Pac.  1090;  Second  Nat. 
Bank  v.  Weston,  31  App.  Div.  403,  52  N.  Y.  Supp.  315;  Van  Voorhis  v.  Brown,  29 
App.  Div.  119,  51  N.  Y.  Supp.  440;  Cheever  v.  Pittsburgh,  S.  &  L.  E.  R.  Co.,  28 


942  EIGHTS   OF   A   BONA    FIDE   HOLDER  §  795b 

But  further  than  this,  gross  negligence,  which  is  not  in  itself  proof  of 
mala  fides,  may  be  so  great  as  to  amount  to  proof  of  notice.  "  I  agree," 
says  Baron  Parke,  "that  notice  and  knowledge  mean  not  merely 
express  notice,  but  knowledge  or  the  means  of  knowledge  to  which 
the  party  wilfully  shuts  his  eyes."  ^ 

But  it  is  not  a  good  ground  of  defense  against  a  bona  fide  holder  for 
value  that  he  was  informed  that  the  note  was  made  or  the  bill  accepted 
in  consideration  of  an  executory  contract,  unless  he  was  also  informed 
of  its  breach. ^°    If  he  has  such  knowledge  he  cannot  recover.^^ 

App.  Div.  81,  50  N.  Y.  Supp.  10G7,  citing  text;  J.  I.  Case  Threshing  Mach.  Co.  v. 
Hall,  32  Tex.  Civ.  App.  214,  73  S.  W.  835  (as  to  knowledge  of  a  breach  of  war- 
ranty); Nottingham  v.  Ackiss,  107  Va.  63,  57  S.  E.  592  (as  to  conditions  contained 
in  a  collateral  agreement).  In  a  suit  by  an  assignee  of  a  note  against  the  maker, 
evidence  tending  to  show  that  the  payee,  a  stranger  in  the  community  and  known 
to  the  assignee  to  be  engaged  in  some  kind  of  business,  was  engaged  in  a  fraudulent 
business,  and  had  defrauded  another  person  whose  note  he  had  taken  in  the  course 
of  that  business,  and  that  those  facts  had  been  made  known  to  the  assignee  before 
he  purchased  the  note  in  suit,  is  admissible  to  show  circumstances  calculated  to 
attract  the  assignee's  notice,  put  him  on  his  guard  and  stimulate  inquiry  as  to  the 
character  of  the  note.  Loftin  v.  Hill,  131  N.  C.  105,  42  S.  E.  548.  On  taking 
a  note  as  collateral  indorsed  in  the  partnership  name  by  one  of  the  partners,  the 
unexplained  fact  that  a  partnership  security  has  been  received  in  discharge  of  a 
separate  claim  against  himself  is  a  badge  of  fraud  which  it  is  incumbent  on  the 
party  who  takes  the  security  to  remove  by  showing  either  that  the  party  from 
whom  he  received  it  acted  with  the  authority  of  his  partners  or  that  he  himself 
had  good  reason  to  believe  so;  the  omission  to  make  inquiry  so  customary  exhibits 
heedlessness  or  a  purpose  not  to  scrutinize.  United  States  Exch.  Bank  v.  Zim- 
merman, 113  N.  Y.  S.  33. 

9.  May  v.  Chapman,  16  M.  &  W.  355;  Hamilton  v.  Vought,  34  N.  J.  L.  187; 
Edwards  v.  Thomas,  66  Mo.  486;  Sherwood,  C.  J.:  "Neither  courts  nor  juries  are 
allowed  to  shut  their  eyes  to  natural  and  rational  inferences,  clearly  deducible 
from  proven  facts."  Bush  v.  Groomes,  125  Ind.  14,  24  N.  E.  81 ;  Hager  v.  National 
German-American  Bank,  105  Ga.  116,  31  S.  E.  141.  See  Johnson  v.  Realty  Co., 
62  Mo.  App.  156.    See  also,  ante,  §  775. 

10.  Bank  v.  Cason,  39  La.  Ann.  867;  Black  v.  First  Nat.  Bank,  96  Md.  399,  54 
Atl.  88;  Whitehead  v.  Purdy  (Mich.),  137  N.  W.  684;  Hakes  v.  Thayer,  131  N.  W. 
174,  165  Mich.  476;  Patten  v.  Gleason,  106  Mass.  439;  Jennings  v.  Todd,  118  Mo. 
296,  24  S.  W.  148,  40  Am.  St.  Rep.  366;  Madison  County  Bank  v.  Graham,  74 
Mo.  App.  251;  Davis  v.  McCready,  17  N.  Y.  230;  Croix  v.  Sibbett,  15  Pa.  St. 
238;  Buchannan  v.  Wren,  10  Tex.  Civ.  App.  560,  30  S.  W.  1077,  quoting  text; 
Moyses  v.  Bell,  62  Wash.  534,  114  Pac.  193;  Bend  v.  Wietze,  12  Wis.  611.  In 
Harris  v.  Nicholls,  26  Ga.  413,  it  is  held  that  failure  of  consideration  may  be 
pleaded  against  a  transferee  who  took  the  note  with  knowledge  of  the  contract, 

11.  Wilson  v.  Carter,  4  Ga.  App.  349,  61  S.  E.  494;  Wagner  v.  Diedrich,  50 
Mo.  484;  Coffman  v.  Wilson,  2  Mete.  (Ky.)  542;  Bonman  v.  Van  Kuren,  29  Wis. 
218. 


§  795c  ''purchaser  WITHOUT  notice''  943 

Under  Negotiable  Instrument  statute.— And  under  the  statute, 
knowledge  that  a  note  was  given  in  consideration  of  an  executory- 
agreement  or  contract  of  the  payee  which  has  not  been  performed 
will  not  deprive  the  indorsee  of  the  character  of  a  bona  fide  holder 
unless  he  also  has  notice  of  the  breach  of  that  agreement  or  contract.  ^^ 

§  795c.  From  circumstances  of  corporate  obligation. — When  a 
purchaser  takes  negotiable  paper  made,  drawn,  indorsed  or  accepted 
under  circumstances  which  make  it  prima  facie  the  obligation  of  the 
corporation,  and  without  notice  of  a  defect  therein  and  for  value,  he 
may  recover  thereon. ^^  But  a  purchaser  is  put  on  implied  notice  of 
infirmity  in  the  paper  v^'hen  the  corporation  was  without  power  to 
issue  negotiable  paper,^'*  when  it  was  accepted  or  indorsed  by  a  cor- 
poration for  accommodation,^^  when  it  was  an  idtra  vires  guarantee 


and  that  the  consideration  was  liable  to  fail.  In  Deavenport  v.  Green  River 
Deposit  Bank,  138  Ky.  352,  128  S.  W.  88,  137  Am.  St.  Rep.  386,  it  was  held  that 
where  notice  of  warranty  of  personal  property  for  the  purchase  of  which  a  note  was 
given  was  not  brought  home  to  the  indorsee  of  the  note,  such  indorsee  was  an 
innocent  purchaser  for  value  before  maturity,  and  no  set-off  or  counterclaim  is 
available  as  a  defense.  And  in  Cunningham  v.  Toye,  97  Ark.  537,  134  S.  W.  962, 
it  was  held  that  an  assignee  of  notes  for  the  purchase  money  of  land,  who  knew 
that  the  assignor  and  payee  was  under  obligation  to  make  title  to  the  land  when 
the  notes  were  paid,  took  the  notes  burdened  with  the  obUgation. 

12.  Appendix,  sec.  56.  McKnight  v.  Parsons,  136  Iowa,  390,  113  N.  W.  858, 
22  L.  R.  A.  (N.  S.)  718,  125  Am.  St.  Rep.  265. 

13.  Second  Nat.  Bank  v.  Snoqualime  Trust  Co.,  83  Nebr.  645,  120  N.  W.  182; 
Nassau  Trust  Co.  v.  Matherson,  100  N.  Y.  S.  55,  113  App.  Div.  693;  Cherry  v. 
First  Texas  Chemical  Mfg.  Co.  (Tex.),  123  S.  W.  689;  Lake  Charles  Nat.  Bank  v. 
J.  I.  Campbell  Co.  (Tex.  Civ.  App.),  122  S.  W.  601.  The  fact  that  one  of  the 
indorsees  of  a  note  was  a  stockholder  in  the  corporation  which  was  the  payee  and 
indorser,  was  not  sufficient  to  charge  him  with  notice  of  any  defense  the  maker 
may  have  had.  Landa  v.  Mechler  (Tex.  Civ.  App.),  HI  S.  W.  752.  WTiere  a 
corporation,  payee  of  a  note,  could  not  have  maintained  an  action  thereon  because 
it  was  unlawfully  carrying  on  its  business  in  the  State,  an  indorsee  of  the  note  is 
not  deprived  of  the  right  to  sue  on  it  when  he  is  a  bona  fide  holder  of  the  note. 
Neyens  v.  Worthington,  150  Mich.  580,  114  N.  W.  404.  TMiere  a  note,  purporting 
to  be  executed  for  a  corporation  by  its  general  manager,  was  in  fact  a  forgery  as 
to  the  signature  of  the  general  manager,  but  was  attested  by  the  secretary  as  the 
note  of  the  company  and  as  the  genuine  signature  of  such  manager,  a  purchaser  of 
the  note  was  an  innocent  holder.  Merchants'  &  Farmers'  Cotton  Oil  Co.  v. 
Lufkin  Nat.  Bank,  34  Tex.  Civ.  App.  551,  79  S.  W.  651. 

14.  Scott  V.  Bakers'  Union  of  the  World,  73  Kan.  575,  85  Pac.  604. 

15.  Cook  v.  American  Tubing  &  Webbing  Co.,  28  R.  I.  41,  65  Atl.  641,  9  L. 
R.  A.  (N.  S.)  193,  holding  that  where  drafts  were  drawn  by  a  corporation  payable 
to  the  order  of  and  indorsed  by  the  drawer,  and  accepted  by  the  drawee,  which  was 


944  RIGHTS    OF   A    BONA    FIDE    HOLDER  §  795c 

by  a  corporation,'^  or  when  it  appeared  to  be  a  corporate  obligation 
for  the  personal  debt  of  an  officer  of  the  corporation.'^ 

Under  Negotiable  Instrument  statute. — Under  the  statutory  pro- 
vision that  knowledge  of  such  facts  that  a  transferee's  action  in  taking 
the  instrument  amounted  to  bad  faith  constitutes  notice  of  an  in- 
firmity/* a  person  is  charged  with  notice  of  fraud  or  irregularity  who 
takes  in  payment  of  a  private  debt  a  negotiable  instrument  of  a 
corporation,  executed  by  his  debtor  as  an  officer  of  the  corporation,'^ 
and  where  an  indorsee  took  notes  with  notice  that  they  were  indorsed 
in  the  name  of  the  corporation  payee  by  one  who  was  the  treasurer  of 
the  corporation,  and  that  he  assumed  to  use  its  name  and  credit  in 
his  private  affairs,  he  was  put  upon  inquiry  in  respect  to  such  treas- 
urer's authority  to  indorse,  and,  therefore,  cannot  be  held  to  have 

a  firm  of  which  a  stockholder  of  the  corporation  was  a  member,  and  discounted 
for  the  acceptors,  the  indorsees  were  notified  of  the  character  of  the  drafts  as 
accommodation  paper  by  the  fact  that  it  was  so  presented  and  discounted. 
Notice  of  the  infirmity  of  paper  accepted  or  indorsed  by  a  corporation  for  ac- 
commodation, and  the  knowledge  that  may  be  imputed  from  such  notice,  may 
arise  from  any  irregularity  in  the  paper  or  in  its  chain  of  title,  or  from  the  fact 
that  the  maker  only  has  put  the  note  in  circulation  and  for  his  benefit.  Simmons 
Nat.  Bank  v.  Dilley  Foundry  Co.  (Ark.),  130  S.  W.  162. 

16.  Gaston  &  Ayres  v.  J.  I.  Campbell  Co.  (Tex.  Civ.  App.),  130  S.  W.  222. 
The  fact  that  the  holder  of  a  corporate  note  is  an  officer  of  the  corporation  is  not 
sufficient  to  put  a  purchaser  upon  inquiry.  Spencer  v.  Alki  Point  Transp.  Co., 
53  Wash.  77,  101  Pac.  509,  132  Am.  St.  Rep.  1058.  Where  the  president  of  a 
corporation  had  authority  to  sign  notes  on  its  behalf,  the  fact  that  he  signed  such 
a  note  to  a  financial  corporation  of  which  he  was  also  president,  to  borrow  money, 
to  be  used  for  his  individual  purposes,  would  not  fix  the  payee  corporation  with 
knowledge  of  any  improper  purpose  on  the  part  of  the  president.  Chestnut  St. 
Trust  &  Savings  Fund  Co.  v.  Record  Pub.  Co.,  227  Pa.  235,  75  Atl.  1067,  136 
Am.  St.  Rep.  874.  The  fact  that  a  note  bore  the  indorsement  of  a  former  president 
of  a  company,  who  is  transferring  the  same,  is  not  notice  to  the  purchaser  of  any 
infirmities  which  may  exist,  where  the  party  at  the  time  of  the  transfer  has  ceased 
to  be  president,  although  the  transfer  may  be  for  the  individual  interest  of  the 
former  president.    Jones  v.  Stoddart,  8  Idaho,  210,  67  Pac.  650. 

17.  Capital  City  Brick  Co.  v.  Jackson,  2  Ga.  App.  771,  59  S.  E.  92;  Jenkins  v. 
"Planters'  &  Mechanics'  Bank  (Okl.),  126  P.  757;  Wheeling  Ice  &  Storage  Co.  v. 
Conner,  61  W.  Va.  Ill,  55  S.  E.  982;  Wisconsin  Yearly  Meeting  of  Freewill  Bap- 
tists V.  Babler,  115  Wis.  289,  91  N.  W.  678. 

18.  Appendix,  sec.  56. 

19.  Kipp  V.  Smith,  137  Wis.  234,  118  N.  W.  848.  The  fact  that  the  president 
and  treasurer  of  a  corporation  who  executed  a  note  for  the  corporation  were  also 
members  of  a  firm  presenting  the  note  for  discount,  and  that  the  purchaser  of  the 
note  knew  this  fact,  was  not  notice  nor  a  fact  tending  to  give  notice  that  the 
corporate  note  was  made  and  being  used  for  the  accommodation  of  the  firm. 
In  re  Troy  v.  Cohoes  Shirt  Co.,  136  Fed.  420,  affirmed  142  Fed.  1038. 


§  796  "purchaser  without  notice"  945 

come  by  the  paper  bona  fide  so  as  to  bind  the  corporation.^  But  the 
fact  that  the  payee  of  a  corporate  note  was  a  director  of  the  corpora- 
tion is  not  notice  to  a  purchaser  of  the  note  of  any  infirmity  and  did 
not  put  him  upon  any  inquiry  concerning  the  circumstances  under 
which  it  was  issued  or  came  into  the  hands  of  the  payee;  a  director 
does  not  individually  make  contracts  in  behalf  of  the  corporation,  as 
an  officer  does,^^ 

§  796.  Story  says  that  "it  will  be  sufficient  if  the  circumstances 
are  of  such  a  strong  and  pointed  character  as  necessarily  to  cast  a 
shade  upon  the  transaction,  and  to  put  the  holder  upon  inquiry."  ^^ 
But  this  statement  of  the  rule  is  not  clear  and  satisfactory,  for  it 
means  that  if  the  circumstances  are  of  such  a  nature  as  to  cast  a 
shade  of  suspicion  upon  the  transaction  (and  it  seems  to  us  it  can 
mean  nothing  less),  it  contradicts  the  principle  laid  down  by  the 
author  in  the  same  paragraph,  that  suspicious  circumstances,  and 
gross  negligence  as  to  inquiry  into  them,  are  not  sufficient  to  impeach 
the  holder's  title.  And  it  is  remarkable  that  this  very  proposition 
of  Story  has  been  taken  by  one  authority  as  concurrent  with  the  view 
of  Gill  V.  Cubitt,  heretofore  commented  on;  ^^  while  another  follows 
it  as  adopting  the  very  contrary  precedent.^^  And  the  more  correct 
opinion,  as  it  seems  to  us,  is,  that  the  circumstances  must  be  so 
pointed  and  emphatic  as  to  amount  to  proof  of  mala  fides  in  the 
absence  of  inquiry,  or  such   as  to  be  prima  fade  inconsistent  with 

20.  Pelton  v.  Spider  Lake  Sawmill  &  Lumber  Co.,  132  Wis.  219,  112  N.  W.  29, 
122  Am.  St.  Rep.  963.  When  a  cashier's  check  payable  to  the  order  of  a  corpora- 
tion was  indorsed  in  the  name  of  the  corporation  by  its  president  and  general 
manager  and  delivered  to  a  trust  company  in  the  payment  of  a  note  made  by 
himself  and  another  person,  the  form  of  the  check  was  notice  to  the  trust  com- 
pany that  the  indorser  was  using  the  property  of  the  corporation  of  which  he  was 
president  to  pay  the  personal  debt  of  himself  and  such  other  person  in  apparent 
violation  of  its  rights;  the  effect  of  such  notice  was  to  put  the  trust  company  upon 
inquiry  to  see  whether  it  was  about  to  accept  money  from  one  to  whom  it  did  not 
belong  in  payment  of  its  own  claim.  Ward  v.  City  Trust  Company,  192  N.  Y. 
61,  84  N.  E.  585. 

21.  Orr  V.  South  Amboy  Terra  Cotta  Co.,  98  N.  Y.  S.  1026,  113  App.  Div.  103. 

22.  Story  on  Promissory  Notes,  §  197;  Merrill  v.  Hole,  85  Iowa,  66,  52  N.  W. 
4;  Whaley  v.  Neill,  44  Mo.  App.  316;  Hodson  v.  Eugene  Glass  Co.,  156  lU.  397, 
40  N.  E.  971,  citing  text. 

23.  Hamilton  v.  Marks,  52  Mo.  80  (1873).  See  ante,  §  775.  But  see  Horton  v. 
Bayne,  52  Mo.  533  (note  35,  infra),  which  seems  inconsistent  with  the  case  above 
cited.    Jennings  v.  Todd,  118  Mo.  296,  24  S.  W.  148,  40  Am.  St.  Rep.  373. 

24.  Greenaux  v.  Wheeler,  6  Tex.  526  (1851). 

60 


946  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  797 

any  other  view  than  that  there  is  something  wrong  in  the  title,  and 
thus  amount  to  constructive  notice.  In  other  words,  we  would  say 
that  if  the  circumstances  are  of  such  a  character  as  to  create  such  a 
distinct  legal  presumption  and  'prima  facie  proof  of  fraud,  or  of  some 
equity  between  prior  parties,  it  would  operate  as  legal  information 
and  constructive  notice  to  the  transferee.  This  rule  fixes  a  criterion 
for  judgment  which  is  definite,  and  seems  to  us  the  one  which  should 
be  adopted. ^^  The  proof  of  the  existence  of  the  circumstances  amount- 
ing to  implied  notice  must  be  clear.  As  said  by  Woodbury,  J.:  "It 
must  clearly  appear  that  the  indorsee  was  apprised  of  such  circum- 
stances as  would  have  avoided  the  note  in  the  hands  of  the  indorser."  ^' 

§  797.  The  mere  statement  of  the  consideration  in  a  bill  or  note 

does  not  put  the  holder  upon  inquiry  whether  or  not  it  really  passed, 
or  has  failed  in  any  respect.  It  is  rather  assuring  than  otherwise, 
for  it  is  evidence,  if  the  note  be  genuine,  that  it  was  given  for  value; 
and  the  specification  of  what  value  can  no  more  challenge  the  holder's 
investigation  than  the  omission  of  such  specification.-^  In  legal  effect 
it  does  not  qualify  the  paper  in  any  manner.^^    But  in  North  Carolina, 

26.  In  Missouri  it  was  said  in  the  case  of  Horton  v.  Bayne,  52  Mo.  533,  that 
"Unless  there  be  such  a  combination  of  suspicious  incidents  as  would  in  legal 
contemplation  afford  ground  for  the  presumption  that  the  purchaser  of  the  paper 
was  aware  at  the  time  of  its  acquisition  of  some  equity  between  the  original  parties 
thereto,"  he  would  not  be  affected  by  them.  Wildsmith  v.  Tracy,  80  Ala.  262, 
citing  the  text;  Morton  v.  N.  O.  &  Selma  R.  Co.,  79  Ala.  617,  citing  the  text; 
Tescher  v.  Merea,  118  Ind.  588,  citing  the  text;  Fealy  v.  Bull,  71  Hun,  402,  24 
N.  Y.  Supp.  988;  Stough  v.  Ponca  Mill  Co.,  54  Nebr.  500,  74  N.  W.  868;  Lumber 
Co.  V.  Land  Co.,  120  Cal.  521,  52  Pac.  995,  65  Am.  St.  Rep.  186. 

26.  Perkins  v.  Challis,  1  N.  H.  254;  Lee  v.  Whitney  (Mass.),  21  N.  E.  948; 
First  Nat.  Bank  v.  The  Security  Nat.  Bank,  34  Nebr.  71,  51  N.  W.  652,  33  Am. 
St.  Rep.  618;  Central  Nat.  Bank  v.  Pipkin,  66  Mo.  App.  592;  Brown  v.  Hoffel- 
meyer,  74  Mo.  App.  385;  Hodson  v.  The  Eugene  Glass  Co.,  156  111.  397,  40  N.  E. 
971,  quoting  text. 

27.  Hereth  v.  Merchants'  Nat.  Bank,  34  Ind.  380;  Bank  of  Commerce  v. 
Barrett,  38  Ga.  126;  Doherty  v.  Perry,  38  Ind.  15;  Heard  v.  Dubuque  County 
Bank,  8  Nebr.  16;  Kelley  v.  Whitney,  45  Wis.  110;  Stevenson  v.  O'Neal,  71  111. 
214.  See  ante,  §§  41,  51,  108,  110;  Siegel  v.  Chicago  Trust  &  Sav.  Bank,  23  N.  E. 
417,  citing  the  text.  That  a  note  to  a  building  and  loan  association  recited  that 
it  was  in  consideration  of  the  erection  of  a  building  for  the  maker  was  not  suffi- 
cient to  put  the  indorsee  on  inquiry  as  to  its  vaUdity.  Houston  v.  Keith  (Miss.), 
56  So.  336. 

28.  Beardslee  v.  Horton,  3  Mich.  560;  Doherty  v.  Perry,  38  Ind.  15;  Ferris 
V.  Tavel,  87  Tenn.  390,  citing  the  text;  Buchanan  v.  Wren,  10  Tex.  Civ.  App. 
560,  30  S.  W.  1077,  quoting  text. 


§797  ''purchaser  without  notice"  947 

where  the  note  was  expressed  to  be  for  "the  Rocky  Swamp  tract  of 
land,"  those  words  were  held  to  put  the  holder  on  inquiry,  and  to  fix 
him  with  notice  that  it  could  not  be  collected,  unless  a  title  to  the 
land  were  made.  "In  this  way,"  said  the  court,  "significance  is 
given  to  the  words  referred  to,  otherwise  they  must  be  treated  as 
idle  and  superfluous."  ^^  And  it  has  been  held  that  a  party  taking 
a  note,  knowing  the  consideration,  is  subject  to  any  defense  arising 
out  of  it.^°  But  this  cannot  be,  and  has  been  held  not  to  be  law.^^ 
Where  a  note  to  an  insurance  company  bears  on  its  face  the  memor- 
andum, "on  policy.  No.  33,386,"  it  is  nowise  affected,  although  the 
policy  contains  a  provision  for  allowance  as  set-off  of  notes  due  the 
company. ^^  In  New  York,  where  the  expressed  consideration  of  a 
note  was  "one  knitting  machine,  warranted,"  it  was  held  that  breach 
of  a  parol  contract  warranting  the  article  could  not  be  pleaded  against 
a  bona  fide  holder  before  maturity,  Boardman,  J.,  saying:  "Giving  to 
the  words  the  broadest  meaning  possible  they  do  not  imply  that  there 
has  been  a  breach  of  the  warranty.  They  cannot  be  construed  as 
notice  to  the  purchaser  of  a  defense  to  the  note  in  the  hands  of  the 
payee.  If  they  do,  it  must  be  because  the  law  will  presume  a  breach 
wherever  there  is  a  warranty.  That  would  be  preposterous."  ^^ 
Notice  that  a  note  was  given  for  a  certain  patent  right  has  been  held 
insuflacient  to  put  the  purchaser  on  inquir3\^''    The  requirement  of  a 

29.  Rand  v.  State,  77  N.  C.  175.  Though  a  note  contains  a  recital  that  it  was 
for  the  purchase  money  of  land,  a  purchaser  of  an  interest  in  the  note  is  not  a 
bona  fide  purchaser  when  he  had  notice  before  he  purchased  such  interest  that  the 
purchasers  of  the  land  claimed  that  the  land  had  been  paid  for.  Edwards  v. 
White  (Tex.  Civ.  App.),  120  S.  W.  914  (1909). 

30.  Thrall  v.  Horton,  44  Vt.  386.  See  Harris  v.  Nichols,  26  Ga.  414,  as  to  case 
where  party  knows  consideration  to  be  doubtful. 

31.  Borden  v.  Clark,  26  Mich.  410;  Sackett  v.  Kellar,  22  Ohio  St.  554;  Bank  v. 
Penland,  101  Tenn.  445,  47  S.  W.  693;  Hudson  v.  Best,  104  Ga.  131,  30  S.  E.  688; 
Biegler  v.  The  Merchants'  Loan  &  Trust  Co.,  164  111.  197,  45  N.  E.  512.  A  recital 
in  a  note  that  it  was  given  in  part  payment  for  the  purchase  price  of  certain  land 
is  no  notice  to  an  assignee  that  the  payee's  title  to  the  property  will  fail.  Dollar 
Savings  &  Trust  Co.  v.  Crawford,  69  W.  Va.  109,  70  S.  E.  1089,  citing  text. 

32.  Taylor  v.  Curry,  109  Mass.  36.    See  §§  41,  51. 
23.  Loomis  v.  Mowry,  8  Hun,  312  (1876). 

34.  Borden  v.  Clarke,  26  Mich.  412;  Miller  v.  Finley,  26  Mich.  255,  Camp- 
bell, J.:  "Whatever  may  have  been  the  experience  of  our  people  with  itinerant 
patent  vendors,  it  cannot  be  properly  assumed  as  a  fact  that  a  patent  regularly 
issued  by  the  department  lacks  either  novelty  or  utility.  And  as  fraud  can  never 
be  presumed  without  proof,  the  jury  could  not  properly  be  charged  upon  any 
theory,  supported  by  no  evidence  at  all."  An  exception  to  the  general  rule  is  one 
following  a  statutory  provision,  under  which,  where  notes  are  given  for  patent 


^4^  RIGHTS   OF   A   BONA    FIDE    HOLDER  §  798 

statute  that  notes  given  for  patent  rights  should  express  the  fact  on 
their  face  does  not  violate  the  Federal  Constitution,  which  grants  to 
Congress  the  power  to  grant  patents;  nor  would  a  note  given  for 
a  patent  right  without  the  required  words  be  void  in  the  hands  of  a 
bona  fide  holder  without  notice.^^  A  party  accepting  in  payment  of  a 
debt  a  note  from  a  town  treasurer,  which  was  executed  to  the  latter 
in  his  individual  character  for  certain  assessments,  was  held  not  to 
have  been  put  upon  inquiry,  by  the  mere  fact  that  he  was  dealing 
with  a  public  officer.^^ 

Under  Negotiable  Instrument  statute. — Under  the  statute,  where  a 
note  on  its  face  is  expressed  to  be  for  the  purchase  money  of  property, 
a  defect  of  title  is  not  available  against  an  indorsee  for  value  of  the 
note,  without  notice.^' 

§  798.  Notice  of  maker's  death  at  time  of  negotiation. — Where  a 
check  was  made  in  contemplation  of  a  partnership  to  be  formed  by 
the  drawer  and  four  other  persons,  and  the  drawer  of  the  check  died 
before  the  partnership  was  finally  formed,  the  other  four  had  no 
authority  to  indorse  the  check  in  the  name  of  the  partnership,  and 
another  could  not  acquire  title  to  it  by  such  indorsement.^^  The 
fact  that  one  who  takes  a  promissory  note  in  good  faith  for  value, 
and  before  maturity,  knew  that  the  maker  was  dead,  but  did  not 
know  it  was  made  for  accommodation,  may  recover  on  it  against 
the  maker's  estate,  even  if  the  indorser  for  whose  accommodation  it 
was  made,  put  it  into  circulation  fraudulently  as  against  the  maker. 
And  it  will  be  assumed  that  he  did  not  know  it  was  made  for  accom- 
modation.^^ A  father  who  bought  a  note  of  his  daughter,  who  told 
him  that  her  betrothed  had  given  it  to  her,  has  been  held  a  bona  fide 
holder.^" 


rights  and  the  consideration  is  expressed  in  the  body  of  the  note,  the  purchaser 
must  inquire  or  take  the  risk;  Simmons  v.  Council,  5  Ga.  App.  386,  63  S.  E.  238. 

35.  Haskell  v.  Jones,  86  Pa.  St.  173. 

36.  Chapman  v.  Remington,  46  N.  W.  34. 

37.  Appendix,  sec.  3.    Bank  of  Sampson  v.  Hatcher,  151  N.  C.  359,  66  S.  E.  308. 

38.  Dow  V.  State  Bank,  88  Minn.  355,  93  N.  W.  121. 

39.  Clark  v.  Thayer,  105  Mass.  217. 

40.  Benoin  v.  Paquin,  40  Vt.  199.  And  if  a  note  be  executed  by  one  who  has 
since  died,  the  defendant  cannot  testify  to  what  took  place  between  the  payee 
and  himself  surrounding  the  execution  and  consideration  of  the  note,  although 
the  payee  had  assigned  the  note  before  his  death,  and  his  estate  has  no  interest 
in  the  controversy.  [This  is  under  subsection  2,  §  606  of  the  Civil  Code  of  Ken- 
tucky.]   See  Hurry  v.  Kline,  93  Ky.  358,  20  S.  W.  277. 


§§  799-800a  '^  PURCHASER   WITHOUT   NOTICE ''  949 

§  799.  Particular  and  general  notice. — It  is  quite  clear  and  well 
settled  that  the  purchaser  need  not  have  notice  of  the  particular 
fraud,  or  equity  or  illegality,  in  order  to  be  affected  by  it.  It  is  suffi- 
cient that  there  be  notice,  actual  or  constructive,  that  there  is  some 
fraud,  or  equity  or  illegality  affecting  the  original  parties.  "Thus, 
if  when  he  took  the  bill  he  were  told  in  express  terms  that  there  was 
something  wrong  about  it,  without  being  told  what  the  vice  was,  or 
if  it  can  be  collected  by  a  jury,  from  circumstances  fairly  warranting 
such  an  inference,  that  he  knew,  or  believed,  or  thought  that  the  bill 
was  tainted  with  illegality  or  fraud,  such  a  general  or  implicit  notice 
will  equally  destroy  the  title."  ^^  So  if  he  knows  that  the  maker 
denies  his  liability  or  refuses  to  acknowledge  it.'*^ 

§  800.  Public  records. — Parties  negotiating  for  negotiable  in- 
struments are  not  bound  to  take  notice  of  public  records,  which  would 
affect  them  with  notice  were  they  dealing  with  the  subject-matter. 
And,  therefore,  when  there  is  nothing  on  the  face  of  the  bill  or  note 
to  give  notice  of  any  defects,  the  fact  that  a  deed  of  trust  securing  its 
payment  contains  recitals  which  show  that  equities  or  offsets  exist 
between  the  original  parties  does  not  weaken  the  position  of  a  bona 
fide  holder  without  actual  notice.'*^ 

§  800a.  Lis  pendens;  garnishment  and  trustee  process. — The 

purchaser  of  a  bill,  note,  or  other  negotiable  instrument  for  value 

41.  Byles  (Sharswood's  ed.)  [*119],  226,  citing  Oakley  v.  Ooddeen,  2  F.  & 
F.  659;  Henry  v.  Sneed,  99  Mo.  422,  citing  the  text;  Hager  v.  National  German- 
American  Bank,  105  Ga.  116,  31  S.  E.  141;  Hankey  v.  Downey,  3  Ind.  App.  325, 
29  N.  E.  606,  quoting  text;  Lumber  Co.  v.  Land  Co.,  120  Cal.  521,  52  Pac.  995, 
65  Am.  St.  Rep.  186;  Jackson  v.  Jones  (Ark.),  127  S.  W.  710,  citing  text;  Perth 
Amboy  Mut.  Loan,  etc.,  Assn.  v.  Chapman,  81  N.  Y.  S.  38,  80  App.  Div.  556,  af- 
firmed 178  N.  Y.  558;  70  N.  E.  1104,  quoting  text.  Where  a  purchaser  of  a  note 
had  been  informed  by  an  accommodation  indorser  that  there  was  something  wrong 
with  the  note  and  had  been  advised  not  to  buy  it,  and  at  that  time  refused  to  pur- 
chase it,  but  subsequently  bought  it  upon  being  informed  by  others  that  the  in- 
dorser had  concluded  to  stand  by  his  indorsement,  he  cannot  claim  to  be  an 
innocent  purchaser.    Vette  v.  Sacher,  114  Mo.  App.  363,  89  S.  W.  360. 

42.  Jones  v.  Jackson,  86  Ark.  191,  110  S.  W.  215;  Old.  Nat.  Bank  of  Ft.  Wayne 
V.  Marcy,  79  Ark.  149,  95  S.  W.  145;  Boyce  v.  Geyer,  2  Mich.  N.  P.  71;  Stude- 
baker  v.  Man.  Co.,  70  Mo.  274;  Johnson,  etc.,  Co.  v.  Missouri  Pacific  Ry.  Co., 
72  Mo.  App.  437. 

43.  Minell  v.  Read,  26  Ala.  736.    As  to  the  effect  of  conditions  stated  in  mort- 
gage securing  notes,  but  not  stated  in  the  notes,  see  First  Nat.  Bank  of  Gadsden  • 
V.  Sproull,  105  Ala.  275,  16  So.  879;  Breneman  v.  Mayer,  24  Tex.  Civ.  App.  164. 


950  RIGHTS   OF   A   BONA    FIDE    HOLDER  §  800a 

and  before  maturity,  is  not,  as  a  general  rule,  affected  by  any  liti- 
gation to  which  he  is  not  a  party,  which  may  then  be  pending,  and 
in  which  the  instrument  is  involved,  nor  will  a  decree  or  judgment, 
when  rendered  in  such  litigation,  affect  him,  the  doctrine  of  lis  pendens 
having  no  application  to  negotiable  instruments. ''^  But  if  the  instru- 
ment were  overdue  at  the  time  of  transfer,  it  would  then  be  subject 
to  the  issue  of  the  suit,  as  it  is  then  subject  to  all  equitable  defenses. ^^ 
And  there  is  this  to  be  specially  noted:  if,  under  the  statutes  and 
decisions  of  the  State  where  the  note  is  payable,  the  defendant  is 
compelled,  by  due  process  of  law,  to  pay  the  note  to  another  party 
than  the  plaintiff,  the  latter,  although  a  bona  fide  holder  without  no- 
tice, cannot  recover.  This  result  is  sometimes  reached  when  the  maker 
of  a  negotiable  note  is  compelled  by  garnishee  or  trustee  process  to 
pay  the  amount  of  the  note  to  a  creditor  of  the  payee;  and  in  such  case 
an  indorsee  of  the  payee,  as  has  been  held,  cannot  recover  of  the  maker 
notwithstanding  that  he  acquired  the  note  for  value  before  maturity, 
and  without  notice."*^  The  better  doctrine,  however,  upon  this  sub- 
ject is,  that  the  maker  of  a  negotiable  note  contracts  to  pay  the  holder, 
at  maturity,  whoever  he  may  be;  and  that  while  it  is  current  and 
negotiable  in  the  full  sense  of  the  term,  the  maker  cannot  be  charged 

44.  County  of  Cass  v.  Gillett,  100  U.  S.  (10  Otto)  585;  County  of  Warren  v. 
Mavey,  97  U.  S.  (7  Otto)  106;  Murray  v.  Lylburn,  2  Johns.  Ch.  441;  Kieffer 
V.  Ehler,  18  Pa.  St.  388;  Hill  v.  Kraft,  29  Pa.  St.  186;  Day  v.  Zimmermann,  88 
Pa.  St.  188;  Mayberry  v.  Morris,  62  Ala.  113;  Re  Great  Western  Tel.  Co.,  5 
Biss.  363;  Leitch  v.  Wells,  48  N.  Y.  585,  overruling  same  case  in  48  Barb.  637; 
Mims  V.  West,  38  Ga.  18;  Durant  v.  Iowa  Co.,  1  Woolw.  69;  Stone  v.  Elliott,  11 
Ohio  St.  252;  Wintons  v.  Westfeldt,  22  Ala.  560;  Cheney  v.  Janssen,  20  Nebr. 
128;  Holland  v.  Smit,  11  Mo.  App.  6;  Railway  Co.  v.  Lynde,  55  Ohio,  23,  44  N.  E. 
596;  State  of  Kansas  v.  Board  of  County  Comrs.  of  Wichita  County,  59  Kan. 
512,  53  Pac.  526;  Matter  of  Clover,  8  App.  Div.  556,  40  N.  Y.  Supp.  886;  Gannon 
V.  Northwestern  Nat.  Bank,  83  Tex.  274,  18  S.  W.  573;  Dodd  v.  Lee,  57  Mo. 
App.  167.  But  this  case  is  based  upon  a  State  statute.  Pickens  Township  v. 
Post,  41  C.  C.  A.  1,  99  Fed.  659;  Reid,  Murdoch  &  Co.  v.  Sheffy,  75  111.  App.  136; 
State  V.  Wichita  County,  59  Kan.  512,  53  Pac.  526;  Kimbrough  v.  Hornsby, 
113  Tenn.  605,  84  S.  W.  613,  quoting  text. 

46.  Kellogg  V.  Fancher,  23  Wis.  21;  Mayberry  v.  Morris,  62  Ala.  117  (semble); 
Mills  V.  Stewart,  12  Ala.  96;  Holland  v.  Smit,  supra  where,  under  the  circum- 
stances of  the  case,  this  rule  held  not  to  apply.  Somers  v.  Losey,  48  Mich.  294; 
Roblee  v.  Rankin,  11  Canada  Sup.  Ct.  137. 

46.  Simon  v.  Huot,  8  Hun,  378  (1876),  construing  laws  of  Florida.  (But 
See  Huot  v.  Ely,  17  Fla.  775.)  Hull  v.  Blake,  13  Mass.  153  (1816),  construing 
and  applying  law  of  Georgia;  Mercam  v.  Rundlett,  13  Pick.  515  (1833).  See 
Trubee  v.  Alden,  6  Hun,  75;  2  Parsons  on  Contracts  (6th  ed.)  606,  608;  Levy  v. 
Du  Bose,  3  Tex.  Civ.  App.  68, 21  S.  W.  932. 


§  800a  "  PURCHASER   WITHOUT   NOTICE  ''  951 

as  garnishee  of  the  payee  at  the  suit  of  a  creditor  of  the  payee;  and 
that,  therefore,  no  judgment  could  be  properly  entered  against  the 
maker  that  would  bind  him  to  pay  the  amount  of  the  note  to  any 
other  person  than  the  holder  for  value  before  maturity,  if  such  holder 
there  be.  This  view  is  cogently  supported  by  Drake  in  his  work  on 
Attachment,  and  by  many  adjudicated  cases;  and  the  opposing  de- 
cisions have  been  justly  and  sharply  criticised.'*^  The  true  principle 
and  correct  conclusion  has  been  well  stated  by  Drake  to  be  that  the 
maker  of  a  negotiable  note  should  not  be  charged  as  garnishee  of  the 
payee,  unless  it  be  affirmatively  shown  that  before  the  rendition  of 
the  judgment  the  note  had  become  due,  and  was  then  still  the  prop- 
erty of  the  payee.  ^^ 

Under  Negotiable  Instrument  statute. — The  statute  provides  that 
an  instrument  negotiable  in  its  origin  continues  to  be  negotiable 
until  it  has  been  restrictively  indorsed  or  discharged  by  payment  or 
otherwise."*^    Under  the  statute  a  promissory  note  continues  to  be 

47.  Drake  on  Attachment,  §  584  et  seq;  Wohl  v.  First  Nat.  Bank,  154  Ala. 
332,  46  So.  231;  Gatchell  &  Co.  v.  Foster,  94  Ala.  622,  10  So.  434;  Mayberry 
V.  Morris,  62  Ala.  113;  Leslie  v.  Merrill,  58  Ala.  322;  Gregory  v.  Higgins,  10  Cal. 
339;  Huot  v.  Ely,  17  Fla.  775;  Long  v.  Johnson,  74  Ga.  5;  Cadwalader  v.  Hartley, 
17  Ind.  520;  Junction  R.  Co.  v.  Cleneay,  13  Ind.  161;  Cruett  v.  Jenkins,  53  Md. 
217,  overruling  Somerville  v.  Brown,  5  Gill,  399,  and  Stuart  v.  West,  1  H.  &  J. 
536;  Serviss  v.  Washtenaw  Circuit  Judge,  116  Mich.  101,  74  N.  W.  310,  72  Am. 
St.  Rep.  507;  Karp  v.  National  Bank,  76  Mich.  679,  applying  the  rule  to  the 
liabiUty  of  a  bank  issuing  a  certificate  of  deposit  payable  to  order;  Button  v. 
Trader,  75  Mich.  295;  Littlefield  v.  Hodge,  6  Mich.  326;  Hubbard  v.  Williams,  1 
Minn.  54;  Stone  v.  Dean,  5  N.  H.  502;  Myers  v.  Beeman,  9  Ired.  116;  Kingsley  v. 
Evans,  34  Ohio  St.  158;  Norton  v.  Norton  (Ohio),  1  West.  Rep.  524;  Gaffney  v. 
Bradford,  2  Bailey,  441;  Brittian  v.  Anderson,  8  Baxt.  316;  Willis  v.  Heath,  75 
Tex.  125;  Bassett  v.  Garthwaite,  22  Tex.  230;  Iglehart  v.  Moore,  21  Tex.  501; 
Hinsdill  v.  Safford,  11  Vt.  309;  Hutchins  v.  Evans,  13  Vt.  541;  See  Vermont  cases 
and  changes  of  statute  law  in  Drake  on  Attachment,  §  588  and  notes;  Howe  v. 
Ould,  28  Gratt.  1  {semble) ;  Davis  v.  Pawlette,  3  Wis.  300.  The  matter  is  now  reg- 
ulated in  New  Hampshire  by  statute.  See  Steer  v.  Dow,  78  N.  H.  95,  71  Atl.  217; 
Amoskeag  Mfg.  Co.  v.  Gibbs,  8  Fost.  316.  The  decisions  opposing  the  doctrine 
of  the  text  may  be  found  in  Drake  on  Attachment,  §  589  et  seq. 

48.  Drake  on  Attachment,  §  587;  Kimbrough  v.  Homsby,  113  Tenn.  605, 
84  S.  W.  613,  quoting  text.  In  the  sense  of  the  statutes  on  the  subject  of  attach- 
ment, a  check  is  ordinarily  held  to  be  property.  See  Wildman  v.  Van  Gelder, 
60  Hun,  443,  14  N.  Y.  Supp.  914.  And  likewise,  are  promissory  notes,  book 
accounts  and  other  credits.  See  McCurdy  v.  Prugh,  59  Ohio  St.  465,  55  N.  E. 
154.  But  when  the  payee  has  placed  the  note  in  the  hands  of  the  maker  it  has 
ceased  to  be  current  negotiable  paper  according  to  the  law  merchant,  and  it  may 
be  garnished.    Hutcheson  v.  King,  37  Tex.  Civ.  App.  151,  83  S.  W.  215. 

49.  Appendix,  sec.  47. 


gg2  RIGHTS   OF   A   BONA   FIDE    HOLDER  §§  801,  802 

negotiable  after  maturity,  and  is  not  subject  to  garnishment  when  a 
general  statute  provides  that  "debts  secured  by  bills  of  exchange  or 
negotiable  promissory  notes"  are  exempt  from  process.^ 

§  801.  Notice  of  fraud,  or  defect  of  title,  or  of  defense  valid  be- 
tween prior  parties  may  be  derived  from  circumstances,  and  be  as 
effectual  as  personal  observation,  or  hearing  of  the  facts  in  question. 
Thus,  where  the  assignee  of  a  note,  at  the  time  of  assignment,  re- 
quest's and  receives,  as  security  from  the  transferrer,  a  conveyance  of 
land  for  the  purchase  money  of  which  the  note  is  given,  with  a  provi- 
sion in  the  deed  that  the  assignee  is  to  comply  with  the  terms  of  the 
contract  of  sale  to  the  prior  purchaser,  the  assignee  will  be  chargeable 
with  notice  of  the  character  of  the  note.^^  Mere  proof  of  an  adver- 
tisement in  a  newspaper  cautioning  parties  against  purchasing  a  bill 
or  note,  even  when  made  in  the  place  of  residence  of  the  purchaser,  is 
not  of  itself  sufficient  to  show  notice  to  the  purchaser  of  any  fraud 
affecting  its  validity.^^ 

§  802.  Notice  to  agent.— It  is  a  general  principle  of  law  that 
notice  to  an  agent  is  notice  to  the  principal,  and,  therefore,  if  the 
holder  in  takmg  the  bill  employs  an  agent,  though  he  be  unaffected 
with  notice  to  himself  personally,  yet  notice  to  the  agent  so  employed, 
express  or  implied,  is  notice  to  the  holder.^^    And  notice  to  a  sub- 

50.  Oakdale  Mfg.  Co.  v.  Clarke,  29  R.  I.  192,  69  Atl.  681. 
61.  Packwood  v.  Gridley,  39  111.  383. 

52.  Kellogg  V.  French,  14  Gray,  354. 

53.  Wiley  v.  Knight,  27  Ala.  336;  Morris  v.  Georpa  Loan  Co.,  109  Ga.  12,  34 
S.  E.  378;  Savings  Bank  v.  Schott,  135  111.  655,  26  N.  E.  640,  25  Am.  St.  Rep.  401 ; 
Gear  v.  Higgins,  8  Kan.  520;  Henry  v.  Sneed,  99  Mo.  423;  Livermore  v.  Blood, 
40  Mo.  48;  Patten  v.  Merchants'  Ins.  Co.,  40  N.  H.  375;  Bank  v.  Whitehead,  10 
Watts,  397;  Blum  v.  Loggin,  53  Tex.  137;  Lawrence  v.  Tucker,  7  Greenl.  195; 
In  re  Hopper-Morgan  Co.,  158  Fed.  351;  Warum  v.  Milford,  4  McLean,  93; 
2  Kent  Com.  (*630),  849;  Angell  and  Ames  on  Corporations,  247;  Byles  on  Bills 
(Sharswood's  ed.)  [*120],  226,  227;  Stort  on  Agency,  §  140.  A  principal  cannot 
ratify  the  fraud  of  an  agent  by  accepting  a  note,  the  fruit  of  such  fraud,  and  claim 
to  be  a  good-faith  holder,  because  the  agent  failed  to  acquaint  him  with  the 
circumstances  under  which  he  procured  the  note;  the  principal  being  led  to  be- 
heve  that  it  was  taken  in  the  regular  course  of  business.  First  Nat.  Bank  of 
Durand  v.  Shaw,  157  Mich.  192,  121  N.  W.  809,  133  Am.  St.  Rep.  342.  The  fact 
that  the  purchaser  of  a  note  and  mortgage  from  the  payee  told  him  that  she  had 
some  money  to  lend,  and,  after  he  had  told  her  that  the  mortgages  offered  were 
first  mortgages,  took  his  word  for  what  they  were  and  trusted  his  judgment  and 
bought  one,  does  not  show  that  he  was  the  purchaser's  agent  and  that  his  knowl- 
edge of  any  infirmity  was  her  knowledge.     Thorpe  v.  Mindeman,  123  Wis. 


§  802  *'  PURCHASE    WITHOUT   NOTICE  "  953 

agent  whose  appointment  has  been  authorized  by  the  principal  is 
equally  notice  to  the  principal.^"*  But  this  rule  is  subject  to  the 
qualification  that  the  knowledge  of  the  agent,  in  order  to  affect  his 
principal,  should  either  have  been  acquired  in  the  same  transaction, 
or  at  least  so  recently  as  that  it  may  be  presumed  to  have  remained 
in  his  memory;  and  it  must  be  knowledge  of  a  fact  material  to  the 
transaction,  and  which  it  would  be  the  duty  of  the  agent  to  com- 
municate to  his  principal.^^  That  the  principal  is  bound  by  such 
knowledge  or  notice  as  his  agent  obtains  in  negotiating  the  particular 
transaction  is  everywhere  conceded.  Constructive  notice  to  an 
agent  is  not  to  be  extended.^^  Notice  to  the  active  managing  officers 
of  a  corporation  is  notice  to  the  corporation  itself.  It  is  immaterial 
what  the  official  position  may  be  if  the  person  is  actively  engaged  in 
the  management  of  its  interests.^''    The  mere  fact,  however,  that  the 

149,  101  N.  W.  417,  68  L.  R.  A.  146,  107  Am.  St.  Rep.  1003.  The  knowledge 
of  the  agent  of  the  payee  of  facts  surrounding  the  execution  of  the  note,  does 
not  affect  the  rights  of  a  purchaser  of  the  note,  as  he  was  not  the  agent  of  the  pur- 
chaser.   Keenan  v.  Blue,  240  111.  177,  88  N.  E.  553. 

54.  Boyd  v.  Vanderkemp,  1  Barb.  Ch.  273.  Where  a  subagent  of  an  insurance 
company  procured  a  note  by  fraudulent  representations  as  to  a  policy,  the  general 
agent  who  appointed  him  is  charged  by  law  with  notice  of  his  agent's  fraudulent 
conduct,  though  he  acquired  the  note  before  maturity.  Webb  v.  Moseley,  30 
Tex.  Civ.  App.  311,  70  S.  W.  349. 

65.  The  Distilled  Spirits,  11  Wall.  366  (1870);  Kaufman  v.  Robey,  60  Tex. 
308,  48  Am.  Rep.  266;  Le  Neve  v.  Le  Neve,  2  Lead.  Cas.  in  Eq.  179.  Justice 
Vann,  citing  the  opinion  of  the  court  in  Henry  v.  Allen,  151  N.  Y.  1,  said:  "The 
general  rule  that  notice  to  the  agent,  while  acting  within  the  scope  of  his  authority, 
and  in  regard  to  a  matter  over  which  his  authority  extends,  is  notice  to  the  prin- 
cipal rests  upon  the  duty  of  disclosure  by  the  former  to  the  latter  of  all  the  material 
facts  coming  to  his  knowledge  with  reference  to  the  subject  of  his  agency,  and  upon 
the  presumption  that  he  has  discharged  that  duty."  [Citing  authorities.]  This 
presumption,  however,  does  not  always  arise,  for  there  are  several  exceptions  well 
recognized  by  the  authorities.  Thus,  when  the  agent  has  no  legal  right  to  disclose 
a  fact  to  his  principal,  or  he  is  engaged  in  a  scheme  to  defraud  his  principal,  the 
presumption  does  not  prevail,  because  he  cannot,  in  reason,  be  presumed  to  have 
disclosed  that  which  it  was  his  duty  to  keep  secret,  or  that  which  would  expose 
and  defeat  his  fraudulent  purpose.  See  also  Shipman  v.  Bank  of  the  State  of 
New  York,  126  N.  Y.  318,  27  N.  E.  410,  22  Am.  St.  Rep.  821;  Union  Square 
Bank  v.  Hellerson,  90  Hun,  262,  35  N.  Y.  Supp.  871;  Merchants'  Nat.  Bank  v. 
Tracy,  77  Hun,  443,  29  N.  Y.  Supp.  77;  Knobelock  v.  Germania  Co.  Bank,  50 
S.  C.  259,  27  S.  E.  962. 

56.  WylUe  v.  Pollen,  32  L.  J.  Ch.  782;  Wiggins  v.  Stevens,  33  App.  Div.  83, 
53  N.  Y.  Supp.  90. 

57.  National  Bank  v.  Howe,  40  Minn.  390;  New  England  Mortgage  Co.  v. 
Gay,  33  Fed.  636;  Bank  v.  Penland,  101  Tenn.  445,  47  S.  W.  693;  Merchants' 
Nat.  Bank  v.  Clark,  139  N.  Y.  314,  34  N.  E.  910;  Daniels  v.  The  Empire  State 


954  RIGHTS   OF    A    BONA    FIDE    HOLDER  §  802 

cashier  of  a  bank  is  a  stockholder  and  director  of  a  corporation  which 
is  the  payee  and  indorser  of  a  note,  will  not  charge  the  bank  with 
notice  of  equities  against  the  corporation  when  it  appears  that  the 
cashier  has  no  duties  to  perform  with  reference  to  the  note  as  director 
of  the  company,  and  no  actual  notice  of  such  equities. ^^  Notice  to, 
or  knowledge  of,  one  member  of  a  partnership  is  notice  to  all  of  its 
members.  ^^ 


Sav.  Bank,  92  Hun,  450,  38  N.  Y.  Supp.  580;  Gibson  v.  National  Park  Bank 
of  New  York,  98  N.  Y.  87;  Merchants'  Nat.  Bank  v.  Clark,  139  N.  Y.  314,  34 
N.  E.  910,  36  Am.  St.  Rep.  710;  Le  Due  v.  Moore,  111  N.  C.  516,  15  S.  E. 
888;  Hager  v.  National  German-American  Bank,  105  Ga.  116,  31  S.  E.  141; 
Brobston  v.  Penniman,  97  Ga.  527,  25  S.  E.  350.  Where  a  note  was  executed  to 
secure  a  debt  of  the  husband  of  the  maker,  which  was  barred  by  the  statute  of 
limitations,  and  made  payable  to  a  person  individually  who  was  president  of  a 
bank  and  knew  of  the  consideration  of  the  note,  upon  a  sale  of  the  note  by  the 
payee  to  the  bank  of  which  he  was  president,  the  note  being  accepted  at  a  meeting 
of  the  directors  at  which  he  was  not  present,  the  bank  became  a  bona  fide  purchaser. 
McDonald  v.  Randall,  139  Cal.  246,  72  Pac.  997,  the  court  saying  that  a  corpora- 
tion is  not  chargeable  with  the  knowledge  of  one  of  its  officers  or  agents  who  is 
acting  on  his  own  behalf,  and  not  for  the  corporation.  Where  the  discount  com- 
mittee of  the  directors  of  a  bank  knew  the  circumstances  under  which  notes 
were  taken,  the  bank  was  charged  with  notice  of  any  infirmities  incident  to  their 
procurement,  though  its  officers  may  have  been  without  personal  knowledge  of 
the  method  pursued.  State  Bank  of  Indiana  v.  Menzer,  125  Iowa,  101,  100  N.  W. 
69.  An  agent  and  manager  of  a  foreign  insurance  company  is  presumed  to  know 
of  the  company's  failure  to  comply  with  the  conditions  precedent  prescribed 
by  statute  to  the  right  to  do  business,  and  when  he  has  purchased  a  note  taken 
by  a  soUcitor  in  consideration  of  business  done  for  the  company,  he  is  not  a  bona 
fide  purchaser.  Katz  v.  Herrick,  12  Idaho,  1,  86  Pac.  873  (1906).  But  notice 
to  officer  of  bank  in  order  to  charge  the  bank,  must  be  to  the  officer  in  his  official 
capacity  while  in  the  discharge  of  bank  business.  Washington  Nat.  Bank  v. 
Pierce,  6  Wash.  491,  33  Pac.  972. 

58.  First  Nat.  Bank  v.  Loyhed,  28  Minn.  396;  Wilson  v.  Second  Nat.  Bank 
(Pa.),  6  Cent.  756;  Merchants'  Nat.  Bank  v.  Lovitt,  114  Mo.  519,  21  S.  W.  825, 
35  Am.  St.  Rep.  770;  Morris  v.  Georgia  Loan  Co.,  109  Ga.  12,  34  S.  E.  378;  Knobe- 
lock  V.  Germania  Co.  Bank,  50  S.  C.  259,  27  S.  E.  962.  See  First  Nat.  Bank  v. 
Bevin,  72  Conn.  666,  45  Atl.  954;  Benton  v.  German-American  Nat.  Bank,  122 
Mo.  332,  26  S.  W.  975;  National  Bank  v.  Fitze,  76  Mo.  App.  356;  Holm  v.  Atlas 
Nat.  Bank,  28  C.  C.  A.  297,  84  Fed.  119. 

59.  Bigelow  v.  Henninger,  33  Kan.  362;  McCosker  v.  Banks,  84  Md.  292, 
3o  Atl.  935.  It  is  declared  in  this  case  that  "While  one  member  of  a  firm  may  be 
ignorant  of  defects  in  the  origin  of  a  promissory  note,  another  member  of  the 
firm  may  have  full  knowledge  of  such  defects,  and  since  this  knowledge  of  one 
would  be  sufficient  to  charge  all  with  notice,  the  ignorance  of  one  partner  cannot 
be  treated  as  ignorance  of  the  others."  Townsend  v.  Hagar,  19  C.  C.  A.  256,  72 
Fed.  949,  citing  text.  In  Flynn  v.  Bank  of  Mineral  Wells,  53  Tex.  Civ.  App.  481, 
118  S.  W.  848,  it  was  held  that  the  fact  that  after  a  check  was  drawn  on  a  bank, 


§§  802a,  803  PURCHASER   AND   TRANSFERRER  955 


SECTION  VI 

WHEN  PURCHASER  OR  HOLDER  STANDS  ON  SAME  FOOTING  AS  HIS 

TRANSFERRER 

§  802a.  There  are  two  aspects  in  which  the  rule  applies  that  the 
purchaser  must  stand  on  the  title  possessed  by  the  transferrer.  (1) 
The  one  is  presented  when  the  transferrer  has  a  good  title,  in  which 
case  as  a  general  rule  he  may  transfer  it.  (2)  The  second  arises  when 
he  has  a  bad  title,  and  there  are  some  cases  of  that  kind  in  which  he 
cannot  by  a  transfer  create  a  good  title. 

§  803.  (I)  Holder  with  good  title  may  transfer  instrument  to 
party  having  notice  of  infirmity. — We  have  seen  under  what  cir- 
cumstances the  purchaser  of  a  negotiable  instrument  may  acquire 
a  better  right  and  title  than  his  transferrer.  It  is  to  be  observed 
further,  that,  as  a  general  rule,  the  purchaser  can  never  be  placed 
on  a  worse  footing  than  his  transferrer,  although  he  himself  could 
not  in  the  first  instance  have  acquired  the  vantage-ground  occupied 
by  such  transferrer.  And,  therefore,  even  if  he  have  notice  that  there 
was  fraud  in  the  inception  of  the  paper,  or  that  it  was  lost  or  stolen, 
or  that  the  consideration  has  failed  between  some  anterior  parties, 
or  the  paper  be  overdue  and  dishonored,  he  is,  nevertheless,  entitled 
to  recover,  provided  his  immediate  indorser  was  a  bona  fide  holder 
for  value  unaffected  by  any  of  these  defenses.  As  soon  as  the  paper 
comes  into  the  hands  of  a  holder,  unaffected  by  any  defect,  its  charac- 
ter as  a  negotiable  security  is  established;  and  the  power  of  trans- 
ferring it  to  others,  with  the  same  immunity  which  attaches  in  his 
own  hands,  is  incident  to  his  legal  right,  and  necessary  to  sustain  the 
character  and  value  of  the  instrument  as  property,  and  to  protect 
the  bona  fide  holder  in  its  enjoyment.^    To  prohibit  him  from  selling 

the  bank  through  its  president  was  notified  by  the  drawer  to  refuse  pajonent,  did 
not  imply  notice  of  the  dishonor  of  the  check  to  a  firm  of  which  the  president  of 
the  bank  was  a  member,  the  managers  of  which  had  no  notice  that  the  president 
had  been  informed  of  its  dishonor,  as  this  was  knowledge  of  a  co-partner  acquired 
in  transactions  outside  the  partnership  business. 

60.  Gunnison  County  Bank  v.  Rollins,  173  U.  S.  275  (255),  19  Sup.  Ct.  Rep. 
390;  Scotland  Co.  v.  Hill,  132  U.  S.  117;  Porter  v.  Pittsburg  Steel  Co.,  122  U.  S. 
267;  Montclair  v.  Ramsdell,  107  U.  S.  147;  Commissioners  v.  Clark,  94  U.  S. 
(4  Otto)  285;  Cromwell  v.  County  of  Sac,  96  U.  S.  (6  Otto)  51;  Hoffman  v.  Bank 


956  RIGHTS   OF   A   BONA    FIDE    HOLDER  §  803 

as  good  a  right  and  title  as  he  himself  has,  would  destroy  the  very- 
object  for  which  they  are  secured  to  him — would  indeed  be  para- 
doxical. And  it  has  been  justly  said  that  this  doctrine  "is  indispen- 
sable to  the  security  and  circulation  of  negotiable  instruments,  and  is 
founded  on  the  most  comprehensive  and  liberal  principles  of  public 

of  Milwaukee,  12  Wall.  181;  Bondot  v.  Rogers,  39  C.  C.  A.  462,  99  Fed.  202; 
Pickens  Township  v.  Post,  41  C.  C.  A.  1,  99  Fed.  659;  Huges  County  v.  Livingston, 
43  C.  C.  A.  541,  104  Fed.  306,  citing  text;  Board  of  Comrs.  of  Lake  County  v. 
Sutliff,  38  C.  C.  A.  167,  97  Fed.  270;  Rollins  v.  Board  of  Comrs.,  26  C.  C.  A.  91, 
80  P'ed.  692,  citing  text;  Butterfield  v.  Town  of  Ontario,  32  Fed.  892;  Braxton  v. 
Braxton,  20  D.  C.  355;  Graham  v.  Larimer,  83  Cal.  179;  Ketchum  v.  Packer,  65 
Conn.  545,  33  Atl.  499;  Weil  v.  Carswell,  119  Ga.  873,  47  S.  E.  217;  Hogan  v. 
Moore,  48  Ga.  156;  Wade  v.  Elliott  (Ga.  App.),  75  S.  E.  989;  Day  v.  Rogers,  7 
Ga.  App.  535,  67  S.  E.  279;  Matson  v.  Alley,  141  111.  284;  Rodriguez  v.  Merriman, 
133  111.  App.  372;  Hurst  v.  Pearce,  130  111.  App.  251;  Woodworth  v.  Huntoon,  40 
111.  131;  Wilcox  V.  Tetherington,  103  111.  App.  404;  Riley  v.  Schawhacker,  50  Ind. 
592;  Hereth  v.  Merchants'  Nat.  Bank,  34  Ind.  380;  Hill  v.  Ward,  45  Ind.  App. 
458,  91  N.  E.  38,  quoting  text;  Mornyer  v.  Cooper,  35  Iowa,  257;  Simonds  v. 
Merritt,  33  Iowa,  537;  Peabody  v.  Rees,  18  Iowa,  571;  Hardy  v.  First  Nat.  Bank 
of  Newton,  56  Kan.  493,  43  Pac.  1125;  Bodley  v.  National  Bank,  38  Kan.  61, 
citing  the  text;  Hillard  v.  Taylor,  114  La.  883,  38  So.  594;  Howell  v.  Crane,  12 
La.  Ann.  126;  Cotton  v.  Sterling,  20  La.  Ann.  282;  Cook  v.  Larkin,  10  La.  Ann. 
507;  Roberts  v.  Lane,  64  Me.  108;  Woodman  v.  Churchill,  52  Me.  58;  Hascall  v. 
Whitmore,  19  Me.  102;  Smith  v.  Hiscock,  14  Me.  449;  Boyd  v.  McCann,  10  Md. 
118;  Symonds  v.  Riley,  188  Mass.  470,  74  N.  E.  926  (as  to  checks);  Suffolk  Sav. 
Bank  v.  Boston,  149  Mass.  305;  Shaw  v.  Clark,  49  Mich.  384;  Wood  v.  Starting, 
48  Mich.  592;  Dispatch  Printing  Co.  v.  National  Bank  of  Commerce,  109  Minn. 
440,  124  N.  W.  236  (as  to  checks);  Crawford  v.  Johnson,  87  Mo.  App.  478,  citing 
text;  First  Nat.  Bank  of  Cameron  v.  Stanley,  46  Mo.  App.  440;  Henley  v.  Holzer, 
19  Mo.  App.  248,  citing  the  text;  Jones  v.  Wiesen,  50  Nebr.  244,  69  N.  W.  762; 
Ludlow  V.  Woodward,  102  N.  Y.  S.  647,  117  App.  Div.  525;  Bassett  v.  Avery,  15 
Ohio  St.  299;  First  Nat.  Bank  v.  Smith  et  al.,  8  So.  Dak.  7,  65  N.  W.  437;  Herman 
V.  Gunter,  83  Tex.  66,  18  S.  W.  428,  29  Am.  St.  Rep.  632,  text  cited;  Watson  v. 
Flanagan,  14  Tex.  354;  Hollimon  v.  Karger,  30  Tex.  Civ.  App.  558,  71  S.  W.  299; 
Rotan  V.  Maedgen,  24  Tex.  Civ.  App.  558;  Prentice  v.  Zane,  2  Gratt.  262;  Don- 
nerberg  v.  Oppenheimer,  15  Wash.  291,  46  Pac.  254;  Prentiss  v.  Strand,  116  Wis. 
647,  93  M.  W.  816;  Verbeck  v.  Scott,  71  Wis.  63;  Kinney  v.  Kruse,  28  Wis.  190; 
Haly  v.  Lane,  2  Atk.  182;  Booth  v.  Quinn,  7  Price,  193;  Robinson  v.  Reynolds, 
2  Q.  B.  196;  Lickbarrow  v.  Mason,  2  T.  R.  63;  Chalmers  v.  Lanier,  1  Campb.  383; 
Masters  v.  Iberson,  18  L.  J.  C.  P.  348;  8  C.  B.  100  (65  Eng.  C.  L.);  Roscoe  on 
Bills,  §  111;  Kyd,  277;  Byles  (Sharswood's  ed.),  236,  255;  Johnson  on  Bills,  80.  See 
ante,  §§  396a,  726,  782,  786,  and  j)ost,  §  1503.  A  person  holding  in  his  possession 
and  under  his  control,  before  maturity,  a  promissory  note  made  to  the  order  of  the 
maker,  and  indorsed  by  him,  may  be  presumed,  as  between  the  indorser  and 
the  pubUc,  the  owner  of  the  same,  or  as  agent  with  full  power  to  dispose  of  it; 
and  a  purchaser  of  such  a  note  from  the  holder  takes  it  as  a  bona  fide  purchaser. 
Theard  v.  Gueringer,  115  La.  242,  38  So.  979. 


§§  804,  805  PURCHASER   AND    TRANSFERRER  957 

policy."  ^^  Nor  is  it  a  hardship  to  the  maker  or  acceptor  of  the  instru- 
ment. For,  as  said  by  Beck,  C.  J.,  in  Iowa:  "The  maker  of  the  note 
would  be  liable  to  the  transferrer;  his  condition  is  made  no  harder 
by  the  note  coming  into  the  hands  of  one  having  notice  of  its  infirmi- 
ties." ^^  Like  principles  prevail  in  courts  of  equity  in  respect  to  par- 
ties acquiring  defective  titles  to  estates.®^ 

§  804.  Illustrations  of  doctrine  that  purchaser  with  notice  of  de- 
fect may  acquire  title  from  holder  without  notice. — As  illustra- 
tions of  this  doctrine,  it  has  been  held  in  Louisiana,  where  the  courts 
held  that  Confederate  notes  were  an  illegal  consideration,  that  the 
purchaser  for  value  of  a  negotiable  note  given  for  a  loan  of  Confederate 
money,  could  recover  against  the  maker,  notwithstanding  he  knew 
the  nature  of  the  consideration  when  he  took  it — the  party  who  trans- 
ferred it  to  him  having  acquired  it  bona  fide,  and  without  such  notice.®"* 
So  in  Indiana,  the  plaintiff,  who  knew  when  he  acquired  the  note 
that  the  defendant  was  induced  by  fraud  to  give  it  for  a  worthless 
patent,  was  held  entitled  to  recover,  his  immediate  indorser  not  hav- 
ing possessed  such  knowledge  when  he  acquired  it.®^  So  in  Massa- 
chusetts. But  where  the  holder  with  notice,  acquired  the  note  through 
an  agent  who  had  no  knowledge  of  its  defects,  he  was  held  not  to 
be  within  the  protection  of  the  rule,  and  not  entitled  to  recover.^® 

§  805.  Exception  to  general  rule. — But  this  rule  is  subject  to 
the  single  exception  that  if  the  note  were  invalid  as  between  maker 
and  payee,  the  payee  could  not  himself  by  purchase  from  a  bona 
fide  holder  become  a  successor  to  his  rights;  it  not  being  essential  to 
such  bona  fide  holder's  protection  to  extend  the  principle  so  far." 

61.  Story  on  Promissory  Notes,  §  191.  See  also  Story  on  Bills,  188;  1  Parsons 
on  Notes  and  Bills,  161. 

62.  Simonds  v.  Merritt,  33  Iowa,  537;  Perry  on  Trusts,  §  222;  Ketchum  v. 
Packer,  65  Conn.  556,  33  Atl.  499. 

63.  Story's  Eq.  Jur.,  §§  409,  410. 

64.  Cotton  V.  Sterling,  20  La.  Ann.  282;  Braxton  v.  Braxton,  20  D.  C.  355. 

65.  Hereth  v.  Merchants'  Nat.  Bank,  34  Ind.  380.  Also  held  in  Missouri. 
Griswold  v.  Buechle,  72  Mo.  App.  53. 

66.  Vosburgh  v.  Diefendorf,  119  N.  Y.  357,  23  N.  E.  801. 

67.  Sawyer  v.  Wiswell,  9  Allen,  42;  Kost  v.  Bender,  25  Mich.  516;  Camp  v. 
Sturdevant,  16  Nebr.  694;  Chariton  Plow  Co.  v.  Davidson,  16  Nebr.  374;  Eckert 
V.  Ellis,  25  Hun,  665,  citing  the  text;  Tod  v.  Wick,  36  Ohio  St.  387;  Elwell  v. 
Tatum,  6  Tex.  Civ.  App.  397,  24  S.  W.  71,  25  S  W.  434;  Aragon  Coffee  Co.  v. 
Rogers,  105  Va.  51,  52  S.  E.  843;  See  ante,  §  176. 


958  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  805 

And  the  like  exception  is  made  by  courts  of  equity  in  determining 
the  rights  of  persons  having  defective  titles  to  estates.^  If  the  payees 
of  the  note  were  the  agents  of  the  real  party  in  interest  they  could 
not  become  the  owners  of  the  note  so  as  to  be  held  purchasers  with- 
out notice  of.  the  transaction  in  which  the  defense  inhered.®^ 

Under  Negotiable  Instrument  statute, — Declaratory  of  the  rules 
aoove  discussed,  the  statute  provides  that  a  holder  who  derives  his 
title  through  a  holder  in  due  course  and  who  is  not  himself  a  party 
to  any  fraud  or  illegality  affecting  the  instrument,  has  all  the  rights 
of  such  former  holder  in  respect  of  all  parties  prior  to  the  latterJ" 
This  rule  prevents  a  payee,  who  is  so  circumstanced  that  he  cannot 
recover,  from  transferring  it  to  an  innocent  third  party  for  value  and 
recovering  thereon  on  subsequently  purchasing  it  back  for  valueJ^ 

68.  In  Story's  Equity  Jurisprudence,  §§409,  410,  it  is  said:  "This  doctrine 
in  both  of  its  branches  has  been  settled  for  neariy  a  century  and  a  half  in  Eng- 
land, and  it  arose  in  a  case  in  which  A.  purchased  an  estate  with  notice  of  an 
incumbrance,  and  then  sold  it  to  B.,  who  had  no  notice,  and  B.  afterward  sold  it 
to  C,  who  had  notice,  and  the  question  was  whether  the  incumbrance  bound  the 
estate  in  the  hands  of  C.  The  then  Master  of  Rolls  thought  that  although  the 
equity  of  incumbrance  was  gone  while  the  estate  was  in  the  hands  of  B.,  yet  it  was 
revived  upon  the  sale  to  C.  But  the  Lord  Keeper  reversed  the  decision,  and  held 
that  the  estate  in  the  hands  of  C.  was  discharged  of  the  incumbrance,  notwith- 
standing the  notice  of  A.  and  C."    Harrison  v.  Firth,  Free.  Ch.  61. 

69.  Boit  V.  Whitehead,  50  Ga.  76. 

70.  Appendix,  sec.  58.    Bryan  v.  Harr,  21  App.  D.  C.  190;  Black  v.  First  Nat. 
Bank,  96  Md.  399,  54  Atl.  88;  Jennings  v.  Cariuci,  87  N.  Y.  S.  475;  Comstock  v. ' 
Buckley,  141  Wis.  228,  124  N.  W.  414;  Moyses  v.  Bell,  62  Wash.  534,  114  Pac. 
193. 

71.  Andrews  v.  Robertson,  111  Wis.  334,  87  N.  W.  190,  87  Am.  St.  Rep.  870, 
54  L.  R.  A.  673.  One  who  fraudulently  sells  a  note  and  retains  the  proceeds  in 
fraud  of  the  rights  of  his  principal,  becomes  a  primary  debtor,  and  cannot  there- 
after purchase  the  note  so  as  to  acquire  a  good  title  which  the  original  transferee 
had  by  virtue  of  being  a  holder  in  due  course.  Comstock  v.  Buckley,  141  Wis. 
228,  124  N.  W.  414.  In  Moyses  v.  Bell,  62  Wash.  534,  114  Pac.  193,  under  sees. 
52,  55  and  59,  it  was  held  that  a  payee  who  obtains  a  note  without  fraud  or  duress 
or  other  unlawful  means  for  consideration  of  an  agreement  to  furnish  in  the 
future  water  to  irrigate  the  land  of  the  maker,  and  who  negotiates  it  before  the 
time  fixed  to  furnish  water  without  being  guilty  of  fraud,  has  a  title  which  is  not 
defective  and  the  burden  is  not  on  the  indorser  or  one  claiming  under  him  to  show 
that  they  are  holders  in  due  course,  though  the  second  indorsee  acquired  it  after 
maturity  and  with  notice  of  the  payee's  failure  to  perform  his  contract  to  furnish 
water.  In  Boston  Steel  &  Iron  Co.  v.  Steuer,  183  Mass.  140,  66  N.  E.  646,  97 
Am.  St.  Rep.  426,  it  was  held  that  when  a  drawer  of  a  check  handed  it  to  another 
to  be  delivered  to  the  payee,  and  such  other  fraudulently  delivered  it  to  the  payee 
in  payment  of  hia  own  debt,  the  payee  is  a  bona  fide  purchaser,  under  section  52. 


§§  806-807  PURCHASER   AND   TRANSFERRER  959 

§  806.  (II)  As  to  the  defenses  against  which  a  bona  fide  holder 
is  not  protected. — There  are  some  defenses  which  are  as  available 
against  a  bona  fide  holder  for  value,  and  without  notice,  as  against 
any  other  party.  They  are  those  which  go  to  show  that  the  instru- 
ment was  absolutely  and  utterly  void,  and  not  merely  voidable, 
(1)  by  reason  of  the  incapacity  of  the  party  assuming  to  contract; 
or,  (2)  by  reason  of  some  positive  interdiction  of  law;  or,  (3)  by  rea- 
son of  the  want  of  consent  of  the  party  sought  to  be  bound  to  the 
particular  contract. 

§  806a.  Incapacity  of  maker. — Thus  (1)  if  the  maker  of  the 
note  were  an  infant,  a  married  woman,  a  lunatic,  or  a  person  under 
guardianship,  the  signature  would  impart  no  validity  to  it,  and  the 
bona  fide  holder  could  not  recover  against  him,  or  her,  however 
ignorant  of  the  incapacity  when  he  took  the  paper.^^ 

§  807.  Statutory  denunciation  of  instrument  as  void. — (2)  So  if 

the  statute  law  pronounces  the  contract  evidenced  by  the  bill  or 
note  to  be  void,  because  made  upon  a  gambling,  usurious,  or  other 
illegal  consideration,  it  is  an  absolute  nullity;  and,  although  in  form 
negotiable,  no  currency  in  the  market,  and  no  degree  of  innocence 
or  ignorance  on  the  part  of  the  holder  can  impart  any  validity  to 
it/^  though  it  has  been  held  that  a  statute  will  not  be  construed  so 

72.  Hosier  v.  Beard,  54  Ohio  St.  398,  43  N.  E.  1040,  56  Am.  St.  Rep.  720; 
The  fact  that  a  note  is  payable  to  any  bank,  and  has  passed  into  the  hands  of  an 
innocent  holder,  does  not  estop  a  married  woman  from  asserting  that  she  executed 
the  same  as  surety,  and  the  consequent  invalidity  of  the  note  as  to  her.  See 
Leschen  v.  Guy,  149  Ind.  17,  48  N.  E.  344. 

73.  Birmingham  Trust  &  Sav.  Co.  v.  Curry,  160  Ala.  370,  49  So.  319,  135 
Am.  St.  Rep.  102;  Merriman  &  Co.  v.  Knox,  99  Ala.  93,  11  So.  741;  Hogg  v. 
Thurman,  90  Ark.  93,  117  S.  W.  1070;  Texarkana  &  Fort  Smith  R.  Co.  v.  Bemis 
Lumber  Co.,  67  Ark.  542,  55  S.  W.  944,  citing  text;  Western  Nat.  Bank  v.  State 
Bank  of  Rocky  Ford,  18  Colo.  App.  128,  70  Pac.  439;  Weed  v.  Bond,  21  Ga.  195; 
Town  of  Eagle  v.  Kohn,  84  111.  292;  Voereis  v.  Nussbaum,  131  Ind.  267,  31  N.  E. 
70;  Sondheim  v.  Gilbert,  117  Ind.  76,  citing  the  text;  Aurora  v.  West,  22  Ind.  88; 
Bayley  v.  Taber,  5  Mass.  286;  Gray  v.  Robinson,  95  Miss.  1,  48  So.  226;  Burke 
V.  Buck  (Nev.),  99  Pac.  1078;  Ramsdell  v.  Morgan,  16  Wend.  574;  Vallet  v.  Par- 
ker, 6  Wend.  615;  Hall  v.  Wilson,  16  Barb.  548;  Faison  v.  Grandy,  128  N.  C.  438, 
38  S.  E.  897,  83  Am.  St.  Rep.  693;  Harper  v.  Young,  112  Pa.  St.  419;  Taylor  v. 
Beck,  3  Rand.  316;  Hurlburt  &  Sons  v.  Straub,  54  W.  Va.  303,  46  S.  E.  163;  Hatch 
V.  Burroughs,  1  Woods,  439;  See  ante,  §§  197,  198.  Notes  given  for  fertiUzers, 
the  bags  containing  which  had  not  been  tagged  as  required  by  law,  cannot  be 
sued  on  by  a  purchaser  of  the  notes  for  value  without  notice.  Alabama  Nat. 
Bank  v.  C.  C.  Parker  &  Co.,  146  Ala.  513,  40  So.  987.    If  a  note  is  void  under  a 


960  RIGHTS   OF   A    BONA   FIDE    HOLDER  §  808 

as  to  make  a  negotiable  instrument  void  in  the  hands  of  a  bona  fide 
purchaser,  unless  the  act  specifically  so  declares^'*  But,  although 
the  party  executing  such  bill  or  note  cannot  be  bound  even  to  a  horm 
fide  holder,  the  indorser  will  be  liable  upon  his  indorsement,  which 
warrants  its  validity,  and  is  a  separate  and  independent  contract^^ 
And  in  many  localities  negotiable  instruments  executed  upon  gam- 
ing or  usurious  ^^  considerations  are  upon  the  same  footing  as  those 
executed  for  other  illegal  considerations — that  is,  void  between  the 
parties,  but  valid  in  the  hands  of  a  bona  fide  holder. 

§  808.  Instances  of  instruments  void  only  between  original  par- 
ties.— Sometimes  the  statute  declares  a  note  void  only  as  between 
original  parties,  and  in  such  cases  the  bona  fide  purchaser  is  not 
affected  by  the  illegahty;"  and  when  the  instrument  was  executed 
upon  an  illegal  consideration,  especially  if  illegal  by  statute  (but  not 
absolutely  avoiding  the  instrument),  it  throws  upon  the  holder  the 
burden  of  proving  bona  fide  ownership  for  value7^  But  a  failure  of 
consideration  does  not  throw  this  burden  upon  him7^  And  in  all 
cases  where  the  statute  does  not  declare  the  instrument  void,  bona 
fide  ownership  for  value  being  proved,  the  holder  is  entitled  to  re- 

80 


cover. 


statute  for  having  been  given  for  an  illegal  consideration,  a  gambling  contract, 
the  maker  is  not  estopped  to  plead  the  defense  given  to  him  by  the  statute,  be- 
cause he  said  to  a  purchaser  of  the  note,  before  he  purchased  it,  that  it  was  not 
given  for  any  illegal  consideration.    Kyser  v.  Miller,  144  111.  App.  316. 

74.  Citizens'  State  Bank  v.  Nore,  67  Nebr.  69,  93  N.  W.  160,  60  L.  R.  A.  737. 

75.  See  ante,  §  671  et  seq.;  Hart  et  al.  v.  Livermore  Foundry  &  Machine  Co., 
72  Miss.  809, 17  So.  769. 

76.  Haight  v.  Joyce,  2  Cal.  64;  Cheney  v.  Cooper,  14  Nebr.  415;  Bovier  v. 
McCarthy,  4  Nebr.  (Unof.)  490,  94  N.  W.  965;  Lynchburg  Nat.  Bank  v.  Scott, 
91  Va.  655,  22  S.  E.  487,  citing  text.    See  ante,  §§  197,  198. 

77.  Birdsall  v.  Wheeler,  71  N.  Y.  S.  67,  62  App.  Div.  625,  affirmed  173  N.  Y. 
590,  65  N.  E.  1114;  Baton  v.  Coit,  5  Mich.  (1  Cooley)  505;  Lynchburg  Nat.  Bank 
V.  Scott,  91  Va.  655,  22  S.  E.  487,  50  Am.  St.  Rep.  860,  citing  text;  Ash  v.  Clark, 
32  Wash.  390,  73  Pac.  351.    See  ante,  §  198. 

78.  Baton  v.  Coit,  5  Mich.  (1  Cooley)  505;  Wyat  v.  Campbell,  1  Moody  &  M. 
80;  Bailey  v.  Bidwell,  13  M.  &  W.  74;  Northam  v.  Latouche,  4  Car.  &  P.  140; 
Harvey  v.  Towers,  6  Exch.  656;  Smith  v.  Braine,  16  Q.  B.  201;  Fitch  v.  Jones, 
32  Eng.  L.  &  Eq.  134;  Vallett  v.  Parker,  6  Wend.  615;  Story  on  Bills,  §  193; 
Doe  v.  Bumham,  11  Fost.  426;  Johnson  v.  Meeker,  1  Wis.  436;  Norris  v.  Lang- 
ley,  19  N.  H.  423;  Bottomley  v.  Goldsmith,  36  Mich.  27. 

79.  Wilson  v.  Lazier,  11  Gratt.  478,  and  cases  cited.  See  ante,  §§  165,  198, 
and  post,  §  810  et  seq. 

80.  WiUiams  v.  Cheney,  3  Gray,  215;  Hubbard  v.  Chapin,  2  Allen,  328;  Story 


§  809  PURCHASER   AND   TRANSFERRER  961 

Under  Negotiable  Instrument  statute. — Under  the  provision  declar- 
ing that  the  maker  of  a  negotiable  instrument  by  making  it  engages 
that  he  will  pay  it  according  to  its  tenor,  and  admits  the  existence  of 
the  payee  and  his  then  capacity  to  indorse,^^  it  has  been  held  that  a 
negotiable  promissory  note  in  the  hands  of  parties  obtaining  it  for 
value,  in  good  faith,  before  maturity,  from  a  foreign  corporation, 
payable  to  such  foreign  corporation,  is  valid  as  against  the  maker 
though  such  corporation,  at  the  time  of  the  execution  and  delivery 
of  such  note  or  subsequently,  had  not  complied  with  the  statute 
authorizing  it  to  engage  in  business  within  the  state,  when  the  statute 
does  not  provide  that  a  note  given  by  such  a  corporation  shall  be  in- 
valid.^2 

§  809.  When  party  has  never  consented  to  signature. — (3)  So 
where  the  party  has  never  in  fact  signed  the  instrument  as  it  then 
stands,  as,  for  instance,  where  it  was  forged  in  its  inception,  and  is 
not  genuine,^^  or  was  subsequently  materially  altered.^'*  In  such 
cases  the  bona  fide  holder  cannot  enforce  it,  for  the  defendant  has 
only  to  say:  "This  is  not  my  contract,"  ^'non  hcec  in  foedra  veni.'' 
So  if  executed  by  one  acting  as  agent  of  the  principal,  but  exceeding 
his  authority,  the  bona  fide  holder  cannot  recover  unless  the  principal 
were  in  fault  in  inducing  him  to  believe  that  the  agent  had  authority .^° 
So  if  the  party  signed  under  duress  he  would  not  be  bound. ^® 

on  Promissory  Notes,  §  192;  Hart  et  al.  v.  Livermore  Foundry  &  Machine  Co., 
72  Miss.  809,  17  So.  769;  First  Nat.  Bank  v.  Smith  et  al.,  8  S.  Dak.  7,  65  N.  W. 
437;  Farmers'  Nat.  Bank  v.  Sutton  Mfg.  Co.,  3  C.  C.  A.  1,  52  Fed.  191;  Pope  v. 
Hanke,  155  111.  617,  citing  text;  Myers  v.  Kessler,  142  Fed.  730. 

81.  Appendix,  sec.  60. 

82.  McMann  v.  Walker,  31  Colo.  261,  72  Pac.  1055.  This  statute,  declaratory 
of  the  law  of  negotiable  paper,  clearly  estops  a  corporation  from  pleading  as  a 
defense  to  the  action  a  statute  which  makes  void  anj'  contracts  entered  into  by  a 
foreign  corporation  doing  business  in  the  State  in  violation  of  law,  in  a  case  in 
which  the  officers  and  stockholders  of  such  corporation  made  a  negotiable  promis- 
Bory  note  to  the  corporation,  and  then  acting  as  officers  and  agents  of  the  cor- 
poration assigned  the  note  to  an  innocent  holder  for  value  in  the  name  of  the 
corporation.    Young  v.  Gaus,  134  Mo.  App.  166,  113  S.  W.  735. 

83.  See  chapter  XLII,  on  Forgery,  vol.  II;  Indiana  Nat.  Bank  v.  Holtzclaw, 
98  Ind.  85;  Citizens'  Bank  v.  Adams,  91  Ind.  281. 

84.  See  chapter  XLIII,  on  Alteration,  vol.  II. 

85.  Andover  Bank  v.  Grafton,  7  N.  H.  298;  Weathered  v.  Smith,  9  Tex.  622; 
Feam  v.  Filica,  7  M.  &  G.  514;  The  Floyd  Acceptance,  7  Wall.  666. 

86.  See  chapter  XXVI,  section  VIII. 

61 


962  RIGHTS   OF   A   BONA   FIDE    HOLDER  §§  810-812 

SECTION  VII 

THE   BURDEN    OF   PROOF   AS   TO    BONA    FIDE    OWNERSHIP 

§  810.  We  come  now  to  consider  how  the  holder  of  a  negotiable 
instrument  must  proceed  to  establish  his  right  to  a  recovery  against 
the  parties  thereto.  And  first,  it  is  to  be  observed  that  as  between 
him  and  his  immediate  predecessor,  or  party  between  whom  and 
himself  a  privity  exists,  he  stands  upon  the  same  footing  as  the  payee 
of  a  note  against  the  maker.  Fraud,  illegality,  want  or  failure  of 
consideration  may  be  pleaded  against  him  by  such  immediate  party 
as  freely  as  if  the  instrument  were  not  negotiable;  and  the  only  dif- 
ference is,  that  the  negotiable  instrument  imports  a  valid  considera- 
tion not  only  as  between  the  original  parties,  but  also  as  between  the 
immediate  parties  to  its  transfer,  and  that  the  burden  of  proof  de- 
volves upon  the  party  who  impeaches  such  consideration.^'^ 

§  811.  As  to  interior  parties  to  the  transfer  of  the  instrument, 
the  rule  is,  as  between  them  on  the  one  part  and  the  holder  on  the 
other,  altogether  different.  They  are  not  in  privity  with  him,  and 
they  cannot  set  up  against  him  defenses  which  might  be  valid  as 
between  them  and  any  party  prior  to  him,  unless  he  is  affected  by 
such  defenses  through  mala  fides,  notice,  or  otherwise  having  taken 
the  paper  without  value,  or  without  the  usual  course  of  business;' 
which  circumstances  have  been  already  discussed.  But  still,  circum- 
stances of  defense,  valid  as  against  prior  parties,  may  affect  his 
position  in  respect  to  the  measure  of  proof  necessary  to  establish  that 
he  is  not  affected  by  them.  And  the  course  of  legal  procedure  m 
presenting  such  proof  may  be  stated  to  be  as  follows : 

§  812.  Possession  with  ostensible  title  makes  prima  facie  case. — 
First:  The  mere  possession  of  a  negotiable  instrument,  produced  in 
evidence  by  the  indorsee,  or  by  the  assignee  where  no  indorsement  is 


87.  See  ante,  chapter  VII,  on  Consideration,  section  I;  Kenny  v.  Walker, 
29  Oreg.  41,  44  Pac.  501,  citing  text;  Journal  Printing  Co.  v.  Maxwell,  1  Penne- 
will,  511,  43  Atl.  615;  Shirk  v.  Mitchell,  137  Ind.  186,  36  N.  E.  850;  Sollenbergcr 
V.  Stephens,  46  Kan.  386,  26  Pac.  690;  Hoskinson  v.  Bagby,  46  Kan.  758, 
27  Pac.  110;  Brook  v.  Teague,  52  Kan.  119,  34  Pac.  347;  First  Nat.  Bank  v. 
Emmitt,  52  Kan.  603,  35  Pac.  213;  First  Nat.  Bank  of  Gadsden  v.  Sproull,  105 
Ala.  275, 16  So.  879;  Press  Co.  v.  City  Bank,  7  C.  C.  A.  248,  58  Fed.  321. 


§  812  PROOF    AS    TO    BONA    FIDE    OAVNERSHIP  963 

necessary,  imports  'prima  facie  that  he  acquired  it  bona  fide  for  full 
value,  in  the  usual  course  of  business,  before  maturity,  and  without 
notice  of  any  circumstances  impeaching  its  validity;  and  that  he  is 
the  OAvner  thereof,  entitled  to  recover  the  full  amount  against  all  prior 
parties.  In  other  words,  the  production  of  the  instrument  and  proof 
that  it  is  genuine  (where  indeed  such  proof  is  necessary),  'prima  jade 
establishes  his  case;  and  he  may  there  rest  it;  ^^  the  burden  of  proving 

88.  Austen  v.  United  States  Nat.  Bank,  174  U.  S.  125,  19  Sup.  Ct.  Rep.  628; 
West  St.  Louis  Sav.  Bank  v.  Shawnee  County  Bank,  95  U.  S.  557;  Brown  v. 
Spofford,  95  U.  S.  (5  Otto)  478;  Collins  v.  Gilbert,  94  U.  S.  (4  Otto)  753;  Com- 
missioners V.  Clark,  94  U.  S.  (4  Otto)  285;  Pickens  v.  Post,  41  C.  C.  A.  1,  99  Fed. 
659;  Dawson  Town  &  Gas.  Co.  v.  WoodhuU,  14  C.  C.  A.  464,  67  Fed.  451,  citing 
text;  Cheney  v.  Stone,  29  Fed.  886;  Bank  of  British  N.  Am.  v.  Ellis,  6  Sawy.  98, 
citing  the  text;  Croplcy  v.  Eyster,  9  App.  D.  C.  373;  First  Nat.  Bank  of  Gadsden 
V.  Sproull,  105  Ala.  275,  16  So.  879;  Nelson  v.  Larmer,  95  Ala.  300,  11  So.  294; 
Cobb  V.  Bryant,  86  Ala.  316;  In  re  Tallahassee  Mfg.  Co.,  64  Ala.  593;  Bank  of 
Paris  V.  Pearson,  66  Ark.  310,  50  S.  W.  692,  citing  text;  Caldwell  v.  Hall,  49 
Ark.  509;  Winship  v.  Merchants'  Nat.  Bank,  42  Ark.  22;  Schwind  v.  Hall,  129 
Cal.  40;  Griffith  v.  Lewin,  125  Cal.  618,  58  Pac.  205;  McCann  v.  Lewis,  9  Cal. 
246;  Reed  v.  First  Nat.  Bank,  23  Colo.  380,  48  Pac.  507;  Perot  v.  Cooper,  17 
Colo.  80,  28  Pac.  391,  31  Am.  St.  Rep.  258;  Solomon  v.  Brodie,  10  Colo.  App. 
353,  50  Pac.  1045;  Wyman  v.  Colorado  Nat.  Bank,  5  Colo.  32,  citing  the  text; 
King  V.  Mecklenburg,  17  Colo.  App.  312,  68  Pac.  984;  Standard  Cement  Co.  v. 
Windham  Nat.  Bank,  71  Conn.  668,  42  Atl.  1006;  Arnold  v.  Lane,  71  Conn.  61, 
40  Atl.  921;  Ross  v.  Webster,  63  Conn.  64,  26  Atl.  476;  First  Nat.  Bank  of  Etowah, 
Tenn.,  v.  Messer,  71  S.  E.  148,  136  Ga.  226;  Parr  v.  Erickson,  115  Ga.  873,  42 
S.  E.  240;  Day  v.  Rogers,  7  Ga.  App.  535,  67  S.  E.  279;  South  &  Lane  v.  People's 
Nat.  Bank,  4  Ga.  App.  92,  60  S.  E.  1087;  Bothell  v.  Whitley  Bros.,  3  Ga.  App. 
755,  60  S.  E.  371;  Johnson  v.  Cobb,  100  Ga.  139,  28  S.  E.  72  (see  §  769a  for  com- 
ment); Hudson  V.  Equitable  Mortgage  Co.,  100  Ga.  83,  26  S.  E.  75;  Merchants' 
&  P.  Nat.  Bank  v.  Trustees,  62  Ga.  271;  Warman  v.  First  Nat.  Bank,  185  111. 
60,  57  N.  E.  6,  citmg  text;  Keenan  v.  Blue,  240  III.  177,  88  N.  E.  553;  Peck  v. 
Dyer,  147  111.  592,  35  N.  E.  479;  Newton  v.  Clarke,  235  111.  530,  85  N.  E.  747; 
Matson  v.  Alley,  141  111.  284,  31  N.  E.  419;  NorUn  v.  Becker,  138  111.  App.  488; 
Eldridge  v.  Kay,  124  111.  App.  136;  Palmer  v.  Nassau  Bank,  78  111.  380;  Tescher 
V.  Merea,  118  Ind.  588,  citing  the  text;  Hall  v.  Allen,  37  Ind.  541;  Halstead  v. 
Woods  (Ind.  App.),  95  N.  E.  429;  Stouffer  v.  Stoy,  46  Ind.  App.  180,  91  N.  E. 
250;  Wilson  v.  National  Fowler  Bank,  47  Ind.  App.  689,  95  N.  E.  269;  Crumrine 
V.  Estate  of  Crumrine,  14  Ind.  App.  641,  43  N.  E.322;  Tolman  v.  Janson,  106  Iowa, 
455,  76  N.  W.  732;  Graff  v.  Adams,  100  Iowa,  481,  69  N.  W.  539;  O'Keeffe  v. 
First  Nat.  Bank  of  Frankfort,  49  Kan.  347,  30  Pac.  473,  33  Am.  St.  Rep.  370; 
Hcskinson  v.  Bagby,  46  Kan.  758,  27  Pac.  110;  First  Nat.  Bank  of  Fort  Scott 
V.  ElUott,  46  Kan.  32,  26  Pac.  487;  First  Nat.  Bank  v.  Emmitt,  52  Kan.  603, 
35  Pac.  213;  Mann  v.  National  Bank,  34  Kan.  752,  citing  the  text;  Gafford  v. 
Hall,  39  Kan.  169;  Carnahan  v.  Lloyd,  4  Kan.  App.  605,  46  Pac.  323;  McCarty 
&  Co.  V.  Louisville  Banking  Co.,  100  Ky.  4;  Owsley  &  Co.  v.  Louisville  Banking 
Co.,  100  Ky.  4,  37  S.  W.  144;  Hilhard  v.  Taylor,  114  La.  883,  38  So.  594;  Pan- 


964  RIGHTS    OF    A    BONA    FIDE'  HOLDER  §  812 

that  a  holder  did  not  acquire  it  bona  fide,  for  value,  and  without  no- 
tice, is  on  the  defendant .^^    Bills  and  notes  payable  to  bearer  do  not 


handle  Nat.  Bank  v.  Alexander  et  al,  49  La.  Ann.  1590,  22  So.  813;  Denton  Nat. 
Bank  v.  Kenney,  116  Md.  24,  81  Atl.  227;  Williams  v.  Holt,  170  Mass.  351,  49 
N.  E.  654;  New  York  Iron  Mine  Co.  v.  First  Nat.  Bank,  39  Mich.  644;  Cook  v. 
Brown,  67  Mich.  474;  Keim  v.  Vette,  167  Mo.  389,  67  S.  W.  223;  Lee  v.  Smith, 
84  Mo.  304,  54  Am.  Rep.  101;  Johnson  v.  McMurry,  72  Mo.  282;  Horton  v.  Bayne, 
52  Mo.  531;  Adams  County  Bank  v.  Hainline,  67  Mo.  App.  483;  Cloud  v.  Book 
&  News  Co.,  23  Mo.  App.  320;  llcinhard  v.  Dorsey  Coal  Co.,  25  Mo.  App.  352; 
First  Nat.  Bank  of  Dubuque  v.  McKibbcn,  50  Ncbr.  513,  70  N.  W.  38;  McDonald 
V.  Aufdengarten,  41  Nebr.  41,  59  N.  W.  762;  Coaklcy  v.  Christie,  20  Nebr.  509; 
Claftin  V.  Farmers',  etc..  Bank,  25  N.  Y.  293;  Central  Nat.  Bank  of  Brooklyn 
V.  Hammet,  50  N.  Y.  158;  Vallet  v.  Parker,  6  Wend.  615;  Flour  City  Nat.  Bank 
V.  Grovcr,  88  Hun,  4,  34  N.  Y.  Supp.  496;  Van  Aernam  v.  Granger,  86  Hun, 
476,' 33  N.  Y.  Supp.  885;  Rogers  v.  McGuire,  90  Hun,  455,  37  N.  Y.  Supp.  76; 
Shute  V.  Jones,  78  Hun,  99,  28  N.  Y.  Supp.  1072;  Evans  v.  Freeman,  142  N.  C.  61, 
54  S.  E.  847;  Triplett  v.  Foster,  115  N.  C.  335,  20  S.  E.  475;  Jackson  v.  Love, 
82  N.  C.  405;  Kerr  v.  Anderson,  16  N.  D.  36,  111  N.  W.  614,  citing  text;  Vickery 
V.  Burton,  0  N.  D.  245,  69  N.  W.  193;  Davis  v.  Bartlett,  12  Ohio  St.  544;  Spreckles 
V.  Bender,  30  Oreg.  577,  48  Pac.  418;  Owens  v.  Snell,  29  Oreg.  483,  44  Pac. 
827;  Lamb  v.  Burke  (Pa.),  20  Atl.  685;  Hohne  v.  Karsper,  5  Binn.  469;  Third 
Nat.  Bank  v.  Angell,  18  R.  L  1,  29  Atl.  500;  Mumford  v.  Weaver,  18  R.  I. 
801,  31  Atl.  1;  Hazard  v.  Spencer,  17  R.  I.  563,  23  Atl.  729;  Park  v.  Funder- 
burk,  87  S.  C.  76,  68  S.  E.  963;  Gibbes  Machinery  Co.  v.  Roper,  77  S.  C.  39, 
57  S.  E.  667;  First  Nat.  Bank  v.  Anderson,  28  S.  C.  143;  Mars  v.  Mars,  27 
S.  C.  133;  Herman  v.  Gunter,  83  Tex.  66,  18  S.  W.  428,  29  Am.  St.  Rep. 
632,  text  cited;  Guerin  v.  Patterson,  55  Tex.  124;  Blum  v.  Loggins,  53  Tex. 
136,  approving  text;  Milmo  Nat.  Bank  v.  Cobbs  (Tex  Civ.  App.),  128  S.  W. 
151;  Buchanan  v.  Wren,  10  Tex.  Civ.  App.  560,  30  S.  W.  1077,  citing  text, 
Blaney  v,  Pelton,  60  Vt.  275;  Hawse  v.  First  Nat.  Bank  of  Piedmont, 
W.  Va.  (Va.),  75  S.  E.  127;  Lodge  v.  Lewis,  32  Wash.  191,  72  Pac.  1009;  Citizens' 
Nat.  Bank  v.  Wmtler,  14  Wash.  558,  45  Pac.  38,  53  Am.  St.  Rep.  890;  Poncin 
V.  Furth,  15  Wash.  201,  46  Pac.  241;  Brooks  v.  James,  16  Wash.  335,  47  Pac.  751; 
First  Nat.  Bank  v.  Johns,  22  W.  Va.  524;  Studebaker  Bros.  Mfg.  Co.  v.  Langson 
et  al,  89  Wis.  200,  61  N.  W.  773;  Wayland  University  v.  Boorman,  56  Wis.  660; 
See  ante,  §§  573,  741,  7Sla,  and  post,  §§  1181a,  1191.  See  Causey  v.  Snow,  120 
N.  C.  279,  26  S.  E.  775,  wherein  the  court  held  that  the  plaintiff  having  produced 
the  note  on  the  trial,  and  the  defendant  having  admitted  its  execution,  the  law 
raised  the  presumption  that  the  plaintiff  was  the  rightful  owner,  and  this  presump- 
tion was  not  rebutted  by  the  defendant's  denial  in  his  answer.  And  this  presump- 
tion will  not  be  rebutted  by  evidence  of  an  assignment  to  a  third  party  signed  by 
plaintiff,  of  all  of  plaintiff's  claims  and  demands  against  the  defendant  and  an- 
other, but  not  mentioning  the  note  in  suit,  without  evidence  of  the  delivery  of 

89.  Price  v.  Winnebago  Nat.  Bank,  14  Okl.  268,  79  Pac.  105;  Houston  v.  Keith 
(Miss.),  56  So.  336.  Except  in  cases  where  the  instrument  is  shown  to  be 
tainted  with  fraud  or  illegality.  Johnson  County  Savings  Bank  v.  Capito,  47 
Ind.  App.  461,  94  N.  E.  797.    See  post,  §  815. 


§  812  PROOF   AS   TO    BONA   FIDE    OWNERSHIP  965 

differ  in  this  respect  from  others,  and  the  bearer  is  entitled  to  all 
the  presumptions  that  apply  to  an  indorsee  in  his  favor.^°  But  the 
presumption  of  bona  fide  o\\Tiership  does  not  apply  where  the  instru- 
ment is  not  payable  to  bearer,  unless  it  be  indorsed  specially  to  the 
holder,  or  in  blank,^^  and  when  such  indorsement  is  denied,  the  holder 
must  prove  the  indorsement  by  the  original  payee  in  order  to  hold  a 
presumption  that  he  is  an  innocent  purchaser.^^  And  holder  could 
not  recover  against  subsequent  parties,  as  his  possession  of  the  bill 
or  note  would  be  prima  facie  evidence  that  he  had  paid  it  to  some 

the  assignment  or  of  the  note  to  the  person  named  as  assignee  in  such  assignment. 
See  Trost  v.  Hinman,  68  Hun,  94,  22  N.  Y.  Supp.  612.  When  evidence  is  produced 
showing  that  another  is  entitled  to  the  proceeds  of  a  note,  the  burden  is  upon  the 
holder  to  show  that  he  is  a  bona  fide  holder  for  value.  American  Valley  Co.  v. 
Wyman,  92  IMo.  App.  294.  Where  an  agent  of  a  principal  is  furnished  with  money 
to  buy,  and  does  buy  up,  claims  against  the  latter,  it  is  his  duty,  if  he  asserts 
a  right  to  the  claims,  to  show  by  the  preponderance  of  testimony  that  the  claims 
are  his — therefore  a  tax  collector  of  a  county,  having,  by  authority  of  the  county, 
received  coupons  of  county  bonds  in  payment  of  taxes,  brought  suit  against  the 
county  to  recover  on  coupons  of  the  same  kind  which  he  claimed  to  o^Ti,  it  was 
improper  on  the  trial  to  instruct  the  jury  that  the  possession  of  the  coupons 
raised  a  presumption  of  his  ownership.  Threadgill  v.  Commissioners,  116  N.  C. 
616,  21  S.  E.  425. 

90.  Faulkner  v.  Ware,  34  Ga.  498;  Schulte  v.  Coulthurst,  94  Iowa,  418,  62 
N.  W.  770,  citing  text. 

91.  See  chapter  XXXVII,  on  Action,  vol.  II,  section  IV,  §  1197;  Dorn  v.  Par- 
sons, 56  Mo.  601;  Mayer  v.  Old,  51  Mo.  App.  214;  Bellis  v.  Lyons,  97  Mich.  398, 
56  N.  W.  770,  text  cited;  Lyon,  Potter  &  Co.  v.  Frist  Nat.  Bank,  29  C.  C.  A.  45, 
85  Fed.  120,  text  cited;  Bovard  v.  Dickinson,  131  Cal.  162,  63  Pac.  162. 

92.  Johnston  v.  Loar,  145  111.  App.  443;  James  v.  Blackman,  68  Kan.  723,  75 
Pac.  1017;  Dunlap  v.  Kelly,  105  Mo.  App.  1,  78  S.  W.  664;  Payne  v.  Liebee,  3 
Nebr.  (Unof.)  448,  91  N.  W.  851;  Jones  v.  TVTieeler,  23  Okl.  771,  101  Pac.  1112; 
Clymer  v.  Terry,  50  Tex.  Civ.  App.  300,  109  S.  W.  1129.  In  an  action  by  the 
indorsee  of  a  negotiable  note,  upon  a  declaration  on  the  note  as  indorsed  and  upon 
a  general  denial  in  the  answer,  the  plaintiff  is  not  required  to  prove  the  genuine- 
ness of  the  indorsement,  under  Rev.  Laws,  ch.  173,  §  86.  WTiiddon  v.  Sprague, 
203  Mass.  526,  89  N.  E.  917.  See  also  Melton  v.  Pensacola  Bank  &  Trust  Co., 
190  Fed.  126,  111  C.  C.  A.  166.  In  an  action  on  a  note  by  an  indorsee  against  the 
maker,  the  burden  of  establishing  an  agreement  between  the  indorsee  and  the  in- 
dorser  that  it  should  be  held  only  as  the  note  of  the  indorser,  and  that  it  should  be 
paid  from  the  collateral  security  which  the  indorsee  held  from  the  indorser, 
was  upon  the  defendant.  National  Bank  of  Rondout  v.  BjTnes,  82  N.  Y.  S. 
497,  84  App.  Div.  100,  affirmed  178  N.  Y.  561,  70  N.  E.  1103.  The  burden  is  on 
one  claiming  to  own  a  note  by  assignment  to  prove  the  execution  and  delivery 
of  the  assignment,  and  the  burden  is  on  one  charging  that  the  assignment  was 
void  because  obtained  by  fraud,  duress  and  undue  influence,  to  sustain  that  issue. 
McHay  v.  Peterson,  52  Tex.  Civ.  App.  195,  113  S.  W.  981. 


966  RIGHTS   OF   A   BONA   FIDE    HOLDER  §  812 

subsequent  party,  to  whom  he  was  hable.  Therefore,  where  A. 
brought  suit  against  B.  on  a  note  made  by  C.  payable  to  A.,  and  by 
A.  indorsed  to  B.,  and  by  B.  indorsed  back  to  A.,  it  was  held  A.  could 
not  recover  against  B.^^  But  it  has  been  held  that  special  circum- 
stances, showing  that  it  had  been  indorsed  back  to  A.  for  a  valid 
consideration,  would  enable  him  to  recover  against  B.^^  And  if  a 
prior  indorser  offered  a  note  for  discount  on  his  o\\ti  account,  the 
transaction  would  import  that  the  subsequent  indorsement  was  made 
for  the  accommodation  of  the  prior  indorser,  and  the  party  discount- 
ing it  could  recover  against  him.^^  Possession  of  a  note  by  the  per- 
sonal representative  of  the  deceased  payee,  payable  to  the  decedent, 
and  unindorsed,  would  be  evidence  of  ownership;  ^^  and  so  possession 
of  a  bill  by  a  drawer  payable  to  his  own  order.^^  Possession  of  a  bill 
or  note  unindorsed  by  the  payee  would  not  be.°^ 

Under  Negotiable  Instrument  statute. — The  statute,  in  various 
sections,^^  recognizes  the  rule  that  possession  of  a  negotiable  instru- 
ment imports  prima  facie  that  it  was  acquired  bona  fide  before  ma- 
turity, and  for  value.  Section  59  declares  that  "Every  holder  is 
deemed  prima  fade  to  be  a  holder  in  due  course,"  and  the  burden  of 
proof  is  upon  the  party  impeaching  the  instrument.^ 


93.  Palmer  v.  Whitney,  21  Ind.  61.    See  also  Oberle  v.  Schmidt,  86  Pa.  St.  221. 

94.  Palmer  v.  Whitney,  21  Ind.  61. 

96.  Mauldin  v.  Branch  Bank,  2  Ala.  502. 

96.  Scoville  v.  Landon,  50  N.  Y.  686.     But  in  such  case,  in  Pennsylvania, ' 
the  ownership  of  the  paper  was  held  in  question  for  the  jury.     Holohan  v.  Mix 
(Pa.),  19  Atl.  496.    See  as  to  possession  by  heir,  King  v.  Gottschalk,  21  Iowa,  512; 
Fant  V.  Wickes,  10  Tex.  Civ.  App.  394,  32  S.  W.  126;  Brooks  v.  Holt,  65  Mo. 
App.  613. 

97.  Merritt  v.  Duncan,  7  Heisk.  156.    See  ante,  §§  753,  781. 

98.  Gibson  v.  Miller,  29  Mich.  355.  See  ante,  §  781a;  Durein  v.  Moeser,  36 
Kan.  443,  citing  the  text;  Esau  v.  Green  &  Button  Co.,  94  Wis.  8,  68  N. 
W.  405. 

99.  Appendix,  sees.  55,  56,  57,  59. 

1.  Campbell  v.  Fourth  Nat.  Bank,  137  Ky.  555,  126  S.  W.  114;  Beck  v.  Mailer, 
115  N.  Y.  S.  596,  131  App.  Div.  243;  Joveshof  v.  Rockey,  109  N.  Y.  S.  818,  58 
Misc.  559;  McCormick  v.  Swem  (Utah),  102  Pac.  626;  Cole  Banking  Co.  v.  Sin- 
clair, 34  Utah,  454,  98  Pac.  411.  And  until  the  defendant  offers  evidence  sus- 
taining a  defense  that  the  note  was  tainted  with  fraud  in  its  inception  or  fraud- 
ulently put  in  circulation,  the  plaintiff  is  under  no  ohUgation  to  negotiate  it  or  to 
assume  the  burden  of  showing  that  he  is  the  holder  in  good  faith  and  without 
notice.  Cox  v.  Cline,  139  Iowa,  128,  117  N.  W.  48.  For  further  discussion  of  the 
effect  of  the  statute  on  the  question  of  burden  of  proof,  see  post,  under  §§  814a, 
819. 


§§  813,  814         PROOF   AS   TO    BONA   FIDE    OWNERSHIP  967 

§  813.  It  is  not  competent  for  the  defendant  to  deny  that  the 
plaintiff  is  the  owner  and  holder  of  a  note  upon  which  he  brings 
suit  as  such,  without  traversing  the  signature,  the  indorsement,  or 
the  delivery  of  the  note;  and  in  such  case,  evidence  is  inadmissible 
to  prove  that  the  plaintiff  never  owned  the  note,  never  employed 
counsel,  and  had  no  interest  in  the  suit.^  But  where  the  holder  sued 
under  a  blank  indorsement  in  New  York  it  was  held  that  under  the 
Code  of  that  State  it  might  be  shown  he  was  not  the  real  party  in 
interest,  though  the  presumption  would  be  that  he  was,^  This  sub- 
ject is  elsewhere  more  fully  discussed.* 

§  814.  Proof  of  want  of  consideration,  or  misapplication  of  in- 
strument, does  not  shift  burden  of  proof. — Second:  Countervailing 
proof  that  the  instrument  was  executed  without  consideration  as 
between  the  original  parties — as,  for  instance,  that  it  was  executed 
for  accommodation  as  between  them,  or  that  the  consideration, 
originally  valid,  has  subsequently  failed — does  not  impair  the  holder's 
superiority  of  position,  and  he  may  still  rest  his  case  upon  the  instru- 
ment itself,  from  which  it  will  still  be  presumed  that  he  acquired  it 
in  a  manner  entitling  him  to  stand  upon  the  vantage-ground  of  a 
bona  fide  holder  for  value,^  nor  will  proof  that  it  was  given  for  the 


2.  Way  V.  Richardson,  3  Gray,  412.  See  Schroeder  v.  Nielson,  39  Nebr,  335, 
57  N.  W.  993;  Mayer  v.  Old,  51  Mo.  App.  214. 

3.  Hays  v.  Hathorn,  74  N.  Y.  488.    See  §  1192a. 

4.  §  1181  et  seq. 

5.  Commissioners  v.  Clark,  94  U.  S.  (4  Otto)  285;  Colling  v.  Gilbert,  94  U.  S. 
(4  Otto)  757;  Goodman  v.  Simonds,  20  How.  343;  Bank  of  Pittsburg  v.  Neal, 
22  How.  96;  Murray  v.  Lardner,  2  Wall.  110;  Tabor  v.  Merchants'  Nat.  Bank, 
48  Ark.  454;  McDonald  v.  Randall,  139  Cal.  246,  72  Pac.  997;  Jones  v.  Evana,  6 
Cal.  App.  88,  91  Pac.  532;  Credit  Co.  v.  Howe  Mach.  Co.,  54  Conn.  357;  Johnson 
County  Sav.  Bank  v.  Wootten,  118  Ga.  927,  45  S.  E.  705;  Mathews  v.  Poy- 
thews,  4  Ga.  287;  Bothell  v.  WTiitley  Brothers,  3  Ga.  App.  755,  60  S.  E.  371; 
Sheffield  v.  Johnson  County  Savings  Bank,  2  Ga.  App.  221,  58  S.  E.  386;  Hill  v. 
Ward,  45  Ind.  App.  458,  91  N.  E.  38;  Batesville  Bank  v.  Lehner,  43  Ind.  App. 
457,  87  N.  E.  990;  Freittenberg  v.  Rubel,  123  Iowa,  154,  98  N.  W.  624;  Lynda  v. 
Van  Valkenburg,  77  Kan.  24,  93  Pac.  615;  Kellogg  v.  Curtis,  69  Me.  212;  Fletcher 
V.  Cushee,  32  Me.  587;  Baxter  v.  Ellis,  57  Me.  ISO;  Ellicott  v.  Martin,  6  Md.  509; 
Cummings  v.  Thompson,  18  Minn.  252;  National  Bank  of  Rolla  v.  Romine,  136 
Mo.  App.  57,  117  S.  W.  104;  Hahn  v.  Bradley,  92  Mo.  App.  399;  Organ  Co.  v. 
Boyle,  10  Nebr.  409;  Cropsey  v.  Averill,  8  Nebr.  157;  Mechanics',  etc..  Bank  v. 
Crow,  60  N.  Y.  85;  Harger  v.  Worrall,  69  N.  Y.  370;  Belmont  Branch  Bank  v. 
Hoge,  35  N.  Y.  (8  Tiff.)  65  (overruling  Pringle  v.  Phillips,  5  Sandf.  157);  Magee 
V.  Badger,  34  N.  Y.  (7  Tiff.)  247;  Ross  v.  Bedell,  5  Deur,  462;  Grocers'  Bank  v. 


968  RIGHTS    OF   A    BONA   FIDE    HOLDER  §  814 

debt  of  another,^  nor  proof  of  mere  misapplication  of  the  instrument, 
where  it  has  subserved  its  substantial  purpose,  shift  the  burden  of 


Penfield,  7  Hun,  279;  Bank  of  Now  Hanover  v.  Bridgers,  98  N.  C.  67,  citing  the 
text;  Flagg  V.  School  District,  4  N.  Dak.  30,  58  N.  W.  499;  Davis  v.  Bartlett,  12 
Ohio  St.  537;  Sloan  v.  Union  Banking  Co.,  67  Pa.  St.  479;  Knight  v.  Pugh,  4 
Watts  &  S.  4-45;  Holeman  v.  Hobson,  8  Humphr.  127;  McCormick  v.  Kampmann 
(Tex.  Civ.  App.),  109  S.  W.  492,  affirmed  102  Tex.  215,  115  S.  W.  24;  Grcnaux  v. 
Wheeler,  6  Tex.  515;  Johnson  County  Savings  Bank  v.  Kemp  Mercantile  Co. 
(Tex.  Civ.  App.),  114  S.  W.  402;  Adams  v.  Bartell,  46  Tex.  Civ.  App.  349,  102 
S.  W.  779;  Duerson's  Admr.  v.  Alsop,  27  Gratt.  248;  Wilson  v.  Lazier,  11  Gratt. 
478;  Cook  v.  Helms,  5  Wis.  107;  W^hitakcr  v.  Edmonds,  1  Moody  &  R.  366; 
Mills  V.  Barber,  1  M.  &  W.  425;  Low  v.  Chifney,  1  Bing.  N.  C.  267;  Smith  v. 
Braine,  16  Q.  B.  244;  Story  on  Bills  (Bennett's  ed.),  §  193.  Sec  ante,  §  165  et  seq. 
The  burden  is  upon  the  defendant  to  show  that  an  indorsee  of  a  note  had  actual 
knowledge  of  a  defense  made  when  he  bought  the  note  or  had  actual  knowledge 
of  such  facts  indicating  the  defense  that  his  action  in  taking  the  note  rynounted  to 
bad  faith.  Old  Nat.  Bank  v.  Marcy,  79  Ark.  149,  95  S.  W.  145.  In  an  action  by 
an  indorsee  holding  the  note  as  collateral  security,  the  note  having  been  executed 
for  the  accommodation  of  the  payee,  the  burden  is  on  the  plaintiff  to  show  that 
he  was  a  holder  for  value.  Mercantile  Guaranty  Co.  v.  Hilton,  191  Mass.  141,  77 
N.  E.  312.  And  in  an  action  by  an  indorsee  of  a  note,  wherein  the  defendant  sets 
up  a  collateral  written  agreement  between  the  maker  and  the  payee  that  the  note 
should  not  be  transferred,  and  that  it  could  not  be  collected  save  as  satisfied  by 
dividends  from  stock  for  the  purchase  of  which  the  note  was  given,  the  burden  ia 
on  the  defendant  to  show  that  the  indorsee  had  knowledge  of  such  an  arrangement 
when  the  note  was  transferred  to  him.  State  Bank  of  Indiana  v.  Cook,  125  Iowa, 
111,  100  N.  W.  72.  In  Vermont,  however,  it  is  held  that  upon  a  defense  that  the 
consideration  for  the  note  had  failed,  the  burden  is  on  the  plaintiff  to  show  that 
he  took  the  note  in  good  faith,  and  a  statement  that  he  bought  it  for  value  does  not 
meet  the  requirement.  Pierson  v.  Huntington,  82  Vt.  482,  74  Atl.  88,  the  court 
saying:  "The  production  of  a  negotiable  instrument,  properly  indorsed,  is  prima 
facie  evidence  of  the  holder's  right  to  recover  against  the  maker;  but  the  maker 
may  compel  the  holder  to  support  his  prima  facie  case  with  further  evidence  by 
showing  a  defense  that  would  have  been  available  against  the  payee.  The  de- 
fenses which  have  ordinarily  been  recognized  as  imposing  this  additional  burden 
are  illegaUty,  procurement  by  fraud  or  duress,  want  of  consideration,  and  an 
intervening  theft  or  loss.  This  enumeration  is  in  accord  with  the  statements 
generally  made  in  our  own  decisions.  It  was  said,  however,  in  Quinn  v.  Hard,  43 
Vt.  375,  5  Am.  Rep.  284,  that  it  did  not  appear  to  be  very  clearly  settled  in  what 
cases  and  to  what  extent  the  burden  of  proof  would  be  thrown  upon  the  plaintiff 
by  the  introduction  of  matters  amounting  to  a  defense  against  the  payee.  The 
more  recent  cases  have  apparently  relieved  the  subject  of  some  of  its  uncer- 
tainty, for  the  statement  is  now  generally  framed  in  terms  that  cover  fraud  in  the 
inception  of  the  note,  and  a  subsequent  failure  of  consideration  as  well  as  an 
original  want  of  it." 

6.  Chicago  &  Northwestern  R.  R.  Co.,  impleaded  with  George  F.  Cummin 
V.  Edson,  41  Mich.  673. 


§  814a  PROOF   AS   TO   BONA   FIDE    OWNERSHIP  969 

proof,  as  has  been  already  indicated;  ^  though  in  New  York  it  is  other- 
wise considered.^ 

§  814a.  This,  however,  is  to  be  observed:  if  the  instrument  be 
payable  to  bearer,  and  there  be  no  indorsement  upon  it,  there  is 
nothing  upon  its  face  to  indicate  whether  the  holder  is  the  original 
paj'-ee  or  a  transferee  by  delivery.  If  he  is  the  original  payee,  proof 
of  want  or  failure  of  consideration  is  a  complete  defense;  if  a  trans- 
feree the  defense  of  want  or  failure  of  consideration  will  not  affect 
him  unless  he  had  notice.  When  there  is  nothing  in  the  case  but  the 
production  of  the  paper,  paj'able  to  bearer  on  the  one  side,  and  proof 
of  want  or  failure  of  consideration  on  the  other,  what  presumption 
arises?  Is  it  to  be  presumed  that  the  holder  is  the  original  payee,  or 
that  he  is  a  transferee?  The  general  burden  of  proof  is  upon  the 
plaintiff  in  all  cases;  and  presumptions  of  fact  are  simply  presump- 
tions that  certain  facts  have  occurred  as  the  natural  and  usual  conse- 
quence of  a  fact  proved.  The  original  payee  and  possessor  of  the 
paper  cannot  be  presumed  to  have  transferred  it,  unless  it  be  pre- 
sumed that  owners  of  such  instruments  more  generally  part  with 
their  property  than  retain  it.  This  is  too  vague  and  uncertain  a 
presumption  to  rely  upon;  and  if  the  holder  be  a  transferee,  and, 
therefore,  entitled  to  recover  notwithstanding  want  or  failure  of  con- 
sideration, he  should  bear  the  burden  of  showing  his  superior  position 
to  exist.^ 

Voider  Negotiable  Instrument  statute. — The  effect  of  the  Negotiable 
Instrument  statute  on  the  question  of  the  burden  of  proof  in  this  con- 


7.  Ante,  §§790,  791;  Holme  v.  Karsper,  5  Binn.  469;  Tilghman,  Ch.  J.,  say- 
ing: "In  the  first  instance,  it  is  presumed  that  every  man  acts  fairly.  It  lies  on 
the  defendant,  therefore,  to  show  some  probable  ground  of  suspicion,  before  the 
plaintiff  is  expected  to  do  anything  more  than  produce  the  note  on  which  he 
founds  his  action.  But  this  being  done,  it  is  reasonable  that  the  holder  should 
be  called  on  to  rebut  the  suspicions.  All  that  is  asked  of  him  is  to  show  that  he 
acted  fairly,  and  paid  value."    Bunzel  v.  Maas  &  Schwarz,  116  Ala.  68,  22  So.  568. 

8.  See  ante,  §  791.  A  failure  or  want  of  consideration,  notice  of  which  is  brought 
home  to  the  holder  for  value,  is  a  good  defense  against  the  latter.  See  Scott  v. 
Scott,  2  App.  Div.  241,  38  N.  Y.  Supp.  613. 

9.  Bissell  V.  ]Morgan,  11  Cush.  198.  Article  of  Stephen  H.  Tyng,  of  the  Boston 
Bar,  Am.  Law  Review,  May,  1881,  vol.  XV,  p.  354;  Terry  v.  Taylor,  64  Iowa,  36, 
in  which  case  the  mere  allegation  of  such  fraud  without  proof,  held  insufficient  to 
shift  the  burden  of  proof  as  to  bona  fide  acquisition  of  the  paper.  Holden  v. 
Phcenix  Rattan  Co.,  168  Mass.  570,  47  N.  E.  241;  Zink  v.  Dick,  1  Ind.  App.  269, 
27  N.  E.  622. 


970  RIGHTS   OF   A   BONA    FIDE   HOLDER  §  814a 

nection,  may  be  considered  under  several  sections  of  the  statute.^" 
Section  59  declares  that  ''Every  holder  is  deemed  prima  facie  to  be 
a  holder  in  due  course;  but  when  it  is  shown  that  the  title  of  any 
person  who  has  negotiated  the  instrument  was  defective,  the  burden 
is  on  the  holder  to  prove  that  he  or  some  person  under  whom  he 
claims  acquired  the  title  as  holder  in  due  course,"  and  section  52  de- 
fines "a  holder  in  due  course."  The  conflict  of  authority  on  the  ques- 
tion whether  on  proof  of  having  paid  value  for  the  instrument  the 
plaintiff  must  also  show  good  faith  or  whether  the  defendant  must 
prove  notice,  is  generally  considered  settled  by  the  statute  in  favor  of 
the  former  rule.  It  is  therefore  generally  held  that  to  sustain  the 
burden  of  proof  to  show  that  he  acquired  title  as  a  holder  in  due 
course,  under  the  statutory  definition,  a  purchaser  from  one  whose 
title  was  defective  must  show  not  only  that  he  acquired  the  note 
before  maturity  and  for  value,  but  also  that  he  took  the  same  in  good 
faith,  and  that  at  the  time  the  instrument  was  negotiated  to  him  he 
had  no  notice  of  any  infirmity  therein  or  defect  of  title. ^^  And  so, 
a  showing  by  the  defendant  that  there  was  a  want  or  failure  of  con- 
sideration,^^ or  that  the  consideration  was  illegal,  ^^  or  that  the  in- 

10.  Appendix,  sees,  52,  55,  56,  59,  61. 

11.  Lucker  v,  Iba,  66  N.  Y.  S.  1019,  54  App.  Div.  566;  Singer  Mfg.  Co.  v.  Sin- 
ners, 143  N.  C.  102,  55  S.  E.  522;  Keene  v.  Behan,  40  Wash.  505,  82  Pac.  884. 
In  Leavitt  v.  Thurston  (Utah),  113  Pac.  77,  on  the  question  of  the  burden  of 
proof  as  distinguished  from  the  burden  of  proceeding,  the  court  said:  "If  evidence 
is  given  by  him  tending  to  show  that  he  was  such  a  holder  in  due  course,  that  does 
not  then  shift  the  burden  of  proof  to  the  defendant  to  estabUsh  the  fact  that  he,  or  ■ 
the  person  from  whom  he  acquired  title,  had  notice  or  knowledge  of  the  fraud,  or 
that  no  value  was  paid  for  the  note,  or  that  it  was  purchased  overdue,  but  merely 
the  duty  of  proceeding  in  the  production  of  evidence  if  he  desires  to  meet  or 
overcome  the  effect  or  weight  to  be  given  the  evidence  so  adduced  by  the  holder." 
See  also  Link  v.  Jackson,  158  Mo.  App.  63,  139  S.  W.  588,  wherein  the  court 
said  that  under  section  59  of  the  statute,  "burden  of  proof"  is  used  in  the  strict 
sense,  and  not  in  the  sense  of  "burden  of  evidence."  Proof  that  the  note  in  suit 
was  given  by  the  corporate  defendant's  treasurer  to  pay  his  own  individual  debt, 
without  authority  of  the  corporation  would  destroy  the  existing  presumption 
that  the  plaintiff  indorsee  was  "holder  in  due  course"  and  throw  upon  him  the 
burden  of  proving  that  fact,  or  of  overcoming  the  proof  of  the  defendant  that  the 
note  was  given  for  the  treasurer's  personal  debt  and  that  his  act  in  making  it  was 
not  authorized.  Louis  De  Jonge  &  Co.  v.  Woodport  Hotel  &  Land  Co.  (N.  J.), 
72  Atl.  439.  Compare  Standing  Stone  Nat.  Bank  v.  Walser  (N.  C  Spring 
Term,  1913). 

12.  Shellenberger  V.  Nourse,  20  Idaho,  323,  118  Pac.  508;  Johnson  County  Sav. 
Bank  V.  Mills,  143  Mo.  App.  265,  127  S.  W.  425;  Jobes  v.  Wilson  (Mo.  App.),  124 
S.  W.  548. 

13.  In  re  Hill,  187  Fed.  214;  O'Connor  v.  Kleiman,  143  Iowa,  435,  121  N.  W. 


§  815  PROOF   AS   TO    BONA   FIDE    OWNERSHIP  971 

strument  had  been  lost  or  stolen/^  imposes  the  burden  on  the  plain- 
tiff to  show  that  he  or  someone  under  whom  he  claims  title  was  a 
holder  in  due  course,  as  thus  defined, ^^ 

§  815.  Proof  of  fraud,  illegality  or  loss  shifts  burden  of  proof. — 

Third:  There  may  be  at  this  juncture  a  shifting  of  the  burden  of  proof 
from  the  defendant  to  the  plaintiff,  for  the  principle  is  well  established 
that  if  the  maker  or  acceptor,  who  is  primarily  liable  for  payment  of 
the  instrument,  or  any  party  bound  by  the  original  consideration, 
proves  that  there  was  fraud  or  illegality  in  the  inception  of  the  instru- 
ment; or  if  the  circumstances  raise  a  strong  suspicion  of  fraud  or  il- 
legality the  owner  must  then  respond  by  showing  that  he  acquired  it 
bona  fide  for  value,  in  the  usual  course  of  business,  while  current,  and 
under  circumstances  which  create  no  presumption  that  he  knew  the 
facts  which  impeach  its  validity.  This  principle  is  obviously  salutary, 
for  the  presumption  is  natural  that  an  instrument  so  issued  would  be 
quickly  transferred  to  another;  and  unless  he  gave  value,  which  could 
be  easily  proved  if  given,  it  would  perpetrate  great  injustice,  and 
reward  fraud  to  permit  him  to  recover.  ^^    In  an  action  by  a  partner- 

10S8;  Keegan  v.  Rock,  128  Iowa,  39,  102  N.  W.  805;  Matlock  v.  Sheuerman,  51 
Over,.  49,  93  Pac.  823,  17  L.  R.  A.  (N.  S.)  747;  Simpson  v.  Hefter,  87  N.  Y.  S.  243, 
42  Misc.  482. 

14.  Warren  v.  Smith  (Utah),  100  Pac.  1069,  holding  in  an  action  to  recover  the 
proceeds  of  a  check  alleged  to  have  been  stolen  from  or  lost  by  the  payee,  that 
when  the  plaintiff  proved  that  the  check  was  stolen  from  him,  the  burden  shifted 
to  the  defendant  to  prove  that  he,  or  some  person  under  whom  he  claims,  acquired 
title  as  a  holder  in  due  course. 

15.  As  to  the  effect  of  a  showing  of  fraud,  see  post,  under  §  819. 

16.  Commissioners  v.  Clark,  94  U.  S.  (4  Otto)  285;  Collins  v.  Gilbert,  94  U.  S. 
(4  Otto)  761;  Smith  v.  Sac  County,  11  Wall.  139;  McClintick  v.  Cummins,  2 
McLean,  98;  Simons  v.  Fisher,  5  C.  C.  A.  311,  55  Fed.  905;  Fisher  v.  Simons,  12 
C.  C.  A.  125,  64  Fed.  311;  Shain  v.  Goodwin,  46  Fed.  564;  Winter  &  Loeb  v. 
Pool,  100  Ala.  503,  14  So.  411;  Giman  v.  New  Orleans  R.  Co.,  72  Ala.  582;  Reid  v. 
Bcink  of  Mobile,  70  Ala.  210;  Mayor  of  Wetumpka  v.  Wetumpka  Wharf  Co.,  63 
Ala.  611;  Ross  v.  Drinkard,  35  Ala.  434;  Thompson  v.  Armstrong,  7  Ala.  256; 
Boyd  v.  Mclvor,  11  Ala.  822;  Union  Collection  Co.  v.  Buckman,  150  Cal.  159,  88 
Pac.  70S;  Jordan  v.  Grover,  99  Cal.  194,  33  Pac.  889,  citing  text;  Fames  v.  Crosier, 
101  Cal.  260,  35  Pac.  873;  Redington  v.  Wood,  45  Cal.  406;  Sperry  v.  Spaulding, 
45  Cal.  544;  Fuller  v.  Hutchings,  10  Cal.  526;  Le  Tourneux  v.  Gillis,  1  Cal.  App. 
546,  82  Pac.  627;  Merchants'  &  P.  Nat.  Bank  v.  Trustees,  62  Ga.  271;  Sheffield  v. 
Johnson  County  Savings  Bank,  2  Ga.  App.  221,  58  S.  E.  386;  Vaughn  v.  Johnson, 
20  Idaho,  669,  119  Pac.  379,  37  L.  R.  A.  (N.  S.)  816;  Hodson  v.  The  Eugene  Glass 
Co.,  156  111.  397,  40  N.  E.  971,  citing  text;  Merchant  Loan  &  Trust  Co.  v.  Welter, 
205  111.  647,  68  N.  E.  1082;  Finegan  v.  Green,  130  lU.  App.  445;  Citizens'  Bank  v. 


972  RIGHTS    OF   A    BONA    FIDE    HOLDER  §  815 

ship  bank  on  a  note  fraudulent  in  its  inception,  taken  by  it  as  collat- 
eral, the  partnership  must  show  that  all  its  members  were  at  the 

Leonhart,  126  Ind.  206,  25  N.  E.  1099;  Schmueckle  v.  Waters,  125  Ind.  265,  25 
N.  E.  281;  Eichelberger  v.  Bank,  103  Ind.  402;  Mitchell  v.  Tomlinson,  91  Ind. 
168;  Baldwin  v.  Shuter,  82  Ind.  560;  Harbison  v.  Bank  of  Indiana,  28  Ind.  133; 
Harbison  v.  Bank,  72  Ind.  133;  Hill  v.  Ward,  45  Ind.  App.  458,  91  N.  E.  38; 
Batcsville  Bank  v.  Lehner,  43  Ind.  App.  457,  87  N.  E.  990;  Bowser  v.  Spiesshofer, 
4  Ind.  App.  349,  30  N.  E.  942;  Zink  v.  Dick,  1  Ind.  App.  269,  27  N.  E.  622;  State 
Bank  of  Indiana  v.  Cook,  125  Iowa,  111,  100  N.  W.  72;  Galbraith  v.  McLaughlin, 
91  Iowa,  399,  59  N.  W.  338;  Smith  v.  Eals  (Iowa),  46  N.  W.  1110,  citing  the  text; 
McLaren  v.  Cochran,  46  N.  W.  408;  Bank  of  Monroe  v.  Mining  Co.,  65  Iowa,  701 ; 
Frank  v.  Blake,  58  Iowa,  750;  Kelly  v.  Ford,  4  Iowa,  140;  Tredick  v.  Walters, 
81  Kan.  828,  106  Pac.  1067;  Abmeyer  v.  First  National  Bank,  76  Kan.  877,  92 
Pac.  1109;  Kennedy  v.  Gibson,  68  Kan.  612,  75  Pac.  1044;  Brook  v.  Teague,  52 
Kan.  119,  34  Pac.  347,  citing  text;  Morris  v.  Case,  4  Kan.  App.  691,  46  Pac.  54; 
Christina  v.  Cusimans,  129  La.  873,  57  So.  157;  Wing  v.  Ford,  89  Me.  140,  35 
Atl.  1023;  Kellogg  v.  Curtis,  69  Me.  212;  Roberts  v.  Lane,  64  Me.  108;  Cuttle  v. 
Cleaves,  70  Me.  256;  Perrin  v.  Noyes,  39  Me.  384;  Griffith  v.  Shipley,  74  Md.  591, 
22  Atl.  1107;  Rhinehart  v.  Schall,  69  Md.  355;  Crampton  v.  Perkins,  65  Md.  24; 
McCosker  v.  Banks,  84  Md.  292,  35  Atl.  935;  Christian  Feigenspan  v.  McDonald, 
201  Mass.  341,  87  N.  E.  624;  Regester's  Sons  Co.  v.  Reed,  185  Mass.  226,  70  N.  E. 
53;  Savage  v.  Goldsmith,  181  Mass.  420,  63  N.  E.  918;  National  Revere  Bank  v. 
Morse,  163  Mass.  383,  40  M.  E.  180;  Merchants'  Nat.  Bank  of  Lowell  v.  Haver- 
hill Iron  Works,  159  Mass.  158,  34  N.  E.  93;  Bill  v.  Stewart,  156  Mass.  508,  31 
N.  E.  386;  Sistermans  v.  Field,  9  Gray,  331;  Merchants'  Nat.  Bank  v.  Wadsworth, 
166  Mich.  528,  131  N.  W.  1108;  Stouffer  v.  Fletcher,  146  Mich.  311,  109  N.  W. 
684;  Glines  v.  State  Sav.  Bank,  132  Mich.  638,  94  N.  W.  195;  Conley  v.  Winsor, 
41  Mich.  253;  Cochran  v.  Stein  (Minn.),  136  N.  W.  1037;  Park  v.  Winsor,  115 
Minn.  256,  132  N.  W.  264;  Mendenhall  v.  Ulrich,  94  Minn.  100,  101  N.  W.  1057; 
Askegaard  v.  Dalen,  93  Minn.  354,  101  N.  W.  503;  Robbins  v.  Swinburne  Print-' 
ing  Co.,  91  Minn.  491,  98  N.  W.  331,  867,  citing  text;  Merchants'  Exchange  Bank 
V.  Luckow,  37  Minn.  542;  Cummings  v.  Thompson,  18  Minn.  246;  Campbell  v. 
Hoff,  129  Mo.  317,  31  S.  W.  603;  Henry  v.  Sneed,  99  Mo.  422,  citing  the  text; 
Johnson  v.  McMurry,  72  Mo.  282;  Horton  v.  Bayne,  52  Mo.  531;  Devlin  v.  Clark, 
31  Mo.  22;  Carson  v.  Porter  (Mo.),  4  West.  Rep.  883;  National  Bank  of  RoUa  v. 
Romine,  136  Mo.  App.  57,  117  S.  W.  104,  citing  text;  Penfield  Inv.  Co.  v.  Bruce, 
132  Mo.  App.  257,  111  S.  W.  888;  New  Madrid  Banking  Co.  v.  Poplin,  129  Mo. 
App.  121, 108  S.  W.  115;  Stewart  &  Co.  v.  Andes,  110  Mo.  App.  243,  84  S.  W.  1134; 
Hahn  v.  Bradley,  92  Mo.  App.  399,  citing  text;  Smith  v.  Mohr,  64  Mo.  App.  39, 
citing  text;  Ern  v.  Rubinstein,  72  Mo.  App.  337;  Adams  County  Bank  v.  Hainline, 
67  Mo.  App.  483;  Goodin  v.  Buhler,  65  Mo.  App.  288;  Harrington  v.  Butte  & 
Boston  Mining  Co.,  19  Mont.  411,  48  Pac.  758;  Lahrman  v.  Bauman,  76  Nebr. 
846,  107  N.  W.  1008;  Bolen  v.  Wright,  89  Nebr.  116,  131  N.  W.  185;  Kelman  v. 
Calhoun,  43  Nebr.  157,  61  N.  W.  615;  Suiter  v.  National  Bank,  35  Nebr.  372,  53 
N.  W.  205;  Thompson  v.  West,  59  Nebr.  677;  National  Bank  v.  Miller,  51  Nebr. 

156,  70  N.  W.  933;  McDonald  v.  Aufdengarten,  41  Nebr.  41,  59  N.  W.  762; 
Fawcett  v.  Powell,  43  Nebr.  437,  61  N.  W.  586;  Kelman  v.  Calhoun,  43  Nebr. 

157,  61  N.  W,  615;  Violet  v.  Rose,  39  Nebr.  660,  58  N.  W.  216;  Colby  v.  Parker, 


§  815  PROOF   AS   TO    BONA   FIDE    OWNERSHIP  973 

time  of  the  purchase  ignorant  of  the  fraudulent  character  of  the 
note.^^    And  it  if  be  shown  that  the  original  owner  lost  the  bill  or 

34  Nebr.  510,  52  N.  W.  693;  Perkins  v.  Prout,  47  N.  H.  387;  American  Exch. 
Nat.  Bank  v.  New  York  Belting  &  Packing  Co.,  148  N.  Y.  698,  43  N.  E.  168; 
Pelly  V.  Naylor,  139  N.  Y.  598,  65  N.  E.  317;  Canajoharie  Nat.  Bank  v.  Die- 
fendorf,  123  N.  Y.  202,  25  N.  E.  402;  Vosburg  v.  Diefendorf,  119  N.  Y.  357,  23 
N.  E.  801,  16  Am.  St.  Rep.  836;  Woodhull  v.  Holmes,  10  Johns.  231;  Miller  v. 
Boyer,  79  Hun,  131,  29  N.  Y.  Supp.  479;  Hay  v.  Jaeckle,  90  Hun,  114,  35  N.  Y. 
Supp.  605;  Flour  City  Nat.  Bank  v.  Grover,  88  Hun,  4,  34  N.  Y.  Supp.  496; 
Donai  v.  Lutjens,  21  App.  Div.  254,  47  N.  Y.  Supp.  659;  Pelly  v.  Onderdonk,  61 
Hun,  314,  15  N.  Y.  Supp.  915;  Triplett  v.  Foster,  115  N.  C.  335,  20  S.  E.  475; 
Bank  v.  Burgwyn,  108  N.  C.  62,  12  S.  E.  952,  23  Am.  St.  Rep.  49,  citing  and  ap- 
proving the  text;  Tamlyn  v.  Peterson,  15  N.  D.  488,  107  N.  W.  1081;  McKesson  v. 
Stanberry,  3  Ohio  (N.  S.),  156;  Lerch  Hardware  Co.  v.  Columbia  Bank,  109  Pa. 
St.  240;  Sloan  v.  Union  Banking  Co.,  67  Pa.  St.  470;  Smith  v.  Popular  Loan  & 
Bldg.  Assn.,  93  Pa.  St.  20;  Hutchinson  v.  Bogg,  28  Pa.  St.  294;  Citizens'  Trust  & 
Savings  Bank  v.  Stackhouse  (S.  C),  74  S.  E.  977;  First  Nat.  Bank  v.  Harvey 
(S.  D.),  137  N.  W.  365;  Union  Nat.  Bank  of  Columbus,  Ohio  v.  Mailloux  (S.  D.), 
132  N.  W.  168;  Mee  v.  Carlson,  22  S.  D.  365,  117  N.  W.  1033;  Rochford  v.  Bar- 
rett, 22  S.  D.  83,  115  N.  W.  522;  McGill  v.  Young,  16  S.  D.  360,  92  N.  W.  1066; 
Kirby  v.  Berguin,  15  S.  D.  444,  90  N.  W.  856;  Elgin  City  Banking  Co.  v.  Hall,  119 
Tenn.  548,  108  S.  W.  10G8;  Taylor  v.  Trussell  (Tex.  Civ.  App.),  139  S.  W.  660; 
Churchill  v.  Bielstein,  9  Tex.  Civ.  App.  445,  29  S.  W.  392;  Capital  Savings  Bank  & 
Trust  Co.  v.  Montpelier  Savings  Bank  &  Trust  Co.,  77  Vt.  189,  59  Atl.  827;  Pied- 
mont Bank  v.  Hatcher,  94  Va.  231,  26  S.  E.  505,  citing  text;  Duerson  v.  Alsop,  27 
Gratt.  248;  Wilson  v.  Lanier,  11  Gratt.  477;  Vathir  v.  Zane,  6  Gratt.  246;  Duer- 
son V.  Alsop,  27  Gratt.  249;  Gottstein  v.  Sinmions,  59  Wash.  178,  109  Pac.  596; 
City  Nat.  Bank  of  Lafayette  v.  Mason,  58  Wash.  492,  108  Pac.  1071;  Cedar 
Rapids  Nat.  Bank  v.  Myhre  Bros.,  57  Wash.  596,  107  Pac.  518;  Hodge  v.  Smith, 
130  Wis.  326,  110  N.  W.  192;  Fuller  v.  Green,  64  Wis.  169;  Fitch  v.  Jones,  32  Eng. 
L.  &  Eq.  134;  Smith  v.  Braine,  3  Eng.  L.  &  Eq.  380,  16  Q.  B.  244;  Hall  v.  Feather- 
stone,  3  H.  &  N.  284;  Bailey  v.  Bidwell,  13  M.  &  W.  73;  Story  on  Bills,  §  193; 
Byles  on  Bills  (Sharswood's  ed.)  222.  In  the  case  of  the  Spring  Brook  Chemical 
Co.  V.  Dunn,  the  Appellate  Division  of  the  Supreme  Court  of  New  York  laid 
down  the  proposition  that  "the  burden  is  with  a  bank  claiming  to  be  a  bona  fide 
holder  for  value,  to  establish  all  the  facts  necessary  to  give  it  that  character," 
citing  Grant  v.  Walsh,  145  N.  Y.  502,  40  N.  E.  209,  45  Am.  St.  Rep.  626.  Grant  v. 
Walsh  not  only  does  not  support  the  proposition  above  announced,  but  the  deci- 
sion is  exactly  to  the  contrary.  It  is  there  held  that  when  evidence  is  furnished 
tending  to  show  fraud  in  the  inception  of  the  contract,  that  the  burden  shifts 
from  the  defendant  to  the  plaintiff,  and  it  then  becomes  the  duty  of  the  plain- 
tiff to  show  that  he  acquired  title  to  the  instrument  bona  fide  and  for  value,  etc. 
"Fraud  in  the  procurement  of  the  note,"  as  used  in  Civ.  Code,  1895,  §  3696, 
which  declares  that  the  holder  of  a  note  is  presumed  to  be  such  bona  fide  and  for 
value,  but  "such  presumption  is  negatived  by  proof  of  any  fraud  in  the  procure- 
ment of  the  note,"  means  the  fraud  of  the  holder  thereof,  and  has  no  reference  to 

17.  Commercial  Bank  of  Essex  v.  Paddick,  90  Iowa,  63,  57  N.  W.  687. 


974  RIGHTS   OF   A   BONA    FIDE    HOLDER         §§  815a,  S15b 

note,  then,  also,  the  burden  of  proof  is  upon  the  holder  to  prove  his 
title.  i» 

§  815a.  "In  the  nature  of  things,"  it  is  remarked  by  Staples,  J., 
in  a  Virginia  case,  "it  is  impossible  to  lay  down  any  fixed,  unvarying 
rule  as  to  the  circumstances  which  will  be  deemed  sufficient  to  throw 
upon  the  holder  the  burden  of  showing  that  he  has  given  value  for 
the  note.  The  courts  must  determine  in  each  whether  the  transac- 
tion is  of  such  a  character  as  to  rebut  the  presumption  usually  arising 
from  the  possession  of  the  instrument."  Long  delay,  which  con- 
tinued until  the  death  of  an  indorser  whose  estate  was  sought  to  be 
charged,  coupled  with  a  variety  of  peculiar  circumstances,  was  held 
in  the  particular  case  to  rebut  the  presumption  in  the  holder's  favor» 
and  to  require  of  him  proof  that  he  gave  value.^^ 

§  815b.  The  holder  is  not  bound,  however,  to  show  that  he  acted 
cautiously  hi  inquiring  into  the  history  of  the  instrument  in  proving 
his  bona  fides.  If  the  defendant  plead  that  the  paper  was  made  on 
an  illegal  consideration,  and  that  the  plaintiff  gave  no  value,  and  the 
plaintiff  put  the  whole  plea  in  issue,  it  will  be  sufficient  for  the  de- 
fendant to  prove  the  illegality,  and  the  plaintiff  must  then  prove 

fraud  in  the  contract  out  of  which  the  note  arose,  or  fraud  of  an  intervening  in- 
dorser. Harrell  v.  National  Bank,  128  Ga.  504,  57  S.  E.  869  (1907).  If  the  maker 
proves  there  was  fraud  or  illegahty  in  the  inception  of  the  instrument  and  a  total 
want  of  consideration  therefor,  then  the  maker  would  be  entitled  to  show  the 
grossly  inadequate  price  paid  by  the  purchaser  for  the  note,  as  a  circumstance 
which  would  create  a  presumption  that  he  knew  the  facts  that  would  impeach  its 
validity.  Hogg  v.  Thurman,  90  Ark.  93,  117  S.  W.  1070.  In  an  action  by  an 
indorsee  of  a  bank  check  wherein  the  defendant  alleged  that  the  check  was  ob- 
tained by  an  indorsee  from  the  payee  by  fraud  and  by  him  indorsed  to  the  plain- 
tiff without  consideration,  the  burden  was  upon  the  defendant  to  prove  that  the 
check  was  obtained  from  the  payee  by  fraud,  and  the  burden  was  upon  the  sub- 
sequent indorsee  to  show  by  a  preponderance  of  evidence  that  he  was  a  bond  fide 
holder  for  value.  Harrington  v.  Butte  &  B.  Min.  Co.,  27  Mont.  1,  69  Pac.  102. 
In  an  action  by  an  indorsee  of  a  note  made  by  a  corporation  for  accommodation, 
the  burden  is  upon  the  plaintiff  to  prove  that  he  purchased  without  notice  that  it 
was  accommodation  paper.  National  Bank  of  Newport  v.  H.  P.  Synder  Mfg.  Cc, 
102  N.  Y.  S.  478,  117  App.  Div.  370.  When  the  defense  of  fraud  is  not  submitted, 
the  burden  is  upon  the  defendant  to  show  that  the  plaintiff  is  not  an  innocent 
holder.  City  Deposit  Bank  v.  Green,  130  Iowa,  384,  106  N.  W.  942. 

18.  Walden  v.  Downing  Co.,  4  Ga.  App.  534,  61  S.  E.  1127;  Union  Nat.  Bank 
V.  Barber  (Iowa),  9  N.  W.  809;  Thamling  v.  Duffey,  14  Mont.  567,  37  Pac.  363, 
43  Am.  St.  Rep.  658;  Robinson  v.  Powers,  63  Mo.  App.  290.     See  infra,  §  1471. 

19.  Duerson's  Admr.  v.  Alsop,  27  Gratt.  249. 


§  816  PROOF   AS   TO    BONA   FIDE    OWNERSHIP  975 

the  consideration.  And  in  case  of  fraud,  the  burden  will  be  equally 
cast  upon  the  plaintiff  of  proving  consideration,  if  the  defendant 
prove  so  much  of  the  plea  as  alleges  that  he,  the  defendant,  was  de- 
frauded of  the  bill.^° 

§  816.  Illustrations  of  false  representation,  shifting  burden  of 
proof. — In  Virginia,-^  it  appeared  that  J.  R.  Johnson  met  Platoff 
Zane  in  Philadelphia,  and  induced  him  to  purchase  certain  lots  situ- 
ated in  South  St.  Louis,  an  addition  to  the  city  of  St.  Louis,  Missouri. 
Johnson  represented  them  to  be  of  great  value,  and  likely  to  be- 
come a  part  of  that  city,  and  that  he  could  make  an  unincumbered 
title  to  the  purchaser.  Confiding  in  these  representations,  Zane 
executed  his  promissory  notes  for  about  $14,000,  and  Johnson  as- 
signed one  of  said  notes  for  $652.40  to  John  L.  Vathir,  who  brought 
suit  upon  it,  and  recovered  judgment  against  Zane.  Zane  obtained 
an  injunction  to  this  judgment;  and  it  appeared  that  Johnson's  rep- 
resentations as  to  the  value  of  the  lots  were  false;  and  besides  that, 
he  could  make  no  title  to  them,  it  having  reverted  to  the  city  of  St. 
Louis  in  default  of  his  pajnnent  of  the  purchase  money.  Said  Allen,  J. : 
"As  a  general  rule,  the  indorsement  of  a  negotiable  note  is  of  itself 
prima  facie  evidence  that  the  indorsee  has  paid  value  for  it.  But 
when  the  payee  has  procured  the  note  by  fraud,  this  general  pre- 
sumption is  rebutted,  and  the  holder  cannot  recover  without  prov- 
ing that  he  has  paid  value.  The  reason  on  which  this  exception  to 
the  general  rule  rests  is  briefly  stated  by  Parke,  B.,  in  Bailey  v.  Bid- 
well,  13  M.  &  W.  73:  'It  certainly,'  he  says,  'has  been  the  universal 
understanding  since  the  later  cases,  that  if  the  note  were  proved  to 
have  been  obtained  by  fraud,  or  affected  by  illegality,  that  afforded  a 
presumption  that  the  person  who  had  been  guilty  of  the  illegality 
would  dispose  of  it,  and  would  place  it  in  the  hands  of  some  other 
person  to  sue  upon  it;  and  that  such  proof  casts  upon  the  holder  the 
burden  of  showing  that  he  was  a  bona  fide  holder  for  value.'  "^^ 

20.  Byles  on  Bills,  223.  See  ante,  §§  775,  795  et  seq.;  Thamling  v.  Duffey,  14 
Mont.  567,  37  Pac.  263,  43  Am.  St.  Rep.  658;  Schroeder  v.  Nielson,  39  Nebr. 
335,  57  N.  W.  993;  Horrigan  v.  WjTnan,  90  Mich.  121,  51  N.  W.  187;  First  Nat. 
Bank  of  Cameron  v.  Stanley,  46  Mo.  App.  440;  Whaley  v.  Neill,  44  Md.  App. 
316;  Ganz  v.  Weisenberger,  66  Mo.  App.  110;  The  Hide  &  Leather  Nat.  Bank 
V.  Alexander,  184  111.  416,  56  N.  E.  809. 

21.  Vathir  v.  Zane,  6  Gratt.  246. 

22.  See  Monroe  v.  Cooper,  5  Pick.  412;  Rogers  v.  Morton,  12  Wend.  484; 
Holme  V.  Karsper,  5  Binn.  469.  In  the  Bank  v.  Looney,  99  Tenn.  278,  42  S.  W. 
149,  63  Am.  St.  Rep.  830,  it  was  held,  "That  the  maker  of  a  note  was  induced 


976  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  817 

"Nor  is  the  requisition  for  such  proof  confined  to  cases  in  which 
the  note  was  put  into  circulation  by  fraud,  as  where  it  was  lost  or 
stolen.  In  the  case  of  Rogers  v.  Morton,  12  Wend.  484,  the  note 
was  voluntarily  given  for  an  assumed  balance,  on  a  settlement  of 
accounts.  The  balance  was  in  part  made  up  by  a  charge  for  a  draft, 
of  which  the  creditor  was  never  holder;  and  proof  of  this  fraud  com- 
mitted on  the  makers  at  the  time  the  note  was  given,  was  held  suffi- 
cient to  throw  upon  the  plaintiffs  the  burden  of  showing  that  they 
were  bona  fide  holders  for  value."  ^^  It  was  held  incumbent  on  Vathir 
to  give  proof  according  to  this  view. 

§  817.  In  another  case  it  appeared  that  Rector  sold  to  Wilson  & 
Mills,  wath  general  warranty,  real  estate  in  Washington  county, 
Ohio,  and  received  in  part  payment  the  note  of  Wilson,  which  he 
transferred  as  a  gift  to  the  trustees  of  Rector  College,  in  Taylor 
count}'-,  Virginia.  Previous  to  the  assignment.  Rector  had  mort- 
gaged the  real  estate  aforesaid  to  the  Ohio  Life  and  Trust  Companj% 
and  it  had  been  sold,  and  so  the  consideration  had  entirely  failed. 

The  trustees  of  the  college  assigned  the  note  to  Wright  &  Bald- 
win, who  sold  it  to  William  Lazier,  who  indorsed  it  to  another  party, 
and  was  sued  upon,  and  paid  it.  The  bill  prayed  that  the  contract 
for  the  sale  of  the  land  might  be  rescinded,  and  the  note  canceled. 
Daniel,  J.,  said:  "There  is  no  evidence  of  fraud  in  the  origin  or  nego- 
tiation of  the  note;  and  the  mere  failure  of  consideration  does  not 
impose  on  the  innocent  holder  the  onus  of  showing  the  consideration 
he  gave  for  the  note."  In  note  to  Chitty  on  Bills  (10th  Am.  ed.), 
p.  648,  we  have  a  report  of  the  case  of  Whitaker  v.  Edmonds,  1  Moody 
&  R.  366.  In  that  case,  Patterson,  J.,  said:  "Since  the  decision  of 
Heath  v.  Sansom,  2  B.  &  Ad.  291  (22  Eng.  C.  L.  78),  the  considera- 
tion of  the  judges  has  been  a  good  deal  called  to  the  subject;  and  the 
prevalent  opinion  among  them  is  that  the  courts  have  of  late  gone  too 
far  in  restricting  the  negotiability  of  bills  and  notes.  If,  indeed,  the 
defendant  can  show  that  there  has  been  something  of  fraud  in  the 
previous  steps  of  the  transfer  of  the  instrument,  that  throws  upon 
the  plaintiff  the  necessity  of  showing  under  what  circumstances  he 

to  execute  it  by  false  representations  as  to  the  value  and  income  and  the  incum- 
brances on  property  for  an  interest  in  which  it  was  given,  does  not  avoid  the  note 
whers  the  misrepresentations  were  not  made  bj^  the  vendor,  or  by  his  authority 
or  procurement,  but  by  parties  associated  with  the  maker  in  a  syndicate  for  the 
purchase  of  the  property." 

23.  See  also  Thomas  v.  Newton,  2  Car.  &  P.  606. 


§§  818,  819         PROOF   AS   TO    BONA    FIDE    OWNERSHIP  977 

became  possessed  of  it.  So  far  I  acceded  to  the  case  of  Heath  v.  San- 
som,  for  there  were,  in  that  case,  circumstances  raising  a  suspicion  of 
fraud;  but  if  I  added  on  that  occasion  that,  even  independently  of 
these  circumstances  of  suspicion,  the  holder  would  have  been  bound 
to  show  the  consideration  which  he  gave  for  the  bill,  merely  because 
there  was  an  absence  of  consideration  as  between  the  previous  parties 
to  the  bill,  I  am  now  decidedly  of  opinion  that  such  doctrine  was 
incorrect."  ^^ 

In  England  it  has  been  held,  that  where  the  drawer  of  a  bill,  which 
he  indorsed  in  blank,  delivered  it  to  W.  to  get  it  discounted  for  him, 
and  W.  went  off  with  the  bill  promising  to  get  and  bring  him  the 
money,  but  never  returned  with  the  bill  or  the  money,  and  the  drawer 
never  heard  of  the  bill  until  called  upon  by  H.  to  pay  it,  it  was  held 
that  H.  must  prove  that  he  gave  value  in  order  to  recover  on  the 
bill.  26 

§  818.  It  is  to  be  observed,  however,  that  the  fraud  which  shifts 
the  burden  of  proof  upon  the  holder  of  the  note,  and  renders  it  neces- 
sary for  him  to  establish  bona  fide  ownership  for  value,  must  be 
fraud  committed  upon  the  maker;  and  fraud  against  the  payee  or 
any  intermediate  holder  is  insufficient.  ^^ 

§  819.  Prima  facie  case  of  holder  restored  by  proving  that  he 
gave  value  in  due  course ;  defendant  must  prove  notice  of  fraud. — 

Fourth:  That  when  the  holder  responds  by  showing  that  he  did  ac- 
quire  the  instrument  bona  fide,  for  value,  in  the  usual  course  of  busi- 
ness, while  it  was  current,  and  under  circumstances  which  do  not 
operate  as  constructive  notice  of  the  facts  which  impeach  the  original 
validity,  the  defendant  must  then  prove  that  he  had  actual  notice 
of  such  facts;  otherwise  the  holder's  right  to  a  recovery  against  him 
is-  perfected.  This  principle  is  obviously  correct,  for  to  require  the 
plaintiff  to  show  absolutely  that  he  had  knowledge  of  facts  would  be 
to  burden  him  with  the  necessity  of  proving  an  impossible  negative.^ 

24.  Wilson  v.  Lazier,  11  Gratt.  478. 

26.  Hall  V.  Featherstone,  3  H.  &  N.  284;  Duerson  v.  Alsop,  27  Gratt.  249. 

26.  Kinney  v.  Kruse,  28  Wis.  183.    See  Atlas  Bank  v.  Doyle,  9  R.  I.  76. 

27.  Young  V.  Lowry,  192  Fed.  825;  Woodall  &  Son  v.  People's  Nat.  Bank, 
153  Ala.  576,  45  So.  194;  First  Nat.  Bank  v.  Dawson,  78  Ala.  71,  citing  the  text; 
Bank  of  Monette  v.  Hale  (Ark.),  149  S.  W.  845;  Meyer  v.  Lovdal,  6  Cal.  App. 
369,  92  Pac.  322;  Walden  v.  Downing  Co.,  4  Ga.  App.  534,  61  S.  E.  1127  (as  to  a 
note  stolen  or  otherwise  appropriated);  Howell  v.  Merchants'  T.  &  S.  Co.,  134 
111.  App.  467;  Dewey  v.  Merrit,  106  111.  App.  156;  Harbison  v.  Bank,  72  Ind. 

62 


978  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  819 

He  makes  out  a  prima  facie  case  by  proving  tliat  the  instrument  was 
indorsed  to  him  for  value  before  maturity.  Nothing  else  appearing, 
a  presumption  arises  that  lie  purchased  the  note  in  good  faith  with- 
out notice  of  the  fraud,  because  it  is  not  hkely  that  he  would  give  full 
value  for  a  note  which  he  believed  to  be  fraudulent,  taking  the  hazard 
upon  himself,  and  because  it  would  be  difficult  to  prove  good  faith 

133;  Bank  v.  Sargent,  85  Me.  350,  29  Atl.  192,  35  Am.  St.  Rep.  376;  Kellogp  v. 
Curtis,  69  Me.  214;  Keim  v.  Vette,  167  Mo.  389,  67  S.  W.  223;  Henry  v.  Sneed, 
99  Mo.  422,  citing  the  text;  Johnson  v.  McMurry,  72  Mo.  282;  Hayes  v.  Blaker, 
138  Mo.  App.  24,  119  S.  W.  1004;  Third  Nat.  Bank  v.  Tinsley,  11  Mo.  App.  49S; 
Smith  V.  Mohr,  64  Mo.  .\pp.  39;  Jones  v.  Burden,  .56  Mo.  App.  199;  Canajoharie 
Nat.  Bank  of  Diefendorf  (N.  Y.),  25  N.  E.  404,  citing  the  text;  Hay  v.  Jaeckle,  90 
Hun,  114,  35  N.  Y.  Supp.  600;  American  Exch.  Nat.  Bank  v.  N.  Y.  BeUing  Co.,  74 
Hun,  446,  26  N.  Y.  S.  822;  Bank  v.  Burgwyn,  110  N.  C.  267,  14  S.  E.  623,  citing 
text;  Tod  v.  Wick,  36  Ohio  St.  390;  Battles  v.  Laudenslager,  84  Pa.  St.  446; 
Seymour  Opera  House  Co.  v.  Thurston,  18  Tex.  Civ.  App.  417,  45  S.  W.  810; 
First  Nat.  Bank  v.  Moore,  148  Fed.  953.  Evidence  of  fraud  in  procuring  the 
execution  of  a  negotiable  instrument  shifts  the  burden  of  proof  as  to  the  good 
faith  of  a  purchaser  thereof  before  maturity  and  is  admissible  for  that  purpose, 
but  of  itself  in  no  way  tends  to  establish  bad  faith  on  the  part  of  such  purchaser. 
Vaughn  v.  Johnson,  119  P.  879,  20  Idaho,  669,  37  L.  R.  A.  (N.  S.)  816.  In  Davis 
V.  Bartlett,  12  Ohio  St.  541,  SuthfT,  C.  J.,  said:  "The  case  of  Monroe  v.  Cooper, 
5  Pick.  412,  is  also  relied  upon  by  the  defendants  in  this  case  as  an  authority. 
That  was  an  action  by  the  indorsee  upon  a  negotiable  note  against  the  members 
of  a  partnership  company,  by  whom  the  note  purported  to  be  made.  Two  of  the 
three  partners  appeared,  and  pleaded  the  general  issue,  and,  on  the  trial,  offered 
to  prove  that  the  note  was  made  bj^  the  other  partner,  who  had  made  default  in 
the  case,  for  his  own  benefit,  and  not  for  the  benefit  or  on  account  of  the  company 
or  with  the  knowledge  of  the  other  partners;  but  as  the  defendants  did  not  ofTer 
to  prove,  also,  that  the  note  was  due  when  indorsed  to  the  plaintiff,  or  that  he 
had  knowledge  of  the  facts,  the  judge,  on  the  trial  of  the  case,  was  of  the  opinion 
that  the  facts  so  proposed  to  be  proved  did  not  amount  to  a  defense,  and  ex- 
cluded the  proof.  The  Supreme  Court,  in  revising  this  opinion,  by  Wilde,  J.,  held 
that  the  defendants  had  the  right  to  prove,  if  they  could,  that  fraud  was  practiced 
in  the  inception  of  the  note,  or  that  it  was  fraudulently  put  in  circulation.  And 
the  Judge  adds:  'This  fact  being  established,  will  throw  upon  the  plaintiff  the 
burden  of  proof,  to  show  that  he  came  by  the  possession  of  the  note  fairly  and 
without  any  knowledge  of  the  fraud.'  There  can  be  no  doubt  that  the  judgment 
of  the  Supreme  Court,  in  this  case  also,  was  strictly  correct;  and  bj'  the  burden 
of  proof  to  show  possession  of  the  note  fairly  and  without  knowledge  of  the  fraud, 
he  only  meant  that  upon  the  defendants  proving  the  note  to  have  been  fraudu- 
lently executed  and  put  in  circulation,  that  it  was  incumbent  upon  the  plaintiff 
to  prove  that  he  received  the  negotiable  paper  before  due  in  the  usual  course  of 
trade,  upon  a  valuable  consideration,  the  remark  of  Judge  Wilde  is  strictly  correct 
and  consonant  with  the  authorities  to  which  he  refers;  but  if  this  remark  is  to 
be  understood,  as  intimating  that  the  rule  in  such  a  case  imposes  any  further 
burden  upon  the  plaintiff  than  to  prove  he  purchased  and  received  the  transfer 


§  819  PROOF   AS   TO    BONA    FIDE    OWNERSHIP  979 

in  any  better  way.^  These,  at  least,  are  the  conclusions  of  well- 
considered  decisions  which  rest,  as  we  think,  on  sound  reasoning,  but 
in  others  the  courts  have  indicated  a  more  stringent  rule  and  a  dis- 
position not  to  relieve  the  plaintiff  of  the  burden  of  proof  by  mere 
proof  that  he  gave  value.  ^^  Unless  there  were  circumstances  which 
seem  to  bring  home  to  him  notice  of  the  fraud  or  illegality  imputed, 
the  requirement  of  further  proof  than  the  giving  of  fair  value  seems 
unreasonably  harsh  and  exacting. 

Under  Negotiable  Instrument  statute. — The  effect  of  the  statute  on 
the  question  of  the  burden  of  proof  has  been  heretofore  discussed. ^° 
In  accordance  with  what  is  considered  as  the  effect  of  the  statute, 
it  has  so  far  been  generally  held  that  on  a  showing  of  fraud  on  the 
part  of  the  payee  or  of  any  one  who  has  negotiated  the  instrument,^^ 

of  the  negotiable  paper  before  due,  in  the  usual  course  of  trade,  bona  fide,  and  upon 
a  valuable  consideration  it  is  not  only  not  sustained  by,  but  is  opposed  to,  the 
authorities  to  which  he  refers. 

28.  Harbison  v.  Bank,  72  Ind.  133;  Kellogg  v.  Curtis,  69  Me.  214;  ante,  §  780. 
See  Wortendyke  v.  Meehan,  9  Nebr.  229,  where  holder  who  gave  value  was 
defeated,  the  circumstances  being  thought  sufficient  to  put  him  on  inquiry,  and 
he  did  not  deny  knowledge  of  illegal  consideration.  In  an  action  on  a  note  to 
which  a  defense  of  fraud  in  procuring  the  note  is  set  up,  a  shp  which  had  been 
detached  from  the  note  before  assignment  and  which  shows  consideration  for 
which  the  note  was  given,  may  be  admitted  in  evidence.  Ireland  v.  Scharpenberg, 
54  Wash.  558,  103  Pac.  801.  In  Scandinavian  American  Bank  v.  Johnston,  63 
Wash.  187,  115  Pac.  102,  the  court  said  that  when  the  payee  is  shown  to  have 
procured  the  note  by  fraud  the  burden  devolves  upon  the  holder  to  show  that 
he  is  a  bona  fide  holder;  but  after  he  has  introduced  evidence,  not  in  any  manner 
contradicted  or  disputed,  showing  him  to  be  such  a  holder,  and  no  circumstance 
appears  suggesting  bad  faith  on  his  part,  it  then  devolves  upon  the  maker  to  show 
that  the  holder  was  guilty  of  some  neglect  or  wrongful  act  amounting  to  bad  faith. 

29.  Tilden  v.  Barnard,  43  Mich.  376,  Marston,  C.  J.;  Giberson  v.  Jolley,  120 
Ind.  304;  Bunting  v.  Mick,  5  Ind.  App.  289,  31  N.  E.  378,  1055;  Arnold  v.  Lane, 
71  Conn.  73,  40  Atl.  921,  where  the  court  held  an  instruction  wrong  that  if  fraud 
were  shown  on  the  acceptance  of  a  note,  the  law  presumes  the  holder  knew  it; 
and  was  not  fully  remedied  by  adding  that  the  presumption  might  be  rebutted 
by  plaintiff's  showing  that  he  bought  for  value  and  in  due  course.  Landauer 
V.  Sioux  Falls  Improvement  Co.,  10  S.  Dak.  205,  72  N.  W.  467;  Eames  v.  Rosier, 
101  Cal.  260,  35  Pac.  873,  citing  text. 

30.  See  ante,  under  §  814a. 

31.  Johnson  County  Savings  Bank  v.  Greeg  (Colo.),  117  Pac.  1003;  Shellen- 
berger  v.  Nourse,  20  Idaho,  323,  118  Pac.  508;  Amd  v.  Alyesworth,  145  Iowa, 
185,  123  N.  W.  1000;  City  Nat.  Bank  v.  Jordan,  139  Iowa,  499,  117  N.  W.  758; 
City  Deposit  Bank  v.  Green,  138  Iowa,  156,  115  N.  W.  893;  Keegan  v.  Rock, 
126  Iowa,  39,  102  N.  W.  805;  Campbell  v.  Fourth  Nat.  Bank,  137  Ky.  555,  126  S. 
W.  114;  Wilson  v.  Kelso,  115  Md.  162,  80  Atl.  895;  Link  v.  Jackson,  139  S.  W. 
588,  158  Mo.  App.  63;  Bank  of  Ozark  v.  Hanks  (Mo.  App.),  125  S.  W.  221;  Jobea 


980  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  81d 

or  that  it  has  been  negotiated  in  breach  of  faith,*-  the  plaintiff  must 
sustain  the  burden  of  proof  that  he  is  not  only  a  holder  for  value  and 
before  maturity,  but  also  without  notice.  This  seems  clearly  to  be 
required  by  the  statutory  definition  of  "a  holder  in  due  course."  ^^ 
But  while  the  burden  is  upon  the  plaintiff  to  show  that  he  or  some 
person  under  whom  he  claims  acquired  title  as  a  holder  in  due  course, 
it  has  been  held  that  there  is  a  prima  facie  case  of  taking  the  instru- 
ment in  good  faith  when  he  proves  that  a  full  consideration  was 
paid  for  the  paper.  ^"^ 

When,  however,  fraud  was  not  committed  upon  the  maker,  but 
there  has  been  a  transfer  of  the  instrument  fraudulent  as  to  the  payee 
or  intermediate  holder,  the  defendant  has  the  burden  of  proving 
want  of  good  faith  on  the  part  of  the  purchaser  in  accepting  the  note 
from  the  fraudulent  transferrer.^^ 

V.  Wilson  (Mo.  App.),  124  S.  W.  54S;  Midwood  Park  Co.  v.  Baker,  128  N.  Y.  S. 
9o4,  affirmed  129  N.  Y.  S.  1135:  Eisengerg  v.  Lefkowitz,  127  N.  Y.  S.  595,  142  App. 
Div.  569;  Beck  v.  Mailer,  115  N.  Y.  S.  596,  131  App.  Div.  243;  Consolidation 
Nat.  Bank  v.  Kirkland,  91  N.  Y.  S.  353,  99  App.  Div.  121;  German- American 
Bank  v.  Cunningham,  89  N.  Y.  S.  836,  97  App.  Div.  244;  Mitchell  v.  Baldwin, 
84  N.  Y.  S.  1043,  88  App.  Div.  265;  Sutherland  v.  Mead,  80  N.  Y.  S.  504,  80  App. 
Div.  103;  Chadwick  v.  Kirkman,  159  N.  C.  259,  74  S.  E.  968;  American  Nat. 
Bank  v.  Fountain,  148  N.  C.  590,  62  S.  E.  738;  Walters  v.  Rock  (N.  D.),  115 
N.  W.  511;  Kerr  v.  Anderson,  16  N.  D.  36,  111  N.  W.  614;  Second  Nat.  Bank  of 
Pittsburg  V.  Hoffman,  78  Atl.  1002,  229  Pa.  St.  429;  Schultheis  v.  Sellers,  223 
Pa.  St.  513,  72  Atl.  887,  22  L.  R.  A.  (N.  S.)  1210;  Cook  v.  American  Tubing  & 
Webbing  Co.,  28  R.  I.  41,  65  Atl.  641,  9  L.  R.  A.  (N.  S.)  193;  Ireland  v.  Scharpen- 
berg,  54  Wash.  558,  103  Pac.  801;  Wells  v.  Duffy  (Wash.),  124  Pac.  907.  The 
statute  is  not  an  invasion  by  the  legislature  in  the  field  of  the  judicial  power,  but 
simply  regulates  the  manner  of  introducing  relevant  evidence.  Johnson  County 
Sav.  Bank  v.  Walker,  79  Conn.  348,  65  Atl.  132.  An  accommodation  note,  made 
on  false  representations  by  the  payee  as  to  his  intended  use  thereof,  is  obtained 
by  fraud,  within  section  55,  rendering  its  title  defective,  so  that  an  indorsee, 
suing  the  maker,  has  the  burden  of  proving  that  he  is  the  holder  for  value,  as  re- 
quired by  section  59.    Kennedy  v.  Spilka,  129  N.  Y.  S.  390,  72  Misc.  Rep.  89. 

32.  Iowa  Nat.  Bank  v.  Carter,  144  Iowa,  715,  123  N.  W.  237;  McKnight  v. 
Parsons,  136  Iowa,  397,  113  N.  W.  858,  125  Am.  St.  Rep.  265;  Freittenberg  v. 
Rubel,  123  Iowa,  154,  98  N.  W.  624.  Ginsberg  v.  Shurman,  128  N.  Y.  S.  653,  71 
Misc.  Rep.  463;  National  Bank  of  Barre  v.  Foley,  103  N.  Y.  S.  553,  54  Misc. 
126.    But  compare  Croslcy  v.  Reynolds,  196  Fed.  640. 

33.  See  appendix,  sec.  52. 

34.  Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  192. 

35.  Appendix,  last  sentence  of  sec.  59.  Voss  v.  Chamberlain,  139  la.  569,  117 
N.  W.  269.  This  provision  of  the  statute  seems  to  codify  the  rule  stated  in  §  818 
of  the  text,  on  the  authority  of  Kinney  v.  Kruse,  28  Wis.  183.  But  see  Parsona 
V.  Utica  Cement  Co.,  82  Conn.  333,  73  Atl.  785,  135  Am.  St.  Rep.  278,  80  Conn. 
58,  66  Atl.  1024. 


CHAPTER  XXV 

HOLDER  OF  BILLS  AND  NOTES  TRANSFERRED  TO  fflM  AS  COLLAT- 
ERAL SECURITY;  AND  HOLDER  OF  BILLS  AND  NOTES  SECURED 
BY  MORTGAGE. 

SECTION  I 

RIGHTS    AND    DUTIES    OF    HOLDER    OF   A    NEGOTIABLE    INSTRUMENT   AS 
COLLATERAL    SECURITY    FOR   A    DEBT 

§  820.  Bills  and  notes  are  frequently  transferred,  and  pledged  as 
collateral  securities  for  debts  of  the  pledgor,  and  many  questions 
have  arisen  as  to  the  rights  of  the  various  parties  concerned  in  such 
transactions.  And  whether  or  not  the  indorsee  or  pledgee  becomes 
a  bona  fide  holder,  and  is  protected  against  defenses  which  would 
be  available  against  the  indorser  or  pledgor,  is  often  difficult  to  de- 
termine, (ireat  contrariety  of  opinion  is  found  in  the  decisions  on 
the  subject.  But  by  keeping  in  view  a  few  well-fixed  principles,  we 
think  that  every  case  which  can  arise  may  be  satisfactorily  solved. 

§  821.  In  the  first  place,  it  should  be  determined  whether  or  not 
the  party  holding  the  instrument  has  the  form  of  the  legal  title.  If 
the  instrument  be  transferable  by  delivery  (by  being  payable  to  bearer, 
or  bearing  an  indorsement  in  blank),  he  is  then  its  prima  facie  pro- 
prietor and  owner.  If  it  be  payable  to  order  and  unindorsed,  he  then 
holds  only  the  equitable  title,  and  cannot  claim  the  rights  of  an 
indorsee.' 

§  822.  In  the  second  place,  if  the  holder  be  an  indorsee,  or  a  trans- 
feree by  delivery  of  a  bill  or  note  payable  to  bearer,  let  it  be  ascer- 
tained whether  or  not  he  is  merely  the  agent  of  the  real  owner  or 
has  himself  an  interest  in  the  instrument;  whether  or  not  he  has  a 
bare  authority,  or  an  authority  coupled  with  an  interest.  If  he  were 
only  authorized  to  collect  the  proceeds  for  the  indorser,  or  transferrer 

1.  See  ante,  §  741  et  seq. ;  Bank  of  Chadron  v.  Anderson,  6  Wyo.  520,  48  Pac. 
197. 

981 


<>S2     BILLS    AND    NOTES    AS    SEC'URITV,    AND    SECURED   §§  828,  S24 

))y  delivery,  and  then  to  appb'  the  proceed;;  to  tlie  payment  of  a  debt 
due  to  himself,  this  would  not  give  him  an  interest  in  the  paper  itself. 
It  would  be  much  the  same  as  if  he  were  to  apply  the  proceeds  to  the 
payment  of  some  other  debt  due  from  the  principal;  nor  could  he  have 
the  rights  of  a  principal  instead  of  agent,  unless  there  has  been  an 
actual  assignment  to  him.-  For  if  he  is  agent  of  the  owner,  any  de- 
fense available  against  the  owner  is  available  against  him,  and  this 
even  in  the  case  where  the  owner  owes  his  agent  more  than  the  amount 
of  the  paper.  ^ 

§  823.  If  it  turn  out  that  the  holder  is  agent,  the  principal  may 
revoke  that  agency  at  any  time  and  recall  the  paper  from  his  hands. 
And  he  cannot  set  up  then,  as  we  have  seen,  any  better  right  than 
his  principal.  The  test  question,  then,  is  simply  this:  has  there  been 
a  change  in  the  legal  rights  of  the  parties?  If  so,  the  transfer  is  irrevo- 
cable without  the  holder's  consent.  If  so,  there  has  been  a  considera- 
tion for  the  transfer — either  of  damages  to  the  holder,  or  of  benefit 
to  the  transferrer.  And  if  so,  the  holder  is  a  pledgee  and  bona  fide 
proprietor  of  the  paper,  and  is  entitled  to  recover  upon  it  even  against 
those  who  might  have  made  a  defense  against  his  pledgor — at  least  to 
the  extent  of  the  debt  of  which  the  instrument  is  collateral  security."* 

In  California,  where,  by  the  provisions  of  the  law  in  force,  the  right 
to  proceed  against  a  debtor  by  attachment  was  forfeited  by  taking 
such  a  collateral,  the  pledgee  of  a  negotiable  instrument  was  held  to 
be,  by  that  circumstance — if  none  other — a  holder  for  value,  and  pro- 
tected against  equitable  defenses.^ 

We  will  now  enter  more  minutely  into  the  various  ramifications 
which  this  question  assumes,  applying  the  test  above  stated. 

§  824.  (1)  In  the  first  place,  as  to  collateral  for  debt  contracted 


2.  2  Parsons  on  Notes  and  Bills,  42,  43.    See  Be.st  v.  Crall,  2.3  Kan.  482. 

3.  Solomons  v.  Bank  of  England,  13  East,  135,  note;  Lowndes  v.  Anderson, 
1  Rose,  99.  See  Loewen  v.  Forsee,  137  Mo.  29,  38  S.  W.  712,  59  Am.  St.  Rep. 
489.  Where  a  pledgee  had  notice  that  the  pledgor  had  no  right  to  pledge  or  dis- 
pose of  the  bonds  for  his  personal  account,  the  pledgee  could  not  hold  them  as  a 
bona  fide  holder  for  an  advance  made  to  the  pledgor  as  against  the  real  owner. 
Perth  Amboy  Mut.  Loan,  etc.,  Assn.  v.  Chapman,  81  N.  Y.  S.  38,  80  App.  Div. 
556,  affirmed  178  N.  Y.  558,  70  N.  E.  1104. 

4.  Wyman  v.  Colorado  Nat.  Bank,  5  Colo.  34,  citing  the  text;  State  v.  Fitz- 
patrick,  1  Houst.  385  (dictum) ;  Humble  v.  Curtis,  160  111.  193,  43  N.  E.  749. 

6.  Naglee  v.  Lyman,  14  Cal.  455;  Payne  v.  Bensley,  8  Cal.  260. 


§  825  COLLATERAL   SECURITY  983 

at  the  time. — When  the  bill  or  note  of  a  third  party,  payable  to 
order,  is  indorsed  as  collateral  security  for  a  debt  contracted  at  the 
time  of  such  indorsement,  the  indorsee  is  a  bona  fide  holder  for  value 
in  the  usual  course  of  business,  and  is  entitled  to  protection  against 
equities  and  offsets  and  other  defenses  available  between  antecedent 
parties — provided,  of  course,  that  the  bill  or  note  transferred  as  col- 
lateral security  is  itself  at  the  time  not  overdue.  And  the  same  principle 
applies  where  the  collateral  bill  or  note  is  payable  to  bearer,  and  is 
transferred  to  the  creditor  by  delivery.  This  doctrine  rests  upon  clear 
grounds.  There  is  an  evident  present  consideration  for  the  transfer 
of  the  collateral  bill  or  note;  a  present  change  in  the  legal  rights  of 
the  parties.  And  the  text-writers,  supported  by  an  almost  unbroken 
train  of  decisions,  agree  that  the  indorsee  is  entitled  to  protection  to 
the  extent  of  the  debt  secured.^ 

§  825.  (2)  In  the  second  place,  as  to  collateral  for  debt  not  yet 
due. — When  the  debt  is  not  yet  due  and  the  collateral  bill  or  note 
is  indorsed  as  security  and  there  is  an  agreement  for  delay  until  the 

6.  Thompson  v.  Maddux,  117  Ala.  468,  23  So.  157  (or  in  pursuance  of  a  pre- 
vious agreement,  made  at  the  time  the  debt  was  contracted);  Miller  v.  Boykin, 
70  Ala.  476;  Patridge  v.  Williams,  72  Ga.  808;  Exchange  Bank  v.  Bulner,  60  Ga. 
654;  Humble  v.  Curtis,  160  lU.  193,  43  N.  E.  749;  Slotts  v.  Byers,  17  Iowa,  303; 
National  Bank  of  St.  Joseph  v.  Dakin,  54  Kan.  656,  39  Pac.  180,  45  Am.  St.  Rep. 
299;  Best  v.  Crall,  23  Kan.  482;  State  Savings  Assn.  v.  Hunt,  17  Kan.  532;  Mc- 
Pherson  v.  Boudreau,  48  La.  Ann.  431,  19  So.  550;  Mechanics'  Assn.  v.  Ferguson, 
29  La.  549;  Louisiana  State  Bank  v.  Gaennie,  21  La.  Ann.  551;  Williams  v. 
National  Bank  of  BaUimore,  72  Md.  441,  20  All.  191,  citing  text;  Chicopee 
Bank  v.  Chapin,  8  Mete.  (Mass.)  40;  Crump  v.  Berdan,  97  Mich.  293,  56  N.  W. 
559,  37  Am.  St.  Rep.  345,  text  cited;  Stewart  v.  Givens,  128  Mo.  App.  389,  107 
S.  W.  422;  Monett  State  Bank  v.  Eubanks,  124  Mo.  App.  499,  101  S.  W.  687; 
Jones  V.  Wiesen,  50  Nebr.  244,  69  N.  W.  762;  Helmer  v.  Commercial  Bank,  44 
N.  W.  482;  Connecticut  Trust  &  Safe  Deposit  Co.  v.  Fletcher,  61  Nebr.  166, 
85  N.  W.  59;  Connecticut  Trust  &  Safe  Deposit  Co.  v.  Trumbo,  2  Nebr.  (Unof.) 
850,  90  N.  W.  216;  American  Exch.  Nat.  Bank  v.  New  York  Belting  &  Packing 
Co.,  148  N.  Y.  698,  43  N.  E.  168;  Bank  of  New  York  v.  Vanderhorst,  32  N.  Y.  553; 
Watson  V.  Cabot  Bank,  5  Sandf.  423;  Ferdon  v.  Jones,  2  E.  D.  Smith,  106;  Wil- 
liams V.  Smith,  2  Hill,  301;  Second  Nat.  Bank  v.  Werner  (N.  D.),  126  N.  W.  100; 
Munn  V.  McDonald,  10  Watts,  270;  Dearman  v.  Trimmer,  26  S.  C.  510;  Bank 
V.  Stockell,  92  Tenn.  252,  21  S.  W.  523,  citing  and  approving  text;  Texas  Banking 
Co.  V.  Turnley,  61  Tex.  369,  citing  the  text;  Noyes  v.  Landon  (Vt.),  10  Atl. 
342;  Griswold  v.  Davis,  31  Vt.  390;  Samson  v.  Ward,  147  Wis.  48,  132  N.  W.  629; 
Bowman  v.  Van  Kuren,  29  Wis.  219;  Lyon  v.  Ewing,  17  Wis.  70;  Curtis  v.  Mohr, 
18  Wis.  619;  Jenkins  v.  Schaub,  14  Wis.  1;  Greenway  v.  Orthwein,  etc.,  Co.,  29 
C.  C.  A.  330,  85  Fed.  536. 


984   BILLS    AND    NOTES    AS    SECURITY,    AND    SECURED     §§  825a,  826 

collateral  shall  mature,  such  agreement  by  the  creditor  constitutes  a 
consideration  and  makes  him  a  holder  for  value/ 

§  825a.  No  presumption  of  agreement  for  delay  when  collateral 
matures  later  than  debt  secured. — If  the  collateral  had  its  matu- 
rity fixed  at  a  time  later  than  the  maturity  of  the  debt,  there  would 
be  no  implied  agreement  for  delay,  because  the  occasion  for  delay 
would  not  have  arisen.  And  the  presumption  would  be  that  the 
indorsement  of  the  collateral  was  merely  intended  to  add  by  its  se- 
curity to  the  assurance  that  the  debt  would  be  paid.  This  presump- 
tion would  be  all  the  stronger  if  the  collateral  matured  before  the 
debt.  And  it  has  led  to  the  opinion  that  such  an  indorsee  would 
not  be  a  holder  for  value.  "If,"  says  Redfield,  C.  J.,  in  Atkinson  v. 
Brooks,*^  one  holds  a  debt  due  six  months  hence,  and  his  debtor,  as  a 
mere  volunteer  service,  indorses  a  current  note  or  bill  as  collateral 
security,  the  collateral  being  due  in  three  months,  it  could  not  be 
made  to  appear  that  such  transaction,  before  the  indorsee  had  been 
at  any  pains  in  the  matter,  was  a  contract  upon  consideration.  The 
prior  debt  not  being  due,  the  creditor  could  forego  nothing,  and  the 
debtor  receive  no  advantage  from  the  transaction.  And  the  agree- 
ment to  apply  the  collateral  upon  a  debt  not  yet  due — being  without 
consideration — would  probably,  in  the  first  instance,  be  revocable 
at  will;  and  so  also  as  long  as  the  parties  remained  in  the  same  situa- 
tion." 

§  826.  This  reasoning  is  strong,  but,  withal,  does  not  seem  to  us 
conclusive.  If  it  is  the  intention  of  the  debtor  to  transfer  the  title 
to  and  property  in  the  instrument  at  the  time  when  he  so  makes  it 
collateral  security,  we  should  say  that  the  pre-existing  indebtedness 
would  be  a  suflScient  consideration.  It  is  well  established  that  a 
transfer  of  a  bill  or  note  in  payment  of  a  pre-existing  debt  is  upon  a 
sufiicient  consideration  if  made  when  the  debt  is  due,  and  we  can  see 

7.  On  the  other  hand,  if  the  debt  is  due  and  there  is  no  agreement  for  delay, 
the  holder  will  not  be  protected  against  equities.  Bone  v.  Tharp,  63  Iowa,  224; 
Union  Nat.  Bank  v.  Barber,  56  Iowa,  561.  In  Farmers'  Bank  of  Lyons  v.  Dixon, 
(Nebr.),  136  N.  W.  845,  it  was  held  that  if  a  negotiable  promissory  note  is  trans- 
ferred to  a  bank  as  collateral  security  to  an  indebtedness  to  the  bank  substanti- 
ally equal  to  the  amount  of  the  note,  and  the  note  is  so  taken  by  the  bank  in  the 
regular  course  of  business  and  without  notice  of  any  defense  thereto,  the  bank 
becomes  an  innocent  holder,  and  the  note  is  not  subject  to  the  defenses  that  may 
have  existed  as  against  the  original  payee. 

8.  26  Vt.  564  (1854).    See  also  Bowman  v.  Van  Kuren,  29  Wis.  218. 


§  827  COLLATERAL   SECURITt  985 

no  good  ground  for  distinguishing  the  two  cases.  When  the  indorsee 
receives  title  to  the  collateral,  he  has  imposed  upon  hun  the  strict 
responsibilities  and  duties  of  a  holder.  If  he  fails  to  take  due  steps 
for  the  collection  of  the  paper  by  making  prompt  demand,  and  giving 
notice  of  dishonor,  the  indorsers  are  discharged,  and  the  loss  pro  tanto 
of  the  debt  secured  devolves  upon  him.^  Besides,  he  is  in  the  nature 
of  things  lulled  into  security  by  possession  of  the  collateral,  and  after 
transferring  it  to  him  we  do  not  think  it  would  be  in  the  power  of  the 
indorser  to  recall  it.  A  debt  barred  by  limitation  is  a  good  considera- 
tion for  a  new  promise  to  pay  it;  a  retraction  of  that  promise  cannot 
be  made.  And  a  debt  still  current  should  be  esteemed  as  well  a 
good  consideration  for  a  conditional  appropriation  to  its  payment 
by  anticipation.  Nor  is  it  true  that  the  creditor  could  forego  noth- 
ing, and  the  debtor  receive  no  advantage  from  the  transaction.  The 
latter  receives  the  advantage  of  shifting  the  duties  and  responsibilities 
of  holder  on  the  indorsee,  and  the  former,  if  mdeed  he  actually  fore- 
goes nothing,  is  certainly  under  inducement  to  forego  that  watchful- 
ness and  concern  about  his  debtor  which  he  would  otherwise  exercise 
— and  even  if  he  foregoes  nothing,  the  advantage  to  the  debtor  is 
sufficient.  Prior  parties  cannot  justly  complain  when  suit  is  brought 
that  defenses  available  against  the  payee  or  prior  holder  are  excluded. 
By  the  very  form  of  their  contract  they  have  put  it  on  the  world  to 
circulate  like  cash— barring  the  gates  behind  it  and  shutting  out  such 
defenses.  And  if  the  creditor  has  taken  them  by  their  word,  they— 
not  he — should  suffer.  The  question  seems  to  us  simply  one  of  in- 
tent. If  the  holder  takes  the  paper  only  as  an  agent,  he  simply  steps 
in  the  shoes  of  his  transferrer;  but  if  he  takes  it  as  the  proprietary 
holder,  he  takes  its  burdens  and  benefits  in  full.^° 

§  827.  (3)  In  the  third  place,  when  pre-existing  debt  is  novated, 
or  other  securities  surrendered.— In  the  next  place,  when  a  pre- 
existing debt  has  matured,  and  the  creditor  surrenders  securities 
formerly  held  and  receives  the  collateral  bill  or  note  in  their  stead; 
or  the  debtor  renews  the  debt  by  executing  a  new  bill  or  note  and 
transfers  the  collateral  bill  or  note  as  security  to  the  creditor— then 
the  latter  receives  it  m  the  usual  course  of  business  upon  a  present 
consideration,  and  is  a  bona  fide  holder  in  the  full  sense  of  the  term. 
A  leading  case  on  this  point  is  that  of  Goodman  v.  Simonds.^^    There 

9.  Jennison  v.  Parker,  7  Mich.  355. 

10.  See  the  New  York  cases  on  this  question,  §  831c. 

11.  20  How.  343;  reaffirmed  in  Gates  v.  National  Bank,  100  U.  S.  (10  Otto) 


986  BILLS    AND    NOTES    AS    SECURITY,    AND    SECURED         §  827 

it  appeared  that  upon  a  settlem'ent  of  a  pre-existing  debt  prior  securi- 
ties were  surrendered,  and  the  collateral  bill  transferred  as  security 
for  two  new  notes,  at  sixty  and  seventy-five  days  respectively,  their 
maturity  being  twelve  or  fifteen  days  before  the  maturity  of  the  bill. 
Clifford,  J.,  said:  "When  the  settlement  was  made  the  new  notes 
were  given  in  payment  of  the  prior  indebtedness,  and  the  collaterals 
previously  held  were  surrendered  to  the  defendant,  and  the  time  of 
payment  was  extended  and  definitely  fixed  by  the  terms  of  the  notes, 
showing  an  agreement  to  give  time  for  the  payment  of  a  debt  already 
overdue,  and  a  forbearance  to  enforce  remedies  for  its  recovery;  and 
the  implication  is  very  strong  that  the  delay  secured  by  the  arrange- 
ment constituted  the  principal  inducement  to  the  transfer  of  the  bill. 
Such  a  suspension  of  an  existing  demand  is  frequently  of  the  utmost 
importance  to  a  debtor,  and  it  constitutes  one  of  the  oldest  titles  of 
the  law  under  the  head  of  forbearance,  and  has  always  been  con- 
sidered a  sufficient  and  valid  consideration. ^^  The  surrender  of  other 
instruments  although  held  as  collateral  security,  is  also  a  good  con- 
sideration; and  this,  as  well  as  the  former  proposition,  is  now  generally 
admitted,  and  is  not  open  to  dispute.  ^^ 

"It  seems  now  to  be  agreed,  that  if  there  was  a  present  considera- 
tion at  the  time  of  the  transfer,  independent  of  the  previous  indebt- 
edness, that  a  party  acquiring  a  negotiable  instrument  before  its 
maturity  as  a  collateral  security  to  a  pre-existing  debt,  without  knowl- 
edge of  the  facts  which  impeach  the  title  as  between  the  antecedent 
parties,  thereby  becomes  a  holder  in  the  usual  course  of  business,  and 
that  his  title  is  complete  so  that  it  will  be  unaffected  by  any  prior 
equities  between  other  parties — at  least  to  the  extent  of  the  previous 
debt  for  which  it  is  held  as  collateral. ^^  And  the  better  opinion  seems 

247;  Bank  of  Commerce  v.  Wright,  63  Ark.  604,  40  S.  W.  81;  ZoUman  v.  Jackson 
Trust  &  Savings  Bank,  238  111.  290,  87  N.  E.  297;  Des  Moines  Nat.  Bank  v. 
Chisholm,  71  Iowa,  679;  First  Nat.  Bank  v.  Bentley,  27  Minn.  87;  Park  Bank  v. 
Watson,  42  N.  Y.  490;  Ayrault  v.  McQueen,  32  Barb.  305;  Kingsland  v.  Pryor, 
33  Ohio  St.  19;  Beckhaus  v.  Commercial  Bank  (Pa.),  12  Atl.  72;  Linnard's  App. 
(Pa.),  2  Cent.  840.    See  also  post,  §§  831a,  831c. 

12.  Etting  V.  Vanderlyn,  4  Johns.  237;  Morton  v.  Burn,  7  Ad.  &  El.  19;  Baker 
V.  Walker,  14  M.  &  W.  46.5;  Jennison  v.  Stafford,  1  Cush.  168;  Walton  v.  Mascall, 
13  M.  &  W.  453;  Wheeler  v.  Slocum,  16  Pick.  62;  Judy  v.  Louderman,  48  Ohio 
St.  562,  29  N.  E.  181 ;  Allen  v.  Harris,  79  Mo.  App.  490. 

13.  First  Nat.  Bank  v.  Johnston,  97  Ala.  655,  11  So.  690;  Dupeau  v.  Wadding- 
ton,  6  Whart.  220;  Hornblower  v.  Prond,  2  B.  &  Aid.  327;  Rideout  v.  Bristow,  1 
Cromp.  &  J.  231;  Bank  of  Salina  v.  Babcock,  21  Wend.  499;  Youngs  v.  Lee,  12 
N.  Y.  551.    See  an<e,  §  826. 

14.  White  V.  Springfield  Bank,  3  Sandf.  222;  New  York  M.  Iron  Works  v. 


§  82^  COLLATERAL   SECURITY  987 

to  be  in  respect  to  parol  contracts,  as  a  general  rule,  that  there  is  but 
one  measure  of  the  sufficiency  of  a  consideration,  and  consequently 
whatever  would  have  given  validity  to  the  bill  as  between  the  original 
parties  is  sufficient  to  uphold  a  transfer  like  the  one  in  this  case.  We 
are  not  aware  that  the  principle,  as  thus  limited  and  qualified,  is  now 
the  subject  of  serious  dispute  anywhere,  and  that  is  amply  sufficient 
for  the  decision  of  this  cause.  Whether  the  same  conclusion  ought 
to  follow  where  the  transfer  was  without  any  other  consideration  than 
what  flows  from  the  nature  of  the  contract  at  the  time  of  delivery 
and  such  as  may  be  inferred  from  the  relation  of  debtor  and  creditor 
in  respect  to  the  pre-existing  debt,  is  still  the  subject  of  earnest  dis- 
cussion, and  has  given  rise  to  no  small  diversity  of  judicial  decision. 
It  seems  it  is  regarded  as  sufficient  in  England,  according  to  a  recent 
case.^^  A  contrary  rule  prevails  in  New  York,  according  to  several 
decisions,  also  in  Tennessee,  in  Pennsylvania,  and  in  Maine.  It  is 
settled  that  is  a  sufficient  consideration  in  Massachusetts,  Vermont, 
and  New  Jersey;  and  such  was  the  opinion  of  the  late  Justice  Story,  in 
Swift  V.  Tyson,  and  in  his  valuable  treatise  on  'Bills  of  Exchange.'  "'^ 

§  828.  In  an  English  case,^'  where  the  defendant  indorsed  to  the 
plaintiff  a  bill,  of  which  he  was  indorsee,  as  collateral  security  for  a 
debt  of  greater  amount,  then  due,  the  residue  of  which  he  paid  in  cash, 
and  the  plaintiff  failed  to  make  presentment  or  to  give  notice  it  was 
held  that  he  had  lost  recourse  upon  his  indorser,  both  upon  the  bill 
and  upon  the  original  debt.  Byles,  J.,  said:  "That  as  they  had  the 
rights,  so  they  had  the  duties  of  holders."  Willis,  J.,  said:  "The  bill 
may  be  taken  for  or  on  account  of  the  debt,  but  with  an  understanding 
that  the  party  receiving  it  is  to  have  the  option  of  suing  for  the  debt 
before  the  maturity  of  the  bill." 

Smith,  4  Duer,  362;  Miller  v.  Pollock,  99  Pa.  St.  202;  Keokuk  County  State 
Bank  v.  Eunice  HaU,  106  Iowa,  540,  76  N.  W.  832;  McPherson  v.  Boudreau, 
48  La.  Ann.  431,  19  So.  550;  Randall  v.  Rhode  Island  Lumber  Co.,  20  R.  I.  627; 
Westmghouse  v.  German  Nat.  Bank,  196  Pa.  St.  249,  46  Atl.  380. 

16.  In  Poirier  v.  Moms,  20  Eng.  L.  &  Eq.  103,  Lord  Campbell,  C.  J.,  said: 
"There  is  nothing  to  make  a  difference  between  this  and  a  common  case  where 
a  bill  is  taken  as  security  for  a  debt,  and  in  that  case  an  antecedent  debt  is  a 
sufficient  consideration."  Crampton,  J.,  said:  "Whether  the  bill  was  a  col- 
lateral security,  or  whether  it  has  the  effect  of  suspending  the  payment  of  the 
antecedent  debt,  is  quite  immaterial." 

16.  See  post,  §§  831a,  831d,  831c. 

17.  Peacock  v.  PurceU,  14  C  B.  (N.  S.)  728.  See  §§  971,  1276;  Betterton  y. 
Roope,  3  Lea,  220. 


t)88    BILLS    AND    NOTES    AS    SECURITY,    AND    SECURED   §§  829,  829a 

Adopting  the  view  of  Byles,  J.,  we  might  say  as  well,  that  "as  the 
indorsee  has  the  duties,  so  he  has  the  rights  of  a  holder."  And  as  those 
duties,  as  indicated  by  Willis,  J.,  do  not  depend  upon  whether  or  not 
there  is  a  suspension  of  the  original  debt,  neither  should  the  rights  of 
the  holder  turn  upon  that  question. 

§  829.  (4)  In  the  fourth  place,  when  there  is  no  novation  of  pre- 
existing debt,  and  no  securities  surrendered. — When  the  pre- 
existing debt  has  fallen  due,  and  there  is  no  novation  of  it  l\y  the  ex- 
ecution of  a  new  security,  and  no  surrender  of  other  securities  held 
for  its  payment,  the  question  whether  or  not  the  bill  or  note  then 
transferred  as  collateral  is  received  upon  a  consideration  in  the  usual 
course  of  business,  may  be  more  difficult  of  solution. 

§  829a.  When  there  is  express  agreement  for  delay. — If  there 
is,  then,  an  express  agreement  on  the  part  of  the  creditor  to  forbear 
suit  until  the  collateral  should  mature,  or  until  he  should  have  en- 
deavored to  realize  from  it,  there  is  no  doubt  that  the  case  would  then 
come  within  the  principle  of  Goodman  v.  Simonds,  and  that  the  agree- 
ment to  delay  would  constitute  the  transferee  a  holder  for  value  in 
the  usual  course  of  business.  And  it  has  been  so  held  in  many  cases,  ^^ 
and  recognized  as  a  sound  principle  in  others.^*  As  said  by  Redfield, 
C.  J.:  -^  "The  transaction  possesses  both  the  cardinal  ingredients  of  a 
valuable  consideration;  it  is  a  detriment  to  the  promisee,  and  an  ad- 
vantage to  the  promisor.  And  it  is  no  satisfactory  answer  to  say 
that  the  party  who  takes  such  a  bill  or  note  is  in  the  same  condition 
he  was  before.  This  is  by  no  means  certain.  He  has  for  the  time  fore- 
gone the  collection  of  his  debt,  and  in  such  matters  time  is  of  the 
essence  of  the  transaction.  And  the  debtor  thereby  gains  time — 
it  may  be  more  or  less — but  of  necessity,  some  time  is  thereby  gained ; 
and  in  such  matters  this  is  always  accounted  an  advantage,  and  is 

18.  Farmer  v.  First  Nat.  Bank,  89  Ark.  132,  115  S.  W.  1141,  131  Am.  St.  Rep. 
79;  Mix  v.  National  Bank,  91  111.  20;  Worcester  Nat.  Bank  v.  Cheney,  87  111.  602; 
Manning  v.  McClure,  36  111.  498;  Deere  v.  Marsden,  88  Mo.  512;  Paulette  v. 
Brown,  40  Mo.  54;  Farmers'  Nat.  Bank  v.  McCall,  25  Okl.  600,  106  Pac.  866: 
Atkinson  v.  Brooks,  26  Vt.  574.  See  ante,  §  827.  In  Reid  v.  Bank  of  Mobile,  70 
.\la.  210,  and  Fenonille  v.  Hamilton,  35  Ala.  319,  it  was  held  that  one  who  takes 
negotiable  paper  as  collateral  security  for  the  payment  of  a  pre-existing  or  an- 
tecedent debt,  is  not  a  purchaser  for  value  in  the  usual  course  of  trade,  though 
indulgence  or  forbearance  is  granted. 

19.  Swift  V.  Tyson,  16  Pet.  1  (1842). 

20.  Atkinson  v.  Brooks,  26  Vt.  574. 


§  SSO  COLLATERAL   SECURITY  989 

often  of  the  most  vital  consequence  to  the  debtor."  The  doctrine  was 
enunciated  with  great  force  by  Story,  J.,  in  Swift  v.  Tyson,^^  though 
the  question  was  not  there  distinctly  presented,  as  it  is  in  the  case 
just    quoted. 

§  830.  When  collateral  is  given  for  overdue  debt,  is  there  implied 
agreement  for  delay  until  collateral  matures? — But  when  the  col- 
lateral bill  or  note  is  simply  indorsed  by  the  debtor  to  the  creditor, 
who  holds  his  overdue  paper,  and  no  express  agreement  is  entered 
into,  the  question  whether  or  not  the  indorsee  is  a  holder  for  value 
has  been  thought  to  turn  upon  the  question  whether  or  not  there  is  an 
implied  suspension  of  the  prior  debt  until  the  collateral  should  be- 
come due.^^  If  there  is  an  agreement  for  forbearance  of  the  prior 
debt,  it  is  as  binding  when  implied  as  when  expressed  in  terms;  and 
in  the  United  States,  as  well  as  in  England,  the  doctrine  is  settled 
that  the  indorsee  of  the  bill  or  note  of  a  third  party,  who  takes  it  on 
account  of  a  precedent  debt,  takes  it  by  implication  as  conditional 
payment,  and  the  antecedent  debt  is  not  extinguished,  but  suspended 
until  the  bill  or  note  given  in  conditional  payment  has  fallen  due.^^ 

21.  16  Pet.  1. 

22.  Manning  v.  McClure,  36  111.  489.  See  also  Pitts  v.  Foglesong,  37  Ohio 
St.  679;  HotchkisH  v.  Plaster  Co.,  41  W.  Va.  357,  23  S.  E.  576,  text  cited. 

23.  See  chapter  XXXIX,  on  Conditional  and  Absolute  Payment,  vol.  II,  §  1269 
e.t  seq.;  Blanchard  v.  Stevens,  3  Cush.  168  (1849).  The  court  thought  that  the 
note  was  taken  in  payment  of  a  pre-existing  debt,  but  .said,  per  Dewey,  J.:  "If, 
however,  the  case  had  been  one  of  a  note  taken  as  collateral  security,  it  is  difficult 
for  us  to  perceive  any  sound  reason  for  a  different  result.  All  of  the  cases,  those 
of  the  New  York  court  inclusive,  concur  in  this,  that  if  the  party  receiving  the 
note  parts  with  anything  valuable,  he  is  entitled  to  enforce  the  payment  of  the 
note,  irrespective  of  the  equities  as  between  the  original  parties.  But  may  you 
not  as  well  show  a  legal  consideration  by  showing  forbearance  to  act  as  by  show- 
ing an  act  done?  A  damage  to  the  promisee  is  all  that  is  necessary  to  show  a 
consideration  for  a  promise;  and  ought  not  the  same  rule  to  apply  in  protection  of 
a  note  transferred  to  him?  If  the  party  had  not  received  the  note  as  collateral 
security,  he  might  have  pursued  other  remedies  to  enforce  the  security  or  payment 
of  his  debt.  He  might  have  obtained  other  securities  or  perhaps  payment  in 
money.  It  is  a  fallacy  to  say  that,  if  the  plaintiffs  are  defeated  in  their  attempt 
to  enforce  the  payment  of  these  notes,  they  are  in  as  good  a  situation  as  they 
would  have  been  if  the  notes  had  not  been  transferred  to  them.  That  fact  is 
assumed,  not  proved,  and,  from  the  very  nature  of  the  case,  is  matter  of  entire 
uncertainty.  The  convenience  and  safety  of  those  deahng  in  negotiable  paper 
seem  to  require  and  justify  the  rule  that  when  a  person  takes  a  negotiable  note  not 
overdue  or  apparently  dishonored,  and  without  notice,  actual  or  otherwise,  of 
want  of  consideration  or  other  defense  thereto,  whether  in  payment  of  a  precedent 
debt,  or  ai  collateral  security  for  a  debt,  the  holder  would  have  the  legal  right 


990  BILLS    AND    NOTES    AS    SECURITY,    AND    SECURED         §  831 

When  the  new  bill  or  note  so  received  falls  due,  the  creditor  may  bring 
suit  upon  the  original  debt,  or  upon  the  new  bill  or  note,  or  upon  both, 
at  his  election;  so  that  the  new  bill  or  note  is  a  collateral  in  any  case 
unless  there  be  an  express  agreement  or  a  special  usage,  as  in  some  of 
the  States,  that  the  acceptance  of  the  new  bill  or  note  shall,  prima 
facie,  extinguish  the  debt. 

§  831.  When  agreement  for  delay  cannot  be  inferred. — But  this 

to  enforce  the  same  against  the  parties  thereto,  notwithstanding  such  defense 
might  not  have  been  effectual  as  between  the  original  parties  thereto."  In  Man- 
ning V.  McClure,  36  111.  498,  Lawrence,  J.,  said:  "  It  is  said  that  the  position  of  the 
indorsee,  in  cases  of  this  kind,  is  not  different  from  that  of  a  general  assignee  for 
the  benefit  of  creditors.  What  we  have  already  said  shows  wherein,  in  our  opinion, 
the  difference  consists.  In  the  case  of  a  general  assignment,  there  is  no  ground  for 
presuming  forbearance  as  one  of  the  objects,  or  any  implied  agreement  to  forbear 
on  the  part  of  the  creditors.  Indeed,  these  general  assignments  are  ordinarily 
made  without  the  wish  or  knowledge  of  the  creditors,  and  where  the  object  is  not 
fraud  it  is  generally  to  secure  an  equal  distribution  of  the  assets.  The  assignee  is  a 
mere  trustee,  to  collect  what  may  be  due  the  assignor  for  the  benefit  of  his  credit- 
ors. We  have  stated  why,  in  our  opinion,  the  equity  is  with  the  indorsee,  to  wit, 
that  by  the  almost  universal  usage  of  the  world  of  commerce,  a  transaction  of  this 
sort  is  understood  by  the  parties  to  imply  further  forbearance  on  the  pre-existing 
debt,  and  thus  the  indorsee  is  lulled  into  a  false  security  by  means  of  an  instru- 
ment which  the  person  sought  to  be  held  liable  has  made  and  put  in  circulation. 
We  have  only  to  add,  that  the  line  of  decisions  which  we  follow  contributes  to  that 
stability  in  negotiable  paper  which  is  so  important  a  consideration  in  a  mercantile 
community.  To  accomphsh  this  has  been  the  constant  tendency  of  judicial  de- 
cisions, from  the  time  of  Chief  Justice  Holt  to  the  present  day.  The  value  of  this 
stabiUty  to  commerce  is  acknowledged  by  all  courts,  and  by  all  writers  upop 
mercantile  law.  It  is  easy  to  see  how  much  it  strengthens  credit  and  facilitates 
the  multitudinous  transactions  of  a  commercial  people.  We  are  led  then  by  what 
we  consider  the  equities  between  the  parties,  and  by  the  acknowledged  policy  of 
giving  stability  to  negotiable  paper,  to  hold  that  the  indorsee  of  such  paper,  before 
its  maturity,  taking  it  as  payment  or  security  for  a  pre-existing  debt,  and  without 
any  express  agreement,  shall  be  deemed  a  holder  for  a  valuable  consideration,  in 
the  ordinary  course  of  trade,  and  shall  hold  it  free  from  latent  defenses  on  the  part 
of  the  maker."  See  also  Worcester  Nat.  Bank  v.  Cheney,  87  111.  602,  approving 
the  text;  Bank  of  Commerce  v.  Wright,  63  Ark.  604,  40  S.  W.  81;  Benton  v.  Ger- 
man American  Nat.  Bank,  45  Nebr.  850,  64  N.  W.  227.  Contra,  Bowman  v. 
Van  Kuren,  29  Wis.  220,  Dixon,  C.  J.:  "We  forbear  to  express  any  opinion  fur- 
ther than  that  the  mere  transfer  of  the  collateral  raises  no  presumption  of  a  stipula- 
tion for  further  time  to  pay  a  pre-existing  debt,  which  will  operate  to  defeat  the 
equities  of  the  maker  or  indorser,  as  the  same  existed  before  the  transfer  was  made; 
which  is  all  it  is  necessary  to  decide  in  this  case."  In  Tennessee  it  is  held  that  the 
transfer  of  negotiable  paper  before  maturity  as  collateral  for  a  matured  debt,  is 
not  in  the  due  course  of  trade,  and  that  if  it  were  paid  before  such  transfer,  the 
holder  cannot  recover. 


§  831a  COLLATERAL   SECURITY  991 

implication,  that  the  precedent  debt  is  suspended  until  the  maturity 
of  the  collateral  bill  or  note,  only  arises  in  cases  where  the  latter  is 
equal  ^"^  or  greater  in  amount  than  the  debt  which  it  is  given  to  se- 
cure. ^^  And,  therefore,  where  the  collateral  is  less  in  amount,  there 
cannot  be  any  inferred  consideration  of  forbearance  or  delay  to  con- 
stitute the  holder,  on  that  ground,  a  holder  for  value. 

§  831a.  Becoming  a  party  to  the  instrument  transferred  as  col- 
lateral for  pre-existing  debt  alone  as  protecting  transferee  as  a  bona 
fide  holder. — When  there  is  no  novation  of  the  pre-existing  debt  or 
surrender  of  other  securities,  nor  any  express  or  implied  agreement 
for  forbearance  and  delay  as  to  the  pre-existing  debt,  the  transferee 
of  the  collateral  cannot  be  regarded  as  a  bona  fide  holder  for  value 
within  the  law  merchant,  unless  simply  becoming  a  party  to  the  bill 
or  note  transferred  as  collateral  security  for  the  debt,  and  the  existence 
of  the  debt,  are  sufficient  to  create  that  relation.  Many  cases  deny 
that  it  is.^^    The  general  and  better  rule,  however,  would  seem  to  be 


24.  See  Michigan  State  Bank  v.  Leavenworth,  28  Vt.  209. 

26.  See  Redfield  &  Bigelow's  Lead.  Cas.  203;  Hotchkiss  v.  Plaster  Co.,  41 
W.  Va.  357,  23  S.  E.  576,  text  cited. 

26.  Thompson  v.  Maddux,  117  Ala.  468,  23  So.  157;  Miller  v.  Boykin,  70  Ala. 
476;  Wagner  v.  Simmons,  61  Ala.  143;  Cullum  v.  Branch  Bank,  4  Ala.  21;  Ber- 
trand  v.  Barkman,  8  Eng.  (Ark.)  150;  Voas  v.  Chamberlain,  139  Iowa,  569,  117 
N.  W.  269,  19  L.  R.  A.  (N.  S.)  106,  130  Am.  St.  Rep.  331;  Noteboom  v.  Watkins, 
103  Iowa,  580,  70  N.  W.  766;  Nutter  v.  Stover,  48  Me.  169;  Bramhall  v.  Beckett, 
31  Me.  205;  Smith  v.  Bibber  (Me.),  19  Atl.  89;  Maynard  v.  Davis,  127  Mich.  571, 
86  N.  W.  1051;  First  Nat.  Bank  v.  Strauss  (Miss.),  6  So.  233;  Brainard  v.  Davis,  2 
Mo.  App.  490;  Leslie  v.  Bassett,  129  N.  Y.  523,  29  N.  E.  834;  Coddington  v.  Bay, 
20  Johns.  637;  Stalker  v.  McDonald,  6  Hill,  93;  Prentiss  v.  Graves,  33  Barb.  621 
(see  further  as  to  New  York  cases,  post,  §  831c);  Pitts  v.  Foglesong,  37  Ohio  St. 
679;  Roxborough  v.  Messic,  6  Ohio  St.  448;  Schaeffer  v.  Fowler,  111  Pa.  St.  458; 
Carpenter  v.  National  Bank  of  the  Republic,  106  Pa.  St.  171;  Maynard  v.  Na- 
tional Bank,  98  Pa.  St.  250;  Pennsylvania  Bank  v.  Prankish,  91  Pa.  St.  339; 
Ferris  v.  Tavel,  87  Tenn.  391;  Goslin  v.  Griffin,  85  Tenn.  737;  Napier  v.  Elam,  5 
Yerg.  108;  Prentice  v.  Xane,  2  Gratt.  262  (as  to  defenses  against  the  person  from 
the  holder  received  it);  Cook  v.  Helms,  5  Wis.  107.  In  Loewen  v.  Forsee,  137 
Mo.  29,  38  S.  W.  712,  59  Am.  St.  Rep.  489,  this  rule  was  reaffirmed,  following 
Goodman  v.  Simonds,  19  Mo.  107,  and  repudiating  Grant  v.  Kidwell,  30  Mo.  455. 
See  also  Fitzgerald  v.  Barker,  96  Mo.  665.  The  rule  was  apphed  to  a  warehouse 
receipt.  See  Wright  v.  Mississippi  Valley  Trust  Co.,  144  Mo.  App.  640,  129 
S.  W.  407,  and  Conrad  v.  Fisher,  37  Mo.  App.  413.  It  was  so  held  in  Porter  v. 
Andrus,  10  N.  D.  558,  88  N.  W.  567,  the  court  saying  that  a  different  question 
would  have  been  presented  had  the  transferees  acquired  the  note  by  guaranty  or 
indorsement,  where  prior  indorsements  had  been  made  of  the  note,  as  the  duty 


992  BILLS    AND    NOTES    AS    SECURITY,    AND    SECURED       i  83U 

that  adopted  by  thr  Supremo  C.'ourt  of  the  United  States,"  and 
followed  in  a  number  of  the  States,  declaring  that  a  holder  should  be 
considered  a  holder  for  value,  though  there  may  have  been  no  other 
consideration  than  a  transfer  of  the  instrument  as  collateral  security 
for  an  antecedent  debt.™    It  is  to  be  noticed,  however,  that  the  rulings 

would  havo  (U'voIv<m1  u|Kjn  the  phiinliffH  to  s*-**  that  such  prior  imlorHcn*  wt-n'  duly 
charged  by  demand  and  notice,  and  the  note-  protested  in  caae  of  nonpayment. 

27.  See  post,  §  H31h. 

28.  Payne  v.  Bensley,  8  Cal.  2(H);  .Murphy  v.  (lumaer,  12  Colo.  .\pp.  472,  dr) 
Pae.  0')!;  Walden  v.  DowninR  Co.,  4  C.a.  App.  .5.34,  Gl  S.  E.  1127;  Rockville  Nat. 
Hank  v.  Citizens'  CJjus  Li^ht  Co.,  72  (\)nn.  oHl,  4')  .\tl.  3G1;  Mann  v.  Merchants' 
Loan  &  Trust  Co.,  lt)()  111.  Apj).  224;  Pro<tor  v.  HiUdwin,  82  Ind.  37G;  Straughan 
V.  Kairchild,  SO  Ind.  59S;  Hlai-k  v.  First  .Nat.  Hank,  90  Md.  :iW,  fA  Atl.  H.S;  Stod- 
dard V.  Kimball,  ti  Cush.  4«i<J;  HIanehard  v.  Stev.ns,  3  Cuith.  H)2;  Chicoi)ee  Bank 
V.  Chaplin,  8  Mete.  (Maaa.)  40;  First  .\at.  Hank  v.  Huseh,  1()2  .Minn.  365,  113 
N.  W.  898;  Allaire  v.  Hartdhome,  1  Zabr.  tMi5;  Hrook  v.  Voiinest,  59  N.  J.  L.  103. 
59  .\m.  St.  Hep.  .078;  Fretwell  v.  Carter,  78  S.  C.  531,  59  S.  E.  039;  Third  Nat. 
Bank  of  Springfield,  Mtuw.,  v.  Nat.  Hank  of  Commerce  (Tex.  Civ.  App.),  139  S.  W. 
m->;  State  liunk  of  Chicago  v.  Holland  (Te.x.  Civ.  App.),  128  8.  W.  435;  .Martin 
V.  CJcrman  American  Nat.  Bank  (Tex.  Civ.  App.),  102  S.  W.  131;  Watz.lavzick  v. 
( )ppenheimer,  38  Tex.  Civ.  App.  3(Xi,  8.5  S.  W.  8,55;  Alexander  v.  Hank,  19  Tex. 
Civ.  App.  020,  47  S.  W.  840,  eiting  text;  May  v.  Martin.  32  Tex.  Civ.  App.  132, 
73  S.  \V.  840;  Atkinson  v.  Hnx)ks,  2t)  Vt.  .509;  American  Saving  Hank  &  Trust  Co. 
V.  Ilelgesen,  64  Wiish.  .54,  116  Pac.  837;  Mercantile  Hank  v.  Boggs,  48  W.  Va.  289, 
37  S.  E.  587;  Hotchkiss  v.  Plaster  Co.,  41  VV.  Va.  357,  23  S.  E.  .576,  citing  text. 
Palmer  v.  Richards,  1  Eng.  L.  A  F:(i.  529;  Story  on  Hills,  J  192.  In  Hirkett  v. 
Elward.  68  Kan.  205,  74  Pac.  IKM),  04  L.  R.  A.  .5<>H,  lO-l  Am.  St.  R.p.  40.'),  the 
court  said:  "The  rule  in  the  Fe<ieral  courts  an  well  an  in  those  of  England  and 
Canada  is  that  the  holder  of  a  negotiable  note  taken  as  collateral  security  for  a 
pre-existing  debt  is  a  holder  for  value  in  due  course  of  business,  and  aa  such  is 
protected  against  all  latent  equities  of  third  parties.  The  State  courts  that  have 
passed  upon  the  question  are  in  irreconcilable  conflict.  The  cases  are  collected 
in  volume  IV  of  the  American  and  Engli.sh  Encyclopedia  of  law,  second  edition, 
pages  209  to  203  and  in  volume  \TI  of  the  Cyclopedia  of  Law  and  Procedure,  pages 
932  to  935.  The  lists  there  given  indicate  with  substantial,  but  not  absolute  cor- 
rectness the  line  of  cleavage.  *  ♦  ♦  A  careful  examination  of  the  cases  cited  in  the 
lists  referred  to  discloses  that  in  the  following  states  the  rule  of  the  federal  courts 
has  been  adopted,  although  in  CaUfomia  and  Nevada  the  matter  is  affected  by 
statutory  provisions  that  the  acceptance  of  the  security  forfeits  a  right  to  attach: 
California,  Colorado,  Connecticut,  Georgia,  Illinois,  Indiana,  Louisiana,  Mary- 
land, Massachusetts,  Minnesota,  Nevada,  New  Jersey,  Rhode  Island,  South  Caro- 
lina, Texas,  Vermont,  and  West  Virginia.  Nebraska  also  is  now  committed  to  this 
doctrine:  Lashmett  v.  Prall,  2  Nebr.  (Unof.)  284,  96  N.  W.  152.  Such  citations 
further  show  that  in  the  following  states  the  rule  has  been  denied:  Alabama, 
Arkansas,  Iowa,  Kentucky,  Maine,  Michigan,  Mississippi,  Missouri,  New  Hamp- 
shire, New  York,  North  Dakota,  Ohio.  Pennsylvania,  Tennessee,  Virginia,  and 
Wisconsin.     North  Carolina  also  should  now  be  placed  in  this  list,  but  there  aa 


§  S3  la  COLLATERAL   SECURITY  993 

discussed  in  the  preceding  sections,  holding  that  a  holder  receives  a 
negotiable  instrument  for  value  on  being  taken  as  collateral  security, 
when  some  other  consideration  has  entered  into  the  transfer,  does  not 
necessarily  mean  that  in  the  absence  of  such  other  consideration,  the 
holder  would  take  the  instrument  subject  to  defenses.  For  instance, 
in  a  recent  Arkansas  case,^  the  court  referred  to  previous  cases  de- 
cided in  that  State,^  and  said  that  the  transfers  in  those  cases  were 
accompanied  by  other  transactions  or  promises,  which  the  court  held 
to  constitute  a  new  consideration,  and,  considering  the  question  herein 
discussed  as  squarely  presented  for  the  first  time  in  that  court,  held 
tliat  a  transferee  of  a  note;  merely  as  collateral  security,  is  a  holder  for 
value  in  due  course  of  business.^^ 

well  as  in  Tennessee  and  in  Virginia,  the  recent  adoption  by  the  legislature  of  a 
complete  cotie  relating  to  negotiable  instruments  is  held  to  have  changed  the 
rule."    See  infra,  under  Negotiable  Instrument  statute. 

29.  Exchange  Nat.  Bank  v.  Coe,  94  Ark.  3S7,  127  S.  W.  453. 

30.  Farmer  v.  First  Nat.  Rank,  SO  Ark.  132,  11.5  S.  W.  1141,  131  Am.  St.  Rep. 
79;  Bank  of  Commerce  v.  Wri-lvt,  (13  Ark.  004,  40  S.  W.  81. 

31.  In  Maifiand  v.  Citizens'  Nat.  Bank,  40  Md.  .'J4();  .\lvey  J.,  after  quoting 
Swift  V.  Ty.son  and  the  New  York  cases,  said:  "Sub.secjuently  the  ^doctrine  has 
been  mooteil  in  the  Supreme  Court  of  the  United  States,  upon  the  theory  that 
the  case  of  Swift  v.  Tyson  did  not  call  for  the  decision  of  the  broad  and  compre- 
hensive question,  whether  the  holder  of  a  negotiable  note,  received  simply  as 
collateral  .security  for  a  pre-e.visting  debt,  should  be  regarded  as  a  holder  for  value, 
and,  if  receive<l  honn  fule,  protected  against  antecedent  equities.  In  the  case  of 
Goodman  v.  Simon(l.><,  20  How.  343,  the  question  w:is  much  discussed,  and  though 
the  facts  of  that  ca.sc  did  not  re<iuire  the  expression  of  a  direct  opinion  ui)on  the 
subject,  yet  it  is  not  didicult  to  perceive  the  inclination  of  the  court  in  favor  of  the 
principle  of  their  former  decision;  as  they  take  care  to  fortify  it  by  showing  that 
it  is  in  accordance  with  the  decisions  in  England,  and  in  many  of  the  States  of  this 
country.  In  the  later  case  of  McCarty  v.  Roots,  21  How.  432,  439,  which  arose 
on  the  indorsement  of  an  accommodation  bill,  and  where  the  defendant  pleaded 
that  the  bill  has  been  delivered  to  the  plaintiff  by  the  indorser  as  collateral  security 
for  a  pre-existing  liability  of  the  indorser,  and  for  no  other  consideration,  upon 
demurrer  to  the  plea,  and  the  demurrer  being  sustained  by  the  court  below,  the 
Supreme  Court  held  the  demurrer  properly  sustained,  and  expressly  declared  that 
the  delivery  of  the  bill  to  the  plaintiff  as  collateral  security  for  a  pre-existing  debt, 
under  the  decision  of  Swift  v.  Tyson,  was  legal,  and  consequently  the  plaintiff 
was  entitled  to  recover.  The  principle,  therefore,  may  be  taken  to  be  established 
in  the  Supreme  Court,  and,  indeed,  in  the  entire  Federal  jurisdiction  of  the  coun- 
tr)';  as  upon  commercial  questions  the  State  adjudications  are  not  accepted  by  the 
Federal  courts  as  binding  rules  of  decision.  In  this  State  there  has  been  no  deci- 
sion of  the  appellate  court,  going  to  the  extent  of  maintaining  fully  the  doctrine 
of  the  cases  in  the  Supreme  Court,  to  which  we  have  referred.  In  the  case  of  the 
Cecil  Bank  v.  Ileald  ct  al.,  25  Md.  563,  this  court  helfl  that  a  bona  fide  holder  of 
negotiable  paper,  for  value,  without  notice,  will  be  protected  against  the  antece- 

63 


994  BILLS   AND    NOTES   AS   SECURITY,    AND   SECURED       §  831a 

Under  Ncgoliahle  Instrument  statute. — It  is  generally  concocled  that 
the  conflict  of  authority  discussed  in  the  preceding  sections  of  the 
text  has  been  settled  in  those  states  which  have  adopted  the  statute, 

dent  equities  existing  between  the  original  p:irtie8,  and  tliut  such  holder  is  entitled 
to  protection  where  he  has  received  the  paper  in  payment  of  an  antecedent  debt, 
regarding  such  debt  as  a  valuable  consideration;  and  the  case  of  Swift  v.  Tyson 
was  so  far  approved,  as  it  declared  tluit  the  receiving  of  negotiable  i)a|>er  in  i)ay- 
nicnt  of  a  pre-existing  debt  is  according  to  the  known  usu:d  courw  of  tnide  and 
business.  The  court,  however,  dedinetl  expressing  any  o{)ini()n  Uf)on  the  right  of  a 
holder  of  a  negotiable  instrument  receiveil  by  him  as  security  for  a  pre-existing 
debt.  The  case  of  Miller  v.  The  Farmers'  &  Mechanics'  Bank  of  C:irri)ll  County, 
30  Md.  392,  has  been  relieil  on  by  the  counsel  of  defendants,  as  nuiintaining  a 
doctrine  sfjmewhat  in  variance  with  that  maintiiinetl  in  Swift  v.  Tyson.  But  we 
are  not  of  that  opinion.  The  case  of  Miller  v.  The  Bank  was  the  ordinarj-  case  of  a 
bank  asserting  its  lien  upon  security  in  its  hands  for  the  i)ayment  of  balances  due 
from  its  customers.  According  to  the  law  of  the  land,  the  bank,  a  kind  of  factor 
in  pecuniary  tran.sactions,  was  entitled  to  a  hen  upon  all  the  securities  for  money 
of  its  customers  in  its  hands  for  its  mlvancea  to  such  customers,  in  the  ordinary 
course  of  business,  without  reference  to  the  true  ownership  of  such  securities,  if 
the  bank  was  without  knowledge  upon  the  subject  (Davis  v.  Howshcr,  5  T.  II. 
488;  Collins  v.  Martin,  1  Bos.  &  P.  64S;  Bamett  v.  Brandao,  6  M.  &  Gr.  G30);  and 
the  question  was,  whether  the  bank  had  received  the  note  from  its  customers  in  its 
usual  course  of  dealing  without  notice  of  the  true  ownership,  and  whether  any 
credit  had  been  given  on  the  faith  of  it.  There  being,  then,  no  adjudication  in  the 
State  to  restrict  the  ajjplication  of  the  principle  jus  maintained  in  the  decisions  of 
the  Supreme  Court  to  which  wc  have  referred,  we  have  no  hesitation  in  giving  to  it 
our  full  approval;  believing  it  to  be  supported  by  reason  and  the  usual  and  ordi- 
nary course  of  dealing  in  the  commercial  community,  n^  well  as  by  a  decided 
preponderance  of  judicial  authority.  Indeed,  so  well  established  is  the  principle, 
as  applicable  to  accommodation  paper,  that  we  find  Mr.  Parsons,  in  his  works  on 
Notes  and  Bills,  vol.  I,  p.  220,  stating  that  it  is  universjilly  concede<l,  that  the 
holder  of  an  accommodation  note,  without  restriction  a.s  to  the  mode  of  using  it, 
may  transfer  it,  either  in  payment  or  as  collateral  security  for  an  antecedent  debt, 
and  the  maker  will  have  no  defense.  See  also  Lord  v.  Ocean  Bank,  20  Pa.  St.  384. 
Applying  the  principle  just  stated  to  the  case  before  us,  there  can  be  no  doubt  of 
the  sufficiency  of  the  consideration  for  the  transfer  of  the  note  to  the  plaintiff, 
whether  it  was  as  collateral  security  for  a  pre-existing  or  a  contemporaneous  debt, 
or  to  secure  future  discounts  or  advances,  or  all  combined.  In  either  case,  the 
consideration  would  be  valuable  in  the  sense  of  the  rule  which  protects  the  holder 
of  negotiable  paper,  and  the  plaintiff  be  entitled  to  the  full  benefit  of  the  security, 
unless  mala  fides,  or  notice  of  such  facts  as  will  impeach  its  title  to  the  note,  be 
shown."  If  the  holder  obtained  notes  from  the  owner  by  fraud  and  used  them  as 
collateral  to  secure  a  debt  of  such  holder,  it  devolved  upon  the  pledgee  to  show  that 
he  took  them  in  good  faith,  for  value,  before  maturity,  and  in  the  usual  course  of 
business;  but  if  the  owner  parted  with  the  possession  of  the  papers  to  the  holder 
knowingly  and  voluntarily,  and  thereby  enabled  him  to  inflict  a  loss  either  upon 
the  owner  or  pledgee,  the  pledgee's  possession  would  be  prima  facie  evidence  of 
title,  and  he  would  be  presumed  to  have  acquired  the  notes  in  good  faith,  for  value, 


§  X;.;H)  COLLATERAL    SECURITY  995 


SO  that  it  is  the  rule  in  those  states,  in  view  of  the  several  provisions 
of  the  statute,^^  that  one  who  takes  a  note  merely  as  collateral  security 
for  a  pre-existing  debt  is  regarded  as  a  holder  for  value.^^ 

§  831b  In  the  United  States  Supreme  Court  the  question  under 
consideration  was  fairly  presented,  and  it  was  called  on  to  determine 
whether  the  transfer  of  a  negotiable  note,  merelij,  as  collateral  security 
for  a  pre-existing  debt,  was  such  a  negotiation  as  excluded  defenses 
which  were  available  between  anterior  parties.  In  the  case  referred 
to  it  appeared  that  the  Brooklyn  City  and  Ne%nown  Railroad  Com- 
pany executed  and  delivered  to  II.  k  J.  a  certain  note  for  the  purpose 
only  of  raising  money  for  the  company;  and  that  H.  &  J.  indorsed 
it  in  blank,  and  transferred  it  as  security  for  a  call  loan  to  the  National 
Bank  of  the  Republic.  The  court  sustained  the  right  of  the  bank  to 
recover  the  railroad  company,  notwithstanding  the  fact  that  the 
transaction  was  in  New  York,  in  which  State  the  decisions  of  the 
courts  are  in  principle,  opposed  to  such  right.  And  the  opinions  of 
Judges  Harlan,  Clifford,  and  Bradley  are  most  learned  and  able  ex- 
positions of  tho  subject  in  all  of  it-^  nimifications.-^» ^ 

before  maturity,  in  the  usual  course  of  business,  and  without  notice.    Kittler  v. 
Studbaker,  113111.Ai)p.342. 

32.  Appendix,  sees.  2r,,  20,  27,  30,  52,  101.  ^  ^    ,on    m  r^   n    a    irfi- 

33.  Mdton  V.  Pensacola  Bank  &  Trust  Co.,  190  Fed  26,  111  C.  C  A  66 
Inre  Hopper-Morgan  Co.,  154  Fed.  249;  State  Bank  of  Ilalstad  v.  B.lstad  (I  nva), 
13rrN   W  'o4-  Voss  V.  Chamberlain,  139  Iowa,  560,  117  N.  W.  200,  19  L.  R^  A. 

N  S  )    go:  3i  Am.  St.  Rep.  3.1;  Campbell  v.  Fourth  Nat.  Bank,  137  Ky.  5.>.. 

-0  S  W  14-  Wilkins  V.  U-sher,  123  Ky.  606,  97  S.  W.  37;  National  Bank  of 
Clmele  in  it.  Loui.s  v.  Morri.  156  Mo.  App.  43,  ^^o  ^^^^'^J^^  ^^'-S,- 
KaufTmann,  93  N.  Y.  S.  609.  104  App.  Div.  442;  Petne  v.  Miller,  67  N.  Y.  S^  1042 
Vt  Ann  Div  17  affirmed  173  N.  Y.  596,  65  N.  E.  1121;  Brewster  v.  Shrader,  57 
N  y's.  So,' 26  mI^HsO;  Brooks  v.  Sullivan,  129  N.  C.  190,  39  S.  E.  822,  Payne 

V  7p11  qs  Va  294  36  S.  E.  379.    To  the  extent  of  the  amount  due  lum.    Graham 

V  sill's  'nek  6.,,  118  N.  W.  726.  See  j>o^,  under  §  832a.  The  fact  that  a 
demand  'note  was  payable  to  a  bank  did  not  P-ent  >ts  becommg  a^^^^^^^^^^  for 
value  as  against  an  accommodation  maker.  Lowell  v.  Biskford,  201  Mass.  543,  88 
N  E  T.  An  agreement  to  extend  the  time  for  paj^ent  of  a  debt  is  amp^o  con- 
sideration  within  sections  25  and  27  of  the  statute  for  an  agreement  m  a  coUatcral 
note  that  notes  pledged  may  be  held  to  secure  any  other  debt.  Amencan  N  at. 
Balv  J.  S.  Minor  &  Son,  135  S.  W.  278,  142  Ky.  792.  This  rule  is  not  affected 
by  tclion  54  of  the  statute.  Felt  v.  Bush  (Utah),  126  Pac  688.  One  who  has 
advanc^to  the  payee  of  a  check  the  full  amount  of  the  check,  is  entitled  o  a 
u";  u"on  he  paper'for  the  full  amount  thus  advanced,  and  under  the  st.^  e 
must  be  deemed  to  be  a  holder  for  value  to  the  extent  of  the  hen.  Blairsville 
Nat  Bank  V.  Crabbs,  44  Pa.  Super.  Ct.  454.  ,,„„„,    „    i 

34.  Mroad  Co.  v.  National  Bank   102  U.  S.  (12  Otto)  25  (1880),  Harlan, 


996  BILLS   AND    NOTES   AS    SECURITY,    AND    SECURED      §  831c 

§  831c.  New  York  decisions. — In  the  UnulinR  case  in  New  York, 
on  tiie  question  under  consideration,  it  was  held  that  to  constitute 
the  transferee  of  a  negotiable  instrument,  a  purchaser  "for  value," 
in  the  sense  of  the  law  merchant,  so  as  to  protect  him  against  de- 
fenses available  against  his  transferrer,  he  must  pay  something  in 
money  or  property;  some  subsisting  debt  must  be  satisfied  or  sus- 
pended, or  3ome  new  responsibility  must  be  incurred;  and  that  the 
mere  transfer  of  the  paper  as  collateral  security  for  an  antecedent 
debt  or  liability  does  not,  per  se,  place  the  transferee  upon  the  superior 
footing  of  a  holder  for  value.^^     Many  phases  of  the  question  are 

J.,  pursuing  the  views  set  forth  in  sections  828,  831,  and  saying:  "We  are  of 
o|)inion  that  the  undertaking  of  the  bank  to  fix  the  liability  of  prior  parties,  by 
due  presentation  for  payment,  and  due  notice  in  ca.se  of  nonpayment — an  under- 
taking necessarily  implied  by  becoming  a  party  to  the  instrument — was  a  sufficient 
consideration  to  protect  it  against  equities  existing  between  the  other  parties,  of 
which  it  had  no  notice.  It  assumed  the  duties  and  responsibiUties  of  a  holder  for 
value,  and  should  have  the  rights  and  privileges  pertaining  to  that  position.  ♦  •  * 
Our  conclusion,  therefore,  is,  thr.t  the  transfer  before  maturity  of  negotiable  paper, 
as  security  for  an  antecedent  debt,  merely,  without  other  circumstances,  if  the  paper 
be  so  indorsed  (hat  the  holder  becomes  a  party  to  (he  instrument,  although  the  transfer 
is  without  express  agreement  by  the  creditor  for  indulgence,  is  not  an  imi)roper 
use  of  such  paper,  and  is  as  much  in  the  usual  course  of  commercial  business  as  its 
transfer  in  the  payment  of  .such  debt."  ClifTord,  J.,  said:  " Bills  and  notes  of  the 
kind  indorsed  in  blank,  or  payable  to  bearer,  when  transferred  to  an  innocent 
holder,  create  the  same  liability  as  if  indorsed  at  the  time  of  the  transfer."  Brad- 
ley, J.,  said:  "Security  for  the  payment  of  a  debt  actually  owing,  is  a  good  con- 
sideration, and  sufficient  to  support  a  transfer  of  property.  When  such  transfer 
is  made  for  such  purpose  it  has  due  elTect  as  a  complete  transfer,  according  to  the 
nature  and  incidents  of  the  property  transferred.  WTien  it  is  a  promi.ssor>'  note  or 
bill  of  exchange  it  has  the  effect  of  giving  absolute  title  and  of  cutting  off  prior 
equities,  provided  the  ordinary  conditions  exist  to  give  it  that  effect.  If  not 
transferred  before  maturity,  or  in  due  course  of  business,  then,  of  course,  it  cannot 
have  such  effect.  But  I  think  it  is  well  shown  in  the  principal  opinion  that  a 
transfer  for  the  purpose  of  securing  a  debt  is  a  transfer  in  due  course."  While  the 
courts  of  Tennessee  hold  contra  on  the  main  proposition,  yet  in  that  State  it  has 
been  held  that  the  transfer  of  notes  is  for  value  when  made  as  collateral  security 
for  a  pre-existing  debt,  upon  consideration  of  the  grant  of  a  definite  extension  of 
the  time  for  the  payment  of  such  debt.  Atlanta  Guano  Co.  v.  Hunt,  100  Tenn.  89, 
42  S.  W.  4S2.    See  also  Scherer  &  Co.  v.  Everest,  168  Fed.  822. 

35.  Bay  v.  Coddington,  5  Johns.  Ch.  54  (1821);  affirmed  in  Coddington  v. 
Bay,  20  Johns.  637;  approved  in  Francia  v.  Joseph,  3  Edw.  Ch.  182  (1838) ;  Stalker 
V.  McDonald,  6  Hill,  93  (1848);  Phoenix  Ins.  Co.  v.  Church,  81  N.  Y.  222  (1880); 
Rosa  v.  Brotherton,  10  Wend.  85  (1833);  Ontario  Bank  v.  Worthington,  12  Wend. 
600  (1834);  Payne  v.  Cutler,  13  Wend.  605  (1835);  Wardell  v.  Howell,  9  Wend. 
(N.  Y.)  173;  Laurence  v.  Clark,  36  N.  Y.  128  (18G7);  Rochester  Printmg  Co. 
V.  Loomis,  45  Hun,  93.    See  Bumham  v.  Merchants'  Bank,  92  Wis.  277,  66  N.  W. 


§  831c  COLLATERAL    SECURITY  997 

presented  in  the  eases  in  that  State;  and  the  transferee  has  been 
declared  to  be  entitled  to  protection  as  a  bo?ia  fide  holder  for  value 
in  the  following  instances:  (1)  Where  the  collateral  note  was  taken 
for  a  loan  contracted  on  the  faith  of  its  transfer;  ^^  (2)  where  the 
transferee  of  the  note  surrendered  a  security  for  the  antecedent  debt ;  " 
(3)  where  he  received  the  note  in  payment  of  a  previous  note  which 
was  surrendered  and  canceled;  ^  (4)  where  he  received  the  note  as 
a1)solute  payment  of  pre-existing  debt  and  not  merely  as  security;  ^^ 

olO;  Leslie  v.  Bassett,  129  N.  Y.  523,  29  N.  E.  834.  See  the  new  Negotiable 
Instrument  Law  of  New  York,  §  51,  which  declares  that  "An  antecedent  or  pre- 
existing debt  constitutes  value;  and  is  deemed  such  whether  the  instrument  is 
payable  on  demand  or  at  a  future  time." 

36.  Williams  v.  Smith,  2  Hill,  301  (1842);  Bank  of  New  York  v.  Vanderhorst, 
32  N.  Y.  553  (18G5);  Bookheim  v.  Alexander,  64  Hun,  459,  19  N.  Y.  Supp.  776. 

37.  Bank  of  Salina  v.  Babcock,  21  Wend.  499  (1839),  Nelson,  Ch.  J.:  "The 
court  ought  not  to  speculate  about  the  probability  of  reviving  these  canceled 
st'C'uritics  in  ca.se  the  paper  upon  the  strength  of  which  they  were  canceled  turn 
out  to  be  unavailable."  Park  Bank  v.  Watson,  42  N.  Y.  490  (1870);  Phoenix 
Ins.  Co.  v.  Church,  81  N.  Y.  222;  Goodwin  v.  Conklin,  So  N.  Y.  21  (1881);  Ayrault 
v.  McQueen,  32  Barb.  305.  In  Stettheim  v.  Myer,  33  Barb.  215,  a  security  was 
surrendered  and  part  cash  paid.    Farrington  v.  Frankfort  Bank,  24  Barb.  554. 

33.  Pratt  v.  Coman,  37  N.  Y.  440  (1868);  Brown  v.  Leavitt,  31  N.  Y.  113 
(1SG5);  Clothier  v.  Adriance,  51  N.  Y.  326  (1873);  some  security  seems  to  have 
bfon  surrendered  with  the  old  one.  Youngs  v.  Lee,  12  N.  Y.  551.  Held,  holder 
for  value  to  extent  of  note  surrendered.  Day  v.  Sauders,  1  Abb.  Ct.  App.  Dec. 
49.');  Paddon  v.  Taylor,  44  N.  Y.  371  (1871).  The  acceptance  of  a  letter  of  credit 
in  payment  of  an  indebtedness,  for  which  he  had  receipted  in  full,  and  had  there- 
upon relinquished  his  then  right  to  legally  enforce  his  claim  for  such  indebtedness, 
constitutes  such  a  party  a  bona  fide  holder  for  value,  and  the  defense  that  the  letter 
of  credit  had  been  obtained  by  the  original  payee  upon  false  and  fraudulent 
representations,  cannot  avail  against  such  holder  for  value.  See  Johannessen  v. 
Munroe,  9  App.  Div.  409,  41  N.  Y.  Supp.  586;  Tompkins  County  Nat.  Bank  v. 
Bunnell  &  Eno  Co.,  8  App.  Div.  90,  40  N.  Y.  Supp.  411. 

39.  Bank  of  Sandu.sky  v.  Scovillc,  24  Wend.  115  (1840),  Bronson,  J.;  Bank 
of  St.  Albans  v.  Gilliland,  23  Wend.  311  (1840),  Nelson,  Ch.  J.;  Phoenix  Ins. 
Co.  V.  Church,  81  X.  Y.  226  (ISSO),  Andrews,  J.,  saying:  "That  the  actual  ex- 
tinguishment and  discharge  of  a  prior  debt  upon  the  transfer  of  a  note  of  a  third 
person  by  the  debtor  to  the  creditor  is  a  parting  with  value  by  the  former,  was 
hold  in  Bank  of  St.  Albans  v.  Gilliland,  and  Bank  of  Sandusky  v.  Scoville.  If 
the.se  cases  are  in  any  respect  inconsistent  with  prior  or  subsequent  decisions  of  the 
court,  the  inconsistency  is  to  be  found  in  the  conclusion  that  the  prior  debts  were 
extinguished  by  the  transactions  in  those  cases:  a  conclusion  which  it  may  be 
thought  was  reached  upon  evidence  which,  if  the  dealings  had  been  between 
individuals,  would  not,  according  to  other  cases,  have  been  sufficient  to  estabhsh 
an  extinguishment."  Gould  v.  Segee,  5  Duer,  260;  Mayer  v.  Mode,  14  Hun,  155 
(1878).  In  New  York  Marbled  Iron  Works  v.  Smith,  4  Duer,  377  (1855),  Oakley, 
Ch.  J.,  said:  "Since  our  judgment  in  Wliite  v.  Springfield  Bank,  3  Sandf.  7, 


[)\  BILLS   AND    NOTES   AS   SECUUITY,    AM*    sii  IkKI)      §  S-ilO 


10 


(5)  vvliere  he  received  the  note  with  a  valid  aRrti  iiit  ul  Inr  ixteiisioii 
of  time,  or  with  an  a^reeraent  not  to  sue  upon  a  pre-existing  tUht; 
(0)  where  he  received  the  note,  paying  part  cash,  and  applying  residue 
in  payment  of  a  pre-existing  debt;  *^  (7)  where  hi'  received  the  note  in 
part  payment  of  the  pre-existing  del)t,  surrendering  old  notes  and 
taking  new  note  for  balance;  '-  (8)  and  where  he  received  the  note, 
and  discontinued  proceedings  upon  an  execution.'^ 

And  the  transferee  has  been  held  not  entitled  to  protection  iis  a 
purchaser  for  value:  (1)  Where  tlie  note  transferred  w;us  hypothe- 
cated as  security  for  a  pre-existing  debt;  **  (2)  where  the  note  was 
transferred  as  collateral  security,  and  tliere  was  an  agreement  for 
forbearance  and  the  surrender  of  a  collateral  note  previously  held;  *"* 
(3)  where  the  note  was  transferred  on  account  of  a  precedent  debt 
(an<l  a  dishonored  check  surrendered),  with  no  indication  that  it  was 
taken  in  absolute  payment  beyond  that  of  a  receipt  for  it  in  pay- 
ment; '"'  (4)  where  a  time  draft  was  fraudulently  diverted  in  payment 

justified  as  it  la  by  the  prior  de<i8ion8  of  the  Supreme  Court  in  the  Bank  of  Sulina 
V.  Rubcock,  21  VVcncI.  400;  Hunk  of  Siindusky  v.  Scovillc,  24  W.nd.  115,  and 
H;ink  of  St.  Albuna  v.  Gillil:ind,  23  Wend.  311,  the  law,  :it  Unisl  in  this  court, 
must  be  considered  as  settled,  that  the  rtalisfa(tii>n  of  a  pr»c.-<lent  debt  is  as  truly 
a  valuable  consideration  for  the  transfer  of  a  negotiable  bill  or  note  aa  the  advance 
in  cash  of  its  amount  at  the  time  of  the  transfer." 

40.  Merchants'  &  Farmers'  liank  v.  Wexson,  42  N.  Y.  43S  (1870).  In  Gmcers' 
Hank  of  r.-nfield,  7  Hun.  270  (1S7))),  it  wxs  held  that  su-spending  pre-existing 
debt  and  extending  time  protected  t he  t  ransf eree  as  a  purch!us«T  for  value. 

41.  Meclianics'  &  Traders'  Nat.  Bank  v.  Crow,  0()  N.  Y.  S.")  (1S75). 

42.  Chrysler  v.  Renois,  43  N.  Y.  209  (1870);  W'ecma  v.  Shaughneaey,  70  Hun, 
17").24N.Y.Supp.271. 

43.  Boyd  v.  Cummings,  17  N.  Y.  101  (1858). 

44.  Stalker  v.  McDonald,  6  Hill,  93  (18-18).  See  also  Webster  v.  Van  Steon- 
burnh,  46  Barb.  312;  Chcsbrough  v.  Wright,  41  Barb.  2S;  Ontario  Bank  v.  Worth- 
in^iton,  12  Wend.  600. 

45.  Francia  v.  Joseph,  3  Edw.  Ch.  182  (1838). 

46.  Phoenix  Ins.  Co.  v.  Clnirch,  81  N.  Y.  218  (1S80);  Potts  v.  Mayer,  74  N.  Y. 
594  (1878).  In  Payne  v.  Cutler,  13  Wend.  605  (1835),  the  note  was  charged  up 
in  an  account  as  payment,  but  the  transferee  was  held  not  to  be  a  holder  for  value. 
In  Buhrman  v.  Baylis,  14  Hun,  608  (1878),  the  note  was  taken  in  payment  of  a 
pre-existing  debt,  but  the  transferee  was  held  not  a  bona  fide  holder  for  value, 
partly  upon  the  ground,  as  it  would  seem,  that  he  was  chargeable  with  notice  of 
circumstances  affecting  its  validity.  In  Schepp  v.  Carpenter,  51  N.  Y.  602  (1873), 
Johnson,  Comr.,  said:  "The  existence  of  the  debt  from  Church  to  the  plaintiff 
was  a  sufficient  consideration  between  them  to  sustain  a  promise  to  pay  it  or  a 
transfer  of  property  to  secure  its  payment,  and  according  to  the  doctrine  which 
has  prevailed  in  this  State  for  many  years,  to  sustain  the  transfer  of  a  note  made 
for  the  debtor's  accommodation  and  general  benefit.    When,  however,  an  accom- 


§  832  COLLATERAL   SECURITY  999 

of  a  past-due  debt;  *''  (5)  where  the  note  was  indorsed  by  the  debtor 
of  a  call  loan,  with  agreement  for  a  little  delay,  but  with  no  definite 
extension  of  time;  *^  (6)  and  where  the  note  was  taken  in  conditional 
payment,  and  suit  on  pre-existing  debt  dismissed.^^  To  reconcile  the 
New  York  decisions  is  impossible. 

§  832.  When  instrument  is  transferred  in  absolute  payment. — 
There  is  no  doui)t,  we  think,  that  if  the  paper  be  indorsed  in  pay- 
ment of  a  pre-existing  de])t,  the  purchaser  is  protected  against 
equities,^  though  there  are  authorities  which  hold  otherwise. ^^ 

modatioD  note  is  made  for  a  specific  purp>08e,  and  has  been  diverted  to  some  other 
purpose,  the  rule  is  different,  and  the  party  asserting  a  title  to  it  must  show  him- 
self to  be  a  bona  fide  holder." 

47.  Moore  v.  Ryder,  6.^3  N.  Y.  438  (1875). 

48.  Atlantic  Nat.  Bank  v.  I>anklin,  .5.5  N.  Y.  23.5  (1873). 

49.  Wardtll  v.  Howi-11,  9  Wind.  (N.  Y.)  173  (1832).  In  Rosa  v.  Brotherton, 
10  Wend.  85  (1833),  Savano,  Ch.  J.,  giving  the  opinion  of  the  court,  said:  "The 
h(i!(lcr  of  a  note,  negotiable  upon  its  face,  who  receives  it  in  payment  of  a  pre- 
cedent debt,  or  respon.sibility  incurred,  takes  it  subject  to  all  the  equities  existing 
between  the  original  parties."  But  this  is  no  longer  the  rule  in  New  York,  as 
will  be  seen  from  more  recent  decisions  already  cited. 

60.  Sec  ante,  §  184.  Swift  v.  Tyson,  16  Pet.  1;  Hadcn  v.  Lehman,  83  Ala.  243; 
Murks  V.  First  Nat.  Bank,  79  Ala.  5.50;  Reid  v.  Bank  of  Mobile,  70  Ala.  210;  May- 
berry  v.  Morris,  02  Ala.  UG;  Thompson  v.  Maddux,  117  Ala.  4CS,  23  So.  157; 
Barney  v.  Earlo,  13  Ala.  106;  Tabor  v.  Merchants'  Nat.  Bank,  48  Ark.  454,  citing 
the  text;  Rockville  Nat.  Bank  v.  Citizens  Ga.s  Light  Co.,  72  Conn.  581,  45  .\tl. 
361;  Brush  v.  Scribner,  11  0)nn.  388;  Bush  v.  Peckard,  3  Harr.  385;  Harrell  v. 
National  Bank  of  Commerce,  128  Ga.  504,  57  S.  E.  869;  Mix  v.  National  Bank, 
91  111.  20;  Worcester  Nat.  Bank  v.  Cheney,  87  III.  602;  Manning  v.  McClure,  36 
111.  490;  McKnight  v.  Kinsley,  25  Ind.  336;  Draper  v.  Cowles,  27  Kan.  484;  May  v. 
Quimby,  3  Bush,  96;  Norton  v.  Waite,  20  Me.  175;  Holmes  v.  Smyth,  16  Me.  177; 
Buchanan  v.  Savings  In.stitution,  84  Md.  430,  35  Atl.  1099;  Burroughs  v.  Ploof,  73 
Mich.  607;  Hanold  v.  Kayn.  64  .Mith.  446;  Bo.stwick  v.  Dodge,  1  Doug.413;  Wood- 
worth  &  Co.  V.  Carroll,  104  Minn.  65,  112  N.  W.  10.54;  Pollock  &  Bernheimer 
et  al.  V.  Simmons  Bros,  et  al.,  76  Miss.  198,  23  So.  626  citing  te.xt;  Emanuel  v. 
WTiite,  34  Miss.  56;  Fitzgerald  v.  Barker,  96  Mo.  665;  Crawford  v.  Spencer  (Mo.), 
4  S.  W.  713,  citing  the  text;  Hodges  v.  Black,  8  Mo.  App.  389  (semble);  Yellow- 
stone Nat.  Bank  v.  Gagnon,  19  Mont.  402,  48  Pac.  762;  Second  Nat.  Bank  v.  Sno- 
qualmic  Trust  Co.,  83  Nebr.  645,  120  N.  W.  182;  Smith  v.  Thompson,  67  Nebr. 
627,  93  N.  W.  678;  Mechanics'  Bank  v.  Chardavoyne,  69  N.  J.  L.  2.56,  55  Atl.  1080, 
101  Am.  St.  Rep.  701;  Mayer  v.  Heidelbach  (N.  Y.),  25  N.  E.  416,  citing  text; 
Youngs  v.  Lee,  18  Barb.  187,  12  N.  Y.  511;  Brown  v.  Leavitt,  31  N.  Y.  113;  Red- 
dick  v.  Jones,  6  Ired.  107;  Dunham  v.  Peterson,  5  N.  Dak.  414,  67  N.  W.  293,  cit- 
ing text;  CarUsle  v.  Wishart,  11  Ohio,  172;  Struthers  v.  Kendall,  5  Wright,  214; 

61.  Buhrman  v.  BayUs,  14  Hun,  608;  Weaver  v.  Borden,  49  N.  Y.  293.  See 
New  York  cases,  ante,  §  831c. 


1000         BILLS   AND    NOTES    AS    SECURITY,    AND    SECURED        §  832 

Under  Negotiable  Instrument  statute. — Under  the  statutory  declara- 
tion that  "an  antecedent  or  pre-existing  debt  constitutes  value,"  " 
it  is  generally  held  that  the  conflict  of  authority  is  settled  in  favor  of 
the  rule  that  the  extinguishment  or  part  satisfaction  of  an  imtecedent 
debt  in  consideration  of  the  transfer  of  negotiable  paper  constitutes 
the  transferee  a  holder  for  value.^' 


Bradsloy  v.  Deep,  88  Pa.  St.  420;  Bank  of  Republic  v.  Ciirrington,  5  R.  I.  515; 
Vuttcrlien  v.  Howell,  5  Sneed.  441  (but  see  anlc,  §  830,  and  note);  KinR  v.  Doolit- 
tle,  1  Head,  77;  Wormlcy  v.  Lowry,  1  Ilumphr.  408;  Trezevant  &  Cochran  v. 
R.  H.  Powell  &  Co.  (Tex.  Civ.  App.),  130  S.  W.  2.34;  Rowe  v.  Gohlman,  44  Tex. 
Civ.  App.  315,  98  S.  W.  1077;  Dixon  v.  Dixon,  21  Vt.  450;  Heath  v.  Silverhorn 
Lead  Min.  Co.,  39  Win.  147;  Knox  v.  ClifTord,  38  Wis.  G51;  Kello^K  v.  Faucher,  23 
Wis.  21 ;  Stcvenn  v.  Campbell,  13  Wis.  35.  But  not  when  purchased  before  matur- 
ity at  a  judicial  sale.  Tipton  v.  Christopher,  153  Mo.  App.  019,  110  S.  W.  1125. 
\\'here  the  claim  was  for  an  antecedent  debt,  which  was  not  released  on  receiving 
the  notes,  the  indorsees  were  not  bona  fide  holders  for  value.  Carpenter  v.  Hoad- 
Icy,  123  N.  Y.  S.  Gl,  138  App.  Div.  190.  Where  the  president  of  a  bank  was  the 
treasurer,  director  and  a  stockholder  of  a  manufacturinR  corporation,  and  the  cash- 
ier was  the  secretary  and  a  stockholder  of  the  corporation,  and  it  was  the  daily 
custom  of  these  corporations  that  notes  of  the  manufacturinp  corporation  were 
discounted  by  the  bank,  where  a  note  held  by  the  corporation  was  discounted  by 
the  bank  at  the  time  there  was  a  large  overdraft  by  the  corp»)ration  on  the  bank, 
the  question  whether  the  proceeds  of  the  discounted  note  were  usihI  in  discharpe 
of  the  overdraft  in  good  faith  and  without  notice  is  a  question  for  the  jury, 
in  view  of  the  interest  of  such  officers  in  both  corporations,  and  this  notwithstand- 
ing the  testimony  was  not  contradictetl.  Iowa  Nat.  Bank  v.  Sherman  A'  Bratager, 
19  S.  D.  238,  103  N.  W.  19,  117  Am.  St.  Rep.  941,  modifymg  on  rehearing  17 
S.  D.  396,  97  N.  W.  12,  106  Am.  St.  Rep.  778. 

52.  Appendix,  sec.  25. 

53.  Campbell  v.  Fourth  Nat.  Bank,  137  Ky.  555,  126  S.  W.  114;  Reeves  v. 
Letts,  143  Mo.  App.  128,  128  S.  W.  246;  Albert  v.  Hoffman,  117  N.  Y.  S.  1043, 
64  Misc.  87;  Mindlin  v.  Appclbaum,  114  N.  Y.  S.  908,  62  Misc.  300;  Ward  v. 
City  Trust  Co.,  102  N.  Y.  S.  50,  117  App.  Div.  130,  reversed  on  another  ground, 
192  N.  Y.  61,  84  N.  E.  585;  Petrie  v.  Miller,  67  N.  Y.  S.  1042,  57  App.  Div.  17, 
affirmed  173  N.  Y.  596,  65  N.  E.  1121;  Singer  Mfg.  Co.  v.  Summers,  143  N.  C. 
102,  55  S.  E.  522.  But  in  Harris  v.  Fowler,  110  N.  Y.  S.  987,  .59  Misc.  Rep.  523, 
the  court  said  that  this  statute  must  be  construed  to  mean  that  in  order  to  con- 
stitute value,  which  will  support  an  action  against  an  accommodation  maker  of 
a  check  which  has  been  fraudulently  diverted,  the  antecedent  debt  must  have 
been  canceled  and  discharged  on  the  acceptance  of  the  check,  or  the  time  of  pay- 
ment extended.  The  creditor  must  have  parted  with  something,  either  the 
debt  itself  or  the  right  to  sue  upon  it  for  some  determinate  period  by  the 
extension  of  the  time  of  payment.  Under  section  52  of  the  statute,  it  has  been 
held  that  check  received  by  the  payee  named,  in  payment  of  a  debt  due  from  the 
remitter  of  a  check,  makes  the  payee  a  holder  in  due  course  within  this  section. 
Boston  Steel  &  Iron  Co.  v.  Steuer,  183  Mass.  140,  66  N.  E.  646,  97  Am.  St.  Rep. 
426. 


§  832a  COLLATERAL   SECURITY  1001 

§  832a.  Amount  and  mode  of  recovery. — When  it  appears  that 
the  bill  or  note  was  acquired  by  the  holder  as  collateral  security  for 
a  debt,  and  he  is  deemed  entitled  to  recover  upon  it,  he  is  still  limited 
to  the  amount  of  the  debt  which  it  secures,  if  there  be  a  valid  defense 
against  his  transferrer,  being  regarded  as,  at  all  event,  a  bona  fide 
holder,  and  entitled  to  stand  upon  a  better  footing  only  pro  tanto}^ 
Thus  such  a  holder  could  recover  against  an  acconmaodation  party  no 
more  than  the  consideration  actually  advanced;  ^^  but  in  the  absence 
of  proof  he  will  be  deemed  to  have  advanced  the  full  amount  of  the 

64.  Bank  of  the  University  v.  Tuck,  96  Ga.  456,  23  S.  E.  467;  Hatcher  &.  Co. 
V.  Ind.  Nat.  Bank  of  Phila.,  79  Ga.  59,  citing  text;  Vallette  v.  Mason,  1  Smith,  89; 
First  Nat.  Bank  v.  Werst,  52  Iowa,  684;  Farmers'  State  Bank  of  Solomon  City 
V.  Blevins,  46  Kan.  536,  26  Pac.  1044;  Buchanan  v.  Savings  Institution,  84  Md. 
430,  35  Atl.  1099,  citing  te.\t;  Fisher  v.  Fisher,  98  Mass.  303;  Stoddard  v.  Kimball, 
6  Cush.  469;  Chicopee  Bank  v.  Chapin,  8  Mete.  (Mass.)  40;  Baker,  Admr.  v. 
Burkett,  75  Miss.  89,  21  So.  970;  Yellowstone  Nat.  Bank  v.  Gagnon,  19  Mont. 
402,  48  Pac.  762,  61  Am.  St.  Rep.  520,  citing  text;  Benton  v.  Sikyta,  84  Nebr.  808, 
122  N.  W.  61,  24  L.  R.  A.  (N.  S.)  1057;  Barmby  v.  Wolfe,  44  Nebr.  77,  62  N.  W. 
318;  Duncan  &  Sherman  v.  Gilbert,  30  N.  J.  L.  (5  Dutch.)  527;  Allaire  v.  Harts- 
home,  21  N.  J.  L.  6G5;  Continental  Nat.  Bank  v.  Bell,  125  N.  Y.  38,  25  N.  E. 
1070;  \Miite  v.  Springfield  Bank,  3  Sandf.  222;  Youngs  v.  Lee,  12  N.  Y.  551;  N. 
Y.  M.  I.  W.  V.  Smith,  4  Duer,  362;  Kaminski  v.  Schefer,  46  App.  Div.  170,  61 
N.  Y.  Supp.  771;  Williams  v.  Smith,  2  Hill,  301;  Handy  v.  Sibley,  46  Ohio  St.  15 
First  Nat.  Bank  v.  Fowler,  36  Ohio  St.  524;  Kingsland  v.  Pr>-or,  33  Ohio  St.  19 
Beckhaus  v.  Commercial  Nat.  Bank  (Pa.),  12  \\\.  72;  Memphis  Bethel  v.  Bank 
101  Tenn.  130,  45  S.  W.  1072;  Canadian  Bank  of  Commerce  v.  John  J.  Sesnon  Co. 
(Wash.),  123  Pac.  602;  Union  Nat.  Bank  v.  Roberts,  45  Wis.  373.  Story  on 
Notes  (7th  ed.),  §  195,  note.  WTiere  a  debtor  to  a  bank  executed  a  note  for  the 
amount  of  the  debt  and  the  casliier  pledged  the  note  as  collateral  security  for 
money  borrowed  by  it,  and  on  the  maturity  of  the  note  he  executed  a  renewal 
note,  and  the  cashier  promised  to  return  the  original  but  instead  pledged  the 
second  note  to  secure  another  loan  to  the  bank,  the  maker  of  the  notes  is  liable 
to  each  pledgee,  but  each  of  them  should  be  required  to  exhaust  first  its  other 
collateral  before  requiring  the  maker  of  the  notes  to  pay  to  both  of  them  anything 
more  than  the  amount  of  the  debt  for  which  the  original  note  was  given  and 
interest.  Citizens'  Bank  v.  Bank  of  Waddy,  126  Ky.  169,  103  S.  W.  249,  11  L.  R. 
A.  (N.  S.),  598,  128  Am.  St.  Rep.  282. 

55.  Duncan  &  Sherman  v.  Gilbert,  30  N.  J.  L.  (5  Dutch.)  527;  Atlas  Bank  v. 
Doyle,  9  R.  I.  276;  Maitland  v.  Citizens'  Nat.  Bank,  40  Md.  540;  Mechanics', 
etc..  Bank  v.  Bamett,  27  La.  Ann.  177;  Brown  v.  Callaway,  41  Ark.  420,  citing 
the  text;  Bell  v.  Bean,  75  Cal.  87;  Beacon  Trust  Co.  v.  Bobbins,  173  Mass.  261, 
53  N.  E.  868.  The  same  principle  apphcs  to  case  of  subpledge  where  subpledgce 
has  knowledge  that  the  party  from  whom  he  received  the  paper  held  it  simply 
as  a  pledge,  in  which  event  subpledgee  could  only  recover  the  amount  due  to  the 
ordinary  pledgee.  See  Security  Bank  v.  Kingsland,  5  N.  Dak.  263,  65  N.  W.  697; 
Berkeley  v.  Tinsley,  88  Va.  209.    See  ante,  §  757  et  seq. 


1UU2         BILLS    AND    NOTES   AS   SECURITY,    AND    SECURED         §  832 

paper.^^  In  Maryland,  however,  it  has  been  said  in  respect  to  an 
accommodation  note,  which  was  transferred  as  collateral  security 
merely:  "Such  being  the  case,  it  was  clearly  incumbent  upon  the 
plaintiff  to  show  what  debts  were  eml)raced  by  the  security,  and  the 
amount  due  thereon."  ^'  Although  the  debts  secured  by  the  collateral 
be  less  in  amount,  yet  if  there  be  no  defense  to  the  collateral  note, 
the  holder  may  in  general  recover  the  full  amount,  holding  the  bal- 
ance as  a  trustee.^     If  the  paper  has  been  pledged  to  a  bona  fide 

66.  Duncan  &  Sherman  v.  Gilbert,  30  N.  J.  L.  (5  Dutch.)  527.  "And  oral 
evidence  is  admissible  to  show  that  such  a  transaction,  however  absolute  in  form, 
is  merely  a  pledge;  and  the  consideration  and  purpose  of  the  transaction  may  be 
shown  in  the  same  way."  Riley  v.  Hampshire  County  Nat.  Bank,  164  Mass. 
482,  41  N.  E.  t)79;  Hank  of  Edgefield  v.  Farmers'  Co-operative  Mfp;.  Co.,  2  C  C.  A. 
637,  ')2  led.  98,  citing  text. 

67.  Maitland  v.  Citizens'  Nat.  Bank,  40  Md.  540  (1874),  Alvey,  J.;  Webb 
City  Lumber  Co.  v.  Mining  Co.,  78  Mo.  App.  676.  "If  a  policy  of  in.surance 
is  pledged  as  security  for  the  debt  of  assured  and  the  pledgee  pays  the  premiums 
in  order  to  keep  the  policy  alive,  the  beneficiary,  who  joined  with  the  assured  in 
pledging  the  policy,  is  entitled  to  redeem  the  policy,  only  upon  paying,  in  addition 
to  the  amount  of  the  debt  with  interest  thereon,  the  amount  of  the  premiums 
paid  by  the  pledgee,  with  interest  from  the  time  of  such  payment."  See  Kenilall 
V.  Equitable  Life  .\ssurance  Society,  171  Mass.  .568,  51  N.  E.  464.  It  has  been 
recently  decided  in  New  York  that  where  an  agreement  in  printed  form  of  note 
furnished  by  the  bank  and  signed  by  a  customer  on  obtaining  a  loan  for  the 
amount  of  the  note,  by  which  the  customer  pledged  certain  property  as  collateral 
security  for  the  payment  of  the  note,  "or  any  other  liability  or  liabilities  of  the 
undersigned  to  the  said  bank,  due  or  to  become  due,  or  which  may  here- 
after be  contracted  or  existing,"  is  properly  construed  in  accordance  with  the 
reasonable  intention  of  the  parties,  as  referring  only  to  liabilities  of  the  customer 
to  the  bank  in  the  ordinary  course  of  its  banking  business,  and  the  bank  is  not 
entitled  to  retain  pledged  property  for  the  purpose  of  applying  it  upon  a  note  of 
the  customer  to  a  third  party,  which,  although  drawn  payable  at  the  customer's 
bank,  was  not  paid  by,  or  charged  to,  the  customer's  account,  but  was  dishonored 
and  then  purchased  by  the  bank.  Gillet  v.  Bank  of  America,  160  N.  Y.  549, 
55  N.  E.  292.  See  also  Tracy  v.  First  Nat.  Bank  of  Syracuse,  48  App.  Div.  285, 
62  N.  Y.  Supp.  657. 

58.  McArthur  v.  Magee,  114  Cal.  126,  45  Pac.  1068;  Tooke  v.  Newman,  75 
111.  215;  Jefferson  v.  Century  Sav.  Bank,  143  Iowa,  83,  120  N.  W.  308;  Benton 
V.  Sikyta,  84  Nebr.  808,  122  N.  W.  61,  24  L.  R.  A.  (N.  S.),  1057;  Martin  v.  German 
American  Nat.  Bank  (Tex.  dv.  App.),  102  S.  W.  131.  A  pledgee  may  properly 
bring  an  action  on  a  promissory  note  for  the  full  amount  thereof,  no  matter  what 
his  interest  in  the  note  may  be;  the  maker  may  urge  any  defense  against  the  note 
which  would  be  good  against  the  original  payee,  and,  if  successful,  limit  the 
plaintiff's  recoverj'  to  his  interest  in  the  pledge.  Gold  Glen  Mining,  Milling  & 
Tunneling  Co.  v.  Dennis  (Colo.  App.),  121  Pac.  677.  WTiether  the  pledgee,  after 
collecting  the  note,  has  made  proper  application  of  the  proceeds,  does  not  con- 
cern the  maker.    Johnson  v.  GuUedge,  115  Ga.  981,  42  S.  E.  354. 


§  g33  COLLATERAL   SECURITY  1003 

pledgee  in  fraud  of  the  true  owner,  as  the  pledgee  has  only  a  lien  for 
the  amount  of  his  debt,  the  true  owner  may,  by  paying  that  debt,  and 
discharging  the  lien,  repossess  himself  of  the  instrument.^^ 

U>ider  Negotiable  Instrument  statute.— Vnder  the  statutory  provi- 
sions,«'  a  holder  of  a  paper  as  collateral  security  may  enforce  payment 
to  the  extent  of  his  lien,"  and  where  a  third  person  received  from  the 
payee  a  note  as  collateral  security  to  save  him  against  loss  as  surety 
for  the  payee,  the  maker  of  the  note  is  liable  only  to  the  amount  the 
third  person  must  pay  as  surety  .^^ 

§  833.  How  holder  of  negotiable  collaterals  may  enforce  them.— 
The  remedy  of  an  accommodation  indorser  of  a  note  secured  by 
collaterals,  is  to  pay  the  note  and  enforce  the  collaterals  for  his  own 
benefit  He  cannot  require  a  bona  fide  holder  of  the  paper  to  exhaust 
the  collaterals  before  realizing  from  him.^^  In  ordinary  cases  of 
pledges  as  collateral  security  for  debts,  the  pledgee  may  file  a  bill  m 
chancery  to  have  a  judicial  sale,  and  this  has  been  frequently  done  m 
the  case  of  stocks,  bonds,  plate,  and  other  chattels;  or  he  may  himsel 
sell  upon  giving  reasonable  notice  to  the  debtor  to  redeem,  and  ot 
the  time  and  place  of  sale.«^  Commercial  paper  pledged  as  collateral 
security  is  an  exception  to  this  rule  in  part,  that  is  to  say,  the  holder 
is  not  authorized  to  sell  such  paper  so  pledged  in  the  absence  of  a 
special  power  for  that  purpose,  at  either  a  public  or  private  sale;  but 
he  is  bound  to  hold  and  collect  such  paper  as  it  falls  due,  and  apply 

69.  Stoddard  v.  Kimball,  6  Cush.  469;  Chicopee  Bank  v.  Chapin,  8  Mete. 

(Mass.)  40. 
60.  Appendix,  sees.  27,  52-57.  /~,i       u    i  •„ 

61    Mersick  v.  Alderman,  77  Conn.  634,  60  Atl.  109,  Voss  y   Chamberlam, 

139  Iowa  569,  117  N.  W.  269,  19  L.  R.  A.  (N.  S.)  106,  130  Am.  St.  Rep.  331. 

62.  Jett  V.  Standafer,  137  S.  W.  513,  143  Ky.  787. 

63.  Fir^t  Nat.  Bank  v.  Wood,  71  N.  Y.  405;  Third  Nat^  Bank  v^  Shields  62 
N  Y  Super.  Ct.  276;  Olvey  v.  Jackson,  106  Ind.  286;  Lmdenschmidt  v-  Vallee, 
23  Mo    App.  595;  L;rmer  v.  Bain,  14  Nebr.  179;  Grable  v.  Beatty,  56  Nebr. 

'U  Al«a!df :  Loudoun,  etc.,  R.  Co.  v.  Burke,  22  Gratt.  261 ;  Goldsmidt  v 
First  M  Church,  25  Minn.  202;  2  Story  Eq.  Jur.,  §  1008;  2  Kent.  Comm  [5821, 
Fi^  Nat  Bank  V.  Woolery,  6  Wash.  St.  215,  33  Pac.  357.  Held  m  the  las  case 
that  where  one  chattel  mortgage  is  given  to  secure  three  promissory-  notes  to 
different  parties,  and  the  holder  of  one  of  the  notes,  under  the  power  of  sale  con- 
tained in  the  mortgage,  has  the  entire  property  sold  without  the  holders  of  the 
other  notes  being  made  parties  thereto,  the  entire  title  to  the  property  passes  to 
the  purchaser,  and  all  the  mortgagees  are  entitled  to  share  pro  rata  m  the  pro- 
ceeds of  the  sale.    Greer  v.  Lafayette,  128  Mo.  559,  30  S.  W.  319. 


lUo-i         BILLS   AND    NOTLS    AS   SECURITY,    AND    SECURED         §  833 

the  money  to  the  payment  of  the  <lebt.°^    It  has  been  held  that  he 
may,  if  he  chooses,  file  a  bill  in  chancery  to  have  it  sold  under  the 

65.  Wlu'dcr  v.  NewbouKl,  10  X.  Y.  392,  5  Duor,  20;  Alexnndrui,  etc.,  R. 
Co.  V.  Burke,  22  Gratt.  202;  GoKKsinhlt  v.  First  M.  Church,  25  Minn.  202;  Johet 
Iron  Co.  V.  Scioto  F.  B.  Co.,  82  111.  oSl;  xMiinton  v.  Kohinson,  19  R.  I.  40.'),  34 
Atl.  148.  And  if  the  pledgee  tiikcd  pos^jeasion  of  the  plcdj^ed  property  and  makes 
sale  of  it,  it  operates  as  a  payment  of  the  note  secured  by  the  collateral.  See 
German-/Vm.  Bank  v.  Scribncr  Lumber  Co.,  81  Ilun,  1 10,  30  N.  Y.  Hupp.  740. 
And  when  special  power  is  given  in  the  collateral  agreement  to  sell  the  security, 
the  terms  and  conditions  specified  must  be  complied  with.  And  accordingly 
it  has  been  held  in  Georgia,  that  where  in  a  promi.s.sory  note,  the  payment  of  which 
was  secured  by  the  deposit  of  specified  collaterals,  it  was  stipulated  that  in  case  of 
the  nonpayment  of  the  note  at  maturity,  the  payee  might  sell  the  collaterals  after 
giving  at  least  ten  days'  notice  to  the  maker  of  the  note,  and  the  cretlitors  sold 
the  collaterals  without  giving  such  notice,  the  act  of  sale  was  a  conversion,  and 
especially  so  when  the  seller  also  became  himself  the  purchaser  of  the  securities. 
Waring  v.  Gaskill,  95  Ga.  731,  22  S.  E.  059;  Beacon  Trust  Co.  v.  Robbins,  173 
Mass.  201,  53  N.  E.  808.  Held,  "The  maker  of  a  promissory  note,  who  hjia 
notified  the  holder  of  it  as  a  plctlgec  that  it  was  given  for  accommodation  only, 
is  entitled  to  require  the  holder,  before  resorting  to  the  note,  first  to  credit  actual 
payments  upon  other  notes  for  which  this  was  held  as  collateral,  and  also  the 
amount  of  any  other  collateral  security,  which  he  has  surrendered  without  the 
defendant's  consent  after  knowledge  that  he  was  merely  a  surety."  But  an  in- 
dorsement in  blank  underneath  a  printed  form  of  transfer  and  a  power  of  attorney 
to  make  a  transfer,  has  been  held  to  constitute  a  power  of  sale  of  the  stock  certifi- 
cate pledged  as  collateral.  Taft  v.  Church,  102  Ma.ss.  527,  39  N.  E.  283;  Bank 
V.  Chattanooga  Pulley  Co.,  97  Tenn.  30S,  37  S.  W.  8.  A  promissory  note,  secured 
by  collaterals,  provided  that  "if  recourse  is  had  to  collaterals,  any  excess  of 
collaterals  upon  this  note,  shall  be  applicable  to  any  other  note  or  claim  held 
by  said  holder  against  the  maker  or  makers  hereof."  Held,  that  "recourse  to 
collaterals,"  meant  an  actual  sale  thereof  and  that  a  tender  of  the  amount  due 
on  note  before  sale  of  the  collaterals,  superseded  authority  to  sell  and  redeemed 
the  collaterals,  leaving  no  right  to  have  any  excess  in  their  value  applied 
on  other  cldms.  See  Winkler  v.  Madgeburg,  100  Wis.  421,  70  N.  W.  332.  If  the 
pledge  empowers  pledgee  to  sell  collateral  without  notice  to  pledgor,  and  pledgee 
thereafterward  waives  the  right  to  sell  the  collateral  without  notice  to  pledgor, 
and  a  sale  without  such  notice  is  illegal,  and  such  act  constitutes  a  conversion, 
the  pledgee  is  liable  in  damages  to  the  pledgor.  See  Toplitz  v.  Bauer,  101  N.  Y, 
325,  55  N.  E.  1059.  And  if  pledgee  without  authority  makes  sale  of  the  collateral 
(stock)  it  is  a  conversion,  and  the  pledgor  is  entitled  to  recover  to  the  defendant, 
as  a  measure  of  damages,  the  highest  price  which  the  collateral  reached  within 
a  reasonable  time  after  the  illegal  sale.  See  Smith  v.  Savin,  141  N.  Y.  315,  36 
N.  E.  338.  A  power  of  attorney  in  the  collateral  agreement,  authorizing  the 
pledgee  to  sell  collateral,  does  not  necessarily  require  him  to  do  so,  and  ordinarily 
the  pledgee  is  not  liable  in  damages  to  the  pledgor  for  a  loss  sustained  by  him, 
consequent  upon  failure  by  the  pledgee  to  sell  the  article  pledged.  See  Howell  v. 
Dimock,  15  App.  Div.  102,  44  N.  Y.  Supp.  271.  WTiere  pledgee  has  power  to  sell, 
he  may  do  so  without  waiting  for  favorable  condition  of  the  market.    See  Franldin 


§  833  COLLATERAL    SECURITY  1005 

directions  of  the  court.^^  But  on  the  other  hand  it  has  been  decided 
that  he  has  a  complete  and  adequate  remedy  at  law  by  suit  on  the 
paper  itself,  and,  therefore,  cannot  go  into  equity.«^  Without  some 
special  circumstance  existing,  the  latter  seems  to  be  the  correct  con- 
clusion; but  such  circumstances  may  exist,  and  should  be  dealt  with 
according  to  the  general  principles  of  equity  jurisdiction^  Where 
defendant  was  sued  as  an  indorser  upon  a  note  containmg  a  statement 
that  the  maker  had  deposited  with  the  payee  certain  collaterals  with 
authority  to  the  latter  to  sell,  without  notice,  in  case  of  nonpayment, 
and  these  collaterals  came  to  plaintiff's  hands  when  it  became  the 
holder,  it  was  held  that  the  maker  was  entitled  to  the  return  of  the 
collaterals  when  payment  was  demanded;  and  that  a  presentment 
to  hiiu  of  the  note  for  payment  by  a  notary,  who  was  not  in  readi- 
ness to  procure  or  surrender  the  collaterals,  in  response  to  the  maker's 
demand  for  them,  was  insufficient  to  charge  an  indorser.^^ 

Nat.  Bank  v.  Newcombe,  1  App.  Div.  294,  37  N.  Y.  Supp.  271 ;  Fisher  v.  Briscoe, 
10  Mont  124,  25  Pac.  30;  Boswcll  v.  Thippen,  Admr.,  75  Miss.  308,  22  So.  823; 
Richardson  v.  A.shby,  132  Mo.  238,  33  S.  W.  SOG;  Rurascy  v.  People's  Ry.  Co., 
154  Mo.  215,  55  S.  W.  G15;  Thompson-Houston  Electric  Co.  v.  Capital  Electric 
Co.,  12  C.  C.A.  G43,  05  Fed.  341.  „r     ,    o 

66.  Donohoe  v.  Gamble,  38  Cal.  314.  But  quaref  See  Brown  v.  ^\ard  3 
Duer,  G60;  Atlantic,  etc.,  M.  Ins.  Co.  v.  Boies,  6  Duer,  583;  Wheeler  v.  Newbould, 
10  X  Y  392  5  Duer,  29.    But  see  Powell  v.  Patison,  100  Cal.  2.36,  34  Pac.  0^7. 

67.  Whittcker  v.  Charleston  Gas  Co.,  16  W.  Va.  717;  Reed  v.  First  Nat.  Bank, 
23  Colo.  384,  48  Pac.  507,  citing  text  with  approval;  McDaniel  v.  Chmski,  23  Tex. 
Civ  App  504.  The  holder  of  a  note  as  collateral  security  is  not  Uable  for  mere 
delay  in  enforcing  the  collateral,  especially  where  th.;re  has  been  no  demand  upon 
him  to  sue  the  maker  of  the  note.    Johnson,  Bcrger  &  Co.  v.  Downmg,  /6  Ark. 

128, 88  S.  W.  825.  ,         .      .... 

68.  In  Donohoe  v.  Gamble,  38  Cal.  354,  the  couri^  sustained  eqmty  jurisdic- 
tion on  the  ground  that  the  pledgor  resided  in  New  York  and  it  did  not  appear 
that  he  had  estate  in  CaUfornia,  and  thought  that  the  pledgees  should  not  be 
subjected  to  the  hardship  of  pursuing  with  legal  process  in  New  York,  which  would 
"equally  demand  that  they  should  follow  him  to  Europe,  South  Amenca,  or  any 
other  foreign  countr>-."  See  also  Whitteker  v.  Charicston  Gas  Co.,  16  W.  Va. 
717;  Nelson  v.  WelUngton,  5  Bosw.  178;  Brookman  v.  MctcaH,  5  Bosw.  429; 
Wheeler  v.  Newbould,  16  N.  Y.  392,  5  Duer,  29. 

69.  Ocean  Nat.  Bank  v.  Faut,  50  N.  Y.  474.  If  the  collateral  agreement  pro- 
vides that  the  collaterals  may  be  held  for  the  payment  of  the  note  and  for  any 
general  balance  due  or  to  become  due,"  the  borrower  has  no  right  to  withdraw 
the  coUaterals  without  the  consent  of  the  bank,  on  payment  or  tendering  pay- 
ment of  the  note  only,  if  the  bank  is  the  holder  of  other  just  demands  against  the 
maker  not  then  fully  secured.  Merchants'  Nat.  Bank  of  Savannah  v.  Demere, 
92  Ga.  735,  19  S.  E.  38;  Romero  &  Bayard  v.  Newman,  50  La.  Ann.  80,  23  So. 
493.    See  Gage  v.  McDermid,  150  111.  596,  37  N.  E.  1026. 


lOUG         BILLS    AND    NOTK8    AS    SL(lKirv,    AND    SECURED         §  S.'M 

It  has  been  liekl  that  the  holder  of  a  note,  executed  to  liim  us 
colhiteral  security  for  the  payment  of  a  note  which  he  has  indorsed, 
may  enforce  it  against  the  maker,  though  the  hitter  note  is  still 
outstandinfj;  and  unpaid,  and  such  accommodation  indorser's  liu- 
bihty  thereon  unenforced.'" 


SECTION   II 

HOLDER   OF   NEGOTIABLE   INSTRUMENTS  SECURED   BY   MORTGAGE 

§  834.  Tliere  is  no  doubt  that  a  mortpagi*,  or  any  other  security 
given  for  the  payment  of  a  bill  or  note,  passes  by  a  transfer  of  the 
bill  or  note  to  the  trimsfereeJ'  The  doctrine  has  been  laid  down  by 
a  number  of  cases,  and  is  stated  by  Mr.  Hilliard,  in  his  treatise  on 
Mortgages,  that  if  a  mortgage  is  given  to  secure  a  negotiable  note, 

70.  Hapgood  v.  WclUnpton,  136  Mass.  217;  Merchants'  &  Manufacturcre' 
Bank  v.  CuminKs,  149  N.  Y.  3m,  44  N.  E.  173;  Ryan  v.  Ilolliday,  110  Cal.  335, 
42  Pac.  891.  Sec  also  Emerson  v.  Paine,  170  Ma.s8.  391,  FjI  N.  E.  t)<)7,  as  to  proving 
a  note  Riven  as  collateral  against  the  insolvent  estate  of  the  decejwc*!  maker. 

71.  See  ante,  §  784,  and  post,  §  12S1;  IlaKemian  v.  Sutton,  91  .Mo.  .520;  Boat- 
man's Sav.  Bank  v.  Grewe,  8-1  Mo.  477;  Johnson  v.  Johnson,  81  Mo.  331;  Kuhns 
V.  Bankes,  15  Nebr.  92,  citinR  the  text.  And  if  there  are  two  or  more  noti-s,  se- 
oured  by  one  mortpape,  the  assipneos  of  said  noti>8  are  «'ntitle<.l  to  share  fjro  rata, 
without  regard  to  the  time  the  several  notes  mature.  First  Nat.  Bank  v.  Andrews, 
7  Wash.  201,  34  Pac.  913,  38  Am.  St.  Rep.  885.  Upon  the  same  principle,  it  has 
been  held  that  one  who  purchases  a  note  secured  by  a  general  guaranty,  is  entitled 
to  the  benefits  of  such  guaranty,  though  he  buys  in  ignorance  thereof.  See  Sav- 
ings Bank  v.  Libbey,  101  Wis.  193,  77  N.  W.  182,  70  Am.  St.  Rep.  907;  Brewing 
Co.  V.  Manasse,  99  Wis.  99,  74  N.  W.  535,  07  Am.  St.  Rep.  854;  Niushville  Trust 
Co.  V.  Smythe,  94  Tenn.  513,  29  S.  W\  903,  45  Am.  St.  Rep.  748;  Kemohan  v. 
Manss,  53  Ohio  St.  118,  41  N.  E.  258;  Demuth  v.  Old  Town  Bank,  85  Md.  315, 
37  Atl.  200,  60  Am.  St.  Rep.  322;  Mutual  Benefit  Life  Ins.  Co.  v.  Huntington, 
57  Kan.  744,  48  Pac.  19;  Robinson  v.  Campbell,  60  Kan.  60,  55  Pac.  276.  Held, 
in  the  last  case  that  the  assignment  of  a  note  ordinarily  operates  as  an  assign- 
ment of  a  mortgage  made  to  secure  the  note,  and  where  it  so  operates,  an  irregu- 
larity in  the  assignment  of  the  mortgage  is  immaterial.  Perkins  Bros,  ct  al.  v. 
Gumbel  el  al,  49  La.  Ann.  653,  21  So.  743;  Keith,  Davis  &  Co.  v.  Blanton,  71 
Miss.  821, 15  So.  132;  Tilden  v.  Stilson,  49  Nebr.  382,  68  N.  W.  478.  In  Whipple 
v.  Fowler,  41  Nebr.  676,  60  N.  W.  15,  it  is  held  that  in  Nebraska  the  transfer  of 
one  of  several  notes  maturing  at  different  times  and  secured  by  a  mortgage,  oper- 
ates as  an  assignment  pro  tanto  of  the  mortgage,  and  upon  sale  of  property  the 
notes  should  share  pro  tanto  in  the  proceeds  of  sale.  Gamble  v.  Wilson,  33  Nebr. 
270,  50  N.  W.  3;  Thomas  v.  Linn,  40  W.  Va.  122,  20  S.  E.  878;  Adler  v.  Sargent, 
109  Cal.  42,  41  Pac.  799;  Fountain  v.  Bookstaver,  141  111.  461,  31  N.  E.  17. 


§  834    HOLDER   OF    INSTRUMENTS   SECURED    BY   MORTGAGE     1007 

and  both  the  mortgage  and  the  note  are  transferred  before  maturity 
to  a  bona  fide  indorsee,  such  indorsee  takes  the  benefit  of  the  mort- 
gage as  well  as  of  the  note,  clear  of  any  equities  between  the  origmal 
parties.72  it  is  the  debt  which  gives  character  to  the  mortgage,  and 
gives  the  rights  and  remedies  of  the  parties  under  it,  and  not  the 
mortgage  which  determines  the  nature  of  the  debt."  ^^ 

But  this  doctrine  is  denied  on  the  ground  that  the  mortgage  is 
simply  a  chose  in  action,  and  is  taken  subject  to  the  accounts  be- 
tween mortgagor  and  mortgac;ee;  and  while  it  is  an  incident  to  the 

72.  Hilliard  on  Mortgages,  526,  §49a;  Carpenter  v.  Longan,  16  Wall.  273; 
Siwvcr  V   Prickett,  19  Wall.  166;  Burkhaus  v.  Hutchcson,  25  Kan.  631;  Kellcy 

V  Whitney,  45  Wis.  110;  Reeves  v.  Scully,  Walker  Ch.  24S;  Croft  v.  Bunstcr, 
9  WiB  503;  Cornell  v.  Ilichens,  11  Wi.s.  353;  Fisher  v.  Otis,  3  Chand.  49;  Martineau 

V  MoCollum,  4  Chand.  153;  Cicotte  v.  Gagnier,  2  Mich.  381.  But  it  is  said  in 
Michigan  that  this  effcK^t  ia  given  to  the  transfer  only  "because  the  two  papers 
are  bound  together  by  such  references  aa  identify  the  one  as  collateral  to  the  other. 
Generally  speaking  every  assignee  of  a  mortgage  takes  it  subject  to  ^^f'^^^'^'"'- 
ties  "  Cooper  v.  Smith.  75  Mich.  254.  See  also  McKenna  v.  Ivu-kwood,  oO  Mich. 
545;  deciding  that  the  a.s..ignee  takes  subject  to  equities  though  he  has  no  actual 
notice  of  the  claims.  Merchants'  Nat.  Bank  v.  Abernat^hy,  32  Mo.  ApP^  2--, 
citing  the  text;  Hagennan  v.  Sutton,  91  Mo.  520;  Blumenthal  v.  Ja.ssoy  29  Minn. 
177;  Mundy  v.  Whitmore,  15  Nebr.  647;  Updegraft  v.  Edwards,  45  Iowa,  515, 
Preston  v.  Morris,  42  Iowa,  549;  Farmers'  Nat.  Bank  v.  Fletcher,  44  Iowa,  256, 
Clasey  v.  Sigg,  51  Iowa,  372;  Duncan  v.  Louisville,  13  Bush,  385;  Dutton  v. 
1IZ5  Mich  515;  Kelmer  v.  Krolick,  36  Mich.  373;  Judge  v.  Vogel  38  Mich. 
568  In  Murray  v.  Jones,  50  Ga.  109,  held,  that  bona  fide  holder  of  the  note, 
without  notice,  was  protected  against  defense,  that  the  mortgage  was  made 
by  the  debtor  in  anticipation  of  bankruptcy,  to  defraud  creditors.  Central  Trust 
ci.  V.  New  York  Equipment  Co.,  87  Hun,  421,  34  N.  Y.  Supp.  349.  A  mortgage 
given  to  secure  the  payment  of  a  note  must  be  construed  together  with  the  note 
L  a  part  of  one  transaction  or  contract,  the  same  as  if  they  were  a  part  of  the  same 
instrument.  See  Cabbell  v.  Knote,  2  Kan.  App.  68,  43  Pac.  309;  /^-^sas  Loan 
&  Trust  Co.  V.  Gill,  2  Kan.  App.  488.  43  Pac.  991 ;  Thompson  v.  Maddux,  117  Ala. 
468.  23  So.  157;  Brewer  v.  Atkeison,  121  Ala.  410,  25  So.  f  2,  77  Am^  St^ Rep 
64;  Bank  v.  Rohrer,  138  Mo.  369,  39  S.  W.  1047;  Il.mrod  v^GiUman  147  lU. 
293,  35  N.  E.  373;  Hunter  v.  Clarke.  184  lU.  158,  75  Am.  St.  Rep.  160,  56  N.  E. 

297 

73.  Croft  V.  Bunster.  9  Wis.  510;  Davis  v.  Erickson.  3  Wash.  654  29  Pac. 
86,  citing  text;  Hawkins,  Receiver,  v.  Fourth  Nat.  Bank,  150  Ind^  17,  49  N.  E. 
r57,  citing  the  text;  Hussey  v.  Hill,  119  N.  C.  318,  25  S  E.  1023;  Pul^n  v.  ^^ard 
60  \rk.  90,  28  S.  W.  1084,  citing  text;  Hutchinson  v.  Benedict,  49  Kan  545  31 
Pac.  147;  Britton  &  Koontz  v.  Harvey  et  al.,  47  La.  Ann.  259  16  So.  747,  citing 
text-  Keys  v.  Lardner,  55  Kan.  331,  40  Pac.  644,  contra;  WiU.ams  v.  Keyes  90 
Mich.  290,  51  N.  W.  520,  30  Am.  St.  Rep.  438;  Campbell,  etc.,  Mfg.  Co.  v.  Boeder 
44  Mo.  App.  324;  Hawes  v.  Mulholland,  78  Mo.  App.  493;  Ryan  v.  nolbday  110 
Cal.  335;  Lawson  v.  Spencer,  81  Mo.  App.  169;  Babcock  v.  \oung.  117  Mich. 
165,  75  N.  W.  302. 


lOOS         HIl.l..-^    AM)    NOTKS    AS    SKCUKITY,    AND    SKCUUKD       §  X'M& 

debt,  the  l)enefit  of  whit-li,  so  far  lus  the  iis.siniior  is  contenuHl,  pii-sum 
with  it,  the  assiKnee  eunnot  rely  on  the  privile^?«il  chanicter  of  the 
note  to  insure  him  the  advantage  of  the  mortgage,'*  The  doctrine 
stated  by  Mr.  Ililliard  seems  to  us  c<iuital)le  and  just,  es|)eeially  in 
cases  where  the  mortguKe  uses  such  terms  as  show  an  intention  to 
secure  the  note  to  the  holder.  The  security  of  the  mortgage  may  im- 
|):irt  to  the  pajxT  its  marketable  value,  as  in  the  ca.sc  of  cori)oration 
coupon  bonds,  which  rests  mainly  UfKm  the  bjusis  of  such  security  for 
their  payment.  .\nd  to  sever  the  bjuiis  of  credit  from  the  obligation 
to  pay  would  most  fre(|uently  defeat  the  negotiation  of  these,  or  sim- 
ilar instnunciits,  at  anything  like  their  par  value.  A  different  rule 
applies  to  mortgages  made  to  se<ure  nonnegotiable  instruments.'^ 

§  834a.  Tn  Ma.ssa(liu.>etts,  where  note  and  iiK^rtgagc  were  upon 
illegal  c(jnsideration  and  void,  it  wils  held  that  as  a  bona  Jhlc  holder 
without  notice  could  enforce  the  note,  he  could  al.so  enforce  the 
mortgage  assigned  with  it,  Mctcalf,  J.,  .saying:  "We  know  of  no 
principle  which  makes  the  mortgage  less  valid  than  the  note  in  the 
plaintilT's  hands."'"  In  a  ca.se  l>efore  the  United  States  Supreme 
Court  where  failure  of  considjTation  l)otween  maker  of  a  note  so- 
cured  by  mortgage,  was  pleuiied  against  enforcement  of  tlie  mort- 

74.  .Tohn.Hon  v.  CaiTM'ntcr,  7  Minn.  1R3  (1802);  Walkrr  v.  Domont,  42  III. 
27S;  HclltT  V.  Moi.M,  2  ('in.  (Ohio)  2.S7;  Prtillon  v.  Nohio,  73  111.  5<)7  (1H74); 
Hryant  v.  Vix,  S-'i  III.  It  (lSf,7);  Nh-l.-ndy  v.  Keen,  89  111.  :<0.^.;  Unif.Hl  Sfjiti* 
.MurtKape  Co.  v.  Gro.ss,  93  HI.  tS^i;  C.  I).  &  V.  R.  Co.  v.  Uj<w.nthal.  *Xi  HI.  451; 
Barntl  v.  Hinckley,  124  111.  40;  Towni-r  v.  MrCl.lIand,  112  III.  549;  .Mutual 
Mill  Ins.  Co.  V.  Gordon  (111.),  12  N.  K.  747;  Mclntirc  v.  Yates,  104  111.  497. 
But  the  doctrine  of  those  caHoa  ia  held  in  Illinois  not  to  apply  to  deeds  of  trust 
given  to  secure  railroad  cou{)on  Ixinds  intende<l  to  be  thrown  upon  the  market 
and  circulated  as  commercial  paper,  and  to  be  u.sotl  as  socurit.-s  for  permanent  in- 
vestments. Peoria,  etc.,  R.  Co.  v.  Thompson,  10.3  III.  20.'),  di.sapprovinp;  in  part 
C.  D.  \-  V.  R.  Co.  V.  Lwwenthal,  supra.  It  Ls  there  held,  also,  not  to  apply  to 
accommodation  paper,  secured  on  real  estate,  tran.-^ferred  to  another  as  collateral 
security.  Miller  v.  Lamed,  103  111.  579;  Morris  v.  White,  28  La.  855  (1S7G); 
Johnson  v.  Vickers,  31  La.  Ann.  943;  New  England  Mtge.  Sec.  Co.  v.  Cascbier, 
3  Kan.  App.  741;  Savings  Bank  v.  Schott,  135  lU.  655,  26  N.  E.  640,  25  Am.  St. 
Rep.  401. 

76.  Van  Keuren  v.  Corkins,  66  N.  Y.  77. 

76.  Taylor  v.  Page,  6  .\llen,  80  (1803).  On  the  other  hand,  it  has  been  held 
in  North  Carolina,  that  a  mortgage,  if  duly  executed  to  secure  a  loan  made  by 
the  mortgagee,  can  be  forcclo.sed,  although  the  note  mentioned  in  the  mortgage, 
be  forged.  Mcdlin  v.  Buford,  117  N.  C  278,  23  S.  E.  217;  Kenney  v.  The  JefTer- 
eon  County  Bank,  12  Colo.  App.  24,  54  Pac.  404.  Sec  also  Coler  v.  Barth,  24 
Colo.  31,  48  Pac.  656. 


1009 


§  S34b  HOLDER   OF    INSTRUMENTS   SECURED    BY   MORTGAGE 

gage  it  was  held  that  the  bona  fide  holder  of  the  note,  without  notice, 
couli  enforce  it,  and  Swayne,  J.,  said:  ''The  contrac^  as  regards  the 
note  was  that  the  maker  should  pay  it  at  maturity  to  any  bona  fide 
indorsee  without  reference  to  any  defense  to  which  it  might  have  been 
lial)le  in  the  hands  of  the  payee.  The  mortgage  was  conditioned  to 
secure  the  fulfillment  of  that  contract."  ^^  A  deed  of  trust  stands  on 
the  same  footing  as  a  mortgage;  and  as  an  incident  and  accessory  to 
the  paper,  the  transfer  of  the  latter  carrier  with  it  to  the  transferees 
tlH^  benefit  of  the  security.-  The  holder  of  a  bill  or  note  secured  by 
ni..rtgage  or  deed  of  trust  may  proceed  at  law  and  in  equity  at  the 
8ame  time.'»  Where  a  mortgage  was  made  to  secure  the  indorser  of  a 
note,  it  was  held,  in  Maryland,  that  it  inured  to  the  l)enefit  of  every 
bona  fide  holder;  and  that  the  mortgagee  could  not  release  the  mort- 
gagor so  as  to  deprive  the  holder  of  its  benefit.^^ 

S  834b.  But  the  doctrine  of  the  text  is  subject  to  this  limitation: 
that  if  the  land  conveyed  by  the  mortgage  was  subject  to  a  prior 
lion  of  a  thinl  party,  the  indorsee  of  the  note  would  on  y  acquire  the 
right  to  enforce  his  claim  against  the  land  subject  to  such  hen  whether 
he  had  notice  of  it  or  not.  This  doctrine  arises  from  the  very  nature 
of  such  a  case,  as  the  indorser  himself  could  not  by  a  negotiable,  or 
other  contract,  supersede  the  pre-existing  rights  of  a  third  person  not 
a  party  to  his  act.^^     And  wherever  the  assignee  is  chargeable  with 

77.  Carpenter  v.  I>ongan.  16  Wall.  273  (1872);  Sa^Tor  v^Pr'ckeU  19  Wall. 
16C  (IStI).  &>e  to  same  effect  Logan  v.  Srn.th  (Sup.  Ct.  ^J")'  ^  CenL  L.  J 
a«4  (1870)  6'  Mo.  4.^5.  S<.^  Laplace  v.  Uplace  ct  al.,  43  La.  Ann^284  8  So.  914, 
ZnX'^  ;  Sch..t.  1:35  in.  055.  25  A.n.  St.  Rep  401  20  N.  E.  04  • 

78.  N.w  Orleans,  etc..  V.  MontRomerj-.  95  U.  S/-5  Otto)  16  (1877),  Pott«^. 
HlUw.ll,  4  Jon.^  Kq.  5S;  Crawford  v.  Aultman  &  Co.,  139  Mo.  262,  40  S.  W. 
95-'-   V.lhr  V.  Surti.nt.  100  Cal.  42.  41  Pac.  709. 

7i.  Ober  V.  Gulla.ho.^  9;^U.  Sg3  ^)^  ^   ^^^^„  p-,,  j,,.  Co.. 

u!.p  322;  A'nder^n  v.  Kreidlcr.  50  Nebr.  171,  70  N.  W^  ^^f^^^^ 
1.  ,,TXf  u    ire  7r;  V   W  'V)o- Pock  V.  Dv<'r,  147  lU.  o'Jz.  .lO  ^N  .£-•'*' •'• 

''l;rs°ubiccM:?J^.^o  ex.:.  ti  Ly  hi,  ^n.or,  and  .hereafter  conveys  it 
Tb  C-  th  the  rL^^^  r.heI.J  that  B.  assume,  and  aKroe,  to  pay  the  mortgage 
debt^  tan  of  the  consideration  of  the  sale,  he  may  be  held  liable  on  , he  mortgage 
note  Crone  v.  Stinde,  1.5fi  Mo.  App.  202;  Kowse  v.  Johnson,  60  Mo.  App.  57, 
Johns  V.  \Vil»n,  ISO  U.  S.  440,  21  Sup.  Ct.  Rep.  445. 
04 


lUlU        KILLS    AND    N(JT1':S    AS    SKCUHITY,    AND    SECURED  §  835 

constructive  notice  of  an  (•<iuity  prior  to  the  niurt^aKe  under  which 
he  claims,  he  must  yield  to  it.'*-  If  the  transfer  of  a  note  payal)le  to 
order,  and  of  the  mortgaRe  to  secure  it,  be  by  delivery  merely,  both 
note  and  mortgage  are  open  to  equities."  A  mortgaKee  in  a  mortgage 
to  secure  a  note  which  he  holds  cannot  transfer  the  uiortgage  so  as  to 
exclude  the  rights  of  another  party  without  notice  to  whom  he  trans- 
ferred the  note,  and  the  bomi  Jhit  holder  of  the  note  may  in  equity  re- 
quire assigmuent  of  the  ujortgage  to  himself.*^ 

§  835.  It  has  been  held  that  where  a  promissory  note  and  a  mort- 
gage securing  its  payment  have  bcH.>n  executed  to  a  corjMjration  by 
A.,  and  such  corporation  execute<i  to  C.  its  negotiable  l>ond  for  a 
sum  equal  to  the  note,  attaching  thereto  the  note  and  mortgage, 
and  reciting  in  the  bond  that  the  conwration  transferred  the  note 
and  mortgage  to  C.  as  security,  and  that  l>oth  should  l>e  transfer- 
able in  connection  with  the  boml,  and  not  othenvise;  that  this  was  a 
sufficient  indorsement  within  the  law  merchant  to  pass  to  C.  the 
legal  title  to  the  note,  and  that  he  became  thereby  a  bona  fide  holtlcr, 
and  was  entitled  to  protection  against  equitable  defenses  existing 
against  it  in  the  hands  of  the  corporation.**  Where  a  note  is  secured 
by  mortgage,  and  there  is  a  provision  in  the  mortgage  not  contained 
in  the  note,  the  mortgage  will  control.*^    In  Massachusetts  it  has  been 

82.  Sims  V.  Hammond,  33  Iowa,  3GS',  EnKliah  v.  Wiifliw,  13  Iowa,  57;  Sav- 
inn8  Bank  v.  Schott,  135  111.  G55,  26  N.  E.  G40;  25  Am.  St.  Rep.  401. 

83.  Crurn  v.  Corby,  1 1  Kan.  4G4. 

84.  Morri-s  v.  Bacon,  123  M;i.'<h.  iV^.  See  also  StronR  v.  Jackson,  123  Maas. 
GO;  Burhans  v.  Ilutcheson,  25  Kan.  025;  Adlcr  v.  Sar^rnt,  109  Cal.  42,  41  Pac. 
799. 

85.  Crosby  v.  Roub,  10  Wis.  025  (1863),  Paine,  J.:  "The  intent  to  pass  the 
title  and  make  the  note  transferable  by  delivery  afterward  as  a  note  payable  to 
order,  and  duly  indorsed  by  the  payee,  is  beyond  question.  And  this  contract, 
like  all  others,  must  take  effect  according  to  the  intent  of  the  parties,  if  it  is  suffi- 
cient in  law  to  express  that  intent.  .Vnd  the  fact  that  the  parties  contracted  for  an 
absolute  liiihility  by  the  vendor,  evidenced  by  a  distinct  negotiable  instrument 
on  the  back  of  the  one  transferred,  cannot,  upon  any  rational  principle,  be  held 
to  distinguish  the  case,  so  far  as  the  mere  question  of  a  transfer  is  concerned,  from 
a  case  where  they  contract  for  no  liability,  or  for  the  conditional  Uability  of  an 
indorser,  or  the  absolute  liability  of  a  guarantor.  I  conclude,  then,  that  if  the 
bond  had  been  written  on  the  back  of  the  note,  it  would  have  been  fully  sufficient 
to  pass  the  legal  title  within  the  law  merchant."  Bange  v.  Flint,  25  Wis.  456. 
See  ante,  §  089,  and  post,  §  855;  Pullen  v.  Ward,  60  Ark.  90,  28  S.  W.  1084;  Ameri- 
can Nat.  Bank  v.  Klock,  58  Mo.  App.  335. 

86.  Dobbins  v.  Parker,  40  Iowa,  358.  See  ante,  §  156.  When  a  note  expressly 
provides  that  the  principal  bears  interest  at  the  rate  of  7  per  cent,  from  date 


§  83oa  HOLDER   OF    INSTRUMENTS  SECURED  BY  MORTGAGE      1011 

held  that  if  one  who  holds  by  assignment  duly  recorded  a  mortgage 
and  a  note  indorsed  in  blank  purporting  on  its  face  to  be  secured  by 
it    "the  same  being  collateral  to"  a  certam  note,  assigns  the  mort- 
gage and  afterward  indorses  the  note  for  which  it  was  collateral  (re- 
taining the  mortgage  note)  to  another  by  an  assignment  m  like  words 
duly  recorded,  he  conveys  a  title  to  the  mortgage  debt,  except  as 
against  an  innocent  purchaser  for  value  without  notice;  and  one  to 
whom  he  subsequently  passes  the  mortgage  note  and  fraudulently 
assigns  the  mortgage  upon  a  separate  paper  as  collateral  security  for 
a  loan,  is  not  such  a  purchaser.^^    Where  a  deed  of  trust  given  to 
secure  sundry  notes  maturing  at  different  times,  provides  that  none 
of  them  shall  become  due,  and  that  the  deed  shall  not  be  foreclosed 
till  the  maturity  of  the  note  made  last  payable,  the  holder  purchasmg 
one  of  the  notes,  with  knowledge  of  such  provisions,  cannot  recover 
judgment  until  the  last  note  matures.^ 

S  835a.  The  parties  to  a  mortgage  may  substitute  a  new  note  for 
the  original  by  way  of  renewal  without  affecting  the  validity  of  the 
security.    No  change  in  the  form  of  the  indebtedness  or  in  the  mode 

or  time  of  payment  will  discharge  the  mortgage.^ 

iTntil  paid,  and  "the  mortKaKO  ^^curinR  the  .Hume  provides  that  in  default  of  pay- 
ment  of  any  part  of  th.  sum  H.-curc.i  when  due,  interest  shal  be  paul  at  the  ra  e 
of  12  per  cent,  per  annum  from  the  date  of  the  note,  the  rate  of  mterest  recoverable 
in  an  action  brought  on  the  note  and  mortfjape  is  controlled  by  the  t-rms  of  the 
note  and  is  Umite<l  to  7  per  cent,  per  annum.  See  New  Ln.landMortgaRe  Se- 
curity Co.  V.  C:isebicr,  3  Kan.  App.  741,  45  Pac.  4.52.  Compare  Hawea  vMul- 
holland,  78  Mo.  App.  493;  Lawson  v.  Spencer,  81  Mo.  App.  169;  Brooke  v. 
Struthers,  110  Mich.  .5(12,  O-S  N.  W.  272. 

87.  Stronp  v.  Jackson,  123  Mass.  60.     See  Tilden  v.  Stilson,  49  Nebr.  382, 

^^8.'  Brov^-niec  v.  Arnold,  GO  Mo.  79.     WTiere  a  mortgage  is  given  to  secure 
a  series  of  notes  of  even  date,  maturing  at  different  times,  an<l  the  mortgage 
contains  a  provision  that  upon  the  failure  to  pay  any  one  of  said  notes  at  matunty, 
then  all  of  said  notes  shall  become  due  and  payable,  and  the  mortgage  may  be 
foreclosed-  and  all  of  the  notes  so  secure«l  are  a.s.signed  to  different  parties  before 
maturity  of  any  of  them,  the  assignees  of  the  notes  take  a  pro  tnnlo  interest  in  the 
mortgage  securitv,  with  priority  acconiing  to  the  dates  at  which  their  notes 
mature,  as  stated  in  the  notes,  and  this  rule  of  priority  is  not  clianged  by  the 
default  of  the  mortgagor  and  maker  on  failure  to  pay  either  the  principal  or 
interest  of  any  note  at  maturity,  by  which  default  all  the  notes  mature.     See 
Horn  V.  Bennett,  135  Ind.  158.    Contra,  Green  County  Bank  v^  Chapman,  134 
Mo  4-^7  35  S.  W.  1 150.    See  Maddox  v.  Wyman,  92  Cal.  6/ 4,  28  Pac.  838. 
*   89.  "st'cin  V.  Kaun,  244  111.  32,  91  N.  E.  77;  Buck  v.  Wood,  85  Me.  204,  27  Atl. 
103;  Watkins  v.  Hill.  S  Pick.  522;  Pomeroy  v.  Rice,  16  Pick.  22;  Jones  on  Mort- 
gages, 924.    See  ante,  §  205,  and  §  748. 


CIIAI^TER   XXVT 

RIGHTS  OF  A  BONA  FIDE  HOLDER  OR  PURCHASER  OF  NEGOTIABLE 
INSTRUMENTS  ORIGINATING  IN  FRAUD,  DURESS,  OR  VIOLA- 
TION OF  AUTHORITY. 

§  836.  Tlierc  are  numerous  cases  in  wliicli  the  lino  of  demarca- 
tion between  the  fraud  \vhi(  h  does  not  affect  the  hona  jhlv  holder 
for  value,  and  without  notice,  and  that  which  utterly  vitiates  the 
instrument  in  all  hands  whatsoever,  is  narrow  and  difficult  to  dis- 
tinguish. The  distinctions  taken  are  fretjuently  very  refined  and 
metaphysical;  but  the  test  questions  to  Ix?  applied,  we  think,  are 
these:  (1)  Has  the  party  soupht  to  be  charRcd  creatcil  an  agency  or 
trust,  by  means  of  which  the  fraud  has  been  committetl?  (2)  Has  he 
deliberately  p;iven  the  appeariuice  of  validity  to  the  instrument? 
(3)  Has  he  committed  ne^li^ence  respecting  it,  by  means  of  which  an 
opportunity  for  the  fraud  Ikus  been  created?  And  whenever  either 
of  these  cjuestions  c;m  be  answered  aflirmatively  upon  a  fair  con- 
sideration of  all  the  circumstances  of  the  case,  the  balance  of  equity 
is  in  favor  of  the  bona  fide  holder  for  value  and  without  notice,  the 
axiomatic  principle  of  law  then  apjilying,  that  where  t)ne  of  two  inno- 
cent persons  must  sutler,  the  one  who  creates  the  trust,  or  does  the 
act  from  which  the  loss  results,  must  bear  it. 


SECTION   I 

HOLDER    OF    NEGOTL\BLE    INSTRUMENTS    COMPLETED,     BUT    NOT 

DELIVERED 

§837.  (1)  T\\o  first  class  of  cases  of  the  description  above  men- 
tioned are  those  in  which  a  completed  bill  or  note  is  obtained  from 
the  maker  or  drawer,  without  any  delivery  on  his  part,  actual  or 
constructive.  We  have  seen  that  delivery  is  necessary  in  the  case  of  a 
bill  or  note,  as  it  is  in  the  case  of  every  other  contract,  in  order  to 
consummate  its  validity  between  the  parties  to  it.  Suppose,  how- 
ever, that  a  bill,  or  promissory  note,  or  bank  note,  has  been  fully 
1012 


§  838  HOLDER    OF    INSTRUMENTS   COMPLETED  1013 

completed  in  form  and  signed  by  the  drawer  or  maker,  and,  before 
delivery,  is  stolen  from  the  possession  of  the  party  who  has  signed 
it  and  passed  by  the  thief  to  a  bona  fide  holder  for  value  m  the  usual 
course  of  business,  would  the  fact  that  the  party  signmg  had  never 
dehvered  it  afford  him  a  defense  against  such  bona  fide  holder? 
Whether  the  instrument  be  payable  to  bearer,  or  to  the  order  of  the 
thief,  if  it  be  indorsed  by  him,  we  can  see  no  reason  why  the  bona  fide 
holder  should  not  be  entitled  to  recover.    The  want  of  delivery  is  a 
defect  not  apparent  on  the  face  of  the  bill  or  note.    The  party  has 
given  the  appearance  of  validity  to  his  paper.    His  signature  is  itself 
an  assurance  that  his  obligation  has  been  perfected  by  delivery;  and 
it  being  neces.sary  that  the  loss  should  fall  upon  one  of  two  innocent 
pr.rties,  it  should  fall  upon  the  one  whose  act  had  opened  the  door  for 
it  to  enter.*     In  Massachusetts  this  doctrine  has  been  applied  in 
favor  of  the  holder  of  bank  notes  which  were  signed  and  ready  for 
use,  and  which  were  stolen  before  tlu'y  had  been  issued  from  the  vault 
of  the  bank  in  which  they  were  deposited;  -  and  in  Illinois,  against  the 
maker  of  a  note  who  signed  it  as  a  mere  matter  of  amusement,  and 
from  whom  it  was  stolen  by  one  who  saw  him  sign  it,  and  who  passed 
it  to  an  innocent  indorsee,  the  court  saying,  per  Walker,  J.: '  "The 
maker  evidentlv  intended  to  sign  such  a  note  as  this,  and  she  knew  its 
contents  when  she  signed  the  instrument.     This  case  does  not  ma- 
terially ditTer  from  anv  other  note  or  bank  bill  which  may  be  stolen 
and  negotiated  after  it  ha.s  been  made."    And  in  a  latter  case,  where 
the  maker  drew  his  note  for  S108,  intending  to  insert  a  condition 
that  it  should  not  be  valid  unless  the  plows  for  which  it  was  executed 
were  delivered,  and  the  payee  snatched  it  from  his  hand,  ran  off, 
and  transferred  it  to  a  bona  fide  holder  for  value,  without  notice,  this 
case  was  reaffirmed,  and  its  principle  applied."* 

§  838.  There  are  cases  which  take  a  different  view.  Thus  in 
Michigan,  where  the  maker  of  a  note  payable  to  the  order  of  B., 
si-ned  it  and  left  it  on  a  table  in  a  room  where  his  sister  and  B.  re- 

1.  Kinyon  v.  Wohlfurd,  17  Minn.  230;  Faulkner  v.  White  &  Son,  33  Nebr. 
199,  49  N.  W.  1122;  Worsham  v.  State,  56  Tex.  Cr.  253,  120  S.  W.  439,  quoting 

\"  Worce'^ter  County  Bank  v.  Dorchester,  etc.,  Bank,   10  Cush.  488.     See 
Thompson  on  Bills  (Wilson's  ed.),  92;  1  Parsons  on  Notes  and  Bills,  114,  and 

^3.'  Sey  V.  Carroll,  45  111.  2S5;  Martina  v.  Muhlke,  186  III.  327,  37  N.  E  954. 
4.  Clarke  v.  Johnson,  51  111.  200;  First  Nat.  Bank  v.  Farmers'  &  Merchants 
Bank,  50  Nebr.  149,  70  N.  W.  430. 


1014  RIGHTS   OF   A   BONA    FIDE   HOLDER  §  838 

mained  together,  enjoining  B,  not  to  take  it,  as  the  negotiation 
pending  was  not  concluded;  but  B.,  nevertheless,  took  it  and  trans- 
ferred it  to  an  innocent  purchaser,  it  was  held  that  the  maker  waa 
not  liable,  not  having  been  guilty  of  "culpable  negligence."  '" 

In  this  particular  case  it  would  seem  that  the  maker,  by  trusting 
the  paper  in  the  custody  of  B.,  rendered  himself  liable  for  the  conse- 
quences; and  that  the  facts  hardly  justifietl  the  conclusion  that  the 
maker  was  guilty  of  no  culpable  negligence.  But  if  the  paper  had 
been  snatched  from  the  maker's  hand,  as  in  one  of  the  Illinois  cases 
above  cited,  then  having  trusted  no  one,  having  been  guilty  of  no 
negligence,  and  not  having  deliberately  concluded  the  act  which 
imparted  the  appearance  of  validity  to  it,  it  would  seem  too  extreme 
an  extension  of  the  doctrine  in  favor  of  a  bona  fide  hokler  of  a  nego- 
tiable instrument  to  subject  the  maker  to  its  payment.  All  pur- 
chasers must  incur  some  risk;  and  to  j^rotect  them,  after  tlie  maker 
has  done  some  act  which,  in  eciuity  and  good  conscience,  should  seal 
his  mouth,  is  all  that  seems  to  us  necessary  to  guard  their  rights, 
without  inflicting  great  injustice  on  the  innocent  party.  It  is  the 
case  of  one  innocent  party  against  anotlier  equally  so;  and  when  the 
latter  has  done  nothing  to  lower  the  grade  of  his  claim  to  protection, 
we  do  not  see  that  the  former  stands  upon  any  superior  footing. 

Under  Negotiable  Instrument  statute. — While  the  statute  provides 
that  every  contract  on  a  negotiable  instrument  is  incomplete  and 
revocable  until  delivery,  it  further  declares  that  where  the  instrument 
is  in  the  hands  of  a  holder  in  due  course,  a  valid  delivery  thereof  by 
all  parties  prior  to  him  so  as  to  make  them  liable  to  him  is  conclu- 
sively presumed.^  So  that,  in  those  states  which  have  enacted  the 
statute,  the  conflict  of  authority  discussed  in  the  foregoing  sections  is 
settled  against  the  rule  that  a  maker  is  not  liable  unless  he  has  been 
guilty  of  negligence,  and  in  favor  of  the  protection  of  an  innocent 
purchaser,  as  to  whom  a  valid  delivery  is  conclusively  presumed.^  It 
has  been  held  thereunder  that  the  conclusive  presumption  declared 
by  the  statute  applies  when  the  instrument  is  complete,  and  that 
when  a  check  is  in  the  hands  of  a  holder  in  due  course,  the  maker 
cannot  defend  on  the  ground  that,  because  his  agent  had  no  express 

5.  Burson  v.  Huntington,  21  Mich.  415.  Very  similar  were  the  circumstances 
in  Salander  v.  Lockwood,  66  Ind.  285,  except  that  maker  did  not  know  he  had 
signed  a  note.  He  was  held  bound.  See  Branch  v.  Commissioners,  80  Va.  434; 
Dodd  V.  Dunne,  71  Wis.  582. 

6.  Appendix,  sec.  16. 

7.  Hodge  V.  Smith,  130  Wis.  326, 110  N.  W.  192. 


§§  839,  840        HOLDER   OF   INSTRUMENTS   COMPLETED  1015 

authority  to  deliver  the  check  to  the  payee,  it  was  unlawfully  put 
in  circulation,^  and  that  such  presumption  exists  as  well  when  the 
note  was  taken  from  a  thief  as  in  any  other  case.^ 

§  839.  Where  the  maker  has  perfected  the  instrument,  and  left 
it  undelivered  in  a  safe,  desk,  or  other  receptacle,  it  should  then  be 
at  his  hazard.  Such  papers  are  made  for  use,  and  not  for  preserva- 
tion. The  maker  creates  the  risk  of  their  being  eloigned,  by  keepmg 
them  on  hand,  and  places  them  on  the  same  basis  as  negotiable  papers 
which  have  been  put  upon  the  market.  When  once  issued  the  pur- 
chaser is  protected  and  the  o^vTier  loses,  even  though  he  had  guarded 
his  property  with  bolt  and  bar;  and  if  bankers  and  others  who  must 
necessarily  be  in  possession  of  negotiable  securities  m  the  course  of 
trade  are  not  protected,  we  can  discover  no  principle  which  can  be 
invoked  to  protect  one  who  holds  his  own  paper  contrary  to  the  or- 
dinary wants  and  usages  of  trade.  ^° 

§  840  In  New  York  the  cases  on  this  point  do  not  seem  to  us 
reconcilable.  In  one  case,  where  a  note  for  S120,  made  payable  to 
A  or  bearer,  for  the  purpose  of  being  given  in  renewal  of  another,  was 
stolen  out  of  the  maker's  desk,  and  sold  to  the  holder  for  SI  15  it 
was  held  that  the  maker  was  not  liable;  W.  F.  Allen,  J.,  saymg:  The 
note  never  had  any  inception  so  as  to  enable  any  person  to  become  a 
bona  fide  holder  of  it.  It  was  an  imperfect  instrument,  wantmg  de- 
livery to  give  it  validity  as  the  promissory  note  of  the  defendant. 
The  holder  has  taken  a  blank  piece  of  paper,  not  a  promissory  note." 
But  in  a  later  case,  where  the  note  was  indorsed  by  the  payee,  for 
whose  accommodation  it  was  made,  and  left  in  his  desk,  and  it  was 
eloigned  therefrom  and  passed  to  a  bona  fide  holder,  for  value,  and 


8.  Buzzell  V.  Tobin,  201  Mass.  1,  86  N.  E.  923. 

9.  Massachusetts  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E.  959. 

10.  Thompson  on  Bills  (Wilson's  cd.),  92;  1  Parsons  on  Notes  and  Bills  114  m 
which  it  is  said:  "If  a  person  sign  notes  in  blank,  and  lock  them  up  in  his  safe, 
whence  they  are  stolen,  filled  up  and  negotiated,  without  fault  or  negligence  on 
his  part  he  is  not  liable.  Possibly  it  might  be  held  otherwise,  if  he  make  and  sign  a 
perfect  note,  payable  to  bearer,  and  it  be  stolen  under  similar  circumstances;  on 
the  ground  that,  when  the  instrument  is  once  perfected  (although  it  has  never 
passed  out  of  the  maker's  hand,  and  consequently  ha3  had  no  inception  as  a  con- 
tract), it  is  Uke  money;  and  any  one  who  receives  it  in  good  faith,  and  for  a 
valuable  consideration,  acquires  a  perfect  title." 

11.  Hall  V.  Wilson,  16  Barb.  556  (1853). 


1016  RIGHTS    OF   A    BONA    FIDE    HOLDER  §§  841-842a 

without  notice,  it  was  held  that  the  fact  it  had  never  been  delivered 
as  a  valid  security  was  no  defense.  ^■- 


SECTION  II 

HOLDER  OF  NEGOTIABLE  INSTRUMENTS  INCOMPLETE  AND  UNDELIVERED 

§  841.  (2)  The  second  class  of  cases  arises  when  an  incomplete 
instrument  has  been  signed  and  stolen,  without  any  delivery  to  an 
agent  in  trust,  or  otherwise,  intervening.  In  such  cases  no  trust  for 
any  purpose  has  been  created.  No  instrument  has  been  perfected. 
No  appearance  of  validity  luvs  been  given  it.  No  negligence  can  be 
imputed.  Therefore,  if  the  blank  be  filled,  it  is  sheer  forgery,  in  which 
the  maker  is  in  nowise  involved,  and  he  is  not,  therefore,  bound,  even 
to  a  bona  fide  holder  without  notice.''^ 

§  842.  In  New  York  it  has  been  held  that  where  coupon  bonds 
of  a  railroad  corporation,  negotiable  in  form,  and  containing  a  pro- 
vision on  their  face  that  "the  president  of  the  company  is  authorized 
to  fix  by  his  indorsement  the  place  of  payment  of  the  principal  and 
interest,  in  conformity  with  the  tenor  of  this  obligation,"  and  also 
bearing  the  following  indorsement:  "I  hereby  agree  that  the  within 
bonds  and  the  interest  coupons  thereto  attached  shall  be  payable  in 

,  G.  C.  Young,  president,"  were  not  valid  in  the  hands  of  bona 

fi,de  holders  for  value,  and  without  notice,  they  having  been  stolen 
from  the  safe  of  the  company  by  the  soldiers  of  the  United  States, 
and  issued  into  the  world  in  this  imperfect  form.  The  ground  of  the 
decision  is  that  the  blank  as  to  place  of  payment  not  having  been 
filled,  was  notice  to  the  world  that  the  instrument  had  not  been  com- 
pleted, and  that  no  one  w^as  clothed  with  authority  by  the  president 
of  the  company  to  complete  it.^'* 

§  842a.  In  England,  where  the  defendant  gave  his  blank  acceptance 
to  H.,  who  returned  it,  and  it  w\as  then  stolen  from  the  chamber  of  the 

12.  Gould  V.  Segee,  5  Duer,  270  (1856). 

13.  1  Parsons  on  Notes  and  Bills,  114.    See  ante,  §  839,  note  6. 

14.  Ledwick  v.  McKim,  53  N.  Y.  315  (1873).  See  Redlick  v.  Doll,  54  N.  Y. 
236;  Davis  Machine  Co.  v.  Best,  105  N.  Y.  67.  But  where  the  instrument  is 
complete  in  form  no  subsequent  reformation  of  it  can  affect  the  rights  of  a  bona 
fide  holder.    Dunham  v.  Packing  Co.,  100  Mich.  75,  58  N.  W.  627. 


§  842a  HOLDER   OF   INSTRUMii^NTS   INCOMPLETE  1017 

defendant,  and  C.  filled  in  his  own  name  and  negotiated  it,  it  was  held 
that  a  bona  fide  holder  could  not  recover,  Brett,  L.  J.,  saying  there  was 
no  estoppel,  no  ratification,  and  no  negligence  on  the  part  of  the  de- 
fendant.^^ 

15.  Baxendale  v.  Bennett,  L.  R.,  3  Q.  B.  D.  525  (1878),  47  L.  J.  Q.  B.  624, 
26  W.  R.  899,  33  Am.  Rep.  137,  40  L.  T.  R.  (Court  of  Appeals)  23  (1878),  Bram- 
well,  L.  J.,  saying:  "The  defendant  i.s  sued  on  a  bill  alleged  to  have  been  drawn  by 
W.  Cartwright  on  and  accepted  by  him.  In  very  truth  he  never  accepted  such  a 
bill;  and  if  he  i.s  to  be  liable,  it  can  only  be  on  the  ground  that  he  is  estopped  to 
deny  that  he  did  so  accept  such  a  bill.  Estoppels  are  odious,  and  the  doctrine 
should  never  be  applied  without  a  necessity  for  it.  It  never  can  be  applied  except 
in  cases  where  the  person  against  whom  it  is  used  has  so  conducted  himself,  either 
in  what  he  has  said  or  done,  or  failed  to  say  or  do,  that  he  would  unless  estopped  be 
saying  something  contrary  to  his  former  conduct  in  what  he  had  said  or  done  or 
failed  to  say  or  do.  Is  that  the  case  here?  Let  us  examine  the  facts.  The  defend- 
ant drew  a  bill  (or  what  would  be  a  bill  had  it  had  a  drawer's  name)  without  a 
drawer's  name,  addressed  to  himself,  and  then  wrote  what  was  in  terms  an  accep- 
tance across  it.  In  this  condition  it,  not  being  a  bill,  was  stolen  from  him,  filled 
up  with  a  drawer's  name,  and  transferred  to  the  plaintiff,  a  bona  fide  holder  for 
value.  It  may  be  that  no  crime  was  committed  in  the  filling  in  of  the  drawer's 
name,  for  the  thief  may  have  taken  it  to  a  person  telling  him  it  was  given  by  the 
defendant  to  the  thief  with  authority  to  get  it  filled  in  with  a  drawer's  name  by 
any  person  he,  the  thief,  pleased.  This  may  have  been  believed,  and  the  drawer's 
name  honn  fide  put  by  such  person.  I  do  not  say  such  person  could  have  recovered 
on  the  bill.  I  am  of  opinion  he  could  not;  but  what  I  wish  to  point  out  is,  that  the 
bill  might  be  made  a  complete  instrument  without  the  commission  of  any  crime  in 
the  completion.  But  a  crime  was  committed  in  this  case  by  the  stealing  of  the 
document,  and  without  that  crime  the  bill  could  not  have  been  complete,  and  no 
one  could  have  been  defrauded.  Why  is  not  the  defendant  at  liberty  to  show  this? 
Why  is  he  estopped?  What  has  he  said  or  done  contrary  to  the  truth,  or  which 
should  cause  any  one  to  believe  the  truth  to  be  other  than  it  is?  Is  it  not  a  rule 
that  every  one  has  a  right  to  suppose  that  a  crime  will  not  be  committed,  and  to 
act  on  that  belief?  \Mu're  is  the  limit  if  the  defendant  is  estopped  here?  Suppose 
he  had  signed  a  blank  check  with  no  payee  or  date  or  amount,  and  it  was  stolen, 
would  he  be  liable  or  accountable,  not  merely  to  his  banker,  the  drawee,  but  to  a 
holder?  If  so,  suppose  there  was  no  Stamp  Law,  and  a  man  simply  wrote  his 
name,  and  the  paper  was  stolen  from  him,  and  somebody  put  a  form  of  a  check 
or  bill  to  the  signature,  would  the  .signer  be  liable?  I  cannot  think  so.  But  what 
about  the  authorities?  It  must  be  admitted  the  cases  of  Young  v.  Grote  (4  Bing. 
253)  and  Ingham  v.  Primrose  (7  C.  B.  [X.  S.]  82,  L.  J.  C.  P.  294),  go  a  long  way  to 
justify  this  judgment ;  but  in  all  those  cases,  and  in  all  the  others  where  the  alleged 
maker  or  acceptor  has  been  held  liable,  he  has  voluntarily  parted  with  the  instru- 
ment, it  has  not  been  got  from  him  by  the  commission  of  a  crime.  This  undoubt- 
edly is  a  distinction,  and  a  real  distinction.  The  defendant  here  has  not  volun- 
tarily put  into  any  one's  hands  the  means,  or  part  of  the  means,  for  committing  a 
crime.  But  it  is  said  that  he  had  done  so  through  negligence.  I  confess  I  think 
he  has  been  negligent,  that  is  to  say,  I  think  if  he  had  had  this  paper  from  a  third 
person  as  a  bailee  bound  to  keep  it  with  ordinary  care,  he  would  not  have  done  so. 


1018  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  843 


SECTION   III 

HOLDER  OF  NEGOITABLE  INSTRUMENTS  INTRUSTED  TO  ANOTHER  WITH 

BLANKS 

§  843.  (3)  The  third  class  of  cases  comprises  those  in  which  the 
party  sought  to  be  charged  upon  the  negotiable  instrument  has  been 
betrayed  by  his  agent,  or  some  other  party  to  whom  ho  hiis  intrusted 
liis  signature  on  a  bhmk  paper,  and  who  lias  fraudulently  written  over 
it  a  bill  or  note.  There  is  no  doubt  that  if  the  bill  or  note  were  com- 
plete with  the  exception  that  there  was  a  blank  left  for  the  sum,  the 
parties  who  had  signed,  ac<.'cpted,  or  indorsed  it  would  be  bound  to 
pay  any  sum  with  which  it  might  be  filled  up  to  a  bona  fide  holder 
without  notice  of  the  limitation  of  authority  to  the  agent  or  other 
person  having  it  in  hand,^*^  and  it  is  immaterial  that  such  holder  knew 
that  it  had  been  signed,  accepted,  or  indorsed  in  blank,,  unless  he  was 


But  then  this  ncplipcnce  is  not  the  proximate  or  effective  cause  of  the  fraud.  A 
crime  was  necessary  for  its  completion.  Then  the  Bank  of  Ireland  v.  Evans' 
Trustees  (5  H.  of  L.  Cas.  389)  shows,  under  such  circumstances,  there  is  no 
estoppel.  It  is  true  that  was  not  the  case  of  the  nepotiahle  instrument,  but  those 
who  complained  of  the  negligence  were  the  parties  immediately  affected  by  the 
forged  instrument."  See  District  of  Columbia  v.  Cornell,  130  U.  S.  659;  Garrard 
V.Lewis,  10  Q.  B.  Div.  30. 

16.  Michigan  Bank  v.  Eldred,  9  Wall.  544;  Russell  v.  Langstaffe,  2  Doug.  514; 
Violett  V.  Patton,  5  Cranch,  142;  Orrick  v.  Colston,  7  Gratt.  189;  Frank  v. 
Lilienfcld,  33  Gratt.  385;  Diercks  v.  Roberts,  13  S.  C.  338;  Hopps  v.  Savage,  69 
Md.  516;  Eichelberger  v.  Bank,  103  Ind.  402;  National  E.xch.  Bank  v.  White, 
30  Fed.  414.  In  FuUerton  v.  Sturgis,  4  Ohio  St.  530,  A.  and  B.,  as  sureties  of  C, 
signed  an  instrument  payable  to  D.  or  order,  in  blank  as  to  date,  amount,  and 
time  of  payment,  and  delivered  it  to  C,  the  principal,  with  the  agreement  that 
it  should  not  be  filled  up  for  more  than  $1,000  or  $1,500.  C.  filled  it  up  for  $10,000, 
and  discounted  it,  and  it  was  held  that  the  parties  were  bound.  In  Johnston 
Harvester  Co.  v.  McLean,  57  Wis.  258,  A.,  as  accommodation  maker  with  B., 
signed  a  note  upon  the  upper  left-hand  comer  of  which  were  the  figures  "$45," 
but  the  amount  of  which  was  left  blank  with  the  understanding  that  B.  should 
fill  the  blank  so  as  to  make  it  a  note  for  $45.  B.,  however,  before  delivery  to 
payee,  and  without  his  knowledge,  added  a  cipher  to  the  figures  and  filled  the 
blank  with  the  words  "four  hundred  and  fifty  dollars."  Held,  (1)  that  the  figures 
in  the  corner  were  no  part  of  the  note,  and  an  unauthorized  change  in  them  did  not 
vitiate  the  note;  (2)  that  A.  having  intrusted  the  blank  to  B.,  was,  as  against 
persons  having  no  knowledge  of  his  want  of  authority,  bound  by  the  act  of  B.  in 
filling  up  the  note  for  the  unauthorized  amount.  See  Redlick  v.  Doll,  54  N.  Y. 
236.    And  see  ante,  §§  142  et  seq,  147,  842. 


§  844    HOLDER   OF   INSTRUMENTS   INTRUSTED   TO   ANOTHER    1019 

also  cognizant  of  its  being  fraudulently  filled  up."  H  he  knew  when 
he  took  the  paper  that  authority  as  to  filling  it  up  was  exceeded,  he 
could  not  recover.^^ 

It  seems,  also,  to  be  well  settled  that  if  the  party  sought  to  be 
charged  has  intrusted  his  blank  signature  to  an  agent  or  other  person, 
and  has  authorized  such  agent  or  other  person  to  fill  the  blank  in 
some  form,  for  some  purpose,  that  he  would  be  bound  to  a  bona  fide 
holder  if  the  agent  or  person  wrote  over  such  signature  a  bill  or  note. 
Thus,  where  papers  indorsed  in  blank  were  left  with  a  clerk,  with 
authority  to  use  them  for  certain  purposes,  and  they  were  fraudu- 
lently obtained  from  him  and  used  differently,  the  indorser  was  held 
liable.  ^^ 

§  844.  In  all  these  cases  the  first  test  stated  by  the  text  obviously 
applies.  The  party  sought  to  be  charged  has  created  the  agency  or 
trust  by  means  of  which  the  fraud  has  been  committed.  Holding  the 
agent  out  to  the  world,  by  confiding  his  signature  into  his  hands,  and 
accrediting  him  with  that  "letter  of  credit  for  an  indefinite  sum,"  -° 
he  who  has  thus  told  others  to  trust  him,  cannot  throw  the  burden  of 
loss  on  them  when  they  have  complied  with  that  request.  To  hold 
otherwise  would  be  to  punish  confiding  innocence,  and  to  protect  the 
authors  of  the  fraud.  In  Maine,  where  suit  was  brought  by  a  bona 
fide  holder  against  the  maker  of  a  note  who  alleged  that  it  was  a 
forgery,  and  his  evidence  tended  to  show  that  the  instrument  when 
delivered  contained  blanks  unfilled,  which  were  afterward  fraudu- 
lently filled,  it  was  held  that  it  was  for  the  jury  to  determine  whether 
the  instrument  was  delivered  as  an  incomplete  paper  with  blanks  to 
be  filled,  and  that  if  it  was  so  delivered  for  any  purpose,  the  person 
receiving  it  had  implied  authority  to  fill  the  blanks,  and  the  maker 
would  be  liable  thereon  to  a  holder  in  good  faith.^i  So,  where  a  blank 
was  signed  to  be  filled  as  an  order  on  a  savings  bank  and  a  negotiable 
note  was  written  over  it.^^  So,  where  the  maker  of  a  note  for  $300 
left  a  blank  between  "hundred"  and  "dollars,"  and  "twenty"  was 

17.  Huntington  v.  Branch  Bank,  3  Ala.  186;  Breckenridge  v.  Lewis,  84  Me. 
349,  24  Atl.  864,  30  Am.  St.  Rep.  353. 

18.  Clewer  v.  Wynn,  59  Ga.  246. 

19.  Putnam  v.  Sullivan,  4  Mass.  45.  See  1  Parsons  on  Notes  and  Bills,  114; 
Faullcner  v.  WTiite  &  Son,  33  Nebr.  199,  49  N.  W.  1122;  Brittan  v.  Bank,  124 
Cal.  282,  57  Pac.  84,  71  Am.  St.  Rep.  58. 

20.  Seean^e,  §  142. 

21.  Abbott  V.  Rose,  62  Me.  194. 

22.  Breckenridge  v.  Lewis,  84  Me.  349,  24  Atl.  864,  30  Am.  St.  Rep.  353. 


1020  RIGHTS   OF    A    BONA    FIDE    HOLDER  §  845 

inserted  so  as  to  make  the  note  for  $320,  a  bona  fide  holder  was  held 
entitled  to  recover,  the  maker  having  atYorded  the  opportunity  of 
alteration.-''  In  an  English  case  it  appeared  that  the  defendant 
signed  an  acceptance  blank  as  to  the  amount  in  the  body,  l)ut  in  the 
margin  of  which  were  the  figures  £14  0.s.  Gd.,  that  l)eing  the  sum  for 
which  he  desired  to  accept.  He  then  himded  the  acceptance  to  the 
drawer,  who  inserted  in  the  blank  "one  hundretl  and  forty-four 
pounds,  no  shillings,  and  sixpence,"  and  fraudulently  altered  the 
marginal  figures  to  correspond.  The  plaintiff  having  received  the 
bill  thus  altered,  bona  fide,  and  without  notice  of  the  fraud,  was  held 
entitled  to  recover.-''  Cases  of  this  kind  are  elsewhere  more  fully 
cited  and  discussed.-" 

Under  Ne<jutiahle  Instrument  statute. — Under  the  statute  it  has  been 
held  that  where  there  was  no  apparent  authority  on  the  part  of  the 
holder  to  fill  in  ])lanks,  and  there  was  no  reliance  on  possession  as 
evidencing  authority  to  complete  the  in.strunient,  a  bjuik  which  dis- 
counted notes  was  not  a  bona  fide  holder  when  the  notes  were  not 
complete  and  could  only  be  made  so  by  filling  the  amount  and  date 
and  time  of  payment,  as  it  was  said  that  one  can  be  a  holder  in  due 
course  only  where  the  instrument  is  "complete  and  regular  upon  its 
face."  2« 

SECTION  IV 

HOLDER    OF    NEGOTIABLE    INSTRUMENTS    WRITTEN    OVER    BLANK 

SIGNATURES 

§  845.  (4)  The  fourth  class  of  cases  comprises  those  in  which  the 
signature  of  the  party  has  been  written  on  a  blank  paper,  and  no 
authority  has  been  given  to  the  persons  in  whose  hands  it  is  intrusted, 
or  to  whose  it  may  come,  to  write  any  contract  over  it;  as,  for  instance, 
if  such  signature  were  written  on  the  fly-leaf  of  a  book  loaned  to  such 
person,  or  in  an  album,  or  were  left  with  him  for  any  legitimate  pur- 

23.  Yocum  v.  Smith,  63  111.  321. 

24.  Garrard  v.  Lewis,  10  Q.  B.  Div.  30;  Johnston  Harvester  Co.  v.  McLean, 
57  Wis.  258,  in  which  case  the  same  fraud  was  practiced,  and  the  same  rule  apphed. 

25.  See  vol.  II,  chapter  XLIII,  on  Alteration,  section  VI,  §§  1405  to  1409 
inclusive. 

26.  Appendix,  sec.  52.  Hunter  v.  Bacon,  111  N.  Y.  S.  820, 127  App.  Div.  573, 
in  which  case  the  note  had  been  made  by  a  partner  after  dissolution  and  sent  to  a 
bank,  whose  cashier,  knowing  of  the  dissolution,  filled  in  the  blanks,  and  it  was 
held  that  the  retired  partner  was  not  hable  thereon. 


§  S46  INSTRUMENTS   OVER   BLANK   SIGNATURES  1021 

pose,  such  as  to  be  used  as  a  means  of  identifying  the  writer's  hand- 
writing; and  in  such  cases,  if  a  bill  or  note  be  written  over  the  blank 
signature,  the  party  would  not  be  bound.^'^  Thus,  where  the  party 
wrote  his  name  on  a  blank  paper,  and  it  was  taken  from  his  table  by 
another,  who  caused  a  note  to  be  written  over  it,  and  put  in  circula- 
tion, these  views  were  taken,  Colher,  C.  J.,  saying:  "If  a  recovery 
were  allowed  upon  such  a  state  of  facts,  then  every  one  who  ever  in- 
dulges in  the  idb  habit  of  writing  his  name  for  mere  pastime,  or  leaves 
sufficient  space  between  a  title  and  his  subscription,  might  be  made 
a  bankrupt  by  having  promises  to  pay  money  written  over  his  signa- 
ture." 28 

§  846.  In  these  cases,  no  trust  or  agency  was  reposed  in  the  holder 
of  the  blank.  No  appearance  of  validity  was  given  to  the  paper  as  a 
note.  And  it  could  hardly  be  said  that  the  party  was  guilty  of  any 
negligence  in  exercising  his  right  to  do  so  simple  a  thing  as  the  mere 
writing  of  his  name,  when  he  attached  no  words  to  it  to  give  it  any 
significance.  In  Iowa,  the  doctrines  above  stated  have  been  adopted, 
and  there,  in  a  case  where  A.  wrote  his  name  on  a  piece  of  blank  paper, 
and  sent  it  to  B.,  who  was  his  agent  respecting  certain  matters,  in 
order  that  he  might  use  it  in  identifying  his  signature,  and  B.  had  a 
note  printed  over  it  and  passed  it  to  C,  before  maturity,  in  the  usual 
course  of  business,  it  was  held  that  the  latter  could  not  recover.-^ 


27.  Caulkins  v.  Whislcr,  29  Iowa,  495;  Nance  v.  Lary,  5  Ala.  370;  First  Nat. 
Bank  v.  Zcims,  93  Iowa,  140,  61  N.  W.  483,  citing  the  text. 

28.  Nance  v.  Lary,  5  Ala.  370;  Chamberlain  Banking  House  v.  Noble,  85 
Mo.  App.  428,  citing  text.  ^ 

29.  Caulkins  v.  WhLsler,  29  Iowa,  495,  in  which  ca.se  Beck,  J.,  said:  The 
case  differs  materially  in  its  facts  from  the  case  cited  in  support  of  plaintiff's 
right  to  recover.  In  these  cases  blanks  were  filled  up  contrary  to  the  direction 
of  the  maker,  or  without  his  authority.  But  in  all  of  such  cases  the  makers  in- 
tended to  execute  an  instrument  which  should  be  binding  upon  them.  Blanks 
were  filled  up  contrary  to  the  authority  given  by  the  makers,  or  in  some  other  way 
the  instruments  were  made  so  that  they  did  not  correspond  with  the  intention  of 
the  makers;  but  in  all  such  cases  there  were  makers  and  instruments,  and  through 
the  frauds  of  those  to  whom  the  instruments  were  intrusted,  they  were  thus  made 
to  be  of  different  effect  than  was  designed  by  the  makers.  In  these  cases  it  is  cor- 
rectly held,  that  while  the  parties  perpetrating  the  fraud  in  some  cases  may  have 
been  guilty  of  forgery,  yet  the  makers  were  bound  upon  the  instruments  as  agamst 
holders  in  good  faith  and  for  value.  The  reason  is  obvious.  The  maker  ought 
rather  to  suffer  on  account  of  the  fraudulent  act  of  one  to  whom  he  intrusts  his 
paper,  or  who  is  made  agent  in  respect  to  it,  than  an  innocent  party.  The  law 
esteems  him  in  fault  in  thus  putting  it  in  the  power  of  another  to  perpetrate  the 


1022  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  847 


SECTION  V 

HOLDER  OF  NEGOTIABLE  INSTRUMENTS  PROCURED   BY   IMPOSITION  ON 
INFIRM    OH    ILLITERATE    PERSONS 

§  847.  (5)  The  fiflh  class  of  cases  are  those  in  which  some  natural 
infirmity  or  defect  of  education  has  been  imposed  upon,  and  the 
party  deceived  into  signing  a  note  under  the  impression  that  it  was 
for  a  different  amount,  or  was  a  contract  of  a  different  character. 
Thus,  if  a  note  were  fraudulently  or  falsely  read  to  a  blind  man,  and 
he  were  to  sign  it  believing  it  to  have  been  correctly  read;  ^^  or  if  the 
party  were  unable  to  read,  and  signed  a  note,  after  due  inquiry  and 
precaution,  under  the  assurance  that  it  was  an  agreement  of  a  different 
kind,  we  should  have  a  new  element  entering  into  the  consideration 
of  his  liability.  In  such  cases  the  want  of  faculties  to  detect  the  fraud 
shields  the  party  from  its  consequences,  and  the  authorities  justly 
exonerate  him. 

He  has  created  no  agency  or  trust.  He  has  not  intentionally  or 
knowingly  given  the  appearance  of  validity  to  the  paper.  It  cannot 
l)e  said  that  he  has  acted  negligently,  l)ecause  his  infirmities  prevented 
that  diligence  which  men  of  ordinary  faculties  and  of  education 
possess.^^ 


fraud,  and  requires  him  to  bear  the  loss  consequent  upon  this  negligence.  In  the 
case  under  consideration  no  fault  can  bo  imputed  to  defendant.  He  did  not  intrust 
his  signature  to  the  possession  of  the  forger  for  the  purpose  of  binding  himself  by  a 
contract.  He  conferred  no  power  upon  the  party  who  committed  the  crime  to 
use  it  for  any  such  purpose.  He  was  not  guilty  of  neghgonce  in  thus  giving  it, 
for  it  is  not  unusual,  in  order  to  identify  signatures,  and  for  other  purposes,  for 
men  thus  to  make  their  autographs.  The  defendant  cannot  be  regarded  as  being 
so  far  in  fault  in  the  transaction  that  he  ought  to  bear  the  loss  resulting  from  the 
crime."  See  Kline  v.  Guthrie,  42  Ind.  227;  Deturler  v.  Besh,  44  Ind.  70;  First 
Nat.  Bank  v.  Zeims,  93  Iowa,  140,  61  N.  W.  483,  citing  the  text. 

30.  Putnam  v.  Sullivan,  4  Mass.  45,  Parsons,  C.  J.,  saying:  "That,  perhaps,  if 
a  blind  man  had  a  note  falsely  and  fraudulently  read  to  him,  and  he  indorsed  it 
supposing  it  to  be  the  note  read  to  him,  he  would  not  be  liable  as  indorsee,  because 
he  is  not  guilty  of  any  laches."  See  Schuylkill  County  v.  Copley,  67  Pa.  St.  386 
(a  bond). 

31.  The  doctrine  of  negligence  has  been  held  not  to  apply  to  nonnegotiable 
instruments.  Kastner  v.  Pribilinski,  96  Ind.  232;  Means  v.  Anderson,  19  R.  I. 
118,  32  Atl.  82;  Green  v.  Wilkie,  98  Iowa,  74,  66  N.  W.  1046;  Willard  v.  Nelson, 
35  Nebr.  651,  53  N.  W.  572,  37  Am.  St.  Rep.  455,  note;  The  Kalamazoo  Nat. 
Bank  V.  Clark,  52  Mo.  App.  593,  quoting  text. 


§  848  INSTRUMENTS    PROCURED    BY   IMPOSITION  1023 

§  848.  In  New  York,^^  where  a  bona  fide  holder  for  value,  and 
without  notice  of  any  defect,  brought  suit  on  a  promissory  note, 
the  defendant  offered  to  prove  in  evidence  that  he  was  unable  to 
read,  and  that,  w^hen  he  signed  the  note,  it  was  represented  to  him, 
and  he  believed,  that  it  was  a  certain  other  contract,  offered  to  be 
also  produced  in  evidence,  and  which  purported  to  ])e  of  an  entirely 
different  character.  The  Supreme  Court  of  New  York  (overruling 
the  decision  of  the  lower  court)  held  that  the  evidence  was  admissible, 
and  presented  a  sufficient  defense,  Talcott,  J.,  saying:  "A  bona  fide 
holder  of  commercial  paper,  for  value  and  before  maturity,  is  pro- 
tected, in  many  cases,  against  defenses  which  are  perfectly  available 
against  the  original  parties,  such  as  that  the  signature  was  obtained 
l)y  false  and  fraudulent  representations;  that  the  paper  has  been 
diverted;  that  a  blank  bill  or  acceptance  has  been  filled  up  for  a  greater 
amount  thiin  the  party  to  whom  it  was  delivered  was  authorized 
to  insert,  etc.  But,  in  all  these  cases,  the  party  intended  to  sign  and 
put  in  circulation  the  instrument  as  a  negotiable  security;  where  this 
is  the  case,  he  is  bound  to  know  that  he  is  furnishing  the  means 
whereby  third  parties  may  be  deceived  and  innocently  led  to  part 
with  their  property  on  the  faith  of  his  signature,  and  in  ignorance  of 
the  true  state  of  facts.  But  while  this  is  a  rule  of  great  convenience 
and  propriety,  there  are  and  must  be  some  limits  to  its  application, 
some  defenses  as  to  which  even  a  bona  fide  purchaser  purchases  at 
his  peril.  ♦  *  *  The  true  distinction  was  tersely  stated  by  Bovill, 
C.  J.,  in  Foster  v.  McKinnon  (38  Law  Journal  Rep.  [N.  S.]  310), 
interrupting  counsel,  arguendo,  who  was  stating  the  proposition  that 
where  the  plaintiff  proves  he  is  a  botm  fide  holder  for  value,  it  is 
immaterial  that  the  signature  of  the  defendant  was  obtained  l^y  fraud. 
'That,'  said  the  Chief  Justice,  'is  where  the  defendant  intended  to 
put  his  name  to  an  instrument  which  was  a  bill.'"  In  another  New 
York  case  evidence  was  given  tending  to  show  that  the  note  was 
signed  by  the  maker  at  his  own  house;  that  he  and  two  of  his  sons 
were  present  who  could  read;  that  defendant  attempted  to  read  the 
paper,  l)ut  did  not  understand  it  well,  and  that  it  was  then  read  over 
by  the  person  presenting  the  paper,  an  entire  stranger  to  the  defend- 
and  and  his  family,  and  was  signed  by  defendant.  The  note  was 
held  by  a  bojm  fide  holder,  and  the  defendant  claimed  to  have  signed 
it  under  the  belief  that  it  was  a  contract  to  act  as  agent  for  a  patent 

32.  Whitney  v.  Snyder,  2  Lans.  477.  See  Chapman  v.  Rose,  5G  N.  Y.  137, 
and  post,  §  850;  Willard  v.  Nelson,  35  Nebr.  651,  53  N.  W.  572,  37  Am.  St.  Rep. 
455,  note. 


1024  RIGHTS    OF   A    BONA    FIDE    HOLDER  §§  849,  849a 

cultivator.  It  was  held  that  the  case  turned  on  the  question  of  the 
dofondiint's  noKlip;ence;  that  it  was  improper  in  the  inferior  court  tc 
direct  a  verdict  for  tiie  piuintitT;  imd  that  whether  the  maker  was 
negligent  or  not  was  a  question  of  fact  for  the  jury. 


33 


§  849.  In  Wisconsin,  where  a  German,  unable  to  read  or  ^\Tite 
the  English  language,  was  induced  to  sign  a  note  on  the  fraudulent 
representation  that  it  was  a  contract  of  agency  respecting  a  patent 
machine,  he  was  likewise  protected  against  a  buna  Jidt  holder,  on 
the  ground  that  he  had  no  intention  of  signing  a  note,  and  was  guilty 
of  no  negligence  in  aflixing  his  signature.^*  So  it  was  held,  in  the  same 
State,  that  where  the  maker  of  a  note  was  induced  by  fraud  to  sign  a 
negotiable  note,  supposing  it  to  be  noimegotiable,  notwithstanding 
laches  on  his  part,  he  was  not  bound  to  a  bona  fide  holder.^^  But  this 
case  seems  to  go  too  far.  In  Iowa  the  payee  read  the  note  falsely  to 
a  German  unable  to  read  English,  who  signed  it,  supposing  it  to  be, 
as  read,  for  a  smaller  amount.  It  was  held  that  he  was  bound  unless 
he  could  show  that  he  was  not  negligent.^*^ 

§  849a.  It  has  been  said  by  Chief  Justice  Gibson,  that  "if  a  party 
who  can  read,  will  not  read  a  deed  put  before  him  for  execution;  or, 
if  being  unable  to  read  will  not  demand  to  have  it  read  and  explained 
to  him,  he  is  guilty  of  supine  negligence,  which,  I  take  it,  is  not  the 


33.  Fenton  v.  Robinson,  4  Hun,  252;  Green  v.  Wilkie,  98  Iowa,  74,  66  N.  W. 
1046. 

34.  Walker  v.  Ebert,  29  Wis.  96.  To  same  effect  see  Puffer  v.  Smith,  57  111. 
527;  Van  Brunt  v.  Singlcy,  85  111.  281;  Baldwin  v.  Bricker,  86  Ind.  222;  Green  v. 
Wilkie,  98  Iowa,  74,  66  N.  W.  1046,  60  Am.  St.  Rep.  184;  First  Nat.  Bank  v. 
Lierman,  5  Nebr.  247;  Shenandoah  Nat.  Bank  v.  Gravatte,  4  Nebr.  (Unof.)  591, 
95  N.  W.  694,  citing  text;  Bowers  v.  Thomas,  62  Wis.  480;  Griffiths  v.  Kellogg, 
39  Wis.  290.  In  CaUfornia  the  contrary  has  been  held.  Bedell  v.  Hering,  77  Cal. 
572. 

35.  Kellogg  V.  Stciner,  29  Wis.  627  (1871).  See  also  Butler  v.  Carns,  37  Wis. 
61  (1875),  and  Mitchell  v.  Tomlinson,  91  Ind.  168. 

36.  Fayette  County  Sav.  Bank  v.  Stcffer,  54  Iowa,  214;  Allen  v.  Haley,  77 
Cal.  572.  An  answer  to  a  complaint  in  an  action  on  a  promissory  note,  alleging 
that  defendant  could  not  read,  and  that  the  payee  undertook  to  read  the  instru- 
ment for  him,  and  read  same  as  if  it  contained  a  clause  making  the  payment 
thereof  conditional,  but  failed  to  read  that  it  was  payable  in  bank,  and  provided 
for  the  payment  of  interest  from  date,  is  not  sufficient  as  an  answer  of  non  est 
factum  where  it  was  not  averred  that  a  disinterested  person  could  not  be  found  to 
read  the  instrument  for  him.  See  Lindley  v.  Hoffman,  22  Ind.  App.  237,  53  N.  E. 
471;  First  Nat.  Bank  of  Cameron  v.  Stanley,  46  Mo.  App.  440,  citing  text. 


§  849a  INSTRUMENTS   PROCURED    BY   IMPOSITION  1025 

subject  of  protection,  either  in  equity  or  law."  ^"^  And,  ordinarily, 
in  the  absence  of  any  device  to  put  the  party  off  his  guard,  an  omission 
to  read  the  instrument  by  one  having  the  capacity  to  do  so,  will 
render  him  liable,  and  put  him  beyond  the  protection  of  the  law, 
although  he  is  assured  that  he  is  signing  a  paper  of  a  different  kind 
from  what  it  really  is.^  But  in  all  such  cases  the  question  of  negli- 
gence is  difficult  of  legal  solution,  and  no  absolute  invariable  rule  can 
well  be  laid  do^\^l.  If  the  paper  be  ostensibly  read  to  one  who  cannot 
himself  read,  it  is  still  to  him  a  matter  that  must  rest  on  faith;  and  if 
he  takes  due  precaution  to  ascertain  its  true  character,  it  would  be  a 
great  hardship  to  inflict  responsibility  upon  him  which  he  did  not 
intend  to  assume.  And  what  is  due  precaution  must  be  determined 
!>y  the  peculiar  circumstances  of  each  case.^^ 

37.  Greenfield's  Estate,  2  Harr.  496;  Radcliffe  v.  Biles,  94  Ga.  480,  20  S.  E. 
359.    See  Crim  v.  Crim,  1G2  iMo.  544,  63  S.  W.  489. 

38.  Ruddcll  V.  Phalor,  72  Ind.  533;  Ruddell  v.  Dillman,  73  Ind.  521;  Fisher 
V.  Von  Behren,  70  Ind.  19;  Penn.sylvania  R.  Co.  v.  Shay,  82  Pa.  St.  198;  Roach  v. 
Karr,  18  Kan.  529;  Seebright  v.  Fletcher,  6  Blackf.  (Ind.)  380;  McCormack  v. 
Molburg,  43  Iowa,  561;  Hopkins  v.  Ilawkeye  Ins.  Co.,  57  Iowa,  203;  Merritt  v. 
Bagwell,  70  Ga.  579;  Cannon  v.  Lindsay,  85  Ala.  198;  Baldwin  v.  Barrows,  8G 
Ind.  351;  Yeagley  v.  Webb,  86  Ind.  427;  Carey  v.  Miller,  25  Ilun,  28;  RadclifTc  v. 
Biles,  94  Ga.  480,  20  S.  E.  354;  Martin  v.  Smith,  116  Ala.  639,  22  S.  E.  917.  It  is 
no  defense  to  an  action  on  a  promissory  note  that  the  maker  relied  on  certain 
representations  made  by  an  agent  of  the  payee  at  the  time  of  its  execution,  and 
that  it  did  not  contain  the  contract  as  actually  made;  the  note  not  having  been 
signed  under  any  emergency,  and  there  being  nothing  to  prevent  the  maker 
from  reading  it,  and  it  not  being  shown  that  the  failure  to  read  it  was  brought 
about  by  an  actual  fraud  perpetrated  by  the  agent  of  the  payee  at  the  time  of  its 
execution.  Walton  Guano  Co.  v.  Copelan,  112  Ga.  319,  37  S.  E.  411,  52  L.  R.  A. 
268.  An  excuse  for  failing  to  pay  the  full  amount  of  a  note  that  the  maker  was 
worried  in  mind  and  did  not  read  the  mortgage  security,  is  not  a  valid  excuse  by  a 
man  of  large  practical  business  experience  who  could,  by  ordinary  attention  to  the 
terms  of  the  mortgage,  have  detected  any  error  in  it.  Condon  v.  Rice,  88  Md.  720, 
44  Atl.  169.  But  it  has  been  held  that  where  a  drawer  signed  a  draft  for  goods 
shipped  without  reading  it,  not  having  his  spectacles,  he  was  held  not  to  have 
been  negligent  therein,  when  he  applied  to  the  defendant  bank,  and,  having  given 
the  data  required,  signed  a  draft  prepared  by  the  cashier,  as  he  had  a  right  to 
rely  on  the  accuracy  and  skill  of  the  cashier  in  a  matter  so  peculiarly  within  the 
line  of  his  business.    Stoner  v.  Zachary,  122  la.  287,  97  N.  W.  1098. 

39.  Baldwin  v.  Bricker,  86  Ind.  222;  Williams  v.  Stoll,  79  Ind.  80.  Though  the 
maker  of  a  note  could  not  read  and  wTite,  yet  where  his  fourteen  year  old  eon 
signed  the  note  for  him,  at  his  request,  and  in  his  presence,  without  reading  the 
paper  to  the  maker,  the  defense  of  mistake  cannot  be  maintained  against  an 
innocent  holder  for  value.  New  Madrid  Banking  Co.  v.  Poplin,  129  Mo.  App. 
121,  108  S.  W.  115.    On  a  defense  of  fraud  against  the  maker,  in  an  action  by  an 

65 


1026  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  850 


SECTION   VI 

HOLDER    OF    NEGOTIABLE    INSTRUMENTS    EXECUTED    UNDER    MISTAKE 
AND    MISREPRESENTATION 

§  850.  (0)  The  .sixth  chuss  of  cases  are  those  in  which  the  party 
possesses  the  onHnary  faculties  and  knowledge,  and  is  betrayed  into 
sip;ninp;  a  bill  or  note  by  the  assuranre  that  it  is  an  instrument  of  a 
different  kind.  It  is  generally  agreed  that  if  the  party  is  guilty  of  any 
negligence  in  signing  the  paper,  he  is  bound; '"'  and  the  act  itself,  it 
seems  to  us,  can  hardly  be  committed  without  negligence."^    A  man 

innorcnt  holder,  it  \v:us  hold  lluil  the  iii:ik<T  could  not  nniintiiin  Huch  defenw  on  the 
jj;round  that  he  could  not  rend  iind  Hupposed  that  he  wa-s  siRiiinn  another  contract, 
when  several  membera  of  hiw  family  wenr  standing  by  who  could  read;  and  espe- 
cially when  ho  contented  himself  with  a  partial  reading  by  a  total  stranger. 
First  Nat.  Bank  v.  Hall,  129  Mo.  App.  2SG,  108  S.  W.  633. 

40.  In  Chapman  v.  Rose,  44  How.  Pr.  3()4,  56  N.  Y.  1.37,  Johnson,  J.,  said: 
•  In  such  case  the  rule  is,  that  ho  is  hound  by  the  act  of  him  whom  he  h-aa  trusted, 
in  favor  of  a  holder  in  good  faith."  Fenton  v.  Hohin.son,  4  Hun,  252;  Putnam  v. 
Sullivan;  Ross  v.  Doland,  29  Ohio  St.  473;  Nebeker  v.  Cutsingor,  48  Ind.  430; 
Fayette  County  Sav.  Bank  v.  HivSlva,  54  Iowa,  214;  Salander  v.  Lockwood,  Cii 
Ind.  285;  I'^irst  Nat.  Bank  v.  Latton,  67  Ind.  2.56;  I'^isher  v.  Von  Behren,  71  Ind. 
10;  Ruddcll  v.  Phalor,  72  Ind.  533;  Indiana  Nat.  Bank  v.  Wcckcrly,  67  Ind.  345; 
Gettlor  v.  Pickett,  61  Ala.  387  (scmhlc);  Din.smore  v.  Stimbert,  12  Ncbr.  439; 
National  Exch.  Bank  v.  Veneman,  43  Hun,  244,  citing  th«>  text;  Holling.shoad  v. 
American  Nat.  Bank  of  Macon,  104  Ga.  250,  30  S.  K.  728;  First  Nat.  Bank  of 
Cameron  v.  Stanley,  46  Mo.  App.  440,  citing  text;  Yoomans  v.  Lane,  101  111. 
App.  228;  Grant  v.  Isctt,  81  Kan.  439,  105  Pac.  1021;  Cedar  Rapids  Nat.  Bank  v. 
Rhodes,  96  Miss.  700,  51  So.  717.  See  aJite,  §  847,  and  post,  §  851.  The  fact  that 
the  maker  of  a  note  given  for  a  premium  on  a  life  insurance  policy  did  not  read  it 
and  supposed  that  it  wius  to  be  due  immediately  and  to  be  paid  out  of  the  money  ho 
was  to  borrow  from  the  insurance  company,  whereas  the  notes  were  due  in  one 
y(>ar  from  that  date,  does  not  show  such  mistake  of  which  the  law  can  take  notice. 
Poindexter  v.  McDowell,  110  Mo.  App.  233,  84  S.  W.  1133.  Where  a  person, 
unable  to  read  or  distinguish  papers  without  his  ghussos,  signed  without  using  hi.n 
glasses  a  note  which  had  been  surreptitiously  placed  among  other  papers  which 
it  was  his  duty  to  sign  and  in  such  a  manner  that  he  could  not  distinguish  it  from 
the  other  papers,  he  is  estopped  by  his  carelessness  from  setting  up  the  fraud 
practised  in  defense  to  the  note  as  against  a  payee  who  was  not  a  party  thereto 
and  had  no  knowledge  of  it.     McCoy  v.  Gouvion,  102  Ky.  386,  43  S.  W,  699. 

41.  Leonard  v.  Dougherty,  22  W.  Va.  536;  First  Nat.  Bank  v.  Johns,  22  W. 
Va.  520,  Johnson,  J.,  saying:  "If  the  party  signed  the  note,  if  it  was  his  genuine 
signature,  and  he  intended  to  sign  a  paper,  and  by  artifice  and  fraud  was  induced 
to  sign,  and  did  in  fact  sign  a  negotiable  promissory  note,  which  was  afterward  pur- 
chased for  value  before  maturity  without  notice  of  any  such  fraud  in  its  procure- 


§  850  INSTRUMENTS   EXECUTED    UNDER   MISTAKE  1027 

has  no  right  to  have  eyes  and  see  not;  or  ears  and  hear  not;  and  while 
the  law  should  protect  those  who  suffer  from  the  want  of  the  senses 
in  their  proper  development,  or  ordinary  education  to  throw  the 
burden  of  the  failure  to  use  them  upon  innocent  third  parties.  In 
such  cases  we  should  say  the  act  of  signing  the  paper  without  intend- 
ing to  do  so,  as  a  general  rule,  imported  negligence  per  se,  and  rendered 
the  party  liable.^'-  A  misrepresentation  bj'-  a  total  stranger  is  not 
sufficient  to  defeat  an  action  on  a  promissory  note,  plainly  legible, 
and  assigned  before  maturity  to  a  holder  for  value,  when  the  only 
excuse  of  the  maker  is  that  he  was  too  busy  to  read  the  note.^^  If  he 
has  full  and  unrestricted  means  of  ascertaining  the  true  character  of 
the  instrument  before  signing  it,  but  neglecting  to  avail  himself  of 
such  means  of  information,  and  relying  on  others'  representations,  he 
signs  and  delivers  a  negotiable  paper,  instead  of  a  different  paper, 
which  he  intended  to  sign,  he  cannot  be  heard  to  impeach  it  when  it 
luus  been  passed  to  a  bo7ia  fide  holder.  In  accordance  with  this  doc- 
trine it  was  held  in  Iowa  that  where  one  Matting  was  induced  to  sign 
a  promissory  note  under  the  false  representation  that  it  was  a  con- 
tract of  agency,  respecting  a  certain  patent  seeder  and  cultivator, 
lie  was  bound  to  a  bona  fi'k  holder/^ 

ir.ont,  he  is  bound  to  such  innocent  holder,  and  the  well-established  rule  applies 
with  striking  force  in  such  a  case  (even  if  it  could  be  said  that  the  maker  was 
<'n; irely  without  fault  in  .signing  the  note)  'when  one  of  two  innocent  parties  must 
HufTer  by  the  act  of  a  third,  he,  who  by  his  act  haa  enabled  such  third  person  to 
cause  the  loss,  must  sustain  it.'"  In  Yakima  Valley  Bank  v.  McAllister,  37 
W  ;ush.  566,  79  Pac.  1119,  L.  R.  A.  (N.  S.)  1075,  107  Am.  St.  Rep.  823,  it  was  held 
that  where  an  indorsement  of  a  note,  payable  to  the  order  of  the  maker,  was  the 
effect  of  a  fraudulent  trick  or  device,  which  the  indorscr  was  in  no  way  responsible 
for,  an  innocent  purchiuser  for  value  cannot  recover  thereon. 

42.  Ort  v.  Fowler,  31  Kan.  47S,  47  Am.  Rep.  505,  Brewer,  J.,  citing  the  text; 
First  Nat.  Bank  v.  Johns,  22  VV.  Va.  520,  46  Am.  Rep.  500;  Harrison  v.  Walden, 
89  Mo.  App.  104;  Hollingshead  v.  American  Nat.  Bank  of  Macon,  104  Ga.  250, 
30  S.  E.  728;  Pavey  v.  Stauffer,  45  La.  Ann.  353,  12  So.  512;  Crim  v.  Crim,  102 
Mo.  544.  Unless  the  plea  aver  notice  to  the  holder  of  such  fraud  and  deception 
before  he  acquired  the  note.  Tower  v.  Whip,  53  W.  Va.  158,  44  S.  E.  179,  03 
L.  R.  A.  937. 

43.  Wilcox  V.  Tetherington,  103  111.  App.  404. 

44.  In  Douglass  v.  Matting,  29  Iowa,  498,  Beck,  ,].,  said:  "The  defendant 
trusted  the  one  with  whom  he  was  dealing  with  the  preparation  of  the  instrument. 
The  instrument  as  prepared  was  not  what  defendant  had  agreed  to  sign,  but  was 
voluntarily  executed  by  him.  The  act  of  the  agent  was  a  fraud  whereby  the  de- 
fendant was  induced  to  make  a  note,  and  not  the  false  making  of  it,  which  is 
necessary  to  constitute  a  forgery.  *  *  *  Now  it  would  be  manifestly  unjust  to 
permit  the  maker,  while  admitting  the  genuineness  of  his  signature,  to  defeat 
the  note,  on  the  ground  that,  through  his  own  culpable  carelessness  while  dealing 


1028  RIGHTS    OF   A    BONA    FIDE    HOLDER  §  850 

Again,  in  Iowa,  where  a  party's  signature  was  fraudulently  oi)- 
tained  to  a  printed  form  or  blank,  under  pretense  of  getting  an  order 
for  a  machine,  and  the  payee  filled  it  up  as  a  negotiable  note  for  ::7."), 
payable  to  T.  H.,  or  bearer,  the  like  decision  was  rendered.'^  In  New 
York  similar  views  now  prevail;  *^  and  in  Illinois,  where  the  maker 
of  a  note  for  $180  signed  it  without  reading  it,  under  representations 
that  it  contained  a  condition  that  it  should  not  be  paid  until  a  certain 
number  of  hay-loading  devices  were  sold,  he  was  held  bound  to  tl.e 
bona  fide  holder,  upon  the  same  principles.-*^    In  Kansas,  the  maler 

with  a  .stranpor,  ho  sipncd  the  instrument  without  readinK  it  or  attempting  to 
ji-seertain  its  true  contents.  The  law  will  favor,  as  between  the  holder  and  mala  r 
in  such  a  case,  the  more  innocent  and  dilipent.  The  maker  had  it  in  his  power  to 
protect  himself  from  the  fraud,  but  failed  to  do  so.  When  the  consetiuenccs  (  f 
this  act  are  about  to  be  visited  upon  him,  he  scoLs  to  make  another  bear  it,  on 
the  ground  that  he  wa.s  defrauded  through  his  own  gross  negligence.  lie  can 
certainly  claim  protection  either  on  the  ground  of  his  innocence  or  diligence. 
The  rule  contended  for  by  the  appellee  would  tend  to  destroy  all  confidence  in 
commercial  pai)er.  It  is  better  that  defendant,  and  others  who  so  carelessly  afFi.v 
their  names  to  paper,  the  contents  of  which  are  unknown  to  them,  .should  suffer 
from  the  fraud  which  their  recklessness  invites,  than  that  the  character  of  com- 
mercial paper  should  be  impaired,  and  the  business  of  the  country  interfered 
wi  h  and  unsettled."  See  this  case  distinguished  in  Kno.willc  Nat.  Bank  v. 
Clarke,  51  Iowa,  204;  Millard  v.  Barton,  13  R.  I.  003;  Bro\vn  v.  Hoffelmcycr,  74 
Mo.  App.  385. 

45.  In  McDonald  v.  Muscatine  Nat.  Bank,  27  Iowa,  319  (1809),  Cole,  J., 
said:  "This  conclusion  is  based  upon  the  fact,  as  shown  by  plaintiff's  own  evidence, 
that  the  signature  of  the  plaintiff  was  placed  to  the  blank  instrument,  and  it  was 
delivered  and  intrusted  by  him  to  the  payee  for  .some  pun)osc.  In  such  case  the 
rule  may  well  be  apphed."    Cowgill  v.  Pctifish,  51  Mo.  App.  204. 

46.  Chapman  v.  Rose,  50  N.  Y.  137  (1874),  overruling  same  case  in  44  How. 
Pr.  3G4  (1873),  and  explaining  Whitney  v.  Snyder,  2  Lans.  477;  Fenton  v.  Robin- 
son, 4  Hun,  354.  See  ante,  §  848.  See,  to  same  effect,  Shirts  v.  Ovcrjohn,  GO  Mo. 
315;  Fredericks  v.  Clemens,  GO  Mo.  313;  Citizens'  Nat.  Bank  v.  Smith,  55  N.  II. 
393;  Cannon  v.  Moore,  17  Mo.  App.  101. 

47.  Leach  v.  Nichols,  55  111.  273,  Mc.Ulister,  J.:  "The  case  of  Foster  v.  Mc- 
Kinnon,  decided  in  the  Enr.lisli  Common  Pleas,  in  July,  1839,  and  reported  in 
38  L.  J.  Rep.  (N.  S.),  p.  310,  is  one  where  the  plaintiff  was  an  indorsee  of  a  bill 
of  e  ^change  for  £3,000,  and  sued  the  defendant  as  indorscr.  The  plaintiff  was  a 
holder  for  value  before  maturity,  and  without  notice  of  the  fraud.  Callow,  the 
acceptor  of  the  bill,  testified  that  he  produced  the  bill  to  the  defendant  (a  gentle- 
man far  advanced  in  life),  for  him  to  put  hLs  signature  on  the  back,  after  that  of 
one  Cooper,  who  was  payee  and  first  indorser  of  the  bill,  Callow  not  sajdng  it  was 
a  bill,  but  told  the  defendant  the  instrument  was  a  guaranty.  The  defendant 
did  not  see  the  face  of  the  bill  at  all,  but  the  bill  was  of  the  usual  shape,  and  bore 
a  bill  stamp,  the  impress  of  which  stamp  was  visible  at  the  back  of  the  bill.  The 
defendant  signed  his  name  after  Cooper,  he,  the  defendant,  as  the  witness  stated, 
believing  the  document  to  be  a  guaranty  only.    The  Lord  Chief  Justice  told  the 


6  850  INSTRUMENTS    EXECUTED    UNDER   MISTAKE  1029 

signed  under  the  impression  that  the  paper  was  a  contract  of  agency, 
and  without  reading  it,  and  it  being  a  negotiable  note  for  $90,  he  was 
held  bound  to  a  bona  fide  holder.'^ 

jury  that  if  the  indorsement  waa  not  the  defendant's  signature,  or  if,  being  his 
signature,  it  was  obtained  upon  a  fraudulent  representation  that  it  was  a  guaranty, 
and  the  defendant  signed  it  without  knowing  that  it  was  a  bill,  and  under  the 
belief  that  it  waa  a  guaranty,  and  if  the  defendant  was  not  guilty  of  any  negli- 
gence in  so  signing  the  paper,  the  defendant  was  entitled  to  a  verdict.  The  jury 
found  for  the  defendant.  A  rule  nisi  was  obtained  for  a  new  trial,  and  the  cause 
was  fully  argued,  and  carefully  considered  by  the  court,  upon  examination  of  all 
the  authorities  which  could  be  found  bearing  upon  the  question.  The  instruction 
was  sustained  by  the  whole  court  in  a  very  elaborate  opinion  delivered  by  Byles,  J., 
who  says:  'It  seems  plain,  on  principle  and  on  authority,  that  if  a  blind  man, 
or  a  man  who  cannot  read,  or  a  man  who  for  some  reason  (not  implying  negligence) 
forbears  to  read,  has  a  written  contract  falsely  read  over  to  him,  the  reader  mis- 
reading to  such  a  degree  that  the  written  contract  is  of  a  nature  altogether  different 
from  the  contract  pretended  to  be  read  from  the  paper,  which  the  blind  or  illiterate 
man  afterward  sign.s,  then,  at  least  if  there  be  no  negligence,  the  signature  so 
obtained  is  of  no  force,  and  it  is  invalid,  not  merely  on  the  ground  of  fraud, 
where  fraud  existed,  but  on  the  ground  that  the  mind  of  the  signer  did  not  accom- 
pany the  signature;  in  other  words,  that  he  never  intended  to  sign,  and,  there- 
fore, in  contemplation  of  law,  never  did  sign  the  contract  to  which  his  name  is 
appended.  The  authorities  appear  to  support  this  view  of  the  law.  In  Thorough- 
good's  Case,  2  Rep.  9G,  it  was  held  that  if  an  illiterate  man  have  a  dt-cd  falsely 
read  over  to  him,  and  he  then  seals  and  delivers  the  parchment,  that  parchment  i.s, 
nevertheless,  not  his  deed.  In  a  note  to  Thoroughgood's  Ca.se,  2  Hep.  90,  in  Fraz- 
ers'  edition  of  Coke's  Reports,  it  is  suggested  that  the  doctrine  is  not  confined  to 
the  condition  of  an  illiterate  grantor,  and  a  case  in  Kelway's  Reports,  p.  70,  is 
cited  in  support  of  this  observation.  On  reference  to  that  case,  it  appears  that 
one  of  the  judges  did  there  obser\'e  that  it  made  no  difference  whether  the  grantor 
were  lettered  or  unlettered.  That,  however,  was  a  case  where  the  grantee  him- 
self was  the  defending  party;  but  the  position,  that  if  a  grantor  or  covenantor 
be  deceived  or  misled  as  to  the  actual  contents  of  the  deed,  the  deed  does  not  bind 
him,  is  supported  by  many  authorities  (see  Com.  Dig.,  tit.  "  Fait,"  62),  and  is  rec- 
ognized by  Bayley,  J.,  and  the  Court  of  Exchequer,  in  the  case  of  Edwards  v. 
Brown,  1  Cromp.  &  J.  312.  Accordingly,  it  has  recently  been  decided  in  the 
Exchequer  Chamber,  that  if  a  deed  be  delivered,  and  a  blank  left  therein  be 
thereafter  improperly  filled  up  (at  least  if  this  be  done  without  the  grantor's 
negligence),  it  is  not  the  deed  of  the  grantor.  Swan  v.  The  North  British  Austra- 
]a.sian  Co.,  2  Hurls.  &  C.  17.5,  32  L.  J.  R.  (N.  S.)  Exch.  273.  These  cases  apply 
to  deeds,  but  the  principle  is  equally  applicable  toother  contracts.  *  *  ♦  It  was 
not  his  design,  and  if  he  was  guilty  of  no  negligence,  it  was  not  even  his  fault 
that  the  instrument  he  signed  turned  out  to  be  a  bill  of  exchange.'  "  See  Sims  v. 
Bice,  G7  111.  88,  where  party  was  imposed  upon,  and  fraudulently  induced  to  sign  a 
note,  supposing  it  to  be  an  agreement  of  agency,  and  was  interrupted  in  the  course 
of  the  transaction.  He  was  unable  to  read  readily,  and  a  verdict  in  his  favor 
was  sustained. 
48.  Ort  V.  Fowler,  31  Kan.  478. 


1030  RIGHTS   OF   A    BONA    FIDK    HOLDER  §  850 

So  in  Mist^ouri  the  horui  fide  holder  wjis  sustaiiu'd  in  his  rij^lit  to 
recover  where  the  maker  signed  a  negotiable  note,  though  supposing 
it  was  a  receipt  for  plows.  In  this  case  he  was  also  deemed  bound  by 
a  subsequent  ratification.''' 

In  Illinois,  under  statutory  enactments,  whether  signature  of  a 
note  is  obtained  by  fraud  of  the  payee,  or  by  inducing  him  to  believe 
it  is  not  a  note,  but  a  tlifferent  instrument,  it  is  void  even  in  the  hands 
of  a  buna  jide  holder."*'  But  if  he  was  acquainted  with  its  language, 
or  might  have  been  by  the  exercise  of  ordinary  prudence  and  caution 
at  the  time  lie  signeil  it,  fal.se  and  fraudulent  representations  of  the 
payee  as  to  its  legal  elTect  will  not  render  it  void  in  such  a  holder's 
hands. ''^ 

In  Ohio,  negligence  is  the  test.  If  the  maker  is  charged  with 
negligence,  as  when  he  signs  a  paper  containing  blanks  capai)l(^  f)f 
being  filled  up  as  a  note,  or  signs  it  without  reading  it,  relying  on 
what  is  told  him,  he  is  bound,  notwithstanding  he  was  deceived  and 
did  not  intend  to  make  a  note;  '"-  but  if  not  chargeable  with  negli- 
gence he  is  not.'*'' 

In  Nebraska  it  is  considered  that  the  party  to  an  instrument  is 
not  guilty  of  negligence  where  he  relies  on  the  reading  of  it  by  another 
party  thereto."*'  If  such  party  were  a  stranger,  we  should  sa}'  it  was 
negligence;  ''^  and,  indeed,  it  seems  that  it  is  negligence  when  one  can 
read,  not  to  read  for  him.self.^ 

49.  Shirts  v.  Ovcrjohn,  60  Mo.  315;  Fredericks  v.  ClomL'n.s,  »)()  Mo.  .n.'J.  See 
KcMiihlo  V.  Christie,  ').">  Ind.  140. 

50.  lluhhiird  v.  Rankin,  71  111.  129;  Richardson  v.  Schirtz,  59  111.  'iVi.  In 
.Vuten  V.  GruntT,  00  111.  300,  the  miikcr  read  the  note  twice  and  thouRht  it  \va.H 
for  $10.  B}-  some  fraud  or  device  unknown  to  him  it  was  for  $300.  Held,  not 
valid  in  hands  of  bona  fide  holder.  The  statute,  makins  fraud  or  circumvention 
used  in  obtaining  the  making  or  execution  of  a  note  a  defense  to  an  action  thereon, 
relates,  in  the  matter  of  the  fraud,  to  the  execution  of  the  instrument  itself, 
and  not  to  the  consideration.  Connolly  v.  Dammann,  232  111.  175,  83  N.  E. 
531;  Freehold  Bank  v.  Kenneily  &  Wright  Co.,  148  111.  App.  310;  Sinnickson  v. 
Richter,  140  111.  App.  212;  Mann  v.  Merchants'  Loan  &  Trust  Co.,  100  111. 
App.  224. 

51.  Homes  v.  Hale,  71  111.  552.  See  also  Swannell  v.  Watson,  71  III.  456; 
Mead  v.  Munson,  60  111.  49;  Commercial  State  Bank  v.  Judy,  133  111.  App.  35; 
Cowgill  V.  Petifish,  51  Mo.  App.  204,  citing  text. 

52.  Ross  V.  Doland,  29  Ohio  St.  473. 

63.  De  Camp  v.  Hanna,  29  Ohio  St.  467. 
54.  Palmer  v.  Largent,  5  Nebr.  223. 

65.  See  Swannell  v.  Watson,  71  III.  456. 

66.  See  ante,  §  850. 


§  851  INSTRUMENTS   EXECUTED    UNDER   MISTAKE  1031 

§  851.  Conflicting  decisions. — In  other  States  the  courts  go  far 
to  protect  the  defrauded  parties  to  the  paper  rather  than  the  inno- 
cent holders.^^  In  Michigan,  where  the  maker  of  a  note,  of  defective 
eyesight  in  the  dusk  of  evening,  was  induced  by  an  impostor  to  sign 
several  papers  adroitly  arranged  to  overlie  each  other,  under  the 
assurance  that  they  were  contracts  respecting  the  agency  for  a  patent 
hayfork,  and  amongst  them  was  a  negotiable  note  for  $120,  Avhich 
was  passed  to  a  bona  fide  holder,  the  holder  was  not  permitted  to 
recover.  The  defective  eyesight  was  not  referred  to  as  exempting 
the  maker  from  the  charge  of  negligence,  but  the  broad  doctrine  was 
asserted,  that,  as  he  did  not  intend  to  make  a  negotiable  paper,  he 
was  not  bound. ''^  And  the  like  view  was  at  one  time  taken  in  Mis- 
souri, in  a  case  differing  only  in  the  circumstance  that  there  was  no 
physical  infinnity  in  the  maker,  and  that  the  patent  machine  about 
which  the  negotiation  took  place  was  a  ])ump  instead  of  a  hayfork;  ''^ 
but  this  case  was  subsequently  overruled,  and  the  doctrine  of  the  text 
adopted,  that  in  order  to  be  protected  against  an  innocent  holder  for 
value,  on  executing  negotiable  paper  when  he  believed  it  to  be  a 
different  contract,  the  maker  must  have  been  guilty  of  no  negligence 
about  the  matter,^"    In  another  Michigan  case  it  was  held,  that  while 

57.  Where  the  frauil  and  deception  were  such  that  inducinR  a  person  to  sign 
an  instrument  not  intended  amounted  to  a  forgery,  such  instrument  is  not  valid 
although  in  the  hands  of  an  innocent  holder  for  value,  in  the  absence  of  negligence. 
Hiddeford  Nat.  Bank  v.  Hill,  102  Me.  346,  (36  Atl.  721,  120  Am.  St.  Rep.  499; 
Yakima  Valley  Bank  v.  McAllister,  37  Wash.  566,  107  Am.  St.  Rep.  823,  79 
Pac.  1119,  1  L.  R.  A.  (N.  S.)  1075;  Keller  v.  Ruppold,  115  Wis.  636,  95  Am.  St. 
Kep.  974,  92  N.  W.  364. 

58.  In  Gibbs  v.  Linabury,  22  Mich.  492  (1S71),  Graves,  J.,  said:  "Now,  when 
a  party  never  designed  to  put,  or  cau.se  to  be  put,  any  sort  of  negotiable  paper 
in  circulation,  when  the  thought  of  doing  so  never  entered  his  mind,  when  he 
had  never  bargained  to  do  so,  when  he  has  never  consciously  been  privy  to  any 
attempt  to  set  such  paper  afloat,  how  can  it  be  said  that  his  will  in  any  way  as- 
sented to  the  concoction  of  such  a  contract  .so  as  to  make  him  an  object  of  the 
rule?  So  far  as  this  principle  is  conccrneil,  it  is  not  perceived  how  the  instance 
here  supposed  would  dilTer  from  that  when  the  act  leading  to  the  mischief  is  done 
by  an  insane  man,  or  is  compelled  by  duress.  The  point  is,  that  the  will  does  not 
go  with  the  act."  First  Nat.  Bank  v.  Deal,  55  Mich.  592;  Soper  v.  Peck,  51  Mich. 
563;  Kagel  v.  Totten,  59  Md.  447;  Baldwin  v.  Fagan,  83  Ind.  447.  See  Deturler 
V.  Bish,  44  Ind.  70. 

59.  Briggs  v.  Ewart,  51  Mo.  251  (1873),  followed  in  Martin  v.  Smylee,  55  Mo. 
577,  and  Corby  v.  Weddle,  57  Mo.  452.  See  Beland  v.  Brewing  Assn.,  157  Mo. 
593. 

60.  Shirts  v.  Overjohn,  60  Mo.  305.  See  also  New  Madrid  Banking  Co.  v. 
Poplin,  129  Mo.  App.  121,  108  S.  W.  115;  Mackey  v.  Peterson,  29  Minn.  298. 


1032  RIGHTS    OF   A    BONA    FIDE    HOLDER  §§  851a,  «o2 

there  may  be  cases  where  one  signing  and  putting  in  circuhition  an 
instrument,  should  be  bound  by  the  terms  thereof,  even  though  dif- 
ferent from  what  he  supposed  them  to  be,  that  rule  would  not  apply 
where  a  party  signed  in  good  faith  what  he  had  heard  read  and  what 
purported  to  be  a  power  of  attorney,  contract,  deed,  or  other  similar 
instrument,  in  case  a  negotiable  note  of  that  date,  of  which  he  had 
no  notice  or  intimation,  should  have  been  mysteriously  lurking  in 
the  depths  of  the  instrument  so  signed,  and  should  afterward  turn  up 
with  his  signature  attached  thereto.^ ^ 

§  851a.  In  England,  it  would  seem,  from  the  case  of  Foster  v. 
McKinnon,*"-  that  the  holder,  undor  such  circumstances,  is  not  pro- 
tected. In  that  case  the  party  was  induced  to  indorse  a  bill  upon  the 
assurance  that  it  was  a  guaranty,  and  it  was  held  that  he  was  not 
bound.  It  appears  from  the  evi(l(>nce,  however,  that  he  was  a  gentle- 
man far  advanced  in  life,  and  that  circumstance  may  have  been  of 
some  weight  in  relieving  him  from  the  imputation  of  negligence. 
We  certainly  cannot  concur  in  the  doctrine  that  the  intention  of  the 
party  signing  the  paper  should  determine  the  question  of  his  responsi- 
bility. Third  parties  can  have  no  opportunity  to  scrutinize  his  inten- 
tion, which  is  a  sealed  book  to  all  i)ut  himself;  ami  he  should  not  be 
permitted  to  escape  the  responsibility  of  what  he  did  by  pleading 
what  he  designed  to  do. 

But  the  language  of  Lord  Chief  Justice  Bovill  is  consonant  with 
the  principle  of  the  text.  He  said:  "If  the  defendant's  signature  to 
the  document  was  o])tained  upon  a  fraudulent  representation  that 
it  was  a  guarantj',  and  if  he  was  not  guilt}'  of  any  negligence  in  so 
signing  the  paper,  he  was  entitled  to  the  verdict." 

§  852.  In  Indiana,  a  very  strong  decision  has  been  rendered  pro- 
tecting the  maker  against  a  bona  fide  holder.^"^  There,  where  the 
maker  of  a  negotiable  promissory  note,  payable  at  a  l)ank  in  that 
State,  was  induced,  by  the  fraud  and  circumvention  of  the  payee, 
to  sign  his  name  to  such  note,  when  he  honestly  supposed  and  be- 
lieved that  he  was  writing  his  name  on  a  blank  piece  of  paper,  to  en- 
able the  payee  to  see  how  his  name  was  spelled  or  written,  and  the 

61.  Anderson  v.  Walter,  34  Mich.  113. 

62.  4  C.  B.  704,  38  L.  J.  (N.  S.)  310.  See  ante,  §  850,  and  Chapman  v.  Rose, 
56  N.  Y.  137. 

63.  Cline  v.  Guthrie,  42  Ind.  227.  See  also  Deturler  v.  Bish,  44  Ind.  70;  Webb 
V.  Corbin,  78  Ind.  406. 


§  853  INSTRUMENTS   EXECUTED    UNDER   MISTAKE  1033 

maker  did  not,  after  he  discovered  that  he  had  so  signed  his  name  to 
the  note,  voluntarily  deliver  it  to  the  payee,  but  it  was  taken  posses- 
sion of  wrongfully  and  forcibly  by  the  payee,  and  by  him  carried 
away  against  the  consent  of  the  maker  and  negotiated,  it  was  held 
(1)  That  the  maker  was  no  more  bound  by  his  signature  than  if  it 
were  a  total  forgery,  although  the  person  to  whom  it  was  negotiated 
was  a  purchaser  and  holder  in  good  faith,  and  for  a  valuable  consider- 
ation before  maturity;  and  also  (2)  That  admitting  that  the  maker 
signed  his  name  to  the  note,  with  full  knowledge  of  its  character,  it 
was  nevertheless  invalid,  and  void,  even  in  the  hands  of  an  innocent 
purchaser  for  value,  for  the  want  of  delivery;  nor  was  the  maker 
liable  on  the  ground  that  when  one  of  two  innocent  persons  must 
suffer  by  the  act  of  a  third,  he  who  has  enabled  such  third  person  to 
occasion  the  loss  must  sustain  it.  But  in  another  case  in  that  State 
the  maker  was  held  liable  to  a  bona  fide  holder  for  value,  notwith- 
standing he  was  led  to  execute  the  note  by  fraudulent  and  false  repre- 
sentations of  the  payee  that  it  was  a  different  sort  of  instrument,  and 
signed  it,  not  supposing  it  was  a  negotiable  note,  nor  intending  to 
make  one.^*  And  in  that  State,  whenever  the  maker  is  negligent  in 
putting  forth  his  signature  to  a  note,  whether  he  knows  it  to  be  a  note 
or  otherwise,  he  is  now  considered  liable  to  a  bona  fide  holder.*'^ 

§  853.  It  is  quite  remarkable  that  throughout  the  northwestern 
iStates  so  many  cases  have  occurred  almost  identical  in  circumstances, 
and  in  which,  in  fact,  the  names  of  the  parties  are  frequently  the  only 
distinguishing  elements.  The  peddlers  of  patent  machines  and  pat- 
ent rights  seem  to  have  practiced  a  particular  trick  upon  their  vic- 

64.  Kimble  v.  Chri.stic,  .55  Ind.  140.  To  same  effect,  see  Nebeker  v.  Cutsinger, 
4S  Ind.  436;  Woollen  v.  Wise,  73  Ind.  201 ;  Woollen  v.  Whitacre,  73  Ind.  201 ;  Rud- 
drll  V.  Dillman,  73  Ind.  .521;  First  Nat.  Bank  v.  Latton,  G7  Ind.  250;  Fisher  v. 
\()n  Behren,  71  Ind.  19;  Ruddell  v.  Phalor,  72  Ind.  733;  Indiana  Nat.  Bank  v. 
Weckerly,  67  Ind.  345;  Woo'lcn  v.  Ulrich,  64  Ind.  120;  Maxwell  v.  Morehead,  66 
Ind.  301;  Thomas  v.  Ruddell,  66  Ind.  .326.    See  Wisconsin  cases,  ante,  §  849,  note. 

65.  See  Cases  supra,  and  Peoples'  State  Bank  v.  Ruxer,  31  Ind.  App.  245,  67 
N.  E.  542.  In  Home  Nat.  Bank  v.  Hill,  165  Ind.  226,  74  N.  E.  1086,  the  court 
said  that  where  one  has  negligently  signed  a  promissory  note  negotiable  by  the 
law  merchant  he  cannot  successfully  defend  against  such  a  note  in  the  hands  of  a 
hona  fide  holder,  although  it  was  procured  from  him  by  the  means  of  fraud,  and 
without  any  consideration  whatever,  but  in  a  case  where  a  party  not  guilty  of 
negligence  signs  a  negotiable  note  in  the  belief  induced  by  fraudulent  practices 
that  it  is  a  paper  of  a  character  altogether  different  from  the  one  which  he  intended 
to  sign,  then,  under  the  circumstances,  such  note  cannot  be  enforced  against 
him,  although  it  has  passed  into  the  hands  of  a  bona  fide  purchaser  for  value. 


1034  RIGHTS    OF    A    BONA    FIDE    HOLDJ.K  .  ■vVt 

tims,  and  have  flooded  the  courts  with  litigation  arising  out  of  it. 
These  cases  are  notable  instances  of  the  contagion  and  imitativeness 
of  fraud.  In  some  of  the  States,  legislation  has  been  deemed  neces- 
sary to  protect  society  against  frauds  committed  through  such  instru- 
mentalities as  those  herein  discussed.*^" 


SECTION  VII 

HOLDER    OF    NEGOTIABLE    INSTRUMENT    DELIVERED    BY    THIRD    PARTY 
IN    VIOLATION    OK    INSTRUCTIONS 

§854.  Still  another  class  of  cases,  i)resenting  a  ([uestion  some- 
what dilTerent  from  any  yet  discussed,  has  arisen  wIutc  parties  have 
signed  their  names  to  bills  and  notes,  either  ])erfect  in  form,  or  in 
blank,  with  authority  only  to  deliver  them  as  complete  and  valid 
instruments  upon  condition  that  some  other  person  shall  become  a 
party,  or  some  contingency  be  fulfilletl.  In  these  cases  it  will  be  ob- 
served the  person  with  whom  such  instrument  is  left  is  its  uktc  cus- 
todian, and  not  an  agent  having  any  absolute  power  to  dispose  of  it. 
He  is  not,  as  to  the  instrument,  an  agent  with  limited  powers,  but 
the  agency  itself  is  conditioned  upon  the  happening  of  the  event  ujwn 
which  he  is  to  become  the  agent  to  deliver.  In  such  cases  there  is 
the  high  authority  of  the  English  Court  of  Exchequer  of  Pleas,  that 
the  party  whose  name  is  upon  the  instrument  will  not  be  bound  if 
the  custodian  of  it  issue  it  to  a  bona  fide  holder  before  the  condition  is 
fulfilled;  but  the  weight  of  authority  in  the  United  States,  with  rea- 
son, as  we  think,  supports  the  opposite  view.  In  the  Court  of  Ex- 
chequer of  Pleas,  where  it  appeared  that  A.  agreed  to  join  his  brother 
B.  in  making  a  promissory  note  for  his  accommodation,  {provided  C. 
would  also  join;  and  with  a  view  to  carrj'ing  out  the  arrangement,  a 
note,  blank  as  to  date  and  as  to  the  payee,  and  running,  "We  jointly 
and  severally  promise  to  pay  Mr.  ,  or  ohUt,  £1,000,"  was 

66.  In  New  York,  by  statute,  whore  a  note  is  given  in  whole  or  in  part  for 
the  right  to  make,  use,  or  vend  a  patent  right,  the  words  "given  for  a  patent  right" 
are  required  to  be  prominently  written  or  printed  on  the  face  before  execution, 
and  it  is  subject  to  all  defenses  as  if  in  the  hands  of  the  original  taker.  The  sale 
of  a  note  so  given  without  a  compliance  with  the  statute  is  a  misdemeanor. 
1  Laws  1877,  chap.  65,  p.  68.  In  some  other  States  there  are  also  provisions  as  to 
notes  given  for  patent  rights.  See  Pendar  v.  Kelley,  48  Vt.  27;  Moses  v.  Corn- 
stock,  4  Nebr.  516. 


§  854  VIOLATION    OF   INSTRUCTIONS  1035 

signed  by  A.,  leaving  room  before  his  name  for  C.'s — another  handed 
it  to  B.;  and  B.,  without  procuring  C.  to  sign,  also  passed  the  note  to 
D.,  filling  up  the  blanks,  and  inserting  D.'s  name  as  payee,  it  was 
held  that  D.  could  not  recover  against  A.,  upon  the  ground  that  the 
refusal  of  C.  to  join  was  a  countermand  of  authority  to  B.  to  issue; 
and  that  B.  then  had  no  authority  to  deal  with  it."  This  is  the  ratio 
decidendi  of  the  case,  as  will  be  seen  by  reference  to  the  opinion  of 
Parke,  B.  In  Vermont,  however,  where  A.  signed  a  joint  and  several 
note  with  B.,  as  his  surety,  payable  at  a  bank,  with  the  agreement 
that  he  should  not  use  it  unless  he  obtained  another  surety  upon  it, 
the  court  held  that  the  bank  to  which  B.  passed  the  note,  without 
procuring  another  surety,  could  recover  against  A.,  A.  being  without 
knowledge  of  the  agreement;  but  distinguished  the  case  from  that 
just  quoted.^    But  there  is  no  distinction  that  we  can  discover  in  the 


67.  Awde  v.  Dixon,  6  Exch.  8G9  (1851),  Parke,  B.,  said:  "It  is  unnecessary 
to  say  whether  this  instrument  is  a  forpcry  or  not,  but  there  is  certainly  ground  for 
contending  that  the  making  of  it  complete,  contrary  to  the  directions  of  the 
defendant,  renders  it  a  false  instrument  as  against  him.  I  do  not  gainsay  the 
position,  that  a  person  who  puts  his  name  to  a  blank  paper  impHedly  authorizes  the 
filling  of  it  up  to  the  amount  that  the  stamp  will  cover.  But  this  is  a  different  case. 
Here,  the  instrument,  to  which  the  defendant's  name  is  attached,  is  delivered  to 
his  brother,  with  power  to  make  it  a  complete  instrument,  on  one  condition  only, 
that  Ls,  provided  Robinson  would  be  a  joint  surety  with  him.  This,  therefore,  is  an 
instance  of  a  hmited  authority,  where,  in  case  of  a  refusal  by  Robinson  to  join, 
there  is  a  countermand.  Robinson  refused  to  join,  and  consequently  the  defend- 
ant's brother  had  no  authority  to  make  u.so  of  the  in.strument.  A  party  who  takes 
such  an  in(!omplete  instrument  cannot  recover  upon  it,  unless  the  person  from 
whom  he  receives  it  had  a  real  authority  to  deal  with  it.  There  was  no  such 
authority  in  this  case,  and  unless  the  circumstances  .'^how  that  the  defendant 
conducted  himself  in  such  a  way  as  to  lead  the  plaintiff  to  believe  that  the  de- 
fendant's brother  had  authority,  he  can  take  no  better  title  than  the  defendant's 
brother  could  give.  The  ma.xim  of  law  is,  nemo  plus  juris  in  alium  transferre 
putc  t  quam  ipse  habet.  It  is  a  fallacy  to  say  that  the  plaintiff  is  a  bona  fide  holder 
for  value;  he  has  taken  a  piece  of  blank  paper,  not  a  promis.sory  note.  He  could 
only  take  it  as  a  note  under  the  authority  of  the  defendant's  brother,  and  he  had 
no  authority,  consequently  the  instrument  is  void  as  against  the  defendant." 
.\lderson,  B.,  and  Piatt,  B.,  concurred.  Rule  absolute.  Twenty-sixth  Ward 
Bank  v.  Ste:u-ns,  148  N.  Y.  515,  42  N.  E.  1050.  In  this  case  it  was  held  that  if  a 
director  of  a  bank  while  acting  as  the  agent  of  the  bank,  procures  an  indorsement 
upon  a  promissory  note  upon  the  understanding  that  an  additional  indorsement 
shall  be  obtained,  which  is  not  done,  the  bank,  on  taking  the  note,  Ls  chargeable 
with  notice  of  the  condition  and  its  nonperformance,  available  to  the  indorser 
as  a  defense  to  an  action  on  the  note  by  the  bank. 

68.  Passumpsic  Bank  v.  Goss,  31  Vt.  315  (1858),  Barrett,  J.:  "The  case  of 
Awde  V.  Dixon,  5  L.  &  E.  Rep.  512,  upon  a  first  impression  seems  to  come  nearer 


1036  RIGHTS    OF   A    BONA    FIDE    HOLDER  §  854 

principles  of  the  two,  though  the  facts,  as  to  the  particular  instru- 
ments, vary.  In  Kentucky,  where  a  party  signed  as  surety,  and  left 
the  note  with  the  principal,  with  the  agreement  that  it  should  not  be 
obligatory  until  a  c(Ttain  other  surety  had  signed,  the  surety  wjus 
held;  and  the  grounds  of  the  decision  seem  to  us  at  once  comprehen- 
sive and  conclusive.^^    In  such  cases  notice  to  the  holder  of  the  condi- 

to  the  present  case,  and  to  countenance  the  defense  here  made.  But  on  examina- 
tion it  clearly  stands  on  a  different  ground.  In  that  case,  the  payee's  name  w;i8 
l<ft  blank  when  the  defendant  sif^ned  the  note  lus  surety.  It  wjus  inserted  at  the 
time  the  note  was  delivered,  and  the  money  was  advanced  upon  it,  the  principal 
'stating  falsely  that  he  had  authority  to  deal  with  it.'  Moreover,  the  defendant 
signed,  leaving  a  space  for  the  name  of  the  person  who  was  to  sign  as  cosurety. 
With  the  note  in  this  condition  when  presented  to  the  plaintid,  he  becomes  the 
payee  by  having  his  name  inserted,  and  receives  it.  It  is  obvious,  from  the  report 
of  tlio  ca.se,  that  the  court  deemed  the  in.sertion  of  the  payee's  name,  and  the 
pa.s.sing  off  of  the  note,  to  be  a  forgery  upon  the  defendant,  the  same  as  if  the  sum 
had  been  left  blank  when  signed  by  tlu;  surety,  and  aftcnvard  had  been  filled  with  a 
larger  sum  than  had  been  agreed  between  the  principal  and  surety."  •  ♦  •  Same 
judge,  p.  321:  "The  propriety  of  this  view  is  strongly  illu-strated  by  the  well- 
known  cour.sc  of  this  kind  of  business.  The  instance  h:us  hardly  occurred  of  a 
bank  making  inquiry  when  paper,  genuine  and  apparently  designed  for  di.scount,  Ls 
pr(>.sented  at  the  counter,  whether,  as  against  the  makers,  it  is  entitled  to  be  u.sed. 
If  the  court  should  .sustain  this  defen.se  in  this  c;use,  it  would  become  necessary  for 
banks,  and  equally  for  all  per.sons,  upon  the  offer  of  a  note  with  sureties,  in  the 
usual  course  of  business,  to  call  before  them  all  the  makers,  and  ascertain,  by 
personal  inquiry,  whether  it  was  '  all  right,'  and  not  subject  to  some  side  agreement 
or  reservation  in  favor  of  some  of  the  sureties,  that  might  render  it  invalid  as 
against  them.  We  think  such  a  rule  of  law  would  not  only  contravene  the  well- 
established  usages  of  business,  but  would  surpri.se,  if  not  shock,  the  judgment  of 
the  community  upon  this  .subject."  See  also  Farmers',  etc.,  Bank  v.  Humphrey, 
3G  Vt.  554.  So  held  in  Nebraska.  Brumback  v.  German  Nat.  Bank,  46  Ncbr. 
540,  G5  N.  W.  198;  Joyce  v.  Cockrill,  35  C.  C.  A.  38,  92  Fed.  838. 

69.  Smith  v.  Moberly,  10  B.  Mon.  269  (1850),  Simpson,  J.,  saying:  "But  a 
delivery  of  a  writing  of  this  character,  under  such  circumstances,  to  the  prin- 
cipal, docs  not  have  the  effect  of  characterizing  it  as  a  mere  escrow;  but,  on  the 
contrary,  the  princii)al  should  be  considered  as  the  agent  of  the  surety,  and 
empowered  by  him  to  pass  the  writing  to  the  person  to  whom  it  may  be  made 
payable,  and  his  deliverj'  as  being  sufficient  to  make  it  effectual,  unless  the  payee 
had  notice  of  the  special  terms  upon  which  it  was  signed.  The  implied  discre- 
tionary authority  to  use  the  note,  arising  out  of  its  possession  by  the  principal, 
uncontradicted  by  its  terms  or  anything  apparent  on  its  face,  cannot  be  restricted 
by  any  agreement  between  the  payors  themselves,  of  which  the  payee  had  no 
notice.  The  same  principle  is  substantially  decided  in  the  case  of  Bank  of  the  Com- 
monwealth v.  Curry,  2  Dana,  142.  The  law  in  relation  to  the  execution  of  deeds 
and  specialties  is  not  applicable  to  promissory  notes.  In  the  language  of  this  court 
in  the  case  of  Taylor,  etc.,  v.  Craig,  2  J.  J.  Marsh.  246,  'promissory  notes  are 
quasi  mercantile,  but  are  not  in  this  country,  as  they  are  in  England,  since  the 


I  855  VIOLATION   OF   INSTRUCTIONS  103/ 

tion,  and  its  violation,  is  necessary  to  a  defense^"  So  in  Missouri 
where  one  indorsed  a  note  upon  agreement  that  another  should  in- 
dorse also  ""■  And  the  same  views  have  prevailed,  justly  as  we  thmk, 
in  Indiana,'^  ^ew  Hampshire/^  and  lowa,^^  and  have  been  recog- 
nized m  other  StatesJ^ 

.<  855    Escrows.— In  none  of  the  cases  is  it  maintained  that  a 
bill  or  note,  cither  in  full  or  in  blank,  intrusted  to  the  payee,  to  be 
valid  upon  a  condition,  will  not  be  binding  if  the  condition  is  violated^ 
Such  delivery  to  the  payee  is  in  law  absolute  and  complete;  and 
whether  the  instrument  be  negotiable  or  under  seal,  the  doctrines 
which  apply  when  third  parties  are  the  custodians  do  not  extend  to 
them'«    An  instrument  under  seal  deposited  with  a  third  party,  to 
be  delivered  upon  condition,  is  called  an  escrow;  and  according  to  the 
English  precedent  referred  to,  and  to  some  of  the  American  decisions 
which  have  either  followed  it  as  an  adjudication  or  recognized  the 
doctrine  which  it  asserts,  a  negotiable  instrument  may  also  be  de- 
posited with  a  third  party  as  an  escrow,  and  the  parties  to  it  will  not 
be  bound  if  the  depositary  issue  it  in  breach  of  the  trust  reposed  in 
hii^  77     In  a  Wisconsin  case,  where  a  promissory  note  and  a  mort- 
^Tatutc  of  Anne,  ncRotiablc  precisely  as  bills  of  exchange.    But,  formany  pur- 
poses the  doctrine  of  bills  of  exchange  applies  to  promissory  notes,  because    he 
rcaso;  of  it  applies  equally  to  both  kinds  of  paper.    The;  law  m  relation  to  t  e 
cXtion  of  boU.  is  the  same;  and  justice  and  the  exigences  of  commerce  require 
hit  the  drawer  of  a  bill,  or  payor  of  a  note,  should  be  ^0-^1  -meUmes,  when    f 
the  instrument  were  a  deed,  he  would  not  be  liable.' "    See  a  so  Ta>lor  v^Cra.,, 
2  J.  J.  Marsh.  449;  Pittsburg,  etc.,  Ry.  Co.  v.  Lynde,  55  Ohio  St.  23,  44  N.  L. 

590. 

70    Bonner  V.  Nelson,  57  Ga.  433.  ^       .  ht-i         n 

71.  Bank  of  Missouri  v.  Phillips,  17  Mo.  30  (1852).    See  Ayrea  v.  Milroy,  53 
Mo  516     Held,  that  in  the  case  of  a  nonnegotiable  note  It  13  different 

72    DeaTdorfi  v.  Foresman,  28  Ind.  481  (18G5);  Whit^^omb  v.  Mills.  90  Ind. 
384;  Riggs  v.  Trees,  120  Ind.  402. 

73.  Mcrriam  V.  Rockwood,  47  N.II.81. 

74  Ga-c  V.  Sharp.  24  Iowa,  15,  the  condition  being  the  execution  of  a  mort- 
gag  "to  protect  tl^surety.  See  also  McCramer  v.  Thompson.  21  lo^v..  244 
MFcklewaitt  v.  Noell.  09  Iowa.  345;  Graff  v.  Logue.  61  Iowa,  707.  citmg  the 

'"5.  Tabor  V.  Merchants'  Nat.  Bank.  48  Ark.  454;  W^d  v.  Hackett  30  Minn^ 
150  44  Am.  Rep.  187;  Jordan  v.  Jordan,  10  Lea,  124.  43  Am.  Rep.  294,  Davis 
V  Gray  oT Tex.  506;  McCormick  v.  Holmes,  41  Kan.  267.  citing  the  text;  Brum- 
back  V  German  Nat.  Bank,  46  Ncbr.  540,  65  N.  W.  198.  t^     ,    1 ,0 

76.  Madman  v.  Holscher,  49  Mo.  87  (1871);  post,  §856;  Hurt  v.  Ford,  142 

''?7''B;bcc^k'l:  Betan.  1  Root.  87;  Couch  v.  Meeker.  2  Conn.  302;  Chipman 


1038  RIGHTS    OF    A    BONA    FIDE    HOLDER  §  85f)K 

gage  to  secure  it  were  placed  in  the  IkuicIs  of  ti  tslraiiger  to  be  de- 
liveretl  to  the  payee  upon  the  happening  of  a  certain  event,  and  he 
delivered  them  to  the  payee  without  authority,  and  without  waiting 
for  such  event,  it  was  held  that  neither  the  mortgage  nor  the  note 
were  valid,  although  the  latter  wa«  in  the  hands  of  a  bona  fuie  holder 
for  value  without  noticed*  A  material  alteration  of  a  note  made  by 
one  of  the  promisors  before  delivery  avoids  it  as  against  the  other, 
although  done  without  fraudulent  intent." 

In  Arkansas,  it  was  said  by  Oldham,  J.,  respecting  a  note:  "If 
delivered  to  a  third  person,  it  is  not  binding  until  the  condition  uj)on 
which  it  was  delivered  be  jHTfornied;  l)ut,  if  directly  to  the  promis(M>, 
it  is  binding  from  delivery,  whether  the  condition  be  performed  or 
not."*" 

v^  855a.  If  tlu'  bill  or  note  be  delivered  to  an  agent  to  be  used  for 
a  certain  purpose,  as,  for  instance,  to  apply  its  proceeds  to  a  par- 
ticular debt,  it  will  be  void  if  diverted  from  that  jjurpose  in  the  hands 
of  any  holder  having  notice  of  such  diversion,  or  affected  with  sucit 
notice."^ 

V.  Tucker,  38  Wi.s.  50.  Contra,  Hutchinson  v.  Brown,  19  D.  C.  130;  Ilunsfonl 
V.  I' rceman,  99  Ga.  370,  27  S.  E.  700. 

78.  Chipmtxn  v.  Tucker,  3S  Wi.s.  43  (1S75),  Colo,  J.:  "Dolivcry  of  a  promis- 
Hory  note  by  thernuker  i.s  necessary  to  a  valid  inception  of  the  contract,  and  until 
there  is  a  deUvery,  the  note  h;\s  no  vitality,  and  the  rules  of  commercial  paper 
have  no  application  to  it."  Sec  also  Roberts  v.  McGrath,  38  Wis.  52;  Roberts  v. 
Wood,  38  Wis.  GO;  Pcigh  v.  Huffman,  0  Ind.  App.  058,  34  N.  E.  32.  Contra, 
National  Bank  of  St.  Joseph  v.  Dakin,  54  Kan.  050,  39  Pac.  180,  45  Am.  St. 
Rep.  299;  Sharp  v.  Allgood,  100  Ala.  183,  14  So.  10;  Norfolk  Nat.  Bank  v.  Nenow, 
50  Nebr.  429,  09  N.  W.  83(1;  Smith  v.  Goodrich,  107  111.  40,  47  N.  E.  316. 

79.  Draper  v.  Wood,  112  Mass.  315. 

80.  Scott  V.  State  Bank,  9  Ark.  30;  Tabor  v.  Merchants'  Nat.  Bank,  48  Ark. 
454,  3  S.  W.  805. 

81.  Ante,  §282  et  seq.;  Smith  v.  Knox,  3  Esp.  40;  (2uebec  Bank  v.  Hellman, 
110  U.  S.  182,  Woods,  J.,  saying:  "  It  is  clear  that  the  deposit  of  a  promissory  note 
with  an  agent  of  a  third  party,  on  the  condition  that  it  should  be  used  by  the 
agent's  principal  for  a  specified  puri)ose,  will  not  confer  title  so  as  to  authorize 
th(?  principal  to  hold  the  note  for  a  different  purpose.  •  ♦  *  Under  such  circum- 
stances, without  the  performance  of  the  condition,  there  is  no  delivery  in  the 
commercial  sense,  and  no  title  passes."  See  also  Delauney  v.  Mitchell,  1  Stark. 
439;  Evans  v.  Kj-mer,  1  B.  &  Ad.  528;  Puget  de  Bras  v.  I^orbes,  1  Esp.  117; 
O'Connor  v.  Jones,  05  Hun,  48,  19  N.  Y.  Supp.  725.  But  the  bona  fide  holder 
(so  it  has  been  decided  by  the  Supreme  Court  of  New  York)  could  only  recover 
what  he  had  actually  paid  for  the  notes.  See  First  Nat.  Bank  of  Springfield  v. 
Haulenbeek,  65  Hun,  54,  19  N.  Y.  Supp.  567;  Norfolk  Nat.  Bank  v.  Nenow,  .'^O 


856  VIOLATION    OF   INSTRUCTIONS 


1039 


§  856.  Difiference  between  sealed  and  unsealed  instruments.— It 

should  be  borne  in  mind  that  there  is  a  cardinal  distinction  between 
the  perversion  of  instruments  in  form  negotiable,  or  capable  and 
intended  to  be  made  so  in  a  certain  contingency,  and  that  of  mstru- 
ments  under  seal.  The  latter,  when  completed,  may  be  delivered  to 
third  persons— that  is,  to  other  than  the  parties— with  authority  only 
to  deUver  them  upon  condition;  and  in  such  case,  if  the  condition  be 
violated,  the  party  intending  to  be  only  conditionally  bound  will  not 
be  bound  absolutely .«2  A  sealed  instrument  so  deUvered  to  a  third 
person  is  called  an  escrow. 

But  negotiable  instruments,  as  it  seems  to  us,  stand  on  a  different 
footing  entirely.  They  are  letters  of  credit,  and  proclamations  that 
all  is  right  to  every  purchaser  or  transferee;  and  one  who  chooses  to 
put  his  name  on  an  instrument  possessing  these  characteristics,  in- 
stead of  confining  his  liability  by  shaping  it  in  a  form  expressive  of 
his  meaning,  should  not  be  permitted  to  ensnare  others  and  escape 
himself  unscathc.1.  To  hold  other%vise  would  be  a  wide  departure 
from  the  i)riuciples  which  ramify  the  law  merchant,  and  would  be 
as  repugnant  to  reason  as  a  decision  that  an  instrument  absolute  on 
its  face  might  be  varied  by  a  parol  condition.  And  even  as  to  sealed 
instruments  the  doctrine  now  finds  favor  that,  if  complete,  and  signed 
by  sureties  with  condition  that  other  sureties  shall  join,  the  signing 
sureties  will  be  bound  if  they  leave  them  with  the  principal  obligors 
and  then  deliver  them  without  procuring  the  additional  sureties,  • 
though  it  is  otherwise  in  cases  where  such  instruments,  when  left  with 
the  obligors,  indicate  on  their  face  that  they  are  incomplete,  and  that 
additional  parties  are  contemplated,^^  and  also  where  the  party  tak- 

Xchr  429  69  N  W.  936.  Where  a  note  executed  by  a  corporation  was  a.ssigned 
by  the  payee  to  the  president  with  the  knowledge  of  the  corporation,  and  with 
the  intention  on  its  part  that  he  should  negotiate  the  note  for  its  benefit  it  should 
not  be  heard  to  complain  that  he  used  the  note  for  his  own  a.lvantage.  Spencer  v. 
Alki  Point  Tran.sp.  Co.,  53  Wa^.h.  77,  101  Pac.  509, 132  Am.  St  Rep  1058 

82  Nash  V.  Fugate,  24  Gratt.  202.  See  §§  68,  148.  Parol  evidence  that  the 
.l.livery  was  conditional  and  evidence  of  the  terms  of  the  condition  is  not  open 
,o  the  objection  of  varying  or  contradicting  the  written  contract,  "•jsms  v. 
Ridgway,  153  N.  Y.  130,  47  N.  E.  32;  Galvin  v.  Syfers,  22  Ind.  App-  43,  52  N .  E. 

96  j~% 

83.  Dair  v.  United  States,  16  Wall.  1 ;  Ni^h  v.  Fugate,  24  Gratt.  202,  32  Gratt. 
595;  Cutter  v.  Roberts,  7  Nebr.  637;  State  v.  Potter,  63  Mo.  212;  State  v.  Peek 
53  Me.  284.  Contra,  People  v.  Bostwick,  32  N.  Y.  445;  State  Bank  v.  Evans,  3 
Green,  155;  Joyce  v.  Cockrill,  35  C  C  A.  38,  92  Fed.  838.    See  ante,  §  68. 

84    Ward  v.  Chum,  18  Gratt.  801.     See  editor's  notes,  20  Moak  s  Reports, 


1040  RIGHTS   OF    A    BONA    FIDE    HOLDER  §  857 

ing  them  has  notice  that  the  condition  is  violated.^^  If  the  sealed  in- 
strument, perfect  on  its  face,  be  left  with  the  obligee,  upon  condition 
that  it  should  be  valid  only  upon  its  execution  by  a  third  person,  the 
delivery  is  complete,  and  it  is  valid  and  operative  though  not  so 
executed.^^ 


SECTION   VIII 

HOLDER    OF    NEGOTIABLE     INSTRUMENTS     EXECUTED    UNDER    DURESS 

§  857.  Any  contract  entered  into  under  duress  lacks  the  first  es- 
sential of  validity — the  consent  of  the  contractor — and  bills  and  notes 
form  no  exception  to  the  rule.  As  between  immediate  parties,  proof 
of  duress  at  once  annuls  the  instrument,  or  ratb.er  enables  the  party 
who  was  under  duress  to  avoid  it,  at  his  option;  ^^  but  whether  or  not 
in  the  hands  of  a  bona  fide  holder  for  value  without  notice,  the  duress 
in  its  inception  renders  it  voidable,  is  a  question  upon  which  tl:e 
authorities  do  not  altogether  agree.  It  has  been  held  in  England  that 
where  it  appeared  that  the  defendant  gave  the  bill  while  under  duress 
abroad,  and  under  a  threat  of  personal  violence  jmd  confiscation  of 
property,  and  without  consideration,  that  it  was  incumbent  on  the 
Ijlaintiff  to  give  some  evidence  of  consideration,^  and  all  the  author- 


593;  National  Bank  of  St.  Joseph  v.  Dakin,  54  Kan.  656,  39  Pac.  180,  45  Am.  St. 
Rep.  299;  Florence  11.  R.  &  Improvement  Co.  v.  Chase  Nat.  Bank,  106  Ala.  304, 
17  So.  720,  citing  text. 

85.  Nash  v.  Fugate,  32  Gratt.  595. 

88.  Miller  v.  Fletcher,  27  Gratt.  403;  Simonton's  Estate,  4  Watts,  180;  Duncan 
V.  Pope,  47  Ga.  445;  Ward  v.  Lewis,  4  Pick.  518;  Currie  v.  Donald,  2  Wash.  59; 
The  Deering  Harvester  Co.  v.  Pcugh  et  cl,  17  Ind.  App.  400,  45  N.  E.  808. 

87.  Bush  V.  Brown,  49  Ind.  573  (1875),  and  authorities  cited;  Fairbanks  v. 
Snow,  145  Mass.  153.  And  to  constitute  duress,  it  is  immaterial  that  the  threats 
were  not  made  directly  to  the  party  signing  the  note,  if  they  were  intended  to, 
and  were  so,  communicated  to  the  maker.  Schultz  v.  Catlin,  78  Wis.  611,  47 
N.  W.  946;  City  Nat.  Bank  v.  Kusworm,  91  Wis.  166,  64  N.  W.  843;  Knott  v. 
Tidyman,  86  Wis.  164,  56  N.  W.  632;  Hensinger  v.  Dyer,  147  Mo.  219,  48  S.  W. 
912. 

88.  Duncan  v.  Scott,  1  Campb.  100.  In  England  the  old  authorities  held 
that  the  duress  sufficient  to  avoid  a  contract  must  be  such  as  to  create  reasonable 
fear  of  death  or  mayhem;  and  that  fear  of  battery  or  trespass  upon  property  is 
insufficient.  See  4  Cruise  Dig.  260.  And  this  old  rule  has  been  adhered  to  in 
modern  English  cases.  But  in  the  United  States  it  is  relaxed,  according  to  many 
decisions.    See  Sasportas  v.  Jennings,  1  Bay,  470;  Collins  v.  Westbury,  2  Bay, 


§  858  INSTRUMENTS   EXECUTED   UNDER   DURESS  1041 

ities  KO  SO  far  as  to  require  evidence  of  consideration.    But  the  party 
who  signs  a  bill  or  note  under  such  threats  and  dangers  of  personal 
violence  as  would  naturally  impel  a  man  of  reasonable  firmness  and 
courage,  is  certainly  not  a  free  agent,  and  m  nowise  m  default;  and 
we  c^  but  think  that  the  better  doctrine  is  that  held  m  Scotland, 
where  force  used  to  obtain  the  subscription  of  a  bill  or  note  nullifies 
the  subscription,  since  the  subscril)er's  consent  is  wxmtmg       f  u- 
party  is  not  bound  by  such  a  subscription,  more  than  if  it  had  beui 
forged,  m  which  case  the  obligation  bemg  originally  null    even  an 
indors;e  can  acquire  no  right  to  enforce  it  -    The  pnnciple  there  is 
not  extended  to  all  cases  where  the  party  consented  under  such  cir- 
cumstances as  to  raise  a  good  objection  against  t  le  origmal  pa>^e- 
for  instance,  where  the  bill  or  note  was  obtained  by  fraud   or  by  a 
mixture  of  deception  and  terror,  though  without  such  a  degree  of 
violence  as  would  influence  a  man  of  ordinary  ^'onstancy.     Thus, 
where  a  party  whose  cattle  had  broken  into  another  s  field  wa^  in- 
timidated by  the  threat  of  a  lawsuit  to  give  him  a  bill  for  an  unreason- 
a^^    amount  of  damages,  it  was  held  that  the  bill  must  be  reduced 
in  so  far  as  the  damages  were  exorbitant  -    But  it  does  not  app^a 
that  the  grounds  of  reduction  in  this  case  could  have  been  pleaded 
against  an  indorsee  suing  on  the  lull  or  note  for  there  was  a  real  ^n- 
sont,  and  consequently  an  obligation  which,  till  reduced,  was  trans- 
missible to  a  third  party. 

§  858.  The  English  doctrine  is  cited  by  many  text-writers  on  bills 
and  notes  without  criticism  or  dissent,  and  as  a  correct  statement  of 


T-  „   =;  m;ii   l=iS-  United  States  v.  Huckabee,  16  Wall.  431. 

4-20, 51  N.  Y. Supp. ^f'^  Tl^t^E  l^H  '    n  Pate  v'.mI^,,,  U4 
r  '  Vn'  ITe  71     U  wi  held  thlt,  to  I:  action  on  a  pr„™»sory  note  brought 

a,^;  Be^  v":  Be...,  ^^^^l^^;^  ^^1^:1^1  New  Vo.. 

of  duress.    See  Newman  v.  Cunel   To  Hun   31^  Jb  in.   i         PP 
Haverstock  v.  Dalbey.  107  Iowa,  463.  78  N.  W.  51. 


66 


1042  RIGHTS   OF    A    BONA    FIDE    HOLDER  §  858 

the  law;"'  but  at  least  one  English  author  seems  to  agree  with  us,'* 
as  does  also  an  American  writer  on  bills  and  notes.*' 

Indeed,  we  can  discern  no  j)rinciple  which  could  compel  any  per- 
son, whether  a  party  to  a  negotialjle  or  other  kind  of  instrument,  to 
pay  it,  when  under  violent  duress — that  is,  under  the  compulsion  of 
force  with  the  only  alternative  of  submitting  to  groat  Ixxliiy  injury  or 
indignity.  Consent  is  of  the  essence  of  every  contract,  and  if  it  is  not 
given,  the  party  should  not  be  l)ound  if  he  had  no  alternative  but  to 
seem  to  give  it,  or  suffer  grievous  wrong.  He  creates  no  trust,  he 
commits  no  negligence,  whereby  the  confidence  of  another  can  be 
betrayed.  He  is  in  no  default,  having  a  right  of  self-tlefense  in  pre- 
ferring his  own  life  and  safety  to  the  chances  of  pecuniary  injury  to 
others;  and  his  extorted  act  is  nothing  more  nor  less  than  the  act  of 
the  wrongdoer  who  uses  his  person  as  the  instrument  of  forging  his 
name.  Threats  to  inflict  slighter  wrongs  would,  as  we  have  seen, 
stand  on  a  different  footing.^^ 

91.  Byles  on  Billn  (Sharswood's  cd.),  220;  Haylcy  on  Hills,  chup.  IX,  p.  318; 
Chitty  on  Bills  (loth  Am.  ed.),  S.5;  Edwards  on  Hills,  325;  Story  on  Notes,  §  188; 
Story  on  Bills,  §  18.5;  Tarmers'  Bank  v.  Butler,  4S  Mich.  192. 

92.  In  Roscoe's  Digest  of  I'-ills  and  Notes,  note  20,  p.  117,  it  is  said,  in  coin- 
montinR  on  Duncan  v.  Scott,  1  Campb.  100:  "It  may  be  doubted  whether  the 
defendant  in  this  cjise  was  liable  even  to  a  bonn  fide  indorsee  for  value.  The  bill 
being  drawn  under  duress,  no  contra"t  arose,  and  it  resembles  the  case  of  a  bill 
drawn  by  a  feme  covert,  who  is  under  a  disability  to  contract." 

93.  Professor  Parsons  says,  in  vol.  I,  Notes  and  Bills,  p.  270:  "A  note  ur 
bill  obtained  by  duress  might  not  be  available  in  any  hands  against  the  party 
so  compelled;  and  if  the  note  were  a  good  note,  and  a  subsequent  party  indorsed 
it  by  duress,  he  would  not  be  bound  to  any  one;  but  a  subsequent  indorsee  who 
indorsed  it  over  for  value  would  be  bound  to  his  own  indorsee,  or  those  deriving 
title  from  him."  But  in  a  previous  portion  of  his  work  he  follows  in  the  rut  of 
the  authorities  already  quoted  in  a  previous  note.  1  Parsons  on  Notes  and  Bills, 
188;  Palmer  v.  Poor,  121  Ind.  13.5,  22  N.  E.  984. 

94.  In  Massachusetts  it  was  held  that  there  is  a  distinction  between  force  and 
threats,  and  Holmes,  .!.,  said:  "No  doubt  if  the  defendant's  hand  had  been  for- 
cibly taken  and  compelled  to  hold  the  pen  and  write  her  name,  and  the  note  had 
been  carried  off  and  delivered,  the  signature  and  delivery  would  not  have  been 
her  acts;  and  if  the  signature  and  delivery  had  not  been  her  acts,  for  what- 
ever reason,  no  contract  would  have  been  made,  whether  the  plaintiff  knew  the 
facts  or  not.  There  sometimes  still  is  shown  an  inclination  to  put  all  cases  of 
duress  upon  this  ground.  Barry  v.  Equitable  Life  Assn.,  .59  N.  Y.  587,  591.  But 
duress,  like  fraud,  rarely,  if  ever,  becomes  material  as  such,  except  on  the  footing 
that  a  contract  or  conveyance  has  been  made,  which  the  party  wishes  to  avoid. 
It  is  well  settled  that  where,  as  usual,  the  so-called  duress  consists  only  of  threats, 
the  contract  is  only  voidable.  Foss  v.  Hildreth,  10  Allen,  76,  80;  Vinton  v.  King, 
4  Allen,  562,  565;  Lewis  v.  Banister,  16  Gray,  500;  Fisher  v.  Shattuck,  17  Pick. 


§  859 


ESTOPPEL    IN    PAIS  1043 


In  a  New  York  case,  where  a  married  woman  was  coerced  by  her 
Imsband  with  threats  of  violence  to  sign  a  promissory  note,  in  such 
form  as  to  charge  her  separate  estate,  the  Court  of  Appeals  held  it 
absolutely  void.^^ 

Although  a  note  be  voidable,  for  duress,  as  to  the  maker,  an  in- 
dorser  cannot  avail  himself  of  that  defense,  there  being  no  coercion 
or  restraint  as  to  him.^*^ 


SECTION    IX 

WHEN    HOLDER   OF   NEGOTIABLE    INSTRUMENTS   IS    PROTECTED    BY 
ESTOPPEL   IN    PAIS 

§  859.  There  are  some  cases  in  which  defenses  which  would  avoid 
the  instrument  in  any  one's  hands  are  rendered  unavailable  to  the 
defendant  by  his  own  conduct— cases  in  which,  to  use  the  legal  phrase, 
he  is  "estopped"  from  pleading  the  particular  defense  which  he 
endeavors  to  set  up.  "An  estoppel,"  says  Lord  Coke,  "is  where  a 
man  is  concluded  by  his  own  act  or  acceptance  to  say  the  truth." 
Thus,  if  a  person  who  is  negotiating  with  the  payee  or  indorsee  of  a 
note  for  the  purchase  of  it,  inquires  concerning  its  validity  of  the 
maker,  and  the  latter  assures  him  that  the  note  is  good,  that  he  has 
no  defense  against  it,  that  it  is  good  business  paper,  or  that  it  is  all 
right  and  will  be  paid,  the  maker  could  not  afterward  plead  that  it 
was  usurious  or  otherwise  illegal,  or  failure  or  want  of  consideration, 
or  r.ny  equity  existing  l)etween  himself  and  the  transferrer.^^     His 

252;  Worcester  v.  Eaton,  13  Maaa.  371,  375,  7  Am.  Dec.  155;  Whelpdalc's  Case,  5 
Coke,  119a,  1  Bl.  Coram.  130;  Hatch  v.  Barrett,  34  Kan.  232,  citing  the  text. 

95.  Loomis  v.  Ruck,  56  N.  Y.  465  (1874);  Berry  v.  Berry,  57  Kan.  691,  47 
Pac.  837,  57  Am.  St.  Hop.  351. 

96.  BowTnan  v.  IliUer,  130  Mass.  153;  West  v.  Miller,  125  Ind.  70,  25  N.  E. 
143;  Graham  v.  Marks  &  Co.,  98  Ga.  67,  25  S.  E.  931. 

97.  Davis  v.  Thomas,  5  Leigh,  1;  Tobey  v.  Chipman,  13  Allen,  133;  Vaughn 
V.  Terrall,  57  Ind.  182;  Rose  v.  Hurley,  39  Ind.  82;  McCabe  v.  Raney,  32  Ind. 
312;  Reedy  v.  Brunner,  60  Ga.  107;  Vanderpool  v.  Brake,  28  Ind.  130;  Plant 
V.  Voegelin,  30  Ala.  160;  Cloud  v.  Whiting,  38  Ala.  57;  Wilkinson  v.  Searcy,  74 
Ala.  243;  Muse  v.  Dantzler,  85  Ala.  359;  Plummer  v.  Farmers'  Bank,  90  Ind.  386; 
Hammett  v.  Bamum,  30  Mo.  App.  291;  Sutton  v.  Beckwith,  68  Mich.  303. 
In  Grauel  v.  Soeller,  52  Hun,  375,  the  language  employed  in  reply  to  an  inquiry 
from  the  purchaser  was,  "So  far  as  giving  the  note  to  S.  was  concerned,  I  supposed 
it  was  all  right,  but  that  it  was  distinctly  understood  that  the  note  was  not  to  be 
negotiated."     The   purchaser   was  protected  notwithstanding  this  agreement, 


1044  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  860 

mouth  is  closed  by  his  previous  representation,  as  to  all  who  act  upon 
it,  and  the  law  will  not  assist  him  to  lead  another  into  a  pitfall,  and 
then  to  make  him  a  scapegoat  for  himself.  And  so,  if  the  holder  pur- 
chased the  note  with  the  defendant's  knowledge  and  consent,  it  h;!> 
been  held  that  the  latter  cannot  set  up  prior  payment,  or  other  de- 
fense against  it.''*  It  is  to  be  observed  that  estoppel  does  not  arise 
unless  the  act  or  course  of  conduct  alleged  to  constitute  it  is  acted  upon 
by  the  party  seeking  to  benefit  by  it,''-'  and,  therefore,  a  statement 
made  by  the  maker  to  the  indorser  of  a  note  after  he  acquires  it,  that 
it  is  all  right,  does  not  amount  to  estoppel.^  Nor  does  it  arise  where 
there  is  a  mistake  or  misunderstanding  as  to  the  identity  of  the  note 
(tonceming  which  the  r('i)resentation  is  made.^ 

§  860.  Representations,  referring  only  to  the  then  existing  status 
of  tlie  instrument ,  will  not  exclude  defenses  subsequently  arising.^ 

which,  it  was  said  by  the  court,  made  no  defense  to  the  note  if  violated.  Scott 
V.  Mart  (Pa.),  3  Cent.  .")74;  Lynch  v.  Kennedy,  .34  N.  Y.  l.')l;  Crout  v.  De  Wulf, 
1  R.  1.  393;  Brooks  v.  Martin,  43  Ala.  3(30,  Peters,  J.:  "It  i.s  dillicult  to  conceive 
what  would  make  a  note  'all  ripht'  that  could  not  be  collected  by  suit,  or  that 
would  not  be  paid  at  maturity,  if  the  maker  w:is  able.  •  ♦  *  Had  there  been  a 
.suit  pending  on  the  note  between  Hrook.sand  Martin,  and  tlic  latter  had  come  into 
court  and  pleaded  tliat  the  note  wa.s  'all  rif^ht,'  the  court  eould  not  have  refrained 
from  givint;  judgment  against  him.  Now,  by  his  words,  he  puts  in  this  plea  be- 
fore suit  is  brought,  and  the  law  will  ncjt  permit  him  to  withdraw  it  after  suit  is 
brought."  See  jw.s/,  §  1351;  Kratliwohl  v.  Dawson,  140  Ind.  1,  .3S  X.  E.  4r)7,  39 
N.  E.  496.  Stephenson  v.  Clayton,  14  Ind.  App.  76,  42  N.  E.  401,  holds  that  the 
maker  of  a  note  is  estopped  to  deny  her  liability  thereon  as  to  a  purchaser  for 
value  before  maturity  by  stating  to  him  before  thf'  purcha.se  that  she  had  no  de- 
fenses thereto,  and  would  pay  the  note,  although  she  did  not  at  the  time  know  that 
slie  had  any  defenses.  Crabtree  v.  Atchi.='on,  93  Ky.  33S,  20  S.  W.  2G0;  Scott  v. 
Taul,  115  Ala.  529,  22  So.  449.    See  Barrettc  v.  Baker,  13()  Mo.  512,  37  S.  \V.  130. 

98.  Downer  v.  Reed,  17  Minn.  493.  But  it  ha.s  been  hel  1  in  Mackay  v.  Hol- 
land, 4  Mete.  (Mass.)  69,  that  where  the  maker  of  a  note  for  the  accommoda- 
tion of  the  payee  said  that  it  was  good,  in  answer  to  a  question  put  by  an  indorser 
who  acquired  it  after  maturity,  was  not  precluded  from  showing  that  he  made  the 
admission  in  ignorance  of  the  fact  that  his  liability  had  been  ended  by  the  pay- 
ment of  the  debt  for  which  it  had  been  indorsed  in  the  first  instance.  Contra, 
R,  edy  v.  Brunner,  60  Ga.  107  (semble);  Brown  v.  First  Nat.  Bank,  103  Ala.  123, 
15  So.  435,  citing  text. 

99.  Moore  v.  Robinson,  62  Ala.  537. 

1.  Crossan  v.  May,  6S  Ind.  242;  Hoover  v.  Kilander,  83  Ind.  420. 

2.  Erickson  v.  Roehm,  33  Minn.  53. 

3.  Maury  v.  Coleman,  24  Ala.  381;  Cloud  v.  Whiting,  38  Ala.  57;  Allen  v. 
Frazee,  85  Ind.  283;  Koons  v.  Davis,  84  Ind.  389;  Jennings  v.  Todd,  118  Mo. 
296,  24  S.  W.  148,  40  Am.  St.  Rep.  373,  citing  text. 


^  j.gl  ESTOPPEL   IN    PAIS  ^"^^ 

And  Where  they  are  made  by  an  indorser,  and  not  by  the  maker  they 
bind  the  former,  but  not  the  latter/  This  plea,  on  the  part  of  the 
plaintiff,  which  excludes  the  right  of  the  defendant  to  set  up  the  true 
I-cndition  of  affairs  as  a  defense,  is  called  "estoppel  in  pais  it  bemg 
an  extraneous  matter  dehors  the  record.  And  whenever  it  is  relied 
upon  where  the  system  of  common-law  pleadmg  prevails,  it  has  been 
hold  that  it  must  be  specially  pleaded.^ 

&  861    Good  faith  essential  to  estoppel.-It  is  to  be  observed  re- 
specting estoppel  that  while  it  exacts  good  faith  from  the  party  bound, 
it  likewise  exacts  good  faith  in  the  party  dealing  with  him.    Therefore, 
if  the  latter  is  himself  cognizant  of  a  fraud  upon  the  maker  at  the 
time  of  the  purchase,  and  knows,  also,  that  the  maker  is  ignorant 
respecting  it,  good  faith  would  require  that  he  should  inform  the 
maker  of  it,  and  if  he  does  not  so  inform  him,  the  maker  wil   not  be 
estopped  by  having  told  the  purchaser  that  the  note  was  all  right 
and  would  be  paid  at  maturity,  from  setting  up  the  fraud  of  which 
the  purchaser  had  notice.^    And  so  the  holder  will  not  be  protected  i 
he  knew  of  any  illegality  in  the  instrument.^    In  other  words,  estoppel 
is  a  plea  that  is  born  of,  and  must  be  nourished  by,  equity,  and  he 
that  asks  equity  must  do  equity.    If  he  conceals  fact^  from  the  maker, 
he  acts  inequitably  and  cannot  recover.^    And  so,  if  the  plain  iff  rely 
upon  an  estoppel  in  pais,  in  order  to  recover  against  the  defendant 
who  has  really  a  defense,  equity  only  requires  that  he  should  be  in- 
demnified to  the  full  extent  of  the  amount  he  has  invested  on  the 
faith  of  the  defendant's  representation,  and  in  the  absence  of  fraud 
on  the  part  of  the  defendant,  the  plaintiff  can  only  recover  that 
amount  with  legal  interest.^    An  indorser  who  signs  the  name  of  a 

4.  Dowc  V.  Schutt,  2  Don.  621. 

5.  Davis  V.  Thoma.s,  5  Leip;h,  1. 

6.  Sackett  v.  Kellar,  22  Ohio  St.  554. 

7.  Watson  v.  Hoag,  40  Iowa,  143  (1874),  Beck,  J. 

8.  Piatt  V.  Jerome,  2  Blatchf.  C.  C  186. 

9  Campbell  v.  Nichols,  33  N.  J.  L.  (4  Vroom)  88,  Beasley  Ch.  J.,  saying. 
"If  theTrawer  of  a  note  .should,  through  mistake,  admit  its  validity  to  a  person 
who  to  the  knowledge  of  such  drawer,  was  about  to  purchase  .t,  after  such  pur- 
rhas;for  full  value.it  isclearhe  could  not  aver  his  mistake  and  set  up  the  mvahd- 
ty  of  he  note  as  a  defense.  In  such  a  case  it  is  right  that  he  should  bear  he  lo^ 
whose  carelessness  occasioned  it.  But  suppose  the  purchaser  gave  only  part 
^alue  for  the  note,  upon  what  principle  should  he  be  allowed  to  -cover  -ore  th^ 
thVmoney  thus  paid  of  the  drawer,  who,  although  he  inadvertently  admitted  h, 
UabiUty,  in  poinLf  fact  owes  nothing  on  the  paper?  The  true  me^ure  is,  hat 
the  pa^y  acting  on  the  faith  of  a  representation  should  be  mdemmfied  from  loss, 


1046  RIGHTS   OF   A    BONA    FIDE    HOLDER  §  862 

firm  is  estopped  to  deny  its  existence,  in  order  to  protect  himself. '° 
The  maker  of  a  note  to  a  company  to  pay  assessments  on  his  real 
estate  is  not  estopped  to  deny  that  the  assessments  were  void,  r.nd 
that  he  was  not  informc<l  as  to  the  facis  affecting  them  when  he  made 
the  note.^' 

§  862.  Certificates  of  validity. — Sometimes  the  practice  is  re- 
sorted to  of  aniu'xinji;  the  niakrr's  certificate  to  the  note  that  the  same 
is  given  for  value  and  will  be  paid  when  due,  or  that  it  is  business 
paper;  and  it  has  been  held  in  New  York  that  if  it  be  afterward  sold 
to  a  third  person  for  an  amount  less  than  should  have  been  paid  for 
it  if  discounted  at  legal  interest  (which  in  New  York  would  be  usur- 
ious), the  maker  is  estopped  b.y  his  certificate  from  setting  up  th.e 
(h'fense  of  usury.'-  This  doctrine  is  questional)le  at  best,  and,  as  we 
think,  erroneous.  If  one  about  to  pay  a  note  in(iuires  touching  its 
character,  it  is  right  that  the  maker's  representations  should  bind  him. 
They  are  given  in  th.e  usual  course  of  business  in  answer  to  a  pertinent 
inquiry,  and  there  is  nothing  to  excite  the  buyer's  suspicions,  but 
everything  to  allay  them.  But  when  a  note  h;is  annexed  to  it  a 
certificate  proclaiming  that  it  is  valid  and  will  be  paid,  this  is  no  more 
than  its  face  purports  without  any  additional  certificate.  It  is  too 
much  like  a  man  having  "I  am  honest"  chalked  on  his  back;  and  as 
the  words  "value  received,"  '^  or  others  equally  importing  value 

by  the  application  of  the  doctrine  of  estoppel  in  pais,  and  these  limits,  as  1  think, 
take  the  whole  field  of  the  doctrine.  The  rule  is  designed  to  protect  against  fraud, 
either  in  fact  or  in  law ;  but  the  remedy  does  not  extend  beyond  the  injury.  Neither 
good  policy  nor  honest  dealing  requires  that  one  who  h:i.s  made  an  admission 
which  has  influenced  the  conduct  of  another,  should  be  estojiped  by  such  admission 
from  showing  the  truth  of  the  case,  except  to  the  extent  of  permitting  the  person 
misled  from  recovering  indemnification.  For  it  is  to  be  remembered  that  the 
principle  of  estoppel  applies  as  well  to  cases  of  unintentional  deceptions  as  to 
designed  and  actual  frauds,  and  it  would  certainly  seem  plain,  that,  in  the  former 
class  of  cases,  the  limitation  of  the  doctrine  above  indicated  is  absolutely  necessary 
for  the  accomplishment  of  the  ends  of  justice." 

10.  Hubbard  v.  Mathews,  54  N.  Y.  43. 

11.  Madry  v.  Sulphur  Springs,  etc.,  Turnpike  Co.,  57  Ind.  149. 

12.  Chamberlain  v.  Townsend,  20  Barb.  611;  Mechanics'  Bank  v.  Towrsend, 
29  Barb.  569;  Truscott  v.  Davis,  4  Barb.  495;  Clark  v.  Sisson,  4  Duer,  408. 
But  if  the  certificate  alleged  to  have  been  given  stating  among  other  things  that 
"there  is  no  offset,  discount  or  counterclaim  or  defense  against  the  same,"  is 
successfully  impeached  upon  the  ground  of  fraud,  the  defendant  will  not  be 
estopped  by  the  statements  contained  in  such  certificate.  See  Hill  v.  Thixton,  94 
Ky.  96,  23  S.  W.  947;  Crabtree  v.  Atchison,  93  Ky.  338,  20  S.  W.  260. 

13.  Gaul  V.  Willis,  26  Pa.  St.  259. 


§  862  ESTOPPEL   IN    PAIS  1047 

received,  and  obligation  to  pay,  do  not  estop  the  maker  from  showing 
that  the  consideration  was  usurious,  or  otherwise  illegal  and  void,  so 
should  not  the  mere  repetition  of  words  to  the  like  effect,  in  another 
form.  On  the  contrary,  the  overzeal  to  create  an  appearance  of 
legahty  would  he  in  itself  a  circumstance  of  suspicion  which  should 
put  the  purchaser  on  his  guard. '^ 

14.  Jaqua  v.  Montgomery,  33  Ind.  46  (1870).  In  this  case  the  maker  of  a 
nonnegotiable  note  wrote  a  certificate  contemporaneous  with  its  execution,  that 
it  was  "all  right  and  will  be  paid  by  mo  when  due."  But  this  was  held  not  to 
estop  the  maker  from  showing,  against  a  bona  fide  holder  who  acquired  it  for  value 
before  maturity,  that  the  note  was  fraudulently  obtained.  Gregory,  Ch.  J., 
said:  "The  instrument  signed  at  the  time  the  note  was  executed  has  not  the  first 
element  of  an  estoppel.  It  is  no  more  than  what  the  note  itself  imported  on  its 
face.  It  was  obtained  by  the  same  fraudulent  act  that  proved  the  execution  of  the 
note.  It  was  a  part  of  the  same  contract,  and  was  as  much  a  part  of  the  note 
as  if  it  had  been  incorporatc<l  in  it.  It  was  a  statement  upon  which  the  appellant 
had  no  right  to  rely.  Indeed,  I  think  that  such  a  paper  accompanying  an  ordinary 
promissory  note  should  have  the  effect  cf  exciting  suspicion  that  all  was  not  right. 
It  looks  too  much  like  the  act  of  the  thief  in  attempting  to  cover  up  his  crime. 


CHAPTER   XXVII 


THE  CONFLICT  OF  LAWS— THE  LAW  OF  PLACE  APPLICABLE  TO  NEGO- 
TIABLE INSTRUMENTS 


SECTION  I 

GENERAL   PRINCIPLKS    OK    THE    LAW    OF    PLACE 

§  863.  Each  one  of  the  United  States  is,  in  contemplation  of  its 
own  and  of  tlie  Federal  Constitution,  a  distinct  and  independent 
sovereignty,  with  its  own  peculiar  coile  of  laws  and  system  of  judi- 
cature. And  while,  in  the  aggregate,  they  compose  one  intogriil 
confederacy,  which  is  itself  an  independent  nation,  paramount  in 
certain  respects  to  the  States,  in  all  other  respects  the  States  retain 
their  separate  autonomies,  and  are  deemed  as  much  foreign  to  each 
other  as  if  not  in  anywise  associated  together.  The  regulation  of 
contracts  comes  peculiarly  within  the  province  of  the  States,  and, 
therefore,  contracts  l)etween  citizens  of  the  different  States,  while 
they  may  be  enforced  by  process  in  the  Fetleral  courts,  nevertheless 
are  to  be  construed  and  effectuated  not  by  a  general  system  of  law 
which  overspread  the  whole  country,  but.  in  accordance  with  the 
principles  of  international  law,  which  govern  transactions  between 
parties  of  different  nations. 

§  864.  As  long  as  all  the  parties  to  a  bill  or  note  are  confined  within 
the  limits  of  a  single  State,  the  local  law  alone  determines  their  rights 
and  liabilities.  No  suit  can  be  lirought  in  a  Federal  court  so  long  as 
the  parties  thereto  continue  to  reside  therein,  and  any  question 
which  may  be  litigated  begins  and  ends  with  the  local  tribunals.^ 
But  the  vast  and  constant  traffic  l)etween  the  States,  and  the  general 
use  of  bills  and  notes  as  a  medium  of  exchange,  give  circulation  to 
those  instruments  from  hand  to  hand,  and  from  State  to  State;  and 
questions  of  nicety  are  often  presented  in  the  inquiry  by  what  law  the 


1.  See  ante,  §  10a. 

1048 


§  865  GENERAL   PRINCIPLES   OF    LAW   OF   PLACE  1049 

rights  and  liabilities  of  the  parties  are  to  be  ascertained.  In  some  of 
the  States  the  English  statute  of  3  &  4  Anne  is  in  force.^  In  others, 
where  none  but  notes  payable  at  bank  are  negotiable,  there  are  pe- 
culiar statutory  provisions  respecting  commercial  paper.  While  in 
the  greater  number  of  jurisdictions  the  Uniform  Negotiable  Instru- 
ments Law  has  been  adopted.' 

In  all  of  the  States,  each  recognizes  the  precedents  of  its  own  courts, 
as  indejiendently  of  the  rulings  of  the  Supreme  Court  of  the  United 
States  as  of  those  of  Great  Britain,  which  may,  indeed,  shed  great 
light  on  all  commercial  questions,  but  are  of  no  binding  authority. 
When  suit  is  brought  in  one  of  the  Federal  courts,  it,  on  the  other 
hand,  will  be  guided  by  the  general  law  merchant  in  questions  ref- 
erable to  it,  and  will  follow  its  own  views  about  it,  unless  the  nature 
of  the  liability  contracted  has  already  l)een  declared  by  statute  in 
the  particular  State  of  the  contract,  before  the  contract  was  entered 
into.'* 

It  is,  therefore,  important,  in  any  treatise  upon  negotiable  instru- 
ments, to  discuss  the  principles  by  which  the  liabilities  of  parties 
are  to  be  determined,  when  they  have  been  contracted  in  different 
States.  A  party  whose  domicile  is  in  Maine,  may  make  a  contract 
in  Maryland  for  the  purchase  of  real  estate  in  Virginia,  and  may  in 
Maryland  execute  his  negotiable  note  therefor,  payable  in  Texas; 
and  suit  might  be  brought  against  him  in  California.  And  the  ques- 
tion might  arise  whether  or  not  the  law  of  the  maker's  domicile,  the 
lex  domicilii,  as  it  is  termed;  or  the  law  of  the  place  where  the  contract 
was  made,  lex  loci  contractus;  or  the  law  of  the  situs  of  the  property 
purchased,  lex  loci  rei  sitce;  or  the  law  of  the  place  where  the  note 
was  made  payable,  lex  loci  solutionis;  or  the  law  of  the  place  where 
suit  was  brought,  lex  fori,  were  applicable  to  the  transaction. 

§  865.  General  principles. — The  following  general  principles  on 
this  subject  may  l.e  stated: 

First.  Every  contract  is,  in  respect  to  its  formalities,  an  authen- 
tication to  be  regulated  by  the  laws  of  the  State  or  country  in  which 
it  is  entered  into;  and  it  is  also  regulated  by  the  laws  of  the  State  or 
country  in  which  it  is  made,  in  respect  to  its  nature,  validity,  inter- 
pretation, and  effect,  except  when  it  is  to  be  performed  in  another 
State  or  country. 

2.  See  ante,  §  5. 

3.  See  the  Appendix. 

4.  See,  ante,  §  10. 


1050  THE    CONFLICT    OF    LAWS  §  8G5 

Second.  When  a  contract  is  made  in  one  State  or  country  to  be 
performed  in  another  State  or  country,  it  is  to  be  regulated  by  the 
laws  cf  the  place  of  performance,  without  regard  to  the  place  at  which 
it  was  written,  signed,  or  dated,  in  respect  to  its  nature,  validity, 
interpretation,  and  efTect.-' 

Third.  In  determining  the  place  where  a  contract  is  made,  the 
place  where  it  was  delivered,  as  consummating  the  bargain,  controls;  " 
and  not  the  place  where  it  was  written,  signed,  or  tlated. 

Fourth.  If  a  party  contracts  while  in  transitu,  and  without  identity 
with  any  other  place,  the  place  of  his  domicile  is  deemed  the  place  of 
the  contract. 

Fifth.  If  a  contract  be  illegal  and  void  at  the  place  where  it  is  made, 
it  is  void  everywhere. 

Sixth.  The  laws  of  a  State  or  country  have  no  extraterritorial 
force,  proprio  vigorc;  and  are  only  executed  by  other  States  and  coun- 
tries from  considerations  of  courtesy  or  policy,  termed  the  comity  of 
nations. 

Seventh.  The  laws  of  a  State  or  country  being  only  executed  in 
another  by  comity,  they  will  be  executed  only  so  far  as  they 
may  be  consistent  with  religion,  good  morals,  and  with  the  public 
rights  and  interests  of  the  State  or  country  in  which  the  remedy  is 
sought. 

Eighth.  The  courts  of  a  State  or  country  cannot  take  judicial 
notice  of  the  laws  of  a  foreign  State  or  country;  and  when  such  laws 
are  sought  to  be  applied,  they  must  be  alleged  and  proved. 

Ninth.  The  law  of  the  place  where  suit  is  brought,  the  lex  fcri, 
as  it  is  termed,  regulates  the  form  of  the  action  and  the  nature  and 
extent  of  the  remedy.    And  we  may  add, 

6.  Brown  v.  Gates,  120  Wis.  349,  98  N.  W.  205,  97  N.  W.  221,  quoting  text. 

6.  Connor  v.  Donnell,  55  Tex.  173,  citing  the  text.  The  law  applicable  to 
promissory  notes  executed  in  one  state  and  payable  in  another,  having  conflicting 
laws,  has  been  summed  up  judicially  as  follows:  (1)  All  matters  hearing  upon  the 
execution,  the  interpretation,  and  validity  of  the  note,  including  the  capacity  of 
the  parties  to  contract,  are  to  be  determined  by  the  law  of  the  place  where  the 
contract  is  made.  (2)  All  matters  connected  with  the  payment,  including  pres- 
entation, notice,  d(>rnand,  protest,  and  damages  for  nonpayment,  are  to  be 
regulated  by  the  law  of  the  place  where  by  its  terms  the  note  is  to  be  paid.  (3)  All 
matters  respecting  the  remedy  to  be  pursued,  including  the  bringing  of  suits, 
service  of  process,  and  admissibility  of  evidence,  depend  upon  the  law  of  the  place 
where  the  action  is  brought.  Garrigue  v.  Keller,  164  Ind.  676,  74  N.  E.  523,  69 
L.  R.  A.  870,  108  Am.  St.  Rep.  324;  Union  Nat.  Bank  v.  Chapman,  169  N.  Y. 
538,  62  N.  E.  672,  57  L.  R.  A.  513,  88  Am.  St.  Rep.  614. 


§  866  GENERAL   PRINCIPLES   OF   LAW   OF    PLACE  1051 

Tenth.  That  if  the  contract  express  the  place  with  reference  to 
which  it  is  made,  that  settles  it  J 

§  866.  The  comity  of  nations. — It  results  from  the  principle  that 
the  laws  of  a  country  have  no  binding  force  beyond  its  own  bound- 
aries, that  the  appeal  for  their  enforcement  addresses  itself  entirely 
to  the  comity  and  discretion  of  the  forum  in  which  suit  is  brought. 
That  comity  is  freely  exercised  by  civilized  countries,  which  look 
for  and  receive  reciprocal  courtesies  from  other  nations;  r.nd  the  close 
relations  of  the  several  States  of  the  Union  with  each  other,  the  family 
likeness  of  their  institutions,  and  the  homogeneity  of  their  people, 
are  powerful  incentives  to  the  exercise  between  them  of  a  comity 
peculiarly  liberal  and  expansive.*  But,  nevertheless,  a  State  must 
be  just  before  it  is  generous;  and,  therefore,  no  State  should  exercise 
comity  in  favor  of  contracts  which  violate  its  own  laws,  or  the  law 
of  nature,  or  the  law  of  Cod.®  It  must  consult  sound  morals  and  the 
interests  and  public  policy  of  its  own  people,  nnd  if  to  enforce  the  laws 
of  another  State  or  country  would  lead  to  their  infringement,  it  would 
1  0  treacherous  to  its  own  duties  to  lend  aid  to  their  execution.^"    As 


7.  Pritchard  v.  Norton,  106  U.  S.  124,  1  Sup.  Ct.  Rep.  102;  Garrigue  v.  Keller, 
104  Ind.  676,  74  N.  E.  523,  69  L.  R.  A.  870,  108  Am.  St.  Rep.  324;  Union  Life 
Ins.  Co.  V.  Pollard,  94  Va.  152,  26  S.  E.  421,  64  Am.  St.  Rep.  715;  Brown  v.  Gates, 
120  Wis.  349,  98  N.  W.  205,  97  X.  W.  221.  Thouf^h  drafts  drawn  in  Germany 
upon  a  firm  in  New  York  were  made  payable  by  their  terms  in  New  York,  they  are 
controlled  as  to  their  validity  by  the  law  of  Germany  when  it  was  understood  by 
the  parties  that  the  drafts  should  be  negotiated  in  Germany  and  were  drawn  for 
that  purpose,  and  the  money  was  actually  advanced  upon  them  there.  Whitehead 
V.  Ileidenheimer,  68  N.  Y.  S.  704,  57  App.  Div.  590.  The  fact  that  the  note 
states  that  the  residence  of  the  payee  is  in  another  state  does  not  designate  that 
state  as  the  place  of  payment.  Strawberry  Point  Bank  v.  Lee,  117  Mich.  122,  75 
N.  W.  444.  But  the  rule  of  intention  will  not  be  applied  where  the  parties  agreed 
to  be  bound  by  a  foreign  law  to  escape  the  provisions  of  a  local  statute.  Mayer 
V.  Roche,  77  N.  J.  L.  681,  75  Atl.  2.35,  26  L.  R.  A.  (N.  S.)  763. 

8.  Lathrop  v.  Commercial  Bank,  8  Dana,  118. 

9.  Forbes  v.  Cochrane,  2  B.  &  C.  448;  Gooch  v.  Faucett,  122  N.  C.  271,  29 
S.  E.  362;  Alexander  v.  Bank,  19  Tex.  Civ.  App.  620,  47  S.  W.  840,  citing  text. 

10.  Ohio  Ins.  Co.  v.  Edmundson,  5  La.  295;  Armstrong  v.  Toler,  11  Wheat. 
258;  Pearsall  v.  Dwight,  2  Ma.ss.  84;  Mahorner  v.  Hooe,  9  Smedes  &  M.  247; 
Donovan  v.  Pitcher,  .53  Ala.  411;  Flagg  v.  Baldwin,  38  N.  .J.  Eq.  219;  Pope  v. 
Hanke,  155  111.  617,  40  X.  E.  339.  In  an  Arkansas  case,  Arden  Lumber  Co.  v. 
Henderson  Iron  Works  &  Su[)ply  Co.,  83  Ark.  240,  103  S.  W.  185,  it  was  held  that 
stipulations  for  attorneys'  fees  arc  agreements  for  a  penalty,  and  that  though 
such  a  stipulation  was  good  and  enforceable  in  Louisiana  where  the  notes  were 
executed,  yet  in  a  suit  brought  thereon  in  Arkansas  such  stipulations  would  not  be 


1052  THE    CONFUCT   OF    LAWS  §  8G7 

an  illustration:  "In  many  countries  a  contract  may  be  maintained 
by  a  courtesan  for  the  price  of  the  prostitution;  and  one  may  suppose 
an  action  to  be  brought  here  upon  such  a  contract  which  arose  in  such 
a  country.  But  that  would  never  be  allowed  in  this  country,"  " 
as  was  well  said  in  England,  and  might  be  said  here. 


SECTION  II 

LEX   LOCI    CONTRACTUS 

§  867.  We  shall  now  endeavor  to  illustrate  these  general  princi- 
ples by  applying  them  to  the  various  liabilities  which  arise  upon 
negotiable  instruments.  The  rule  is  of  general  acceptation  that  the 
law  of  the  place  where  the  contract  is  made  regulates  the  formalities 
of  its  execution  and  authentication  and  the  consideration  necessary 
to  its  validity;  and  also  regulates  its  interpretation,  nature,  obliga- 
tion, and  elTect.''^     If  formally  executed  upon  a  legal  consideration 

enforced.  Sec  also  Security  Co.  of  Hartford  v.  Eyer,  30  Nebr.  507,  54  N.  W.  538, 
3S  Am.  St.  Rep.  735,  that  the  validity  of  a  provision  for  an  attorney's  fee  is 
{governed  by  the  law  of  the  forum,  and  Clark  v.  Tanner,  100  Ky.  275;  Exchange 
Bank  v.  Appalacliian  Land  &  LumlnT  Co.,  128  N.  C.  193,  38  S.  E.  813. 

11.  Robinson  v.  Bland,  2  Burr.  1077,  Wilmot,  J. 

12.  McDougal  v.  Rutherford,  30  Ala.  253;  Tenncy  v.  Porter,  61  Ark.  329,  33 
S.  W.  211;  Lockwood  v.  Lindsey,  6  App.  D.  C.  390;  Dolman  v.  Cook,  1  McCart. 
50;  Evans  v.  Anderson,  78  111.  558;  Mott  v.  Rowland,  85  .Mich.  501,  48  N.  W.  038; 
Houston  v.  Keith  (Miss.),  50  So.  330;  Benton  v.  German-,\m.  Nat.  Bank,  45 
Nebr.  850,  64  N.  \V.  227;  Costa  v.  Davis,  4  Zabr.  319;  Armour  v.  McMichael, 
7  Vroom,  92;  Am.sinck  v.  Rogers,  189  N.  Y.  252,  82  N.  E.  134,  12  L.  R.  A.  (N.  S.), 
875,  121  Am.  St.  Rep.  858;  King  v.  Sarria,  09  N.  Y.  24;  Hyde  v.  Goodnow,  3 
N.  Y.  200;  Merchants'  Bank  of  Canada  v.  Brown,  83  N.  Y.  S.  1037,  86  App.  Div. 
599;  Steward  v.  Commonwealth  Nat.  Bank  (Okl.),  119  Pac.  210.  Jamieson  v. 
Potts,  55  Oreg.  202,  105  Pac.  93,  25  L.  R.  A.  (N.  S.),  24;  Warner  v.  Citizens'  Nat. 
Bank,  0  S.  Dak.  152,  00  N.  W.  740;  Armendiaz  v.  Sana,  40  Tex.  291;  Crofoot 
V.  Thatcher  &  Jo.s.selyn,  19  Utah,  212,  57  Pac.  171,  75  Am.  St.  Rep.  725;  Beach  v. 
lirown,  17  Utah,  435,  53  Pac.  991;  Smith  v.  Anderson,  70  Vt.  424,  41  Atl.  441. 
"  Unless  it  clearly  appears  that  the  contracting  parties  had  some  other  law  in 
view."  See  Brockway  v.  American  Express  Co.,  171  Mass.  158,  50  N.  E.  026. 
The  negotiability  of  a  certificate  of  deposit  must  be  determined  by  the  law  of  the 
state  in  which  it  was  executed,  and  not  by  the  law  of  the  state  in  which  it  may 
have  been  indorsed.  Krieg  v.  Palmer  Nat.  Bank  (Ind.  App.),  95  N.  E.  013. 
\\'here  a  promise  to  accept  a  foreign  bill  of  exchange  was  to  be  performed  in 
another  state,  whether  the  agreement  should  be  in  writing  must  be  determined  by 
the  law  of  that  state.  Bank  of  Laddonia  v.  Bright-Coy  Commission  Co.  (Mo. 
:^pp.),  120  S.  W.  648. 


§  8G7  LEX    LOCI    CONTRACTUS  1053 

there,  it  is  valid  everywhere/^  and  if  defective  there  in  either  respect, 
it  is  invalid  everywhere.^'*  These  doctrines  are  absolutely  necessary 
to  healthful  commercial  intercourse  between  States  and  nations, 
and  they  find  various  illustrations  in  numerous  cases.  Thus,  where 
a  bill  was  made  and  indorsed  in  blank  in  France,  and  sued  in  Eng- 
land, and  it  appeared  that  by  French  law  the  blank  indorsement, 
without  additional  formalities,  did  not  pass  the  property  to  the 
holder,  it  was  held  that  there  could  be  no  recovery  in  England,  al- 
though by  the  English  law  the  indorsee  in  blank  could  sue.^^  But  in 
a  subsequent  case  it  has  been  shown  that,  while  the  legal  principle 
of  this  decision  is  correct,  the  view  taken  of  the  French  law  was 
erroneous,  an  indorsement  by  procuration  meaning  only  that  just 
such  title  as  the  indorser  had  should  pass.'^  So,  where  a  note  was 
made  in  Mississippi,  for  a  slave,  and  lacked  a  certain  certificate, 
which  was  necessary  by  the  laws  of  that  State  to  its  validity,  it  was 
held  void  in  Arkansas,  where  suit  was  brought,  ^^  So,  where  a  bill 
was  drawn  in  Michigan  upon  a  drawee  in  Chicago,  Illinois,  it  was 
held  that  a  parol  acceptance  valid  in  Chicago  was  binding,  although 
by  the  laws  of  Michigan  an  acceptance  must  be  in  writing.'**  So, 
where  a  bill  was  drawn  in  Chicago  upon  a  firm  of  St.  Louis,  Mo.,  and 
was  verbally  accepted  by  a  member  of  the  firm  at  the  time  in  Cliicago, 
it  was  held  to  be  governed  by  the  laws  of  Illinois,  and  Innding.'^  And, 
it  has  been  held,  the  note  of  a  married  woman,  valid  in  the  State 


13.  Ford  V.  Buckeye  Ins.  Co.,  6  Bush,  133;  Fant  v.  Miller,  17  Gratt.  47;  An- 
drews V.  Pond,  13  Pet.  G.');  Palmer  v.  Yarrington,  1  Ohio  St.  253;  Andrews  v. 
Hcrriott,  4  Cow.  510;  Smith  v.  Mead,  3  Conn.  253;  Wood  v.  Wheeler,  111  X.  C. 
231, 16S.  E.  418. 

14.  Thayer  v.  EUiott,  16  N.  H.  102;  Ansted  v.  Sutter,  30  111.  1G4;  Pearsall  v. 
Dwight,  2  Ma.ss.  84;  Van  Schaick  v.  Edwards,  2  Johns.  Cas.  355;  Kanaga  v. 
Taylor,  7  Ohio  St.  134;  Robinson  v.  Bland,  2  Burr.  1077;  Briggs  v.  Latham, 
36  Kan.  255,  citing  the  text;  Hager  v.  National  German-American  Bank,  105 
Ga.  116,  31S.  E.  141. 

16.  Trimbey  v.  Vignier,  1  Bing.  X.  C  151;  Dunnegan  v.  Stevens,  122  111.  396. 
As  to  the  obhgation  of  an  indorsement  being  governed  by  the  law  of  the  place  of 
its  execution,  see  ante,  under  §  678. 

16.  Bradlaugh  v.  De  Rin,  L.  R.,  5  C.  P.  [♦476],  475.    See  post,  §  906. 

17.  Moore  v.  Clopton,  22  Ark.  125. 

18.  Mason  v.  Dousay,  35  111.  424.  See  also  Bissell  v.  Lewis,  4  Mich.  450; 
Exchange  Bank  v.  Hubbard,  10  C.  C.  A.  295,  62  Fed.  112;  Hubbard  v.  Exchange 
Bank,  18  C.  C.  A.  525,  72  Fed.  234;  Garreston  v.  Bank,  47  Fed.  867,  citing  text. 

19.  Scuddcr  v.  Union  Nat.  Bank,  91  U.  S.  (1  Otto)  406.  In  such  case,  held  a 
foreign  bill.  Grimshaw  v.  Bender,  6  Mass.  157;  Warner  v.  Citizens'  Nat.  Bank, 
6  So.  Dak.  152,  60  N.  W.  746. 


X054  THE    CONFUCT   OF    LAWS  §  868 

where  it  is  executed,  will  be  enforced  in  a  State  where  she  is  incom- 
petent to  enter  into  such  a  contract.^" 

§  868.  Place  of  delivery  and  consummation  of  contract. — The 

place  where  a  cun(ra(  t  is  made  tlopends  not  upon  the  place  where 
it  is  written,  signed,  or  dated,  but  upon  the  place  where  it  is  delivered 
as  consummating  the  bargain.-'  Thus,  the  law  of  the  place  where  a 
bill  or  note  is  written,  signed,  or  dated  does  not  necessarily  control  it 
but  the  law  of  the  place  where  it  is  delivered  from  drawer  or  maker 
to  payee,  or  from  indorser  to  indorsee.  A  note  dra\\Ti  ;md  dated  in 
Maryland,  but  delivered  in  New  York,  in  i)ayment  of  goods  there 
purchased,  or  money  loaned,  is  payable  in  and  governed  by  the  laws 
of  New  York.-2  And  if  a  note  be  datctl  and  signed  in  blank  in  Vir- 
ginia, and  sent  to  Maryland,  and  tb.ere  filled  up  and  negotiated,  it  is 
a  Maryland,  and  not  a  Virginia,  note.^'  Where  a  note  was  dated  in 
Missouri,  and  signed  l.y  one  maker  there,  and  was  then  signed  1  y 
other  makers  in  Iowa  and  tl:ere  delivered,  it  was  held  to  be  governed 


20.  Robinson  v.  Queen,  87  Tenn.  446.  See  also  Baer  v.  Terry,  105  La.  479,  29 
So.  88G;  GarrifTue  v.  Kell.T,  1G4  Ind.  076,  74  N.  E.  523,  69  L.  R.  A.  870,  108  Am. 
St.  Rep.  324  (as  to  a  married  woman  .signing  08  surety).  Where  an  accommodation 
note,  signed  by  a  husband  with  his  wife  a.s  surety,  was  executed  and  dchvcred  to 
the  payee  in  Ahibama,  and  made  payable  in  lUinois  without  any  understanding 
as  to  where  it  should  be  negotiated  but  in  fact  negotiated  in  Illinois,  it  is  an 
Alabama  contract,  and  as  to  its  validity  is  governed  by  the  law  of  Alabama. 
Union  Nat.  Bank  v.  Chapman,  169  N.  Y.  538,  62  N.  E.  672,  57  L.  R.  A.  513,  88 
Am.  St.  Rep.  614. 

21.  rhipps  V.  Harding,  17  C.  C.  A.  203,  70  Fed.  468,  citing  text;  McGarry  et  al. 
V.  Nicklin,  110  Ala.  559,  17  So.  720,  55  Am.  St.  Rep.  40,  note,  citing  text;  Kelley 
V.  Telle,  66  Ark.  464,  51  S.  W.  633;  Gay  v.  Rainey,  89  111.  221;  Hart  v.  Wills,  52 
Iowa,  56;  Briggs  v.  Latham,  30  Kan.  255,  citing  the  text;  Cherry  v.  Spraguc,  187 
Mass.  113,  72  N.  E.  4.56,  67  L.  R.  A.  33,  105  Am.  St.  Rep.  381;  Lawrence  v. 
Bassett,  5  Allen,  140;  Freese  v.  BrowncU,  35  N.  J.  L.  (6  Vroom)  286;  Campbell 
v.  Nichols,  33  N.  J.  L.  (4  Vroom)  81;  Overton  v.  Boltcn,  9  Heisk.  762;  E.  L. 
Welsh  Co.  v.  Gillette,  146  Wis.  61,  130  N.  W.  879. 

22.  Cook  v.  Moffat,  5  How.  295;  Ee  Conrad,  1  Pa.  Leg.  Gaz.  284;  Hyde  v. 
Goodnow,  3  N.  Y.  266;  Davis  v.  Coleman,  7  Ired.  424.  On  the  same  principle,  if 
a  merchant  orders  goods  from  England,  and  the  English  merchant  executes  the 
contract,  it  is  governed  by  English  law.  Whiston  v.  Stodder,  8  Mart.  (La.)  95; 
Buchanan  v.  Drovers'  Nat.  Bank,  5  C.  C.  A.  83,  55  Fed.  223.  Where  a  note  was 
given  on  an  order  given  in  Rhode  Island  and  received  and  accepted  in  Massachu- 
setts and  to  be  performed  there,  the  contract  is  a  Massachusetts  contract,  and  if 
the  dealings  were  not  valid  in  Massachusetts,  the  note  was  without  consideration. 
Winward  v.  Lincoln,  23  R.  I.  476,  51  Atl.  106,  64  L.  R.  A.  160. 

23.  Fant  v.  Miller,  17  Gratt.  47. 


§  869  LEX    LOCI    CONTRACTUS  1055 

by  the  laws  of  the  latter  State.^"  And  where  a  note  was  held  by  a 
bank  in  New  Hampshire,  and  a  renewal  for  part  thereof  and  balance 
in  cash  was  sent  to  and  received  and  accepted  by  the  New  Hampshire 
bank  in  place  of  the  old  note,  the  new  note  was  a  New  Hampshire 
contract  -'    And  a  bill  accepted  in  New  York  for  accommodation 
of  a  drawer  in  Massachusetts,  and  there  put  in  circulation,  would 
be  governed  by  IMassachusetts  law."«    So,  where  a  note  is  indorsed 
for  accommodation  in  one  State,  and  delivered  in  another,  the  indorse- 
ment is  governed  by  the  laws  of  the  latter,  for  the  accommodation 
indorser  makes  that  party  to  whom  he  lends  his  signature  his  agent 
for  putting  the  instrument  into  circulation,  and  his  o^vn  contract 
with  those  to  whom  it  is  negotiated  must,  consequently,  be  judged 
on  the  principles  of  agency,  which  refer  it  to  the  place  where  the 
circulation  commences.^^    In  a  Maine  case  it  appeared  that  a  husband 
and  wife  executed  a  note  in  Massachusetts,  the  wife  being  surety 
for  her  husband,  and  the  husband  delivered  it  by  mail  to  the  payee 
in  INIaine    By  the  law  of  Massachusetts  the  wife  could  not  so  bind 
herself,  but  in  Maine  a  married  woman  could  contract  for  any  lawful 
purpose.    The  law  of  Maine  was  held  to  apply,  and  the  wife  held 
liable.28 

S  869    When  apparent  is  presumed  to  be  actual  place  of  deUvery. 

_But  however  the  doctrine  above  illustrated  may  be  as  a  general 
-4  Hart  v.  Wills.  52  Iowa,  56.  Where  a  note  was  executed  in  Michigan  and 
sent  by  the  maker  to  an  indorser  in  Wisconsin  for  signature  who  signed  it  and  by 
TccUon  of  the  maker  sent  the  paper  to  the  payee  in  Michigan,  the  contrac  i. 
governed  by  the  law  of  the  state  of  Michigan.    Hackley  Nat.  Bank  v.  Bairy,  139 

"'^:^^:ia  ^;.'Sr"  Sayles,  1S4  Ma..  520.  69  N.  E.  309.  100  Am.  St. 

^Z  %L  Nat.  Bank  v.  Morris,  1  Hun,  680,  overruling  Jewell  v.  Wright,  30 
N.  Y.  259.  and  approving  Bank  of  Georgia  v.  Lcwin.  45  ^-^^  ^40  and  Bowen  v. 
Bradley.  9  Abb.  (N.  S.)  395;  Farmers'  Nat.  Bank  v.  Sutton  Mfg.  Co..  3  C.  C  A. 

'1?  Cook'v.'  Litchfield.  5  Sandf.  330;  Stanford  v.  Pruet.  27  Ga.  243;  DaviB 
V  ClcmL.  6  McLean.  622;  Gay  v.  Rainey.  89  111.  221;  BeUv  Packard  69 
Me.  105;  Wharton  on  Conflict  of  Laws.  §  459;  2  Pai^ons  on  Notes  and  Bills 
380-  Stubbs  V.  Colt,  30  Fed.  419,  citing  the  text;  Staples  v.  Nott,  128  N  Y^403.  -8 
N  E  515,  26  Am.  St.  Rep.  480.  A  suit  in  Missouri  on  a  note  made  -  P-nsyl- 
vant  dat^d  and  payable  in  Missouri  and  delivered  in  Missouri  i.  not  barred  by 
he  p;nnsylvania  Statutes  of  Limitation,  but  is  governed  by  the  Missouri  Statute  - 
American  School  cf  Osteopathy  v.  Turner,  143  Mo.  App^  416  128  ^^^^229^ 
28  Bell  V.  Packard,  69  Me.  105.  See  also  Mayer  v.  Roche,  77  N.  J.  L.  681.  75 
Atl.235.26L.R.A.  (N.S.)763. 


1U50  TilK    (.ONFLICT   OF    LAWS  §  809 

rule  (and  we  by  no  means  intend  to  discredit  it  as  such),  it  should 
not  be  regarded  as  without  exceptions.  And  where  the  parties  ac- 
(luirinp;  a  bill  for  value,  and  in  the  usual  course  of  business,  have 
no  knowledge  that  it  was  not  issued  and  delivered  as  a  sul)sisting 
instrument  at  the  place  where  it  bears  date,  it  is  but  just  that  they 
should  be  entitled  to  regard  its  ostensible  as  its  real  character,  and 
should  at  least  not  be  permitted  to  suffer  by  reason  of  the  after- 
discovered  fact  that  it  was  not  there  delivered."-'  In  the  absence  of 
evidence  to  the  contrary,  it  will  be  j)resumed  that  a  note  was  ex- 
ecuted and  delivered  at  the  place  where  it  bears  date.^*^  And  where 
one  of  two  makers  of  a  note  lived  in  the  state,  and  it  does  not  appear 
definitely  where  the  other  maker  lived,  it  may  be  presumed  to  have 
been  executed  within  the  State.'" 

In  consonance  with  thi.s  view,  it  has  been  held  in  Pennsylvania, 
that  where  a  drawer  in  Philadelphia  there  dated  and  wrote  a  bill, 
blank  as  to  the  payee,  and  sent  it  to  London,  where  a  payee's  nam(> 
was  inserted,  liis  indorsement  procured,  and  the  bill  negotiated 
to  a  bank  which  had  no  "notice  of  the  manner  in  which  it  origi- 
nated, or  of  the  fact  that  it  was  issued  in  London,  and  not  in  Phila- 
delphia"— such  drawer  was  bound  in  damages  to  the  holder,  as 
upon  a  bill  actually  drawn  and  delivered  in  Philadelphia.  For,  as 
said  by  Lewis,  J.:  "It  bore  the  dress  of  a  bill  of  exchange  drawn  in 
Pennsylvania;  and  upon  the  principle  that  every  one  is  presumed  to 
produce  all  the  consequences  to  which  his  acts  naturally  and  neces- 
sarily tend,  the  pr(\sumpti()n  is  that  the  defendants  intended  that 
the  purchasers  of  it  should  receive  it  under  the  belief  that  it  was  a 
bill  drawn  in  Philadelphia,  in  the  usual  course  of  business."  ^- 

And  where  it  apyieared,  in  England,  that  parties  resident  in  Ire- 
land signed  and  indorsed  a  copper-plate  impression  of  a  bill,  leaving 
blanks  for  the  date,  sum,  time  when  payable,  and  nam(^  of  the  drawee, 
and  transmitted  it  to  B.  in  England  for  his  use;  and  B.  tlated  it 
"  Waterford,"  a  place  in  Ireland,  filled  up  the  blanks,  and  negotiated 
it  to  the  plaintiff,  who  had  no  knowledge  that  the  history  of  the  bill 

29.  1  Parsons  on  Notes  and  Bills,  57.  See  National  Bank  v.  Smoot,  1  Mc- 
Arthur,  371 ;  Quaker  City  Bank  v.  Showacre,  26  W.  Va.  52,  citing  the  text;  Watson 
V.  Boston  Woven  Cordage  Co.,  75  Hun,  115,  26  N.  Y.  Supp.  1101,  quoting  with 
approval  the  text. 

30.  Parks  v.  Evans,  5  Del.  576;  Dundee  Mortgage  &  Trust  Investment  Co.  v. 
Nixon,  95  Ala.  318,  10  So.  311. 

31.  HefHebower  v.  Detrick,  27  W.  Va.  16. 

32.  Lennig  v.  Ralston,  23  Pa.  St.  139. 


§§  870,  871  LEX   LOCI    CONTRACTUS  1057 

was  not  exactly  what  its  face  purported — it  was  held  that  it  was  to 
be  considered  an  Irish  bill,  by  relation  from  the  time  it  was  signed  in 
Ireland,  and  consequently  that  an  English  stamp  was  not  necessary. ^^ 

§  870.  A  bill  sketched  out  and  accepted  in  England,  but  after- 
ward signed  by  the  drawer  abroad,  would  be  considered  as  made 
abroad;  or  vice  versa,  if  signed  by  the  drawer  abroad  and  filled  up 
in  England. ^^  Where  a  bill  was  drawn  in  Jamaica,  on  a  stamp  of 
that  island  only,  and  a  blank  was  left  for  the  payee's  name,  it  was  held 
that  an  English  stamp  was  not  necessary  to  the  validity  of  the  inser- 
tion of  the  bearer's  name  in  England. ^^  And  where  a  British  subject, 
residing  in  Florence,  signed  a  joint  and  several  note  as  one  of  its 
makers,  and  sent  it  by  post  to  his  brother  in  England,  the  other 
maker,  who  also  signed  it,  and  paid  it  into  bank — it  was  held  that  a 
cause  of  action  arose  in  England,  upon  its  delivery  there  to  the  payee. ^® 
It  is  to  be  observed  that  courts  do  not  take  judicial  notice  of  the  di- 
visions of  foreign  States  and  countries  into  counties,  towns,  and 
cities,^' 

§  871.  Interpretation  of  the  contract. — The  ascertainment  of  the 
true  meaning  and  intention  of  the  parties  is  the  prime  object  of 
the  interpretation  of  contracts,  and  as  the  same  words  are  used  ^v^tll 
different  significations  in  different  communities,  and  import  different 
obligations — it  follows  that  the  interpretation  placed  upon  them  must 
bo  according  to  the  signification  and  effect  attached  to  them  in  the 
State  or  country  in  which  the  contract  is  made — otherwise  the  inten- 
tion of  the  parties  will  be  defeated,  instead  of  effectuated.  Thus  by 
the  word  "month"  is  sometimes  meant  a  lunar,  and  sometimes  a 
calendar  month,  and  if  it  were  used  in  a  contract  entered  into  in  a 
foreign  State  or  countrj',  evidence  would  be  admissible  to  show  in 

33.  Saaith  v.  Mingay,  1  Maule  &  S.  87,  Grose,  J.,  said:  "The  question  is, 
whether  this  is  to  be  considered  as  an  Irish  or  an  English  bill  of  exchange.  The 
case  seems  to  me  to  be  this:  a  piece  of  paper  signed  by  a  person  in  Ireland,  is  given 
for  the  purpose  of  being  filled  up,  and  operating  as  a  bill  of  exchange;  and  al  hough 
it  was  imperfect  at  the  time  when  it  was  signed,  yet  when  it  became  perfect  by 
being  filled  up,  it  operated  a.s  a  bill  of  exchange,  from  the  time  when  it  was  signed 
and  intended  to  have  such  operation."  See  National  Bank  v.  Smoot,  1  McArthur 
371. 

34.  Parker  v.  Sterne,  9  Exch.  684. 
36.  Crutchley  v.  Mann,  5  Taunt.  529. 

36.  Chapman  v.  CottereU,  34  L.  J.  Exch.  186- 

37.  Ante,  chapter  I,  §  11. 

67 


1U58  THE   CONFLICT   OK    LAWS  §§  872,  .S7;i 

what  sense  the  term  was  tlicrc  understood.  So  the  word  "pounds" 
when  employed  in  England  would  mean  pounds  sterling;  while  in  the 
United  States  it  would  mran  pounds  in  American  currency,  which  is  a 
fourth  less  in  value.  So  the  term  "usance"  in  difTcrent  countries 
signifies  different  periods  of  time,  varying  from  half  a  month  to  sev- 
eral months  in  duration.  It  is  obvious  that  in  such  cases  the  contract 
mu.st  be  enforced  according  to  the  meaning  of  the  several  terms  in 
the  countries  wherein  they  are  respectively  used.  The  law  in  force 
at  the  time  the  contract  is  ma<le  must  apply  to  it  in  respect  to  its 
interpretation  ami  etTect,  otherwise  the  Legislature  would  itself 
make  a  contract  for  the  parties.  Therefore,  a  State  enactment,  mak- 
ing notes  payable  at  a  designated  place  negotiable,  would  only  relate 
to  notes  executed  after  its  passage.'^ 

§  872.  By  the  nature  of  the  contract  is  meant  those  qualities 
which  pertain  to  it.  Thus,  whether  it  \>v  joint  or  several,  or  joint 
and  several;  whether  absolute  or  conditional;  whether  of  principal 
or  surety;  whether  personal  or  real,  are  points  which  concern  the 
nature  of  the  contract,  and  are  to  be  govcTncnl  by  the  law  of  tl;e 
place  at  which  it  is  entered  into.  This  is  well  illustrated  in  an  English 
case,  where  suit  was  brouglit  in  England  upon  a  bill  accepted  at 
l.ejlhorn,  where  the  law  is,  tliat  if  the  acceptor  have  not  in  his  hands 
sufhcient  funds  of  the  drawer,  and  the  drawer  then  fail,  the  acceptanc(^ 
is  thereupon  vacated.  It  was  held  that  the  law  of  Leghorn  should 
prevail.^^ 

§  873.  Obligation  of  the  contract. — In  speaking  of  the  obliga- 
tion of  contracts.  Story  says:  "It  would  be  easy  to  multiply  illus- 
trations under  this  head.  Suppose  a  contract,  by  the  law  of  one 
country,  to  involve  no  personal  obligation  (as  was  supposed  to  be  the 
law  of  France  in  a  particular  case  which  came  in  judgment),  but 
merely  to  confer  a  right  to  proceed  in  rem,  such  a  contract  would 
be  held  everywhere  to  involve  no  personal  obligation.  Suppose, 
by  the  law  of  a  particular  country,  a  mortgage  for  money  borrowed 
should,  in  the  absence  of  any  express  contract  to  pay,  be  limited  to  a 
mere  repayment  thereof  out  of  the  land,  a  foreign  court  would  refuse 
to  entertain  a  suit  giving  it  a  personal  obligation.  Suppose  a  con- 
tract for  the  payment  of  the  debt  of  a  third  person  in  a  country  where 


38.  Cook  V.  Citizens'  Mut.  Ins.  Co.,  53  Ala.  37.    See  §  970a. 

39.  Burrows  v.  Jomimo,  2  Sir.  733. 


§§  874,  875  LEX    LOCI    CONTRACTUS  1059 

the  law  subjected  such  a  contract  to  the  tacit  condition  that  pay- 
ment must  first  be  sought  against  the  debtor  and  his  estate;  that 
would   limit  the  obligation  to  a  mere  accessorial  and  secondary 
character,  and  it  would  not  be  enforced  in  any  foreign  country   ex- 
cept after  a  compliance  with  the  requisitions  of  the  local  law.    Sure- 
ties  indorsers,  and  guarantors  are,  therefore,  everywhere  liable  only 
according  to  the  law  of  the  place  of  their  contract.    Their  obligations, 
if  created  by  such  local  law  as  an  accessorial  obligation,  will  not  any- 
where else  be  deemed  a  principal  obligation.     So,  if  by  the  law  of 
the  place  of  a  contract,  its  obligation  is  positively  and  ex  diredo  ex- 
tinguished after  a  certain  period  by  the  mere  lapse  of  time,  it  cannot 
be  revived  by  a  suit  in  a  foreign  country,  whose  laws  provide  no  such 
rule,  or  apply  it  only  to  the  remedy.    To  use  the  expressive  language  of 
a  learned  judge,  it  must  be  shown,  in  all  such  cases,  what  the  laws 
of  the  foreign  country  are,  and  that  they  create  an  obligation  which 
our  laws  will  enforce."  ''    Upon  these  principles  the  law  regulating 
the  liability  of  partners  would  be  that  of  the  place  where  the  contract 
was  made.''^ 

§  874.  As  to  defenses  and  discharges.— Any  plea  which  im- 
peaches the  original  validity,  or  declares  the  subsequent  extinguish- 
ment of  the  contract,  must  be  governed  by  the  law  of  the  place 
where  the  contract  was  made.  Thus,  infancy,^^  coverture,^  tender, 
or  payment,^^  or  discharge  by  insolvent  laws,^^  if  a  valid  defense  by 
the  lex  loci  contractus,  will  be  a  valid  defense  everywhere.  And  if  the 
lex  loci  payment  by  bill  or  note  is  conditional  payment  only,  it  will 
be  so  regarded  even  in  States  which  hold  such  payment  absolute, 
and  vice  versa.*^ 

§  875.  But  the  discharge  of  a  contract  by  the  law  of  a  place  where 
it  was  not  made,  or  to  be  performed,  will  not  operate  as  a  discharge 
of  it  in  any  other  count ry.^*^ 

40.  Story  on  Bills,  §  143;  Dunnegan  v.  Stevens,  122  111.  396;  Shoe  &  Leather 
Bank  v.  Wood,  142  Mas.s.  567. 

41.  Kingv.  Sarria,  69N.  Y.24. 

42.  Male  v.  Roberts,  3  Esp.  163;  2  Parsons  on  Notes  and  Bills,  350. 

44!  Selright  V.  Callright,  4  Dall.  325;  Warder  v.  Arell,  2  Wash.  (Va.)  282 
45    Sturgis  V.  Crownin-shield,  4  WTieat.  122;  Ogden  v.  Saunders,  12  Wheat.  213. 

46.  Bartsch  v.  Atwater,  1  Conn.  409;  Vancleef  v.  Therasson,  3  Pick.  12. 

47.  Ward  V.Howe,  38  N.H.  42. 

48.  Smith  V.  Buchanan,  1  East,  6;  M'Millan  v.  M'Neil,  4  Wheat.  209;  Shemll 


1060  THE    CONFLICT   OF    LAWS  §  b7»i 

Thus  a  discharge  under  the  insolvent  laws  of  Pennsylvania  would 
be  no  bar  to  a  suit  brought  by  an  indorsee  against  the  indorscr  of  a 
note,  the  indorsement  having  been  made  in  another  State  where 
action  is  brought,  and  where  the  indorsee  resides,  although  the  in- 
dorser  resides  in  Pennsylvania."'^ 

They  who  are  infants  in  one  country,  may  lawfully  and  validly 
contract  in  another,  where  by  law  they  are  of  full  age.^ 


SECTION   III 

LEX    DOMICILII 

§  87G.  There  are  some  peculiar  circumstances  under  which  the 
domicile  of  the  contracting  parties  becomes  an  important  element 
of  consideration,  both  for  the  purpose  of  ascertaining  their  inten- 
tion, and  of  determining  whether  or  not  such  intention  may  be 
legally  effectuated.  Thus,  where  a  Virginian,  transiently  in  Cali- 
fornia, contracts  a  debt  there  with  a  Californian,  or  with  a  Ken- 
tuckian,  there  transiently  also,  the  question  would  at  once  arise, 
by  what  law  shall  the  contract  be  governed?  If  the  contract  were 
in  express  terms  to  be  performed  in  California,  it  would  seem  clear 
that  the  lav/  of  California  would  govern  it,  it  being  the  lex  loci  solu- 
tionis, and  California  being  thus  intlicated  as  the  place  with  reference 
to  which  the  contract  was  made.^^  And  if  the  circumstances  of  the 
contract  were  such  that  it  would  be  inferentially  to  be  performed  in 
California,  the  like  rule  would  apply.  Thus,  if  it  were  a  debt  for 
board  at  a  hotel,  or  articles  of  personal  subsistence  or  necessity,  it 
would  be  payable  by  usage  before  the  sojourner  left  the  place,  and, 
therefore,  payable  there,  and  controlled  by  its  laws.^^ 

But  suppose  there  was  a  business  transaction  between  the  Virginian 
and  Kentuckian,  and  the  former  were  to  accept  the  bill  of  the  latter, 

V.  Hopkins,  1  Cow.  103,  overruling  Penniman  v.  Meigs,  9  Johns.  325;  Green  v. 
Sarmiento,  Pet.  C.  C.  74;  Frey  v.  Kirk,  4  Gill  &  J.  509;  Smith  v.  Smith,  2  Johns. 
235;  Urton  v.  Hunter,  2  Hag.  (W.  Va.)  83;  Pratt  v.  Chase,  44  N.  Y.  597;  Baldwin 
V.  Hale,  1  Wall.  223;  Story  on  Bills,  §§  165-169;  2  Parsons  on  Notes  and  Bills, 
325.    But  see  Braynard  v.  Marshall,  8  Pick.  194,  where  it  was  held  otherwise. 

49.  Van  Raugh  v.  Van  Arsdale,  3  Cai.  154. 

50.  Saul  V.  Creditors,  17  Mart.  569. 

51.  See  post,  §  879.  The  case  supposed  in  the  text  is  cited  and  approved  in 
Briggs  V.  Latham,  36  Kan.  255. 

62.  Wharton  on  Conflict  of  Laws,  §§  414,  415,  416,  also  §  426,  rule  D. 


§§  877,  878  LEX   DOMICILII  1061 

payable  in  future,  but  not  expressly  at  any  particular  place,  would 
it  be  deemed  a  Virginia  or  a  California  acceptance?  The  criterion  to 
apply  would  be,  whether  or  not  the  acceptance  was  to  be  paid  in 
California  or  in  Virginia.^^  If  the  Virginian  were  in  transitu— that  is, 
merely  there  for  a  particular  negotiation,  or  for  convenience,  or  merely 
casually  passing  through  the  State,  without  any  local  business  estab- 
lished there— the  single  transaction  would  be  governed  by  the  law  of 
his  domicile,  where  it  would  be  presumed  he  would  be,  and  where  it  is 
presumable  he  would  discharge  his  obligation  at  maturity;  but  other- 
wise the  law  of  California  would  govern. 

§  877.  In  a  case  in  Georgia,  it  appeared  that  the  plaintiffs  were 
residents  of  New  York,  and  that  the  makers  and  indorsers  of  the 
note  resided  in  Georgia,  and  that  the  indorsements  were  made  and 
delivered  in  Tennessee  to  the  agents  of  the  plaintiffs.  It  was  con- 
tended that  it  was  accordingly  a  Tennessee  contract;  but  the  court 
held  that,  as  it  was  known  and  understood  that  the  indorsers  re- 
sided in  Georgia,  and  were  in  Tennessee  only  for  the  purpose  of  ef- 
fecting negotiations,  and  as  a  matter  of  convenience,  and  the  plaintiff's 
agent  only  happened  to  be  there  at  the  time,  the  parties  must  be 
deemed  to  have  contemplated  Georgia  as  the  place  of  performance, 
and  to  be  governed  by  its  laws.^* 

§  878.  If  the  transaction,  however,  were  between  a  Virginian  and 
a  Californian,  resident,  of  course,  in  California,  there  would  be  strong 
reason  to  hold  it  a  California  contract,  upon  the  principle  stated  by 
Grotius,  and  quoted  approvingly  by  Story,  that  "if  a  foreigner  makes 
a  bargain  with  a  native,  he  shall  be  obliged  by  the  laws  of  his  (the 
native's)  State;  because  he  who  enters  into  a  contract  in  any  place  is 
a  subject  for  the  time  being,  and  must  be  obedient  to  the  laws  of 
that  place;"  "  which  would,  in  such  case,  seem  justly  applicable. 

But  it  has  been  held  in  Massachusetts,  that  where  the  member 
of  a  Boston  firm,  at  the  time  in  Manchester,  England,  there  ac- 
cepted a  bill  drawn  on  his  firm,  by  a  drawer  in  Manchester,  it  was 

63.  Wharton  on  Conflict  of  Laws,  §  402;  2  Parsons  on  Notes  and  Bills,  351. 

54.  Vanzant  v.  Arnold,  31  Ga.  210.  See  Bullard  v.  Thompson,  35  Tex.  318; 
Bigelow  V.  Burnham,  83  Iowa,  120,  49  N.  W.  104,  32  Am.  St.  Rep.  294. 

55.  Story  on  Conflict  of  Laws,  §  274.  And  in  Jamieson  v.  Potts,  55  Oreg.  292, 
105  Pac.  93,  25  L.  R.  A.  (N.  S.)  24,  it  was  held  that  where  a  nonresident  maker 
of  a  note  w!ls*^in  the  State  when  he  executed  and  deUvered  the  note  to  a  resident 
thereof,  it  was  a  domestic,  and  not  a  foreign  contract. 


1062  THE    CONFLICT   OF    LAWS  §  M7<l 

to  be  deemed  a  bill  accepted  in  Boston,  because  the  domicile  of 
the  firm  was  there,  and  that  damages  were  recoverable  at  ten  per 
cent.,  as  they  would  be  upon  a  like  bill  accepted  in  Boston.^  But 
this  case,  although  quoted,  without  apparent  disapproval,  by  several 
high  authorities,''^  is  not  in  consonance  with  principles  generally 
recognized.  It  has  been  sharply  criticised  by  Story;  ^  and  in  New 
York,  upon  the  like  state  of  facts,  an  opposite  decision  was  ren- 
dered.^^  This  latter  decision  the  same  learned  author  regarded  as 
in  entire  harmony  with  the  general  principles  on  the  subject,  and 
prophesied  that  it  would  obtain  general  credit  in  the  commercial 
world.^° 

In  Scotland,  it  seems  that  an  acceptance  is  deemed  payable  at 
the  place  of  the  acceptor's  domicile  at  the  time  when  it  becomes 
due." 

SECTION   IV 

LEX   LOCI   SOLUTIONIS 

§  879.  If,  by  the  law  of  the  State  or  country  where  the  contract  is 
made,  it  is  formal  and  legal,  it  is  valid  everywhere,  and  will  be  given 
force  and  effect  according  to  such  law,  as  we  have  already  seen,  and 
especially  is  this  so  when  the  note  is  executed  in  one  State  and  by  its 
terras  payable  there.^'-    But  when  the  contract  is  made  in  one  place 


56.  Grimshaw  v.  Bender,  6  Miiss.  157,  Parsons,  Ch.  J.,  saying:  "It  is  manifest 
that  the  remedy  contemplated  by  the  parties,  in  the  event  of  the  bill  being  dis- 
honored, must  be  sought  in  this  State,  where  the  acceptors  lived.  The  instru- 
ment must  be  considered  as  a  foreign  bill,  having  the  same  effect  as  if  the  payee 
had  sent  it  to  Boston,  and  it  had  been  accepted  here  payable  in  London." 

57.  Wharton  on  Conflict  of  Laws,  §451;  2  Parsons  on  Notes  and  Bills,  351. 
But  see  2  Parsons  on  Notes  and  Bills,  339,  note  j. 

53.  Story  on  Conflict  of  Laws,  §  319,  where  it  is  said:  "There  was  nothing  on 
the  face  of  the  bill  that  alluded  to  an  acceptance  in  Boston,  and  nothing  in  the 
circumstances  that  pointed  in  that  direction.  It  was  certainly  competent  for  the 
firm  to  contract  in  England,  and  to  accept  in  England;  and  beyond  all  question, 
if  the  bill  had  been  drawn  solely  on  the  person  who  accepted  it,  the  acceptance 
must  have  been  deemed  to  be  made  in  England,  notwithstanding  his  domicile  in 
Boston." 

59.  Foden  v.  Sharp,  4  Johns.  183. 

60.  Story  on  Conflict  of  Laws,  §  320. 

61.  Don  v.  Lippman,  5  Clarke  &  F.  12,  where  a  bill  payable  generally  was 
accepted  in  Paris  by  a  Scotchman  domiciled  in  Scotland. 

62.  Bailey  v.  Devine,  123  Ga.  653,  51  S.  E.  603,  107  Am.  St.  Rep.  153;  Martin 


J  ^79  LEX    LOCI   SOLUTIONIS  1063 

to  be  performed  in  another  the  law  of  the  place  where  it  is  made 
yields,  in  certain  respects,  to  that  of  the  place  of  performance;  for  it  is 
in  view  of,  and  in  reference  to,  the  laws  of  the  place  of  performance, 
that  it  is  to  be  presumed  the  terms  of  the  contract  were  selected,  and 
its  stipulations  entered  into.^^  "The  general  principle  as  to  contracts 
made  in  one  place  to  be  performed  in  another,"  says  Chief  Justice 
Taney  ''is  well  settled.  They  are  to  be  governed  by  the  law  of  the 
place  of  performance.""  Such,  also,  is  the  rule  of  the  civil  law: 
''Contraxisse  uniusquisque  in  eo  loco  intdUgitur,  in  quo  ut  solveret  se 
obligaviL"  Thus,  in  Massachusetts,  a  note  payable  to  A.  or  order  at 
any  or  either  bank  in  a  city,  is  negotiable;  but  if  such  a  note  were 
made  in  Massachusetts,  and  were  payable  in  Virginia,  it  would  not 
at  one  time  have  been  negotiable,  because  not  payable  at  a  particular 


V  Berrv  1  Ind.  Ter.  399,  37  S.  W.  835,  citing  text,  and  as  to  validity  of  a  stipu- 
lation allowing  attorney's  fees;  Arnett  v.  Pinson  (Ky.),  108  S.  W.  8.52  (as  to  the 
viliditv  of  a  note  not  having  written  across  its  face  the  words  '  peddler  s  note  ); 
Colonial  Nat.  Bank  of  Cleveland  v.  Duerr,  95  N.  Y.  S.  810,  108  App.  Div.  215; 
Merchants'  Bank  of  Canada  v.  Brown,  83  N.  Y.  S.  1037,  80  App.  Div.  599  An 
Iowa  statute  providing  that  if  a  negotiable  note  is  procured  of  the  maker  by  rand, 
and  is  aftenvards  indorsed  before  maturity,  for  value,  to  an  mnocent  purchaser, 
vet  such  purcha.ser  can  only  recover  the  sum  he  paid  for  the  note,  apphes  to  a 
note  made  and  payable  in  Iowa.  Creston  Nat.  Bank  v.  Salmon,  117  Mo.  App. 
WO  93  S  W  288.  A  note  executed  and  made  payable  in  the  State  of  Mmnesota 
is  governed  by  the  law  of  that  state  as  to  its  validity,  and  a  nonresident  of  South 
Dakota  cannot  obtain  the  enforcement  of  a  contract  which  perpetrates  a  fraud 
upon  a  citizen  of  Minnesota  when  a  statute  of  that  state  provides  h.m  with  ample 
protection  and  immunity.    First  x\at.  Bank  of  Sibley,  Iowa  v.  Doeden,  21  S.  D. 

^"es!  RobinL^v."  Bland,  2  Burr.  1077;  Pierce  v.  Indeseth,  106  U.  S.  546,- Andrews 
V.  Pond,  13  Pet.  65;  Belle  v.  Bruen,  1  How.  182;  Kessler  v.  Armstrong  Cork  O^ 
158  Fed  744;  Smith  v.  Mead,  3  Conn.  253;  Strieker  v.  Tinkham,  35  Ga  1/b; 
Midland  Steel  Co.  v.  Citizens'  Nat.  Bank,  34  Ind.  App.  107  72  N.  K  290;  Hunt 
V.  Standart,  15  Ind.  33;  Thorp  v.  Craig,  10  Iowa,  401;  Goddm  v.  Shipley,  7  B. 
Mon.  575;  Shoe  and  Leather  Nat.  Bank  v.  Wood,  142  Mass.  567;  Akers  v.  De- 
mond,  103  Mass.  323;  Woodruff  v.  Hill,  116  Mass.  310;  Prentiss  v  Savage,  13 
Mass.  23;  Houston  v.  Keith  (Miss.),  56  So.  336;  Johnson  v  Noble  Machine  Co 
(Mo.  App.),  129  S.  W.  271 ;  Tyrell  v.  Cairo  &  St.  L.  R.  Co.,  7  Mo.  App.  294;  Smoot 
v  Judd  161  Mo.  673,  61  S.  W.  854;  Freese  v.  Brownell,  35  N.  J.  L.  285,  nyde 
V  Goodnow,  3  N.  Y.  266;  Fanning  v.  Consequa,  17  Johns.  511 ;  Chapman  v.  Rot^ 
ertson,  6  Paige,  627;  Thompson  v.  Ketchum,  4  Johns.  285;  Caras  v-  Thalmann  123 
N  Y  S  97  138  App.  Div.  297;  Sylvester  v.  Crohan,  63  Hun.  509,  18  N.  'i .  b. 
Supp:  546;  Hubble  v.  Morristown  Land  Co.,  95  Tenn.  585,  32  S.  W.  965;  Blodgett 
V.  Durgin,  32  Vt.  361;  Byles  (Sharswood's  ed.)  1*384],  563. 

64.  Andrews  v.  Pond,  supra;  Central  Nat.  Bank  v.  Cooper,  85  Mo.  App. 
383-  Dygert  v.  Vermont  Loan  &  Trust  Co.,  37  C  C.  A.  389,  94  Fed.  913. 


10G4  THE    CONFLICT   OF    LAWS  §  8«0 

bank,  as  a  Virginia  statute  at  that  time  refiuired.'^  Whero  a  part  of 
the  contract  is  to  be  performed  in  one  country,  and  a  part  in  another, 
each  part  is  to  be  governed  by  the  law  of  the  place  where  it  is  per- 
formable.^^  The  question  whether  or  not  a  note  is  negotiable  is 
determined  by  the  law  of  the  fc5tate  where  it  was  made  and  payable, 
not  by  that  of  the  State  where  suit  is  brought,^^  and  this  rule,  it  has 
been  said,  is  not  to  be  changed  because  of  the  incident  that  the  note 
reserves  title  to  the  property  which  forms  the  predicate  of  the  debt.^ 

§  880.  Presumption  as  to  place  of  payment. — Whenever  it  is 
alleged  that  a  bill  is  j)ayable  by  the  acceptor,  or  a  note  l)y  the  maker, 
at  a  place  different  from  that  at  which  such  acceptance  or  making 
took  place,  it  is  necessary  to  show  it,  either  by  the  express  language 
of  the  instrument  itself,  or  by  intendment  and  construction  of  law 
arising  from  the  attendant  circumstances.  And  if  the  note  be  dated 
at  a  particular  place  and  payable  generally — that  is,  without  designa- 
tion of  a  particular  place — the  law  attaches  to  it  the  presumption 

65.  Freeman's  Bank  v.  Ruckman,  16  Gratt.  126.  See  also  Thompson  v. 
Kctohura,  4  Johns.  2S.5,  whore  a  note  made  in  Jamaica,  payable  in  New  York, 
was  held  to  be  governed  by  New  York  law.  A  promi.><s<)r\-  note  for  the  i)aymcnt 
to  the  payee  of  a  certain  sum  of  money  "payable  at  Northern  Bank,  Covinfitmi, 
Ky.,"  signed  by  the  principal  debtor  in  Ohio,  and  before  deliver>',  which  was  in 
Ohio,  signed  in  blank  on  the  back  by  another  party  in  Kentucky  and  by  one  in 
Peimsylvania,  is  a  contract  by  all  the  parties  thereto  that  the  contract  shall  be 
l)erformed  in  Kentucky,  and  aa  to  its  nature,  validity,  interpretation,  and  obliga- 
tion is  governed  by  the  laws  of  that  State.  Montana  Coal  &  Coke  Co.  v.  Cincin- 
nati Coal  &  Coke  Co.,  69  Ohio  St.  351,  69  N.  E.  613.  Where  notes,  executed  in 
Kentucky,  were  payable  at  a  bank  in  the  statute  of  Iowa,  the  law  of  that  state, 
above  referred  to,  places  them  upon  the  footing  of  a  bill  of  exchange,  and  one  who 
was  in  good  faith  the  purchaser  of  the  notes  sued  on  for  value,  and  without 
notice,  can  recover  the  amount  of  them.  Price  v.  Gatliff  (Ky.),  110  S.  W.  332. 
But  see  Staples  v.  Nott,  128  N.  Y.  403,  28  N.  E.  57,  265  Am.  St.  Rep.  480.  In  this 
case  the  court  said:  "But  naming  a  New  York  bank  as  the  place  where  the  maker 
would  provide  for  the  payment  of  note,  did  not  characterize  the  contract  in 
»)ne  way  or  the  other.  That  arrangement  was  one  simply  for  the  convenience^ 
of  the  maker.  It  could  have  no  peculiar  effect.  The  transactions,  which  resulted 
in  an  agreement  to  extend  the  time  for  the  payment  of  the  debt  and  to  accept  a 
new  note,  took  place  wholly  in  the  District  of  Columbia,  and  what  else  was  enacted 
in  the  matter  elsewhere,  neither  added  to,  or  altered  the  agreement  of  the  parties." 

66.  Pomeroy  v.  Ainsworth,  22  Barb.  118;  Young  v.  Harris,  14  B.  Mon.  556. 

67.  Sykes  v.  Citizens'  Nat.  Bank  of  Des  Moines,  78  Kan.  688,  98  Pac.  206, 
19  L.  R.  A.  (N.  S.)  665,  citing  text;  Shoe  and  Leather  Nat.  Bank  v.  Wood,  142 
Mass.  587;  Barger  v.  Farnham,  130  Mich.  487,  90  N.  W.  281;  Stix  v.  Mathews, 
63  Mo.  371;  Barry  v.  Stover,  20  S.  D.  459,  107  N.  W.  672,  129  Am.  St.  Rep.  941. 

68.  Lienkauf  Banking  Co.  v.  Haney,  93  Miss.  613,  46  So.  625. 


J  881  LEX   LOCI   SOLUTIONIS  1065 

that  it  is  to  be  paid  where  made.«^  So  it  is  to  be  presumed  that  an 
acceptance  of  a  bill,  naming  no  place  of  payment,  is  to  be  paid  where 
made;  and  the  address  of  the  drawee  generally  indicates  where  such 

place  of  acceptance  is.  ,  .      ..  j  „ j 

Such  are  the  general  principles  sustained  by  text^wnters  and  ad- 

judicated  cases. 

8  881   It  has  been  held  in  Massachusetts,  that  if  a  bill  or  note  be 
payable  generally,  and  be  negotiated  by  one  holder  to  another  ma 
foreign  country,  it  becomes  a  promise  to  pay  such  holder,  and  .s  con- 
sequently a  contract  of  the  place  of  such  negotiation  to  the  holder, 
and  is  governed  by  its  laws."    But  although  a  debt  payable  general  y 
is  payable  any^vhere,  and,  if  negotiable,  is  payable  to  anybody  to 
whom  it  may  be  transferred,  nevertheless  a  contract  to  pay  generally 
i,  governed  by  the  law  of  the  place  where  it  is  made,  for  the  debt  is 
payable  there  as  well  as  in  every  other  place."    Being  payable  every- 
Ihere  camiot  render  it  subject  to  the  laws  of  every  place.   The  par  les 
must  have  had  in  view  the  law  of  some  place^  and  that  is  Presumed  to 
be  the  place  where  their  contract  is  made.    The  holder  does  not  make 
a  new  contract  mth  the  maker  or  acceptor,  but  becomes  beneficiary 
of  the  contract  as  originally  made,  with  certain  additional  privneges 
which  arise,  not  from  his  location,  but  from  his  character  as  holder. 
Where  a  note  is  payable  generally,  no  evidence  would  be  admissible 
to  show  that  in  fact  it  was  agreed  to  be  paid  in  some  special  place. 

69  Wilson  V  Larior,  U  Gratt.  477,  Daniel,  J.:  "It  seems  to  be  well  settled 
,l,!f'a  neXbie  note  made  ia  a  partieular  country  is  to  be  deemed  a  note  sov- 
lm«i  by  thct  V  „t  that  country,  whether  it  is  expressly  made  payable  the  e,  or 
U  payable  genorallv,  without  naming  any  particular  place;  since,  at  most,  unde 
L'TaUer  Teumstances  it  is  as  much  payable  in  that  --'^  -  ^^J^^ 
Blodgettv.  Durgin,  32  Vt.  301;  Thompson  v.  Ketehum,  8  J  *"'■"?•  ^•'°5?!: 
^5  Ihort  V.  Trabue,  .  Metc^  a<yO  ^  Bac.ho^^^^^ 

ac,  ually  made  and  intended  to  be  performed  m  another  State  the  law  of  the  lat  er 

their  rights.    See  Glenny  Glass  Co.  v.  Taylor,  99  Ky.  24,  34  S.  W.  711. 

70.  Todd  V.  Bank  of  Kentucky,  3  Bush,  626. 

71.  Braynard  v.  Marshall,  8  Pick.  194. 

72.  Story  on  Bills,  §  158. 

73.  Frazier  v.  Warfield,  9  Smedes  &  M.  220. 


1006  THE   CONFUCT   OF    LAWS  §§  882,  883 

SECTION   V 

LEX    FOUl 

§  882.  It  is  a  settled  j)rin(iple  of  l:i\v,  that  the  remedies  for  lireju  li 
of  any  contract  must  he  pursued  according  to  tlie  law  of  the  place? 
where  suit  is  brought.  Those  remedies  are  devised  by  the  State  in 
consonance  with  its  own  views  of  justice,  public  policy,  and  conven- 
ience; and  comity  does  not  reciuire  that  it  should  depart  from  the 
courses  of  procedure  which  it  applies  to  its  own  inhaiiitants,  and 
extend  greater  or  difTcrent  privileges  to  strangers.^'  The  foreigner 
who  sues  must  take  the  law  as  he  finds  it 7^ 

This  doctrine  extends  to  the  determination  of  (1)  the  parties  who 
may  sue  ami  be  sued;  (2)  the  time  within  which  suit  may  be  brought ; 
(3)  the  form  of  action;  antl  (4)  the  nature,  effect,  and  extent  of  th.e 
remedy  applied. 

§  883.  Who  may  sue.^ — Who  may  sue  is  generally  a  question  of 
the  remedy;  and  the  mere  designation  of  the  plaintilT  is  always  made 
by  reference  to  the  lex  fori.  And  as  a  general  rule,  if  allowed  by  the 
lex  fori,  an  assignee  may  sue  in  his  t)wn  name,  altliougii  lie  cannot  so 
sue  at  the  place  of  the  assignment."*^  And  if  not  allowed  by  the  lex 
fori,  he  cannot  sue  in  his  own  name,  although  he  might  do  so  at  the 
place  of  assignment."  But  we  think  this  doctrine  should  not  le 
pushed  farther  than  to  indicate  the  mere  nominal  parties  to  the  suit 
when  it  is  purely  a  question  of  remedy.  Thus,  if  a  note  were  non- 
negotiable  in  Virginia,  and  could  not  be  there  indorsed  or  assigned. 

74.  Scoville  v.  Canficld,  1  \  .Jdliiis.  338;  Bank  of  the  I'nitod  States  v.  Don- 
ally,  8  Pet.  372;  Hyder  v.  (loodnow,  3  X.  Y.  260;  Van  Reimsdyk  v.  Kane,  1  Gall. 
371;  Smith  v.  SpinoUa,  2  John.s.  19S;  Wharton  on  Conflict  of  Laws,  §  747;  Crofoot 
V.  Thatcher  &  Josselyn,  19  Utah,  212,  o7  Pac.  171;  Jamieson  v.  Potts,  .55  Orej;. 
292,  105  Pac.  93,  25  L.  R.  A.  (X.  S.)  24. 

75.  De  la  Vega  v.  Vianna,  1  B.  &  Ad.  284. 

76.  Foss  V.  Xutting,  14  Gray,  484.  See  Pearsall  v.  Dwight,  2  Mass.  84;  also, 
2  Parsons  on  Xotes  and  Bills,  368,  .369,  note  g,  and  cases  cited;  Wharton  on  Con- 
flict of  Laws,  §  457. 

77.  Fisk  V.  Brackett,  32  Vt.  798;  Folcott  v.  Ogden,  1  H.  Bl.  135;  WTiarton 
on  Conflict  of  Laws,  §  735;  2  Parsons  on  Xotes  and  Bills,  368.  In  Roads  v.  Webb, 
91  Me.  414,  40  Atl.  128,  64  Am.  St.  Rep.  246,  the  notes  were  made  in  Indiana 
and  indorsed  in  Maine  as  negotiable  there,  but  the  court  said:  "We  hold  these 
notes  not  negotiable.    Plaintiff,  therefore,  cannot  maintain  this  action." 


§  «84  LEX   FORI 


1007 


yet  if  negotiable  and  actually  indorsed  in  Kentucky,  so  as  to  com- 
pletely vest  title  in  the  indorsee,  the  holder  would  then  have  an 
absolute  right  to  recover  the  amount,  and  the  lex  loci  contractus 
should  govern.''*  So  if  by  the  law  of  the  place  of  transfer,  an  executor 
or  administrator  may  indorse  or  assign  a  note,  so  as  to  vest  title  and 
right  to  sue  completely  in  his  transferee,  the  latter  should  be  permit- 
ted to  sue  anywhere.''-*  This  is  due  to  a  liberal  comity.  But  the  au- 
thorities predominate  in  number  the  other  way.*" 

§  884.  Time  within  which  suit  may  be  brought.— The  time  within 
which  suit  may  be  brought  is  purely  a  question  of  the  forum.  Thus 
suit  may  be  brought  immediately  in  one  State  by  attachment,  al- 
though at  the  time  no  action  would  lie  in  the  State  where  the  cause  of 
action  arose.*^  And  in  like  manner  the  Statute  of  Limitations  of  the 
forum  prevails;*-  and  no  suit  can  l)e  maintained  if  it  be  barred  there, 
although  by  the  law  of  the  contract  there  was  no  limitation,*'^  or  a  less 
restricted  limitation.*^  And  suit  may  be  maintained  where  the  limi- 
tation of  the  lex  fori  has  not  attached,  although  by  the  lex  loci  con- 
tractus action  has  been  formally  barred.*^  This  tloctrine  rests  upon 
the  ground  that  the  time  of  suit  is  purely  a  matter  for  local  municipal 
regulation.  It  may  be  different  in  cases  where  the  right,  in  contra- 
distinction to  the  remedy,  is  held  by  foreign  law  to  be  extinguished. 
Such  extinction  might  operate  by  comity  ever>^vhere."' 


,86 


78.  Stor>-  on  IViUs,  §  173;  Story  on  Conflict  of  Liiws,  §  :i54;  Trimbey  v.  Vigner, 
1  Bin^.  N.  C.  1.")!);  O'Callanhan  v.  Thomond,  3  Taunt.  82;  Lee  v.  Selleck,  33  N.  Y. 
()15,  32  Harb.  o22  {semble). 

79.  Owen  v.  Moody,  29  Miss.  79;  Harper  v.  Butler,  2  Pet.  239;  Barrett  v. 
Barrett,  8  Greenl.  3.53;  2  Parstins  on  Notes  and  Bills,  373,  note  v;  Story  on  Con- 
flict of  Laws,  §  3.50;  Wharton  on  Conflict  of  Laws,  §  457;  Snyder  &  Dull  v.  Critch- 
field,  44  Nebr.  67,  62  N.  W.  300. 

80.  Goodwin  v.  Jones,  3  Mass.  514;  Thompson  v.  Wilson,  2  N.  H.  291;  Stearns 
V.  Bumham,  5  Greenl.  261. 

81.  Clark  v.  Conner,  2  Strobh.  346;  1  Rob.  Pr.  (new  ed.)  317. 

82.  Mineral  Point  K.  Co.  v.  Barron,  83  111.  367;  Jamieson  v.  Potts,  550reg  292, 
105  Pac.  93,  25  L.  R.  A.  (X.  S.)  24. 

83.  Nicolls  V.  Rodgers,  2  Paine  C.  C.  437. 

84.  Jones  v.  Hook,  2  Rand.  303;  British  Linen  Co.  v.  Drummond,  10  B.  &  C. 
003;  Byles  on  Bills  [*3S91,  .572. 

85.  Power  v.  Hathaway,  43  Barb.  214;  Bulger  v.  Roche,  11  Pick.  36;  Put- 
nam V.  Dike,  13  Gray,  53.5;  Estes  v.  Kyle,  Meigs,  34;  Huber  v.  Steiner,  2  Crompt. 
&  M.  629.  Contra,  Harrison  v.  Stacy,  6  Rob.  (La.)  15;  Goodman  v.  Munks,  8 
Port.  89. 

86.  Williams  v.  Jones,  13  East,  439. 


10()8  THE   CONFLICT  OF    LAWS  §§  885-887 

§  885.  Form  of  action. — Tlie  necessity  of  selecting  the  form  of 
action  according  to  tiie  law  of  the  forum  has  been  well  illustrated 
in  the  United  States  in  a  number  of  cases  where  the  instrument 
sued  upon  was  deemed  a  specialty  where  made,  and  a  simple  contract 
where  the  suit  was  brought;  or  ince  versa.  Thus  in  some  of  the  States 
a  scroll  attached  to  the  promisor's  name  is  the  same  as  a  common-law 
seal;  and  covenant  or  debt  would  l)e  the  proper  remedy  in  the  State 
where  the  promise  wiis  made,  assumpsit  not  lying  on  a  sealed  instru- 
ment. And,  moreover,  by  the  local  law  defendant  could  not  plead 
want  of  consideration,  because  of  the  instrument  being  sealed.  But 
if  suit  were  brought  in  a  State  where  a  scroll  is  not  recognized  as  a 
seal,  it  has  been  repeatedly  held,  that  assumpsit  would  be  the  proper 
remedy,  and  that  want  of  consideration  might  be  pleaded.**^  And  the 
converse  has  been  also  held,  that  although  where  made  the  instru- 
ment might  be  a  simple  promissory  note,  yet  if  where  suit  was  brought 
it  was  regarded  a.s  a  si)ecialty,  the  appropriate  action  of  debt  or  cove- 
nant should  be  brought,  and  the  sanctity  attached  to  seals  would  be 
imputed  to  it.^ 

§  886.  Extent  of  remedy.— At  one  time  it  was  held  that  the  extent 
of  the  remedy  was  to  be  determined  by  the  law  of  the  place  of  con- 
tract, and  wIhto  suit  was  brought  in  England  upon  a  French  contract, 
upon  which  by  the  laws  of  France  no  arrest  could  be  made,  it  was 
held  that  the  defendant  could  not  in  England  be  held  to  bail;^^  but 
the  contrary  doctrine  is  now  well  settled.^ 

§  887.  Questions  of  evidence  appertain  to  the  remedy,  and  con- 
sequently are  controlled  by  the  law  of  the  forum.^^     "\Vhether  a 

87.  Bank  of  the  Unit«I  States  v.  Donally,  S  Pet.  .301 ;  Le  Roy  v.  Beard,  8  How. 
451;  Williams  v.  Haynes,  27  Iowa,  2.51;  Douglas  v.  Oldham,  6  X.  H.  1.50;  Andrews 
V.  Herriott,  4  Cow.  508;  Warren  v.  Lynch,  5  Johns.  239;  Steele  v.  Curie,  4  Dana, 
381;  I  Rob.  Pr.  (new  ed.)  234.  That  the  rules  of  pleading  observed  in  a  State 
apply  in  an  action  brought  therein  upon  a  contract  executed  and  to  be  performed 
in  another  State,  see  Kaufman  v.  Barbour,  96  Minn.  158,  107  X.  W.  1128. 

88.  Thrasher  v.  Everhart,  3  Gill  &  J.  319. 

89.  Melun  v.  Fitzjames,  1  Bos.  &  P.  138;  Talleyrand  v.  Boulanger,  3  Ves.  Jr 
447. 

90.  De  la  Vega  v.  Vianna,  1  B.  &  Ad.  284;  Smith  v.  SpinoUa,  2  Johns.  198; 
Sicard  v.  Whale,  11  Johns.  194;  Peck  v.  Hozier,  14  Johns.  346;  Hindley  v.  Marean, 
3  Mason,  90;  White  v.  Canfield,  7  Johns.  117. 

91.  Union  Cent.  L.  Ins.  Co.  v.  Pollard,  94  Va.  155,  26  S.  E.  421,  64  Am.  St. 
Rep.  715;  Fant  v.  Miller,  17  Gratt.  47;  Corbin  v.  Planters'  Xat.  Bank,  87  Va. 
661,  13  S.  E.  98,  24  Am.  St.  Rep.  673;  Story  on  Conflict  of  Laws,  §  634a.    The 


§  688  LEX    FORI  lOOU 

witness  is  competent  or  not;  whether  a  certain  matter  requires  to 
be  proved  by  writing  or  not;  whether  certain  evidence  proves  a 
certain  fact  or  not — this  is  to  be  determined  by  the  law  of  the  country 
where  the  question  arises,  where  the  remedy  is  sought  to  be  enforced, 
and  where  the  court  sits  to  enforce  it,"  is  the  language  of  Lord 
Brougham.^^  Accordingly,  evidence  was  admitted  in  Connecticut  to 
show  that  a  blank  indorsement  was  made  for  collection  only,  although 
by  the  laws  of  New  York,  where  the  indorsement  was  made,  such 
evidence  was  inadmissible;  ^^  and  the  question  of  the  admissibility  of 
parol  evidence  to  show  that  the  makers  were  in  fact  principal  and 
surety  is  to  be  determined  by  the  law  of  the  forum. ^^  Upon  an  anal- 
ogous principle,  it  has  been  held  in  England,  that  as  the  Statute  of 
Frauds  does  not  make  agreements  void,  but  only  prevents  their 
being  enforced  by  action,  a  parol  agreement  not  to  be  performed 
within  a  year,  though  made  in  France,  and  valid  there,  could  not  1  e 
enforced  in  England. ^^ 

The  certificate  of  a  foreign  notary  of  demand  and  notice  as  to  a 
note,  though  evidence  by  the  law  of  the  place  of  payment,  would  be 
excluded  unless  admissible  by  the  law  of  the  place  where  suit  is 
brought.^^ 

§  888.  The  lex  fori  undoubtedly  applies  to  the  admissibility  and 
credibility  of  witnesses;  °^  but  as  to  the  number  of  attesting  witnesses 
necessary  to  the  validity  of  a  writing,  the  law  of  the  place  where  the 
writing  was  made  would  control  on  the  ground  locus  regit  actum l-*^ 
And  where  the  objection  is  not  to  the  competency  of  evidence,  but 
to  its  effect,  the  law  of  the  place  of  contract  should  prevail.  Thus  a 
parol  acceptance  could  only  be  proved  by  parol  evidence,  and,  there- 
whole  matter  of  presumption  and  burden  of  proof  belongs  to  the  law  of  evidence 
and  is  the  law  of  the  forum,  and  must  govern  even  where  a  federal  court,  by  reason 
of  diverse  citizenship,  is  administering  the  law  of  a  state.  Young  v.  LowTy,  192 
F.  825. 

92.  Bain  v.  Whitehaven,  etc.,  R.  Co.,  3  H.  L.  Cas.  1;  Wharton  on  Conflict 
of  Laws,  §  7G8;  Story  on  Conflict  of  Laws,  §  635;  Phillimore,  iv,  GG2. 

93.  Downer  v.  Chesebrough,  3G  Conn.  39. 

94.  Kaufman  v.  Barbour,  9G  Minn.  158, 107  N.  W.  1128. 

95.  Leroux  v.  Brown,  12  C.  B.  801, 14  Eng.  L.  &  Ex.  247;  Byles  on  Bills  [*390], 
573. 

96.  Kirtland  v.  Wanzer,  3  Duer,  277.  See  also  Second  National  Bank  v. 
Smith,  118  Wis.  18,  94  N.  W.  664,  holding  that  the  law  of  the  forum  controls  as  to 
the  kind  and  sufficiency  of  the  evidence  necessary  to  prove  notice  of  dishonor. 

97.  Wharton,  §  769. 

98.  Ibid. 


1071)  VHE    CONFLICT   OF    LAWS  §§  889,  890 

fore,  if  valid  where  made,  it  would  he  uiire:i.sonal)le  to  reject  it  because 
by  the  lex  fori  an  acceptance  must  be  in  writinK.** 

§  889.  Whether  party  is  bona  fide  purchaser  for  value.— So  the 
ctTtrt  of  the  transaction  in  iixin^  the  relations  of  the  parties  is,  as 
between  them,  determined  by  the  lex  loci  contractus.  Thus,  if  by  the 
lex  loci  contractus  the  purchaser  acquires  the  note  as  a  bona  jide  holder, 
not  subject  to  the  defense  of  a  prior  payment,  such  payment  cannot 
be  pleaded,  althouRh  the  lex  fori  would  permit  it.'  And  so,  it  has  been 
held  that  a  statute  of  the  forum  authorizing  the  attachment  of  choses 
in  action,  whether  due  or  not  due,  and  declaring:  inoperative  and  void 
any  transfer,  sale,  or  assignment  thereof  after  the  levy  of  the  attach- 
ment, can  have  no  extra  territorial  effect,  so  as  to  defeat  the  rights  of 
a  bona  fide  purchaser  of  a  note  in  another  State.*  An<l  whether  or  not 
the  proprietor  of  the  hill  or  note  is  a  bmxi  fi'h-  holder,  is  to  be  deter- 
mined by  the  Uxi  loci  contractus— {\ki\  is,  the  j^lace  of  ])ayment.' 

§  890.  In  respect  to  set-off  it  is  laid  down  by  text-writers,  and  by 
the  courts  of  common  law,  that  a  .set-olT  to  any  action  allowed  by 
the  local  law  is  to  be  treated  as  a  part  of  the  remedy;  and  that,  there- 
fore, it  is  admissible  in  claims  between  persons  belonpinp;  to  different 
States  or  countries,  although  it  may  not  be  admissible  by  the  law  of 
the  country  where  the  tlebt  which  is  sued  wius  contracted.*  The 
same  principle  applies  to  the  mode  of  attacking  consideration.  When 
the  lex  fori  allows  a  plea  of  want  of  consideration  in  a  suit  on  an  oblig.-i- 
tion,  which  by  the  lex  loci  contractus  was  sealed,  and  to  which  by  such 
latter  law  no  such  plea  could  be  offered,  the  lex  fori  controls.'  So  as 
to  other  legal  and  equitable  defenses,  where  the  very  contract  itself 

99.   Miuson  v.  Dousay,  3o  111.  424. 

1.  Harrison  v.  Kdwanks,  12  Vt.  65L 

2.  Kimbrough  v.  Hornsby,  113  Tonn.  605,  84  S.  W.  613. 

3.  Allen  v.  Bratton,  47  Miss.  120;  Woodruff  v.  Hill,  116  Mass.  310;  Tyrrell  v. 
Cairo  &  St.  L.  R.  Co.,  7  Mo.  App.  204.  Limerick  Nat.  Bank  v.  Howard,  71  N.  H. 
13,  51  Atl.  641,  73  Am.  St.  Uop-  4S9,  citing  text,  and  holdinR  that  when,  in  Ver- 
mont, where  the  indorsement  w:us  made,  the  holder  must  tak(>  the  note  without 
knowledge  of  facts  and  circumstances  which  would  put  a  careful  and  prudent  man 
to  suspect  that  the  paper  wa.s  invalid,  whereas  in  New  Hampshire,  the  place  of 
suit,  mere  suspicion  of  facts  is  not  notice  of  and  doe-s  not  put  the  indorsee  upon 
inquiry  as  to  such  facts,  the  law  of  Vermont  controls. 

4.  Gibbs  V.  Howard,  2  N.  H.  296;  Bank  of  Gallipolis  v.  Trimble,  6  B.  Mon. 
600;  Story  on  Conflict  of  Laws,  §  575;  Wharton  on  Conflict  of  Laws,  §  788;  Mineral 
Point  R.  Co.  V.  Barron,  83  111.  366. 

5.  Wharton,  §  788. 


J  891  LEX    FORI  lO'^l 

does  not  exclude  them,  they  are  to  be  controlled  by  the  lex  fori.' 
Statutes  providing  certain  exemptions  from  levy  and  sale  upon  execu- 
tion affect  the  remedy,  and  those  of  the  forum  prevail. 

§  891  The  courts  can  take  no  judicial  notice  of  the  laws  of  an- 
other country.-When  relied  upon,  they  must  be  proved  as  facts,  and 
other^vise  it  will  be  presumed  that  thoy  are  the  same  as  the  laws  of 
the  forum  in  which  suit  is  brought; «  or  what  is  the  same  m  effect, 
when  the  laws  of  the  foreign  country  are  not  put  m  proof  as  facts, 
the  court  will  apply  to  the  transaction  in  suit  the  laws  of  the  forum. 
Thus  the  law  as  to  the  rate  of  damages  will  be  presumed  to  be  the 
same  where  the  bill  is  drawn  in  one  country,  and  is  sued  on  m  another; 
so  it  will  be  presumed,  where  the  law  of  the  forum  authorizes  an  in- 
dorsee to  sue  before  exhausting  recourse  against  the  maker,  that  tne 
law  of  the  place  of  the  contract  is  likewise;  ^°  and  so,  where  by  the  law 

6    Bliss  V.  Houchton,  1:5  N- H.  r2r).  r.  1      . 

5;  Mineral  Point  R.  Co.  v.  Burron.  83  111.  3ti7.     Compare  8oay  v.  Palmer, 
q."?  Ma  3S1.  9  So.  001,  30  Am.  St.  Rep.  57.  r-i      •  . 

8  Hunt  'v.  .lohnson,  44  N.  Y.  27;  Dunn  v.  Adams.  1  Ala.  -^'^^i^f-*^^  ^  .^^^^;"^- 
13  Md.  392;  Whi-idon  v.  Svelye.  40  Me.  247;  LeR,  v.  Y'^^l^^^''^''- '"^'^^  \ 
Briggs,  4  Iowa,  4G7;  Harper  v.  Hampton.  1  Harr.  c^  J.0S7;  Bernard  v-  Barrj  1 
Grc^;  3.S8;  Martin  v.  Martin.  1  Smedes  &  ^\^[^^^  ^"^^^^1 
Ann  391-  Hill  v.  Wilker.  41  Ga.  449;  Savage  v.  O  Neill.  44  N.  Y  298,  Byles  on 
Bis  (ll!;rsvvood's  e<l.).  573,  574;  1  Rob.  Pr.  (nejv  chI.)  ^-^j/he  Un.on  Cen.  L. 
Ins  Co  V  Pollard.  94  Va.  152.  20  S.  E.  421.  64  Am.  St.  R.-p.  To  Steward  v. 
Commonwealth  Nat-  Bank  (Okl.),  119  Par.  210;  National  Bank  of  Commerce  v^ 
K'TZ  98Tex  '^^n  H3S  W.  3(iS.  Wh.Te  the  defen<lant  in  an  action  on  a  note 
^  u  S\'  mort.;ie  ..  s  up  the  defen...  that  the  eontract  was  made  in  another 
""and  that  by  the  law  of  that  State  the  mortgage  should  be  foreclo.sed  before 
sui;  i^ Cn  on  the  note,  the  burden  of  maintaining  the  defense  is  upon  the  de- 
fen.lant.    Clark  v.  Eltinge.  34  Wash.  323  75  Pac.  800. 

9  Kuenzi  v  Elvers.  14  La.  Ann.  391,  Merrick,  Ch.  J.,  saymg.  On  the  trial 
thL  els  no  evident,  was  ofTer.^d  of  the  laws  of  Brazil,  where  the  bills  were 
drlwn  The  defendants  have  pai.l  the  amounts  specified  on  the  face  of  the  b  lis 
anTtheonly  c,u-tion  submitte<l  to  this  court  for  its  determination  is,  whether  or 
nc  he  pb  nt  tTs  can  n-eover  damages  at  the  rate  of  10  per  cent.,  as  allowed  by 
ou  statu te  on  b  lis  of  exchange  .Iruwn  in  Louisiana  on  foreign  countries  and  there 
Ztttei  for  nonpavment  or  nonaceeptance.  The  bills  drawn  in  Brazil  althou^ 
:  ^sf:  shipment-of  coffee  to  this  city)  were  payable  in  --^n,  and  are  g  v- 
erned  by  the  laws  of  Brazil,  the  country  where  they  were  drawn.  Story  on  BiUs 
397  But  Ih  record  does  not  furnish  us  any  proof  of  those  laws  In  the  abs  nee 
!f  proof  the  laws  of  that  country,  in  reference  to  bills  drawn  there  "pon  o^er 
teign  ;.untries.  mu.st  be  presumed  to  be  the  same  as  our  own,  and  the  damages 

claimed  must  be  allowed."  „  oqq 

10.  Bean  v.  Briggs,  4  Iowa.  407;  Bernard  v.  Barry,  1  Greene,  389. 


1072  THE   CONFLICT   OF    LAWS  §§  891a,  891b 

of  the  forum  a  party  signing  in  a  certain  way  is  regarded  as  an  indorser, 
the  foreign  law  will  be  presumed  to  be  likewise.'' 

§  891a.  Presumption  as  to  the  common  law.— There  is  this  ex- 
ception to  the  rule  above  stated:  that  where  countries  have  once 
belonged  to  the  same  government,  the  courts,  after  the  separation, 
will  adopt  a  presumption  suitable  to  the  case,  and  most  frequently 
presume  the  continuance  of  pre-existing  laws.'-  And.  therefore,  in 
one  State  of  the  United  States  it  should  be  presumed  as  to  other 
States  that  were  once  under  the  common  law,  that  the  common  law 
still  prevails.'^  Texas,  Louisiana,  and  a  number  of  other  States, 
were  never  under  the  common  law,  and  where  a  promise  to  accept 
a  bill  was  made  in  Texas,  and  was  sued  in  Mi.ssouri  it  was  held  that 
in  the  absence  of  proof  as  to  the  Texas  law,  the  Missouri  statute 
would  apply.'''  Sunday  contracts  were  not  void  by  common  law,  and 
it  has  been  held  in  Michigan  that  it  will  not  be  presumed  that,  in  a 
State  which  adopted  the  common  law,  there  is  a  statute  prohibiting 
tlie  making  such  contracts  on  Sunday.'^  A  contrary  view  has  been 
taken  in  Georgia.'^  It  would  not  be  presumed  that  the  common 
law  ol)tain(Hl  in  Russia,  and  in  the  absence  of  proof,  the  law  of  the 
forum  would  prevail.'^ 

§  891b.  Presumption  as  to  the  law  merchant. — Where  the  ques- 
tion is  one  relating  to  the  law  merchant,  which  is  of  general  applica- 
tion, as,  for  instance,  the  number  of  days  of  grace,  it  would  be  pre- 
sumed that  they  were  fixed  by  the  law  merchant,  that  is,  that  three 
days  of  grace  were  allowed — the  law  merchant  being  regarded  as 
part  of  the  common  law.'^    Bonds  and  coupons  in  form  negotiable 


11  See  §  895. 

12.  Dickinson  v.  Hoomcs,  8  Gratt.  408;  Arayo  v.  Currill,  1  La.  541;  1  Rob. 
Pr.  (new  ed.)  230. 

13.  Wharton  on  Evidence,  §  314,  and  cases  cited;  Holmes  v.  Bank  of  Ft.  Gaines, 
120  Ala.  493,  24  So.  959;  Bailey  v.  Devinc,  123  Ga.  053,  51  S.  E.  003,  107  Am. 
St.  Rep.  153;  Bank  of  Laddonia  v.  Bright  Coy  Commission  Co.,  139  Mo.  App. 
110,  120S.  W.  648. 

14.  Flats  V.  Mulhall,  72  Mo.  522. 

15.  O'Rourke  v.  O'Rourke,  43  Mich.  58. 

16.  Hill  V.  Wilker,  41  Ga.  449. 

17.  Savage  v.  O'Neill,  44  N.  Y.  298. 

18.  Lucas  V.  Ladew,  28  Mo.  342.  See  also  Demelman  v.  Brazier,  193  Mass. 
588,  79  N.  E.  812,  as  to  grace  being  abolished  by  the  Negotiable  Instrument 
statute. 


§§  892,  893  LEX  LOCI  SIT^  1073 

according  to  the  law  merchant  as  now  recognized,  would  be  presumed 
in  one  State  to  be  negotiable  in  another.  ^^ 

§  892.  There  are  some  cases  which  are  consistent  with  the  doc- 
trines above  stated,  and  which  seem  to  qualify  the  rule  given  by  the 
limitation  that  a  contract  entered  into  in  another  State  will  not  be 
presumed  illegal  there,  although  illegal  by  the  law  of  the  forum. 
Thus,  in  New  York,  where  a  minor  under  twenty-one  years  of  age 
could  not  enter  into  a  contract,  the  maker  of  a  note  executed  in  Ja- 
maica was  sued,  and  proved  that  he  was  under  twenty-one  years  of 
age.  But  the  law  of  Jamaica  as  to  infancy  was  not  proved.  Kent, 
Ch,  J.,  said:  "As  the  defendant  did  not  prove  what  the  law  of  Jamaica 
was  on  the  subject,  he  did  not  make  out  his  defense,  and  the  plaintiff 
is  entitled  to  judgment."  ^  The  like  view  obtained  in  a  similar  case 
in  England.-'  So  in  Mississippi,  where  a  note  was  executed  in  Vicks- 
burg,  payable  in  New  Orleans,  Louisiana,  bearing  interest  at  10  per 
cent.  Six  per  cent,  was  the  lawful  rate  of  interest  in  Mississippi, 
where  suit  was  brought.  The  action  was  sustained,  there  being  no 
proof  as  to  the  laws  of  Louisiana.-'- 


SECTION   VI 

LEX    LOCI    REI    SIT.E 

§  893.  Real  estate  is  controlled  in  respect  to  the  validity  and 
form  of  conveyance  by  the  lex  loci  rci  sita — that  is,  by  the  law  of  the 
place  where  it  is  situated.  And  while  the  lex  loci  contractus  determines 
the  nature  and  effect  of  a  negotiable  instrument,  when  it  is  secured 
by  a  mortgage  on  real  estate,  it  becomes  important  in  some  cases  to 
ascertain  the  law  of  the  place  of  the  mortgage,  as  there  may  arise  a 

19.  Tyrcll  v.  Cairo  &  St.  L.  R.  Co.,  7  Mo.  App.  294. 

20.  Thompson  v.  Ketchum,  8  Johns.  192  (1811). 

11.  Male  V.  Roberts,  3  Esp.  X.  P.  1G3  (1S(K)).  Suit  to  recover  upon  contract 
made  in  Scotland.  Plea,  infancy.  Lord  Eldon  said:  "I  hold  myself  not  war- 
ranted in  saying  that  such  a  contract  is  void  by  the  law  of  Scotland,  because  it  is 
void  by  the  law  of  England.  The  law  of  the  country  where  the  contract  arose 
should  govern  the  contract;  and  what  that  law  is,  should  be  given  in  evidence  to 
me  as  a  fact." 

22.  Martin  v.  Martin,  1  Smedes  &  M.  177,  178  (1843),  Clayton,  J.:  "The 
presumption  is,  that  the  parties  have  not  violated  the  law  by  their  contract." 

68 


1074  THE    (  OMLICT   OK    LAWS  §§  894,  894a 

conflict  between  it  and  the  luw  of  the  place  where  the  negotiable 
paper  was  executed,  or  is  made  payable. 

§  894.  When  mortgage  of  realty  is  in  one  State  and  loan  secured 
is  payable  in  another. — The  question  has  l)een  much  litigateci  in 
the  United  States,  as  to  what  la'v  appHes  when  a  mortgage  is  given 
as  security  for  a  loan,  and  the  mortgage  is  in  one  State,  and  the  piaec; 
of  payment  of  the  loan  in  another.  **The  true  test  is,  was  the  mort- 
gage merely  a  collateral  security,  the  money  being  employed  in  an- 
other State,  and  untler  other  laws,  or  was  the  money  emjiloyed  on 
the  land  for  which  the  mortgage  was  given?  If  the  former  be  the  case, 
then  the  law  of  the  place  where  the  money  was  actually  used,  and  nc^t 
that  of  the  mortgage,  applies.-''  If  the  latter,  then  the  law  of  the 
place  where  the  mortgage  is  situate  must  prevail."  "^^  Where  money 
was  borrowed,  and  the  not(>  made  payable  in  New  York  but  (lat(>(l 
in  Nebraska,  where  a  mortgage  to  secure  it  was  executed  on  land,  the 
mortgage  was  held  to  be  a  mere  incident  of  the  loan,  and  the  transac- 
tion being  usurious  by  New  York  law,  it  was  held  void.^^  In  New 
Jersey  the  court  refused  to  enforce  a  contract  made  in  New  York  and 
secured  by  a  New  Jersey  mortgage  on  real  property  in  that  State,  the 
contract  being  oppos(Ml  to  the  policy  of  the  New  Jersey  statutes 
prohil)iting  stock  gambling.^® 

§  894a.  Married  women  n\i\y,  under  certain  circumstances,  bind 
their  sei)arate  estate;  and  wliere  it  consists  of  realty,  and  a  note  is 
given  by  the  married  woman,  it  is  considered  that  the  law  appli- 
cable to  the  transaction  is  that  of  the  State  where  the  realty  is  situate, 
and  not  that  of  the  State  where  the  note  is  made." 

23.  De  Wolf  V.  Johnson,  10  Wheat.  383;  Newman  v.  Kerson,  10  Wis.  333; 
Kennody  v.  Knight,  21  Wis.  340;  Davis  v.  Clemson,  6  McLean,  622;  Atwatcr 
V.  Walker,  1  C.  E.  Green,  42;  Bank  v.  Cooper,  85  Mo.  App.  383. 

24.  Wharton  on  Conflict  of  Laws,  §  .510;  Arnold  v.  Potter,  22  Iowa,  194; 
Chapman  v.  Robinson,  (>  Paige,  (527;  Goddard  v.  Sawyer,  9  Allen,  78;  Pine  v. 
Smith,  11  Gray,  38;  Fitch  v.  Hemer,  8  Am.  Law  Reg.  ()54.  In  an  old  case  a  bond 
was  executed  in  Irclaml  for  a  debt  contracted  in  England.  It  bore  Irish  interest, 
which  was  held  valid  becau.se  it  constituted  a  security  on  lands  situated  in  Ireland. 
Connor  v.  Bellamont,  2  Atk.  381;  Story  on  Conflict  of  Laws,  §30.5;  American 
Freehold  Land  and  Mortgage  Co.  v.  Sewell,  92  Ala.  1G3,  9  So.  143.' 

25.  Sands  v.  Smith,  1  Nebr.  108;  Thompson  v.  Kyle,  39  Fla.  582,  23  So.  12. 

26.  Flagg  V.  Baldwin,  11  Stew.  219. 

27.  Frierson  v.  Williams,  57  Miss.  457;  Hayden  v.  Stone,  13  R.  1. 106. 


§  895 


LIABILITY   OF   PARTY  1075 


SECTION  VII 


BY    WHAT    LAW    THE    LIABILITY    OF    THE    MAKER,    ACCEPTOR,    DRAWER, 
AND    INDORSER   IS    DETERMINED 

§  895.  In  the  first  place,  as  to  the  maker  of  a  note. — The  maker's 
lialiilities  are  controlled  by  the  law  of  the  place  where  the  note  is 
cxociitecl  and  delivered,  unless  it  be  payable  elsewhere,  in  which  case 
he  will  be  deemed  to  have  had  reference  to  the  law  of  such  place,  and 
it  will  control  his  obligation.^ 

Where  A.  in  Baltimore,  Md.,  wrote  out  a  promissory  note  payable 
to  the  order  of  himself,  sent  it  to  B.  in  New  York  to  be  signed,  and 
B.  signed  it  there  and  mailed  it  to  A.  in  Baltimore,  it  was  considered 
a  New  York  contract,  that  being  the  place  of  delivery  and  the  post- 
office  being  regarded  as  a  common  agent  of  both  parties — of  the 
maker  for  the  purpose  of  transmitting  the  note  and  of  the  payee  for 
the  purpose  of  receiving  it  for  the  maker.-^ 

If  by  the  law  of  the  place  of  making,  equitable  defenses  are  ad- 
missible in  the  maker's  favor,  no  subsequent  indorsement  in  another 
place  where  the  rule  is  different  can  preclude  him  from  making  them."'" 

Accordingly,  it  has  been  held  that  the  maker  of  a  note  made  and 
indorsed  in  Mississippi,  where  the  maker  was  entitled  to  the  benefit 
of  all  defenses  against  an  indorsee  which  he  could  have  made  against 
the  payee  before  notice  of  the  indorsement,  could  avail  himself  of 
such  defense  in  a  suit  brought  in  another  State  where  a  different  rule 
prevailed.^^  And  the  converse  has  also  been  held,  that  where  a  note 
was  made  between  parties  resident  in  New  York,  and  there  negotiated 
while  current,  but  paid  l-y  the  maker  ])efore  maturity,  was  afterward 

28.  Central  Trust  Co.  v.  Burton,  74  Wis.  329;  Stevens  v.  Gregg  (Ky.),  12 
S.  W.  77.5;  Phipps  V.  Harding,  17  C.  C.  A.  203,  70  Fed.  468,  citing  text. 

29.  Barrett  v.  Dodge,  16  R.  I.  744,  19  Atl.  530,  27  Am.  St.  Rep.  777.  See  also 
tiiipra,  §  868. 

30.  Wilson  V.  Lazier,  11  Gratt.  482;  Chartres  v.  Cairnes,  16  Mart.  1;  Yeatman 
V.  Cullen,  5  Blackf.  241;  Stacy  v.  Baker,  1  Scam.  417;  Brabston  v.  Gibson,  9 
How.  263;  Ory  v.  Wilson,  4  Mart.  (N.  S.)  277;  Backhouse  v.  Selden,  29  Gratt.  581 . 

31.  Brabston  v.  Gibson,  9  How.  263.  The  general  rule  that  the  law  of  the 
State  in  which  an  assignment  is  made  controls  (post,  §  899),  is  only  available  as  a 
defense  by  the  assignor,  and  where  the  question  of  the  vaUdity  of  a  note  is  gov- 
erned by  the  law  of  another  state,  the  a-ssignment  made  by  other  persons  than  the 
makers  of  the  note  in  the  state  in  which  suit  is  brought  could  not  make  the  con- 
tract, so  far  as  the  makers  are  concerned,  governed  by  the  laws  of  such  state. 
Amett  V.  Pinson  (Ky.),  108  S.  W.  852. 


1076  THE   CONFLICT   OF    LAWS  §  806 

sued  upon  in  Vermont  by  a  buna  fide  holder  for  value  and  without 
notice,  the  maker  could  not  avail  himself  of  the  defense  of  payment 
which  was  not  good  according  to  the  law  of  New  York,  although  by 
the  law  of  Vermont  in  force  at  the  time  of  such  payment  it  would 
have  been  a  good  defense  to  the  action. ^•^  The  law  of  the  place  where 
the  instrument  is  delivered  and  the  contract  consummated  will  in  like 
manner  determine  whether  the  party  sued  is  to  be  regarded  as  a 
joint  promisor,  an  indorser,  or  otherwise,'^""^  and  will  control  as  to  a 
surety.^'' 

§  896.  In  the  second  place,  as  to  the  acceptor  of  a  bill. — The  ac- 
ceptor of  a  bill  occupies  a  position  analogous  to  tliat  of  the  maker 
of  a  note,  and  his  acceptance  is  a  contract  to  pay  the  amount  at  the 
place  where  the  acceptance  is  made,  if  the  bill  be  in  terms  there  pay- 
able, or  inferentiall}'  so  from  being  silent  as  to  the  place  of  payment.''"'' 
The  address  of  the  bill  to  the  drawee  at  a  particular  place  generally 
indicates  the  place  of  his  acceptance,  and  of  payment;  but  if  the  bill 
i)e  expressly  payable  elsewhere,  then  the  place  of  jjayment  determines 
the  acceptor's  liabilities.^^  Thus  if  a  bill  be  drawn  in  Massachusetts, 
by  a  drawer  there  resident,  upon  a  drawee  in  New  York,  and  no  place 
of  payment  be  mentioned,  it  would  be  presumably  payable  in  New 
York  and  be  governed  by  the  laws  of  that  State."  And,  if  a  mer- 
chant promise  to  accept  a  bill  clra^^'n  on  him  by  a  merchant  of  another 
country,  it  is  to  be  deemed  a  contract  of  the  place  where  the  accept- 
.'.nce  is  to  be  made.'''* 

32.  Harrison  v.  Edwards,  12  Vt.  648. 

33.  Lawrence  v.  Basset t,  5  Allen,  140;  Staples  v.  Nott,  128  N.  Y.  403,  28  N.  E. 
r)15,  26Am.St.  Rep.  4S0. 

34.  Backhouse  v.  Selden,  29  Gratt.  581;  Pugh  v.  Cameron,  11  W.  Va.  523. 

35.  Musson  v.  Lake,  4  How.  262;  Duerson's  Admr.  v.  Alsop,  27  Gratt.  241; 
Wilde  V.  Sheridan,  21  L.  J.  Q.  B.  200;  Frierson  v.  Galbraith,  12  Lea,  129;  Johnson 
County  Sav.  Bank  v.  Kramer,  42  Ind.  App.  548,  86  X.  E.  84;  Bank  of  Laddonia  v. 
Bright-Coy  Commission  Co.,  139  Mo.  App.  110,  120  S.  \V.  648.  Ames  on  Bills 
and  Notes,  vol.  I,  p.  214. 

36.  Freesev.  Brownell,  .35  x\.  J.  L.  (6  Vroom)  286;  Bright  v.  Judson,  47  Barb. 
29;  Everett  v.  Vendryes,  19  N.  Y.  436;  Frazier  v.  Warfield,  9  Smedes  &  M.  220; 
Bainbridge  v.  Wilcocks,  1  Baldw.  536;  Don  v.  Lipman,  5  Clarke  &  F.  1;  Cooper  v. 
Earl  of  Waldergrave,  2  Beav.  282.  See  Barney  v.  Newcomb,  9  Cush.  46;  Heller 
V.  Goslin,  65  N.  Y.  S.  232,  32  Misc.  36.    Byles  on  Bills  (Sharswood's  ed.)  568. 

37.  Ibid.;  Worcester  Bank  v.  Wells,  8  Mete.  (Mass.)  107;  Lewis  v.  Owen,  4 
B.  &  Aid.  654;  Lizardi  v.  Cohen,  3  Gill,  430;  Todd  v.  Bank  of  Kentucky,  3  Bush, 
626;  Freese  v.  Brownell,  36  N.  J.  L.  285.    See  post,  §  898. 

38.  Boyce  v.  Edwards,  4  Pet.  HI;  Garretson  v.  Bank,  47  Fed.  867,  citing  text. 


§§  897,  898  LIABILITY    OF    PARTY  1077 

§  897.  Sometimes  letters  of  credit  are  written  in  one  country  by 
w'hicli  the  letter-writer  becomes  liable  to  accept  bills  in  another  coun- 
try; or  to  accept  them  in  the  same  country  payable  in  another  coun- 
try. In  the  first  instance,  the  engagement  to  make  the  acceptance 
must  be  construed  as  an  engagement  to  accept  according  to  the  laws 
of  the  country  where  the  acceptance  is  to  be  made.  And  although 
the  acceptance  would  not  be  valid  unless  made  in  accordance  with 
the  laws  of  the  place  where  made,  the  promise  to  accept  contained 
in  the  letter  of  credit  (while  it  might  not  operate  as  an  acceptance) 
would  be  held  valid  in  the  judicial  tribunals  of  the  civilized  world 
and  enforced  equally  in  one  country  as  in  another  as  a  subsisting 
contract,  the  breach  of  which  would  entitle  the  injured  party  to 
complete  redress  for  all  the  damage  sustained  by  him.^^  But  in  Ohio 
u  different  view  has  been  taken,  apparently  under  the  peculiar  cir- 
cumstances of  the  case,  the  court  saying:  "The  letter,  indeed,  is  dated 
New  Orleans  (Louisiana),  and  the  acceptances  were  to  be  there;  but 
the  contract  was  closed  in  Cincinnati  (Ohio);  the  bills  were  to  be 
tlrawn  and  indorsed  there;  the  money  upon  them  to  be  obtained,  and 
the  produce  brought  there.  With  such  a  state  of  facts  we  suppose 
that  Ohio  furnishes  the  law  of  the  contract."  ■*" 

§  898.  In  the  third  place,  as  to  the  drawer  of  a  bill. — The  con- 
tract of  the  drawer  of  a  bill  and  of  the  indorser  of  a  bill  or  note  is 
very  different  in  its  nature  from  that  of  the  maker  or  acceptor.  Thus, 
if  a  merchant  in  New  York  draw  a  bill  on  another  in  Richmond,  Vir- 
ginia, rec|uiring  him  to  pay  a  certain  amount  without  specifying  any 
place  of  payment,  the  drawee  will,  if  he  accepts,  be  bound  to  pay  the 
amount  in  Richmond,  that  being  implied  by  the  address  of  the  bill 
to  him  at  that  place.  But  it  does  not  follow  that  the  drawer  would 
be  himself  bound  to  pay  the  amount  of  the  bill  in  Richmond  in  the 
event  of  dishonor  for  nonpayment  by  the  acceptor.  His  undertaking 
is  not  to  pay  it  in  Richmond  himself,  but  a  guaranty  that  it  (the  bill) 
shall  be  paid  there  by  the  drawee,  and  a  further  undertaking  that  if 
not  so  paid  by  the  drawee,  he  will  pay  the  amount  in  New  York,  pro- 
vided the  bill  be  duly  presented,  and  he  has  received  due  notice  of 
its  dishonor.  In  other  words,  the  drawer  of  a  bill  does  not  bind  him- 
self to  pay  it  specially  where  the  acceptor  is  impliedly  or  expressly 
called  on  to  pay  it;  but  his  contract  is  to  pay  generally,  and  is  conse- 

39.  Russell  v.  Wiggin,  2  Story,  230;  Carnegie  v.  Morrison,  2  Mete.  (Mass.) 
397;  Bissell  v.  Lewis,  4  Mich.  459.    See  Barney  v.  Newcomb,  9  Cush.  46. 

40.  Lonsdale  v.  Lafayette  Bank,  18  Ohio  (O.  S.),  142  (1849). 


1078  THE    CONFLICT   OF    LAWS  §  898 

(luently  construed  to  be  u  contract  to  piiy  at  the  place  where  the  ImII 
is  drawn.'''  Accordingly,  where  a  resident  in  Demcrara  drew  a  bill 
in  favor  of  another  resident  there,  payable  in  London,  upon  C,  a 
resident  in  Scothmd,  and  C.  accepted  it  payable  "at  Payne  and 
Smith's,  in  London";  it  was  held  that  the  contract  of  the  drawer  was 
to  be  governed  by  the  law  of  Demerara,  and  that  the  Dutch-Roman 
law  there  in  force  applied  to  this  ol)ligation.  And  T.  Pemberton 
Leigh,  Chancellor,  said:  •*-  "It  is  argued  that  this  bill  being  drawn 
payable  in  London,  not  only  the  acceptor,  but  the  drawer  must  be 
held  to  have  contracted  with  reference  to  the  English  law.  This  argu- 
ment, however,  appears  to  us  to  be  founded  on  a  misapprehension  of 
the  ol)ligation  which  the  drawer  and  indorser  of  a  l;ill  incurs.  The 
drawer,  by  his  contract,  undertakes  that  the  drawee  shall  accept, 
and  shall  afterward  pay  the  bill  according  to  its  tenor  at  the  place 
and  domicile  of  the  drawee.  If  this  contract  of  the  drawer  be  broken 
by  the  drawee,  either  by  nonacceptance  or  nonpayment,  the  drawer  is 
liable  for  payment  of  th.e  bill,  not  where  the  bill  is  to  be  paid  by  th.e 
drawee,  but  where  he,  the  drawer,  made  his  contract,  with  his  in- 
terest, damages,  and  costs,  as  the  law  of  the  country  where  he  made 
the  contract  may  allow." 

So,  where  a  bill  was  drauTi  in  California,  where  the  rate  of  interest 
was  twenty-five  per  cent.,  on  a  drawee  in  Washington  City,  where 
(he  rate  w^as  six  per  cent.,  it  was  held  that  the  drawer  was  bound  for 
the  rate  of  interest  at  the  place  where  the  bill  was  drawn.''^ 

And  so  where,  by  the  laws  of  Mississippi,  a  bill  was  drawn,  the 
drawer  may  set  up  want  or  failure  of  consideration  between  himself 
and  the  payee,  although  sued  by  an  innocent  holder  for  value  and 
without  notice;  such  defense  has  been  held  admissible,  although,  by 

41.  Freese  v.  Brownell,  35  N.  J.  L.  286;  Everett  v.  Vcndryes,  19  N.  Y.  43G; 
Hunt  V.  Standart,  15  Ind.  33;  Raymond  v.  Holme.s,  11  Tex.  55;  Kuenzi  v.  Elvers, 
14  La.  Ann.  391;  Lennig  v.  Ralston,  23  Pa.  St.  137;  Price  v.  Page,  24  Mo.  67; 
Bonedon  v.  Page,  24  Mo.  595;  Page  v.  Page,  24  Mo.  596;  Bank  of  the  United 
States  v.  United  States,  2  How.  711;  Ex  parte  Herbelback,  In  re  Glyn,  2  Low.  526; 
Story  V.  McKay,  15  Ont.  170;  Hazclhurst  v.  Kean,  4  Yeates,  19.  See  London  & 
S.  F.  Bank  v.  Moore,  128  Cal.  650;  Amsinck  v.  Rogers,  189  N.  Y.  252,  82  N.  E. 
134,  12  L.  R.  A.  (N.  S.)  875,  121  Am.  St.  Rep.  858,  affirming  93  N.  Y.  S.  87,  103 
App.  Div.  428. 

42.  Allen  v.  Kemble,  6  Moore  P.  C.  314  (1848). 

43.  Gibbs  v.  Fremont,  20  Eng.  L.  &  Eq.  555,  9  Exch.  25.  See  §  918.  To  same 
effect,  see  Crawford  v.  Branch  Bank,  6  Ala.  (N.  S.)  15;  Bailey  v.  Heald,  17  Tex. 
102;  Hubble  v.  Morristown  Land  Co.,  95  Tenn.  575,  32  S.  W.  965.  Contra: 
Indorser  liable  for  interest  according  to  law  of  place  in  which  bill  is  drawn.  Mullen 
V.  Morris,  2  Barr.  87. 


§899  LIABILITY   OF    PARTY  1079 

the  laws  of  Louisiana,  where  the  drawee  resided,  and  on  which  the 
bill  was  drawn,  such  defense  was  not  available/^ 

§  899.  In  the  fourth  place,  as  to  the  indorser  of  a  bill  or  note.— 

The  indorser  of  a  bill  or  note  is  regarded,  in  like  manner,  as  under- 
taking to  pay  at  the  place  where  his  indorsement  is  made,  ui  the  event 
of  dishonor  and  due  notice,  for  the  reason  that  he  is,  in  effect,  the 
drawer  of  a  new  bill  at  the  place  where,  and  the  time  when,  he  makes 
the  indorsement,  and  is  not  considered  as  merely  adopting  the  date 
of  place  and  time  of  the  bill  or  note  which  he  indorses.  And  he  is 
bound  by  the  law  of  the  place  of  indorsement,-"'^  even  though  the  bill 


44  Wood  V.  Gibbs'  Admr.,  35  Miss.  560.  In  Musson  v.  Lake,  4  How.  262, 
where  a  bill  drawn  and  indorsed  in  Mississippi  was  accepted  in  Louisiana,  where 
the  acceptors  resided,  the  United  States  Supreme  Court  said:  'So  far  as  their 
(the  acceptors')  liabilities  are  concerned,  they  were  governed  by  the  law  of  Louis- 
iana But  the  drawer  and  indorsers  resided  in  Mississippi;  the  bill  wa.s  drawn  and 
indorsed  there,  and  their  liabilities,  if  any,  occurred  there."  And  due  diligence  to 
recover  of  the  drawer  and  indorsers  was  to  be  controlled,  it  was  held,  by  the  laws  of 
he  Lttc  State  See  Roquette  v.  Overman.  L.  R.  16  Q.  B.  525  (1875)  (quoted 
pol/,  §  970a),  and  Duorson's  Admr.  v.  ALsop,  27  Gratt.  241  (187G),  wherein  i  is 
said  by  Staples,  J.:  -The  decision  (in  Roquette  v.  Overman)  is  based  upon  he 
idea,  chiefly,  that  as  the  liability  of  the  indorser  is  to  be  measured  by  that  of  the 
acceptor  whose  surety  he  is,  it  foUoweth  that  an  indorser  residing  in  England 
might  be  reached  by  a  law  of  France,  through  the  medium  of  the  acceptor  who 
resided  in  France."    And  he  adds  that  the  decision  is  in  direct  conflict  with  that 

in  Musson  v.  Lake,  above  quoted.  .  ,  r,     ,     r  r.  .,„^o 

45    Slocum  V.  Pomeroy,  6  Cranch,  221;  Guernsey  v.  Imperial  Bank  o  Canada 
188  Fed  300,  as  to  necessity  of  some  presentment,  demand,  protest,  and  notice  ot 
dishonor;  Phipps  v.  Harding,  17  C.  C  A.  203,  70  Fed.  468,  citing  t.xt;  Dundas  v^ 
Bowler,  3  McLean,  400;  Clanton  v.  Barnes,  50  Ala.  403;  Greathead  v    V alton,  40 
Conn.  226;  Yeatman  v.  CuUen,  5  Blackf.  240;  National  Bank  of  Michigan  v^ 
Green,  33  Iowa,  140;  Short  v.  Trabue,  4  Mete.  (K>-.)  2«^ '  T-^ue  v^  Short,  18 
La.  Ann.  257;  Glidden  v.  Chamberline,  167  Mass.  48(^,  46  NE   103   57  Am^St. 
Rep.  479,  citing  and  approving  text;  Baxter  Nat.  Bank  v  Talbot,  154  Mass^  213 
28  N.  E.  163;  Williams  v.  Wade,  1  Mctc.  (Mass.)  82;  Mackintosh  v^  Gibbs,  81 
N  J  L  577,  80  Atl.  554,  affirming  judgment  79  N.  J.  L.  43,  74  Atl.  708;  Spies  v. 
National  City  Bank,  174  N.  Y.  222,  66  N^E.  736  61  L^  R.  A.  193,  citing    ex  ; 
Lee  V.  Selleck,  33  N.  Y.  615,  32  Barb.  522;  Cook  v.  L'tchfieM  9  N.  Y- 280  (1853), 
5  Sandf.  330;  Hyde  v.  Goodnow,  3  N.  Y.  270;  Aymar  v^Sheldon,  12  Wend^443 
Colonial  Nat.  Bank  v.  Duerr,  95  N.  Y.  S.  810,  108  App.  Div.  215;  Dow  v.  Rowell, 
12  N   H  49;  National  Exch.  Bank  of  Baltimore  v.  Rock  Granite  Co.,  155  JN.  K.. 
43   70  S.  E.  1002,  as  to  validity  of  indorsement  by  married  "^"""^fJ^^^'^lJ. 
Tait   21  Okl.  361,  99  Pac.  810;  Douglass  v.  Bank,  97  Tenn.  133,  36  b.  W.  »/4, 
citing  text;  Trabue  v.  Short,  5  Coldw.  293;  Edwards  on  Bills,  185     The  law  of  th^ 
place  of  indoraement  governa  as  to  the  necessity  of  showing  that  the  plaintiff 


1080  THE    CONFLICT   OF    LAWS  §  899 

or  note  be  expressly  payaljle  elsewhere.'*®  "For,"  says  the  court, 
in  the  case  in  Tennessee,  cited  below,  where  the  note  was  indorsed 
in  Kentucky,  "the  fact  that  the  note  is  payable  in  Louisiana  is  not 
enough.  That  is  the  maker's  undertaking;  but  the  indorser's  con- 
tract is  separate  and  distinct;  and  being  made  without  any  view  of 
performance  under  the  laws  of  Louisiana,  it  must  be  governed  both 
upon  principle  and  authority  by  the  laws  of  Kentucky,  where  it  was 
made."  "'^    Therefore,  each  of  several  and  successive  indorsers  of  a 

exhausted  the  maker's  resourscs  before  proceeding  against  the  indorsers.  Colum- 
bia Finance  &  Trust  Co.  v.  Purcell,  142  Fed.  Rep.  984. 

46.  Lee  v.  Selleck,  33  N.  Y.  615,  .32  Barb.  522;  Trabuo  v.  Short,  18  La.  Ann. 
257  (18GG).  The  note  was  made  in  Kentucky,  payable  to  the  order  of  the  payees 
at  their  office  in  New  Orleans,  La.,  and  \v;us  indorsed  in  Kentucky.  The  indorsfTs 
were  sued  in  Louisiana,  where  th«'y  were  domiciled.  The  court  .said :  "The  dcferi.se 
is,  that  the  contract  of  indor.s«"inent  haviii<i  been  made  in  Kentucky,  the  liability 
of  defendants  as  indonsers  is  governed  by  the  law  of  that  State,  according  to  which 
a  remote  assignor  of  a  note  is  not  primarily  liable  to  the  holder,  and  the  immediate 
a.s.signor  is  only  liable  for  the  consideration  received,  with  G  per  cent.,  and  the 
holder  cannot  make  him  liable  without  first  i)ro.sccut ing  the  payor  with  diligence, 
which  is  not  shown  to  have  been  done.  *  *  *  The  general  rule  is  that  the  form 
and  effect  of  public  and  private  written  instruments  are  governed  by  the  laws  of 
the  |)lace  where  they  are  pa.s.sed  or  executed,  unless  it  is  expre.s.sed  that  they  are 
to  have  effect  in  another  country;  and  the  question  is  presented:  Does  the  fact 
that  the  note  sued  on  is  payable  to  the  defendants  at  their  office  in  the  city  make 
them  liable,  under  the  laws  of  Louisiana,  upon  their  indorsement  made  in  Ken- 
tucky? Every  indorsement,  accommodation  orotherwi.se,  is  es.sentially  an  original 
contract,  equivalent  to  a  new  note  or  bill  in  favor  of  the  holder  and  the  acceptor 
or  obligor.  12  M.  1S5  [Hill  v.  Martin,  12  Martin  (La.),  177-1X5);  11  Whart.  2i:{, 
341;  Story  on  Notes,  §  l.')5.  The  agreement  or  obligation  of  defendants  as  in- 
dorsers having  been  entered  into  in  Kentucky,  without  expressing  a  different 
place  of  performance,  must,  under  the  above  general  rule,  be  regulated  by  the  law 
of  Kentucky.  The  fact  that  the  payors  reside  where  the  note  is  payable  does  not 
amount  to  such  a  designation  of  the  place  of  performance  as  to  take  it  out  of  the 
general  rule.  The  parties,  at  the  time  of  making  the  indorsements,  were  all  in 
Kentucky,  and  are  presumed  by  law  to  have  contracted  with  reference  to  the 
laws  of  that  State.  See  Story  on  Conflict  of  Laws,  §  3W>;  G  Cranch,  221 ;  8  X.  S. 
21  [Depau  v.  Humphreys,  8  Martin  X.  S.  (La.)  21].  Doubtless  the  defendants 
may  be  sued  at  their  domicile,  but  the  obligation  of  their  indorsement  and  the 
duties  of  the  holders  are  governed  by  the  law  of  Kentucky,  where  the  indorsement 
was  made.  Such  was  the  ruling  in  the  case  of  Duncan  v.  Sparrow,  3  Ky.  1G7, 
which  was  a  suit  upon  a  note  made  in  Louisiana  and  payable  in  Mississippi." 
To  same  effect,  see  Artisans'  Bank  v.  Park  Bank,  41  Barb.  602  (1864);  Short  v. 
Trabue,  4  Mete.  (Ky.)  299;  Trabue  v.  Short,  5  Coldw.  293  (1868);  Hunt  v. 
Standart,  15  Ind.  35  (ISGO);  Lowry's  Admr.  v.  Western  Bank,  7  Ala.  (N.  S.) 
120;  Holbrook  v.  Vibbard,  2  Scam.  465;  Currier  v.  Lockwood,  40  Conn.  349; 
Brook  v.  Vannest,  58  N.  J.  L.  162,  33  Atl.  382. 
47.  Trabue  v.  Short,  5  Coldw.  293. 


§  900  UABILITY    OF   PARTY  1081 

bill  or  note  may  contract  several  and  different  liabilities,  each  being 
bound  according  to  the  law  of  the  place  where  his  indorsement  was 
made.  Thus,  if  a  bill  be  drawn  or  note  made  in  one  State  and  in- 
dorsed successively  in  several  others,  the  indorser  in  one  State  may  be 
merely  liable  as  a  surety;  ^*  in  another,  he  may  not  be  liable  until 
the  holder  has  exhausted  his  remedy  against  the  acceptor  or  maker;  *^ 
while,  in  a  third,  he  may  be  liable  according  to  the  general  principle 
of  the  law  merchant,  immediately  upon  due  notice  of  dishonor.'^" 

§  900.  In  a  leading  case  on  this  subject,  it  was  said  by  Shaw, 
Ch,  J.:^'  "The  note  declared  on  being  made  in  Illinois,  both  par- 
ties residing  there  at  the  time,  and  it  also  bemg  indorsed  in  Illinois, 
we  think  that  the  contract  created  by  that  indorsement  must  be 
governed  by  the  law  of  that  State.  The  law  in  question  does  not 
affect  the  remedy,  but  goes  to  create,  limit,  and  modify  the  contract 
effected  by  the  fact  of  indorsement.  In  that  which  gives  force  and 
effect  to  the  contract,  and  imposes  restrictions  and  modifications 
upon  it,  the  law  of  the  place  of  contract  must  prevail  when  another 
is  not  looked  to  as  a  place  of  performance.  Suppose  it  were  shown 
that,  by  the  law  of  Illinois,  the  indorsement  of  a  note  by  the  payee 
merely  transferred  the  legal  interest  in  the  note  to  the  indorsee,  so 
as  to  enable  him  to  sue  in  his  own  name,  but  imposed  no  conditional 
obligation  on  the  indorser  to  pay,  it  would  hardly  be  contended  that 
an  action  could  be  brought  here,  upon  such  an  indorsement,  if  the 
indorser  should  happen  to  be  found  here,  because,  by  our  law,  such 
an  indorsement,  if  made  here,  would  render  the  indorser  conditionally 
liable  to  pay  the  note. 

"By  the  law  of  Illinois,  the  indorser  is  liable  only  after  a  judg- 
ment obtained  against  the  maker;  and  as  no  such  judgment  appears 
to  have  been  obtained  on  this  note,  the  condition  upon  which  alone 


48.  Ingersoll  v.  Long,  4  Dfv.  &  Bat.  293.  Wliere  a  transaction  between  the 
holder  and  maker  has  the  effect,  under  the  law  of  the  state  where  the  note  was 
made,  of  releasing  the  maker  from  liability,  the  law  of  the  state  where  an  indorse- 
ment was  made  that  the  effect  of  such  release  of  the  maker  will  prevent  the  holder 
from  proceetling  against  the  indorser  will  apply.  Spies  v.  National  City  Bank, 
174  X.  Y.  222,  66  N.  E.  736,  61  L.  R.  A.  193. 

49.  Hunt  V.  Standart,  15  Ind.  33;  Violett  v.  Patton,  5  Cranch,  142;  Howell 
V.  Wilson,  2  Blarkf.  41S;  Williams  v.  Wade,  1  Mete.  (Mass.)  82;  Slocum  v. 
Pomeroy,  6  Cranch,  221;  Trabue  v.  Short,  18  La.  Ami.  257. 

50.  McDonald  v.  Bailey,  14  Me.  101. 

51.  Williams  v.  Wade,  1  Mete.  (Mass.)  82. 


1082  THE    CONFLICT    OF    LAWS  §  901 

tli(>  i)laintifT  may  sue  is  not  {•onii)lied  with,  and,  therefore,  the  action 
cannot  be  maintained." 

§  901.  This  doctrine,  that  the  drawer  and  indorser  are  bound 
according  to  the  hiw  of  the  phice  of  drawing  or  in(h)rsing,  although 
sustained  by  great  weight  of  opinion,  and  an  overwhelming  current 
of  authorities,  has  not  escaped  criticism  and  dissent,  and  rests,  as  it 
seems  to  us,  rather  upon  the  s;Lnction  of  decisions  than  ui)on  clear 
and  well-defined  principles.  If  A.,  in  New  York,  draws  a  bill  on  B., 
in  Richmond,  directing  him  to  pay  Sl.OOO  at  the  First  National  Bank, 
in  Kaleigh,  North  CaroHna,  he  thereby  guarantees  to  C,  the  payee, 
lliat  the  money  shall  be  there  paid  by  B.  on  the  day  of  its  maturity, 
lie  is  as  clearly  bound  as  B.  is,  altliough  secondarily,  that  the  money 
shall  be  paid  at  tlie  time  and  at  the  place  named.  If  either  tenders 
the  amount  at  the  time  and  place,  it  would  be  a  good  tender.  And, 
although  A.'s  lial;ility  is  contingent  upon  due  notice  of  dishonor,  the 
liability  is,  nevertiieless,  for  breach  of  his  contract  that  B.  should 
pay  at  Raleigh.  He  has  contracted  that  the  amount  shall  be  there 
paid  by  the  hand  of  B.,  and  yet  his  contract  is  regarded  as  being 
governed  by  the  law  of  New  York;  while  B.'s  contract  to  pay  by  his 
own  hand  is  governed  by  the  laws  of  North  Carolina.  This  seems 
to  us  an  inconsistency  of  the  law;  and  while  the  doctrine  is  now  per- 
haps too  well  settled  to  be  disturbed,  it  does  not  l)ear  the  test  of 
searching  analysis.     In  Indiana,^^  j^  ^^^  ^^  ^j^g  ^j^^-j^  ij^ij^jiy  denied, 

though  subsequently  established,-'^'  r.nd   Chancellor   Kent   has  ex- 


52.  Shanklin  v.  Cooper,  8  Ind.  42  (1846).  The  note  was  executed,  and  made 
payable  in  New  York,  and  indorsed  to  the  plaintiff  in  Indiana.  Blackford,  J., 
said:  "We  consider  the  indorsement  to  be  a  contract  which  must  be  governed  by 
the  law  of  the  place  where  the  note  is  payable,  without  regard  to  the  place  where 
the  indorsement  was  actually  made.  The  maker  of  the  note  before  us  bound 
himself  to  pay  it  in  New  York  to  the  payee  or  order,  and  the  payee,  by  the  in- 
dorsement, directed  him  to  pay  it,  at  the  same  place,  to  the  indorsee.  The 
indorser  is,  indeed,  the  drawer  of  a  bill  of  exchange,  in  which  the  maker  of  the 
note  is  the  acceptor,  and  the  indorsee  the  payee;  and  it  is  payable  where  the 
note  is  payable.  The  indorsement  in  the  present  case,  therefore,  if  made  in 
this  State,  stands  on  the  same  ground  with  a  bill  of  exchange  drawn  here  and 
payable  in  New  York,  and  there  can  be  no  doubt  but  that  the  contract  of  the 
drawer  of  such  a  bill  would  be  governed  by  the  law  of  New  York."  To  same  effect, 
.see  Peck  v.  Mayo,  14  Vt.  33. 

63.  Hunt  V.  Standart,  15  Ind.  33  (1860);  Mox  v.  State  Bank,  13  Ind.  521. 
In  Raymond  v.  Holmes,  11  Tex.  60,  it  is  said  by  Lipscomb,  J.:  "It  would  seem, 
that  if  it  be  true,  that  the  drawer  and  every  indorser  undertakes  that  the  bill 
shall  be  paid  at  the  place  of  payment  named  in  the  bill,  it  would  be  difficult,  on 


§  902  LIABILITY   OF    PARTY  1083 

pressed  his  dissatisfaction  with  it.^^  Professor  Parsons  thinks  it 
would  be  a  better  rule  if  the  place  of  payment  should  be  generally 
adopted  as  governing  the  liability  of  all  parties,  except  with  regard 
to  damages,  etc.,  and  whatever  may  be  properly  regarded  as  be- 
longing to  remedy,  which  depends  upon  the  lex  fori. "^ 

§  902.  Whether  or  not  the  transferrer  is  liable  as  indorser  or 
assignor  must  be  determined  by  the  law  of  the  place  where  the 
transfer  is  made.  The  United  States  Supreme  Court  has  said:  "An 
instrument  may  be  negotiable  in  one  State  which  may  yet  be  in- 
capable of  negotiability  by  the  laws  of  another  State,  and  the  remedy 
must  be  in  the  courts  of  the  latter  on  such  instrument."  '"^  Therefore, 
if  a  note  negotiable  by  the  laws  of  Maryland  be  transferred  in  Vir- 
ginia or  West  Virginia,  where  it  is  not  negotiable  (not  being  payable 
at  a  particular  bank),  the  transferrer  is  not  an  indorser  in  the  sense  of 
the  law  merchant,  but  an  assignor,  and  cannot  be  sued  until  recourse 
against  the  maker  has  been  exhausted. ■^'^  So  if  a  note  drawn  in  Ohio, 
where,  being  payable  at  bank,  it  is  negotiable,  be  transferred  in 
Kentucky,  where  such  a  note  is  not  negotiable,  the  indorser  in  Ken- 
tucky is  not  technically  such,  but  only  an  assignor.''"*  If  the  note  be 
made  and  be  payable  in  Illinois,  where  recourse  against  maker  must 
be  exhausted  before  indorser  is  liable,  yet,  if  indorsed  in  New  York, 
the  law  of  the  latter  State  would  control.^^  The  law  applying  to  an 
accommodation  indorsement  made  in  one  State,  but  to  be  used  in 
another,  is  elsewhere  considered.^" 

principle,  to  reconcile  the  distinction  between  such  undertaking,  and  any  other 
contract  for  performance  at  a  particular  place,  where  the  law  is  different  from  the 
lex  loci  contractus.  Hut  the  American  doctrine  has  acquired  the  force  of  authority, 
and  uniformity  must  he  observed  on  this  question." 

54.  2  Kent  Coram.  459,  4(50.    And  see  Mullen  v.  xMorris,  2  Barr,  87. 

55.  2  Parsons  on  Notes  and  Bills,  347. 

56.  Bank  of  the  United  States  v.  Donally,  8  Pet.  361.  See  2  Parsons  on  Notes 
and  Bills,  352;  Dunnegan  v.  Stevens,  122  111.  396. 

57.  Nichols,  Ex.  v.  Porter,  2  Hagans,  13. 
68.  Cariisle  v.  Chambers,  4  Bush,  269. 

59.  Lee  v.  Selleck,  33  N.  Y.  615,  32  Barb.  522. 

60.  Ante,  ^  868. 


1084  THE   CONFLICT   OF    LAWS  §§  903,  904 


SECTION   VIII 

BY    WHAT    LAW    THE    VALIDITY    AND    EFFECT    OF    TRANSFER    AND    THE 
RIGHTS    OF    THE    HOLDER    ARE    DETERMINED 

§  903.  Questions  have  arisen  whether  negotiahh'  notes  and  bills, 
made  in  one  country,  are  transferai^le  in  otluT  countries,  so  as  to 
found  a  right  of  action  in  the  holder  against  the  other  parties.^'  It 
has  been  held  in  England  that  the  statute  of  Anne,  which  makes 
promissory  notes  payable  to  oriler  or  bearer  negotiable,  a[)plies  as 
well  to  foreign  as  to  inland  promissory  notes;  and,  therefore,  that 
a  note  made  in  Scotland  and  indorsed  (whether  in  England  or  Scot- 
land did  not  appear)  could  be  sued  in  England  by  the  indorsee  against 
the  maker,  the  Court  of  King's  Bench  saying:  "  It  is  for  the  advantage 
of  commerce  that  foreign  as  well  as  inland  not(>s  should  be  nego- 
tiable." *'-  And  that  a  promissory  note  payable  to  bearer,  made  in 
England  and  transferred  in  France,  could  be  likewise  sued  by  the 
holder.^^  And  this,  although  by  the  law  of  France  mere  delivery 
would  be  inoperative."^ 

§  904.  Very  many  other  interesting  questions  arise  in  respect  to 
the  liabilities,  rights,  and  remedies  of  parties  to  negotiable  instru- 
ments when  they  have  been  drawn,  mad(%  or  accepted  in  one  country 
and  have  been  transferred  by  indorsement  or  assignment  in  another. 
In  the  first  place,  suppose  a  note  transferred  '.n  the  country  where 
made,  so  as  to  vest  title  in  the  transferee,  does  such  transfer  have  the 
same  efficacy  where  suit  is  brought?  It  has  been  held  not.  Thus,  in 
Illinois,  it  appears  it  was  necessary  that  a  note  payable  to  A.  or  bearer 
should  be  transferred  by  indorsement,  so  as  to  vest  a  title  in  the  holder. 
The  note  sued  on  was  made  and  transferred  in  New  York  without 
indorsement,  and  it  was  held  that  the  transferee  could  sue  in  Illinois, 

61.  Story  on  Bills,  §  71. 

62.  Milne  v.  Graham,  1  B.  &  C.  192  (1823).  Sec  also  to  same  effect,  Splil- 
berger  v.  Kohn,  1  Stark,  125  (1815);  Chitty,  Jr.,  on  Bills,  947;  Heuriet  v.  Morris, 
3  Campb.  303  (1812).  In  Carr  v.  Shaw,  Chitty,  Jr.,  on  Bills,  614  (1799),  Lord 
Kenyon  thought  a  note  made  in  America  not  to  be  within  the  statute  of  Anne, 
but  was  evidence  under  the  money  counts.  But  it  is  settled  that  "all  notes" 
described  in  the  statute,  wherever  made,  are  within  the  statute. 

63.  De  la  Chaumette  v.  Bank  of  England,  2  B.  &  Ad.  385,  9  B.  &  C.  208; 
1  Ames  on  Bills  and  Notes,  354. 

64.  Ibid.;  Byles  on  Bills  (Sharswood's  ed.)  [*385],  569. 


§  905  VALIDITY   AND    EFFECT   OF   TRANSFER  itbo 

but  it  would  not  follow  that  he  could  do  so  in  his  own  name.®^  And  it 
seems  that  the  law  of  the  forum  would  generally  determine  in  whose 
name  the  suit  should  be  brought.^^ 

§  905.  In  the  second  place,  suppose  the  instrument  is  made  in 
one  country,  and  is  transferred  in  another,  in  a  way  valid  by  the 
law  of  the  country  where  it  was  made,  but  not  so  by  the  law  of  the 
place  where  it  was  transferred.  In  such  a  case,  as  between  the  trans- 
ferrer and  transferee,  it  would  doubtless  be  regarded  that  suit  could 
not  be  anywhere  sustained.  But  as  between  the  transferee  and  the 
maker  or  acceptor,  the  law  of  the  place  of  contract  would  prevail. 
This  was  well  illustrated  in  a  Scotch  case.  In  Scotland,  a  bill  or  note 
is  transferable  by  indorsement  when  payable  to  A.  B.  simply,  with- 
out the  negotiable  words  "to  the  bearer"  or  "or  order"  being  added. 
And  the  note  in  question  was  made  in  Scotland,  and  indorsed  in  Eng- 
land, where  such  a  note  is  not  negotiable.  Upon  the  maker  being 
sued  in  Scotland,  it  was  held  that  suit  could  be  maintained,  and 
Lord  Medwyn  said:  "It  is  often  said,  and  truly,  that  by  indorsation 
a  new  contract  is  created;  and  I  was  puzzled,  at  one  time,  with  the 
circumstance  that  the  indorsation  in  the  present  cavSe  was  by  an 
Englishman  to  an  Englishman,  and  executed  in  England;  and  it 
appeared  difficult  for  me  to  conceive  how  such  a  contract  could  be 
validly  entered  into  in  a  country  where  such  an  indorsation  was  not 
valid,  so  as  not  to  con.stitute  a  right  in  favor  of  the  one,  or  an  obliga- 
tion against  the  other.  But  although  it  might  be  consistent  with 
principle  to  allow  the  law  of  the  place  where  the  indorsement  was 
made  to  regulate  its  effect  between  indorser  and  indorsee,  as  between 
the  indorsee  and  the  maker  no  new  contract  is  created,  the  contract 
between  them  remaining  the  same  original  contract,  regulated  by  the 
Ux  loci  contractus;  the  indorsee  is  merely  substituted  in  the  place  of 
the  original  payee,  and  the  maker  remains  under  the  same  liability 
he  contracted  at  the  time  he  made  the  note,  which  was  to  pay  to  the 
payee  or  to  the  holder  by  indorsement;  and  he  cannot  object  to  the 
form  of  the  transfer,  if  it  be  made  according  to  the  law  which  gives 
it  its  character,  and  regulates  the  quality  of  the  note — that  is,  in  the 
present  case,  according  to  the  law  of  Scotland."  " 

65.  Roosa  v.  Crist,  17  111.  4.50.  WTiere  a  note  was  executed,  made  payable  in 
and  assigned  in  another  State,  the  contract  of  assignment  must  be  tested  by  the 
laws  of  that  State.    Weil  v.  Sturgis  (Ky.),  63  S.  W.  602. 

66.  Harper  v.  Butler,  2  Pet.  239;  ante,  §  883. 

67.  Robertson  v.  Burdekin,  1  Rosa  Lead.  Cas.  812;  Wharton  on  Conflict  of 
Laws,  §  542. 


108G  THE    CONFLICT   OF    LAWS  §§  906,  907 

§  903.  It  appears  now  to  be  settled  that  each  liolder  has  the  same 
rights  against  the  acceptor  or  maker  as  the  original  payee,  though 
the  intermecHate  indorsements  were  executed  al)road,  and  were 
inoperative  by  the  foreign  law,  while  good  by  the  law  of  the  place 
of  the  acceptor's  or  maker's  contract.  Thus,  on  a  bill  payable  to 
order,  drawn,  accepted,  and  payable  in  England,  an  indorsee  can 
maintain  an  action  against  the  acceptor  in  England,  though  such 
action  could  not  be  maintained  in  France,  and  though  the  indorser 
and  indorsee  were,  at  the  time  of  the  indorsement,  which  was  made 
in  France,  residents  of  and  domiciled  in  France.''^  On  the  other 
hand,  when,  by  the  law  to  which  the  defendant's  contract  is  subject, 
the  indorsements  are  defective,  he  cannot  be  sued  on  them  in  a  foreign 
court.  Thus,  where  a  promissory  note  was  made  in  France,  and 
in(lors(>il  in  blank  by  the  paycH-  in  that  country,  the  maker  and  payee, 
both  at  the  time  of  making  and  indorsing  the  note  being  domiciled 
there,  it  was  held  that  as  no  action  could  have  been  maintained  upon 
it  in  the  French  courts  of  law,  in  the  name  of  the  indorsee,  the  in- 
dorsement, according  to  the  law  of  France,  operating  as  a  procura- 
tion only  and  not  as  a  transfer,  so  no  action  could  be  maintained 
by  him  in  England.^'-* 

§  907.  Again,  in  the  third  place:  Suppose  a  note  not  negotiable 
by  the  law  of  the  place  where  made,  but  negotiable  by  the  law  of  the 
place  where  indorsed.  In  such  a  case  the  right  of  action  by  the  in- 
dorsee against  the  maker  would  be  governed  by  the  law  of  the  forum.''' 
It  would  seem  that  in  the  country  w^here  the  note  was  made,  suit  could 
not  be  sustained  by  the  indorsee  against  the  maker,  because  incon- 
sistent with  its  laws.     But  in  the  countrv  of  the  indorsement  the 


68.  Lebel  v.  Tucker,  2  Q.  B.  77  (1867),  8  Best  &  Smith,  830;  Wharton  on 
Conflict  of  Laws,  §  454.  See  also  Woodruff  v.  Hill,  116  Mass.  310,  holding  that 
where  a  note  was  made  in  Massachusetts,  the  contract  of  the  maker  with  the  payee 
and  with  any  indorsee  thereof  was  to  be  performed  there  and  was  to  be  governed  by 
the  law  of  that  State,  notwithstanding  the  fact  that  the  payee  and  indorsee  lived 
in  New  York  and  that  the  indorsement  was  made  in  that  State.  See  ant  , 
§  889. 

69.  Trimbey  v.  Vignier,  4  Moore  &  S.  695,  1  Bing.  N.  C.  151,  6  Car.  &  P.  25 
(1834);  Wharton  on  Conflict  of  Laws,  §  455.  In  the  case  of  Trimbey  v.  Vignier, 
the  French  law,  as  was  afterward  held  in  Bradlaugh  v.  De  Rin,  L.  R.,  5  C.  P. 
473  (1868),  was  misconstrued,  it  being  held  in  the  latter  case  that  title  passes 
in  France  by  an  indorsement  in  blank.  See  observatioiis  on  these  cases  in  2  Ames 
on  Bills  and  Notes,  807.    See  ante,  §  867. 

70.  2  Parsons  on  Notes  and  Bills,  353. 


§  908  PRESENTMENT,    PROTEST,    AND    NOTICE  1087 

same  reason  would  not  apply;  and  if  the  maker  used  terms  of  nego- 
tiability in  his  contract,  capable  of  binding  him  to  the  indorsee,  there 
would  not  seem  to  be  any  solid  objection  to  giving  the  contract  its 
full  effect  there.  Thus,  it  has  been  held,  that  where  a  note  was  made 
in  Connecticut  payable  to  order,  but  by  the  laws  of  that  State  was 
not  negotiable,  and  was  indorsed  in  New  York,  where  it  was  nego- 
tiable, the  indorsee  suing  in  New  York  could  recover  against  the 
maker."  But  if  there  were  no  words  of  negotiability  in  the  note,  it 
might  be  different.^-  And  as  a  general  principle,  it  may  be  stated, 
that  if  the  instrument  be  not  assignable  at  all  in  its  inception,  the  laws 
of  no  other  country  would  enlarge  the  contract,  and  give  title  against 
the  debtor,  to  any  assignee  against  his  consent." 


SECTION  IX 

BY  WHAT  LAW  THE  FORMALITIES  IN  RESPECT  TO  PRESENTMENT, 
PROTEST,    AND    NOTICE   ARE    GOVERNED 

§  903.  In  order  to  charge  the  drawer  or  indorser,  the  holder  must 
exercise  due  diligence  in  presenting  the  bill  to  the  drawee,  or  ac- 
ceptor, and  the  note  to  the  maker;  and  the  necessity  of  making 


71.  Lodge  V.  Phelps,  1  Johns.  Cas.  139,  2  Cai.  Cas.  321. 

72.  Story  on  Conflict,  of  Laws,  §  253a;  Story  on  Bills,  §  175. 

73.  Talleyrand  v.  Boulanger,  3  Ves.  Jr.  447.  There  is  a  striking  criticism  of 
the  conflicting  decisions  upon  the  various  questions  connected  with  foreign  trans- 
fers of  negotiable  instruments  in  volume  II,  Ames  on  Notes  and  Bills,  808.  The 
editor  of  that  work  says:  "Upon  principle,  it  is  submitted,  the  tran.sfer  of  a  bill 
is  governed  by  the  law  of  the  place  where  it  is  at  the  time  of  transfer.  If  a  bill 
can  be  regarded  as  a  chattel,  this  law  governs  as  a  matter  of  right  upon  genera* 
principles  of  juri.sdiction  (Green  v.  Van  Buskirk,  7  Wall.  139).  If  a  bill  must  be 
considered  simply  as  made  up  of  as  many  choses  in  action  as  there  are  parties 
liable  upon  it,  the  liability  of  those  parties  to  a  transferee  would  depend,  it  is 
true,  as  a  matter  of  jurisdiction,  upon  the  law  of  the  place  where  each  party 
happened  to  be  at  the  time  of  transfer.  But  the  courts  of  the  debtor's  country, 
unloss  prohibited  by  the  settled  policy  or  declared  will  of  their  sovereign,  would 
presumably  adopt  as  their  law,  upon  principles  of  comity,  the  law  of  the  place 
where  the  bill  was  at  time  of  transfer  as  the  only  law  which  would  give  full  effect  to 
the  mercantile  idea  that  a  bill  is  negotiable  as  an  entirety,  and  avoid  the  startling 
consequences  which  have  been  pointed  out  as  corollaries  from  the  doctrines 
ad .  anced,  in  the  English  and  New  York  cases;  and  the  courts  of  other  countries, 
in  deciding  according  to  the  same  law,  would  fully  respect  the  law  of  the  country 
having  jurisdiction  over  the  subject-matter  of  the  transfer." 


1088  THE    CONFLICT    OF    LAWS  §  908 

demand  or  presentment  and  protest  depends  upon  the  law  of  the 
place  of  contract/'  while  as  the  acts  necessary  to  constitute  a  due 
presentment  are  to  be  done  at  the  place  upon  which  the  bill  is  drawn, 
or  at  which  the  bill  or  note  is  payable,  they  must  be  governed  by  tiio 
law  of  the  place  upon  which  it  is  drawn,  or  at  which  it  is  payable,  as 
the  case  may  be.  Thus,  if  a  bill  were  drawn  by  a  merchant  in  New 
York,  payable  at  tliirty  days'  sight,  upon  a  merchant  in  London, 
England,  it  should  be  presented  for  acceptance,  according  to  the  law 
of  England;  and  should  be  presented  for  payment  at  maturity,  also 
according  to  the  law  of  England,  as  it  would  be  there  payable."'  But 
if  the  bill  were  drawn  in  like  manner  in  New  York  upon  London,  with 
the  exception  that  it  was  drawn  and  accepted  payable  at  a  jxirticular 
place  in  New  Y^ork  or  in  France,  then  the  law  of  England  would  con- 
trol the  presentment  for  acceptance,  and  the  law  of  New  York,  or 
Krance,  the  presentment  for  and  demand  of  payment.  Accordingly, 
tlie  question  whether  or  not  the  bill  should  have  grace  would  be  dc- 
((Tmined  by  the  law  of  the  place  of  payment;  and  also,  if  allowable, 
in  how  many  days  grace  should  consist.  In  France  no  grace  is  al- 
l(jwable,  while  in  England  and  the  United  States  is  it  generally  three 

74.  In  Amsinck  v.  Rogers,  189  N.  Y.  2.-)2,  82  N.  E.  i:}4,  12  L.  R.  A.  (X.  S.)  875, 
121  Am.  St.  Rep.  SoS,  the  court  said  that  while  as  to  certain  details,  such  as  the 
days  of  grace,  the  manner  of  making  the  protest,  and  the  person  by  whom  protest 
shall  be  made,  the  law  or  custom  of  the  place  where  it  is  payable  will  govern,  the 
necessity  of  making  a  demand  and  protest  and  the  circumstances  under  which  the 
same  may  be  required  or  dispensed  with  are  incidents  ci  tiie  original  contract 
which  are  governed  by  the  law  of  the  place  where  the  bill  is  drawn,  rather  than 
of  the  place  where  it  is  payal)lc.  They  constitute  implied  conditions  upon  which 
the  liability  of  the  drawer  is  to  attach  according  to  the  lex  loci  contractus.  Sec 
also  Guernsey  v.  Imperial  Bank  of  Canada,  188  Fed.  300,  and  in  Columbia 
Finance  &  Trust  Co.  v.  Purcell,  142  Fed.  Rep.  984,  it  was  held  that  where  a  note 
was  indorsed  in  a  State  other  than  that  in  which  it  was  dated  and  delivered,  the 
necessity  of  demand  and  protest  is  to  be  determined  by  the  law  of  the  place  when- 
the  note  was  indorsed.    See  also,  post,  §  936. 

75.  Rothschild  v.  Currie,  1  Ad.  &  El.  (X.  S.)  434  (1  Eng.  C.  L.  428);  approved 
m  Phillips  v.  Im.  Thurn.,  L.  R.  1  C.  P.  463.  See  also  Rouquette  v.  Overman, 
L.  R.  10  Q.  B.  525  (14  Moak's  Eng.  Rep.  330);  Todd  v.  Ncal's  Admr.,  49  Ala. 
266;  Pierce  v.  Indseth,  10(5  U.  S.  546;  Sylvester  et  ol.  v.  Crohan  et  at.,  138  N.  Y. 
496,  34  N.  E.  514.  The  law  of  the  place  of  performance  governs  the  question  of 
the  proper  time  of  presentment  and  demand  of  a  promissory  note.  Vaughan  v. 
Potter,  131  III.  App.  334,  where  drafts  had  been  drawn  in  Marjdand  upon  a 
drawee  residing  in  Dublin,  who  acceptetl  them  payable  in  London,  the  English 
law,  as  the  lex  fori,  would  regulate  the  method  of  their  payment  and  the  matters 
incident  thereto.  Hammond,  Snyder  &  Co.  v.  American  Express  Co.,  107  Md. 
295,  68  Atl.  496  (1908). 


§§  909,  910         PRESENTMENT,    PROTEST,    AND    NOTICE  1089 

days.  But  it  ranges  in  different  places  from  three  to  thirty  days, 
and  in  each  case  the  law  of  the  particular  place  would  determine.'^ 

§  909.  The  protest. — When  a  foreign  bill  is  dishonored,  it  is 
necessary  that  it  should  be  protested,  and  the  protest  should  be 
made  at  the  time,  in  the  manner,  and  by  the  persons  prescribed  in 
the  place  where  the  bill  is  refused  acceptance  or  payment,  as  the  case 
may  be.  The  bill  might  be  drawn  in  New  York  upon  England,  and 
might  be  indorsed  in  Pennsylvania  and  in  Maryland,  in  Germany 
and  in  France.  But  only  one  protest  would  be  necessary,  and  that 
should  be  made  according  to  the  laws  of  England,  where  the  bill  is 
payable.  To  hold  otherwise  would  subject  the  holder  to  the  necessity 
of  making  five  different  protests  conformably  to  the  laws  of  the  five 
different  places  in  which  the  parties  to  be  charged  signed  as  drawer  or 
indorsers,  provided  there  were  as  many  different  styles  of  protest 
required.  The  doctrine  on  this  subject  is  well  settled,"^  and  it  is  not 
until  the  question  of  notice  arises  that  any  conflict  of  authority  pre- 
sents itself. 

§  910.  Notice. — In  respect  to  notice,  it  has  been  distinguished 
from  the  presentment  and  protest  in  an  often-quoted  American  case,"^ 

76.  Bank  of  Washington  v.  Triplctt,  1  Pet.  25;  Bowen  v.  Newell,  13  X.  Y. 
290;  Vidal  v.  Thompson,  11  Mart.  23;  Goddin  v.  Shipley,  7  B.  Mon.  575;  Bryant 
V.  Edson,  8  Vt.  325;  Bank  of  Orange  County  v.  Colby,  12  N.  H.  520;  Aymar 
V.  Sheldon,  12  Wend.  439;  Rothschild  v.  Currie,  1  Ad.  &  El.  (N.  S.)  43  (41  Eng. 
C.  L.  42S);  Jewell  v.  Wright,  30  X.  Y.  2G4;  Thorp  v.  Craig,  10  Iowa,  4G1;  Cribl;s 
V.  Adams,  13  Gray,  597;  Blodgctt  v.  Durgin,  32  Vt.  3G1;  Walsh  v.  Dart,  12  Wis. 
635;  Hatcher  v.  McMorine,  4  Dev.  124.  See  ante,  §§  622,  G23,  634.  A  note  was 
made  payable  in  the  state  of  Connecticut,  and  the  law  cf  the  place  of  payment 
must  govern  as  to  the  allowance  of  days  cf  grace  on  bills  and  notes.  Pawcatuok 
Nat.  Bank  v.  Barber,  22  R.  I.  73,  46  Atl.  1035.  Second  Xat.  Bank  v.  Smith,  118 
Wis.  18,  94  X.  W.  664. 

77.  Townsley  v.  Sumrall,  2  Pet.  170;  Carter  v.  Union  Bank,  7  Humphr.  548; 
Raymond  v.  Holmes,  11  Tex. 54;  Snow  v.  Perkins,  2  Mich.23S;  Ticknor  v.  Roberts, 

11  La.  16;  Bank  of  Rochester  v.  Gray,  2  Hill  (X.  Y.),  227;  Aymar  v.  Sheldon, 

12  Wend.  444;  Ross  v.  Bedell,  5  Duer,  462;  WilUams  v.  Putman,  14  N.  H.  543; 
1  Rob.  Pr.  (new  ed.)  79;  Wharton  on  Conflict  of  laws,  §§  699a,  462;  2  Parsons 
on  Notes  and  Bills,  344,  345;  Story  on  Conflict  of  Laws,  360;  Story  on  Bills,  §§  138, 
176;  Todd  v.  Neal's  Admr.,  49  Ala.  266.  The  necessity  of  protest  is  to  be  deter- 
mined by  the  law  of  the  place  where  the  note  was  indorsed.  Columbia  Finance 
&  Trust  Co.  V.  Purccll,  142  Fed.  984. 

78.  Aymar  v.  Sheldon,  12  Wend.  444;  Lee  v.  Selleck,  33  N.  Y.  815,  32  Barb. 
522.  See  also  WilUams  v.  Putnam,  14  N.  H.  543;  Story  on  Bills,  §  285;  Snow  v. 
Perkins,  2  Mich.  238.    In  Guernsey  v.  Imperial  Bank  of  Canada,  188  Fed.  300,  the 

69 


1090  THE    CONFLICT   OF    LAWS  §  910 

in  which  it  is  held  that  it  must  conform  to  the  law  of  the  place  where 
the  drawing  or  indorsement  occurs,  in  order  to  charge  the  drawer 
or  any  particular  indorser,  on  the  ground  that  the  nature  and  extent 
of  the  liabilities  of  the  drawer  or  indorser  are  to  be  determined  accord- 
ing to  the  law  of  the  place  where  the  ijill  is  drawn  or  indorsement 
made,  and  that  the  mode  and  time  of  notice  constitute  an  implied 
condition  of  the  contract. 

In  the  case  referred  to,  the  bill  was  drawn  in  the  French  island  of 
Martinique,  on  parties  at  Bordeaux,  France.  It  was  indorsed  by 
the  payee  in  New  York  to  the  plaintiffs,  and  was  protested  for  non- 
acceptance  in  France.  The  contract  of  the  drawer,  according  to  the 
French  law,  was,  that  if  the  holder  should  present  it  within  a  year, 
and  it  should  l>e  protested  for  nonacceptnnce,  and  notice  given,  he 
would  give  security  to  pay  it,  and  pay  it  if  default  were  made  in  the 
payment  by  the  drawee,  after  protest  for  nonpayment  and  notice. 
Suit  being  brought  in  New  York  after  notice  of  nona('cei)tance,  with- 
out any  protest  for  or  notice  of  nonpayment,  it  was  held  that  the  law 
of  New  York  controlled  the  contract  of  indorsement  there  made,  and 
that  the  defendant,  having  received  notice  according  to  the  New  York 
law,  was  liable  to  the  plaint ilY."^     This  case  impliedly  determines 

distinction  is  pointed  out,  that  wlicro  an  indorsement  i.s  made  in  one  jurisdiction, 
and  the  commercial  paper  is  i)ayahle  in  another,  the  manner  of  giving  notice  of 
dishonor  and  the  sufliciency  thereof  are  Koverninl  by  the  hiw  of  the  place  where 
the  paper  is  payable,  but  that  the  hvws  of  the  place  where  the  indorsement  is 
signed  or  is  delivered  so  that  it  becomes  a  contract,  govern  the  vahdity  and  extent 
of  the  contract  and  therefore  the  necessity  of  some  presentment,  protest,  and 
notice  of  dishonor. 

79.  Aymar  v.  Sheldon,  12  Wend.  444,  Mr.  Justice  Xclson  saying:  "Upon  the 
principle  that  the  rights  and  obhgations  of  the  parties  are  to  be  determined  by 
the  law  of  the  place  to  which  they  had  reference  in  making  the  contract,  there  are 
some  steps  which  the  holder  must  take  according  to  the  law  of  the  place  in  which 
the  bill  is  drawn.  It  must  be  presented  for  payment  when  due,  having  regard  to 
the  amount  of  days  of  grace  there,  as  the  drawee  is  under  obligation  to  pay  only  ac- 
cording to  such  calculation;  and  it  is,  therefore,  to  be  presumed  that  the  parties 
had  reference  to  it.  So  the  protest  must  be  according  to  the  .same  law,  which  is  not 
only  convenient,  but  grows  out  of  the  neces.sity  of  the  case.  The  notice,  however, 
must  be  given  according  to  the  law  of  the  place  where  the  contract  of  the  drawer  or 
indorser,  as  the  case  may  be,  was  made,  such  being  an  implied  condition."  So 
in  Allen  v.  Merchants'  Bank,  22  Wend.  215  (overruling  same  Ciise,  15  Wend.  482), 
where  a  bill  was  drawn  on  New  York  in  Philadelphia,  Pa.,  it  was  held  that  a 
failure  by  the  notary  to  give  notice  of  nonacceptance  was  fatal,  although  by  the 
law  of  Pennsylvania  such  notice  was  not  necessary.  See  also  Second  Nat.  Bank  v. 
Smith,  118  Wis.  18,  94  N.  W.  664,  holding  that  a  note  dated  in  Wisconsin,  but 
actually  executed,  negotiated,  and  made  payable  in  Indiana,  must  be  considered 


§  911  PRESENTMENT,    PROTEST  AND    NOTICE  1091 

that  if  the  law  of  France,  where  the  bill  was  payable,  had  been  fol- 
lowed, the  holder  could  not  have  recovered;  and  it  is  quoted  with  ap- 
probation by  Story,  in  his  treatises  on  Bills  and  Notes,  and  on  the 
Conflict  of  Laws.^°  It  has  also  been  followed,  though  with  evident 
reluctance,  in  Texas.^^ 

§  911.  English  ruling  that  notice  must  conform  to  law  of  place  of 
dishonor. — But  in  England  the  question  of  notice  has  been  con- 
sitlered  to  be  on  the  same  footing  as  that  of  demand  and  protest, 
and  if  it  be  in  accordance  with  the  law.  of  the  place  where  the  dis- 
honor of  which  notice  is  given  occurs,  it  is  sufncient.^^     Nor  will 

an  Indiana  contract,  and  the  law  of  Indiana  controls  as  to  the  manner  of  giving 
notice  of  dishonor  to  the  indorsers. 

80.  Story  on  Bills,  §§  285,  296;  Story  on  Notes,  §  339. 

81.  Raymond  v.  Holmes,  1 1  Tex.  55.  See  Third  Nat.  Bank  of  Springfield,  Mass. 
V.  National  Bank  of  Commerce  (Tex.  Civ.  App.),  139  S.  W.  G65,  holding  that  in 
an  action  involving  a  note  transferred  in  Missouri,  a  rule  of  Missouri  law,  not 
based  upon  any  statute,  when  contrary  to  the  law  of  the  forum  and  the  weight 
of  authority,  is  not  binding  upon  the  domestic  courts. 

82.  Rothschild  v.  Currie,  1  Ad.  &  El.  (N.  S.)  43  (41  Eng.  C.  L.  428).  In  this 
case  it  appeared  that  a  bill  was  drawn  in  England  upon  a  house  in  Paris,  France, 
by  whom  it  was  accepted,  in  favor  of  the  defendant,  a  payee  in  England;  and 
was  expressed  to  be  payable  in  Paris,  and  indorsed  to  the  plaintiff  in  England. 
Upon  its  dishonor  for  nonpayment  notice  was  given  to  the  plaintiff  in  England, 
which  notice  was  good  according  to  French  law,  but  too  late  according  to  the 
English  law.  The  notice  was  tran.smitted  the  same  day  by  the  plaintiff  to  the 
defendant.  In  an  action  in  England,  by  the  Engli.sh  indorsee  against  the  payee 
and  indorser,  the  Court  of  Queen's  Bench  held,  that  the  bill  being  payable  in 
France,  the  French  law  as  to  notice  of  dishonor  transmitted  from  France  to  Eng- 
land must  prevail.  In  Hirschficld  v.  Smith,  L.  R.  1  C.  P.  350  (1866),  Erie,  Ch. 
J.,  said:  "Due  notice  is  such  notice  as  can  be  reasonably  required  under  the  cir- 
cumstances; and  the  reasonableness  of  the  notice  proved  in  evidence  is  a  question 
of  law  depending  on  the  facts  of  each  particular  case,  and  such  facts  are  for  the 
jury.  In  the  course  of  practice,  rules  have  been  recognized  by  the  judges,  and  so 
have  become  law.  See  the  judgments  of  Grove,  J.,  Lawrence,  J.,  and  Le  Blanc,  J., 
in  Darbishire  v.  Parker,  6  East,  2.  If,  by  the  law  of  the  place  where  the  bill 
is  payable,  there  are  regulations  for  giving  notice  of  dishonor,  in  order  to  make 
indorsers  liable  to  the  holder,  a  presumption  is  raised  that  notice  according  to 
those  regulations  is  all  that  the  indorser  should  require."  "The  indorser  of  a 
bill  accepted  paj^able  in  France  promises  to  pay  in  the  event  of  dishonor  in  France 
and  notice  thereof.  By  his  contract  he  must  be  taken  to  know  the  law  of  France 
relating  to  the  dishonor  of  bills;  and  notice  of  dishonor  is  a  portion  of  that  law. 
Then,  although  his  contract  is  regulated  by  the  law  of  England  relating  to  in- 
dorsement, and  although  he  may  not  be  liable,  unless  reasonable  notice  of  dishonor 
has  been  sent  to  him,  yet  the  notice  of  dishonor  according  to  the  law  of  France 
may  be,  and,  we  think,  ought  to  be,  deemed  reasonable  notice  according  to  the 


1092  THE    CONFLICT   OF    LAW.S  Oil 

notice,  according  to  any  other  law,  suffice.  In  this  view  high  legal 
authorities  concur,^'  and  the  reasoning  upon  which  it  rests  seems  to 
us  unanswerable.  It  is  undoubtedly  true  that  the  nature  and  extent 
of  the  liability  of  the  drawer,  or  of  any  indorser,  when  it  is  once  fixed, 
is  determined  by  the  law  of  the  place  of  his  contract;  but  we  cannot 
see  that  that  fact  at  all  alters  or  concerns  the  conditions  to  be  com- 
plied with  by  the  holder  in  order  to  fix  his  liability.  The  contract  of 
indorsement  is  a  bilateral  contract  between  the  indorser  and  the 
hokler,  that  he  will  paj''  the  bill  drawn  upon  a  foreign  land,  provided 
that  the  holder  will  exercise  due  diligence  in  presenting  the  bill,  and 
demanding  payment  of  the  drawee  or  acceptor  at  the  place  upon  which 
the  bill  is  drawn,  or  where  it  is  payable,  and  in  protesting  it  in  the 
ev(>nt  of  dishonor,  and  giving  him  due  notice.  Now,  the  payment  is 
to  be  made  by  the  indorser  at  the  place  of  his  indorsement;  that  is, 
the  place  where  his  part  of  the  contract  is  to  be  performed,  and  by 
the  laws  of  which  it  is  accordingl}--  to  be  governed.  But  the  acts 
constituting  due  diligence,  which  the  holder  contracts  to  peiform, 
are  to  be  performed  at  the  place  where  the  nonpayment,  which  is  to 
be  protested  and  notified,  occurs,  and  consequently  they  are  to  be 

law  of  England,  and  be  sufBoicnt  in  England  to  entitle  the  plaint ifT  to  recover 
according  to  that  law."  It  is  reasonable  to  hold  that  the  foreign  holder  should 
have  time  to  make  good  his  right  of  recourse  against  all  the  parties  to  the  bill, 
in  whatever  county  they  may  be.  Here  the  holder  was  a  Frenchman,  in  France. 
The  indorsement  to  him  was  by  the  plaintiff,  a  Frenchman,  in  France.  The  in- 
dorsement to  the  plaintiff  was  by  the  defendant,  an  Englishman,  in  England;  and 
the  indorsement  to  that  Englishman  by  Lion,  the  payee,  may  have  been  in  any 
country.  The  inconvenience  would  be  great  if  the  holder  was  bound  to  know  the 
place  of  each  indorsement,  and  the  law  of  that  place  relating  to  notice  of  dis- 
honor, and  to  give  notice  accordingly,  on  pain,  in  case  of  mistake,  of  losing  his 
remedy;  whereas  there  would  be  great  convenience  to  the  holder  if  notice  valid 
according  to  the  law  of  the  place  should  be  held  to  be  reasonable  notice  for  each 
of  the  countries  of  each  of  the  parties,  unless  an  exceptional  case  should  give 
occasion  for  an  e.xception."  See  Redfield  &  Bigelow's  Lead.  Cas.,  §§  713  et  seq. 
In  Home  v.  Rouquette,  3  Q.  B.  Div.  514,  a  bill  drawn  in  England  and  payable 
in  Spain  was  indorsed  in  England  by  defendant  to  plaintifT,  and  in  Spain  by  plain- 
tiff to  M.  Twelve  days  after  dishonor  for  nonacceptance  in  Spain,  M.  sent  notice 
to  plaintiff,  who,  on  receiving  it,  immediately  notified  defendant.  By  the  law 
of  Spain  no  notice  for  nonacceptance  is  necessary.  The  English  Court  of  Appeals 
held  that  defendant  was  liable  on  his  indorsement  to  plaintiff,  but  declined  to 
decide  whether  M.  could  have  charged  defendant  if  no  notice  whatever  had  been 
given. 

83.  2  Parsons  on  Notes  and  Bills,  344,  345,  and  340,  note  j;  Byles  on  Bills 
(Sharswood's  ed.),  567;  1  Rob.  Pr.  (new  ed.)  80;  Todd  v.  Neal's  admr.,  49  Ala. 
266;  Wooley  v.  Lyon,  117  111.  244,  citing  the  text. 


si  912,  913      REVENUE   LAWS    OF    OTHER   COUNTRIES  1093 

defined  and  governed  by  its  laws.  It  is  simply  a  case  in  which  each 
party  contracts  to  do  different  things,  at  different  places,  and  which 
fall  severally  and  respectively  under  the  laws  of  the  place  at  which 
they  are  to  be  done. 

§  912.  To  hold  otherwise  than  in  accordance  with  these  views 
would  involve  the  law  respecting  notice  in  great  perplexities.  In 
the  case  of  a  bill  drawn  in  Massachusetts  upon  a  drawee  in  France, 
and  indorsed  successively  in  Pennsylvania  and  Maryland,  Austria 
and  England,  the  notice  would  have  to  conform  to  the  law  of  Massa- 
chusetts in  order  to  charge  the  drawer,  and  to  the  laws  of  the  four 
different  States  and  countries  in  order  to  charge  the  successive  in- 
dcrsers  respectively.  The  holder  in  France,  perhaps  a  bank  for 
collection,  might  thus  be  under  an  intolerable  burden;  for  notaries 
and  other  officials  and  agents  could  not  be  presumed  to  know  the 
laws  of  foreign  countries,  and,  indeed,  it  might  be  a  matter  of  the 
greatest  difficulty  to  ascertain  them,  even  were  counsel  consulted. 

If  the  law  of  France  were  complied  with  in  respect  to  the  drawer 
and  all  the  indorsers,  we  should  say  that  it  was  sufficient  for  all  pur- 
poses. If  the  holder  in  France  only  notified  the  English  indorscr, 
then  the  latter  would  have  to  notify  the  German  indorser  and  his 
antecedents  by  English  law,  for  in  England  his  due  diligence  would 
have  to  be  exercised,  and  so  on,  each  successive  party  would  have 
to  act  by  the  law  of  his  own  land.^^ 


SECTION  X 

REVENUE  LAWS   OF  OTHER  COUNTRIES — LAW  APPLICABLE  TO  STAMPS 
UPON    NEGOTIABLE    INSTRUMENTS 

§  913.  It  is  frequently  laid  do%\Ti  as  a  general  rule  that  one  coun- 
try will  not  regard  the  revenue  laws  of  another  country,*^  and  it  is 
applied  to  maintain  the  doctrine  that  a  bill  or  note  which,  according 
to  the  law  of  the  State  or  country  where  it  is  made,  requires  a  stamp 

84.  See  2  Parsons  on  Notes  and  Bills,  345. 

85.  Byles  on  Bills  (Sharswood's  ed.),  563;  2  Parsons  on  Notes  and  Bills,  318, 
321,  330;  1  Rob.  Pr.  (new  ed.)  62;  Ludlow  v.  Van  Rensselaer,  1  Johns.  94;  Lam- 
bert V.  Jones,  2  Pat.  &  H.  144;  James  v.  Catherwood,  2  Dowl.  &  R.  190;  Skinner 
V.  Tinker,  34  Barb.  333.  Note  held  valid  in  New  York,  though  without  stamp 
required  by  laws  of  Cuba,  where  note  was  made. 


1094  THE    CONFLICT   OF    LAWS  §§  914,  1)15 

ill  order  to  its  validity,  will,  nevertheless,  be  regarded  as  valid  in 
another  State  or  country  where  suit  is  brought.  But  this  rule  is  by 
no  means  universally  conceded,  and  Story  refers  to  it  in  terms  of 
strong  reprobation,  declaring  that  "sound  morals  would  seem  to 
point  to  a  very  different  conclusion,"  and  citing  with  approval  the 
view  of  Pothier  that  the  doctrine  is  "inconsistent  with  good  faith, 
and  the  just  duties  of  nations  to  each  other."  **^  The  general  rule 
that  the  formalities,  proofs,  and  authentications  of  a  contract  must 
conform  to  the  laws  of  the  place  where  it  is  made,  is  conceded,  and 
why  such  an  exception  as  this  should  be  made  to  it,  which  not  only 
involves  departure  from  a  principle  wise  in  itself,  but  also,  in  the 
particular  instance,  leads  to  the  countenancing  of  frauds  upon,  and 
evasions  of,  the  fiscal  laws  of  another  people — is  to  us  entirely  un- 
discemible. 

§  914.  If  instrument  void  where  made  for  want  of  stamp  it  is  void 
everywhere. — The  true  view  of  this  subject  seems  to  us  to  be  this: 
that  if  the  l)ill  or  note  be  absolutely  void  according  to  the  law  of  the 
place  where  it  is  made,  unless  it  be  stamped,  then  it  is  void  every- 
where; but  if  the  Irr  loci  cuntradus  only  declares  that  it  shall  not  1  e 
.(Imissible  in  evidence,  then  the  regulation  is  regarded  as  merely  a 
iule  of  evidence,  and  has  no  force  or  effect  beyond  the  confines  of  the 
State  or  country  whose  laws  enact  it.  Some  of  the  English  ciises  do 
not  recognize  this  discrimination  between  contracts  declared  void 
and  those  which  were  only  inadmissible  in  evidence;  ^^  but  the  later 
English  ;;s  well  as  the  later  American  cases  adopt  it  as  sound  doc- 
trine,^^  and  it  meets  the  approval  of  such  text-writers  as  Story,  Whar- 
ton, Phillimore,  and  Westlake.**^ 

"It  is  now  clear,"  says  Phillimore,  "that  if  by  the  foreign  law  the 
want  of  a  stamp  renders  the  contract  void,  it  cannot  be  enforced 
in  this  country." 

§  915.  When  a  contract  is  made  in  one  country  to  be  performed 
in  another,  and  by  the  laws  of  the  latter  a  stamp  is  required  to  render 

86.  Story  on  Bills,  §§  136,  137. 

87.  Wynne  v.  Jackson,  2  Russ.  251;  James  v.  Catherwood,  2  Dowl.  &  R.  190. 

88.  Fant  v.  Miller,  17  Gratl.  47;  Alves  v.  Hodgson,  7  T.  R.  241;  Clegg  v. 
Levy,  3  Campb.  Kili;  Bri.stow  v.  Sequeville,  5  Exch.  279,  Rolfe,  B.,  saying:  "1 
agree  that  if  for  want  of  a  stamp  a  contract  made  in  a  foreign  country  is  void,  it 
cannot  be  enforced  here."    See  Lambert  v.  Jones,  2  Pat.  &  H.  144. 

89.  Story  on  Bills,  §  137;  Wharton  on  Conflict  of  Laws,  §§  685,  688;  PhilUmore, 
IV,  698;  Westlake,  art,.  176.     See  2  Parsons  on  Notes  and  Bills,  330. 


1095 


§  916  LAW   AS   TO    INTEREST   AND    DAMAGES 

it  valid,  the  question  arises  whether  it  is  governed  by  the  lex  solu- 
tionis or  the  lex  loci  contractus,  as  to  the  stamp.  Here  the  genera 
rule  is  appUcable,  that,  as  to  the  form.,  vahdity,  interpretation,  and 
effect  of  the  contract,  it  is  to  be  governed  by  the  laws  of  the  place  o. 
performance;  but  its  mere  form  and  authentication  by  the  lex  loci 
contractus.  And,  accordingly,  it  has  been  held  that  a  stamp  m  suca 
cases  is  not  necessary.^^  This  view  is,  as  we  thmk,  sustamable  also 
upon  the  ground  that,  in  such  cases  of  international  transactions,  the 
parties  are  entitled  to  elect  by  what  law  they  will  be  governed,  and 
that  they  will  be  presumed  to  have  elected  the  law  of  the  place  by  the 
laws  of  which  their  contract  is  valid,  ut  res  magis  valeat,  quam  vereat. 

SECTION   XI 

LAW    APPLICABLE    TO    THE    CURRENCY    OF    PAYMENT,    AND    INTEREST 

AND   DAMAGES 

&916.  The  first  inquiry  is  to  ascertain  where  the  money,  accord- 
ing to  the  contract,  is  payable;-^  and  then  the  proper  rule  in  all 
cases  would  seem  to  be  to  allow  that  sum  in  the  currency  of  the 
countrj^  where  suit  is  brought  which  shall  approximate  most  nearl> 
to  the  amount  to  which  the  party  is  entitled  in  the  country  where 
the  debt  is  payable,  calculated  by  the  real  par,  and  not  by  the  nomi- 
nal par  of  exchange.^3     Thus,  suppose,  to  use    he  lUustration  c, 
Story    that  a  debt  of  £100  sterling  is  contracted  in  England,  and 
is  there  payable,  and  after^vard  a  suit  was  brought  in  the  Lnited 
States  to  recover  the  amount,  the  par  of  exchange,  fixed  by  Ux., 
"IT^al  V  Thompson,  11  Mart.  23,  the  court  saying:  "An  instrument,  as  to 
it^  form  andihe  formalitios  attending  its  execution,  must  be  tested  by  the  laws  o 

:.p  ace  where  it  is  made;  but  the  laws  and  usages  of  the  place  of  the  obligation  <n 
.;;ietu  ile  'idence  is  to  be  fulfilled  must  regulate  the  performance^"    Story  on 
Conflict  of  Laws,  §  318;  Stor>'  on  Bills,  §  159;  2  Parsons  on  No  e.  and  Bills,  331. 
91    See  marton  on  Conflict  of  Laws,  §  698  et  seq.,  and  infra,  §  922. 

93  ^^K^^^t^r.  Lord  Eldon  held  that  if  a  man  agre.  to 
pay  £100  in  T.ondon  on  a  certain  day,  he  ought  to  have  that  sum  here  on  tha^ 
pay  tiuu  contract,  wherever  the  creditor  sues  him,  the  law 

Barker,  3  Wheat.  lUi,  urani  v.  nt-aij,  ^  „...  vyhnrton  on 

R.  48;  Story  on  Bills,  §  151;  Story  on  Conflict  of  Laws  §§  308-311,  Wharton 
Conflict  of  Laws,  §  514;  2  Parsons  on  Notes  and  Bills,  370. 


1096  THE    CONFLICT   OF    LAWS  §§  917,  918 

is  to  estimate  the  pound  sterling  at  four  dollars  and  forty-four  cents. 
But  the  rate  of  exchange  on  bills  drawn  in  the  United  States  on  Eng- 
land is  generally  at  from  eight  to  ten  per  cent,  advance  on  the  same 
amount.  And  accordingly,  in  order  to  replace  in  England  the  amount 
there  borrowed  and  there  payable,  it  would  require  a  larger  amount 
than  four  dollars  and  forty-four  cents  for  every  pound  sterling  which 
should  have  been  there  paid.  The  judgment  should,  therefore,  be 
for  an  amount  sufficient  to  enable  the  plaintiff  to  i)urchase  the  allotted 
amount  of  English  currency  at  the  place  of  performance;  ^^  for  other- 
wise the  defendant,  who  had  broken  his  contract,  would  profit  by  its 
breach,  and  the  plaintiff,  who  had  already  suffered  by  his  default, 
would  suffer  still  further. 

§  917.  This  is  the  doctrine  which  obtains  in  the  Court  of  King's 
Bench,  where,  in  an  action  for  a  dei)t  payable  in  Jamaica,  but  sued 
in  England,  it  was  held  that  the  amount  should  be  ascertained  by 
adding  the  rate  of  exchange  to  the  par  value,  if  above  it;  and  so, 
rice  versa,  by  deducting  it  when  the  exchange  is  below  the  par.^'' 
.\nd  it  is  clearly  the  only  doctrine  consonant  with  justice.  But  in 
some  of  the  United  States,  it  is  held,  that  the  parties  can  only  re- 
cover according  to  the  par  of  exchange  as  established  by  law,  and 
not  according  to  the  actual  rate  of  exchange  necessary  to  remit 
the  amount  to  the  foreign  country  where  the  debt  is  payable.^^ 

§  918.  Interest  and  damages. — The  rate  of  interest  which  a  bill 
of  exchange  or  promissory  note,  or  other  contract  bears,  when  no 
rate  is  specified,  and  the  question  whether  or  not  it  shall  bear  in- 
terest, are  both  determinable  by  the  law  of  the  place  where  it  is 
expressl}''  or  impliedly  to  be  paid.^"     Thus,  if  a  note  be  made  in 

94.  Ibid. 

95.  Scott  V.  Bevan,  2  B.  &  Aid.  78.  But  Lord  Tenterden  expressed  doubt  as  to 
I  he  correctness  of  the  judgment. 

96.  Schofield  v.  Day,  20  Johns.  102;  Martin  v.  Franklin,  4  Johns.  125;  Adams 
V.  Cordis,  8  Pick.  280.    But  this  case  excepts  bills  of  exchange. 

97.  Missouri,  etc..  Trust  Co.  v.  Krumseig,  172  U.  S.  351,  19  Sup.  Ct.  Rep.  179. 
A.ndrews  v.  Pond,  13  Pet.  65;  Consequa  v.  Willings,  1  Pet.  C.  C.  225;  De  Wolf  v. 
.Johnson,  10  Wheat.  367;  Kraus  v.  Torry,  146  Ala.  548,  40  So.  956.  Camp  v. 
llundle,  81  Ala.  240;  Gingnon  v.  Union  Trust  Co.,  156  111.  135,  40  N.  E.  556, 
quoting  text;  Kopelke  v.  Kopelke,  112  Ind.  435;  Palmer  v.  Hill,  140  Mich.  468,  103 
N.  W.  838;  Chase  v.  Dow,  47  N.  H.  407;  Campbell  v.  Nichols,  33  N.  J.  L.  (4 
Vroom)  81;  Simpson  v.  Hefter,  87  N.  Y.  S.  243,  42  Misc.  Rep.  482.  Austin  v. 
Imus,  23  Vt.  286;  Amott  v.  Redfeme,  2  Car.  &  P.  88;  Montgomery  v.  Budge,  3 


§  919  LAW   AS   TO   INTEREST  AND   DAMAGES  1097 

Canada,  where  the  rate  of  interest  is  six  per  cent.,  payable  in  Eng- 
land, where  the  rate  is  five  per  cent.,  the  note  will  bear  only  the 
English  interest  of  five  per  cent.®^  And  so,  it  would  seem,  that  if 
a  bill  were  drawn  in  New  York  upon  London,  and  were  there  ac- 
cepted generally,  so  that  constructively  it  would  be  payable  in  Lon- 
don, and  default  were  made  in  payment,  the  acceptor  would  be 
bound  to  pay  English  interest,  for  his  contract  is  like  that  of  the 
maker  of  a  note.^^  But  the  drawer  would  be  liable  for  New  York 
interest.^  If  no  place  of  payment  be  specified,  the  instrument  will 
carry  interest  according  to  the  law  of  the  place  where  the  drawing, 
making,  indorsement,  or  acceptance  may  have  been  made.^ 

The  Federal  courts,  in  dealing  with  a  question  of  interest  or  usury, 
look  to  the  laws  of  the  State  where  the  transaction  took  place  and 
follow  the  State  statute  and  judicial  decisions.^ 

§  919.  Where  the  note  in  terms  bears  interest,  it  is  as  much 

a  part  of  the  debt  as  the  principal;  ^  and  if  the  rate  of  interest  be 
changed  by  statute  after  the  note  is  made,  it  will,  nevertheless,  bear 
the  rate  expressly  stipulated  for.^  When  interest  is  not  expressly 
payable,  the  law  of  the  place  of  payment,  if  it  allow  interest,  silently 
fixes  the  rate;  and  though  the  note  be  expressed  to  be  payable  "with- 


Dow.  &  C.  297.  And  if  the  plaintiff  does  not  introduce  evidence  of  the  rate  of 
interest  in  the  State  in  which  payment  is  to  be  made,  he  is  not  entitled  to  recover 
any  interest.    Kraus  v.  Torry,  146  Ala.  548,  40  So.  956. 

98.  Schofield  v.  Day,  20  Johns.  102.  See  also  Davis  v.  Coleman,  7  Ired.  424; 
Summers  v.  Mills,  21  Tex.  77;  Braynard  v.  Marshall,  8  Pick.  194;  Boyce  v.  Ed- 
wards, 4  Pet.  Ill;  Hawley  v.  Sloo,  12  La.  Ann.  815;  Hunt's  Exr.  v.  Hall,  37  Ala. 
702;  Peck  v.  Mayo,  14  Vt.  33;  Thompson  v.  Powles,  2  Sim.  194. 

99.  2  Par.sons  on  Notes  and  Bills,  376. 

1.  Gibbs  V.  Fremont,  20  Eng.  L.  &  Eq.  555.    See  ante,  §  898;  post,  §  920. 

2.  Troendle  v.  Highleyman  (Ky.),  113  S.  W.  812;  Hewitt  v.  Bank  of  Indian 
Territory,  64  Nebr.  403,  90  N.  W.  250,  92  N.  W.  741;  Smith  v.  Smith,  2  Johns. 
235;  Clark  v.  Seabright,  19  Atl.  941. 

3.  Missouri,  etc.,  Trust  Co.  v.  Krumseig,  172  U.  S.  351,  19  Sup.  Ct.  Rep. 
179.    But  as  to  questions  arising  out  of  interstate  commerce,  see  page  361. 

4.  Fake  v.  Eddy,  15  Wend.  76;  Gordon  v.  Phelps,  7  J.  J.  Marsh.  619;  Staples  v. 
Knott,  128  N.  Y.  403,  28  N.  E.  515,  26  Am.  St.  Rep.  480. 

5.  Lee  v.  Davis,  1  A.  K.  Marsh.  .397;  Thompson  v.  Kyle,  39  Fla.  582.  Held, 
"That  a  note  executed  and  payable  in  one  State,  though  secured  by  mortgage 
on  lands  in  another,  will  be  governed  as  to  the  rate  of  interest  it  shall  bear  by  the 
laws  of  the  former;  and  if  bj'  such  laws  all  interest  is  forfeited  for  usury,  the  same 
result  will  follow  upon  foreclosure  of  the  mortgage  securing  it,  in  the  State  where 
the  mortga^  lands  are  situated." 


1 098  THE    CONFLICT    OF    LAWS  5  920 

out  interest,"  interest  may,  nevertheless,  be  allowed  as  damages.' 
The  law  of  the  forum  will  fix  the  rate  of  interest,  unless  it  be  af- 
firmatively shown  that  a  different  law  applies.' 

§  920.  The  drawer  of  a  bill  and  the  indorser  of  a  bill  or  note  stand 
upon  a  footing  very  different  from  that  of  the  acceptor  or  maker. 
If  the  bill  be  drawn  by  a  drawer  in  one  State  or  country,  for  a  debt 
payable  there,  upon  a  person  in  another  coinitry,  and,  being  non- 
accepted,  an  action  is  brought  against  the  drawer,  the  plaintiff  is 
only  entitled  to  the  rate  of  interest  of  the  country  where  the  bill  was 
drawn,  and  not  to  that  of  the  country  in  which  he  resides  or  in  which 
the  drawee  was  recjuested  to  pay  it.*    This  is  on  the  ground  which  has 

6.  Healy  v.  Gorman,  3  Green,  328. 

7.  .J:ifTniy  v.  Dennis,  2  W.isli.  C.  C.  253;  Wood  v.  Corl.  4  Mctc.  (Masa.)  203; 
Ayniar  v.  Slielilon,  12  Wrud.  221;  BallinKulLs  v.  Glostcr,  3  Kiu^t,  4.S1. 

8.  Crawford  v.  lirancii  Bank,  6  Ala.  (N.  S.)  15;  Baylcy  v.  Hcald,  17  Tex. 
102;  Bank  of  the  United  States  v.  United  States,  2  How.  711;  Gibbs  v.  Fremont, 
20  Eng.  L.  &  Eq.  555,  9  Exch.  25,  .Vlderson,  B.,  saying:  "The  general  rule  in  all 
cases  like  the  pre.sent  is,  that  the  Its  IkI  contractus  i.s  to  govern  in  the  conhtru<'tion 
of  the  instrument,  Init  that  a|»|)lies  only  when  the  eontraet  L<  not  express;  if  it  is 
special  it  must  he  construed  according  to  the  express  terms  in  which  it  is  framed. 
Now,  a  bill  drawn  on  a  third  jM-rson,  in  di.scharge  of  a  present  del)t,  Ls,  in  truth,  an 
offer  by  the  drawer,  that  if  the  payee  will  give  time  for  payment,  he  will  give  an 
order  on  his  del)tor  to  pay  a  given  sum  at  a  given  time  and  place.  The  payee 
agrees  to  accept  this  order,  and  to  give  the  time,  with  a  proviso  that  if  the  acceptor 
does  not  pay,  and  he,  the  payee,  or  the  holder  of  the  hill,  gives  notice  to  the  drawer 
of  that  default,  the  drawer  shall  pay  him  the  amount  specified  in  the  bill,  and 
lawful  interest.  This  is,  then,  the  contract  between  the  parties.  If  the  interest  bv- 
expres.sly,  or  by  necessary  implication,  .specified  on  the  face  of  the  bill,  then  the 
interest  is  governeil  by  the  terms  of  the  contract  itself;  but  if  not,  it  swias  to  follow 
the  rate  of  interest  of  the  place  where  the  contract  is  made.  So  if  the  mode  of 
performing  it  be  expressly  or  impliedly  specified,  as  was  the  case  of  Roth.schild  v. 
Currie.  In  case  of  a  bill  drawn  at  .V.,  it,  prima  facie,  bears  interest  as  a  debt  at 
A.  would,  if  nothing  else  appearetl;  but  if  that  bill  be  indorsed  at  B.,  the  indorser 
is  a  new  drawer,  and  it  may  be  a  question  whether  this  indorsement  is  a  new  draw- 
ing of  a  bill  at  B.,  or  only  a  new  drawing  of  the  same  bill — that  is,  a  bill  expressly 
made  at  A.  In  the  former  case  it  would  carry  interest  at  the  rate  at  B.;  in  the 
latter  at  the  rate  at  A.;  and  on  tliis  subject  we  find  a  difference  of  opinion  in  the 
books — Mr.  Justice  Story,  in  his  Conflict  of  Laws,  §  314,  maintaining  the  former, 
and  Pardessus,  Droit  du  Commerce,  art.  1500,  maintaining  the  latter  opinion. 
But  this  case  is  a  contract  at  San  Francisco,  by  which  the  defendant  there  offers 
to  pay  to  the  payee,  in  discharge  of  a  tlebt  due  there,  the  payment  at  Washington, 
by  the  acceptor  thereof,  of  a  given  sum.  That  sum  is  not  paid.  The  defendant's 
original  liability  then  revives  on  notice  of  dishonor  duly  given  to  him,  and  the 
defendant  has  become  liable  to  pay,  as  he  was  liable  at  the  first.  At  first  he  waa 
clearly  to  have  paid  the  money  at  San  Francisco,  and  if  he  did  not,  he  would  have 


§  921  LAW   AS   TO    INTEREST   AND    DAMAGES  1099 

been  already  explained,  that  the  place  where  the  drawee  or  acceptor 
should  pay  is  not  considered  that  at  which  the  drawer  or  indorser 
must  pay  in  the  event  of  his  default.  Their  contract  is  to  pay,  upon 
receiving  notice  of  dishonor,  at  the  place  where  they  respectively 
entered  into  the  contract.  In  Vermont  it  has  been  held  that  the 
indorser  is  liable  for  interest  according  to  the  law  of  the  place  where 
the  note  is  payable.*  It  has  also  been  held  in  that  State,  that  where 
a  farm  situated  there  was  sold,  and  notes  given  in  New  York,  they 
would  bear  Vermont  interest,  as  the  payee  resided  there  and  the  land 
was  there  located. ^"^ 

§  921.  Damages. — The  rule  applicable  to  interest  applies  as  well 
to  what  is  distinctly  termed  "damages."  Each  party,  drawer, 
indorser,  and  acceptor,  is  liable  according  to  the  place  where  the 
bill  is  drawn,  indorsed,  or  accepted.  Thus,  where  a  bill  was  drawn 
in  Barbadoes  by  a  merchant  there  upon  drawees  in  Liverpool,  Eng- 
land, and  was  indorsed  by  the  defendant  in  Alexandria,  Virginia, 
and  it  appeared  that  the  damages  allowed  in  Barbadoes  was  ten 
per  cent.,  and  in  Virginia  fifteen  per  cent.,  the  indorser's  contract 
was  held  to  be  governed  by  Virginia  law,  and  fifteen  per  cent,  al- 
lowed. ^^    It  was  implied  that  the  drawer  would  be  liable  for  damages 

been  liable  to  pay  interest  at  the  usual  rate  in  California  for  a  period  as  long  as  the 
debt  remained  unpaid;  and  that  is  the  amount  which  he  ought  to  pay  now.  This 
point  was  expressly  ruled  in  Allen  v.  Kemble.  It  was  also  so  ruled  in  Congan  v. 
Bankes.  And  this  is  not  to  be  left  to  the  jury,  for  it.  depends  on  the  rule  of  law. 
The  amount  of  interest  at  each  place  is  to  be  so  left;  so  is  the  question  whether  any 
damage  had  been  sustained  by  nonpayment  of  interest  at  all — for  these  are  ques- 
tions of  fact.  Here  the  jury  have  found  interest  was  due,  and  that  there  was 
damage  which  ought  to  be  recovered  in  the  shape  of  interest.  They  also  have 
found  what  the  usual  rate  of  such  interest  is  at  Washington,  and  what  the  usual 
rate  of  such  interest  is  in  California;  but  which  rate  is  to  be  adopted  by  them  is, 
so  we  think,  a  question  purely  of  law  for  the  direction  of  the  judge  to  the  jury. 
We  think  the  direction  in  this  case  should  have  been,  that  the  California  rate  of 
interest  should  be  adopted  by  them,  in;ismuch  as  the  contract  was  made  in 
California;  and,  therefore,  this  rule  must  be  absolute,  to  enter  the  verdict  for  the 
plaintiffs,  with  19  per  cent,  additional  interest  to  the  6  per  cent,  already  allowed." 
But  contra,  that  drawer  is  liable  for  interest  according  to  place  of  payment.  See 
Mullen  V.  Morris,  2  Barr.  Si7;  Hanrick  v.  Andrews,  9  Port.  10. 

9.  Peck  v.  Mayo,  11  \'t .  :V^.  But  this  is  against  the  general  tenor  of  the  author- 
ities.   See  ante,  §  899. 

10.  Austin  V.  Imus,  23  Vt.  286.  See  De  Wolf  v.  Johnson,  10  Wheat.  367; 
Stewart  v.  Ellice,  2  Paige,  604. 

11.  Slocum  V.  Pomeroy,  6  Cranch,  221;  Gingnon  v.  Union  Trust  Co.,  156  III. 
135,  40  N.  E.  556. 


1100  THE    CONFLICT   OF    LAWS  §  922 

by  the  law  of  Barbadoes,  where  the  bill  was  drawn.  The  doctrine  of 
the  text  on  this  sul)ject  is  well  settled. ^^  It  follows  that  the  various 
parties  may  be  bound  for  different  measures  of  damages.  ^^  Professor 
Parsons  says,  "This  seems  to  us  to  arise  from  the  clear  rule  that 
remedy  depends  upon  the  forum."  "  The  subject  is  more  fully  con- 
sidered elsewhere,  in  the  chapter  on  Re-exchange  and  Damages." 
Sureties  are  only  secondarily  liable,  and  they  are  liable  for  what  their 
principal  has  bound  himself.  Therefore,  if  the  rate  of  interest  be 
legal  in  the  State  or  country  of  the  principal  where  the  contract  is 
to  be  performed,  the  surety  will  be  bound  for  it,  although  in  his  own 
State  or  county  it  would  be  illegal  and  excessive. ^^ 

§  922.  Election  of  law  of  place  as  to  interest. — We  have  alrer.dy 
seen  that  if  a  contract  is  void  where  made,  it  is  void  everywhere; 
and  that,  although  it  be  valid  where  made,  yet  if  involving  moral 
turpitude  or  injury  to  another  nation  or  its  citizens,  such  nation 
will  not  recognize  or  enforce  it.  There  are  some  contracts,  however, 
which  would  be  illegal  if  all  the  parties  resided  or  contracted  either 
in  the  State  where  it  is  made  or  where  it  is  to  be  performed,  which 
are,  nevertheless,  recognized  and  enforced,  if  valid  either  in  the  one 
place  or  the  other;  and  of  this  nature  are  contracts  to  pay  interest  at 
rates  which,  by  the  law  of  one  place  or  the  other,  would  be  usurious 
and  void.  .In  such  cases,  the  intention  of  the  parties  is  effectuated, 
as  a  concession  to  trade  and  commerce  between  nations;  and  if  the 
transaction  is  in  itself  not  immoral,  the  rate  of  interest  authorized 
either  by  the  country  where  the  contract  is  made  or  to  be  performed 
is  allowed  to  prevail.  Thus,  it  has  been  held  that  a  promissory  note, 
made  in  Louisiana,  bearing  ten  per  cent,  interest,  which  was  legal 
in  that  State,  would  not  be  usurious,  but  valid,  although  payable  in 
New  York,  where  all  contracts  to  pay  more  than  seven  per  cent, 
interest  are  usurious. ^^    And  the  like  view  has  been  recognized  and 

12.  Hendricks  v.  Franklin,  4  Johns.  119;  Hicks  v.  Brown,  12  Johns.  142; 
Hazelhurst  v.  Kcan,  4  Yeutes,  19;  Prentiss  v.  Savage,  13  Mass.  20;  Gibbs  v. 
Fremont,  9  Excli.  25;  Lennig  v.  Ralston,  23  Pa.  St.  137. 

13.  Ibid.;  2  Parsons  on  Notes  and  Bills,  346,  372,  373;  Story  on  Conflict  of 
Laws,  §  314. 

14.  2  Parsons  on  Notes  and  Bills,  342,  note  k. 

15.  Chapter  XLV,  vol.  II. 

16.  Backhouse  v.  Selden,  29  Gratt.  586. 

17.  De  Peau  v.  Humphreys,  20  Mart.  1;  Joslin  v.  Miller,  14  Nebr.  91;  Adams 
V.  Pratt,  7  Paige  Ch.  632;  Thornton  v.  Dean,  19  S.  C.  583,  45  Am.  Rep.  796,  citing 
the  text;  Taylor  v.  American  Freehold  Co.,  106  Ga.  238,  32  S.  E.  153;  Underwood 


§  923  LAW   AS   TO    INTEREST   AND   DAMAGES  1101 

adopted  in  numerous  cases,  and  may  be  regarded  as  a  recognized 
principle  of  English  and  American  jurisprudence.^^ 

§  923.  In  like  manner,  although  the  rate  of  interest  be  greater 
than  that  allowed  at  the  place  where  the  contract  is  made,  it  will 
not  be  usurious  if  allowable  at  the  place  of  paj^ment,  the  parties 
having  the  right  of  election  as  to  the  laws  of  the  place  by  which 
their  contract  is  to  be  governed, ^^  if  it  does  not  appear  that  the  parties 
intended  to  evade  the  usury  laws.^" 

It  would  seem  that  Story  dissents  from  this  doctrine  in  his  work 
on  the  Conflict  of  Laws,^^  but  in  that  on  Bills  of  Exchange  he  recog- 
nizes it,  and  cites  with  approval  cases  which  adopt  it;  -^  and  the 
most  approved  text-writers  generally  follow  the  adjudicated  cases. ^^ 

Where  a  party,  temporarily  in  New  York,  where  the  rate  of  in- 
terest is  seven  per  cent.,  made  a  note  bearing  twenty  per  cent,  in- 


V.  American  Mortgage  Co.,  97  Ga.  238,  24  S.  E.  847;  Odon  v.  New  England 
Mortgage  Co.,  91  Ga.  50.5,  18  S.  E.  1.31.  Contra,  Craven  v.  Bates,  96  Ga.  78,  23 
S.  E.  202;  Bigelow  v.  Burnham,  83  Iowa,  120,  49  N.  W.  104,  citing  text;  Bigelow 
V.  Burnham,  90  Iowa,  300,  57  N.  W.  G5;  American  Freehold  Land  and  Mortgage 
Co.  V.  SewcU,  92  Ala.  l(j:);  McGarry  et  al.  v.  Nicklin,  110  Ala.  559;  South  Missouri 
Land  Co.  v.  Rhodes,  54  Mo.  App.  129. 

18.  Potter  V.  Tallman,  35  Barb.  182;  Bank  of  Georgia  v.  Lewin,  45  Barb.  340; 
Richards  v.  Globe  Bank,  12  Wis.  G92;  Vliet  v.  Camp,  13  Wis.  198;  Berrien  v. 
Wright,  26  Barb.  208;  Chapman  v.  Robertson,  6  Paige  Ch.  627;  Edwards  on  Bills, 
183;  Miller  v.  Tiffany,  1  Wall.  310;  Kilgore  v.  Dempsey,  25  Ohio  St.  413;  Sturdi- 
vant  V.  Memphis  Nat.  Bank,  9  C.  C.  A.  256,  60  Fed.  730,  citing  text. 

19.  Thompson  v.  Powles,  2  Sim.  194;  Harvey  v.  Archibald,  1  Ry.  &  Moo. 
184;  Andrews  v.  Pond,  13  Pet.  65;  Chapman  v.  Robertson,  6  Paige,  627;  Van 
Schaick  v.  Edwards,  2  Johns.  Cas.  355,  where  a  note  made  in  Massachusetts 
and  payable  in  New  York  w;i.s  held  valid,  although  the  interest  by  Massachusetts 
law  was  usurious;  Jacks  v.  Nichols,  5  Bar!).  38  (overruling  3  Sandf.  Ch.  313,  and 
affirming  5  N.  Y.  178);  Ilealy  v.  Gorman,  3  Green,  328;  Miller  v.  Tiffany,  1  Wall. 
310;  Kilgore  v.  Dempsey,  25  Ohio  St.  413;  Brown  v.  Gardner,  4  Lea,  145;  Pugh  v. 
Cameron,  11  W.  Va.  523;  Findley  v.  Hall,  12  Ohio,  610;  Second  Nat.  Bank  v. 
Smoot,  2  MacArthur,  371;  Scott  v.  Periee,  39  Ohio  St.  67;  Jackson  v.  American 
Mortgage  Co.,  88  Ga.  756,  15  S.  E.  812;  Bigelow  v.  Burnham,  83  Iowa,  120,  49 
N.  W.  104;  National  Building  Assn.  v.  Ash  worth,  91  Va.  712,  22  S.  E.  521;  Long 
V.  Long,  144  Mo.  352;  Dygert  v.  Vermont  Loan  &  Trust  Co.,  37  C.  C.  A.  389,  94 
Fed.  913. 

20.  British  &  American  Mtg.  Co.  v.  Bates,  58  S.  C.  551,  36  S.  E.  917.     See 

post,  §  925. 

21.  Story  on  Conflict  of  Laws,  §  292. 

22.  Story  on  Bills,  §§  148,  149. 

23.  Wharton  on  Conflict  of  Laws,  §  507;  2  Parsons  on  Notes  and  Bills,  336, 
337.  338,  378,  379;  Edwards  on  Bills,  717,  718. 


1102  THE    CONFLICT   OF    LAWS  $  924 

terest,  which  was  valid  by  Texas  law,  and  dated  it  "Matagorda, 
Texas,"  it  was  held  legal  and  valid,  the  date  showing  it  was  in- 
tended to  be  governed  by  Texas  law.^^ 

§  924.  When  instrument  is  usurious  by  law  of  place  where  made 
and  where  payable  also. — If  the  bill  or  note  bear  usurious  interest 
both  by  the  law  of  the  place  where  made  and  of  the  place  where 
payable,  the  law  of  the  place  where  made  will  govern  as  to  the  legal 
consequences  of  usury,  and  the  effects  imposed  by  way  of  penalties."'^^ 
But  a  bill  or  note  cannot  be  made  payable  in  a  particular  place 
where  the  rate  of  interest  is  higher  than  at  the  place  where  the  con- 
tract is  made,  for  the  mere  purpose  of  creating  a  liability  for  the 
higher  rate  of  interest;  for  such  an  arrangement  would  be  a  mere 
shift  or  screen  to  avoid  the  statutes  against  usury. ^^  The  doctrine 
is  advanced,  however,  that  if  the  money  is  really  obtained  for  use  at 
a  particular  place,  the  rate  of  interest  allowal)!*-  at  that  place  may 

24.  Ballard  v.  Thompson,  35  Tex.  318;  Bigelow  v.  Burnham,  83  Iowa,  120, 
49  N.  W.  104;  Sturdivant  v.  Memphis  Nat.  Bank,  9  C.  C.  A.  256,  60  Fed.  730. 

25.  Andrews  v.  Pond,  13  Pet.  65;  De  Wolf  v.  Johnson,  10  Wheat.  367;  Mix 
V.  Madison  Ins.  Co.,  11  Ind.  117;  Thompson  v.  Kyle,  39  Tla.  582,  23  So.  12,  63 
Am.  St.  Rep.  193. 

26.  Do  Wolf  V.  Johnson,  10  Wheat.  367.  In  Akcrs  v.  Demond,  103  Mass. 
324,  bills  were  drawn  on  New  York  payable  in  Boston,  Massachusetts,  and  ac- 
cepted for  the  drawer's  accommodation  by  the  drawee  in  Boston.  They  were 
discounted  in  New  York  at  a  rate  of  interest  greater  than  that  allowed  in  that 
State  or  in  Massachusetts.  Suit  being  brought  in  Ma.ssachusctts,  the  transaction 
was  held  void,  and  Wells,  J.,  said:  "It  has  often  been  held  in  States  where  re- 
strictions upon  the  rate  of  interest  are  maintained,  that  it  is  not  usury  to  charge 
upon  negotiable  paper  whatever  is  the  lawful  rate  of  interest  at  the  place  where 
the  paper  is  payable,  although  greater  than  the  rate  allowable  where  the  negotia- 
tion takes  place.  But  if  the  paper  is  so  made  for  the  purpose  of  enabling  the  largcsr 
rate  to  be  taken,  or  the  greater  rate  is  received  with  interest  to  evade  the  statutes 
relating  to  usury  and  not  in  good  faith,  as  the  legitimate  proceeds  of  the  contract, 
it  is  held  to  be  usury.  So,  also,  if  a  greater  rate  is  taken  than  is  allowed  by  the 
law  of  either  State,  it  is  usury ;  such  a  rate  necessarily  implies  an  intent  to  disregard 
the  statutes  restricting  interest.  Andrews  v.  Pond,  13  Pet.  65;  Miller  v.  Tiffany, 
t  Wall.  298.  The  legal  rate  of  interest  or  discount  in  Massachusetts  is  6  per  cent, 
per  annum ;  and  at  the  date  of  the  negotiation  of  these  bills  a  greater  rate  than  6  per 
cent,  was  usurious  and  unlawful.  It  follows  from  the.se  considerations  that 
upon  the  evidence  as  it  now  stands  upon  the  part  of  the  defendant,  the  transaction, 
upon  which  alone  the  bills  in  suit  mu.st  depend  for  a  consideration  to  give  them 
validity  as  contracts,  was  illegal,  and  such  as  under  the  laws  of  New  York  renders 
them  utterly  void.  No  action,  therefore,  can  be  maintained  upon  them  in  the 
courts  of  Massachusetts,  unless  the  effect  of  this  evidence  be  in  some  way  over- 
come or  controlled." 


>!  ii25  LAW  AS   TO   INTEREST  AND   DAMAGES  1103 

be  charged,  although  the  bill  or  note  be  both  made  and  payable 
within  another  State. ^^    This  is  certainly  carrying  comity  very  far. 

It  was  held  at  one  time,  in  New  York,  that  if  by  the  law  of  the 
place  of  makmg,  and  also  of  payment,  there  be  usurious  interest 
charged,  the  instrument  cannot  be  negotiated  within  another  State 
where  it  is  not  usurious,  and  thus  become  valid;  ^^  but  it  was  subse- 
quently held,  that  if  made  or  accepted  for  accommodation  in  one 
State,  and  there  payable,  the  instrument  may,  nevertheless,  be 
negotiated  in  another  State  at  a  rate  of  interest  not  usurious  there, 
although  usurious  in  the  State  of  the  accommodation  making  or 
acceptance,  it  being  presumed  that  it  was  intended  by  the  accom- 
modation parties  that  the  instrument  might  be  so  used  by  the  pafty 
accommodated.^  In  a  still  later  case,  in  which  the  authorities  were 
reviewed,  the  New  York  Court  of  Appeals  held  that,  where  a  prom- 
issory note  was  made  in  that  State  by  a  resident  thereof,  and  there 
dated,  by  its  terms  payable  in  that  State,  with  no  rate  of  interest 
specified,  and  no  intention  of  the  maker  existing  that  it  should 
be  discounted  elsewhere,  the  negotiation  of  it  in  another  State  at  a 
rate  of  interest  lawful  there,  but  greater  than  the  legal  rate  in  New 
York,  was  usurious.^''  The  true  test  is  the  intention  of  the  parties; 
and  if  they  contemplate  the  law  of  the  State  where  the  rate  is  usurious 
as  controlling,  then  the  negotiation  will  be  invalid.  It  makes  no 
difference  that  the  rate  of  interest  is  usurious  at  the  place  of  negotia- 
tion if  not  so  at  the  place  of  making  or  payment. ^^ 

§  925.  Shifts  to  cover  usury. — In  the  cases  hitherto  cited,  the 
transaction  is  supposed  to  be  bona  fide.  If  a  mere  shift  to  cover 
usury,  it  will  be  void,  though  otherwise  it  would  be  valid.  Thus, 
where  a  bill  was  drawn  in  New  York  payable  in  Alabama,  and  was 
for  an  antecedent  debt,  and  a  larger  discount  was  taken  from  the 
bill  than  allowed  by  the  law  of  either  State  for  the  supposed  differ- 
ence of  exchange,  the  United  States  Supreme  Court  considered  the 
real  question  to  be  as  to  the  bona  fides  of  the  transaction.^^  It  seems 
that  the  law  of  the  place  where  the  note  is  made  will  govern  as  to 

27.  Wharton  on  Conflict  of  Laws,  §  508. 

28.  Jewell  v.  Wright,  30  N.  Y.  260. 

29.  First  Nat.  Bank  of  New  York  v.  Morris,  1  Hun,  680. 

30.  Dickinson  v.  Edwards,  77  N.  Y.  573. 

31.  Hackettstown  Nat.  Bank  v.  Rea,  64  Barb.  178;  Davis  v.  Marbine,  160 
N.  Y.  269,  54  N.  E.  704;  Rodecker  v.  Littauer,  8  C.  C.  A.  320,  59  Fed.  857. 

32.  Andrews  v.  Pond,  13  Pet.  65;  Smith  v.  Champion,  102  Ga.  92,  29  S.  E. 
160;  Vail  v.  Van  Doren,  45  Nobr.  450,  63  N.  W.  787. 


1104  THE    CONFLICT   OF    LAWS  §925 

the  legal  consequences  of  usury  when  it  is  usurious  by  the  law  of  that 
place  and  by  the  law  of  the  place  of  payment  also.''  In  respect  to 
interest  as  well  as  to  other  liabilities,  the  place  of  delivery  controls 
the  law  of  the  contract  between  the  parties.'"*  Where  the  law  of  the 
place  of  payment  prohibits  corporations  from  pleading  usury,  but 
its  bonds  were  tainted  with  usury  by  the  law  of  the  place  where  made, 
as  well  as  by  that  of  the  place  of  payment,  it  has  been  held  that  in  a 
suit  brought  in  the  State  where  they  were  made,  usury  might  be 
pleaded.'^' 

33.  Ibid. 

34.  Cook  V.  Litchfield,  5  Sandf.  330.    See  Commiasioncre  of  Craven  County 
V.  A.  &  N.  C.  R.  Co.,  77  X.  C.  280. 

36.  Commissioutra  of  Craven  County  v.  A.  &  N.  C.  R.  Co.,  77  N.  C.  289. 


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